Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 26, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | AGI | |
Entity Registrant Name | AFFINION GROUP, INC. | |
Entity Central Index Key | 1,361,394 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 100 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 61.6 | $ 51.2 |
Restricted cash | 26.9 | 29.2 |
Receivables (net of allowances for doubtful accounts of $3.1 and $3.1, respectively) | 116.6 | 114 |
Profit-sharing receivables from insurance carriers | 24.9 | 19.9 |
Prepaid commissions | 30.1 | 38.4 |
Other current assets | 73.8 | 85.6 |
Total current assets | 333.9 | 338.3 |
Non-current assets: | ||
Property and equipment, net | 108.3 | 119.5 |
Goodwill | 222.2 | 225.8 |
Receivables from related parties | 28.9 | 28.9 |
Other non-current assets | 46.4 | 44.9 |
Total assets | 801.2 | 829 |
Current liabilities: | ||
Current portion of long-term debt | 7.8 | 7.8 |
Accounts payable and accrued expenses | 332.8 | 346 |
Payables to related parties | 14.7 | 10.3 |
Deferred revenue | 61 | 69.3 |
Income taxes payable | 3 | 2.4 |
Total current liabilities | 419.3 | 435.8 |
Long-term debt | 1,844.8 | 1,868.4 |
Deferred income taxes | 39.2 | 35.9 |
Deferred revenue | 5.5 | 7.7 |
Other long-term liabilities | 26.3 | 27.1 |
Total liabilities | 2,335.1 | 2,374.9 |
Commitments and contingencies | ||
Deficit: | ||
Common stock and additional paid-in capital, $0.01 par value, 1,000 shares authorized, and 100 shares issued and outstanding | 210.4 | 210.4 |
Accumulated deficit | (1,733.2) | (1,750.8) |
Accumulated other comprehensive income | (12) | (6.2) |
Total Affinion Group, Inc. deficit | (1,534.8) | (1,546.6) |
Non-controlling interest in subsidiary | 0.9 | 0.7 |
Total deficit | (1,533.9) | (1,545.9) |
Total liabilities and deficit | 801.2 | 829 |
Contract rights and list fees, net | ||
Non-current assets: | ||
Intangible assets, net | 15.9 | 16.6 |
Other intangibles, net | ||
Non-current assets: | ||
Intangible assets, net | $ 45.6 | $ 55 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Receivables, allowance for doubtful accounts | $ 3.1 | $ 3.1 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 100 | 100 |
Common stock, shares outstanding | 100 | 100 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Net revenues | $ 238.1 | $ 291.3 | $ 737 | $ 888.6 |
Expenses: | ||||
Marketing and commissions | 81.6 | 104.7 | 254.4 | 331.4 |
Operating costs | 78.5 | 95.1 | 248 | 298.1 |
General and administrative | 27.1 | 29.3 | 87.1 | 93.1 |
Facility exit costs | 0.1 | 0.1 | 0.1 | 1.2 |
Depreciation and amortization | 13.7 | 23.7 | 41.9 | 71.7 |
Total expenses | 201 | 252.9 | 631.5 | 795.5 |
Income from operations | 37.1 | 38.4 | 105.5 | 93.1 |
Interest income | 0.2 | 1.9 | 0.8 | 2.3 |
Interest expense | (27.8) | (47.8) | (82.5) | (142.3) |
Other income, net | 0.6 | 1.2 | ||
Income (loss) before income taxes and non-controlling interest | 9.5 | (6.9) | 23.8 | (45.7) |
Income tax expense | (1.7) | (1.1) | (5.7) | (4.2) |
Net income (loss) | 7.8 | (8) | 18.1 | (49.9) |
Less: net income attributable to non-controlling interest | (0.3) | (0.2) | (0.5) | (0.5) |
Net income (loss) attributable to Affinion Group, Inc. | 7.5 | (8.2) | 17.6 | (50.4) |
Currency translation adjustment, net of tax for all periods | (1.4) | (2.2) | (5.8) | (5.7) |
Comprehensive income (loss) | 6.4 | (10.2) | 12.3 | (55.6) |
Less: comprehensive income attributable to non-controlling interest | (0.3) | (0.5) | (0.2) | |
Comprehensive income (loss) attributable to Affinion Group, Inc. | $ 6.1 | $ (10.2) | $ 11.8 | $ (55.8) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT - USD ($) $ in Millions | Total | Common Stock and Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Beginning Balance at Dec. 31, 2014 | $ (1,615.9) | $ 102.6 | $ (1,720.8) | $ 1.2 | $ 1.1 |
Net income (loss) | (49.9) | (50.4) | 0.5 | ||
Currency translation adjustment | (5.7) | (5.4) | (0.3) | ||
Ending Balance at Sep. 30, 2015 | (1,671.5) | 102.6 | (1,771.2) | (4.2) | 1.3 |
Beginning Balance at Dec. 31, 2015 | (1,545.9) | 210.4 | (1,750.8) | (6.2) | 0.7 |
Net income (loss) | 18.1 | 17.6 | 0.5 | ||
Currency translation adjustment | (5.8) | (5.8) | |||
Dividend paid to non-controlling interest | (0.3) | (0.3) | |||
Ending Balance at Sep. 30, 2016 | $ (1,533.9) | $ 210.4 | $ (1,733.2) | $ (12) | $ 0.9 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating Activities | ||
Net income (loss) | $ 18.1 | $ (49.9) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 41.9 | 71.7 |
Amortization of debt discount and financing costs | 4.5 | 7 |
Provision for (recovery of) accounts receivable loss provided for | 0.2 | (5.5) |
Facility exit costs | 0.1 | 1.2 |
Amortization of carrying value adjustment | (26.2) | |
Share-based compensation | 2.8 | 1.4 |
Deferred income taxes | 1.8 | 1.5 |
Net change in assets and liabilities: | ||
Restricted cash | (0.1) | 4.1 |
Receivables | (4.4) | 8.7 |
Receivables from related parties | 4 | |
Profit-sharing receivables from insurance carriers | (5) | 4.3 |
Prepaid commissions | 7.8 | 1.2 |
Other current assets | 10.3 | (18.8) |
Contract rights and list fees | 0.6 | (0.4) |
Other non-current assets | 0.2 | (13.3) |
Accounts payable and accrued expenses | (4) | (7.8) |
Payables to related parties | 1.7 | (0.8) |
Deferred revenue | (9.2) | (6.3) |
Income taxes receivable and payable | 0.3 | (0.5) |
Other long-term liabilities | (1.6) | (5.7) |
Other, net | 0.6 | 3.2 |
Net cash provided by (used in) operating activities | 40.4 | (0.7) |
Investing Activities | ||
Capital expenditures | (24.3) | (23.3) |
Restricted cash | 1.5 | (1.1) |
Proceeds from sale of investment | 1.5 | |
Net cash used in investing activities | (22.8) | (22.9) |
Financing Activities | ||
Borrowings under revolving credit facility, net | 61 | |
Principal payments on borrowings | (5.8) | (6.6) |
Dividend paid to non-controlling interest | (0.3) | |
Receivables from and payables to parent company | (1.9) | |
Net cash provided by (used in) financing activities | (6.1) | 52.5 |
Effect of changes in exchange rates on cash and cash equivalents | (1.1) | (1.2) |
Net increase in cash and cash equivalents | 10.4 | 27.7 |
Cash and cash equivalents, beginning of period | 51.2 | 28 |
Cash and cash equivalents, end of period | 61.6 | 55.7 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest payments | 90.3 | 138 |
Income tax payments, net of refunds | 3.6 | 2.6 |
Non-cash investing and financing activities: | ||
Accrued capital expenditures | 0.9 | $ 0.4 |
Payment of in-kind interest | $ 3.9 |
Basis of Presentation and Busin
Basis of Presentation and Business Description | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation and Business Description | 1. BASIS OF PRESENTATION AND BUSINESS DESCRIPTION Basis of Presentation —On October 17, 2005, Cendant Corporation (“Cendant”) completed the sale of the Cendant Marketing Services Division to Affinion Group, Inc. (the “Company” or “Affinion”), a wholly-owned subsidiary of Affinion Group Holdings, Inc. (“Affinion Holdings”) and an affiliate of Apollo Global Management, LLC (“Apollo”), pursuant to a purchase agreement dated July 26, 2005 for approximately $1.8 billion (the “Apollo Transactions”). All references to Cendant refer to Cendant Corporation, which changed its name to Avis Budget Group, Inc. in August 2006, and its consolidated subsidiaries, specifically in the context of its business and operations prior to, and in connection with, the Company’s separation from Cendant. The accompanying unaudited condensed consolidated financial statements include the accounts and transactions of the Company. In presenting these unaudited condensed consolidated financial statements, management makes estimates and assumptions that affect reported amounts of assets and liabilities and related disclosures, and disclosure of contingent assets and liabilities, at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Estimates, by their nature, are based on judgments and available information at the time such estimate is made. As such, actual results could differ from those estimates. In management’s opinion, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and following the guidance of Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission (the “SEC”). As permitted under such rules, certain notes and other financial information normally required by accounting principles generally accepted in the United States of America have been condensed or omitted; however, the unaudited condensed consolidated financial statements do include such notes and financial information sufficient so as to make the interim information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes of the Company, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 10, 2016 (the “Form 10-K”). Business Description — The Company is one of the world’s leading loyalty and customer engagement solutions companies. The Company designs, markets and services programs that strengthen and extend customer relationships for many of the world’s largest and most respected companies. The Company’s programs and services include: • Loyalty programs that help reward, motivate and retain consumers, • Membership programs that help consumers save money and gain peace of mind, • Package programs that bundle valuable discounts, protection and other benefits to enhance customer relationships, and • Insurance programs that help protect consumers in the event of a covered accident, injury, illness, or death. The Company designs loyalty and customer engagement solutions with an attractive suite of benefits and ease of usage that it believes are likely to interest, engage and reward consumers based on their needs and interests. For example, the Company provides loyalty program design and management, disaggregated loyalty points redemptions for gift cards, travel and merchandise, credit monitoring and identity-theft resolution, discount travel services, accidental death and dismemberment insurance (“AD&D”), various checking account and credit card enhancement services, roadside assistance, as well as other products and services. The Company is a global leader in the designing, marketing and servicing of loyalty and comprehensive customer engagement solutions that enhances and extends the relationship of millions of consumers with many of the largest and most respected companies in the world. The Company generally partners with these leading companies in two ways: 1) by developing and supporting programs that are natural extensions of its partner companies’ brand image and that provide valuable services to their end-customers, and 2) by providing the back-end technological support and redemption services for points-based loyalty programs. Using its expertise in customer engagement, product development, creative design and data-driven targeted marketing, the Company develops and markets programs and services that enable the companies it partners with to generate significant, high-margin incremental revenue, enhance its partners’ brands among targeted consumers as well as strengthen and enhance the loyalty of their customer relationships. The enhanced loyalty can lead to improved customer satisfaction rates, longer retention of existing customers, increased acquisition of new customers, and greater use of other services provided by such companies. The Company refers to the leading companies that it works with to provide loyalty and customer engagement solutions as clients or marketing partners. The Company refers to the consumers to whom it provides services directly under a contractual relationship as subscribers or insureds. The Company refers to those consumers that it services on behalf of a third party, such as one of its marketing partners, and with whom it has a contractual relationship as end-customers. The Company utilizes its substantial expertise in a variety of direct engagement media to market valuable products and services to the customers of its marketing partners on a highly targeted, campaign basis. The selection of the media employed in a campaign corresponds to the preferences and expectations the targeted customers have demonstrated for transacting with its marketing partners, as the Company believes this optimizes response, thereby improving the efficiency of our marketing investment. Accordingly, the Company maintains significant capabilities to market through direct mail, point-of-sale, the internet, inbound and outbound telephony and voice response unit marketing, as well as other media as needed. Effective January 1, 2016, we implemented a new globalized organizational structure (the “Global Reorganization”) to better support our key strategic initiatives and enhance long-term revenue growth. This new organizational structure allows us to combine similar lines of business on common platforms and shared infrastructures on a global basis to drive best practices and efficiencies with meaningful cost savings. In addition, we intend to no longer materially invest in lines of business that we believe are not essential to our long-term growth prospects. We remain committed to our business strategy of pursuing initiatives that maintain and enhance our position as a global leader in loyalty and customer engagement solutions. The implementation of the new global organizational structure marks another major step in our strategic plan and ongoing transformation. See Note 10 to our unaudited condensed consolidated financial statements for more information concerning our segment results and Note 2 to our unaudited condensed consolidated financial statements for more information concerning the allocation of goodwill among the new segments. Prior period segment amounts throughout the notes to the unaudited condensed consolidated financial statement have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements. Effective January 1, 2016, we have the following four new operating segments: • Global Loyalty . This segment consists of all of the Company’s loyalty assets globally in which we are a provider of end-to-end loyalty solutions that help clients reward, motivate and retain customers, including program design, points management and administration, and broad-based fulfilment and redemption. • Global Customer Engagement . This segment combines all of the Company’s global customer engagement programs in which the Company or its partners expect to actively market. Through the Global Customer Engagement business, the Company expects that it will continue to be a leading global solutions provider that delivers a flexible mix of benefits and services for its clients that meet customers’ needs, including products that are designed to help consumers save money and gain peace of mind. • Insurance Solutions . This segment consists of the domestic insurance business, in which the Company is a leading third-party agent, administrator and marketer of certain Accident and Life insurance products. • Legacy Membership and Package . This segment combines all global membership programs in which the Company no longer expects to actively market (which were previously reported predominantly in our Membership Products segment and to a lesser extent in our International Products segment) and also includes the domestic Package business (which, through December 31, 2015, was reported in its Insurance and Package segment). This segment includes membership programs that were marketed with many of the Company’s large domestic financial institution partners. Although the Company will continue to service these members, it expects that cash flows and revenues will decrease over time due to the anticipated attrition of the member base in this operating segment. Recently Issued Accounting Pronouncements On May 28, 2014, the FASB and International Accounting Standards Board issued their final standard on revenue from contracts with customers. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The fundamental principles of the guidance are that companies should recognize revenue in a manner that reflects the timing of transfer of goods and services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The guidance establishes a five-step approach for the recognition of revenue. In addition, the guidance will also require significantly expanded disclosures about revenue recognition. In July 2015, the FASB issued a new standard that, for public entities, defers the effective date of the standard on revenue from contracts with customers by one year, to annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Entities have the option of using either a full retrospective or modified retrospective approach and early application is not permitted, other than entities may earlier adopt the new guidance as of the originally proposed effective date, which was for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The Company is in the process of performing an evaluation of the impact of the new guidance. On August 27, 2014, the FASB issued an Accounting Standards Update (“ASU”) that provides guidance on determining when and how reporting entities must disclose going concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the financial statements (or within one year after the date on which the financial statements were available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is in the process of performing an evaluation of the impact of the new guidance. On April 7, 2015, the FASB issued an ASU that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with debt discounts and premiums, rather than as a separate asset. On August 16, 2015, the FASB issued an ASU clarifying the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The SEC staff announced that it would not object to the deferral and presentation of debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. The new guidance is effective for financial statements issued for fiscal years beginning after December 31, 2015 and interim periods within those fiscal years. As of January 1, 2016, the Company adopted the new guidance, which did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, and re-cast the December 31, 2015 balances, resulting in a $15.1 million reduction of other non-current assets and long-term debt. On November 20, 2015, the FASB issued ASU 2015-17, which requires entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. It simplifies the current guidance, which requires entities to separately present deferred tax assets and deferred tax liabilities as current or non-current in a classified balance sheet. Netting of deferred tax assets and deferred tax liabilities by tax jurisdiction is still required under the new guidance. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company adopted the new guidance as of the beginning of the second quarter of 2016 on a prospective basis. The December 31, 2015 financial statements were not retrospectively adjusted. The adoption of this standard did not have a material impact on our financial statements. On February 25, 2016, the FASB issued ASU 2016-02, its new standard on accounting for leases. The new standard introduces a lessee model that brings most leases on the balance sheet. The new lease standard also addresses other concerns related to the current leases model. For public business entities, the new guidance will be effective for annual periods beginning after December 31, 2018 and all interim periods within those annual periods. The Company is in the process of performing an initial evaluation of the impact of the new guidance. On August 26, 2016, the FASB issued ASU 2016-15, which addresses eight specific cash flow issues, including presentation of debt prepayments or debt extinguishment costs, with the objective of reducing the existing diversity in practice. For public business entities, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. When adopted, the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2016 | |
Other intangibles, net | |
Intangible Assets and Goodwill | 2. INTANGIBLE ASSETS AND GOODWILL Intangible assets consisted of: September 30, 2016 Gross Carrying Accumulated Net Carrying Amount Amortization Amount (in millions) Amortizable intangible assets: Member relationships $ 934.4 $ (932.0 ) $ 2.4 Affinity relationships 638.3 (604.0 ) 34.3 Proprietary databases and systems 59.7 (58.0 ) 1.7 Trademarks and tradenames 28.4 (21.5 ) 6.9 Patents and technology 47.6 (47.4 ) 0.2 Covenants not to compete 2.5 (2.4 ) 0.1 $ 1,710.9 $ (1,665.3 ) $ 45.6 December 31, 2015 Gross Carrying Accumulated Net Carrying Amount Amortization Amount (in millions) Amortizable intangible assets: Member relationships $ 936.9 $ (933.8 ) $ 3.1 Affinity relationships 639.3 (598.6 ) 40.7 Proprietary databases and systems 59.7 (57.7 ) 2.0 Trademarks and tradenames 28.7 (20.8 ) 7.9 Patents and technology 47.6 (46.5 ) 1.1 Covenants not to compete 2.5 (2.3 ) 0.2 $ 1,714.7 $ (1,659.7 ) $ 55.0 Foreign currency translation resulted in a decrease in intangible assets and accumulated amortization of $3.7 million and $3.7 million, respectively, from December 31, 2015 to September 30, 2016. Amortization expense relating to intangible assets was as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Amortizable intangible assets: Member relationships $ 0.2 $ 1.4 $ 0.7 $ 3.4 Affinity relationships 2.2 9.5 6.6 29.2 Proprietary databases and systems 0.1 0.1 0.3 0.3 Trademarks and tradenames 0.3 0.5 0.9 1.8 Patents and technology 0.3 0.4 0.9 2.0 Covenants not to compete 0.1 0.1 0.1 0.2 $ 3.2 $ 12.0 $ 9.5 $ 36.9 Based on the Company’s amortizable intangible assets as of September 30, 2016, the Company expects the related amortization expense for fiscal year 2016 and the four succeeding fiscal years to be approximately $12.5 million in 2016, $8.3 million in 2017, $7.4 million in 2018, $6.2 million in 2019 and $5.7 million in 2020. At January 1, 2016 and September 30, 2016, the Company had gross goodwill of $654.7 million and $651.2 million, respectively, and accumulated impairment losses of $429.0 million at both dates. The accumulated impairment losses represent the $15.5 million impairment loss recognized in 2006 impairing all of the goodwill assigned to the Global Loyalty segment (previously included in the Global Loyalty Products segment) related to the Apollo Transactions, the $31.5 million impairment loss recognized in 2012 impairing all of the goodwill assigned in connection with the acquisition of Prospectiv Direct, Inc. included in the Legacy Membership and Package segment (previously included in the Membership Products segment) and the $292.4 million and the $89.6 million impairment losses recognized in 2014 and 2015, respectively, impairing all of the goodwill assigned to the former Membership Products segment, which has been allocated to the Legacy Membership and Package segment. The changes in the Company’s carrying amount of goodwill for the year ended December 31, 2015 and the nine months ended September 30, 2016 are as follows: Balance at Balance at Balance at January 1, Currency December 31, Currency September 30, 2015 Acquisition Impairment Translation 2015 Translation 2016 (in millions) Global Loyalty $ 106.2 $ (0.2 ) $ - $ (0.9 ) $ 105.1 $ 0.2 $ 105.3 Global Customer Engagement 68.1 — — (5.7 ) 62.4 (3.8 ) 58.6 Insurance Solutions 58.3 — — — 58.3 — 58.3 Legacy Membership and Package 89.6 — (89.6 ) — - — — Total $ 322.2 $ (0.2 ) $ (89.6 ) $ (6.6 ) $ 225.8 $ (3.6 ) $ 222.2 During the fourth quarter of 2015, the Company performed its annual goodwill impairment test for those reporting units that had goodwill recorded. Key assumptions used in the goodwill impairment test were long-term growth rates ranging from no growth to 2.0% and discount rates ranging from 10.5% to 14.5%. In 2015, the fair value of each of the reporting units that have goodwill exceeded its respective carrying amount by more than 25% of the carrying amount, with the exception of the former Membership Products segment, for which carrying value exceeded its fair value, based on an assumed long-term growth rate of no growth and a discount rate of 13.5%. During the fourth quarter of 2015, the Company reflected these assumptions for the former Membership Products segment in its annual test for goodwill impairment as of December 1. Based on the impairment test, which utilized a combination of the income and market approaches and incorporated assumptions that the Company believes marketplace participants would utilize to determine the fair value of the former Membership Products segment, the Company recorded an impairment loss during the fourth quarter of 2015 of $89.6 million, representing all of the remaining goodwill ascribed to the former Membership Products segment. |
Contract Rights and List Fees,
Contract Rights and List Fees, Net | 9 Months Ended |
Sep. 30, 2016 | |
Contract rights and list fees, net | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Intangible Assets | 3. CONTRACT RIGHTS AND LIST FEES, NET Contract rights and list fees consisted of: September 30, 2016 December 31, 2015 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Contract rights $ 50.1 $ (50.1 ) $ - $ 56.5 $ (56.4 ) $ 0.1 List fees 60.0 (44.1 ) 15.9 57.0 (40.5 ) 16.5 $ 110.1 $ (94.2 ) $ 15.9 $ 113.5 $ (96.9 ) $ 16.6 Amortization expense for the three and nine months ended September 30, 2016 was $1.3 million and $3.8 million, respectively, of which $1.2 million and $3.6 million, respectively, is included in marketing expense and $0.1 million and $0.2 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statement of comprehensive income (loss). Amortization expense for the three and nine months ended September 30, 2015 was $1.3 million and $4.0 million, respectively, of which $1.3 million and $3.8 million, respectively, is included in marketing expense and less than $0.1 million and $0.2 million, respectively, is included in depreciation and amortization expense in the unaudited condensed consolidated statement of comprehensive income (loss). Based on the Company’s contract rights and list fees as of September 30, 2016, the Company expects the related amortization expense for fiscal year 2016 and the four succeeding fiscal years to be approximately $4.9 million in 2016, $3.9 million in 2017, $3.2 million in 2018, $2.5 million in 2019 and $2.0 million in 2020. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 4. LONG-TERM DEBT Long-term debt consisted of: September 30, December 31, 2016 2015 (in millions) First-lien term loan due 2018 $ 755.6 $ 761.4 Second-lien term loan due 2018 425.0 425.0 Revolving credit facility, expiring in 2018 — — 7.875% senior notes due 2018, net of unamortized discount of $0.5 million and $0.6 million, respectively, with an effective interest rate of 8.31% 474.5 474.4 7.5% cash/PIK senior notes due 2018, with an effective interest rate of 7.39% 113.9 110.0 13.50% senior subordinated notes due 2018, with an effective interest rate of 14.31% 22.6 22.6 Capital lease obligations — 0.1 Adjustment to carrying value of debt 71.6 97.8 Total debt 1,863.2 1,891.3 Less: current portion of long-term debt (7.8 ) (7.8 ) Less: unamortized deferred financing costs (10.6 ) (15.1 ) Long-term debt $ 1,844.8 $ 1,868.4 On April 9, 2010, the Company, as Borrower, and Affinion Holdings entered into a $1.0 billion amended and restated senior secured credit facility with its lenders (“Affinion Credit Facility”). On November 20, 2012, the Company, as Borrower, and Affinion Holdings entered into an amendment to the Affinion Credit Facility, which (i) increased the margins on LIBOR loans from 3.50% to 5.00% and on base rate loans from 2.50% to 4.00%, (ii) replaced the financial covenant requiring the Company to maintain a maximum consolidated leverage ratio with a financial covenant requiring Affinion to maintain a maximum senior secured leverage ratio, and (iii) adjusted the ratios under the financial covenant requiring Affinion to maintain a minimum interest coverage ratio. On December 12, 2013, in connection with the refinancing of the Company’s 11 ½ % senior subordinated notes due 2015 (Affinion’s “2006 senior subordinated notes”) and Affinion Holdings’ 11.625% senior notes due 2015 (the “Affinion Holdings’ 2010 senior notes”), the Company, as Borrower, and Affinion Holdings entered into an amendment to the Affinion Credit Facility, which (i) provided permission for the consummation of the exchange offers for the Company’s 2006 senior subordinated notes and Affinion Holdings’ 2010 senior notes; (ii) removed the springing maturity provisions applicable to the term loan facility; (iii) modified the senior secured leverage ratio financial covenant in the Affinion Credit Facility; (iv) provided additional flexibility to make dividends to Affinion Holdings to be used by Affinion Holdings to make certain payments with respect to its indebtedness and to repay, repurchase or redeem subordinated indebtedness of Affinion; and (v) increased the interest rate margins by 0.25%, to 5.25% on LIBOR loans and 4.25% on base rate loans. The amendment became effective upon the satisfaction of the conditions precedent set forth therein, including the payment by Affinion of the consent fee equal to 0.25% of the sum of (i) the aggregate principal amount of all term loans and (ii) the revolving loan commitments in effect, in each case, held by each lender that entered into the amendment on the date of effectiveness of the amendment. On May 20, 2014, the Company, as Borrower, and Affinion Holdings entered into an amendment to the Affinion Credit Facility, which (i) extended the maturity to April 30, 2018 of $775.0 million in aggregate principal amount of existing senior secured term loans and existing senior secured revolving loans, which loans were designated as first lien term loans (the “First Lien Term Loans”), (ii) extended the maturity to October 31, 2018 of $377.9 million in aggregate principal amount of existing senior secured term loans on a second lien senior secured basis, which, together with additional borrowings obtained on the same terms, total $425.0 million (the “Second Lien Term Loans”), (iii) extended the maturity to January 29, 2018 of $80.0 million of the commitments (and related obligations) under the existing senior secured revolving credit facility on a first lien senior secured basis, (iv) reduced the commitments under the existing senior secured revolving credit facility by $85.0 million and (v) removed the existing financial covenant requiring the Company to maintain a minimum interest coverage ratio. The revolving credit facility includes a letter of credit subfacility and a swingline loan subfacility. The First Lien Term Loan facility matures in April 2018 and the Second Lien Term Loan facility matures in October 2018. The First Lien Term Loan facility provides for quarterly amortization payments totaling 1% per annum, with the balance payable upon the final maturity date. The Second Lien Term Loan facility does not provide for quarterly amortization payments. The Affinion Credit Facility also requires mandatory prepayments of the outstanding term loans based on excess cash flow (as defined), if any, and the proceeds from certain specified transactions. The interest rates with respect to First Lien Term Loans and revolving loans under the amended Affinion Credit Facility are based on, at the Company’s option, (a) the higher of (i) adjusted LIBOR and (ii) 1.50%, in each case plus 5.25%, or (b) the highest of (i) Deutsche Bank Trust Company Americas’ prime rate, (ii) the Federal Funds Effective Rate plus 0.5% and (iii) 2.50% (“ABR”), in each case plus 4.25%. The interest rates with respect to Second Lien Term Loans under the amended Affinion Credit Facility are based on, at the Company’s option, (a) the higher of (i) adjusted LIBOR and (ii) 1.50%, in each case plus 7.00%, or (b) the highest of (i) Deutsche Bank Trust Company Americas’ prime rate, (ii) the Federal Funds Effective Rate plus 0.5% and (iii) 2.50% (“ABR”), in each case plus 6.00%. The weighted average interest rate on the First Lien Term Loan for each of the three and nine month periods ended September 30, 2016 and 2015 was 6.75% and the weighted average interest rate on the Second Lien Term Loan for each of the three and nine month periods ended September 30, 2016 and 2015 was 8.50%. The weighted average interest rate on revolving credit facility borrowings for the three months ended September 30, 2016 and 2015 was 7.8%, and 7.2%, respectively and for the nine months ended September 30, 2016 and 2015 was 7.8%, and 7.2%, respectively. The Company’s obligations under the credit facility are, and the Company’s obligations under any interest rate protection or other hedging arrangements entered into with a lender or any of its affiliates will be, guaranteed by Affinion Holdings and by each of the Company’s existing and subsequently acquired or organized domestic subsidiaries, subject to certain exceptions. The Affinion Credit Facility is secured to the extent legally permissible by substantially all of the assets of (i) Affinion Holdings, which consists of a pledge of all the Company’s capital stock and (ii) the Company and the subsidiary guarantors, including but not limited to: (a) a pledge of substantially all capital stock held by the Company or any subsidiary guarantor and (b) security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions. The Affinion Credit Facility also contains financial, affirmative and negative covenants. The negative covenants in the Affinion Credit Facility include, among other things, limitations (all of which are subject to certain exceptions) on the Company’s (and in certain cases, Affinion Holdings’) ability to: declare dividends and make other distributions, redeem or repurchase the Company’s capital stock; prepay, redeem or repurchase certain of the Company’s subordinated indebtedness; make loans or investments (including acquisitions); incur additional indebtedness (subject to certain exceptions); enter into agreements that would restrict the ability of the Company’s subsidiaries to pay dividends; merge or enter into acquisitions; sell assets; and enter into transactions with affiliates. The Affinion Credit Facility also requires the Company to comply with a financial maintenance covenant with a maximum ratio of senior secured debt (as defined) to EBITDA (as defined) of 4.25:1.00. As of September 30, 2016 and December 31, 2015, there were no outstanding borrowings under the revolving credit facility. During the nine months ended September 30, 2016 and 2015, the Company had borrowings of $107.0 million and $81.0 million, respectively, under the revolving credit facility. During the nine months ended September 30, 2016 and 2015, the Company had repayments of $107.0 million and $20.0 million, respectively, under the revolving credit facility. As of September 30, 2016, the Company had $69.2 million available for borrowing under the Affinion Credit Facility after giving effect to the issuance of $10.8 million of letters of credit. On November 9, 2015, (a) Affinion Holdings completed a private offer to exchange (the “2015 Holdings Exchange Offer”) its outstanding 13.75%/14.50% senior secured PIK/toggle notes due 2018 (Affinion Holdings’ “2013 senior notes”) for shares of its Common Stock, par value $0.01 per share (Affinion Holdings’ “Common Stock”), (b) Affinion Investments, LLC (“Affinion Investments”) completed a private offer to exchange (the “2015 Investments Exchange Offer” and, together with the 2015 Holdings Exchange Offer, the “2015 Exchange Offers”) its outstanding 13.50% senior subordinated notes due 2018 (the “Investments senior subordinated notes”) for shares of Common Stock, and (c) Affinion Holdings and Affinion International Holdings Limited (“Affinion International”), a wholly-owned subsidiary of Affinion, jointly completed a rights offering giving holders of Affinion Holdings’ 2013 senior notes and the Investments senior subordinated notes the right to purchase an aggregate principal amount of $110.0 million of 7.5% Cash/PIK Senior Notes due 2018 (the “International Notes”) of Affinion International and up to 2,483,333 shares of Common Stock for an aggregate cash purchase price of $110.0 million. Under the terms of the 2015 Holdings Exchange Offer, for each $1,000 principal amount of Affinion Holdings’ 2013 senior notes tendered during the offer period, holders received 7.15066 shares of Affinion Holdings’ Common Stock. Under the terms of the 2015 Investments Exchange Offer, for each $1,000 principal amount of the Investments senior subordinated notes tendered during the offer period, holders received 15.52274 shares of Affinion Holdings’ Common Stock. Under certain circumstances, certain holders would have received non-participating penny warrants (the “Limited Warrants”) of Affinion Holdings that would have been convertible into shares of Common Stock upon certain conditions. Pursuant to the 2015 Holdings Exchange Offer, approximately $247.4 million of Affinion Holdings’ 2013 senior notes were exchanged for 1,769,104 shares of Common Stock and pursuant to the 2015 Investments Exchange Offer, approximately $337.3 million of Investments senior subordinated notes were exchanged for 5,236,517 shares of Common Stock. Concurrently with the 2015 Exchange Offers, Affinion Holdings and Affinion Investments successfully solicited consents (the “2015 Consent Solicitations”) from holders to certain amendments to (a) the indenture governing Affinion Holdings’ 2013 senior notes to remove substantially all of the restrictive covenants and certain of the default provisions and to release the collateral securing Affinion Holdings’ 2013 senior notes, (b) the indenture governing the Investments senior subordinated notes to remove substantially all of the restrictive covenants and certain of the default provisions, and (c) the note agreement governing Affinion’s 2013 senior subordinated notes (as defined below) to remove substantially all of the restrictive covenants and certain of the default provisions and to permit the repurchase and cancellation of Affinion’s 2013 senior subordinated notes by Affinion in the same aggregate principal amount as the aggregate principal amount of the Investments senior subordinated notes repurchased or redeemed by Affinion Investments at any time, including pursuant to the 2015 Investments Exchange Offer. In connection with the 2015 Exchange Offers, Affinion Holdings and Affinion International jointly conducted a rights offering (the “2015 Rights Offering”) for International Notes and shares of Affinion Holdings’ Common Stock. The 2015 Rights Offering was for an aggregate principal amount of $110.0 million of International Notes and up to 2,483,333 shares of Common Stock. Each unit sold in the 2015 Rights Offering consisted of (1) $1,000 principal amount of International Notes and (2) 22.57576 shares of Affinion Holdings’ Common Stock, and was sold at a purchase price per unit of $1,000. Each holder that properly tendered for exchange, and did not validly withdraw, all of their Affinion Holdings’ 2013 senior notes and the Investments senior subordinated notes in the 2015 Exchange Offers received non-certificated rights to subscribe for rights offering units. In connection with the 2015 Rights Offering, Empyrean Capital Partners, L.P. agreed to purchase any rights offering units that were unpurchased in the 2015 Rights Offering (the “Backstop”). Pursuant to the 2015 Rights Offering and the Backstop, Affinion International received cash of approximately $110.0 million in exchange for $110.0 million aggregate principal amount of International Notes and 2,021,042 shares of Common Stock and a Limited Warrant to purchase up to 462,266 shares of Common Stock. The net cash proceeds from the 2015 Rights Offering were used for working capital purposes of Affinion International and the Foreign Guarantors (as defined below) and to repay certain intercompany loans owed by Affinion International to Affinion and its domestic subsidiaries. Affinion used such intercompany loan repayment proceeds for general corporate purposes, including to repay borrowings under its revolving credit facility and to pay fees and expenses related to the 2015 Transactions (as defined below). The International Notes bear interest at 7.5% per annum, of which 3.5% per annum will be payable in cash (“International Cash Interest”) and 4.0% per annum will be payable by increasing the principal amount of the outstanding International Notes or by issuing International Notes (“International PIK Interest”); provided, that all of the accrued interest on the International Notes from the issue date to, but not including, May 1, 2016 was payable on May 1, 2016 entirely as International PIK Interest. Interest on the International Notes is payable semi-annually on May 1 and November 1 of each year, commencing on May 1, 2016. The International Notes will mature on July 30, 2018. The International Notes are redeemable at Affinion International’s option prior to maturity. The indenture governing the International Notes contains negative covenants which restrict the ability of Affinion International, Affinion and their respective restricted subsidiaries to engage in certain transactions and also contains customary events of default. Affinion International’s obligations under the International Notes are fully and unconditionally guaranteed on an unsecured senior basis by each of Affinion’s existing and future domestic subsidiaries that guarantee Affinion’s indebtedness under its senior secured credit facility (other than Affinion Investments and Affinion Investments II, LLC (“Affinion Investments II”), and additionally including (such additional guarantors, the “Foreign Guarantors”) Affinion International Limited, Affinion International Travel HoldCo Limited, Webloyalty International Limited, Loyalty Ventures Limited, Bassae Holding B.V., Webloyalty Holdings Coöperatief U.A. and Webloyalty International S.à r.l.). The International Notes and guarantees thereof are unsecured senior obligations of Affinion International’s and rank equally with all of Affinion International’s and the guarantors’ existing and future senior indebtedness and senior to Affinion International’s and the guarantors’ existing and future subordinated indebtedness. The carrying value of the aggregate debt instruments held by the participants to the 2015 Exchange Offers and 2015 Rights Offering (including associated debt discounts, deferred financing, and accrued interest), was $728.5 million. This was compared to the fair value of the equity issued in the 2015 Exchange Offers and 2015 Rights Offering for such debt instruments, which were valued at $107.8 million as of the date of the 2015 Exchange Offers. This exceeded the undiscounted cash flows of the aggregate lending. The Company recognized a gain in the consolidated statement of operations of $115.8 million on the 2015 Exchange Offers in 2015, which represented the write-down of the carrying value of the aggregate debt instruments to the undiscounted cash flows of the continuing debt instruments. The 2015 Exchange Offers contemplated a portion of the overall debt instruments held by the participants to the 2015 Exchange Offers. In connection with the recognition of the 2015 Exchange Offers and 2015 Rights Offering, the impact of these transactions is summarized as follows, including the aforementioned gain of $115.8 million (in millions). Reduction of carrying value of debt exchanged $ (337.3 ) Reduction of accrued interest associated with debt exchanged (10.6 ) Write-off of debt discount and deferred financing costs, plus professional fees 21.0 Fair value of equity issued in the debt exchange and rights offering 107.8 Gain recorded as noted above 115.8 Adjustment to carrying value of debt $ (103.3 ) The adjustment to the carrying value of the debt is the net impact of the aforementioned transaction and represents an adjustment of the carrying value of the First Lien Term Loans, the Second Lien Term Loans, Affinion’s 2010 senior notes (defined below) and the International Notes of $103.3 million. This amount represents the interest to be paid in cash on the continuing debt instruments held by those who participated in the exchange but were not subject to the exchange itself through the scheduled maturity of those instruments. This amount, net of amortization, increases the carrying value of the Company’s recorded long term debt at September 30, 2016 and December 31, 2015 by $71.6 million and $97.8 million, respectively. Such amounts have been and will continue to be reduced in future years as scheduled interest is paid on those remaining instruments. On December 12, 2013, the Company completed a private offer to exchange the Company’s 2006 senior subordinated notes for Investments senior subordinated notes, pursuant to which $360.0 million aggregate principal amount of Investments senior subordinated notes were issued in exchange for $352.9 million aggregate principal amount of the Company’s 2006 senior subordinated notes. Under the terms of the exchange offer, for each $1,000 principal amount of the Company’s 2006 senior subordinated notes tendered at or prior to the consent time, holders received $1,020 principal amount of Investments senior subordinated notes. For each $1,000 principal amount of the Company’s 2006 senior subordinated notes tendered during the offer period but after the consent period, holders received $1,000 principal amount of Investments senior subordinated notes. The Investments senior subordinated notes bear interest at 13.50% per annum, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2014. The Investments senior subordinated notes will mature on August 15, 2018. Affinion Investments may redeem some or all of the Investments senior subordinated notes at any time on or after December 12, 2016 at redemption prices (generally at a premium) set forth in the indenture governing the Investments senior subordinated notes. In addition, prior to December 12, 2016, up to 35% of the outstanding Investments senior subordinated notes are redeemable at the option of Affinion Investments, with the net proceeds raised by the Company or Affinion Holdings in one or more equity offerings, at 113.50% of their principal amount. In addition, prior to December 12, 2016, the Investments senior subordinated notes are redeemable, in whole or in part, at a redemption price equal to 100% of the principal amount of the Investments senior subordinated notes redeemed plus a “make-whole” premium. The indenture governing the Investments senior subordinated notes contains negative covenants which restrict the ability of Affinion Investments, any future restricted subsidiaries of Affinion Investments and one of the Company’s other wholly-owned subsidiaries that guarantees the Investments senior subordinated notes to engage in certain transactions and also contains customary events of default. Affinion Investments’ obligations under the Investments senior subordinated notes are guaranteed on an unsecured senior subordinated basis by Affinion Investments II. Each of Affinion Investments and Affinion Investments II is an unrestricted subsidiary of the Company and guarantees the Company’s indebtedness under its senior secured credit facility but does not guarantee the Company’s other indebtedness. The Investments senior subordinated notes and guarantee thereof are unsecured senior subordinated obligations of Affinion Investments, as issuer, and Affinion Investments II, as guarantor, and rank junior in right of payment to their respective guarantees of the Company’s senior secured credit facility. On December 12, 2013, Affinion Investments exchanged with the Company all of the 2006 senior subordinated notes received by it in the exchange offer for Affinion’s 13.50% senior subordinated notes due 2018 (Affinion’s “2013 senior subordinated notes”). Affinion’s 2013 senior subordinated notes bear interest at 13.50% per annum payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2014. The 2013 senior subordinated notes will mature on August 15, 2018. The 2013 senior subordinated notes are redeemable at the Company’s option prior to maturity. The indenture governing the 2013 senior subordinated notes contains negative covenants which restrict the ability of Affinion and its restricted subsidiaries to engage in certain transactions and also contains customary events of default. Affinion’s obligations under the 2013 senior subordinated notes are jointly and severally and fully and unconditionally guaranteed on an unsecured senior subordinated basis by each of Affinion’s existing and future domestic subsidiaries that guarantee Affinion’s indebtedness under its senior secured credit facility (other than Affinion Investments and Affinion Investments II). The 2013 senior subordinated notes and guarantees thereof are unsecured senior subordinated obligations of Affinion’s and rank junior to all of Affinion’s and the guarantors’ existing and future senior indebtedness, pari passu On November 19, 2010, the Company completed a private offering of $475.0 million aggregate principal amount of 7.875% senior notes due 2018 (Affinion’s “2010 senior notes”). The 2010 senior notes bear interest at 7.875% per annum payable semi-annually on June 15 and December 15 of each year, commencing on June 15, 2011. The 2010 senior notes will mature on December 15, 2018. The 2010 senior notes are redeemable at the Company’s option prior to maturity. The indenture governing the 2010 senior notes contains negative covenants which restrict the ability of the Company and its restricted subsidiaries to engage in certain transactions and also contains customary events of default. The Company’s obligations under the 2010 senior notes are jointly and severally and fully and unconditionally guaranteed on a senior unsecured basis by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s indebtedness under the Affinion Credit Facility, other than Affinion Investments and Affinion Investments II. The 2010 senior notes and guarantees thereof are senior unsecured obligations of the Company and rank equally with all of the Company’s and the guarantors’ existing and future senior indebtedness and senior to the Company’s and the guarantors’ existing and future subordinated indebtedness. The 2010 senior notes are therefore effectively subordinated to the Company’s and the guarantors’ existing and future secured indebtedness, including the Company’s obligations under the Affinion Credit Facility, to the extent of the value of the collateral securing such indebtedness. The 2010 senior notes are structurally subordinated to all indebtedness and other obligations of each of the Company’s existing and future subsidiaries that are not guarantors, including the Investments senior subordinated notes. On August 24, 2011, pursuant to the registration rights agreement entered into in connection with the issuance of the 2010 senior notes, the Company completed a registered exchange offer and exchanged all of the then-outstanding 2010 senior notes for a like principal amount of 2010 senior notes that have been registered under the Securities Act of 1933, as amended (the “Securities Act”). On April 26, 2006, the Company issued $355.5 million aggregate principal amount of 2006 senior subordinated notes and applied the gross proceeds of $350.5 million to repay $349.5 million of outstanding borrowings under a then-outstanding $383.6 million senior subordinated loan facility (the “Bridge Loan”), plus accrued interest, and used cash on hand to pay fees and expenses associated with such issuance. The 2006 senior subordinated notes bore interest at 11 1 2 The amended Affinion Credit Facility and the indenture governing the 2010 senior notes both contain restrictive covenants related primarily to the Company’s ability to distribute dividends, redeem or repurchase capital stock, sell assets, issue additional debt or merge with or acquire other companies. Under the Affinion Credit Facility, payment of additional dividends requires the satisfaction of various conditions, including meeting defined leverage ratios and a defined fixed charge coverage ratio, and the total dividend paid cannot exceed a calculated amount of defined available free cash flow, or requires availability under specified baskets. The covenants in the Affinion Credit Facility also require compliance with a senior secured leverage ratio. During the nine months ended September 30, 2016 and the year ended December 31, 2015, the Company did not pay any cash dividends to Affinion Holdings. The Company was in compliance with the covenants referred to above as of September 30, 2016. Payment under each of the debt agreements may be accelerated in the event of a default. Events of default include the failure to pay principal and interest when due, covenant defaults (unless cured within applicable grace periods, if any), events of bankruptcy and, for the amended Affinion Credit Facility, a material breach of representation or warranty and a change of control. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. INCOME TAXES The Company is included as a member of Affinion Holdings’ consolidated federal income tax return and as a member of certain of Affinion Holdings’ unitary or combined state income tax returns. Income taxes are presented in the Company’s consolidated financial statements using the asset and liability approach based on the separate return method for the consolidated group. Under this method, current and deferred tax expense or benefit for the period is determined for the Company and its subsidiaries as a separate group on a standalone basis. Deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statements and income tax bases of assets and liabilities using currently enacted tax rates. Deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion, or all, of the recorded deferred tax assets will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the income tax provision, while increases to the valuation allowance result in additional income tax provision. The realization of deferred tax assets is primarily dependent on estimated future taxable income. As of September 30, 2016 and December 31, 2015, the Company has recorded a full valuation allowance for its U.S. federal net deferred tax assets. As of September 30, 2016 and December 31, 2015, the Company has also recorded valuation allowances against the deferred tax assets related to certain state and foreign tax jurisdictions. The Company’s effective income tax rates for the three and nine months ended September 30, 2016 were 18.6% and 24.1%, respectively, and the Company’s effective income tax rates for the three and nine months ended September 30, 2015 were (16.4)% and (9.2)%, respectively. The difference in the effective tax rates for the three months ended September 30, 2016 and 2015 is primarily a result of the change from a loss before income taxes and non-controlling interest of $6.9 million for the three months ended September 30, 2015 to income before income taxes and non-controlling interests of $9.5 million for the three months ended September 30, 2016 and an increase in the income tax provision from $1.1 million for the three months ended September 30, 2015 to $1.7 million for the three months ended September 30, 2016. The difference in the effective tax rates for the nine months ended September 30, 2016 and 2015 is primarily a result of the change from a loss before income taxes and non-controlling interest of $45.7 million for the nine months ended September 30, 2015 to income before income taxes and non-controlling interests of $23.8 million for the nine months ended September 30, 2016 and an increase in the income tax provision from $4.2 million for the nine months ended September 30, 2015 to $5.7 million for the nine months ended September 30, 2016. The Company’s tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income it earns in those jurisdictions. It is also affected by discrete items that may occur in any given year, but are not consistent from year to year. In addition to state and foreign income taxes, the requirement to maintain valuation allowances had the most significant impact on the difference between the Company’s effective tax rate and the statutory U.S. federal income tax rate of 35%. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company recognized less than $0.1 million and $0.2 million, respectively, of interest related to uncertain tax positions in the three and nine month periods ended September 30, 2016. The Company recognized less than $0.1 million and $0.2 million, respectively, of interest related to uncertain tax positions in the three and nine month periods ended September 30, 2015. The interest has been included in income tax expense for the current period. The Company’s gross unrecognized tax benefits for the nine months ended September 30, 2016 decreased by $1.5 million as a result of tax positions taken during the current period, which was offset by a valuation allowance. The Company’s income tax returns are periodically examined by various tax authorities. In connection with these and future examinations, certain tax authorities, including the Internal Revenue Service, may raise issues and impose additional assessments. The Company regularly evaluates the likelihood of additional assessments resulting from these examinations and establishes liabilities, through the provision for income taxes, for potential amounts that may result therefrom. The recognition of uncertain tax benefits are not expected to have a material impact on the Company’s effective tax rate or results of operations. Federal, state and local jurisdictions are subject to examination by the taxing authorities for all open years as prescribed by applicable statute. For significant foreign jurisdictions, tax years in Germany, France, Turkey, Switzerland and the United Kingdom remain open as prescribed by applicable statute. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will change significantly within the next 12 months. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. COMMITMENTS AND CONTINGENCIES Litigation In the ordinary course of business, the Company is involved in claims, governmental inquiries and legal proceedings related to employment matters, contract disputes, business practices, trademark and copyright infringement claims and other commercial matters. The Company is also a party to lawsuits which were brought against it and its affiliates and which purport to be a class action in nature and allege that the Company violated certain federal or state consumer protection statutes (as described below). The Company intends to vigorously defend itself against such lawsuits. On June 17, 2010, a class action complaint was filed against the Company and Trilegiant Corporation (“Trilegiant”) in the United States District Court for the District of Connecticut. The complaint asserts various causes of action on behalf of a putative nationwide class and a California-only subclass in connection with the sale by Trilegiant of its membership programs, including claims under the Electronic Communications Privacy Act (“ECPA”), the Connecticut Unfair Trade Practices Act (“CUTPA”), the Racketeer Influenced Corrupt Organizations Act (“RICO”), the California Consumers Legal Remedies Act, the California Unfair Competition Law, the California False Advertising Law, and for unjust enrichment. On September 29, 2010, the Company filed a motion to compel arbitration of all of the claims asserted in this lawsuit. On February 24, 2011, the court denied the Company’s motion. On March 28, 2011, the Company and Trilegiant filed a notice of appeal in the United States Court of Appeals for the Second Circuit, appealing the district court’s denial of their motion to compel arbitration. On September 7, 2012, the Second Circuit affirmed the decision of the district court denying arbitration. While that issue was on appeal, the matter proceeded in the district court. There was written discovery and depositions. Previously, the court had set a briefing schedule on class certification that called for the completion of class certification briefing on May 18, 2012. However, on March 28, 2012, the court suspended the briefing schedule on the motion due to the filing of two other overlapping class actions in the United States District Court for the District of Connecticut. The first of those cases was filed on March 6, 2012, against the Company, Trilegiant, Chase Bank USA, N.A., Bank of America, N.A., Capital One Financial Corp., Citigroup, Inc., Citibank, N.A., Apollo Global Management, LLC, 1-800-Flowers.Com, Inc., United Online, Inc., Memory Lane, Inc., Classmates Int’l, Inc., FTD Group, Inc., Days Inn Worldwide, Inc., Wyndham Worldwide Corp., People Finderspro, Inc., Beckett Media LLC, Buy.com, Inc., Rakuten USA, Inc., IAC/InteractiveCorp., and Shoebuy.com, Inc. The second of those cases was filed on March 25, 2012, against the same defendants as well as Adaptive Marketing, LLC, Vertrue, Inc., Webloyalty.com, Inc., and Wells Fargo & Co. These two cases assert similar claims as the claims asserted in the earlier-filed lawsuit in connection with the sale by Trilegiant of its membership programs. On April 26, 2012, the court consolidated these three cases. The court also set an initial status conference for May 17, 2012. At that status conference, the court ordered that Plaintiffs file a consolidated amended complaint to combine the claims in the three previously separate lawsuits. The court also struck the class certification briefing schedule that had been set previously. On September 7, 2012, the Plaintiffs filed a consolidated amended complaint asserting substantially the same legal claims. The consolidated amended complaint added Priceline, Orbitz, Chase Paymentech, Hotwire, and TigerDirect as Defendants and added three new Plaintiffs; it also dropped Webloyalty and Rakuten as Defendants. On December 7, 2012, all Defendants filed motions seeking to dismiss the consolidated amended complaint and to strike certain portions of the complaint. Plaintiff’s response brief was filed on February 7, 2013, and Defendants’ reply briefs were filed on April 5, 2013. On September 25, 2013, the court held oral argument on the motions to dismiss. On March 28, 2014, the court ruled on the motions to dismiss, granting them in part and denying them in part. The court dismissed the Plaintiffs’ RICO claims and claims under the California Automatic Renewal Statute as to all defendants. The court also dismissed certain named Plaintiffs as their claims were barred either by the statute of limitations and/or a prior settlement agreement. Certain Defendants were also dismissed from the case. The court also struck certain allegations from the consolidated amended complaint, including certain of Plaintiffs’ class action allegations under CUTPA. As to the Company and Trilegiant, the court denied the motion to dismiss certain Plaintiffs’ claims under ECPA and for unjust enrichment, as well as certain other claims of Plaintiffs under CUTPA. Also, on December 5, 2012, the Plaintiffs’ law firms in these consolidated cases filed an additional action in the United States District Court for the District of Connecticut. That case is identical in all respects to this case except that it was filed by a new Plaintiff (the named Plaintiff from the class action complaint previously filed against the Company, Trilegiant, 1-800-Flowers.com, and Chase Bank USA, N.A., in the United States District Court for the Eastern District of New York on November 10, 2010). On January 23, 2013, Plaintiff filed a motion to consolidate that case into the existing set of consolidated cases. On June 13, 2013, the court entered an order staying the date for all Defendants to respond to the Complaint until 21 days after the court ruled on the motion to consolidate. On March 28, 2014, the court entered an order granting the motion to consolidate. On May 12, 2014, remaining Defendants in the consolidated cases filed answers in which they denied the material allegations of the consolidated amended complaint. On April 28, 2014, Plaintiffs filed a motion seeking interlocutory appellate review of portions of the court’s order of March 28, 2014. Briefing on the motion was completed on June 5, 2014. On March 26, 2015, the court denied Plaintiff’s motion for interlocutory appeal. On May 29, 2015, the court issued a scheduling order indicating that discovery was to commence immediately and be completed by December 31, 2015. On May 29, 2015, the court also set deadlines for dispositive motions, which were due February 29, 2016. If no dispositive motions were filed, a joint trial memorandum would be due by April 1, 2016, and jury selection would take place on May 3, 2016. If dispositive motions were filed, the joint trial memorandum would be due by October 3, 2016, and jury selection would take place on November 1, 2016. On June 16, 2015, the court set a schedule for class certification, with Plaintiffs’ motion for class certification due on September 15, 2015, and with briefing to be completed by November 30, 2015. Plaintiffs filed their motion for class certification on September 15, 2015, and Defendants filed an opposition brief on December 15, 2015. Plaintiffs filed a reply brief on December 22, 2015, and Defendants filed a sur-reply on December 29, 2015. On February 29, 2016, the Company filed a Motion for Summary Judgment on the individual claims of the remaining named Plaintiffs. Plaintiffs filed a response on March 21, 2016, and the Company filed its response on April 4, 2016. On August 23, 2016 the court granted Defendant’s motion for Summary Judgment as to all remaining claims against the Defendants. Plaintiffs filed a notice of appeal on September 21, 2016. No schedule has been set yet for the appeal. On August 27, 2010, a class action lawsuit was filed against Webloyalty, one of its former clients and one of the credit card associations in the United States District Court for the District of Connecticut alleging, among other things, violations of the EFT, ECPA, unjust enrichment, civil theft, negligent misrepresentation, fraud and CUTPA violation (the “Connecticut Action”). This lawsuit relates to Webloyalty’s alleged conduct occurring on and after October 1, 2008. On November 1, 2010, the Defendants moved to dismiss the initial complaint, which Plaintiff then amended on November 19, 2010. On December 23, 2010, Webloyalty filed a second motion to dismiss this lawsuit. On May 15, 2014, the court heard oral argument on Plaintiff’s motion to strike the Company’s request for judicial notice of the Plaintiff’s membership enrollment documents filed in support of the Company’s second motion to dismiss. On July 17, 2014, the court denied Plaintiff’s motion to strike. The court, at the same time, dismissed those claims grounded in fraud, but reserved until further proceedings the determination as to whether all of Plaintiff’s claims are grounded in fraud and whether those claims not grounded in fraud are dismissible. The court permitted the Plaintiff until August 15, 2014 to amend his complaint and allowed the parties the opportunity to conduct limited discovery, to be completed by September 26, 2014, concerning the issues addressed in its dismissal order. All other discovery was stayed in the case. The July 17, 2014 order indicated that the court would set a further motion to dismiss briefing schedule following the conclusion of this limited discovery. The Plaintiff amended his complaint as scheduled, and the parties conducted limited discovery as ordered. After this limited discovery, the parties proposed a motion to dismiss briefing schedule calling for the Defendants to file their opening briefs on January 9, 2015. The Plaintiff filed his opposition brief on March 24, 2015, and on April 24, 2015, the Defendants filed their reply briefs in response to that opposition. On October 15, 2015, the court entered a judgment dismissing all of the Plaintiff’s claims with prejudice and without further leave to amend. On November 13, 2015, the Plaintiff filed a notice of appeal of the dismissal decision. Plaintiff’s opening appeals brief was filed on February 10, 2016. The Company’s answering brief was filed on April 15, 2016 and the Plaintiff filed a reply brief on May 11, 2016. The court held oral argument on September 14, 2016, but it has not yet issued a decision regarding Plaintiffs’ appeal. On June 7, 2012, another class action lawsuit was filed in the U.S. District Court for the Southern District of California against Webloyalty that was factually similar to the Connecticut Action. The action claims that Webloyalty engaged in unlawful business practices in violation of California Business and Professional Code § 17200, et seq. and in violation of CUTPA. Both claims are based on allegations that in connection with enrollment and billing of the Plaintiff, Webloyalty charged Plaintiff’s credit or debit card using information obtained through a data pass process and without obtaining directly from Plaintiff his full account number, name, address, and contact information, as purportedly required under ROSCA. On September 25, 2012, Webloyalty filed a motion to dismiss the complaint in its entirety and the court scheduled a hearing on the motion for January 14, 2013. Webloyalty also sought judicial notice of the enrollment page and related enrollment and account documents. Plaintiff filed his opposition on December 12, 2012, and Webloyalty filed its reply submission on January 7, 2013. Thereafter, on January 10, 2013, the court cancelled the previously scheduled January 14, 2013 hearing and indicated that it would rule based on the parties’ written submissions without the need for a hearing. On August 28, 2013, the court sua sponte On May 11, 2016, Kohl’s Department Stores, Inc. (“Kohl’s”) filed a third-party complaint against Trilegiant in the United States District Court for the Eastern District of Pennsylvania, alleging claims for indemnification, contribution and breach of contract. The third-party complaint arises in a case filed in the same court on February 13, 2015, in which a putative class action has been brought against Kohl’s and the issuer of Kohl’s credit cards alleging breach of the covenant of good faith and fair dealing and unjust enrichment. Kohl’s third-party complaint alleges that Trilegiant breached alleged obligations to Kohl’s under a marketing agreement between Trilegiant and Kohl’s through which a Trilegiant membership program was offered to Kohl’s credit card customers, including Trilegiant’s purported obligation under that agreement to indemnify Kohl’s and participate in its defense of the class action. Kohl’s third-party complaint seeks damages from Trilegiant, including amounts for which Kohl’s may be liable to the named plaintiffs or the putative class in the class action relating to their claims pertaining to Trilegiant’s membership program and Kohl’s costs, including attorney fees, of defending against such claims. On July 5, 2016, Trilegiant filed a motion to dismiss or, in the alternative, to stay Kohl’s third-party complaint. On September 2, 2016, Kohl’s filed an opposition to Trilegiant’s motion to dismiss. The parties have agreed to extend Trilegiant’s time to respond to Kohl’s to November 4, 2016 to discuss a possible settlement in this matter. Nevertheless, we continue to defend ourselves vigorously against these claims. Other Contingencies From time to time, the Company receives inquiries from federal and state agencies which may include the FTC, the FCC, the CFPB, state attorneys general and other state regulatory agencies, including state insurance regulators. The Company responds to these matters and requests for documents, some of which may lead to further investigations and proceedings. From time to time, our international operations also receive inquiries from consumer protection, insurance or data protection agencies. The Company responds to these matters and requests for documents, some of which may lead to further investigations and proceedings. On January 27, 2015, following voluntary discussions with the FCA, AIL, one of our UK subsidiaries, and 11 UK retail banks and credit card issuers, announced a proposed joint arrangement, which allows eligible consumers to make claims for compensation in relation to a discontinued benefit in one of AIL’s products. The proposed arrangement has been approved by a majority of those affected consumers who voted at a creditors’ meeting held on June 30, 2015, and has also been approved by the High Court in London at a hearing held on July 9, 2015. The proposed arrangement, which will not result in the imposition of any fines on AIL or the Company, became effective on August 17, 2015 and eligible customers had until March 18, 2016 to claim compensation (in exceptional circumstances, they had until September 18, 2016). As of June 30, 2016, substantially all of the compensation to consumers had been paid and, based on the information currently available, the Company has recorded an estimated liability that represents any additional potential consumers’ refunds to be paid by the Company as part of such arrangement. On April 18, 2014, Bank of America, N.A. (“Bank of America”) and FIA Card Services, N.A. (“FIA Card Services”) commenced an arbitration proceeding against Trilegiant and Affinion pursuant to the terms of the parties’ servicing agreements. In the arbitration proceeding, Bank of America asserted various causes of action and requests for monetary and other relief, including a demand for contractual indemnification of the losses and costs, including in particular customer refunds and reasonable attorneys’ fees that Bank of America incurred related to consent orders entered into by Bank of America with the Office of the Comptroller of the Currency on April 7, 2014 and with the CFPB on April 9, 2014. On May 16, 2014, Trilegiant commenced two separate arbitration proceedings against Bank of America, asserting that Bank of America breached the parties’ servicing agreements. On July 7, 2014, the parties agreed to stay one of the arbitrations initiated by Trilegiant and to dismiss the other arbitrations without prejudice, pending mediation. On September 22, 2014, Bank of America and Trilegiant participated in a mediation to attempt to resolve their outstanding disputes. The mediation process was ultimately unsuccessful in resolving the parties’ disputes. As such, the parties resumed the arbitration process. The arbitration hearing commenced on October 12, 2015 and concluded on March 4, 2016. The parties submitted post-hearing memoranda in April 2016. The arbitrator overseeing the foregoing arbitration proceeding denied Trilegiant’s claims, and denied Bank of America’s claims for indemnification related to the consent orders entered into with the OCC and CFPB, but awarded monetary damages to Bank of America and FIA Card Services in the amount of $ 4.3 million on other claims (unrelated to their indemnification claims) asserted by Bank of America in the arbitration proceeding. Both parties filed motions for reconsideration by the arbitrator of portions of the award. On October 24, 2016, the arbitrator denied both parties’ motions for reconsideration, but reduced the award of monetary damages from $4.3 million to $4.0 million due to a calculation error in the original award. The arbitration is now closed. In September 2014, the Company received a NORA letter indicating that the CFPB was considering taking legal action against the Company for violations of Sections 1031 and 1036 of the Consumer Financial Protection Act relating to the Company’s identity theft protection products. In July 2015, the Company entered into a Stipulated Final Judgment and Order (“Consent Order”) settling allegations regarding unfair billing practices related to certain of the Company’s protection products and deceptive retention practices related to these same products. The Consent Order was approved by the court on October 27, 2015. The Consent Order requires a payment by the Company of $1.9 million to the CFPB’s civil penalty fund, which was paid in November 2015, and approximately $6.75 million in consumer restitution, as well as injunctive provisions against the Company related to certain of its billing and retention practices, which are not expected to have a material effect on the Company. The Company is in full compliance with the Consent Order requirements. On November 30, 2015, PNC Bank, N.A. (“PNC”) filed a pleading called a Praecipe for Writ of Summons (the “Writ”) in the Court of Common Pleas of Allegheny County, Pennsylvania, naming as defendants Trilegiant Corporation, Affinion Benefits Group, LLC, Affinion, and/or Affinion Holdings. The Writ does not include a complaint or any specific factual allegations, and does not allege any claims. However, based on a December 4, 2015 letter from PNC’s counsel, the Company understands that PNC may seek indemnification for (i) certain payments made to PNC customers and (ii) a civil money penalty assessed against PNC by the Office of the Comptroller of the Currency pursuant to consent orders dated October 6, 2014. If PNC files a complaint, Affinion intends to defend itself vigorously against any claims that PNC may assert. The parties participated in a non-binding mediation on September 13, 2016. The parties were unable to resolve their dispute in the mediation. However, they have agreed to continue discussions through the mediator regarding possible settlement. On August 5, 2016, Citizens Bank, N.A. (“Citizens”) filed a complaint against Affinion Holdings, Affinion, Trilegiant, and Affinion Group, LLC (collectively, the “Defendants”) in the United States District Court for the District of Rhode Island. In the complaint, Citizens asserts various causes of action and requests for monetary relief, including a demand for contractual indemnification for customer refunds and attorneys’ fees that Citizens incurred related to a consent order entered into by Citizens with the Office of the Comptroller of the Currency on November 10, 2015 with respect to certain identity theft protection products offered to Citizens’ customers. Defendants’ response to the complaint is due on November 18, 2016. On August 18, 2016, Lion Receivables 2004 Trust (“Lion”) served Long Term Preferred Care, Inc. (“LTPC”), a subsidiary of Affinion Benefits Group, LLC, with a complaint (the “Lion Litigation”). LTPC’s filed its response to the complaint on October 24, 2016. In the complaint, Lion alleges that LTPC made certain inaccurate representations and warranties in the Commission Purchase Agreement, dated as of December 30, 2004, between LTPC and Lion. Lion seeks compensatory damages, pre-judgment and post-judgment interest, and attorneys’ fees. Pursuant to our purchase agreement with Cendant, the Cendant Entities (as defined in Note 8 to our unaudited condensed consolidated financial statements) have agreed to indemnify us for any liability relating to this matter. The Company believes that the amount accrued for the above litigation and contingencies matters is adequate, and the reasonably possible loss beyond the amounts accrued will not have a material effect on its consolidated financial statements, taken as a whole, based on information currently available. However, litigation is inherently unpredictable and, although the Company believes that accruals are adequate and it intends to vigorously defend itself against such matters, unfavorable resolution could occur, which could have a material effect on the Company’s consolidated financial statements, taken as a whole. Surety Bonds and Letters of Credit In the ordinary course of business, the Company is required to provide surety bonds to various state authorities in order to operate its membership, insurance and travel agency programs. As of September 30, 2016, the Company provided guarantees for surety bonds totaling approximately $10.8 million and issued letters of credit totaling $12.1 million. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 7. STOCK-BASED COMPENSATION In connection with the closing of the Apollo Transactions on October 17, 2005, Affinion Holdings adopted the 2005 Stock Incentive Plan (the “2005 Plan”). The 2005 Plan authorizes the Board of Directors (the “Board”) of Affinion Holdings to grant non-qualified, non-assignable stock options and rights to purchase shares of Affinion Holdings’ common stock to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Options granted under the 2005 Plan have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant. Stock awards have a purchase price determined by the Board. The Board was authorized to grant up to 4.9 million shares of Affinion Holdings’ common stock under the 2005 Plan over a ten year period. As discussed below, no additional grants may be made under Affinion Holdings’ 2005 Plan on or after November 7, 2007, the effective date of the 2007 Plan, as defined below. As discussed below, on November 9, 2015, the effective date of the Reclassification (as defined below), existing option awards under the 2005 Plan were adjusted in accordance with their terms. Generally, existing options for Class A Common Stock (as defined below) under the 2005 Plan have been converted into options for shares of Affinion Holdings’ Class C Common Stock, $0.01 par value per share (the “Class C Common Stock”), and Affinion Holdings’ Class D Common Stock, $0.01 par value per share (the “Class D Common Stock” and, together with the Class C Common Stock, the “Class C/D Common Stock”), and both the exercise price and the number of shares of Class C Common Stock and Class D Common Stock underlying such options have been adjusted. In November 2007, Affinion Holdings adopted the 2007 Stock Award Plan (the “2007 Plan”). The 2007 Plan authorizes the Board to grant awards of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, RSUs, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of these awards to directors and employees of, and consultants to, Affinion Holdings and its subsidiaries. Unless otherwise determined by the Board of Directors, options granted under the 2007 Plan have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant. Stock awards have a purchase price determined by the Board. The Board was authorized to grant up to 10.0 million shares of Affinion Holdings’ common stock under the 2007 Plan over a ten year period. As discussed below, no additional grants may be made under Affinion Holdings’ 2007 Plan on or after November 9, 2015, the effective date of the Reclassification, as defined below, and all outstanding options granted under the 2007 Plan were cancelled for no consideration, effective November 9, 2015. In connection with the acquisition of Webloyalty in January 2011, the Company assumed the Webloyalty Holdings, Inc. 2005 Equity Award Plan (the “Webloyalty 2005 Plan”). The Webloyalty 2005 Plan, adopted by Webloyalty’s board of directors in May 2005, authorized Webloyalty’s board of directors to grant awards of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, RSUs, stock bonuses and performance compensation awards or any combination of these awards to directors and employees of, and consultants to, Webloyalty. Unless otherwise determined by Webloyalty’s board of directors, incentive stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the fair market value of a share of the underlying common stock on the date of grant and nonqualified stock options granted under the Webloyalty 2005 Plan were to have an exercise price no less than the par value of a share of Webloyalty’s common stock on the date of grant. The Webloyalty board of directors was authorized to grant shares of Webloyalty’s common stock under the Webloyalty 2005 Plan over a ten year period. In connection with the Reclassification, as defined below, all outstanding options granted under the Webloyalty 2005 Plan were cancelled for no consideration, effective November 9, 2015. On November 9, 2015, in conjunction with the 2015 Exchange Offers, the 2015 Consent Solicitations and the 2015 Rights Offering, Affinion Holdings effected the Reclassification (the “Reclassification” and, together with the 2015 Exchange Offers, the 2015 Consent Solicitations, the 2015 Rights Offering and the related transactions, the “2015 Transactions”) as follows. Immediately prior to the Reclassification, Affinion Holdings’ Series A Warrants (the “Series A Warrants”) were mandatorily cashlessly exercised for shares of Affinion Holdings’ then existing Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Affinion Holdings’ Series B Warrants (the “Series B Warrants”) were cancelled for no additional consideration. In addition, all issued and outstanding options under the Webloyalty 2005 Plan and the 2007 Plan were cancelled for no additional consideration. Stock options issued and outstanding under the 2005 Plan were not affected by the cancellation. In accordance with the Reclassification, Affinion Holdings’ Class A Common Stock was converted into shares of Affinion Holdings’ Class C/D Common Stock. Issued and outstanding options under the 2005 Plan were converted into options to acquire shares of Affinion Holdings’ Class C Common Stock and shares of Affinion Holdings’ Class D Common Stock. The number of shares of Class C/D Common Stock subject to the issued and outstanding options were adjusted based on the conversion ratio utilized for the conversion of the Class A Common Stock, and the exercise price was correspondingly adjusted. As of September 30, 2016, there were outstanding options to acquire approximately 2,700 shares of Affinion Holdings’ Class C Common Stock and approximately 2,900 shares of Affinion Holdings’ Class D Common Stock. The weighted average exercise price of the outstanding options, all of which were vested at September 30, 2016, is $151.57 and the issued and outstanding options granted to employees have a weighted average contractual life of 7.5 years and the issued and outstanding options granted to directors have a weighted average contractual life of 4.5 years. On November 9, 2015, the Board of Directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), which authorizes the Compensation Committee to grant stock options, restricted stock, RSUs and other equity-based awards. Under the 2015 Plan, 10% of the outstanding shares of common stock have been reserved for issuance pursuant to awards. On March 9, 2016, the Compensation Committee awarded 859,500 options to employees under the 2015 Plan, all of which are outstanding as of September 30, 2016, and the Compensation Committee awarded an additional 18,000 options during the third quarter of 2016. For employee stock awards, the Company recognizes compensation expense, net of estimated forfeitures, over the requisite service period, which is the period during which the employee is required to provide services in exchange for the award. The Company has elected to recognize compensation cost for awards with only a service condition and have a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Stock Options During the three and nine months ended September 30, 2016 and 2015, there were no stock options granted to employees from the 2005 Plan. All options previously granted were granted with an exercise price equal to the estimated fair market value of a share of the underlying common stock on the date of grant. Stock options granted to employees from the 2005 Plan are comprised of three tranches with the following terms: Tranche A Tranche B Tranche C Vesting Ratably over 5 years* 100% after 8 years** 100% after 8 years** Initial option term 10 years 10 years 10 years * In the event of a sale of the Company, vesting for tranche A occurs 18 months after the date of sale. ** Tranche B and C vesting would be accelerated upon specified realized returns to Apollo. On March 28, 2014, the Company modified approximately 1.9 million of the outstanding options under the 2005 Plan, adjusting the exercise price to $1.14 per common share and extending the contractual life of the modified options until April 1, 2024. During the three and nine months ended September 30, 2016 and 2015, there were no stock options granted to employees from the 2007 Plan. All options granted were granted with an exercise price equal to the estimated fair market value of a share of the underlying common stock on the date of grant. The stock options granted to employees from the 2007 Plan have the following terms: Vesting period Ratably over 4 years Initial option term 10 years On March 28, 2014, the Company modified approximately 2.4 million of the outstanding options under the 2007 Plan, adjusting the exercise price to $1.14 per common share and extending the contractual life of the modified options until April 1, 2024. On November 9, 2015, in conjunction with the Reclassification, all issued and outstanding options under the 2007 Plan were cancelled for no additional consideration. During the three and nine months ended September 30, 2016 and 2015, there were no stock options granted to members of the Board of Directors. Generally, options granted to members of the Board of Directors fully vest on the date of grant and have an initial option term of 10 years. On March 28, 2014, the Company modified approximately 0.2 million of the outstanding options granted to members of the Board of Directors, adjusting the exercise price to $1.14 per common share and extending the contractual life of the modified options until April 1, 2024. On November 9, 2015, in conjunction with the Reclassification, all issued and outstanding options granted to members of the Board of Directors under the 2007 Plan were cancelled for no additional consideration. During the three and nine months ended September 30, 2016, the Compensation Committee granted options to employees under the 2015 Plan to purchase 18,000 shares and approximately 860,000 shares, respectively, of Affinion Holdings’ Common Stock. The options have a contractual life of 10 years and vest ratably on each of the first four anniversaries of the grant date. The exercise price of the options is $13.97 per share, the grant date fair value of a share of Affinion Holdings’ Common Stock. The fair value of each option award was estimated on the date of grant using the Black-Scholes option-pricing model based on the assumptions noted in the following table. Expected volatilities are based on historical volatilities of comparable companies. The expected term of the options granted represents the period of time that options are expected to be outstanding, and is based on the average of the requisite service period and the contractual term of the option. 2016 Grants Expected volatility 75 % Expected life (in years) 6.3 Risk-free interest rate 1.64 % Expected dividends — A summary of option activity for options to acquire shares of Class C/D Common Stock under the 2005 Plan for the nine months ended September 30, 2016 is presented below (number of options in thousands): 2005 Plan 2005 Plan 2005 Plan Grants to Grants to Grants to Grants to Employees - Employees - Employees - Board of Tranche A Tranche B Tranche C Directors Outstanding options at January 1, 2016 7 3 3 2 Granted — — — — Exercised — — — — Forfeited or expired (5 ) (2 ) (2 ) — Outstanding options at September 30, 2016 2 1 1 2 Vested or expected to vest at September 30, 2016 2 1 1 2 Exercisable options at September 30, 2016 2 1 1 2 Weighted average remaining contractual term (in years) — — — — Weighted average grant date fair value per option granted in 2016 $ - $ - $ - $ - Weighted average exercise price of exercisable options at September 30, 2016 $ - $ - $ - $ - Weighted average exercise price of outstanding options at September 30, 2016 $ - $ - $ - $ - A summary of option activity for options to acquire shares of Common Stock granted under the 2015 Plan for the nine months ended September 30, 2016 is presented below (number of options in thousands): Outstanding options at January 1, 2016 — Granted 878 Exercised — Forfeited or expired — Outstanding options at September 30, 2016 878 Vested or expected to vest at September 30, 2016 878 Exercisable options at September 30, 2016 — Weighted average remaining contractual term (in years) 9.4 Weighted average grant date fair value per option granted in 2016 $ 9.35 Weighted average exercise price of exercisable options at September 30, 2016 $ - Weighted average exercise price of outstanding options at September 30, 2016 $ 13.97 Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2016 totaled $0.5 million and $1.1 million, respectively. Based on the estimated fair values of options granted, stock-based compensation expense for the three and nine months ended September 30, 2015 totaled $0.2 million and $1.1 million, respectively. As of September 30, 2016, there was $6.9 million of unrecognized compensation cost related to unvested stock options, which will be recognized over a weighted average period of approximately 1.9 years. Restricted Stock Units On March 30, 2012, the Board’s Compensation Committee approved the 2012 Retention Award Program (the “2012 RAP”), which provides for awards of restricted stock units (“RSUs”) under the 2007 Plan. The RSUs awarded under the 2012 RAP are subject to time-based vesting conditions that generally ran through December 31, 2014. Generally, the number of RSUs awarded to each participant is equal to the quotient of (i) the dollar value of the award, divided by (ii) $8.16, the value per share of Affinion Holdings’ common stock as of the grant date. Upon vesting of the RSUs, participants were able to settle the RSUs in shares of common stock or elect to receive cash in lieu of shares of common stock upon any of the vesting dates for such RSUs. Due to the ability of the participants to settle their awards in cash, the Company accounted for these RSUs as a liability award. A summary of RSU activity under the 2007 Plan for the nine months ended September 30, 2016 is presented below (number of RSUs in thousands): Number of Weighted Average Restricted Grant Date Stock Units Fair Value Outstanding restricted unvested awards at January 1, 2016 261 $ 1.14 Granted — Vested (261 ) 1.14 Forfeited — Outstanding restricted unvested awards at September 30, 2016 — Weighted average remaining contractual term (in years) — On March 25, 2016, each of the non-employee members of the Board of Directors was granted RSUs under the 2015 Plan as a component of their annual compensation. The RSUs vested 3/12 ths th th A summary of RSU activity under the 2015 Plan for the nine months ended September 30, 2016 is presented below (number of RSUs in thousands): Number of Weighted Average Restricted Grant Date Stock Units Fair Value Outstanding restricted unvested awards at January 1, 2016 — Granted 20 $ 13.97 Vested — Forfeited — Outstanding restricted unvested awards at September 30, 2016 20 $ 13.97 Based on the estimated fair value of the RSUs granted, stock-based compensation expense for the three and nine months ended September 30, 2016 was $0.1 million and $0.3 million, respectively. Based on the estimated fair value of the RSUs granted, stock-based compensation expense for the three and nine months ended September 30, 2015 was $0.1 million and $0.3 million, respectively. As of September 30, 2016, there was $0.1 million of unrecognized compensation cost related to the remaining vesting period of RSUs granted under the 2015 Plan. This cost will be recorded in future periods as stock-based compensation expense over a weighted average period of approximately 0.3 years. Incentive Awards On April 1, 2014, the Compensation Committee of the Board approved the terms of the Affinion Group Holdings, Inc. 2014 Performance Incentive Award Program (the “2014 Performance Program”), an equity and cash incentive award program intended to foster retention of key employees of the Company. The awards to key employees consisted of performance incentive units (“PIUs”) and a cash incentive award (“CIA”) and the aggregate cash value of awarded PIUs and CIA comprise the Award Value. The number of PIUs awarded to a participant, which will be awarded from the 2007 Plan, will be equal to the quotient of (i) 50% of the Award Value divided by (ii) the fair market value per share of common stock as of the grant date, which was determined to be $1.14. The amount of the CIA granted to a participant was equal to 50% of the Award Value. Each of the two components of an award was subject to adjustment based on the achievement of performance goals. The awards were subject to certain performance and time-based vesting factors. The maximum number of PIUs and the maximum amount of the CIA into which a participant would be eligible to vest would be determined based on the achievement of certain overall corporate and business unit performance goals, as applicable, during the 2014 calendar year. A participant’s maximum amount of PIUs and the maximum amount of a participant’s CIA would vest in three substantially equal installments on March 15, 2015, 2016 and 2017, subject to that participant’s continued service with the Company on each applicable vesting date. Each PIU that would have vested on a vesting date would be settled for a share of common stock and for the portion of the CIA that vested on a vesting date the Company would have paid the participant an amount equal to the vested portion of the CIA. The aggregate award value granted to participants under the 2014 Performance Program was approximately $9.6 million, subject to adjustment as described above. In March 2015, the Compensation Committee determined that the performance goals established under the 2014 Performance Program had not been achieved and therefore the PIUs and CIA were not eligible to vest and were terminated. During the nine months ended September 30, 2015, the Company recognized an expense reduction related to the 2014 Performance Program of $2.2 million, of which $1.1 million related to the common stock portion of the 2014 Performance Program awards. During the three months ended September 30, 2015, there was no expense recognized relating to the 2014 Performance Program. On March 16, 2015, the Compensation Committee of the Board approved the terms of (i) the Affinion Group Holdings, Inc. 2015 Retention Award Program (the “2015 Retention Program”), an equity and cash incentive award program intended to foster retention of key employees of Affinion Holdings and its subsidiaries, and (ii) the awards (the “Retention Awards”) to each such key employee consisting of retention units (“RUs”) and a cash retention award (“CRA”) to be made by Affinion Holdings under the 2015 Retention Program. Each Retention Award will entitle the employee to one share of Affinion Holdings’ common stock for each RU and a cash payment in respect of the CRA, in each case, subject to applicable withholding taxes, when the applicable vesting conditions for the Retention Awards are met. The Retention Awards are subject to time-based vesting conditions. An employee’s RUs and CRA will vest in two substantially equal installments on each of March 15, 2016 and March 15, 2017 (each, a “Vesting Date”), subject to that employee’s continued service with Affinion Holdings and its subsidiaries on each applicable Vesting Date. An employee’s RUs and the portion of his or her CRA that become vested as of a given Vesting Date in accordance with the above vesting criteria will be settled as follows: (i) for each RU that vests on such Vesting Date, Affinion Holdings will deliver to the employee on the Settlement Date one share of common stock and (ii) for the portion of the CRA that vests on such Vesting Date, Affinion Holdings will pay to the employee on the Settlement Date an amount in cash equal to such vested portion of the CRA, in each case, subject to applicable tax withholding. An employee’s RUs and the portion of his or her CRA that become vested on a given Vesting Date will be settled as soon as practicable following such Vesting Date but in no event later than the sixtieth (60th) day following such Vesting Date (the “Settlement Date”). Upon termination of employment for any reason, an employee will forfeit the entire unvested portion of his or her Retention Award. The aggregate award value granted to participants under the 2015 Retention Program outstanding as of September 30, 2016 was approximately $7.1 million, net of forfeitures of $1.3 million. In conjunction with the Reclassification, which was effective on November 9, 2015, Retention Awards under the 2015 Retention Program that called for vesting of Class A Common Stock will vest in an adjusted number of shares of Class C Common Stock and Class D Common Stock. During the nine months ended September 30, 2016, 6,466 shares of Class C Common Stock and 6,809 shares of Class D Common Stock vested, in addition to CRAs of approximately $2.0 million. During the three and nine months ended September 30, 2016, the Company recognized expense related to the 2015 Retention Program of $0.9 million and $2.7 million, respectively, of which $0.5 million and $1.4 million, respectively, related to the common stock portion of the Retention Awards. During the three and nine months ended September 30, 2015, the Company recognized expense related to the 2015 Retention Program of $1.0 million and $2.2 million, respectively, of which $0.5 million and $1.1 million, respectively, related to the common stock portion of the Retention Awards. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. RELATED PARTY TRANSACTIONS Post-Closing Relationships with Cendant Cendant has agreed to indemnify the Company, Affinion Holdings and the Company’s affiliates (collectively the “indemnified parties”) for breaches of representations, warranties and covenants made by Cendant, as well as for other specified matters, certain of which are described below. Affinion Holdings and the Company have agreed to indemnify Cendant for breaches of representations, warranties and covenants made in the purchase agreement, as well as for certain other specified matters. Generally, all parties’ indemnification obligations with respect to breaches of representations and warranties (except with respect to the matters described below) (i) are subject to a $0.1 million occurrence threshold, (ii) are not effective until the aggregate amount of losses suffered by the indemnified party exceeds $15.0 million (and then only for the amount of losses exceeding $15.0 million), and (iii) are limited to $275.1 million of recovery. Generally, subject to certain exceptions of greater duration, the parties’ indemnification obligations with respect to representations and warranties survived until April 15, 2007 with indemnification obligations related to covenants surviving until the applicable covenant has been fully performed. In connection with the purchase agreement, Cendant agreed to specific indemnification obligations with respect to the matters described below. Excluded Litigation . Cendant has agreed to fully indemnify the indemnified parties with respect to any pending or future litigation, arbitration, or other proceeding relating to accounting irregularities in the former CUC International, Inc. announced on April 15, 1998. Certain Litigation and Compliance with Law Matters . Cendant has agreed to indemnify the indemnified parties up to specified amounts for: (a) breaches of its representations and warranties with respect to legal proceedings that (1) occur after the date of the purchase agreement, (2) relate to facts and circumstances related to the business of Affinion Group, LLC or Affinion International Holdings Limited (“Affinion International”), and (3) constitute a breach or violation of its compliance with law representations and warranties and (b) breaches of its representations and warranties with respect to compliance with laws to the extent related to the business of Affinion Group, LLC or Affinion International. Of the legal proceedings disclosed in Note 6 to our unaudited condensed consolidated financial statements, the Lion Litigation is a matter that involves the Cendant Entities (as defined below) agreeing to indemnify us for any related liabilities. Cendant, Affinion Holdings and the Company have agreed that losses up to $15.0 million incurred with respect to these matters will be borne solely by the Company and losses in excess of $15.0 million will be shared by the parties in accordance with agreed upon allocations. The Company has the right at all times to control litigation related to shared losses and Cendant has consultation rights with respect to such litigation. Prior to 2009, Cendant (i) distributed the equity interests it previously held in its hospitality services business (“Wyndham”) and its real estate services business (“Realogy”) to Cendant stockholders and (ii) sold its travel services business (“Travelport”) to a third party. Cendant continues as a re-named publicly traded company which owns the vehicle rental business (“Avis Budget,” together with Wyndham and Realogy, the “Cendant Entities”). Subject to certain exceptions, Wyndham and Realogy have agreed to share Cendant’s contingent and other liabilities (including its indemnity obligations to the Company described above and other liabilities to the Company in connection with the Apollo Transactions) in specified percentages. If any Cendant Entity defaults in its payment, when due, of any such liabilities, the remaining Cendant Entities are required to pay an equal portion of the amounts in default. Wyndham held a portion of the preferred stock issued in connection with the Apollo Transactions until the preferred stock was redeemed in 2011, and a portion of the warrants issued in connection with the Apollo Transactions until the warrants expired in 2011, while Realogy was subsequently acquired by an affiliate of Apollo and remained an affiliate of Apollo until July 2013. Therefore, for the three and nine months ended September 30, 2016 and 2015, none of the Cendant Entities is a related party. Other Agreements On October 17, 2005, Apollo entered into a consulting agreement with the Company for the provision of certain structuring and advisory services. The consulting agreement allowed Apollo and its affiliates to provide certain advisory services for a period of twelve years or until Apollo owned less than 5% of the beneficial economic interests of the Company, whichever was earlier. The agreement could be terminated earlier by mutual consent. The Company was required to pay Apollo an annual fee of $2.0 million for these services commencing in 2006. On January 14, 2011, the Company and Apollo entered into an Amended and Restated Consulting Agreement (“Consulting Agreement”), pursuant to which Apollo and its affiliates would continue to provide Affinion with certain advisory services on substantially the same terms as the previous consulting agreement, except that the annual fee paid by Affinion increased to $2.6 million from $2.0 million, commencing January 1, 2012, with an additional one-time fee of $0.6 million which was paid in January 2011 in respect of calendar year 2011. In connection with the December 2013 refinancing of Affinion’s 2006 senior subordinated notes and Affinion Holdings’ 2010 senior notes, Apollo and the Company further amended the consulting agreement, pursuant to which Apollo would not be paid any fees due under the consulting agreement until such time as none of Affinion Holdings’ 2013 senior notes remained outstanding. If a transaction was consummated involving a change of control or an initial public offering, then, in lieu of the annual consulting fee and subject to certain qualifications, Apollo could have elected to receive a lump sum payment equal to the present value of all consulting fees payable through the end of the term of the consulting agreement. In addition, the Company would have been required to pay Apollo a transaction fee if it engaged in any merger, acquisition or similar transaction. The Company would also indemnify Apollo and its affiliates and their directors, officers and representatives for potential losses relating to the services to be provided under the consulting agreement. In connection with the 2015 Exchange Offers and 2015 Rights Offering, each of the parties to the Consulting Agreement entered into a termination agreement for no additional consideration. As a result of the termination of the consulting agreement, the Company has no obligation to pay Apollo any previously accrued and unpaid amounts for prior services rendered under the consulting agreement. The amount expensed related to this consulting agreement was $0.7 million and $2.0 million, respectively, for the three and nine months ended September 30, 2015, which is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015. There was no expense recognized related to this consulting agreement for the three and nine months ended September 30, 2016. In July 2014, Novitex Enterprise Solutions (“Novitex”), a document outsourcing provider owned by affiliates of Apollo, commenced providing administrative services to the Company. In addition, in June 2015, Novitex assumed responsibility for the performance and management of the Company’s domestic print and mailing operations. During the three and nine months ended September 30, 2015, the Company recognized expenses of $2.5 million and $3.5 million, respectively, which are included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015. As a result of the 2015 Exchange Offers and 2015 Rights Offering consummated on November 9, 2015, Novitex was not a related party during the three and nine months ended September 30, 2016. SkyMall Ventures LLC (now known as Connexions SM Ventures, LLC), which was acquired by the Company in September 2014, provides fulfillment services to Caesar’s Entertainment Corporation (“Caesar’s”), which is owned by an affiliate of Apollo. During the three and nine months ended September 30, 2015, the Company recognized revenues, net of the cost to acquire the merchandise and gift cards, of $0.1 million and $0.9 million, respectively, which are included in net revenues in the accompanying unaudited condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015. As a result of the 2015 Exchange Offers and 2015 Rights Offering consummated on November 9, 2015, Caesar’s was not a related party during the three and nine months ended September 30, 2016. During the three months ended September 30, 2015, the Company sold its investment in Prospectiv Direct, LLC for cash proceeds of $0.1 million, shares of common stock of the buyer valued at $0.2 million and receivables of $0.7 million, which was recorded at its estimated net realizable value of $0.4 million. In connection with the sale, the Company recognized a gain of $0.7 million during the three months ended September 30, 2015 and also recognized revenue of $0.2 million related to the settlement of future royalty income due to the Company. On January 28, 2010, the Company acquired an ownership interest of approximately 5%, subsequently reduced to approximately 2.9%, in Alclear Holdings, LLC (“Alclear”) for $1.0 million. A family member of one of the Company’s directors, at that time, controls and partially funded Alclear and serves as its chief executive officer. In March 2015, the Company sold its ownership interest in Alclear to certain existing members of Alclear who are not related parties or otherwise affiliated with the Company for $1.5 million, and the related gain of $0.5 million is included in other income, net in the accompanying unaudited condensed consolidated statement of comprehensive income (loss) for the nine months ended September 30, 2015. The Company continued to provide support services to Alclear and recognized revenue of $0.1 million and $0.3 million, respectively, for the three and nine months ended September 30, 2015. The master services agreement was terminated on April 1, 2016. The Company provided transition services to Alclear until August 1, 2016. As a result of the 2015 Exchange Offers and 2015 Rights Offering consummated on November 9, 2015, Alclear was not a related party during the three and nine months ended September 30, 2016. On May 8, 2013, in connection with his resignation as Chief Executive Officer of Global Retail Services and Co-President of Affinion, Mr. Richard J. Fernandes entered into a consulting agreement with Trilegiant Corporation, a wholly-owned subsidiary of the Company, effective May 13, 2013, pursuant to which he would continue working with the Company until the one-year anniversary of such resignation. The contract was subsequently amended to extend the term on a month-to-month basis and the contract could be terminated by either party upon thirty days written notice. Mr. Fernandes provided certain consulting services to the Company on a part-time basis and received a fee of $7,500 per month, subject to increase depending on the level of consulting services provided. The agreement also provided for reimbursement of Mr. Fernandes’ out-of-pocket business and travel expenses and for his healthcare insurance costs during the contract period. The consulting agreement was terminated during the fourth quarter of 2015. On each of May 14, 2015 and November 13, 2015, the Company loaned $1.9 million to Affinion Holdings to be utilized to make interest payments on its 2010 senior notes. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Fair Value Measures | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments, Derivatives and Fair Value Measures | 9. FINANCIAL INSTRUMENTS, DERIVATIVES AND FAIR VALUE MEASURES As a matter of policy, the Company does not use derivatives for trading or speculative purposes. The following table provides information about the Company’s financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity for the Company’s long-term debt as of September 30, 2016: Fair Value At 2021 and September 30, 2016 2017 2018 2019 2020 Thereafter Total 2016 (in millions) Fixed rate debt $ — $ — $ 622.1 $ — $ — $ — $ 622.1 $ 441.4 Average interest rate 8.01 % 8.01 % 7.97 % Variable rate debt $ 1.9 $ 7.8 $ 1,170.9 $ — $ — $ — $ 1,180.6 $ 1,052.8 Average interest rate (a) 7.38 % 7.38 % 7.68 % (a) Average interest rate is based on rates in effect at September 30, 2016. Foreign Currency Forward Contracts On a limited basis the Company has entered into 30 day foreign currency forward contracts, and upon expiration of the contracts, entered into successive 30 day foreign currency forward contracts. The contracts have been entered into to mitigate the Company’s foreign currency exposures related to intercompany loans which are not expected to be repaid within the next twelve months and that are denominated in Euros and British pounds. At September 30, 2016, the Company had in place contracts to sell EUR 10.0 million and receive $11.2 million and to sell GBP 13.9 million and receive $18.0 million. During the three and nine months ended September 30, 2016, the Company recognized a realized gain on the forward contracts of $0.3 million and $2.2 million, respectively. During the three and nine months ended September 30, 2015, the Company recognized a realized gain on the forward contracts of $0.7 million and $3.4 million, respectively. As of September 30, 2016, the Company had an immaterial unrealized loss on the foreign currency forward contracts. Credit Risk and Exposure Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of receivables, profit-sharing receivables from insurance carriers, prepaid commissions and interest rate swaps. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties. Receivables and profit-sharing receivables from insurance carriers are from various marketing, insurance and business partners and the Company maintains an allowance for losses, based upon expected collectability. Commission advances are periodically evaluated as to recovery. Fair Value The Company determines the fair value of financial instruments as follows: a. Cash and Cash Equivalents, Restricted Cash, Receivables, Profit-Sharing Receivables from Insurance Carriers and Accounts Payable—Carrying amounts approximate fair value at September 30, 2016 and December 31, 2015 due to the short-term maturities of these assets and liabilities. b. Long-Term Debt—The Company’s estimated fair value of its long-term fixed-rate debt at September 30, 2016 and December 31, 2015 is based upon available information for debt having similar terms and risks (Level 2). The fair value of the publicly-traded debt is the published market price per unit multiplied by the number of units held or issued without consideration of transaction costs. The fair value of the non-publicly-traded debt, substantially all of which is variable-rate debt, is based on third party indicative valuations and estimates prepared by the Company after consideration of the creditworthiness of the counterparties. c. Foreign Currency Forward Contracts—At September 30, 2016 and December 31, 2015, the Company’s estimated fair value of its foreign currency forward contracts is based upon available market information. The fair value of the foreign currency forward contracts is based on significant other observable inputs, adjusted for contract restrictions and other terms specific to the foreign currency forward contracts. The fair value has been determined after consideration of foreign currency exchange rates and the creditworthiness of the parties to the foreign currency forward contracts. The counterparty to the foreign currency forward contracts is a major financial institution. The Company does not expect any losses from non-performance by the counterparty. Current accounting guidance establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, giving the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. Level 1 inputs to a fair value measurement are quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. There were no financial instruments measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015, other than foreign currency forward contracts. Such contracts have historically had a term of approximately thirty days and have been held to maturity. The fair value of the foreign currency forward contracts is measured based on significant observable inputs (Level 2). The following table summarizes assets measured at fair value using Level 3 inputs on a nonrecurring basis subsequent to initial recognition: Fair Value Measurements at December 31, 2015 Impairment Losses Fair Value at Quoted Prices in Active Significant Other Significant Year December 31, Markets for Identical Observable Unobservable Ended 2015 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) December 31, 2015 (in millions) Goodwill - Membership Products $ — $ — $ — $ — $ (89.6 ) |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | 10. SEGMENT INFORMATION Management evaluates the operating results of each of its reportable segments based upon several factors, of which the primary factors are revenue and “Segment EBITDA,” which the Company defines as income from operations before depreciation and amortization. The presentation of Segment EBITDA may not be comparable to similarly titled measures used by other companies. The segment information discussed below reflects our new operating segments in effect as of January 1, 2016, as discussed in Note 1 to our unaudited condensed consolidated financial statements. The Segment EBITDA of the Company’s four reportable segments does not include general corporate expenses. Corporate expenses include certain departmental service costs such as human resources, legal, corporate finance and accounting and unallocated portions of information technology, in addition to expenses previously recorded in corporate such as professional fees related to debt financing activities and stock compensation costs. General corporate expenses have been excluded from the presentation of the Segment EBITDA for the Company’s four reportable segments because they are not reported to the chief operating decision maker for purposes of allocating resources among operating segments or assessing operating segment performance. The accounting policies of the reportable segments are the same as those described in Note 2—Summary of Significant Accounting Policies in the Company’s Form 10-K for the year ended December 31, 2015. Net Revenues For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Global Loyalty $ 42.9 $ 40.8 $ 122.8 $ 131.8 Global Customer Engagement 92.5 106.1 294.8 312.9 Insurance Solutions 59.3 56.8 172.0 175.5 Subtotal 194.7 203.7 589.6 620.2 Legacy Membership and Package 43.6 87.9 148.2 269.4 Eliminations (0.2 ) (0.3 ) (0.8 ) (1.0 ) $ 238.1 $ 291.3 $ 737.0 $ 888.6 Segment EBITDA For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Global Loyalty $ 14.8 $ 14.5 $ 41.2 $ 45.0 Global Customer Engagement 17.2 16.8 54.9 40.8 Insurance Solutions 22.4 18.1 61.3 55.3 Subtotal 54.4 49.4 157.4 141.1 Legacy Membership and Package 8.2 32.3 32.7 71.2 Corporate (11.8 ) (19.6 ) (42.7 ) (47.5 ) $ 50.8 $ 62.1 $ 147.4 $ 164.8 For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Segment EBITDA $ 50.8 $ 62.1 $ 147.4 $ 164.8 Depreciation and amortization (13.7 ) (23.7 ) (41.9 ) (71.7 ) Income from operations $ 37.1 $ 38.4 $ 105.5 $ 93.1 |
Guarantor_Non-Guarantor Supplem
Guarantor/Non-Guarantor Supplemental Financial Information | 9 Months Ended |
Sep. 30, 2016 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Guarantor/Non-Guarantor Supplemental Financial Information | 11. GUARANTOR/NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION The following supplemental condensed consolidating financial information presents, in separate columns, the condensed consolidating balance sheets as of September 30, 2016 and December 31, 2015, and the related condensed consolidating statements of comprehensive income (loss) for the three and nine month periods ended September 30, 2016 and 2015 and the related condensed consolidating statements of cash flows for the nine month periods ended September 30, 2016 and 2015 for (i) the Company (Affinion Group, Inc.) on a parent-only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Guarantor Subsidiaries (the Company’s subsidiaries that guarantee the 2010 senior notes) on a combined basis, (iii) the Non-Guarantor Subsidiaries (the Company’s subsidiaries that do not guarantee the 2010 senior notes) on a combined basis and (iv) the Company on a consolidated basis. The guarantees are full and unconditional and joint and several obligations of each of the guarantor subsidiaries, all of which are 100% owned by the Company. There are no significant restrictions on the ability of the Company to obtain funds from any of its guarantor subsidiaries by dividends or loan. The supplemental financial information has been presented in lieu of separate financial statements of the guarantors as such separate financial statements are not considered meaningful. The supplemental condensed consolidating financial information presented includes Incentive Networks LLC, a recently formed subsidiary, as a Guarantor Subsidiary. Incentive Networks LLC guarantees the 2010 senior notes and the International Notes, but does not guarantee the 2013 senior subordinated notes. UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 30.2 $ 2.8 $ 28.6 $ — $ 61.6 Restricted cash — 17.0 9.9 — 26.9 Receivables, net 1.9 81.4 33.3 — 116.6 Profit-sharing receivables from insurance carriers — 24.9 — — 24.9 Prepaid commissions — 26.3 3.8 — 30.1 Intercompany interest receivable — — 0.4 (0.4 ) — Other current assets 21.5 27.3 25.0 — 73.8 Total current assets 53.6 179.7 101.0 (0.4 ) 333.9 Property and equipment, net 7.1 72.9 28.3 — 108.3 Contract rights and list fees, net — 15.9 — — 15.9 Goodwill — 155.5 66.7 — 222.2 Other intangibles, net — 37.9 7.7 — 45.6 Receivables from related parties 28.9 — — — 28.9 Investment in subsidiaries 2,381.0 81.2 63.9 (2,526.1 ) — Intercompany loan receivable 163.4 20.5 22.6 (206.5 ) — Intercompany receivables — 2,355.9 — (2,355.9 ) — Other non-current assets 12.6 27.6 6.2 — 46.4 Total assets $ 2,646.6 $ 2,947.1 $ 296.4 $ (5,088.9 ) $ 801.2 Liabilities and Deficit Current liabilities: Current portion of long-term debt $ 7.8 $ — $ — $ — $ 7.8 Accounts payable and accrued expenses 81.1 172.4 79.3 — 332.8 Payables to related parties 14.7 — — — 14.7 Intercompany interest payable 0.4 — — (0.4 ) — Deferred revenue 0.1 40.5 20.4 — 61.0 Income taxes payable 0.7 - 2.3 — 3.0 Total current liabilities 104.8 212.9 102.0 (0.4 ) 419.3 Long-term debt 1,691.9 — 152.9 — 1,844.8 Deferred income taxes 14.7 23.6 0.9 — 39.2 Deferred revenue 0.3 2.4 2.8 — 5.5 Intercompany loans payable 22.6 — 183.9 (206.5 ) — Intercompany payables 2,343.6 — 12.3 (2,355.9 ) — Other long-term liabilities 3.5 18.5 4.3 — 26.3 Total liabilities 4,181.4 257.4 459.1 (2,562.8 ) 2,335.1 Total Affinion Group, Inc. deficit (1,534.8 ) 2,689.7 (163.6 ) (2,526.1 ) (1,534.8 ) Non-controlling interest in subsidiary — — 0.9 — 0.9 Total deficit (1,534.8 ) 2,689.7 (162.7 ) (2,526.1 ) (1,533.9 ) Total liabilities and deficit $ 2,646.6 $ 2,947.1 $ 296.4 $ (5,088.9 ) $ 801.2 UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 31.0 $ 1.6 $ 18.6 $ — $ 51.2 Restricted cash — 16.0 13.2 — 29.2 Receivables, net 1.9 68.7 43.4 — 114.0 Profit-sharing receivables from insurance carriers — 19.9 — — 19.9 Prepaid commissions — 32.9 5.5 — 38.4 Intercompany interest receivable 1.2 — 1.1 (2.3 ) — Other current assets 20.4 37.8 27.4 — 85.6 Total current assets 54.5 176.9 109.2 (2.3 ) 338.3 Property and equipment, net 3.6 78.5 37.4 — 119.5 Contract rights and list fees, net — 16.6 — — 16.6 Goodwill — 155.6 70.2 — 225.8 Other intangibles, net — 44.6 10.4 — 55.0 Receivables from related parties 28.9 — — — 28.9 Investment in subsidiaries 2,199.4 52.1 63.9 (2,315.4 ) — Intercompany loan receivable 144.9 20.0 22.6 (187.5 ) — Intercompany receivables — 2,150.4 — (2,150.4 ) — Other non-current assets (1.8 ) 41.5 5.2 — 44.9 Total assets $ 2,429.5 $ 2,736.2 $ 318.9 $ (4,655.6 ) $ 829.0 Liabilities and Deficit Current liabilities: Current portion of long-term debt $ 7.7 $ 0.1 $ — $ — $ 7.8 Accounts payable and accrued expenses 87.6 163.4 95.0 — 346.0 Payables to related parties 10.3 — — — 10.3 Intercompany interest payable 1.1 — 1.2 (2.3 ) — Deferred revenue 0.2 44.9 24.2 — 69.3 Income taxes payable 1.0 0.1 1.3 — 2.4 Total current liabilities 107.9 208.5 121.7 (2.3 ) 435.8 Long-term debt 1,713.1 — 155.3 — 1,868.4 Deferred income taxes — 34.9 1.0 — 35.9 Deferred revenue 0.3 3.7 3.7 — 7.7 Intercompany loans payable 22.6 — 164.9 (187.5 ) — Intercompany payables 2,128.9 — 21.5 (2,150.4 ) — Other long-term liabilities 3.3 19.6 4.2 — 27.1 Total liabilities 3,976.1 266.7 472.3 (2,340.2 ) 2,374.9 Total Affinion Group, Inc. deficit (1,546.6 ) 2,469.5 (154.1 ) (2,315.4 ) (1,546.6 ) Non-controlling interest in subsidiary — — 0.7 — 0.7 Total deficit (1,546.6 ) 2,469.5 (153.4 ) (2,315.4 ) (1,545.9 ) Total liabilities and deficit $ 2,429.5 $ 2,736.2 $ 318.9 $ (4,655.6 ) $ 829.0 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 167.0 $ 71.1 $ — $ 238.1 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions 0.1 56.7 24.8 — 81.6 Operating costs 10.6 26.3 41.6 — 78.5 General and administrative 15.5 6.8 4.8 — 27.1 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.1 8.7 4.9 — 13.7 Total expenses 26.3 98.6 76.1 — 201.0 Income (loss) from operations (26.3 ) 68.4 (5.0 ) — 37.1 Interest income 0.1 — 0.1 — 0.2 Interest expense (26.7 ) (0.1 ) (1.0 ) — (27.8 ) Interest income (expense) - intercompany (0.6 ) — 0.6 — — Income (loss) before income taxes and non-controlling interest (53.5 ) 68.3 (5.3 ) — 9.5 Income tax expense (0.2 ) (0.7 ) (0.8 ) — (1.7 ) (53.7 ) 67.6 (6.1 ) — 7.8 Equity in income of subsidiaries 61.2 0.2 — (61.4 ) — Net income (loss) 7.5 67.8 (6.1 ) (61.4 ) 7.8 Less: net income attributable to non-controlling interest — — (0.3 ) — (0.3 ) Net income (loss) attributable to Affinion Group, Inc. $ 7.5 $ 67.8 $ (6.4 ) $ (61.4 ) $ 7.5 Net income (loss) $ 7.5 $ 67.8 $ (6.1 ) $ (61.4 ) $ 7.8 Currency translation adjustment, net of tax (1.4 ) 0.2 0.1 (0.3 ) (1.4 ) Comprehensive income (loss) 6.1 68.0 (6.0 ) (61.7 ) 6.4 Less: comprehensive income attributable to non-controlling interest — — (0.3 ) — (0.3 ) Comprehensive income (loss) attributable to Affinion Group, Inc. $ 6.1 $ 68.0 $ (6.3 ) $ (61.7 ) $ 6.1 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 509.4 $ 227.6 $ — $ 737.0 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions 0.2 177.7 76.5 — 254.4 Operating costs 33.0 90.7 124.3 — 248.0 General and administrative 45.9 22.1 19.1 — 87.1 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.3 26.8 14.8 — 41.9 Total expenses 79.4 317.4 234.7 — 631.5 Income (loss) from operations (79.4 ) 192.0 (7.1 ) — 105.5 Interest income 0.5 — 0.3 — 0.8 Interest expense (80.0 ) 0.6 (3.1 ) — (82.5 ) Interest income (expense) - intercompany (1.7 ) — 1.7 — — Income (loss) before income taxes and non-controlling interest (160.6 ) 192.6 (8.2 ) — 23.8 Income tax expense (0.7 ) (2.2 ) (2.8 ) — (5.7 ) (161.3 ) 190.4 (11.0 ) — 18.1 Equity in income of subsidiaries 178.9 5.9 — (184.8 ) — Net income (loss) 17.6 196.3 (11.0 ) (184.8 ) 18.1 Less: net income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Net income (loss) attributable to Affinion Group, Inc. $ 17.6 $ 196.3 $ (11.5 ) $ (184.8 ) $ 17.6 Net income (loss) $ 17.6 $ 196.3 $ (11.0 ) $ (184.8 ) $ 18.1 Currency translation adjustment, net of tax (5.8 ) 0.5 1.7 (2.2 ) (5.8 ) Comprehensive income (loss) 11.8 196.8 (9.3 ) (187.0 ) 12.3 Less: comprehensive income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Comprehensive income (loss) attributable to Affinion Group, Inc. $ 11.8 $ 196.8 $ (9.8 ) $ (187.0 ) $ 11.8 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 205.1 $ 86.2 $ — $ 291.3 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions — 72.5 32.2 — 104.7 Operating costs — 49.3 45.8 — 95.1 General and administrative 10.6 10.5 8.2 — 29.3 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.1 16.7 6.9 — 23.7 Total expenses 10.7 149.1 93.1 — 252.9 Income from operations (10.7 ) 56.0 (6.9 ) — 38.4 Interest income (0.3 ) 1.7 0.5 — 1.9 Interest expense (35.1 ) — (12.7 ) — (47.8 ) Interest income (expense) - intercompany (11.5 ) — 11.5 — — Other income, net — 0.7 (0.1 ) — 0.6 Loss before income taxes and non-controlling interest (57.6 ) 58.4 (7.7 ) — (6.9 ) Income tax expense (0.1 ) (0.2 ) (0.8 ) — (1.1 ) (57.7 ) 58.2 (8.5 ) — (8.0 ) Equity in income of subsidiaries 49.5 3.0 — (52.5 ) — Net loss (8.2 ) 61.2 (8.5 ) (52.5 ) (8.0 ) Less: net income attributable to non-controlling interest — — (0.2 ) — (0.2 ) Net loss attributable to Affinion Group, Inc. $ (8.2 ) $ 61.2 $ (8.7 ) $ (52.5 ) $ (8.2 ) Net loss $ (8.2 ) $ 61.2 $ (8.5 ) $ (52.5 ) $ (8.0 ) Currency translation adjustment, net of tax — — (2.2 ) — (2.2 ) Comprehensive loss (8.2 ) 61.2 (10.7 ) (52.5 ) (10.2 ) Less: comprehensive income attributable to non-controlling interest — — — — — Comprehensive loss attributable to Affinion Group, Inc. $ (8.2 ) $ 61.2 $ (10.7 ) $ (52.5 ) $ (10.2 ) UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 632.1 $ 256.5 $ — $ 888.6 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions — 229.0 102.4 — 331.4 Operating costs — 155.6 142.5 — 298.1 General and administrative 21.6 46.0 25.5 — 93.1 Facility exit costs — 1.2 — — 1.2 Depreciation and amortization 0.5 50.9 20.3 — 71.7 Total expenses 22.1 482.7 290.7 — 795.5 Income from operations (22.1 ) 149.4 (34.2 ) — 93.1 Interest income — 1.7 0.6 — 2.3 Interest expense (103.7 ) (0.1 ) (38.5 ) — (142.3 ) Interest income (expense) - intercompany (35.3 ) — 35.3 — — Other income, net — 3.5 (2.3 ) — 1.2 Loss before income taxes and non-controlling interest (161.1 ) 154.5 (39.1 ) — (45.7 ) Income tax expense (0.8 ) (2.0 ) (1.4 ) — (4.2 ) (161.9 ) 152.5 (40.5 ) — (49.9 ) Equity in income of subsidiaries 111.5 1.9 — (113.4 ) — Net loss (50.4 ) 154.4 (40.5 ) (113.4 ) (49.9 ) Less: net income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Net loss attributable to Affinion Group, Inc. $ (50.4 ) $ 154.4 $ (41.0 ) $ (113.4 ) $ (50.4 ) Net loss $ (50.4 ) $ 154.4 $ (40.5 ) $ (113.4 ) $ (49.9 ) Currency translation adjustment, net of tax — — (5.7 ) — (5.7 ) Comprehensive loss (50.4 ) 154.4 (46.2 ) (113.4 ) (55.6 ) Less: comprehensive income attributable to non-controlling interest — — (0.2 ) — (0.2 ) Comprehensive loss attributable to Affinion Group, Inc. $ (50.4 ) $ 154.4 $ (46.4 ) $ (113.4 ) $ (55.8 ) UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Operating Activities Net income (loss) $ 17.6 $ 196.3 $ (11.0 ) $ (184.8 ) $ 18.1 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 0.3 26.8 14.8 — 41.9 Amortization of debt discount and financing costs 4.5 — — — 4.5 Recovery of accounts receivable loss provided for — 0.1 0.1 — 0.2 Facility exit costs — 0.1 — — 0.1 Amortization of carrying value adjustment (20.0 ) — (6.2 ) — (26.2 ) Share-based compensation 2.8 — — — 2.8 Equity in (income) loss of subsidiaries (178.9 ) (5.9 ) — 184.8 — Deferred income taxes 0.3 2.1 (0.6 ) — 1.8 Net change in assets and liabilities: Restricted cash — (0.9 ) 0.8 — (0.1 ) Receivables — (12.8 ) 8.4 — (4.4 ) Receivables from related parties 0.4 — (0.4 ) — — Profit-sharing receivables from insurance carriers — (5.0 ) — — (5.0 ) Prepaid commissions — 6.6 1.2 — 7.8 Other current assets (1.1 ) 10.4 1.0 — 10.3 Contract rights and list fees — 0.6 — — 0.6 Other non-current assets 0.1 0.7 (0.6 ) — 0.2 Accounts payable and accrued expenses (6.4 ) 8.3 (5.9 ) — (4.0 ) Payables to related parties 1.7 — — — 1.7 Deferred revenue (0.1 ) (5.6 ) (3.5 ) — (9.2 ) Income taxes receivable and payable (0.3 ) (0.1 ) 0.7 — 0.3 Other long-term liabilities 0.2 (0.6 ) (1.2 ) — (1.6 ) Other, net 1.4 — (0.8 ) — 0.6 Net cash provided by (used in) operating activities (177.5 ) 221.1 (3.2 ) — 40.4 Investing Activities Capital expenditures (3.9 ) (14.4 ) (6.0 ) — (24.3 ) Restricted cash — — 1.5 — 1.5 Capital contribution to subsidiary (0.2 ) — — 0.2 — Intercompany receivables and payables — (205.5 ) (9.2 ) 214.7 — Net cash provided by (used in) investing activities (4.1 ) (219.9 ) (13.7 ) 214.9 (22.8 ) Financing Activities Principal payments on borrowings (5.8 ) — — — (5.8 ) Intercompany receivables and payables 214.7 — — (214.7 ) — Capital contribution to subsidiary — — 0.2 (0.2 ) — Dividend paid to non-controlling interest — — (0.3 ) — (0.3 ) Intercompany loans (28.1 ) — 28.1 — — Net cash provided by (used in) financing activities 180.8 — 28.0 (214.9 ) (6.1 ) Effect of changes in exchange rates on cash and cash equivalents — — (1.1 ) — (1.1 ) Net increase (decrease) in cash and cash equivalents (0.8 ) 1.2 10.0 — 10.4 Cash and cash equivalents, beginning of period 31.0 1.6 18.6 — 51.2 Cash and cash equivalents, end of period $ 30.2 $ 2.8 $ 28.6 $ — $ 61.6 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Operating Activities Net loss $ (50.4 ) $ 154.4 $ (40.5 ) $ (113.4 ) $ (49.9 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 0.5 50.9 20.3 — 71.7 Amortization of debt discount and financing costs 5.6 — 1.4 — 7.0 Recovery of accounts receivable loss provided for — (5.7 ) 0.2 — (5.5 ) Facility exit costs — 1.2 — — 1.2 Share-based compensation 1.4 — — — 1.4 Equity in (income) loss of subsidiaries (111.5 ) (1.9 ) — 113.4 — Deferred income taxes 0.3 1.9 (0.7 ) — 1.5 Net change in assets and liabilities: Restricted cash 1.7 0.8 1.6 — 4.1 Receivables (0.8 ) 1.6 7.9 — 8.7 Receivables from related parties (12.8 ) 4.0 12.8 — 4.0 Profit-sharing receivables from insurance carriers — 4.3 — — 4.3 Prepaid commissions — 1.3 (0.1 ) — 1.2 Other current assets (36.4 ) 17.1 0.5 — (18.8 ) Contract rights and list fees — (0.4 ) — — (0.4 ) Other non-current assets 0.1 (13.1 ) (0.3 ) — (13.3 ) Accounts payable and accrued expenses 20.0 3.3 (31.1 ) — (7.8 ) Payables to related parties (1.7 ) 0.9 — — (0.8 ) Deferred revenue 0.4 (7.0 ) 0.3 — (6.3 ) Income taxes receivable and payable (0.4 ) — (0.1 ) — (0.5 ) Other long-term liabilities 0.1 (6.5 ) 0.7 — (5.7 ) Other, net 1.3 (0.8 ) 2.7 — 3.2 Net cash used in operating activities (182.6 ) 206.3 (24.4 ) — (0.7 ) Investing Activities Capital expenditures 0.5 (11.2 ) (12.6 ) — (23.3 ) Restricted cash — — (1.1 ) — (1.1 ) Proceeds from sale of an investment — — 1.5 — 1.5 Intercompany receivables and payables — (193.9 ) — 193.9 — Net cash used in investing activities 0.5 (205.1 ) (12.2 ) 193.9 (22.9 ) Financing Activities Borrowings under revolving credit facility, net 61.0 — — — 61.0 Principal payments on borrowings (5.8 ) (0.8 ) — — (6.6 ) Receivables from and payables to parent company (1.9 ) — — — (1.9 ) Intercompany receivables and payables 195.6 — (1.7 ) (193.9 ) — Capital contribution to subsidiary (0.1 ) — 0.1 — — Intercompany loan (45.8 ) — 45.8 — — Net cash provided by financing activities 203.0 (0.8 ) 44.2 (193.9 ) 52.5 Effect of changes in exchange rates on cash and cash equivalents — — (1.2 ) — (1.2 ) Net increase in cash and cash equivalents 20.9 0.4 6.4 — 27.7 Cash and cash equivalents, beginning of period 7.8 2.5 17.7 — 28.0 Cash and cash equivalents, end of period $ 28.7 $ 2.9 $ 24.1 $ −− $ 55.7 |
Basis of Presentation and Bus18
Basis of Presentation and Business Description (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation —On October 17, 2005, Cendant Corporation (“Cendant”) completed the sale of the Cendant Marketing Services Division to Affinion Group, Inc. (the “Company” or “Affinion”), a wholly-owned subsidiary of Affinion Group Holdings, Inc. (“Affinion Holdings”) and an affiliate of Apollo Global Management, LLC (“Apollo”), pursuant to a purchase agreement dated July 26, 2005 for approximately $ 1.8 billion (the “Apollo Transactions”). All references to Cendant refer to Cendant Corporation, which changed its name to Avis Budget Group, Inc. in August 2006, and its consolidated subsidiaries, specifically in the context of its business and operations prior to, and in connection with, the Company’s separation from Cendant. The accompanying unaudited condensed consolidated financial statements include the accounts and transactions of the Company. In presenting these unaudited condensed consolidated financial statements, management makes estimates and assumptions that affect reported amounts of assets and liabilities and related disclosures, and disclosure of contingent assets and liabilities, at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Estimates, by their nature, are based on judgments and available information at the time such estimate is made. As such, actual results could differ from those estimates. In management’s opinion, the unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and following the guidance of Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission (the “SEC”). As permitted under such rules, certain notes and other financial information normally required by accounting principles generally accepted in the United States of America have been condensed or omitted; however, the unaudited condensed consolidated financial statements do include such notes and financial information sufficient so as to make the interim information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes of the Company, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 10, 2016 (the “Form 10-K”). |
Business Description | Business Description — The Company is one of the world’s leading loyalty and customer engagement solutions companies. The Company designs, markets and services programs that strengthen and extend customer relationships for many of the world’s largest and most respected companies. The Company’s programs and services include: • Loyalty programs that help reward, motivate and retain consumers, • Membership programs that help consumers save money and gain peace of mind, • Package programs that bundle valuable discounts, protection and other benefits to enhance customer relationships, and • Insurance programs that help protect consumers in the event of a covered accident, injury, illness, or death. The Company designs loyalty and customer engagement solutions with an attractive suite of benefits and ease of usage that it believes are likely to interest, engage and reward consumers based on their needs and interests. For example, the Company provides loyalty program design and management, disaggregated loyalty points redemptions for gift cards, travel and merchandise, credit monitoring and identity-theft resolution, discount travel services, accidental death and dismemberment insurance (“AD&D”), various checking account and credit card enhancement services, roadside assistance, as well as other products and services. The Company is a global leader in the designing, marketing and servicing of loyalty and comprehensive customer engagement solutions that enhances and extends the relationship of millions of consumers with many of the largest and most respected companies in the world. The Company generally partners with these leading companies in two ways: 1) by developing and supporting programs that are natural extensions of its partner companies’ brand image and that provide valuable services to their end-customers, and 2) by providing the back-end technological support and redemption services for points-based loyalty programs. Using its expertise in customer engagement, product development, creative design and data-driven targeted marketing, the Company develops and markets programs and services that enable the companies it partners with to generate significant, high-margin incremental revenue, enhance its partners’ brands among targeted consumers as well as strengthen and enhance the loyalty of their customer relationships. The enhanced loyalty can lead to improved customer satisfaction rates, longer retention of existing customers, increased acquisition of new customers, and greater use of other services provided by such companies. The Company refers to the leading companies that it works with to provide loyalty and customer engagement solutions as clients or marketing partners. The Company refers to the consumers to whom it provides services directly under a contractual relationship as subscribers or insureds. The Company refers to those consumers that it services on behalf of a third party, such as one of its marketing partners, and with whom it has a contractual relationship as end-customers. The Company utilizes its substantial expertise in a variety of direct engagement media to market valuable products and services to the customers of its marketing partners on a highly targeted, campaign basis. The selection of the media employed in a campaign corresponds to the preferences and expectations the targeted customers have demonstrated for transacting with its marketing partners, as the Company believes this optimizes response, thereby improving the efficiency of our marketing investment. Accordingly, the Company maintains significant capabilities to market through direct mail, point-of-sale, the internet, inbound and outbound telephony and voice response unit marketing, as well as other media as needed. Effective January 1, 2016, we implemented a new globalized organizational structure (the “Global Reorganization”) to better support our key strategic initiatives and enhance long-term revenue growth. This new organizational structure allows us to combine similar lines of business on common platforms and shared infrastructures on a global basis to drive best practices and efficiencies with meaningful cost savings. In addition, we intend to no longer materially invest in lines of business that we believe are not essential to our long-term growth prospects. We remain committed to our business strategy of pursuing initiatives that maintain and enhance our position as a global leader in loyalty and customer engagement solutions. The implementation of the new global organizational structure marks another major step in our strategic plan and ongoing transformation. See Note 10 to our unaudited condensed consolidated financial statements for more information concerning our segment results and Note 2 to our unaudited condensed consolidated financial statements for more information concerning the allocation of goodwill among the new segments. Prior period segment amounts throughout the notes to the unaudited condensed consolidated financial statement have been reclassified to the new segment structure. The reclassification of historical business segment information had no impact on our basic financial statements. Effective January 1, 2016, we have the following four new operating segments: • Global Loyalty . This segment consists of all of the Company’s loyalty assets globally in which we are a provider of end-to-end loyalty solutions that help clients reward, motivate and retain customers, including program design, points management and administration, and broad-based fulfilment and redemption. • Global Customer Engagement . This segment combines all of the Company’s global customer engagement programs in which the Company or its partners expect to actively market. Through the Global Customer Engagement business, the Company expects that it will continue to be a leading global solutions provider that delivers a flexible mix of benefits and services for its clients that meet customers’ needs, including products that are designed to help consumers save money and gain peace of mind. • Insurance Solutions . This segment consists of the domestic insurance business, in which the Company is a leading third-party agent, administrator and marketer of certain Accident and Life insurance products. • Legacy Membership and Package . This segment combines all global membership programs in which the Company no longer expects to actively market (which were previously reported predominantly in our Membership Products segment and to a lesser extent in our International Products segment) and also includes the domestic Package business (which, through December 31, 2015, was reported in its Insurance and Package segment). This segment includes membership programs that were marketed with many of the Company’s large domestic financial institution partners. Although the Company will continue to service these members, it expects that cash flows and revenues will decrease over time due to the anticipated attrition of the member base in this operating segment. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements On May 28, 2014, the FASB and International Accounting Standards Board issued their final standard on revenue from contracts with customers. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The fundamental principles of the guidance are that companies should recognize revenue in a manner that reflects the timing of transfer of goods and services to customers and the amount of revenue recognized reflects the consideration that a company expects to receive for the goods and services provided. The guidance establishes a five-step approach for the recognition of revenue. In addition, the guidance will also require significantly expanded disclosures about revenue recognition. In July 2015, the FASB issued a new standard that, for public entities, defers the effective date of the standard on revenue from contracts with customers by one year, to annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017. Entities have the option of using either a full retrospective or modified retrospective approach and early application is not permitted, other than entities may earlier adopt the new guidance as of the originally proposed effective date, which was for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The Company is in the process of performing an evaluation of the impact of the new guidance. On August 27, 2014, the FASB issued an Accounting Standards Update (“ASU”) that provides guidance on determining when and how reporting entities must disclose going concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the financial statements (or within one year after the date on which the financial statements were available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The ASU is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is in the process of performing an evaluation of the impact of the new guidance. On April 7, 2015, the FASB issued an ASU that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with debt discounts and premiums, rather than as a separate asset. On August 16, 2015, the FASB issued an ASU clarifying the SEC staff’s position on presenting and measuring debt issuance costs incurred in connection with line-of-credit arrangements. The SEC staff announced that it would not object to the deferral and presentation of debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. The new guidance is effective for financial statements issued for fiscal years beginning after December 31, 2015 and interim periods within those fiscal years. As of January 1, 2016, the Company adopted the new guidance, which did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, and re-cast the December 31, 2015 balances, resulting in a $15.1 million reduction of other non-current assets and long-term debt. On November 20, 2015, the FASB issued ASU 2015-17, which requires entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. It simplifies the current guidance, which requires entities to separately present deferred tax assets and deferred tax liabilities as current or non-current in a classified balance sheet. Netting of deferred tax assets and deferred tax liabilities by tax jurisdiction is still required under the new guidance. For public business entities, the ASU is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company adopted the new guidance as of the beginning of the second quarter of 2016 on a prospective basis. The December 31, 2015 financial statements were not retrospectively adjusted. The adoption of this standard did not have a material impact on our financial statements. On February 25, 2016, the FASB issued ASU 2016-02, its new standard on accounting for leases. The new standard introduces a lessee model that brings most leases on the balance sheet. The new lease standard also addresses other concerns related to the current leases model. For public business entities, the new guidance will be effective for annual periods beginning after December 31, 2018 and all interim periods within those annual periods. The Company is in the process of performing an initial evaluation of the impact of the new guidance. On August 26, 2016, the FASB issued ASU 2016-15, which addresses eight specific cash flow issues, including presentation of debt prepayments or debt extinguishment costs, with the objective of reducing the existing diversity in practice. For public business entities, the new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. When adopted, the new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the Company’s carrying amount of goodwill for the year ended December 31, 2015 and the nine months ended September 30, 2016 are as follows: Balance at Balance at Balance at January 1, Currency December 31, Currency September 30, 2015 Acquisition Impairment Translation 2015 Translation 2016 (in millions) Global Loyalty $ 106.2 $ (0.2 ) $ - $ (0.9 ) $ 105.1 $ 0.2 $ 105.3 Global Customer Engagement 68.1 — — (5.7 ) 62.4 (3.8 ) 58.6 Insurance Solutions 58.3 — — — 58.3 — 58.3 Legacy Membership and Package 89.6 — (89.6 ) — - — — Total $ 322.2 $ (0.2 ) $ (89.6 ) $ (6.6 ) $ 225.8 $ (3.6 ) $ 222.2 |
Other intangibles, net | |
Schedule of Amortizable Intangible Assets | Intangible assets consisted of: September 30, 2016 Gross Carrying Accumulated Net Carrying Amount Amortization Amount (in millions) Amortizable intangible assets: Member relationships $ 934.4 $ (932.0 ) $ 2.4 Affinity relationships 638.3 (604.0 ) 34.3 Proprietary databases and systems 59.7 (58.0 ) 1.7 Trademarks and tradenames 28.4 (21.5 ) 6.9 Patents and technology 47.6 (47.4 ) 0.2 Covenants not to compete 2.5 (2.4 ) 0.1 $ 1,710.9 $ (1,665.3 ) $ 45.6 December 31, 2015 Gross Carrying Accumulated Net Carrying Amount Amortization Amount (in millions) Amortizable intangible assets: Member relationships $ 936.9 $ (933.8 ) $ 3.1 Affinity relationships 639.3 (598.6 ) 40.7 Proprietary databases and systems 59.7 (57.7 ) 2.0 Trademarks and tradenames 28.7 (20.8 ) 7.9 Patents and technology 47.6 (46.5 ) 1.1 Covenants not to compete 2.5 (2.3 ) 0.2 $ 1,714.7 $ (1,659.7 ) $ 55.0 |
Schedule of Amortization Expense Relating to Intangible Assets | Amortization expense relating to intangible assets was as follows: For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Amortizable intangible assets: Member relationships $ 0.2 $ 1.4 $ 0.7 $ 3.4 Affinity relationships 2.2 9.5 6.6 29.2 Proprietary databases and systems 0.1 0.1 0.3 0.3 Trademarks and tradenames 0.3 0.5 0.9 1.8 Patents and technology 0.3 0.4 0.9 2.0 Covenants not to compete 0.1 0.1 0.1 0.2 $ 3.2 $ 12.0 $ 9.5 $ 36.9 |
Contract Rights and List Fees20
Contract Rights and List Fees, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Contract rights and list fees, net | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Schedule of Amortizable Intangible Assets | Contract rights and list fees consisted of: September 30, 2016 December 31, 2015 Gross Carrying Accumulated Net Carrying Gross Carrying Accumulated Net Carrying Amount Amortization Amount Amount Amortization Amount (in millions) Contract rights $ 50.1 $ (50.1 ) $ - $ 56.5 $ (56.4 ) $ 0.1 List fees 60.0 (44.1 ) 15.9 57.0 (40.5 ) 16.5 $ 110.1 $ (94.2 ) $ 15.9 $ 113.5 $ (96.9 ) $ 16.6 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Components of Long-Term Debt | Long-term debt consisted of: September 30, December 31, 2016 2015 (in millions) First-lien term loan due 2018 $ 755.6 $ 761.4 Second-lien term loan due 2018 425.0 425.0 Revolving credit facility, expiring in 2018 — — 7.875% senior notes due 2018, net of unamortized discount of $0.5 million and $0.6 million, respectively, with an effective interest rate of 8.31% 474.5 474.4 7.5% cash/PIK senior notes due 2018, with an effective interest rate of 7.39% 113.9 110.0 13.50% senior subordinated notes due 2018, with an effective interest rate of 14.31% 22.6 22.6 Capital lease obligations — 0.1 Adjustment to carrying value of debt 71.6 97.8 Total debt 1,863.2 1,891.3 Less: current portion of long-term debt (7.8 ) (7.8 ) Less: unamortized deferred financing costs (10.6 ) (15.1 ) Long-term debt $ 1,844.8 $ 1,868.4 |
Summary of 2015 Exchange Offers and 2015 Rights Offering Impact on Recognition of Debt | In connection with the recognition of the 2015 Exchange Offers and 2015 Rights Offering, the impact of these transactions is summarized as follows, including the aforementioned gain of $115.8 million (in millions). Reduction of carrying value of debt exchanged $ (337.3 ) Reduction of accrued interest associated with debt exchanged (10.6 ) Write-off of debt discount and deferred financing costs, plus professional fees 21.0 Fair value of equity issued in the debt exchange and rights offering 107.8 Gain recorded as noted above 115.8 Adjustment to carrying value of debt $ (103.3 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Schedule of Fair Value Option Award | The expected term of the options granted represents the period of time that options are expected to be outstanding, and is based on the average of the requisite service period and the contractual term of the option. 2016 Grants Expected volatility 75 % Expected life (in years) 6.3 Risk-free interest rate 1.64 % Expected dividends — |
Summary of Option Activity | A summary of option activity for options to acquire shares of Common Stock granted under the 2015 Plan for the nine months ended September 30, 2016 is presented below (number of options in thousands): Outstanding options at January 1, 2016 — Granted 878 Exercised — Forfeited or expired — Outstanding options at September 30, 2016 878 Vested or expected to vest at September 30, 2016 878 Exercisable options at September 30, 2016 — Weighted average remaining contractual term (in years) 9.4 Weighted average grant date fair value per option granted in 2016 $ 9.35 Weighted average exercise price of exercisable options at September 30, 2016 $ - Weighted average exercise price of outstanding options at September 30, 2016 $ 13.97 |
Summary of RSU Activity | A summary of RSU activity under the 2007 Plan for the nine months ended September 30, 2016 is presented below (number of RSUs in thousands): Number of Weighted Average Restricted Grant Date Stock Units Fair Value Outstanding restricted unvested awards at January 1, 2016 261 $ 1.14 Granted — Vested (261 ) 1.14 Forfeited — Outstanding restricted unvested awards at September 30, 2016 — Weighted average remaining contractual term (in years) — On March 25, 2016, each of the non-employee members of the Board of Directors was granted RSUs under the 2015 Plan as a component of their annual compensation. The RSUs vested 3/12 ths th th A summary of RSU activity under the 2015 Plan for the nine months ended September 30, 2016 is presented below (number of RSUs in thousands): Number of Weighted Average Restricted Grant Date Stock Units Fair Value Outstanding restricted unvested awards at January 1, 2016 — Granted 20 $ 13.97 Vested — Forfeited — Outstanding restricted unvested awards at September 30, 2016 20 $ 13.97 |
2005 Plan | |
Stock Options Granted to Employees | Stock options granted to employees from the 2005 Plan are comprised of three tranches with the following terms: Tranche A Tranche B Tranche C Vesting Ratably over 5 years* 100% after 8 years** 100% after 8 years** Initial option term 10 years 10 years 10 years * In the event of a sale of the Company, vesting for tranche A occurs 18 months after the date of sale. ** Tranche B and C vesting would be accelerated upon specified realized returns to Apollo. |
2005 Plan | Class C and Class D common stock | |
Summary of Option Activity | A summary of option activity for options to acquire shares of Class C/D Common Stock under the 2005 Plan for the nine months ended September 30, 2016 is presented below (number of options in thousands): 2005 Plan 2005 Plan 2005 Plan Grants to Grants to Grants to Grants to Employees - Employees - Employees - Board of Tranche A Tranche B Tranche C Directors Outstanding options at January 1, 2016 7 3 3 2 Granted — — — — Exercised — — — — Forfeited or expired (5 ) (2 ) (2 ) — Outstanding options at September 30, 2016 2 1 1 2 Vested or expected to vest at September 30, 2016 2 1 1 2 Exercisable options at September 30, 2016 2 1 1 2 Weighted average remaining contractual term (in years) — — — — Weighted average grant date fair value per option granted in 2016 $ - $ - $ - $ - Weighted average exercise price of exercisable options at September 30, 2016 $ - $ - $ - $ - Weighted average exercise price of outstanding options at September 30, 2016 $ - $ - $ - $ - |
2007 Plan | |
Stock Options Granted to Employees | The stock options granted to employees from the 2007 Plan have the following terms: Vesting period Ratably over 4 years Initial option term 10 years |
Financial Instruments, Deriva23
Financial Instruments, Derivatives and Fair Value Measures (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Principal Cash Flows and Related Weighted-Average Interest Rates by Expected Maturity | The following table provides information about the Company’s financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted-average interest rates by expected maturity for the Company’s long-term debt as of September 30, 2016: Fair Value At 2021 and September 30, 2016 2017 2018 2019 2020 Thereafter Total 2016 (in millions) Fixed rate debt $ — $ — $ 622.1 $ — $ — $ — $ 622.1 $ 441.4 Average interest rate 8.01 % 8.01 % 7.97 % Variable rate debt $ 1.9 $ 7.8 $ 1,170.9 $ — $ — $ — $ 1,180.6 $ 1,052.8 Average interest rate (a) 7.38 % 7.38 % 7.68 % (a) Average interest rate is based on rates in effect at September 30, 2016. |
Schedule of Fair Value Measured on Nonrecurring Basis | The following table summarizes assets measured at fair value using Level 3 inputs on a nonrecurring basis subsequent to initial recognition: Fair Value Measurements at December 31, 2015 Impairment Losses Fair Value at Quoted Prices in Active Significant Other Significant Year December 31, Markets for Identical Observable Unobservable Ended 2015 Assets (Level 1) Inputs (Level 2) Inputs (Level 3) December 31, 2015 (in millions) Goodwill - Membership Products $ — $ — $ — $ — $ (89.6 ) |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Net Revenues For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Global Loyalty $ 42.9 $ 40.8 $ 122.8 $ 131.8 Global Customer Engagement 92.5 106.1 294.8 312.9 Insurance Solutions 59.3 56.8 172.0 175.5 Subtotal 194.7 203.7 589.6 620.2 Legacy Membership and Package 43.6 87.9 148.2 269.4 Eliminations (0.2 ) (0.3 ) (0.8 ) (1.0 ) $ 238.1 $ 291.3 $ 737.0 $ 888.6 Segment EBITDA For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Global Loyalty $ 14.8 $ 14.5 $ 41.2 $ 45.0 Global Customer Engagement 17.2 16.8 54.9 40.8 Insurance Solutions 22.4 18.1 61.3 55.3 Subtotal 54.4 49.4 157.4 141.1 Legacy Membership and Package 8.2 32.3 32.7 71.2 Corporate (11.8 ) (19.6 ) (42.7 ) (47.5 ) $ 50.8 $ 62.1 $ 147.4 $ 164.8 For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 (in millions) Segment EBITDA $ 50.8 $ 62.1 $ 147.4 $ 164.8 Depreciation and amortization (13.7 ) (23.7 ) (41.9 ) (71.7 ) Income from operations $ 37.1 $ 38.4 $ 105.5 $ 93.1 |
Guarantor_Non-Guarantor Suppl25
Guarantor/Non-Guarantor Supplemental Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule of Condensed Consolidating Balance Sheet | UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 30.2 $ 2.8 $ 28.6 $ — $ 61.6 Restricted cash — 17.0 9.9 — 26.9 Receivables, net 1.9 81.4 33.3 — 116.6 Profit-sharing receivables from insurance carriers — 24.9 — — 24.9 Prepaid commissions — 26.3 3.8 — 30.1 Intercompany interest receivable — — 0.4 (0.4 ) — Other current assets 21.5 27.3 25.0 — 73.8 Total current assets 53.6 179.7 101.0 (0.4 ) 333.9 Property and equipment, net 7.1 72.9 28.3 — 108.3 Contract rights and list fees, net — 15.9 — — 15.9 Goodwill — 155.5 66.7 — 222.2 Other intangibles, net — 37.9 7.7 — 45.6 Receivables from related parties 28.9 — — — 28.9 Investment in subsidiaries 2,381.0 81.2 63.9 (2,526.1 ) — Intercompany loan receivable 163.4 20.5 22.6 (206.5 ) — Intercompany receivables — 2,355.9 — (2,355.9 ) — Other non-current assets 12.6 27.6 6.2 — 46.4 Total assets $ 2,646.6 $ 2,947.1 $ 296.4 $ (5,088.9 ) $ 801.2 Liabilities and Deficit Current liabilities: Current portion of long-term debt $ 7.8 $ — $ — $ — $ 7.8 Accounts payable and accrued expenses 81.1 172.4 79.3 — 332.8 Payables to related parties 14.7 — — — 14.7 Intercompany interest payable 0.4 — — (0.4 ) — Deferred revenue 0.1 40.5 20.4 — 61.0 Income taxes payable 0.7 - 2.3 — 3.0 Total current liabilities 104.8 212.9 102.0 (0.4 ) 419.3 Long-term debt 1,691.9 — 152.9 — 1,844.8 Deferred income taxes 14.7 23.6 0.9 — 39.2 Deferred revenue 0.3 2.4 2.8 — 5.5 Intercompany loans payable 22.6 — 183.9 (206.5 ) — Intercompany payables 2,343.6 — 12.3 (2,355.9 ) — Other long-term liabilities 3.5 18.5 4.3 — 26.3 Total liabilities 4,181.4 257.4 459.1 (2,562.8 ) 2,335.1 Total Affinion Group, Inc. deficit (1,534.8 ) 2,689.7 (163.6 ) (2,526.1 ) (1,534.8 ) Non-controlling interest in subsidiary — — 0.9 — 0.9 Total deficit (1,534.8 ) 2,689.7 (162.7 ) (2,526.1 ) (1,533.9 ) Total liabilities and deficit $ 2,646.6 $ 2,947.1 $ 296.4 $ (5,088.9 ) $ 801.2 UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 31.0 $ 1.6 $ 18.6 $ — $ 51.2 Restricted cash — 16.0 13.2 — 29.2 Receivables, net 1.9 68.7 43.4 — 114.0 Profit-sharing receivables from insurance carriers — 19.9 — — 19.9 Prepaid commissions — 32.9 5.5 — 38.4 Intercompany interest receivable 1.2 — 1.1 (2.3 ) — Other current assets 20.4 37.8 27.4 — 85.6 Total current assets 54.5 176.9 109.2 (2.3 ) 338.3 Property and equipment, net 3.6 78.5 37.4 — 119.5 Contract rights and list fees, net — 16.6 — — 16.6 Goodwill — 155.6 70.2 — 225.8 Other intangibles, net — 44.6 10.4 — 55.0 Receivables from related parties 28.9 — — — 28.9 Investment in subsidiaries 2,199.4 52.1 63.9 (2,315.4 ) — Intercompany loan receivable 144.9 20.0 22.6 (187.5 ) — Intercompany receivables — 2,150.4 — (2,150.4 ) — Other non-current assets (1.8 ) 41.5 5.2 — 44.9 Total assets $ 2,429.5 $ 2,736.2 $ 318.9 $ (4,655.6 ) $ 829.0 Liabilities and Deficit Current liabilities: Current portion of long-term debt $ 7.7 $ 0.1 $ — $ — $ 7.8 Accounts payable and accrued expenses 87.6 163.4 95.0 — 346.0 Payables to related parties 10.3 — — — 10.3 Intercompany interest payable 1.1 — 1.2 (2.3 ) — Deferred revenue 0.2 44.9 24.2 — 69.3 Income taxes payable 1.0 0.1 1.3 — 2.4 Total current liabilities 107.9 208.5 121.7 (2.3 ) 435.8 Long-term debt 1,713.1 — 155.3 — 1,868.4 Deferred income taxes — 34.9 1.0 — 35.9 Deferred revenue 0.3 3.7 3.7 — 7.7 Intercompany loans payable 22.6 — 164.9 (187.5 ) — Intercompany payables 2,128.9 — 21.5 (2,150.4 ) — Other long-term liabilities 3.3 19.6 4.2 — 27.1 Total liabilities 3,976.1 266.7 472.3 (2,340.2 ) 2,374.9 Total Affinion Group, Inc. deficit (1,546.6 ) 2,469.5 (154.1 ) (2,315.4 ) (1,546.6 ) Non-controlling interest in subsidiary — — 0.7 — 0.7 Total deficit (1,546.6 ) 2,469.5 (153.4 ) (2,315.4 ) (1,545.9 ) Total liabilities and deficit $ 2,429.5 $ 2,736.2 $ 318.9 $ (4,655.6 ) $ 829.0 |
Schedule of Condensed Consolidating Statement of Comprehensive Income (Loss) | UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 167.0 $ 71.1 $ — $ 238.1 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions 0.1 56.7 24.8 — 81.6 Operating costs 10.6 26.3 41.6 — 78.5 General and administrative 15.5 6.8 4.8 — 27.1 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.1 8.7 4.9 — 13.7 Total expenses 26.3 98.6 76.1 — 201.0 Income (loss) from operations (26.3 ) 68.4 (5.0 ) — 37.1 Interest income 0.1 — 0.1 — 0.2 Interest expense (26.7 ) (0.1 ) (1.0 ) — (27.8 ) Interest income (expense) - intercompany (0.6 ) — 0.6 — — Income (loss) before income taxes and non-controlling interest (53.5 ) 68.3 (5.3 ) — 9.5 Income tax expense (0.2 ) (0.7 ) (0.8 ) — (1.7 ) (53.7 ) 67.6 (6.1 ) — 7.8 Equity in income of subsidiaries 61.2 0.2 — (61.4 ) — Net income (loss) 7.5 67.8 (6.1 ) (61.4 ) 7.8 Less: net income attributable to non-controlling interest — — (0.3 ) — (0.3 ) Net income (loss) attributable to Affinion Group, Inc. $ 7.5 $ 67.8 $ (6.4 ) $ (61.4 ) $ 7.5 Net income (loss) $ 7.5 $ 67.8 $ (6.1 ) $ (61.4 ) $ 7.8 Currency translation adjustment, net of tax (1.4 ) 0.2 0.1 (0.3 ) (1.4 ) Comprehensive income (loss) 6.1 68.0 (6.0 ) (61.7 ) 6.4 Less: comprehensive income attributable to non-controlling interest — — (0.3 ) — (0.3 ) Comprehensive income (loss) attributable to Affinion Group, Inc. $ 6.1 $ 68.0 $ (6.3 ) $ (61.7 ) $ 6.1 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 509.4 $ 227.6 $ — $ 737.0 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions 0.2 177.7 76.5 — 254.4 Operating costs 33.0 90.7 124.3 — 248.0 General and administrative 45.9 22.1 19.1 — 87.1 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.3 26.8 14.8 — 41.9 Total expenses 79.4 317.4 234.7 — 631.5 Income (loss) from operations (79.4 ) 192.0 (7.1 ) — 105.5 Interest income 0.5 — 0.3 — 0.8 Interest expense (80.0 ) 0.6 (3.1 ) — (82.5 ) Interest income (expense) - intercompany (1.7 ) — 1.7 — — Income (loss) before income taxes and non-controlling interest (160.6 ) 192.6 (8.2 ) — 23.8 Income tax expense (0.7 ) (2.2 ) (2.8 ) — (5.7 ) (161.3 ) 190.4 (11.0 ) — 18.1 Equity in income of subsidiaries 178.9 5.9 — (184.8 ) — Net income (loss) 17.6 196.3 (11.0 ) (184.8 ) 18.1 Less: net income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Net income (loss) attributable to Affinion Group, Inc. $ 17.6 $ 196.3 $ (11.5 ) $ (184.8 ) $ 17.6 Net income (loss) $ 17.6 $ 196.3 $ (11.0 ) $ (184.8 ) $ 18.1 Currency translation adjustment, net of tax (5.8 ) 0.5 1.7 (2.2 ) (5.8 ) Comprehensive income (loss) 11.8 196.8 (9.3 ) (187.0 ) 12.3 Less: comprehensive income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Comprehensive income (loss) attributable to Affinion Group, Inc. $ 11.8 $ 196.8 $ (9.8 ) $ (187.0 ) $ 11.8 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 205.1 $ 86.2 $ — $ 291.3 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions — 72.5 32.2 — 104.7 Operating costs — 49.3 45.8 — 95.1 General and administrative 10.6 10.5 8.2 — 29.3 Facility exit costs — 0.1 — — 0.1 Depreciation and amortization 0.1 16.7 6.9 — 23.7 Total expenses 10.7 149.1 93.1 — 252.9 Income from operations (10.7 ) 56.0 (6.9 ) — 38.4 Interest income (0.3 ) 1.7 0.5 — 1.9 Interest expense (35.1 ) — (12.7 ) — (47.8 ) Interest income (expense) - intercompany (11.5 ) — 11.5 — — Other income, net — 0.7 (0.1 ) — 0.6 Loss before income taxes and non-controlling interest (57.6 ) 58.4 (7.7 ) — (6.9 ) Income tax expense (0.1 ) (0.2 ) (0.8 ) — (1.1 ) (57.7 ) 58.2 (8.5 ) — (8.0 ) Equity in income of subsidiaries 49.5 3.0 — (52.5 ) — Net loss (8.2 ) 61.2 (8.5 ) (52.5 ) (8.0 ) Less: net income attributable to non-controlling interest — — (0.2 ) — (0.2 ) Net loss attributable to Affinion Group, Inc. $ (8.2 ) $ 61.2 $ (8.7 ) $ (52.5 ) $ (8.2 ) Net loss $ (8.2 ) $ 61.2 $ (8.5 ) $ (52.5 ) $ (8.0 ) Currency translation adjustment, net of tax — — (2.2 ) — (2.2 ) Comprehensive loss (8.2 ) 61.2 (10.7 ) (52.5 ) (10.2 ) Less: comprehensive income attributable to non-controlling interest — — — — — Comprehensive loss attributable to Affinion Group, Inc. $ (8.2 ) $ 61.2 $ (10.7 ) $ (52.5 ) $ (10.2 ) UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Net revenues $ — $ 632.1 $ 256.5 $ — $ 888.6 Expenses: Cost of revenues, exclusive of depreciation and amortization shown separately below: Marketing and commissions — 229.0 102.4 — 331.4 Operating costs — 155.6 142.5 — 298.1 General and administrative 21.6 46.0 25.5 — 93.1 Facility exit costs — 1.2 — — 1.2 Depreciation and amortization 0.5 50.9 20.3 — 71.7 Total expenses 22.1 482.7 290.7 — 795.5 Income from operations (22.1 ) 149.4 (34.2 ) — 93.1 Interest income — 1.7 0.6 — 2.3 Interest expense (103.7 ) (0.1 ) (38.5 ) — (142.3 ) Interest income (expense) - intercompany (35.3 ) — 35.3 — — Other income, net — 3.5 (2.3 ) — 1.2 Loss before income taxes and non-controlling interest (161.1 ) 154.5 (39.1 ) — (45.7 ) Income tax expense (0.8 ) (2.0 ) (1.4 ) — (4.2 ) (161.9 ) 152.5 (40.5 ) — (49.9 ) Equity in income of subsidiaries 111.5 1.9 — (113.4 ) — Net loss (50.4 ) 154.4 (40.5 ) (113.4 ) (49.9 ) Less: net income attributable to non-controlling interest — — (0.5 ) — (0.5 ) Net loss attributable to Affinion Group, Inc. $ (50.4 ) $ 154.4 $ (41.0 ) $ (113.4 ) $ (50.4 ) Net loss $ (50.4 ) $ 154.4 $ (40.5 ) $ (113.4 ) $ (49.9 ) Currency translation adjustment, net of tax — — (5.7 ) — (5.7 ) Comprehensive loss (50.4 ) 154.4 (46.2 ) (113.4 ) (55.6 ) Less: comprehensive income attributable to non-controlling interest — — (0.2 ) — (0.2 ) Comprehensive loss attributable to Affinion Group, Inc. $ (50.4 ) $ 154.4 $ (46.4 ) $ (113.4 ) $ (55.8 ) |
Schedule of Condensed Consolidating Statement of Cash Flows | UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Operating Activities Net income (loss) $ 17.6 $ 196.3 $ (11.0 ) $ (184.8 ) $ 18.1 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 0.3 26.8 14.8 — 41.9 Amortization of debt discount and financing costs 4.5 — — — 4.5 Recovery of accounts receivable loss provided for — 0.1 0.1 — 0.2 Facility exit costs — 0.1 — — 0.1 Amortization of carrying value adjustment (20.0 ) — (6.2 ) — (26.2 ) Share-based compensation 2.8 — — — 2.8 Equity in (income) loss of subsidiaries (178.9 ) (5.9 ) — 184.8 — Deferred income taxes 0.3 2.1 (0.6 ) — 1.8 Net change in assets and liabilities: Restricted cash — (0.9 ) 0.8 — (0.1 ) Receivables — (12.8 ) 8.4 — (4.4 ) Receivables from related parties 0.4 — (0.4 ) — — Profit-sharing receivables from insurance carriers — (5.0 ) — — (5.0 ) Prepaid commissions — 6.6 1.2 — 7.8 Other current assets (1.1 ) 10.4 1.0 — 10.3 Contract rights and list fees — 0.6 — — 0.6 Other non-current assets 0.1 0.7 (0.6 ) — 0.2 Accounts payable and accrued expenses (6.4 ) 8.3 (5.9 ) — (4.0 ) Payables to related parties 1.7 — — — 1.7 Deferred revenue (0.1 ) (5.6 ) (3.5 ) — (9.2 ) Income taxes receivable and payable (0.3 ) (0.1 ) 0.7 — 0.3 Other long-term liabilities 0.2 (0.6 ) (1.2 ) — (1.6 ) Other, net 1.4 — (0.8 ) — 0.6 Net cash provided by (used in) operating activities (177.5 ) 221.1 (3.2 ) — 40.4 Investing Activities Capital expenditures (3.9 ) (14.4 ) (6.0 ) — (24.3 ) Restricted cash — — 1.5 — 1.5 Capital contribution to subsidiary (0.2 ) — — 0.2 — Intercompany receivables and payables — (205.5 ) (9.2 ) 214.7 — Net cash provided by (used in) investing activities (4.1 ) (219.9 ) (13.7 ) 214.9 (22.8 ) Financing Activities Principal payments on borrowings (5.8 ) — — — (5.8 ) Intercompany receivables and payables 214.7 — — (214.7 ) — Capital contribution to subsidiary — — 0.2 (0.2 ) — Dividend paid to non-controlling interest — — (0.3 ) — (0.3 ) Intercompany loans (28.1 ) — 28.1 — — Net cash provided by (used in) financing activities 180.8 — 28.0 (214.9 ) (6.1 ) Effect of changes in exchange rates on cash and cash equivalents — — (1.1 ) — (1.1 ) Net increase (decrease) in cash and cash equivalents (0.8 ) 1.2 10.0 — 10.4 Cash and cash equivalents, beginning of period 31.0 1.6 18.6 — 51.2 Cash and cash equivalents, end of period $ 30.2 $ 2.8 $ 28.6 $ — $ 61.6 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 (In millions) Non- Parent Guarantor Guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated Operating Activities Net loss $ (50.4 ) $ 154.4 $ (40.5 ) $ (113.4 ) $ (49.9 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 0.5 50.9 20.3 — 71.7 Amortization of debt discount and financing costs 5.6 — 1.4 — 7.0 Recovery of accounts receivable loss provided for — (5.7 ) 0.2 — (5.5 ) Facility exit costs — 1.2 — — 1.2 Share-based compensation 1.4 — — — 1.4 Equity in (income) loss of subsidiaries (111.5 ) (1.9 ) — 113.4 — Deferred income taxes 0.3 1.9 (0.7 ) — 1.5 Net change in assets and liabilities: Restricted cash 1.7 0.8 1.6 — 4.1 Receivables (0.8 ) 1.6 7.9 — 8.7 Receivables from related parties (12.8 ) 4.0 12.8 — 4.0 Profit-sharing receivables from insurance carriers — 4.3 — — 4.3 Prepaid commissions — 1.3 (0.1 ) — 1.2 Other current assets (36.4 ) 17.1 0.5 — (18.8 ) Contract rights and list fees — (0.4 ) — — (0.4 ) Other non-current assets 0.1 (13.1 ) (0.3 ) — (13.3 ) Accounts payable and accrued expenses 20.0 3.3 (31.1 ) — (7.8 ) Payables to related parties (1.7 ) 0.9 — — (0.8 ) Deferred revenue 0.4 (7.0 ) 0.3 — (6.3 ) Income taxes receivable and payable (0.4 ) — (0.1 ) — (0.5 ) Other long-term liabilities 0.1 (6.5 ) 0.7 — (5.7 ) Other, net 1.3 (0.8 ) 2.7 — 3.2 Net cash used in operating activities (182.6 ) 206.3 (24.4 ) — (0.7 ) Investing Activities Capital expenditures 0.5 (11.2 ) (12.6 ) — (23.3 ) Restricted cash — — (1.1 ) — (1.1 ) Proceeds from sale of an investment — — 1.5 — 1.5 Intercompany receivables and payables — (193.9 ) — 193.9 — Net cash used in investing activities 0.5 (205.1 ) (12.2 ) 193.9 (22.9 ) Financing Activities Borrowings under revolving credit facility, net 61.0 — — — 61.0 Principal payments on borrowings (5.8 ) (0.8 ) — — (6.6 ) Receivables from and payables to parent company (1.9 ) — — — (1.9 ) Intercompany receivables and payables 195.6 — (1.7 ) (193.9 ) — Capital contribution to subsidiary (0.1 ) — 0.1 — — Intercompany loan (45.8 ) — 45.8 — — Net cash provided by financing activities 203.0 (0.8 ) 44.2 (193.9 ) 52.5 Effect of changes in exchange rates on cash and cash equivalents — — (1.2 ) — (1.2 ) Net increase in cash and cash equivalents 20.9 0.4 6.4 — 27.7 Cash and cash equivalents, beginning of period 7.8 2.5 17.7 — 28.0 Cash and cash equivalents, end of period $ 28.7 $ 2.9 $ 24.1 $ −− $ 55.7 |
Basis of Presentation and Bus26
Basis of Presentation and Business Description - Additional Information (Details) $ in Millions | Jan. 02, 2016Segment | Dec. 31, 2015USD ($) | Oct. 17, 2005USD ($) |
Basis Of Presentation And Business Description [Line Items] | |||
Number of operating segments | Segment | 4 | ||
Reduction of other noncurrent assets and long-term debt | $ 15.1 | ||
Cendant Marketing Services Division | |||
Basis Of Presentation And Business Description [Line Items] | |||
Sale pursuant to a purchase agreement | $ 1,800 |
Intangible Assets and Goodwil27
Intangible Assets and Goodwill - Schedule of Amortizable Intangible Assets (Details) - Other intangibles, net - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 1,710.9 | $ 1,714.7 |
Accumulated Amortization | (1,665.3) | (1,659.7) |
Net Carrying Amount | 45.6 | 55 |
Member relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 934.4 | 936.9 |
Accumulated Amortization | (932) | (933.8) |
Net Carrying Amount | 2.4 | 3.1 |
Affinity relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 638.3 | 639.3 |
Accumulated Amortization | (604) | (598.6) |
Net Carrying Amount | 34.3 | 40.7 |
Proprietary databases and systems | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 59.7 | 59.7 |
Accumulated Amortization | (58) | (57.7) |
Net Carrying Amount | 1.7 | 2 |
Trademarks and trade names | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 28.4 | 28.7 |
Accumulated Amortization | (21.5) | (20.8) |
Net Carrying Amount | 6.9 | 7.9 |
Patents and technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 47.6 | 47.6 |
Accumulated Amortization | (47.4) | (46.5) |
Net Carrying Amount | 0.2 | 1.1 |
Covenants not to compete | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2.5 | 2.5 |
Accumulated Amortization | (2.4) | (2.3) |
Net Carrying Amount | $ 0.1 | $ 0.2 |
Intangible Assets and Goodwil28
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | |
Finite Lived Intangible Assets [Line Items] | |||
Decrease in intangible assets | $ 3.7 | ||
Decrease in accumulated amortization | 3.7 | ||
Goodwill, gross | $ 654.7 | 651.2 | $ 654.7 |
Accumulated impairment loss | $ 429 | 429 | $ 429 |
Fair value in excess of carrying value | 25.00% | 25.00% | |
Goodwill impairment loss | $ 89.6 | ||
Minimum | |||
Finite Lived Intangible Assets [Line Items] | |||
Goodwill long-term growth rate | 0.00% | ||
Maximum | |||
Finite Lived Intangible Assets [Line Items] | |||
Goodwill long-term growth rate | 2.00% | ||
Global loyalty products | 2006 Recognition Period | |||
Finite Lived Intangible Assets [Line Items] | |||
Accumulated impairment loss | $ 15.5 | 15.5 | 15.5 |
Legacy Membership and Package | |||
Finite Lived Intangible Assets [Line Items] | |||
Goodwill impairment loss | 89.6 | ||
Legacy Membership and Package | 2014 Recognition Period | |||
Finite Lived Intangible Assets [Line Items] | |||
Accumulated impairment loss | 292.4 | 292.4 | 292.4 |
Legacy Membership and Package | 2015 Recognition Period | |||
Finite Lived Intangible Assets [Line Items] | |||
Accumulated impairment loss | $ 89.6 | 89.6 | $ 89.6 |
Impairment of goodwill and other long-lived assets | |||
Finite Lived Intangible Assets [Line Items] | |||
Minimum discount rates | 10.50% | 10.50% | |
Maximum discount rates | 14.50% | 14.50% | |
Membership products | |||
Finite Lived Intangible Assets [Line Items] | |||
Goodwill long-term growth rate | 0.00% | ||
Discount rate | 13.50% | ||
Goodwill impairment loss | $ 89.6 | ||
Prospectiv | Legacy Membership and Package | 2012 Recognition Period | |||
Finite Lived Intangible Assets [Line Items] | |||
Accumulated impairment loss | $ 31.5 | 31.5 | $ 31.5 |
Other intangibles, net | |||
Finite Lived Intangible Assets [Line Items] | |||
Expected amortization expense in 2016 | 12.5 | ||
Expected amortization expense in 2017 | 8.3 | ||
Expected amortization expense in 2018 | 7.4 | ||
Expected amortization expense in 2019 | 6.2 | ||
Expected amortization expense in 2020 | $ 5.7 |
Intangible Assets and Goodwil29
Intangible Assets and Goodwill - Schedule of Amortization Expense Relating to Intangible Assets (Details) - Other intangibles, net - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | $ 3.2 | $ 12 | $ 9.5 | $ 36.9 |
Member relationships | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | 0.2 | 1.4 | 0.7 | 3.4 |
Affinity relationships | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | 2.2 | 9.5 | 6.6 | 29.2 |
Proprietary databases and systems | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | 0.1 | 0.1 | 0.3 | 0.3 |
Trademarks and trade names | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | 0.3 | 0.5 | 0.9 | 1.8 |
Patents and technology | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | 0.3 | 0.4 | 0.9 | 2 |
Covenants not to compete | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expenses | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.2 |
Intangible Assets and Goodwil30
Intangible Assets and Goodwill - Schedule of Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | $ 225.8 | $ 322.2 |
Acquisition | (0.2) | |
Impairment | (89.6) | |
Currency Translation | (3.6) | (6.6) |
Goodwill, Ending Balance | 222.2 | 225.8 |
Global Loyalty | ||
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | 105.1 | 106.2 |
Acquisition | (0.2) | |
Currency Translation | 0.2 | (0.9) |
Goodwill, Ending Balance | 105.3 | 105.1 |
Global Customer Engagement | ||
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | 62.4 | 68.1 |
Currency Translation | (3.8) | (5.7) |
Goodwill, Ending Balance | 58.6 | 62.4 |
Insurance Solutions | ||
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | 58.3 | 58.3 |
Goodwill, Ending Balance | $ 58.3 | 58.3 |
Legacy Membership and Package | ||
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | 89.6 | |
Impairment | $ (89.6) |
Contract Rights and List Fees31
Contract Rights and List Fees, Net - Components of Contract Rights and List Fees (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Contract rights | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 50.1 | $ 56.5 |
Accumulated Amortization | (50.1) | (56.4) |
Net Carrying Amount | 0.1 | |
List fees | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 60 | 57 |
Accumulated Amortization | (44.1) | (40.5) |
Net Carrying Amount | 15.9 | 16.5 |
Contract rights and list fees, net | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 110.1 | 113.5 |
Accumulated Amortization | (94.2) | (96.9) |
Net Carrying Amount | $ 15.9 | $ 16.6 |
Contract Rights and List Fees32
Contract Rights and List Fees, Net - Additional Information (Details) - Contract rights and list fees, net - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 1,300,000 | $ 1,300,000 | $ 3,800,000 | $ 4,000,000 |
Expected amortization expense in 2016 | 4,900,000 | 4,900,000 | ||
Expected amortization expense in 2017 | 3,900,000 | 3,900,000 | ||
Expected amortization expense in 2018 | 3,200,000 | 3,200,000 | ||
Expected amortization expense in 2019 | 2,500,000 | 2,500,000 | ||
Expected amortization expense in 2020 | 2,000,000 | 2,000,000 | ||
Marketing expense | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense | 1,200,000 | 1,300,000 | 3,600,000 | 3,800,000 |
Depreciation and amortization expense | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 100,000 | $ 200,000 | $ 200,000 | |
Depreciation and amortization expense | Maximum | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Amortization expense | $ 100,000 |
Long-Term Debt - Components of
Long-Term Debt - Components of Long-Term Debt (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | May 20, 2014 | |
Debt Instrument [Line Items] | |||
Adjustment to carrying value of debt | $ 71.6 | $ 97.8 | |
Total debt | 1,863.2 | 1,891.3 | |
Less: current portion of long-term debt | (7.8) | (7.8) | |
Less: unamortized deferred financing costs | (10.6) | (15.1) | |
Long-term debt | 1,844.8 | 1,868.4 | |
First lien term loan due 2018 | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | 755.6 | 761.4 | $ 775 |
Second lien term loan due 2018 | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | 425 | 425 | $ 377.9 |
7.875% senior notes due 2018 | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | 474.5 | 474.4 | |
7.5 % Cash/PIK senior notes due 2018 | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | 113.9 | 110 | |
13.50% senior subordinated notes due 2018 | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | $ 22.6 | 22.6 | |
Capital lease obligations | |||
Debt Instrument [Line Items] | |||
Carrying value of debt | $ 0.1 |
Long-Term Debt - Components o34
Long-Term Debt - Components of Long-Term Debt (Parenthetical) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 12, 2013 | Nov. 19, 2010 |
7.875% senior notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate on notes | 7.875% | 7.875% | 7.875% | |
Debt Instruments, unamortized discount | $ 0.5 | $ 0.6 | ||
Effective interest rate on notes | 8.31% | 8.31% | ||
7.5 % Cash/PIK senior notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate on notes | 7.50% | 7.50% | ||
Effective interest rate on notes | 7.39% | 7.39% | ||
13.50% senior subordinated notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate on notes | 13.50% | 13.50% | 13.50% | |
Effective interest rate on notes | 14.31% | 14.31% |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | May 20, 2014 | Dec. 12, 2013 | Nov. 20, 2012 | Apr. 09, 2010 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 |
First lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount on term loans | $ 775,000,000 | $ 755,600,000 | $ 755,600,000 | $ 761,400,000 | |||||
Debt instrument amortization percentage | 1.00% | ||||||||
Interest rate under line of credit facility | 6.75% | 6.75% | 6.75% | 6.75% | |||||
Second lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount on term loans | 377,900,000 | $ 425,000,000 | $ 425,000,000 | $ 425,000,000 | |||||
Interest rate under line of credit facility | 8.50% | 8.50% | 8.50% | 8.50% | |||||
Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Secured credit facility with lenders | 80,000,000 | ||||||||
Maturity date of term loan facility | Jan. 29, 2018 | ||||||||
Reduction amount of revolving credit facility | (85,000,000) | ||||||||
Revolving Credit Facility | Option Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 4.25% | ||||||||
Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Secured credit facility with lenders | $ 1,000,000,000 | ||||||||
Amended Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Incremental percentage on interest rate margins | 0.25% | ||||||||
Amended Affinion Credit Facility | Option One | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 5.25% | ||||||||
Amended Affinion Credit Facility | First lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity date of term loan facility | Apr. 30, 2018 | ||||||||
Amended Affinion Credit Facility | Second lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Maturity date of term loan facility | Oct. 31, 2018 | ||||||||
Interest rate under line of credit facility | 1.50% | ||||||||
Amended Affinion Credit Facility | Second Lien Term Loan Including Additional Borrowing Due Twenty Eighteen | |||||||||
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount on term loans | $ 425,000,000 | ||||||||
Amended Affinion Credit Facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 7.80% | 7.20% | 7.80% | 7.20% | |||||
LIBOR Loans | Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 3.50% | ||||||||
LIBOR Loans | Amended Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 5.25% | 5.00% | |||||||
LIBOR Loans | Amended Affinion Credit Facility | Option One | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 7.00% | ||||||||
LIBOR Loans | Amended Affinion Credit Facility | First lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 1.50% | ||||||||
LIBOR Loans | Amended Affinion Credit Facility | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 1.50% | ||||||||
Maximum Required Ratio For Financial Maintenance Covenants | 4.25% | 4.25% | |||||||
Base Rate | Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 2.50% | ||||||||
Base Rate | Amended Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 4.25% | 4.00% | |||||||
Base Rate | Amended Affinion Credit Facility | Option Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 6.00% | ||||||||
Federal Funds Effective Rate | First lien term loan due 2018 | Option Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 0.50% | ||||||||
Federal Funds Effective Rate | Second lien term loan due 2018 | Option Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 0.50% | ||||||||
Federal Funds Effective Rate | Revolving Credit Facility | Option Two | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest margin of loans | 0.50% | ||||||||
Alternate Base Rate | First lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 2.50% | ||||||||
Alternate Base Rate | Second lien term loan due 2018 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 2.50% | ||||||||
Alternate Base Rate | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate under line of credit facility | 2.50% | ||||||||
Eleven Point Five Percent Senior Notes Due Two Thousand Fifteen | Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate of notes | 11.50% | 11.50% | |||||||
Eleven Point Six Two Five Percent Senior Notes | Affinion Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate of notes | 11.625% | 11.625% |
Long-Term Debt - Additional I36
Long-Term Debt - Additional Information 1 (Details) | Nov. 09, 2015USD ($)shares$ / shares | Dec. 12, 2013USD ($) | Sep. 30, 2016USD ($)$ / shares | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2013USD ($) | Nov. 19, 2010USD ($) |
Debt Instrument [Line Items] | |||||||
Letters of credit issued | $ 12,100,000 | ||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |||||
Adjustment to carrying value of debt | $ 71,600,000 | $ 97,800,000 | |||||
2015 Exchange Offers and 2015 Rights Offering | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument aggregate carrying amount | $ 728,500,000 | ||||||
Fair value of equity issued in the debt exchange and rights offering | 107,800,000 | ||||||
Gain on extinguishment of debt | 115,800,000 | ||||||
Adjustment to carrying value of debt | (103,300,000) | ||||||
Affinion Holdings and Affinion International Holdings Limited | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of notes | $ 110,000,000 | ||||||
Debt conversion, shares issued | shares | 2,483,333 | ||||||
Debt conversion, price per unit | $ / shares | $ 1,000 | ||||||
Affinion International | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 7.50% | ||||||
Aggregate principal amount of notes | $ 1,000 | ||||||
Proceeds from rights offering | $ 110,000,000 | ||||||
Cash interest percentage | 3.50% | ||||||
PIK interest percentage | 4.00% | ||||||
Maturity date of notes | Jul. 30, 2018 | ||||||
Affinion International | Maximum | Limited Warrants | |||||||
Debt Instrument [Line Items] | |||||||
Debt conversion, shares issued | shares | 462,266 | ||||||
Affinion International | New Common Stock | |||||||
Debt Instrument [Line Items] | |||||||
Debt conversion, shares issued | shares | 2,021,042 | ||||||
Affinion Investment | |||||||
Debt Instrument [Line Items] | |||||||
Debt conversion, shares issued | shares | 22.57576 | ||||||
2013 senior subordinated notes | |||||||
Debt Instrument [Line Items] | |||||||
Maturity date of notes | Aug. 15, 2018 | ||||||
2013 senior subordinated notes | 13.75% senior secured PIK | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 13.75% | ||||||
2013 senior subordinated notes | 14.50% toggle notes due 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 14.50% | ||||||
2013 senior subordinated notes | 13.50% senior subordinated notes due 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 13.50% | ||||||
2013 senior subordinated notes | Affinion Holdings | |||||||
Debt Instrument [Line Items] | |||||||
Common stock, par value | $ / shares | $ 0.01 | ||||||
Aggregate principal amount of notes | $ 1,000 | ||||||
Principal amount of notes exchanged | $ 247,400,000 | ||||||
Debt conversion, shares issued | shares | 7.15066 | ||||||
2013 senior subordinated notes | Affinion Holdings | New Common Stock | |||||||
Debt Instrument [Line Items] | |||||||
Debt conversion, shares issued | shares | 1,769,104 | ||||||
2013 senior subordinated notes | Affinion Holdings and Affinion International Holdings Limited | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of notes | $ 110,000,000 | ||||||
Principal amount of notes exchanged | $ 110,000,000 | ||||||
2013 senior subordinated notes | Affinion Holdings and Affinion International Holdings Limited | 7.5 % Cash/PIK senior notes due 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 7.50% | ||||||
2013 senior subordinated notes | Affinion Holdings and Affinion International Holdings Limited | New Common Stock | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Maximum amount of shares note holders could receive on exchange | shares | 2,483,333 | ||||||
2013 senior subordinated notes | Affinion Investment | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of notes | $ 1,000 | ||||||
Principal amount of notes exchanged | $ 337,300,000 | ||||||
Debt conversion, shares issued | shares | 15.52274 | ||||||
2013 senior subordinated notes | Affinion Investment | New Common Stock | |||||||
Debt Instrument [Line Items] | |||||||
Debt conversion, shares issued | shares | 5,236,517 | ||||||
13.50% senior subordinated notes due 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 13.50% | 13.50% | 13.50% | ||||
Aggregate principal amount of notes | $ 360,000,000 | $ 360,000,000 | |||||
Debt instrument, payment terms | The Investments senior subordinated notes bear interest at 13.50% per annum, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2014. The Investments senior subordinated notes will mature on August 15, 2018. | ||||||
Third party beneficiaries | 25.00% | ||||||
13.50% senior subordinated notes due 2018 | At Prior to Consent Period | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of bonds would be received for the tender of each bond | $ 1,020 | ||||||
13.50% senior subordinated notes due 2018 | Scenario One | |||||||
Debt Instrument [Line Items] | |||||||
Percentage of Senior Subordinate Notes redeemable | 35.00% | ||||||
Debt Instrument, Redemption Price, Percentage | 113.50% | ||||||
13.50% senior subordinated notes due 2018 | Scenario Two | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | ||||||
13.50% Senior subordinated notes due 2015 | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal amount of notes | 352,900,000 | $ 1,000 | |||||
13.50% Senior subordinated notes due 2015 | Subsidiary of Common Parent | After Consent Period | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of bonds would be received for the tender of each bond | $ 1,000 | ||||||
7.875% senior notes due 2018 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate of notes | 7.875% | 7.875% | 7.875% | ||||
Aggregate principal amount of notes | $ 475,000,000 | ||||||
Maturity date of notes | Dec. 15, 2018 | ||||||
Affinion Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Available for borrowings under revolving credit facility | $ 69,200,000 | ||||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding borrowings | 0 | $ 0 | |||||
Borrowings under revolving credit facility | 107,000,000 | $ 81,000,000 | |||||
Repayments under revolving credit facility | 107,000,000 | $ 20,000,000 | |||||
Letters of credit issued | $ 10,800,000 | ||||||
Maturity date of notes | Jan. 29, 2018 | ||||||
First Lien And Second Lien Term Loans | Two Thousand Ten Senior Notes And International Notes | |||||||
Debt Instrument [Line Items] | |||||||
Adjustment to carrying value of debt | $ 103,300,000 | ||||||
Increases the carrying value of long term debt | $ 71,600,000 | $ 97,800,000 |
Long-Term Debt - Summary of 201
Long-Term Debt - Summary of 2015 Exchange Offers and 2015 Rights Offering Impact on Recognition of Debt (Details) - USD ($) $ in Millions | Nov. 09, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Adjustment to carrying value of debt | $ 71.6 | $ 97.8 | |
2015 Exchange Offers and 2015 Rights Offering | |||
Debt Instrument [Line Items] | |||
Reduction of carrying value of debt exchanged | $ (337.3) | ||
Reduction of accrued interest associated with debt exchanged | (10.6) | ||
Write-off of debt discount and deferred financing costs, plus professional fees | 21 | ||
Fair value of equity issued in the debt exchange and rights offering | 107.8 | ||
Gain recorded as noted above | 115.8 | ||
Adjustment to carrying value of debt | $ (103.3) |
Long-Term Debt - Additional I38
Long-Term Debt - Additional Information 2 (Details) - USD ($) | Apr. 26, 2006 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | Dec. 12, 2013 |
Debt Instrument [Line Items] | |||||
Cash dividends paid | $ 0 | $ 0 | |||
Bridge Loan | |||||
Debt Instrument [Line Items] | |||||
Repayments of Debt | $ 349,500,000 | ||||
Outstanding borrowings | 383,600,000 | ||||
11 1/2% senior subordinated notes due 2015 | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount of notes | $ 355,500,000 | $ 352,900,000 | |||
Interest rate of notes | 11.50% | ||||
Gross proceeds from issuance of debt | $ 350,500,000 | ||||
Maturity date of notes | Oct. 15, 2015 | ||||
13.50% senior subordinated notes due 2018 | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount of notes | $ 360,000,000 | $ 360,000,000 | |||
Interest rate of notes | 13.50% | 13.50% | 13.50% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Taxes [Line Items] | ||||
Effective income tax rates | 18.60% | (16.40%) | 24.10% | (9.20%) |
Income (Loss) before income taxes and non-controlling interest | $ 9.5 | $ (6.9) | $ 23.8 | $ (45.7) |
Income tax expense | 1.7 | 1.1 | $ 5.7 | 4.2 |
Statutory U.S federal income tax rate | 35.00% | |||
Decrease in gross unrecognized tax benefits as a result of tax positions taken during the current period | $ 1.5 | |||
Maximum | ||||
Income Taxes [Line Items] | ||||
Interest in income tax expense related to uncertain tax positions | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Oct. 24, 2016 | Oct. 27, 2015 | Nov. 30, 2015 | Sep. 30, 2016 |
Commitments And Contingencies [Line Items] | ||||
Letters of credit issued | $ 12,100 | |||
Surety Bond | ||||
Commitments And Contingencies [Line Items] | ||||
Surety bonds outstanding | 10,800 | |||
CFPB | ||||
Commitments And Contingencies [Line Items] | ||||
Litigation settlement | $ 1,900 | |||
Payment to CFPB's civil penalty fund | $ 1,900 | |||
Consumer restitution payment related to billing and retention practices | $ 6,750 | |||
Bank of America and FIA Card Services | ||||
Commitments And Contingencies [Line Items] | ||||
Monetary damages awarded | $ 4,300 | |||
Bank of America and FIA Card Services | Subsequent Event | ||||
Commitments And Contingencies [Line Items] | ||||
Monetary damages awarded | $ 4,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) | Mar. 09, 2016shares | Nov. 09, 2015$ / shares | Mar. 16, 2015Installments | Mar. 28, 2014$ / sharesshares | Oct. 17, 2005shares | Mar. 31, 2014$ / shares | Nov. 30, 2007shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)shares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)shares | Dec. 31, 2015$ / shares | Apr. 01, 2014Installments |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||||
Exercise price of the outstanding options vested | $ / shares | $ 151.57 | ||||||||||||
Outstanding options granted to employees have a weighted average contractual life | 7 years 6 months | ||||||||||||
Number of stock options granted | 18,000 | 860,000 | |||||||||||
Vesting period | 4 years | ||||||||||||
Exercise price of the options | $ / shares | $ 13.97 | $ 13.97 | |||||||||||
CRAs | $ | $ 2,000,000 | ||||||||||||
Board of Directors | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
Outstanding options granted to employees have a weighted average contractual life | 4 years 6 months | ||||||||||||
Employee Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Stock-based compensation expense | $ | $ 500,000 | $ 200,000 | $ 1,100,000 | $ 1,100,000 | |||||||||
Stock-based compensation, nonvested awards, total compensation cost not yet recognized | $ | $ 6,900,000 | $ 6,900,000 | |||||||||||
Weighted average period of recognition | 1 year 10 months 24 days | ||||||||||||
Modified Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Range of exercise price, Minimum | $ / shares | $ 1.14 | ||||||||||||
Modified Stock Option | Board of Directors | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Number of stock options granted | 200,000 | 0 | 0 | 0 | 0 | ||||||||
Range of exercise price, Minimum | $ / shares | $ 1.14 | ||||||||||||
RSU | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Stock-based compensation expense | $ | $ 100,000 | $ 100,000 | $ 300,000 | $ 300,000 | |||||||||
Weighted average period of recognition | 3 months 18 days | ||||||||||||
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized | $ | 100,000 | $ 100,000 | |||||||||||
2014 Performance Program | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Range of exercise price, Minimum | $ / shares | $ 1.14 | ||||||||||||
Stock-based compensation expense | $ | 0 | ||||||||||||
Percentage of award value | 50.00% | ||||||||||||
Number of installments vesting | Installments | 3 | ||||||||||||
Award value granted under Performance Program | $ | 9,600,000 | 9,600,000 | |||||||||||
Stock-based compensation expense reduction | $ | 2,200,000 | ||||||||||||
Common Stock, Value | $ | 1,100,000 | ||||||||||||
2014 Performance Program | Tranche A | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Vesting period | Mar. 15, 2015 | ||||||||||||
2014 Performance Program | Tranche B | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Vesting period | Mar. 15, 2016 | ||||||||||||
2014 Performance Program | Tranche C | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Vesting period | Mar. 15, 2017 | ||||||||||||
Retention Program | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Number of installments vesting | Installments | 2 | ||||||||||||
Retention Program | Tranche A | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Vesting period | Mar. 15, 2016 | ||||||||||||
Retention Program | Tranche B | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Vesting period | Mar. 15, 2017 | ||||||||||||
2015 Retention Program | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Stock-based compensation expense | $ | 900,000 | 1,000,000 | 2,700,000 | 2,200,000 | |||||||||
Award value granted under Performance Program | $ | 7,100,000 | 7,100,000 | |||||||||||
Common Stock, Value | $ | 500,000 | $ 500,000 | 1,400,000 | $ 1,100,000 | |||||||||
Aggregate award forfeiture value under Performance Program | $ | $ 1,300,000 | $ 1,300,000 | |||||||||||
2005 Plan | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Authorized shares granted | 4,900,000 | ||||||||||||
Number of stock options granted | 0 | 0 | 0 | 0 | |||||||||
2005 Plan | Employee Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
2005 Plan | Employee Stock Option | Tranche A | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
Vesting period | 5 years | ||||||||||||
2005 Plan | Employee Stock Option | Tranche B | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
Vesting period | 8 years | ||||||||||||
2005 Plan | Employee Stock Option | Tranche C | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
Vesting period | 8 years | ||||||||||||
2005 Plan | Modified Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Number of option outstanding | 1,900,000 | ||||||||||||
2007 Plan | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Authorized shares granted | 10,000,000 | ||||||||||||
Number of stock options granted | 0 | 0 | 0 | 0 | |||||||||
2007 Plan | Employee Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | 10 years | |||||||||||
Vesting period | 4 years | ||||||||||||
2007 Plan | Modified Stock Option | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Number of option outstanding | 2,400,000 | ||||||||||||
2007 Plan | RSU | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum vesting date for Restricted Stock Units | Dec. 31, 2014 | ||||||||||||
Value per share of parent company | $ / shares | $ 8.16 | $ 8.16 | |||||||||||
Webloyalty 2005 Plan | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Maximum authorized period for grant of shares | 10 years | ||||||||||||
2015 Equity Incentive Plan | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Percentage of common stock reserved for issuance | 10.00% | ||||||||||||
Number of stock options granted | 859,500 | 18,000 | |||||||||||
Number of option outstanding | 859,500 | 859,500 | |||||||||||
Common Class C | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Common stock, par value | $ / shares | $ 0.01 | ||||||||||||
Outstanding options | 2,700 | 2,700 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 6,466 | ||||||||||||
Common Class D | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Common stock, par value | $ / shares | 0.01 | ||||||||||||
Outstanding options | 2,900 | 2,900 | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 6,809 | ||||||||||||
Class A Common Stock | |||||||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||||||
Common stock, par value | $ / shares | $ 0.01 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Granted to Employees (Details) | Oct. 17, 2005 | Nov. 30, 2007 | Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Initial option term | 10 years | |||
Vesting period | 4 years | |||
Employee Stock Option | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Initial option term | 10 years | |||
Employee Stock Option | 2007 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting | Ratably over 4 years | |||
Initial option term | 10 years | 10 years | ||
Vesting period | 4 years | |||
Employee Stock Option | Tranche A | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting | [1] | Ratably over 5 years | ||
Initial option term | 10 years | |||
Vesting period | 5 years | |||
Employee Stock Option | Tranche B | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting | [2] | 100% after 8 years | ||
Initial option term | 10 years | |||
Vesting period | 8 years | |||
Vesting, rate | 100.00% | |||
Employee Stock Option | Tranche C | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Vesting | [2] | 100% after 8 years | ||
Initial option term | 10 years | |||
Vesting period | 8 years | |||
Vesting, rate | 100.00% | |||
[1] | In the event of a sale of the Company, vesting for tranche A occurs 18 months after the date of sale. | |||
[2] | Tranche B and C vesting would be accelerated upon specified realized returns to Apollo. |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Fair Value Option Award (Details) - 2016 Grants - Employee Stock Option | 9 Months Ended |
Sep. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Expected volatility | 75.00% |
Expected life (in years) | 6 years 3 months 18 days |
Risk-free interest rate | 1.64% |
Expected dividends | 0.00% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Option Activity (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Granted | 18,000 | 860,000 | ||
Weighted average remaining contractual term (in years) | 7 years 6 months | |||
2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Granted | 0 | 0 | 0 | 0 |
2015 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Outstanding options, beginning of year | 0 | |||
Granted | 878,000 | |||
Exercised | 0 | |||
Forfeited or expired | 0 | |||
Outstanding options, end of period | 878,000 | 878,000 | ||
Vested or expected to vest at September 30, 2016 | 878,000 | 878,000 | ||
Exercisable options at September 30, 2016 | 0 | 0 | ||
Weighted average remaining contractual term (in years) | 9 years 4 months 24 days | |||
Weighted average grant date fair value per option granted in 2016 | $ 9.35 | |||
Weighted average exercise price of exercisable options at September 30, 2016 | $ 0 | 0 | ||
Weighted average exercise price of outstanding options at September 30, 2016 | $ 13.97 | $ 13.97 | ||
Class C/D Common Stock | Grants to Board of Directors | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Outstanding options, beginning of year | 2,000 | |||
Granted | 0 | |||
Exercised | 0 | |||
Outstanding options, end of period | 2,000 | 2,000 | ||
Vested or expected to vest at September 30, 2016 | 2,000 | 2,000 | ||
Exercisable options at September 30, 2016 | 2,000 | 2,000 | ||
Weighted average grant date fair value per option granted in 2016 | $ 0 | |||
Weighted average exercise price of exercisable options at September 30, 2016 | $ 0 | 0 | ||
Weighted average exercise price of outstanding options at September 30, 2016 | $ 0 | $ 0 | ||
Class C/D Common Stock | Tranche A | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Outstanding options, beginning of year | 7,000 | |||
Granted | 0 | |||
Exercised | 0 | |||
Forfeited or expired | (5,000) | |||
Outstanding options, end of period | 2,000 | 2,000 | ||
Vested or expected to vest at September 30, 2016 | 2,000 | 2,000 | ||
Exercisable options at September 30, 2016 | 2,000 | 2,000 | ||
Weighted average grant date fair value per option granted in 2016 | $ 0 | |||
Weighted average exercise price of exercisable options at September 30, 2016 | $ 0 | 0 | ||
Weighted average exercise price of outstanding options at September 30, 2016 | $ 0 | $ 0 | ||
Class C/D Common Stock | Tranche B | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Outstanding options, beginning of year | 3,000 | |||
Granted | 0 | |||
Exercised | 0 | |||
Forfeited or expired | (2,000) | |||
Outstanding options, end of period | 1,000 | 1,000 | ||
Vested or expected to vest at September 30, 2016 | 1,000 | 1,000 | ||
Exercisable options at September 30, 2016 | 1,000 | 1,000 | ||
Weighted average grant date fair value per option granted in 2016 | $ 0 | |||
Weighted average exercise price of exercisable options at September 30, 2016 | $ 0 | 0 | ||
Weighted average exercise price of outstanding options at September 30, 2016 | $ 0 | $ 0 | ||
Class C/D Common Stock | Tranche C | 2005 Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Outstanding options, beginning of year | 3,000 | |||
Granted | 0 | |||
Exercised | 0 | |||
Forfeited or expired | (2,000) | |||
Outstanding options, end of period | 1,000 | 1,000 | ||
Vested or expected to vest at September 30, 2016 | 1,000 | 1,000 | ||
Exercisable options at September 30, 2016 | 1,000 | 1,000 | ||
Weighted average grant date fair value per option granted in 2016 | $ 0 | |||
Weighted average exercise price of exercisable options at September 30, 2016 | $ 0 | 0 | ||
Weighted average exercise price of outstanding options at September 30, 2016 | $ 0 | $ 0 |
Stock-Based Compensation - Su45
Stock-Based Compensation - Summary of RSU Activity (Details) - RSU shares in Thousands | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
2007 Plan | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Outstanding restricted unvested units Beginning Balance, shares | 261 |
Number of Restricted Stock Units, Granted | 0 |
Number of Restricted Stock Units, Vested | (261) |
Number of Restricted Stock Units, Forfeited | 0 |
Weighted average remaining contractual term (in years) | 0 years |
Outstanding restricted unvested awards, Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 1.14 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 1.14 |
2015 Plan | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of Restricted Stock Units, Granted | 20 |
Number of Restricted Stock Units, Vested | 0 |
Number of Restricted Stock Units, Forfeited | 0 |
Outstanding restricted unvested units Ending Balance, shares | 20 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 13.97 |
Outstanding restricted unvested awards, Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 13.97 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | Jan. 28, 2010 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2011 | Dec. 31, 2015 | Nov. 13, 2015 | Nov. 09, 2015 | May 14, 2015 |
Related Party Transaction [Line Items] | ||||||||||
Cash proceeds from sale of investment | $ 1,500,000 | |||||||||
Loan to parent | $ 28,900,000 | $ 28,900,000 | $ 28,900,000 | $ 1,900,000 | $ 1,900,000 | |||||
Cendant Subsidiaries | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Aggregate amount of losses | 15,000,000 | |||||||||
Indemnification obligation, recovery limit | 275,100,000 | |||||||||
Cendant Subsidiaries | Minimum | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Indemnification obligation occurrence threshold | 100,000 | 100,000 | ||||||||
Cendant And Affinion | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Maximum amount of loss borne by company | $ 15,000,000 | |||||||||
Apollo | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Period of advisory services | 12 years | |||||||||
Beneficial economic interest | 5.00% | |||||||||
Annual Consulting fee | $ 2,000,000 | |||||||||
Apollo | General and Administrative Expense | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Expenses recognized during period | $ 0 | $ 700,000 | 0 | 2,000,000 | $ 600,000 | |||||
Apollo | Net Revenue | Connexions SM Ventures, LLC | Fulfillment Services, Merchandise and Gift Cards | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Revenue recognized, net of the cost | 100,000 | 900,000 | ||||||||
Apollo | Consulting Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Annual Consulting fee | 2,000,000 | |||||||||
Contractual obligation | $ 0 | |||||||||
Apollo | Amended and Restated Consulting Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Annual Consulting fee | $ 2,600,000 | |||||||||
Novitex Enterprise Solutions | General and Administrative Expense | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Expenses recognized during period | 2,500,000 | 3,500,000 | ||||||||
Prospectiv Direct, LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Cash proceeds from sale of investment | 100,000 | |||||||||
Share of common stock valued | 200,000 | 200,000 | ||||||||
Receivable from buyer | 700,000 | 700,000 | ||||||||
Estimated fair value of the receivable due to the company | 400,000 | 400,000 | ||||||||
Gain on sale of investments | 700,000 | |||||||||
Royalty revenue | 200,000 | |||||||||
Alclear | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Revenue recognized, net of the cost | $ 100,000 | 300,000 | ||||||||
Cost method investment, percentage | 5.00% | |||||||||
Revised cost method investment, percentage | 2.90% | |||||||||
Sale of ownership interest | 1,500,000 | |||||||||
Gain on sale of ownership interest | $ 500,000 | |||||||||
Cost method investment, acquisition price | $ 1,000,000 | |||||||||
Agreement termination date | Apr. 1, 2016 | |||||||||
Trilegiant Corporation | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Consulting fees paid per month | $ 7,500 |
Financial Instruments, Deriva47
Financial Instruments, Derivatives and Fair Value Measures - Principal Cash Flows and Related Weighted-Average Interest Rates by Expected Maturity (Details) $ in Millions | Sep. 30, 2016USD ($) | |
Long-Term Debt Percentage Bearing Fixed Interest Rate | ||
Debt Instrument [Line Items] | ||
2,018 | $ 622.1 | |
Total | 622.1 | |
Fair Value At September 30, 2016 | $ 441.4 | |
Long-Term Debt Percentage Bearing Fixed Interest Rate | Year One | ||
Debt Instrument [Line Items] | ||
Average interest rate | 8.01% | |
Long-Term Debt Percentage Bearing Fixed Interest Rate | Year Two | ||
Debt Instrument [Line Items] | ||
Average interest rate | 8.01% | |
Long-Term Debt Percentage Bearing Fixed Interest Rate | Year Three | ||
Debt Instrument [Line Items] | ||
Average interest rate | 7.97% | |
Long-Term Debt Percentage Bearing Variable Interest Rate | ||
Debt Instrument [Line Items] | ||
2,016 | $ 1.9 | |
2,017 | 7.8 | |
2,018 | 1,170.9 | |
Total | 1,180.6 | |
Fair Value At September 30, 2016 | $ 1,052.8 | |
Long-Term Debt Percentage Bearing Variable Interest Rate | Year One | ||
Debt Instrument [Line Items] | ||
Average interest rate | 7.38% | [1] |
Long-Term Debt Percentage Bearing Variable Interest Rate | Year Two | ||
Debt Instrument [Line Items] | ||
Average interest rate | 7.38% | [1] |
Long-Term Debt Percentage Bearing Variable Interest Rate | Year Three | ||
Debt Instrument [Line Items] | ||
Average interest rate | 7.68% | [1] |
[1] | Average interest rate is based on rates in effect at September 30, 2016. |
Financial Instruments, Deriva48
Financial Instruments, Derivatives and Fair Value Measures - Additional Information (Details) - Foreign Exchange Forward € in Millions, £ in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016EUR (€) | Sep. 30, 2016GBP (£) | |
Derivative Instruments Gain Loss [Line Items] | ||||||
Derivative contract period | 30 days | |||||
Foreign currency contracts, realized gain (loss) | $ 0.3 | $ 0.7 | $ 2.2 | $ 3.4 | ||
Buy USD Sell EUR | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Notional amount of foreign currency derivative sale contracts | 11.2 | 11.2 | € 10 | |||
Buy USD Sell GBP | ||||||
Derivative Instruments Gain Loss [Line Items] | ||||||
Notional amount of foreign currency derivative sale contracts | $ 18 | $ 18 | £ 13.9 |
Financial Instruments, Deriva49
Financial Instruments, Derivatives and Fair Value Measures - Schedule of Fair Value Measured on Nonrecurring Basis (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Dec. 31, 2015 | Dec. 31, 2015 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Impairment | $ (89.6) | |
Membership Products | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Impairment | $ (89.6) | |
Fair Value, Measurements, Nonrecurring | Membership Products | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Impairment | $ (89.6) |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2016Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 238.1 | $ 291.3 | $ 737 | $ 888.6 |
Operating income loss before depreciation and amortization | 50.8 | 62.1 | 147.4 | 164.8 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 194.7 | 203.7 | 589.6 | 620.2 |
Operating income loss before depreciation and amortization | 54.4 | 49.4 | 157.4 | 141.1 |
Operating Segments | Global Loyalty | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 42.9 | 40.8 | 122.8 | 131.8 |
Operating income loss before depreciation and amortization | 14.8 | 14.5 | 41.2 | 45 |
Operating Segments | Global Customer Engagement | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 92.5 | 106.1 | 294.8 | 312.9 |
Operating income loss before depreciation and amortization | 17.2 | 16.8 | 54.9 | 40.8 |
Operating Segments | Insurance Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 59.3 | 56.8 | 172 | 175.5 |
Operating income loss before depreciation and amortization | 22.4 | 18.1 | 61.3 | 55.3 |
Operating Segments | Legacy Membership and Package | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 43.6 | 87.9 | 148.2 | 269.4 |
Operating income loss before depreciation and amortization | 8.2 | 32.3 | 32.7 | 71.2 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | (0.2) | (0.3) | (0.8) | (1) |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Operating income loss before depreciation and amortization | $ (11.8) | $ (19.6) | $ (42.7) | $ (47.5) |
Segment Information - Reconcili
Segment Information - Reconciliation of Segment EBITDA to Income from Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting [Abstract] | ||||
Operating income loss before depreciation and amortization | $ 50.8 | $ 62.1 | $ 147.4 | $ 164.8 |
Depreciation and amortization | (13.7) | (23.7) | (41.9) | (71.7) |
Income from operations | $ 37.1 | $ 38.4 | $ 105.5 | $ 93.1 |
Guarantor_Non-Guarantor Suppl53
Guarantor/Non-Guarantor Supplemental Financial Information - Additional Information (Details) | Sep. 30, 2016 |
Guarantor Subsidiaries | |
Condensed Financial Statements Captions [Line Items] | |
Percentage of ownership | 100.00% |
Guarantor_Non-Guarantor Suppl54
Guarantor/Non-Guarantor Supplemental Financial Information - Schedule of Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Nov. 13, 2015 | Sep. 30, 2015 | May 14, 2015 | Dec. 31, 2014 |
Condensed Balance Sheet Statements Captions [Line Items] | ||||||
Cash and cash equivalents | $ 61.6 | $ 51.2 | $ 55.7 | $ 28 | ||
Restricted cash | 26.9 | 29.2 | ||||
Receivables, net | 116.6 | 114 | ||||
Profit-sharing receivables from insurance carriers | 24.9 | 19.9 | ||||
Prepaid commissions | 30.1 | 38.4 | ||||
Other current assets | 73.8 | 85.6 | ||||
Total current assets | 333.9 | 338.3 | ||||
Non-current assets: | ||||||
Property and equipment, net | 108.3 | 119.5 | ||||
Goodwill | 222.2 | 225.8 | 322.2 | |||
Receivables from related parties | 28.9 | 28.9 | $ 1.9 | $ 1.9 | ||
Other non-current assets | 46.4 | 44.9 | ||||
Total assets | 801.2 | 829 | ||||
Current liabilities: | ||||||
Current portion of long-term debt | 7.8 | 7.8 | ||||
Accounts payable and accrued expenses | 332.8 | 346 | ||||
Payables to related parties | 14.7 | 10.3 | ||||
Deferred revenue | 61 | 69.3 | ||||
Income taxes payable | 3 | 2.4 | ||||
Total current liabilities | 419.3 | 435.8 | ||||
Long-term debt | 1,844.8 | 1,868.4 | ||||
Deferred income taxes | 39.2 | 35.9 | ||||
Deferred revenue | 5.5 | 7.7 | ||||
Other long-term liabilities | 26.3 | 27.1 | ||||
Total liabilities | 2,335.1 | 2,374.9 | ||||
Total Affinion Group, Inc. deficit | (1,534.8) | (1,546.6) | ||||
Non-controlling interest in subsidiary | 0.9 | 0.7 | ||||
Total deficit | (1,533.9) | (1,545.9) | (1,671.5) | (1,615.9) | ||
Total liabilities and deficit | 801.2 | 829 | ||||
Eliminations | ||||||
Condensed Balance Sheet Statements Captions [Line Items] | ||||||
Intercompany interest receivable | (0.4) | (2.3) | ||||
Total current assets | (0.4) | (2.3) | ||||
Non-current assets: | ||||||
Investment in subsidiaries | (2,526.1) | (2,315.4) | ||||
Intercompany loan receivable | (206.5) | (187.5) | ||||
Intercompany receivables | (2,355.9) | (2,150.4) | ||||
Total assets | (5,088.9) | (4,655.6) | ||||
Current liabilities: | ||||||
Intercompany interest payable | (0.4) | (2.3) | ||||
Total current liabilities | (0.4) | (2.3) | ||||
Intercompany loans payable | (206.5) | (187.5) | ||||
Intercompany payables | (2,355.9) | (2,150.4) | ||||
Total liabilities | (2,562.8) | (2,340.2) | ||||
Total Affinion Group, Inc. deficit | (2,526.1) | (2,315.4) | ||||
Total deficit | (2,526.1) | (2,315.4) | ||||
Total liabilities and deficit | (5,088.9) | (4,655.6) | ||||
Contract rights and list fees, net | ||||||
Non-current assets: | ||||||
Intangible assets, net | 15.9 | 16.6 | ||||
Other intangibles, net | ||||||
Non-current assets: | ||||||
Intangible assets, net | 45.6 | 55 | ||||
Parent Company | ||||||
Condensed Balance Sheet Statements Captions [Line Items] | ||||||
Cash and cash equivalents | 30.2 | 31 | 28.7 | 7.8 | ||
Receivables, net | 1.9 | 1.9 | ||||
Intercompany interest receivable | 1.2 | |||||
Other current assets | 21.5 | 20.4 | ||||
Total current assets | 53.6 | 54.5 | ||||
Non-current assets: | ||||||
Property and equipment, net | 7.1 | 3.6 | ||||
Receivables from related parties | 28.9 | 28.9 | ||||
Investment in subsidiaries | 2,381 | 2,199.4 | ||||
Intercompany loan receivable | 163.4 | 144.9 | ||||
Other non-current assets | 12.6 | (1.8) | ||||
Total assets | 2,646.6 | 2,429.5 | ||||
Current liabilities: | ||||||
Current portion of long-term debt | 7.8 | 7.7 | ||||
Accounts payable and accrued expenses | 81.1 | 87.6 | ||||
Payables to related parties | 14.7 | 10.3 | ||||
Intercompany interest payable | 0.4 | 1.1 | ||||
Deferred revenue | 0.1 | 0.2 | ||||
Income taxes payable | 0.7 | 1 | ||||
Total current liabilities | 104.8 | 107.9 | ||||
Long-term debt | 1,691.9 | 1,713.1 | ||||
Deferred income taxes | 14.7 | |||||
Deferred revenue | 0.3 | 0.3 | ||||
Intercompany loans payable | 22.6 | 22.6 | ||||
Intercompany payables | 2,343.6 | 2,128.9 | ||||
Other long-term liabilities | 3.5 | 3.3 | ||||
Total liabilities | 4,181.4 | 3,976.1 | ||||
Total Affinion Group, Inc. deficit | (1,534.8) | (1,546.6) | ||||
Total deficit | (1,534.8) | (1,546.6) | ||||
Total liabilities and deficit | 2,646.6 | 2,429.5 | ||||
Guarantor Subsidiaries | ||||||
Condensed Balance Sheet Statements Captions [Line Items] | ||||||
Cash and cash equivalents | 2.8 | 1.6 | 2.9 | 2.5 | ||
Restricted cash | 17 | 16 | ||||
Receivables, net | 81.4 | 68.7 | ||||
Profit-sharing receivables from insurance carriers | 24.9 | 19.9 | ||||
Prepaid commissions | 26.3 | 32.9 | ||||
Other current assets | 27.3 | 37.8 | ||||
Total current assets | 179.7 | 176.9 | ||||
Non-current assets: | ||||||
Property and equipment, net | 72.9 | 78.5 | ||||
Goodwill | 155.5 | 155.6 | ||||
Investment in subsidiaries | 81.2 | 52.1 | ||||
Intercompany loan receivable | 20.5 | 20 | ||||
Intercompany receivables | 2,355.9 | 2,150.4 | ||||
Other non-current assets | 27.6 | 41.5 | ||||
Total assets | 2,947.1 | 2,736.2 | ||||
Current liabilities: | ||||||
Current portion of long-term debt | 0.1 | |||||
Accounts payable and accrued expenses | 172.4 | 163.4 | ||||
Deferred revenue | 40.5 | 44.9 | ||||
Income taxes payable | 0.1 | |||||
Total current liabilities | 212.9 | 208.5 | ||||
Deferred income taxes | 23.6 | 34.9 | ||||
Deferred revenue | 2.4 | 3.7 | ||||
Other long-term liabilities | 18.5 | 19.6 | ||||
Total liabilities | 257.4 | 266.7 | ||||
Total Affinion Group, Inc. deficit | 2,689.7 | 2,469.5 | ||||
Total deficit | 2,689.7 | 2,469.5 | ||||
Total liabilities and deficit | 2,947.1 | 2,736.2 | ||||
Guarantor Subsidiaries | Contract rights and list fees, net | ||||||
Non-current assets: | ||||||
Intangible assets, net | 15.9 | 16.6 | ||||
Guarantor Subsidiaries | Other intangibles, net | ||||||
Non-current assets: | ||||||
Intangible assets, net | 37.9 | 44.6 | ||||
Non-Guarantor Subsidiaries | ||||||
Condensed Balance Sheet Statements Captions [Line Items] | ||||||
Cash and cash equivalents | 28.6 | 18.6 | $ 24.1 | $ 17.7 | ||
Restricted cash | 9.9 | 13.2 | ||||
Receivables, net | 33.3 | 43.4 | ||||
Prepaid commissions | 3.8 | 5.5 | ||||
Intercompany interest receivable | 0.4 | 1.1 | ||||
Other current assets | 25 | 27.4 | ||||
Total current assets | 101 | 109.2 | ||||
Non-current assets: | ||||||
Property and equipment, net | 28.3 | 37.4 | ||||
Goodwill | 66.7 | 70.2 | ||||
Investment in subsidiaries | 63.9 | 63.9 | ||||
Intercompany loan receivable | 22.6 | 22.6 | ||||
Other non-current assets | 6.2 | 5.2 | ||||
Total assets | 296.4 | 318.9 | ||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | 79.3 | 95 | ||||
Intercompany interest payable | 1.2 | |||||
Deferred revenue | 20.4 | 24.2 | ||||
Income taxes payable | 2.3 | 1.3 | ||||
Total current liabilities | 102 | 121.7 | ||||
Long-term debt | 152.9 | 155.3 | ||||
Deferred income taxes | 0.9 | 1 | ||||
Deferred revenue | 2.8 | 3.7 | ||||
Intercompany loans payable | 183.9 | 164.9 | ||||
Intercompany payables | 12.3 | 21.5 | ||||
Other long-term liabilities | 4.3 | 4.2 | ||||
Total liabilities | 459.1 | 472.3 | ||||
Total Affinion Group, Inc. deficit | (163.6) | (154.1) | ||||
Non-controlling interest in subsidiary | 0.9 | 0.7 | ||||
Total deficit | (162.7) | (153.4) | ||||
Total liabilities and deficit | 296.4 | 318.9 | ||||
Non-Guarantor Subsidiaries | Other intangibles, net | ||||||
Non-current assets: | ||||||
Intangible assets, net | $ 7.7 | $ 10.4 |
Guarantor_Non-Guarantor Suppl55
Guarantor/Non-Guarantor Supplemental Financial Information - Schedule of Condensed Consolidating Statement of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Income Statements Captions [Line Items] | ||||
Net revenues | $ 238.1 | $ 291.3 | $ 737 | $ 888.6 |
Cost of revenues, exclusive of depreciation and amortization shown separately below: | ||||
Marketing and commissions | 81.6 | 104.7 | 254.4 | 331.4 |
Operating costs | 78.5 | 95.1 | 248 | 298.1 |
General and administrative | 27.1 | 29.3 | 87.1 | 93.1 |
Facility exit costs | 0.1 | 0.1 | 0.1 | 1.2 |
Depreciation and amortization | 13.7 | 23.7 | 41.9 | 71.7 |
Total expenses | 201 | 252.9 | 631.5 | 795.5 |
Income from operations | 37.1 | 38.4 | 105.5 | 93.1 |
Interest income | 0.2 | 1.9 | 0.8 | 2.3 |
Interest expense | (27.8) | (47.8) | (82.5) | (142.3) |
Other income, net | 0.6 | 1.2 | ||
Income (loss) before income taxes and non-controlling interest | 9.5 | (6.9) | 23.8 | (45.7) |
Income tax expense | (1.7) | (1.1) | (5.7) | (4.2) |
Income (loss) from continuing operations after income taxes, before equity method investments, extraordinary items, noncontrolling interest | 7.8 | (8) | 18.1 | (49.9) |
Net income (loss) | 7.8 | (8) | 18.1 | (49.9) |
Less: net income attributable to non-controlling interest | (0.3) | (0.2) | (0.5) | (0.5) |
Net income (loss) attributable to Affinion Group, Inc. | 7.5 | (8.2) | 17.6 | (50.4) |
Currency translation adjustment, net of tax for all periods | (1.4) | (2.2) | (5.8) | (5.7) |
Comprehensive income (loss) | 6.4 | (10.2) | 12.3 | (55.6) |
Less: comprehensive income attributable to non-controlling interest | (0.3) | (0.5) | (0.2) | |
Comprehensive income (loss) attributable to Affinion Group, Inc. | 6.1 | (10.2) | 11.8 | (55.8) |
Eliminations | ||||
Cost of revenues, exclusive of depreciation and amortization shown separately below: | ||||
Equity in income (loss) of subsidiaries | (61.4) | (52.5) | (184.8) | (113.4) |
Net income (loss) | (61.4) | (52.5) | (184.8) | (113.4) |
Net income (loss) attributable to Affinion Group, Inc. | (61.4) | (52.5) | (184.8) | (113.4) |
Currency translation adjustment, net of tax for all periods | (0.3) | (2.2) | ||
Comprehensive income (loss) | (61.7) | (52.5) | (187) | (113.4) |
Comprehensive income (loss) attributable to Affinion Group, Inc. | (61.7) | (52.5) | (187) | (113.4) |
Parent Company | ||||
Cost of revenues, exclusive of depreciation and amortization shown separately below: | ||||
Marketing and commissions | 0.1 | 0.2 | ||
Operating costs | 10.6 | 33 | ||
General and administrative | 15.5 | 10.6 | 45.9 | 21.6 |
Depreciation and amortization | 0.1 | 0.1 | 0.3 | 0.5 |
Total expenses | 26.3 | 10.7 | 79.4 | 22.1 |
Income from operations | (26.3) | (10.7) | (79.4) | (22.1) |
Interest income | 0.1 | (0.3) | 0.5 | |
Interest expense | (26.7) | (35.1) | (80) | (103.7) |
Interest income (expense) - intercompany | (0.6) | (1.7) | (35.3) | |
Income (loss) before income taxes and non-controlling interest | (53.5) | (57.6) | (160.6) | (161.1) |
Income tax expense | (0.2) | (0.1) | (0.7) | (0.8) |
Income (loss) from continuing operations after income taxes, before equity method investments, extraordinary items, noncontrolling interest | (53.7) | (57.7) | (161.3) | (161.9) |
Equity in income (loss) of subsidiaries | 61.2 | 49.5 | 178.9 | 111.5 |
Net income (loss) | 7.5 | (8.2) | 17.6 | (50.4) |
Net income (loss) attributable to Affinion Group, Inc. | 7.5 | (8.2) | 17.6 | (50.4) |
Currency translation adjustment, net of tax for all periods | (1.4) | (5.8) | ||
Comprehensive income (loss) | 6.1 | (8.2) | 11.8 | (50.4) |
Comprehensive income (loss) attributable to Affinion Group, Inc. | 6.1 | (8.2) | 11.8 | (50.4) |
Guarantor Subsidiaries | ||||
Condensed Income Statements Captions [Line Items] | ||||
Net revenues | 167 | 205.1 | 509.4 | 632.1 |
Cost of revenues, exclusive of depreciation and amortization shown separately below: | ||||
Marketing and commissions | 56.7 | 72.5 | 177.7 | 229 |
Operating costs | 26.3 | 49.3 | 90.7 | 155.6 |
General and administrative | 6.8 | 10.5 | 22.1 | 46 |
Facility exit costs | 0.1 | 0.1 | 0.1 | 1.2 |
Depreciation and amortization | 8.7 | 16.7 | 26.8 | 50.9 |
Total expenses | 98.6 | 149.1 | 317.4 | 482.7 |
Income from operations | 68.4 | 56 | 192 | 149.4 |
Interest income | 1.7 | 1.7 | ||
Interest expense | (0.1) | 0.6 | (0.1) | |
Other income, net | 0.7 | 3.5 | ||
Income (loss) before income taxes and non-controlling interest | 68.3 | 58.4 | 192.6 | 154.5 |
Income tax expense | (0.7) | (0.2) | (2.2) | (2) |
Income (loss) from continuing operations after income taxes, before equity method investments, extraordinary items, noncontrolling interest | 67.6 | 58.2 | 190.4 | 152.5 |
Equity in income (loss) of subsidiaries | 0.2 | 3 | 5.9 | 1.9 |
Net income (loss) | 67.8 | 61.2 | 196.3 | 154.4 |
Net income (loss) attributable to Affinion Group, Inc. | 67.8 | 61.2 | 196.3 | 154.4 |
Currency translation adjustment, net of tax for all periods | 0.2 | 0.5 | ||
Comprehensive income (loss) | 68 | 61.2 | 196.8 | 154.4 |
Comprehensive income (loss) attributable to Affinion Group, Inc. | 68 | 61.2 | 196.8 | 154.4 |
Non-Guarantor Subsidiaries | ||||
Condensed Income Statements Captions [Line Items] | ||||
Net revenues | 71.1 | 86.2 | 227.6 | 256.5 |
Cost of revenues, exclusive of depreciation and amortization shown separately below: | ||||
Marketing and commissions | 24.8 | 32.2 | 76.5 | 102.4 |
Operating costs | 41.6 | 45.8 | 124.3 | 142.5 |
General and administrative | 4.8 | 8.2 | 19.1 | 25.5 |
Depreciation and amortization | 4.9 | 6.9 | 14.8 | 20.3 |
Total expenses | 76.1 | 93.1 | 234.7 | 290.7 |
Income from operations | (5) | (6.9) | (7.1) | (34.2) |
Interest income | 0.1 | 0.5 | 0.3 | 0.6 |
Interest expense | (1) | (12.7) | (3.1) | (38.5) |
Interest income (expense) - intercompany | 0.6 | 1.7 | 35.3 | |
Other income, net | (0.1) | (2.3) | ||
Income (loss) before income taxes and non-controlling interest | (5.3) | (7.7) | (8.2) | (39.1) |
Income tax expense | (0.8) | (0.8) | (2.8) | (1.4) |
Income (loss) from continuing operations after income taxes, before equity method investments, extraordinary items, noncontrolling interest | (6.1) | (8.5) | (11) | (40.5) |
Net income (loss) | (6.1) | (8.5) | (11) | (40.5) |
Less: net income attributable to non-controlling interest | (0.3) | (0.2) | (0.5) | (0.5) |
Net income (loss) attributable to Affinion Group, Inc. | (6.4) | (8.7) | (11.5) | (41) |
Currency translation adjustment, net of tax for all periods | 0.1 | (2.2) | 1.7 | (5.7) |
Comprehensive income (loss) | (6) | (10.7) | (9.3) | (46.2) |
Less: comprehensive income attributable to non-controlling interest | (0.3) | (0.5) | (0.2) | |
Comprehensive income (loss) attributable to Affinion Group, Inc. | $ (6.3) | $ (10.7) | $ (9.8) | $ (46.4) |
Guarantor_Non-Guarantor Suppl56
Guarantor/Non-Guarantor Supplemental Financial Information - Schedule of Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Operating Activities | ||||
Net income (loss) | $ 7.8 | $ (8) | $ 18.1 | $ (49.9) |
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: | ||||
Depreciation and amortization | 13.7 | 23.7 | 41.9 | 71.7 |
Amortization of debt discount and financing costs | 4.5 | 7 | ||
Recovery of accounts receivable loss provided for | 0.2 | (5.5) | ||
Facility exit costs | 0.1 | 0.1 | 0.1 | 1.2 |
Amortization of carrying value adjustment | (26.2) | |||
Share-based compensation | 2.8 | 1.4 | ||
Deferred income taxes | 1.8 | 1.5 | ||
Net change in assets and liabilities: | ||||
Restricted cash | (0.1) | 4.1 | ||
Receivables | (4.4) | 8.7 | ||
Receivables from related parties | 4 | |||
Profit-sharing receivables from insurance carriers | (5) | 4.3 | ||
Prepaid commissions | 7.8 | 1.2 | ||
Other current assets | 10.3 | (18.8) | ||
Contract rights and list fees | 0.6 | (0.4) | ||
Other non-current assets | 0.2 | (13.3) | ||
Accounts payable and accrued expenses | (4) | (7.8) | ||
Payables to related parties | 1.7 | (0.8) | ||
Deferred revenue | (9.2) | (6.3) | ||
Income taxes receivable and payable | 0.3 | (0.5) | ||
Other long-term liabilities | (1.6) | (5.7) | ||
Other, net | 0.6 | 3.2 | ||
Net cash provided by (used in) operating activities | 40.4 | (0.7) | ||
Investing Activities | ||||
Capital expenditures | (24.3) | (23.3) | ||
Restricted cash | 1.5 | (1.1) | ||
Proceeds from sale of an investment | 1.5 | |||
Net cash used in investing activities | (22.8) | (22.9) | ||
Financing Activities | ||||
Borrowings under revolving credit facility, net | 61 | |||
Principal payments on borrowings | (5.8) | (6.6) | ||
Receivables from and payables to parent company | (1.9) | |||
Dividend paid to non-controlling interest | (0.3) | |||
Net cash provided by (used in) financing activities | (6.1) | 52.5 | ||
Effect of changes in exchange rates on cash and cash equivalents | (1.1) | (1.2) | ||
Net increase in cash and cash equivalents | 10.4 | 27.7 | ||
Cash and cash equivalents, beginning of period | 51.2 | 28 | ||
Cash and cash equivalents, end of period | 61.6 | 55.7 | 61.6 | 55.7 |
Eliminations | ||||
Operating Activities | ||||
Net income (loss) | (61.4) | (52.5) | (184.8) | (113.4) |
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: | ||||
Equity in (income) loss of subsidiaries | 61.4 | 52.5 | 184.8 | 113.4 |
Investing Activities | ||||
Capital contribution to subsidiary | 0.2 | |||
Intercompany receivables and payables | 214.7 | 193.9 | ||
Net cash used in investing activities | 214.9 | 193.9 | ||
Financing Activities | ||||
Intercompany receivables and payables | (214.7) | (193.9) | ||
Capital contribution to subsidiary | (0.2) | |||
Net cash provided by (used in) financing activities | (214.9) | (193.9) | ||
Parent Company | ||||
Operating Activities | ||||
Net income (loss) | 7.5 | (8.2) | 17.6 | (50.4) |
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: | ||||
Depreciation and amortization | 0.1 | 0.1 | 0.3 | 0.5 |
Amortization of debt discount and financing costs | 4.5 | 5.6 | ||
Amortization of carrying value adjustment | (20) | |||
Share-based compensation | 2.8 | 1.4 | ||
Equity in (income) loss of subsidiaries | (61.2) | (49.5) | (178.9) | (111.5) |
Deferred income taxes | 0.3 | 0.3 | ||
Net change in assets and liabilities: | ||||
Restricted cash | 1.7 | |||
Receivables | (0.8) | |||
Receivables from related parties | 0.4 | (12.8) | ||
Other current assets | (1.1) | (36.4) | ||
Other non-current assets | 0.1 | 0.1 | ||
Accounts payable and accrued expenses | (6.4) | 20 | ||
Payables to related parties | 1.7 | (1.7) | ||
Deferred revenue | (0.1) | 0.4 | ||
Income taxes receivable and payable | (0.3) | (0.4) | ||
Other long-term liabilities | 0.2 | 0.1 | ||
Other, net | 1.4 | 1.3 | ||
Net cash provided by (used in) operating activities | (177.5) | (182.6) | ||
Investing Activities | ||||
Capital expenditures | (3.9) | 0.5 | ||
Capital contribution to subsidiary | (0.2) | |||
Net cash used in investing activities | (4.1) | 0.5 | ||
Financing Activities | ||||
Borrowings under revolving credit facility, net | 61 | |||
Principal payments on borrowings | (5.8) | (5.8) | ||
Receivables from and payables to parent company | (1.9) | |||
Intercompany receivables and payables | 214.7 | 195.6 | ||
Capital contribution to subsidiary | (0.1) | |||
Intercompany loans | (28.1) | (45.8) | ||
Net cash provided by (used in) financing activities | 180.8 | 203 | ||
Net increase in cash and cash equivalents | (0.8) | 20.9 | ||
Cash and cash equivalents, beginning of period | 31 | 7.8 | ||
Cash and cash equivalents, end of period | 30.2 | 28.7 | 30.2 | 28.7 |
Guarantor Subsidiaries | ||||
Operating Activities | ||||
Net income (loss) | 67.8 | 61.2 | 196.3 | 154.4 |
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: | ||||
Depreciation and amortization | 8.7 | 16.7 | 26.8 | 50.9 |
Recovery of accounts receivable loss provided for | 0.1 | (5.7) | ||
Facility exit costs | 0.1 | 0.1 | 0.1 | 1.2 |
Equity in (income) loss of subsidiaries | (0.2) | (3) | (5.9) | (1.9) |
Deferred income taxes | 2.1 | 1.9 | ||
Net change in assets and liabilities: | ||||
Restricted cash | (0.9) | 0.8 | ||
Receivables | (12.8) | 1.6 | ||
Receivables from related parties | 4 | |||
Profit-sharing receivables from insurance carriers | (5) | 4.3 | ||
Prepaid commissions | 6.6 | 1.3 | ||
Other current assets | 10.4 | 17.1 | ||
Contract rights and list fees | 0.6 | (0.4) | ||
Other non-current assets | 0.7 | (13.1) | ||
Accounts payable and accrued expenses | 8.3 | 3.3 | ||
Payables to related parties | 0.9 | |||
Deferred revenue | (5.6) | (7) | ||
Income taxes receivable and payable | (0.1) | |||
Other long-term liabilities | (0.6) | (6.5) | ||
Other, net | (0.8) | |||
Net cash provided by (used in) operating activities | 221.1 | 206.3 | ||
Investing Activities | ||||
Capital expenditures | (14.4) | (11.2) | ||
Intercompany receivables and payables | (205.5) | (193.9) | ||
Net cash used in investing activities | (219.9) | (205.1) | ||
Financing Activities | ||||
Principal payments on borrowings | (0.8) | |||
Net cash provided by (used in) financing activities | (0.8) | |||
Net increase in cash and cash equivalents | 1.2 | 0.4 | ||
Cash and cash equivalents, beginning of period | 1.6 | 2.5 | ||
Cash and cash equivalents, end of period | 2.8 | 2.9 | 2.8 | 2.9 |
Non-Guarantor Subsidiaries | ||||
Operating Activities | ||||
Net income (loss) | (6.1) | (8.5) | (11) | (40.5) |
Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: | ||||
Depreciation and amortization | 4.9 | 6.9 | 14.8 | 20.3 |
Amortization of debt discount and financing costs | 1.4 | |||
Recovery of accounts receivable loss provided for | 0.1 | 0.2 | ||
Amortization of carrying value adjustment | (6.2) | |||
Deferred income taxes | (0.6) | (0.7) | ||
Net change in assets and liabilities: | ||||
Restricted cash | 0.8 | 1.6 | ||
Receivables | 8.4 | 7.9 | ||
Receivables from related parties | (0.4) | 12.8 | ||
Prepaid commissions | 1.2 | (0.1) | ||
Other current assets | 1 | 0.5 | ||
Other non-current assets | (0.6) | (0.3) | ||
Accounts payable and accrued expenses | (5.9) | (31.1) | ||
Deferred revenue | (3.5) | 0.3 | ||
Income taxes receivable and payable | 0.7 | (0.1) | ||
Other long-term liabilities | (1.2) | 0.7 | ||
Other, net | (0.8) | 2.7 | ||
Net cash provided by (used in) operating activities | (3.2) | (24.4) | ||
Investing Activities | ||||
Capital expenditures | (6) | (12.6) | ||
Restricted cash | 1.5 | (1.1) | ||
Proceeds from sale of an investment | 1.5 | |||
Intercompany receivables and payables | (9.2) | |||
Net cash used in investing activities | (13.7) | (12.2) | ||
Financing Activities | ||||
Intercompany receivables and payables | (1.7) | |||
Capital contribution to subsidiary | 0.2 | 0.1 | ||
Dividend paid to non-controlling interest | (0.3) | |||
Intercompany loans | 28.1 | 45.8 | ||
Net cash provided by (used in) financing activities | 28 | 44.2 | ||
Effect of changes in exchange rates on cash and cash equivalents | (1.1) | (1.2) | ||
Net increase in cash and cash equivalents | 10 | 6.4 | ||
Cash and cash equivalents, beginning of period | 18.6 | 17.7 | ||
Cash and cash equivalents, end of period | $ 28.6 | $ 24.1 | $ 28.6 | $ 24.1 |