Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 001-32903 | |
Entity Registrant Name | Western Union CO | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-4531180 | |
Entity Address, Address Line One | 7001 EAST BELLEVIEW AVENUE | |
Entity Address, City or Town | Denver | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80237 | |
City Area Code | 866 | |
Local Phone Number | 405-5012 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | WU | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 411,003,966 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001365135 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Revenues | $ 1,114.7 | $ 1,340.5 | $ 2,304.7 | $ 2,677.5 |
Type of Revenue | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember |
Expenses: | ||||
Cost of services | $ 662.2 | $ 776.4 | $ 1,345.6 | $ 1,561.4 |
Type of Cost of Service | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember | us-gaap:ServiceMember |
Selling, general, and administrative | $ 230.7 | $ 305.2 | $ 504.1 | $ 606 |
Total expenses | 892.9 | 1,081.6 | 1,849.7 | 2,167.4 |
Operating income | 221.8 | 258.9 | 455 | 510.1 |
Other income/(expense): | ||||
Gain on divestitures of businesses (Note 4) | 524.6 | 524.6 | ||
Interest income | 0.8 | 1 | 2.4 | 3.1 |
Interest expense | (29.3) | (38.6) | (62.2) | (78.3) |
Other income/(expense), net | (0.1) | (0.3) | (0.1) | 2.2 |
Total other income/(expense), net | (28.6) | 486.7 | (59.9) | 451.6 |
Income before income taxes | 193.2 | 745.6 | 395.1 | 961.7 |
Provision for income taxes | 31.3 | 130.8 | 56.5 | 173.8 |
Net income | $ 161.9 | $ 614.8 | $ 338.6 | $ 787.9 |
Earnings per share: | ||||
Basic (USD per share) | $ 0.39 | $ 1.43 | $ 0.82 | $ 1.82 |
Diluted (USD per share) | $ 0.39 | $ 1.42 | $ 0.81 | $ 1.81 |
Weighted-average shares outstanding: | ||||
Basic (shares) | 411.5 | 430 | 412.9 | 433.8 |
Diluted (shares) | 413.6 | 432.3 | 415.9 | 436.1 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 161.9 | $ 614.8 | $ 338.6 | $ 787.9 |
Other comprehensive income, net of reclassifications and tax (Note 11): | ||||
Unrealized gains on investment securities | 19.5 | 9.9 | 25.2 | 22.9 |
Unrealized gains/(losses) on hedging activities | (19.1) | (5.9) | 1.6 | (2) |
Defined benefit pension plan adjustments | 2.1 | 1.9 | 4.4 | 4.4 |
Total other comprehensive income | 2.5 | 5.9 | 31.2 | 25.3 |
Comprehensive income | $ 164.4 | $ 620.7 | $ 369.8 | $ 813.2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 1,181.6 | $ 1,450.5 |
Settlement assets | 3,522.3 | 3,296.7 |
Property and equipment, net of accumulated depreciation of $643.7 and $616.5, respectively | 167.5 | 186.9 |
Goodwill | 2,566.6 | 2,566.6 |
Other intangible assets, net of accumulated amortization of $995.7 and $961.5, respectively | 473.9 | 494.9 |
Other assets | 795.1 | 762.9 |
Total assets | 8,707 | 8,758.5 |
Liabilities: | ||
Accounts payable and accrued liabilities | 466.9 | 601.9 |
Settlement obligations | 3,522.3 | 3,296.7 |
Income taxes payable | 1,005.5 | 1,019.7 |
Deferred tax liability, net | 167.9 | 152.1 |
Borrowings | 3,085.8 | 3,229.3 |
Other liabilities | 532 | 498.3 |
Total liabilities | 8,780.4 | 8,798 |
Commitments and contingencies (Note 8) | ||
Stockholders' deficit: | ||
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued | ||
Common stock, $0.01 par value; 2,000 shares authorized; 411.0 shares and 418.0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 4.1 | 4.2 |
Capital surplus | 860.5 | 841.2 |
Accumulated deficit | (760.2) | (675.9) |
Accumulated other comprehensive loss | (177.8) | (209) |
Total stockholders' deficit | (73.4) | (39.5) |
Total liabilities and stockholders' deficit | $ 8,707 | $ 8,758.5 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Millions, $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Accumulated Depreciation on Property Plant and Equipment | $ 643.7 | $ 616.5 |
Accumulated Amortization on Other Intangible Assets | $ 995.7 | $ 961.5 |
Stockholders' Equity: | ||
Preferred stock, par value (USD per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 10 | 10 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,000 | 2,000 |
Common stock, shares issued | 411 | 418 |
Common stock, shares outstanding | 411 | 418 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities | ||
Net income | $ 338.6 | $ 787.9 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 32 | 38.2 |
Amortization | 83.3 | 91.4 |
Gain on divestitures of businesses, excluding transaction costs (Note 4) | (532.1) | |
Other non-cash items, net | 63.9 | 52.3 |
Increase/(decrease) in cash, excluding the effects of divestitures, resulting from changes in: | ||
Other assets | (16.6) | 12.3 |
Accounts payable and accrued liabilities | (130.9) | (59.3) |
Income taxes payable | (19.2) | 21.5 |
Other liabilities | (3.3) | (9.6) |
Net cash provided by operating activities | 347.8 | 402.6 |
Cash flows from investing activities | ||
Payments for capitalized contract costs | (46) | (24.5) |
Payments for internal use software | (22.3) | (19.1) |
Purchases of property and equipment | (15.9) | (31.4) |
Proceeds from the sale of former corporate headquarters (Note 4) | 44.2 | |
Proceeds from divestitures of businesses, net of cash divested (Note 4) | 732.6 | |
Purchases of non-settlement related investments | (2.2) | (4.5) |
Proceeds from maturity of non-settlement related investments | 0.6 | 19.8 |
Purchases of held-to-maturity non-settlement related investments | (1.3) | |
Proceeds from held-to-maturity non-settlement related investments | 15.4 | |
Other investing activities | (2.6) | |
Net cash (used in)/provided by investing activities | (44.2) | 687 |
Cash flows from financing activities | ||
Cash dividends paid | (184.9) | (172.9) |
Common stock repurchased (Note 11) | (237.7) | (341.6) |
Net (repayments of)/proceeds from commercial paper | (145) | 143 |
Principal payments on borrowings | (500) | |
Proceeds from exercise of options | 1.5 | 20.5 |
Other financing activities | (0.7) | (0.8) |
Net cash used in financing activities | (566.8) | (851.8) |
Net change in cash, cash equivalents, and restricted cash | (263.2) | 237.8 |
Cash, cash equivalents, and restricted cash at beginning of period | 1,456.8 | 979.7 |
Cash, cash equivalents, and restricted cash at end of period | 1,193.6 | 1,217.5 |
Supplemental cash flow information: | ||
Interest paid | 53.5 | 78.1 |
Income taxes paid | 59.7 | 156.6 |
Cash paid for lease liabilities | 25.6 | 24.3 |
Non-cash lease liabilities arising from obtaining right-of-use assets | 17.8 | 269.1 |
Restricted cash at end of year (included in Other assets) | $ 12 | $ 7.3 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) - USD ($) shares in Millions, $ in Millions | Common Stock | Capital Surplus | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning balance at Dec. 31, 2018 | $ 4.4 | $ 755.6 | $ (838.8) | $ (231) | $ (309.8) |
Beginning balance (shares) at Dec. 31, 2018 | 441.2 | ||||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 173.1 | 173.1 | |||
Stock-based compensation | 13.7 | 13.7 | |||
Common stock dividends and dividend equivalents declared | (87.4) | (87.4) | |||
Repurchase and retirement of common shares | $ (0.1) | (184.9) | (185) | ||
Repurchase and retirement of common shares (shares) | (10.2) | ||||
Shares issued under stock-based compensation plans | 1.8 | 1.8 | |||
Shares issued under stock-based compensation plans (shares) | 1.9 | ||||
Other comprehensive income (Note 11) | 19.4 | 19.4 | |||
Ending balance at Mar. 31, 2019 | $ 4.3 | 771.1 | (938) | (211.6) | (374.2) |
Ending balance (shares) at Mar. 31, 2019 | 432.9 | ||||
Beginning balance at Dec. 31, 2018 | $ 4.4 | 755.6 | (838.8) | (231) | (309.8) |
Beginning balance (shares) at Dec. 31, 2018 | 441.2 | ||||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 787.9 | ||||
Other comprehensive income (Note 11) | 25.3 | ||||
Ending balance at Jun. 30, 2019 | $ 4.3 | 801.3 | (569.7) | (205.7) | 30.2 |
Ending balance (shares) at Jun. 30, 2019 | 425.9 | ||||
Beginning balance at Mar. 31, 2019 | $ 4.3 | 771.1 | (938) | (211.6) | (374.2) |
Beginning balance (shares) at Mar. 31, 2019 | 432.9 | ||||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 614.8 | 614.8 | |||
Stock-based compensation | 11.6 | 11.6 | |||
Common stock dividends and dividend equivalents declared | (85.5) | (85.5) | |||
Repurchase and retirement of common shares | (161) | (161) | |||
Repurchase and retirement of common shares (shares) | (8.3) | ||||
Shares issued under stock-based compensation plans | 18.6 | 18.6 | |||
Shares issued under stock-based compensation plans (shares) | 1.3 | ||||
Other comprehensive income (Note 11) | 5.9 | 5.9 | |||
Ending balance at Jun. 30, 2019 | $ 4.3 | 801.3 | (569.7) | (205.7) | 30.2 |
Ending balance (shares) at Jun. 30, 2019 | 425.9 | ||||
Beginning balance at Dec. 31, 2019 | $ 4.2 | 841.2 | (675.9) | (209) | $ (39.5) |
Beginning balance (shares) at Dec. 31, 2019 | 418 | 418 | |||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 176.7 | $ 176.7 | |||
Stock-based compensation | 12.5 | 12.5 | |||
Common stock dividends and dividend equivalents declared | (93.3) | (93.3) | |||
Repurchase and retirement of common shares | $ (0.1) | (235.1) | (235.2) | ||
Repurchase and retirement of common shares (shares) | (9.2) | ||||
Shares issued under stock-based compensation plans | 1 | 1 | |||
Shares issued under stock-based compensation plans (shares) | 2.1 | ||||
Other comprehensive income (Note 11) | 28.7 | 28.7 | |||
Ending balance at Mar. 31, 2020 | $ 4.1 | 854.7 | (828.2) | (180.3) | (149.7) |
Ending balance (shares) at Mar. 31, 2020 | 410.9 | ||||
Beginning balance at Dec. 31, 2019 | $ 4.2 | 841.2 | (675.9) | (209) | $ (39.5) |
Beginning balance (shares) at Dec. 31, 2019 | 418 | 418 | |||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 338.6 | ||||
Other comprehensive income (Note 11) | 31.2 | ||||
Ending balance at Jun. 30, 2020 | $ 4.1 | 860.5 | (760.2) | (177.8) | $ (73.4) |
Ending balance (shares) at Jun. 30, 2020 | 411 | 411 | |||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Adoption of new accounting pronouncements (Note 1) | (0.6) | $ (0.6) | |||
Beginning balance at Mar. 31, 2020 | $ 4.1 | 854.7 | (828.2) | (180.3) | (149.7) |
Beginning balance (shares) at Mar. 31, 2020 | 410.9 | ||||
Increase/(Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 161.9 | 161.9 | |||
Stock-based compensation | 5.3 | 5.3 | |||
Common stock dividends and dividend equivalents declared | (93.3) | (93.3) | |||
Repurchase and retirement of common shares | (0.6) | (0.6) | |||
Repurchase and retirement of common shares (shares) | (0.1) | ||||
Shares issued under stock-based compensation plans | 0.5 | 0.5 | |||
Shares issued under stock-based compensation plans (shares) | 0.2 | ||||
Other comprehensive income (Note 11) | 2.5 | 2.5 | |||
Ending balance at Jun. 30, 2020 | $ 4.1 | $ 860.5 | $ (760.2) | $ (177.8) | $ (73.4) |
Ending balance (shares) at Jun. 30, 2020 | 411 | 411 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) (Parentheticals) - $ / shares | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) | ||||
Common stock dividends (USD per share) | $ 0.225 | $ 0.225 | $ 0.20 | $ 0.20 |
Business and Basis of Presentat
Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Business and Basis of Presentation | |
Business and Basis of Presentation | THE WESTERN UNION COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business and Basis of Presentation Business The Western Union Company ("Western Union" or the "Company") is a leader in global money movement and payment services, providing people and businesses with fast, reliable, and convenient ways to send money and make payments around the world. The Western Union ® The Western Union business consists of the following segments: ● Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company’s multi-currency money transfer service is provided through one interconnected global network where a money transfer can be sent from one location to another around the world. This service is available for international cross-border transfers and, in certain countries, intra-country transfers. This segment also includes money transfer transactions that can be initiated through websites and mobile devices. ● Business Solutions - The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The majority of the segment’s business relates to exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments. All businesses and other services that have not been classified in the above segments are reported as Other, which primarily includes the Company’s cash-based and electronic-based bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services. In May 2019, the Company sold a substantial majority of its United States based electronic bill payments services, as discussed in Note 4. The Company’s other services, in addition to certain corporate costs such as costs related to strategic initiatives, including costs for the review and closing of mergers, acquisitions, and divestitures, are also included in Other. See Note 16 for further information regarding the Company’s segments. There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of December 31, 2019, the amount of these net asset limitations totaled approximately $610 million. Various aspects of the Company’s services and businesses are subject to United States federal, state, and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations. Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted. The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts were eliminated as of June 30, 2020 and December 31, 2019 and for all periods presented. In the opinion of management, these condensed consolidated financial statements include all the normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of June 30, 2020 and for all periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Consistent with industry practice, the accompanying Condensed Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In March 2020, the World Health Organization declared the outbreak associated with a novel coronavirus a pandemic (“COVID-19”), and governments throughout the world instituted various actions such as lockdowns, stay-at-home orders, travel restrictions, and closures of non-essential businesses in an effort to reduce the spread of COVID-19. These actions have negatively impacted the Company’s ability to offer its services through a portion of its locations and its retail agent locations, at least temporarily. As a result, the Company’s revenues for the second quarter of 2020 were negatively impacted by the effects of COVID-19. Beginning in March 2020, the Company experienced a decrease in transaction volumes, which continued into the second quarter of 2020. The Company believes this decrease is due in part to economic decline and uncertainty resulting from the outbreak. The extent to which the COVID-19 outbreak continues to impact the Company’s business, financial condition, results of operations or cash flows will depend on future developments, which are highly uncertain and are difficult to predict. Recently Adopted Accounting Pronouncements modified retrospective |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Revenue | 2. Revenue The Company’s revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon factors such as channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, and speed of service, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. For the substantial majority of the Company’s revenues, the Company acts as the principal in transactions and reports revenue on a gross basis, as the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company recognized $1,055.6 million and $1,275.0 million for the three months ended June 30, 2020 and 2019, and $2,178.2 million and $2,550.4 million for the six months ended June 30, 2020 and 2019, respectively, in revenues from contracts with customers. There are no material upfront costs incurred to obtain contracts with customers. Under the Company’s loyalty programs, which are primarily offered in its money transfer services, the Company must fulfill loyalty program rewards earned by customers. The loyalty program redemption activity has been and continues to be insignificant to the Company’s results of operations, and the Company has immaterial contract liability balances, which primarily relate to its customer loyalty programs and other services. Contract asset balances related to customers were also immaterial as of the periods presented, as the Company typically receives payment of consideration from its customers prior to satisfying performance obligations under the customer contracts. In addition to revenue generated from contracts with customers, the Company recognizes revenue from other sources, including the sale of derivative financial instruments and investment income generated on settlement assets primarily related to money transfer and money order services. The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Revenues from consumer money transfers are included in the Company’s Consumer-to-Consumer segment, revenues from foreign exchange and payment services are included in the Company’s Business Solutions segment, and revenues from consumer bill payments and other services are not included in the Company’s segments and are reported as Other. See Note 16 for further information on the Company’s segments. Consumer Money Transfers For the Company’s money transfer services, customers agree to the Company’s terms and conditions at the time of initiating a transaction. In a money transfer, the Company has one performance obligation as the customer engages the Company to perform one integrated service which typically occurs within minutes — collect the customer’s money and make funds available for payment to a designated person in the currency requested. Therefore, the Company recognizes revenue upon completion of the following: (i) the customer’s acknowledgment of the Company’s terms and conditions and payment information has been received by the Company, (ii) the Company has agreed to process the money transfer, (iii) the Company has provided the customer a unique transaction identification number, and (iv) funds are available to be picked up by the customer’s designated receiving party. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated. Foreign Exchange and Payment Services For the Company’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with the Company to provide payment services on the customer’s behalf. In the majority of the Company’s foreign exchange and payment services, the Company makes payments to the recipient to satisfy its performance obligation to the customer, and therefore, the Company recognizes revenue on foreign exchange and payment services when this performance obligation has been fulfilled. Revenues from foreign exchange and payment services are primarily comprised of the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market. Consumer Bill Payments The Company offers several different bill payment services that vary by considerations such as: (i) who pays the fee to the Company (consumer or biller), (ii) whether the service is offered to all potential consumers, or only to those for which the Company has a relationship with the biller, and (iii) whether the service utilizes a physical agent network offered for consumers’ convenience, among other factors. The determination of which party is the Company’s customer for revenue recognition purposes is based on these considerations for each of the Company’s bill payment services. For all transactions, the Company’s customers agree to the Company’s terms and conditions, either at the time of initiating a transaction (where the consumer is determined to be the customer for revenue recognition purposes) or upon signing a contract with the Company to provide services on the biller’s behalf (where the biller is determined to be the customer for revenue recognition purposes). As with consumer money transfers, customers engage the Company to perform one integrated service — collect money from the consumer and process the bill payment transaction, thereby providing the billers real-time or near real-time information regarding their customers’ payments and simplifying the billers’ collection efforts. In May 2019, the Company sold a substantial majority of its United States based electronic bill payments services, as discussed in Note 4. Management has determined that the significant majority of the Company’s revenue is recognized at a point in time. The following tables represent the disaggregation of revenue earned from contracts with customers by product type and region for the three and six months ended June 30, 2020 and 2019 (in millions). The regional split of revenue shown in the tables below is based upon where transactions are initiated. Three Months Ended June 30, 2020 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 399.6 $ 17.0 $ 17.1 $ 14.3 $ 448.0 Europe and Russia/CIS 301.2 26.2 0.5 0.2 328.1 Middle East, Africa, and South Asia 137.7 0.3 — — 138.0 Latin America and the Caribbean 54.3 0.6 15.8 2.0 72.7 East Asia and Oceania 55.5 12.9 0.4 — 68.8 Revenues from contracts with customers $ 948.3 $ 57.0 $ 33.8 $ 16.5 $ 1,055.6 Other revenues (a) 28.3 22.4 2.6 5.8 59.1 Total revenues (b) $ 976.6 $ 79.4 $ 36.4 $ 22.3 $ 1,114.7 Six Months Ended June 30, 2020 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 784.4 $ 39.2 $ 39.8 $ 28.7 $ 892.1 Europe and Russia/CIS 602.1 57.7 1.3 0.9 662.0 Middle East, Africa, and South Asia 294.6 0.8 0.1 — 295.5 Latin America and the Caribbean 138.7 1.2 39.6 4.1 183.6 East Asia and Oceania 114.6 29.7 0.7 — 145.0 Revenues from contracts with customers $ 1,934.4 $ 128.6 $ 81.5 $ 33.7 $ 2,178.2 Other revenues (a) 57.6 49.2 7.9 11.8 126.5 Total revenues (b) $ 1,992.0 $ 177.8 $ 89.4 $ 45.5 $ 2,304.7 Three Months Ended June 30, 2019 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments (c) Services Total Regions: North America $ 424.3 $ 23.3 $ 61.1 $ 14.1 $ 522.8 Europe and Russia/CIS 339.8 31.6 0.9 1.0 373.3 Middle East, Africa, and South Asia 159.9 0.5 0.1 — 160.5 Latin America and the Caribbean 98.8 1.0 32.3 4.1 136.2 East Asia and Oceania 65.4 16.4 0.4 — 82.2 Revenues from contracts with customers $ 1,088.2 $ 72.8 $ 94.8 $ 19.2 $ 1,275.0 Other revenues (a) 24.7 22.8 11.3 6.7 65.5 Total revenues (b) $ 1,112.9 $ 95.6 $ 106.1 $ 25.9 $ 1,340.5 Six Months Ended June 30, 2019 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments (c) Services Total Regions: North America $ 819.8 $ 45.4 $ 176.2 $ 28.6 $ 1,070.0 Europe and Russia/CIS 663.0 63.5 1.5 1.9 729.9 Middle East, Africa, and South Asia 313.2 1.0 0.2 — 314.4 Latin America and the Caribbean 194.1 2.0 65.9 7.6 269.6 East Asia and Oceania 131.9 33.9 0.7 — 166.5 Revenues from contracts with customers $ 2,122.0 $ 145.8 $ 244.5 $ 38.1 $ 2,550.4 Other revenues (a) 47.8 45.4 20.8 13.1 127.1 Total revenues (b) $ 2,169.8 $ 191.2 $ 265.3 $ 51.2 $ 2,677.5 (a) Includes revenue from the sale of derivative financial instruments, investment income generated on settlement assets primarily related to money transfer and money order services, and other sources. (b) Revenues from "Consumer money transfers" are included in the Company’s Consumer-to-Consumer segment, revenues from "Foreign exchange and payment services" are included in the Company’s Business Solutions segment, and revenues from "Consumer bill payments" and "Other services" are not included in the Company’s segments and are reported as Other. See Note 16 for further information on the Company’s segments. (c) On February 28, 2019, the Company entered into an agreement with ACI Worldwide Corp. and ACW Worldwide, Inc. to sell its United States based electronic bill payments business known as “Speedpay,” and closed the transaction on May 9, 2019. Included within North America revenues are Speedpay revenues of $37.2 million and $125.4 million for the three and six months ended June 30, 2019, respectively. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share | |
Earnings Per Share | 3. Earnings Per Share The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect. Shares excluded from the diluted earnings per share calculation under the treasury stock method, primarily due to outstanding restricted stock units and options to purchase shares of Western Union stock, as the assumed proceeds of the restricted stock and options per unit were above the Company’s average share price during the periods and their effect was anti-dilutive, were 2.6 million and 2.3 million for the three months ended June 30, 2020 and 2019, respectively, and 1.8 million and 3.4 million for the six months ended June 30, 2020 and 2019, respectively. The following table provides the calculation of diluted weighted-average shares outstanding (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Basic weighted-average shares outstanding 411.5 430.0 412.9 433.8 Common stock equivalents 2.1 2.3 3.0 2.3 Diluted weighted-average shares outstanding 413.6 432.3 415.9 436.1 |
Divestitures
Divestitures | 6 Months Ended |
Jun. 30, 2020 | |
Divestitures | |
Divestitures | 4. Divestitures On February 28, 2019, the Company entered into an agreement with ACI Worldwide Corp. and ACW Worldwide, Inc. to sell its United States based electronic bill payments business known as “Speedpay,” which had been included as a component of Other in the Company’s segment reporting. The Company received approximately $750 million and recorded a pre-tax gain on the sale of approximately $523 million, which is included in Gain on divestitures of businesses in the accompanying Condensed Consolidated Statements of Income, in the all-cash transaction that closed on May 9, 2019. Speedpay revenues and direct operating expenses included in the Company’s results were $37.2 million and $30.6 million, respectively, for the three months ended June 30, 2019 and $125.4 million and $98.2 million, respectively, for the six months ended June 30, 2019. On May 6, 2019, the Company completed the sale of Paymap Inc. (“Paymap”), which provides electronic mortgage bill payment services, for contingent consideration and immaterial cash proceeds received at closing. The Company recorded an immaterial pre-tax gain related to this sale for the three and six months ended June 30, 2019. In the first quarter of 2020, the Company sold its former corporate headquarters and recorded an immaterial pre-tax net gain on the sale. The proceeds from this sale have been included in Cash flows from investing activities within the Company’s Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020. |
Restructuring-Related Expenses
Restructuring-Related Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring-Related Expenses | |
Restructuring-Related Expenses | 5. Restructuring-Related Expenses On August 1, 2019, the Company’s Board of Directors approved a plan to change the Company’s operating model and improve its business processes and cost structure by reorganizing the Company’s senior management, including those managers reporting to the Chief Executive Officer, reducing its headcount, and consolidating various facilities. The Company expects to incur approximately $150 million of total expenses through 2020, with approximately $110 million related to severance and employee-related benefits and approximately $40 million related to costs associated with the relocation of various operations to other Company facilities, facility closures, lease terminations, consulting, and other expenses. Substantially all of these expenses are expected to be paid in cash. The foregoing figures are the Company’s estimates and are subject to change as the plan is anticipated to be completed by the end of 2020. While certain of the expenses may be identifiable to the Company’s segments, primarily to the Company’s Consumer-to-Consumer segment, the expenses are not included in the measurement of segment operating income provided to the Chief Operating Decision Maker (“CODM”) for purposes of performance assessment and resource allocation. These expenses are therefore excluded from the Company’s segment operating income results. These expenses are specific to this initiative; however, the types of expenses related to this initiative are similar to expenses that the Company has previously incurred and can reasonably be expected to incur in the future. The following table summarizes the activity for the six months ended June 30, 2020 for expenses related to the restructuring accruals, which are included in Accounts payable and accrued liabilities in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020, and the total expenses incurred since the inception of the restructuring plan (in millions): Severance and Facility Relocations Related and Closures, Employee Consulting, Benefits and Other Total Balance, December 31, 2019 $ 71.2 $ 2.1 $ 73.3 Expenses (a) 3.4 12.3 15.7 Cash payments (32.8) (10.9) (43.7) Non-cash benefits/(charges) (a) 0.1 (1.6) (1.5) Balance, June 30, 2020 $ 41.9 $ 1.9 $ 43.8 Total expenses incurred-to-date $ 101.4 $ 29.8 $ 131.2 (a) Non-cash benefits/(charges) include non-cash write-offs and accelerated depreciation of right-of-use assets and leasehold improvements and a non-cash benefit for adjustments to stock compensation for awards forfeited by employees. These amounts have been removed from the liability balance in the table above as they do not impact the restructuring accruals. The following table presents restructuring-related expenses as reflected in the Condensed Consolidated Statements of Income (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Cost of services $ 0.8 $ — $ 1.7 $ — Selling, general, and administrative 4.4 7.4 14.0 7.4 Total expenses, pre-tax $ 5.2 $ 7.4 $ 15.7 $ 7.4 Total expenses, net of tax $ 5.5 $ 6.0 $ 14.7 $ 6.0 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | 6. Leases The Company leases real properties for use as administrative and sales offices, in addition to automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Operating lease right-of-use (“ROU”) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and variable non-lease components within the Company’s lease agreements are accounted for separately. The Company has no material leases in which the Company is the lessor. The Company’s leasing arrangements are classified as operating leases, for which expense is recognized on a straight-line basis. As of June 30, 2020 and December 31, 2019, total ROU assets were $195.0 million and $199.7 million, respectively, and operating lease liabilities were $234.9 million and $242.3 million, respectively. The ROU assets and operating lease liabilities are included in Other assets and Other liabilities, respectively, in the Company’s Condensed Consolidated Balance Sheets. Cash paid for operating lease liabilities is recorded as Cash flows from operating activities in the Company’s Condensed Consolidated Statements of Cash Flows. Operating lease costs, which are included in Total expenses in the Company’s Condensed Consolidated Statements of Income, were $12.8 million and $14.3 million for the three months ended June 30, 2020 and 2019, respectively, and $26.0 million and $29.3 million for the six months ended June 30, 2020 and 2019, respectively. Short-term and variable lease costs were not material for the three and six months ended June 30, 2020. The Company’s leases have remaining terms from less than 1 year to 11 years. Certain of these leases contain escalation provisions and/or renewal options, giving the Company the right to extend the lease by up to 10 years. However, a significant majority of these options are not reflected in the calculation of the ROU asset and operating lease liability due to uncertainty surrounding the likelihood of renewal. The following table summarizes the weighted-average lease term and discount rate for operating lease liabilities: June 30, 2020 Weighted-average remaining lease term (in years) 7.6 Weighted-average discount rate 6.2 % The following table represents maturities of operating lease liabilities as of June 30, 2020 (in millions): Due within 1 year $ 49.7 Due after 1 year through 2 years 43.0 Due after 2 years through 3 years 36.4 Due after 3 years through 4 years 32.7 Due after 4 years through 5 years 29.8 Due after 5 years 98.1 Total lease payments 289.7 Less imputed interest (54.8) Total operating lease liabilities $ 234.9 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 7. Fair Value Measurements Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how the Company measures fair value, refer to the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The following tables present the Company’s assets and liabilities which are measured at fair value on a recurring basis, by balance sheet line item (in millions): Fair Value Measurement Using Total June 30, 2020 Level 1 Level 2 Fair Value Assets: Settlement assets: Measured at fair value through net income: Money market funds $ 22.9 $ — $ 22.9 Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income): State and municipal debt securities — 1,333.8 1,333.8 State and municipal variable-rate demand notes — 441.3 441.3 Corporate debt securities — 66.5 66.5 United States government agency mortgage-backed securities — 60.4 60.4 Other assets: Derivatives — 266.5 266.5 Total assets $ 22.9 $ 2,168.5 $ 2,191.4 Liabilities: Other liabilities: Derivatives $ — $ 206.3 $ 206.3 Total liabilities $ — $ 206.3 $ 206.3 Fair Value Measurement Using Total December 31, 2019 Level 1 Level 2 Fair Value Assets: Settlement assets: Measured at fair value through net income: Money market funds $ 24.6 $ — $ 24.6 Measured at fair value through other comprehensive income: State and municipal debt securities — 1,257.8 1,257.8 State and municipal variable-rate demand notes — 276.1 276.1 United States government agency mortgage-backed securities — 67.2 67.2 Corporate debt securities — 52.4 52.4 Other United States government agency debt securities — 34.9 34.9 United States Treasury securities 10.0 — 10.0 Other assets: Derivatives — 204.5 204.5 Total assets $ 34.6 $ 1,892.9 $ 1,927.5 Liabilities: Other liabilities: Derivatives $ — $ 159.5 $ 159.5 Total liabilities $ — $ 159.5 $ 159.5 No material non-recurring fair value adjustments or transfers between Level 1 and Level 2 measurements were recorded during the three and six months ended June 30, 2020 and 2019. Other Fair Value Measurements The carrying amounts for many of the Company’s financial instruments, including certain cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and obligations approximate fair value due to their short maturities. The Company’s borrowings are classified as Level 2 within the valuation hierarchy, and the aggregate fair value of these borrowings was based on quotes from multiple banks. Fixed-rate notes are carried in the Company’s Condensed Consolidated Balance Sheets at their original issuance values as adjusted over time to accrete that value to par. As of June 30, 2020, the carrying value and fair value of the Company’s borrowings were $3,085.8 million and $3,256.1 million, respectively (see Note 13). As of December 31, 2019, the carrying value and fair value of the Company’s borrowings were $3,229.3 million and $3,372.2 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Letters of Credit and Bank Guarantees The Company had approximately $360 million in outstanding letters of credit and bank guarantees as of June 30, 2020 that are primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements. The letters of credit and bank guarantees have expiration dates through 2024, with many having a one-year renewal option. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances. These letters of credit and bank guarantees exclude guarantees that the Company may provide as part of its legal matters, as described below. Litigation and Related Contingencies The Company is subject to certain claims and litigation that could result in losses, including damages, fines, and/or civil penalties, which could be significant, and in some cases, criminal charges. The Company regularly evaluates the status of legal matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable possibility that a loss or additional losses may have been incurred and whether an estimate of possible loss or range of loss can be made. Unless otherwise specified below, the Company believes that there is at least a reasonable possibility that a loss or additional losses may have been incurred for each of the matters described below. For those matters that the Company believes there is at least a reasonable possibility that a loss or additional losses may have been incurred and can reasonably estimate the loss or potential loss, the reasonably possible potential litigation losses in excess of the Company’s recorded liability for probable and estimable losses was approximately $30 million as of June 30, 2020. For the remaining matters, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons: (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damage claims are unsupported and/or unreasonable; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; or (vi) novel legal issues or unsettled legal theories are being asserted. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established liability or the range of reasonably possible loss. United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements In late November 2016, the Company entered into discussions with the United States Department of Justice (the “DOJ”), the United States Attorney’s Office for the Central District of California ("USAO-CDCA"), the United States Attorney’s Office for the Eastern District of Pennsylvania ("USAO-EDPA"), the United States Attorney’s Office for the Middle District of Pennsylvania ("USAO-MDPA"), and the United States Attorney’s Office for the Southern District of Florida (“USAO-SDFL”) to resolve the investigations by the USAO-CDCA, USAO-EDPA, USAO-MDPA, and USAO- SDFL (collectively, the “USAOs”). On January 19, 2017, the Company announced that it, or its subsidiary Western Union Financial Services, Inc. (“WUFSI”), had entered into 1) a Deferred Prosecution Agreement (the “DPA”) with the DOJ and the USAOs; 2) a Stipulated Order for Permanent Injunction and Final Judgment (the “FTC Consent Order”) with the United States Federal Trade Commission (“FTC”) resolving claims by the FTC alleging unfair acts and practices under the Federal Trade Commission Act and for violations of the FTC Telemarketing Sales Rule; and 3) a Consent to the Assessment of Civil Money Penalty with the Financial Crimes Enforcement Network (“FinCEN”) of the United States Department of Treasury (the “FinCEN Agreement”), to resolve the respective investigations of those agencies. FinCEN provided notice to the Company dated December 16, 2016 of its investigation regarding possible violations of the United States Bank Secrecy Act. On January 31, 2017, the Company entered into assurances of discontinuance/assurances of voluntary compliance with the attorneys general of 49 U.S. states and the District of Columbia named therein to resolve investigations by the state attorneys general, which sought information and documents relating to money transfers sent from the United States to certain countries, consumer fraud complaints that the Company had received and the Company’s procedures to help identify and prevent fraudulent transfers. On April 12, 2017, the Company settled with the one remaining state attorney general under effectively the same terms as the January 31, 2017 agreement with no additional monetary payment required. The agreements with the state attorneys general are collectively referred to herein as the "State AG Agreement." The DPA, FTC Consent Order, FinCEN Agreement, and State AG Agreement are collectively referred to herein as the "Joint Settlement Agreements." Pursuant to the DPA, the USAOs filed a two-count criminal information in the United States District Court for the Middle District of Pennsylvania, charging the Company with aiding and abetting wire fraud and willfully failing to implement an effective anti-money laundering ("AML") program. The USAOs agreed that if the Company fully complies with all of its obligations under the DPA, the USAOs will, at the conclusion of the DPA’s term, seek dismissal with prejudice of the criminal information filed against the Company. Under the Joint Settlement Agreements, the Company was required to 1) pay an aggregate amount of $586 million to the DOJ to be used to reimburse consumers who were the victims of third-party fraud conducted through the Company’s money transfer services (the “Compensation Payment”); 2) pay an aggregate amount of $5 million to the State Attorneys General to reimburse investigative, enforcement, and other costs; and 3) retain an independent compliance auditor for three years to review and assess actions taken by the Company under the FTC Consent Order to further enhance its oversight of agents and protection of consumers. The FinCEN Agreement also set forth a civil penalty of $184 million, the full amount of which was deemed satisfied by the Compensation Payment. No separate payment to the FTC was required under the Joint Settlement Agreements. The Company paid the Compensation Payment and the aggregate amount due to the State Attorneys General during 2017. The term of the DPA expired on January 19, 2020. On March 6, 2020, the DOJ filed an unopposed motion to dismiss the criminal information with prejudice in the United States District Court for the Middle District of Pennsylvania, and on March 9, 2020, the Court granted the motion. On May 16, 2020, the term of the Independent Compliance Auditor (“ICA”) under the FTC Consent Order ended. On that same date, the ICA issued its final report to the FTC, which concluded that Western Union is in full compliance with the requirements of the FTC Consent Order. Western Union has continuing obligations under the FTC Consent Order, which is a permanent injunction, as well as the requirement to submit annual reports to the FTC through January 2028. The Joint Settlement Agreements required, among other things, the Company to adopt certain new or enhanced practices with respect to its compliance program relating to consumer reimbursement, agent due diligence, agent training, monitoring, reporting, and record-keeping by the Company and its agents, consumer fraud disclosures, agent suspensions and terminations, and other items. The ongoing obligations under the FTC Consent Order and the State AG Agreement have had and could continue to have adverse effects on the Company’s business, including additional costs and potential loss of business. The Company has faced (as described below) additional actions from other regulators as a result of the Joint Settlement Agreements. Further, if the Company fails to comply with the continuing obligations under the FTC Consent order and the State AG Agreement, it could face criminal prosecution, civil litigation, significant fines, damage awards or other regulatory consequences. Any or all of these outcomes could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows. Shareholder Derivative Action On January 16, 2020, Stanley Lieblein filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware naming the Company’s President and Chief Executive Officer, certain current and former directors, and a former executive officer as individual defendants and the Company as a nominal defendant. Mr. Lieblein had previously filed a shareholder derivative action asserting related claims in the United States District Court for the District of Colorado, which was subsequently consolidated with multiple pending related derivative actions. Following the filing of multiple amended complaints, the United States Court of Appeals for the Tenth Circuit affirmed dismissal of the consolidated derivative action on April 16, 2019 on the ground that the plaintiffs did not have standing to proceed on behalf of the Company without making a demand on the Company’s board of directors. The consolidated derivative action is described in further detail in Part I, Item I, Financial Statements On August 1, 2019, Mr. Lieblein made a written demand on the Company’s board of directors to investigate and address alleged misconduct related to the Company’s anti-fraud and AML compliance programs, including certain alleged misconduct at issue in the consolidated derivative action. The Company’s board of directors formed a special committee to evaluate Mr. Lieblein’s demand together with a related shareholder demand. The special committee’s investigation is ongoing. Mr. Lieblein alleges that he filed the January 16, 2020 complaint prior to the completion of the special committee’s investigation because of concerns regarding the statute of limitations on some of the claims asserted. Mr. Lieblein has agreed to stay the action pending completion of the special committee’s investigation, or until September 30, 2020, whichever occurs earlier. The complaint filed by Mr. Lieblein on January 16, 2020 includes allegations that the director and officer defendants declined to implement effective anti-fraud and AML compliance systems after receiving numerous red flags indicating prolonged willful illegality, condoned executive officers’ obstruction of efforts by various regulators to impose an effective compliance system on the Company, approved executive compensation packages for management that were not aligned with development of effective anti-fraud and AML compliance programs, allowed management to fail to timely report known or likely impropriety by Company employees or agents to regulatory authorities, failed to require management to adopt a risk assessment for all very high risk areas, refused to remedy the board’s oversight of executive officers, and, in effect, refused Mr. Lieblein’s shareholder demand and related request for tolling agreements. It also includes allegations that the officer defendants declined to ensure that the Company implemented effective anti-fraud and AML compliance programs after receiving red flags that those programs were inadequate, allowed Company agents to willfully ignore anti-fraud and AML recording and reporting requirements for a prolonged period, opposed efforts by various regulators to implement effective anti-fraud and AML compliance programs, caused the Company to fail to comply with its obligations under settlements with regulators, and knowingly exposed the Company to criminal and civil sanctions. Due to the nature of this matter and the early stage of the proceedings, the Company cannot predict the outcome or potential impact of the matter. Other Matters On March 12, 2014, Jason Douglas filed a purported class action complaint in the United States District Court for the Northern District of Illinois asserting a claim under the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., based on allegations that since 2009, the Company has sent text messages to class members’ wireless telephones without their consent. During the first quarter of 2015, the Company’s insurance carrier and the plaintiff reached an agreement to create an $8.5 million settlement fund that will be used to pay all class member claims, class counsel’s fees and the costs of administering the settlement. The agreement has been signed by the parties and, on November 10, 2015, the Court granted preliminary approval to the settlement. On January 9, 2018, plaintiff filed a motion requesting decisions on its pending motion to approve the settlement and motion for attorneys’ fees, costs, and incentive award. On August 31, 2018, the Court issued an order approving the settlement, in which the Court modified the class definition slightly and ordered the parties to provide additional notice to the class. In 2014, the Company accrued an amount equal to the retention under its insurance policy and believes that any amounts in excess of this accrual will be covered by the insurer. However, if the Company’s insurer is unable to or refuses to satisfy its obligations under the policy or the parties are unable to reach a definitive agreement or otherwise agree on a resolution, the Company’s financial condition, results of operations, and cash flows could be adversely impacted. As the parties have reached an agreement in this matter, the Company believes that the potential for additional loss in excess of amounts already accrued is remote. In October 2015, Consumidores Financieros Asociación Civil para su Defensa, an Argentinian consumer association, filed a purported class action lawsuit in Argentina’s National Commercial Court No. 19 against the Company’s subsidiary Western Union Financial Services Argentina S.R.L. (“WUFSA”). The lawsuit alleges, among other things, that WUFSA’s fees for money transfers sent from Argentina are excessive and that WUFSA does not provide consumers with adequate information about foreign exchange rates. The plaintiff is seeking, among other things, an order requiring WUFSA to reimburse consumers for the fees they paid and the foreign exchange revenue associated with money transfers sent from Argentina, plus punitive damages. The complaint does not specify a monetary value of the claim or a time period. In November 2015, the Court declared the complaint formally admissible as a class action. The notice of claim was served on WUFSA in May 2016, and in June 2016 WUFSA filed a response to the claim and moved to dismiss it on statute of limitations and standing grounds. In April 2017, the Court deferred ruling on the motion until later in the proceedings. The process for notifying potential class members has been completed and the case proceeded to the evidentiary stage. On June 4, 2020, the case was stayed because the consumer association that filed the lawsuit no longer had the registration needed to assert its claims on behalf of the alleged class. The case will be stayed until (i) the Attorney-General instructs the Prosecutor to continue to litigate the claims on behalf of the plaintiff (during the time the registration of Consumidores Financieros before the Secretary of Commerce remains suspended); or (ii) the parties report to the Court that the plaintiff recovered its legal capacity. Due to the stage of this matter, the Company is unable to predict the outcome or the possible loss or range of loss, if any, associated with this matter. WUFSA intends to defend itself vigorously. On February 22, 2017, the Company, its President and Chief Executive Officer, its Chief Financial Officer, and a former executive officer of the Company were named as defendants in two purported class action lawsuits, both of which asserted claims under section 10(b) of the Exchange Act and Securities and Exchange Commission rule 10b-5 and section 20(a) of the Exchange Act. On May 3, 2017, the two cases were consolidated by the United States District Court for the District of Colorado under the caption Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust et al. v. The Western Union Company et al. On February 13, 2017, the Company’s subsidiary, Western Union Payment Services Ireland Limited (“WUPSIL”), was served with a writ of accusation from the National Court of Spain. The writ charges 98 former Western Union money transfer agents or agent representatives with fraud and money laundering in connection with consumer fraud scams they allegedly perpetrated using Western Union money transfer transactions. The writ also names WUPSIL as a civil defendant, allegedly responsible under Spanish law to pay any portion of the alleged amount in victim losses that cannot be repaid by any of the criminal defendants who are convicted. In accordance with Spanish law, on January 4, 2018, the Company, through its subsidiary Western Union International Limited, provided a corporate guarantee in an amount of approximately €23 million to cover any liability that could theoretically attach to WUPSIL. On October 3, 2019, WUPSIL reached a settlement agreement with the Spanish prosecutor that extinguishes WUPSIL’s civil liability for the fraud scams at issue by stating that the liability has already been covered by the Compensation Payment under the DPA. On October 8, 2019, WUPSIL filed a motion requesting release of the corporate guarantee. On November 4, 2019, the Court issued final judgment in this matter consistent with the settlement agreement. WUPSIL filed a new motion requesting release of the corporate guarantee on December 2, 2019. On June 19, 2020, the Court released the corporate guarantee. This decision is now binding and final and cannot be further appealed or modified. On March 31, 2017, the Company received a request for the production of documents from the New York State Department of Financial Services (the "NYDFS"), following up on a meeting the Company had with the NYDFS on March 7, 2017. The requests pertain to the Company’s oversight of one current and two former Western Union agents located in New York state. The two former agents were identified in the DPA described in the United States Department of Justice, Federal Trade Commission, Financial Crimes Enforcement Network, and State Attorneys General Settlements section above, and were terminated as agents by the Company prior to 2013. On July 28, 2017, the NYDFS informed the Company that the facts set forth in the DPA regarding the Company’s anti-money laundering programs over the 2004 through 2012 period gave the NYDFS a basis to take additional enforcement action. On January 4, 2018, the Company’s subsidiary, WUFSI, and the NYDFS agreed to a consent order (the "NYDFS Consent Order"), which resolved the NYDFS investigation into these matters. Under the NYDFS Consent Order, the Company was required, among other things, to pay to the NYDFS a civil monetary penalty of $60 million, which the Company paid on January 12, 2018. On April 26, 2018, the Company, its WUFSI subsidiary, its President and Chief Executive Officer, and various “Doe Defendants” (purportedly including Western Union officers, directors, and agents) were named as defendants in a purported class action lawsuit asserting claims for alleged violations of civil Racketeer Influenced and Corrupt Organizations Act and the Colorado Organized Crime Act, civil theft, negligence, unjust enrichment, and conversion under the caption Frazier et al. v. The Western Union Company et al., In addition to the principal matters described above, the Company is a party to a variety of other legal matters that arise in the normal course of the Company’s business. While the results of these other legal matters cannot be predicted with certainty, management believes that the final outcome of these matters will not have a material adverse effect either individually or in the aggregate on the Company’s financial condition, results of operations, or cash flows. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents commissions for money transfer and other services provided on the Company’s behalf. Commission expense recognized for these agents for the three months ended June 30, 2020 and 2019 totaled $12.9 million and $14.4 million, respectively, and $25.5 million and $27.4 million for the six months ended June 30, 2020 and 2019, respectively. |
Settlement Assets and Obligatio
Settlement Assets and Obligations | 6 Months Ended |
Jun. 30, 2020 | |
Settlement Assets and Obligations | |
Settlement Assets and Obligations | 10. Settlement Assets and Obligations Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders, and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders, and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment. Settlement assets and obligations consisted of the following (in millions): June 30, 2020 Settlement assets: Cash and cash equivalents $ 386.7 Receivables from agents and Business Solutions customers 1,274.3 Less: Allowance for credit losses (40.7) Receivables from agents and Business Solutions customers, net 1,233.6 Investment securities 1,902.0 Total settlement assets $ 3,522.3 Settlement obligations: Money transfer, money order, and payment service payables $ 2,760.9 Payables to agents 761.4 Total settlement obligations $ 3,522.3 December 31, 2019 Settlement assets: Cash and cash equivalents $ 368.2 Receivables from agents and Business Solutions customers, net 1,230.1 Investment securities 1,698.4 Total settlement assets $ 3,296.7 Settlement obligations: Money transfer, money order, and payment service payables $ 2,571.5 Payables to agents 725.2 Total settlement obligations $ 3,296.7 Receivables from agents represent funds collected by such agents, but in transit to the Company, and were $1,171.7 million as of June 30, 2020. Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. The Company performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. Business Solutions receivables totaled $61.9 million as of June 30, 2020. Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer. Collection of these receivables ordinarily occurs within a few days. To mitigate risk associated with potential Business Solutions customer defaults, the Company performs credit reviews on an ongoing basis. On January 1, 2020, the Company adopted a new accounting standard related to the estimation of the allowance for credit losses, as discussed in Note 1. However, due to the short-term nature of the Company’s receivables and the Company’s historical and expected collections practice, the adoption did not have a material impact on the Company’s financial position or results of operations. The Company separately establishes and monitors an allowance for credit losses related to receivables from agents and Business Solutions customers. The Company estimates the allowance based on its historical collections experience, adjusted for current conditions and forecasts of future economic conditions, including those related to COVID-19. Given the short-term nature of these receivables, the Company would not expect the impact of forecasted economic conditions on its allowance for credit loss to be significant. However, during the three and six months ended June 30, 2020, the Company experienced delays in its collections from certain of its agents in connection with COVID-19 agent location closures and other impacts, and the Company believes these delays were largely temporary as certain agents were not able to remit settlement funds during lockdowns or other stay-at-home orders. Still, some of the Company’s agents, such as small businesses, may not easily be able to resume operations due to COVID-19. The Company has estimated credit losses based on information known as of June 30, 2020. The following table summarizes activity in the allowance for credit losses on receivables from agents and Business Solutions customers (in millions): Business Solutions Agents Customers Allowance for credit losses as of January 1, 2020 $ 20.4 $ 4.5 Current period provision for expected credit losses (a) 19.9 1.4 Write-offs charged against the allowance (4.7) (1.7) Recoveries of amounts previously written off 1.2 — Impacts of foreign currency exchange rates and other (0.9) 0.6 Allowance for credit losses as of June 30, 2020 $ 35.9 $ 4.8 (a) Provision does not include losses from chargebacks or fraud associated with transactions initiated through our electronic channels, as these losses are not credit-related. Investment securities included in Settlement assets in the Company’s Condensed Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed-rate term notes and variable-rate demand notes. Variable-rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. Investment securities are exposed to market risk due to changes in interest rates and credit risk. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable regulatory requirements. The Company’s investment securities are classified as available-for-sale and recorded at fair value. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification. Unrealized gains on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Available-for-sale securities with a fair value below the amortized cost basis are evaluated on an individual basis to determine whether the impairment is due to credit-related factors or noncredit-related factors. Factors that could indicate a credit loss exists include but are not limited to: (i) negative earnings performance, (ii) credit rating downgrades, or (iii) adverse changes in the regulatory or economic environment of the asset. Any impairment that is not credit-related is excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes, unless the Company intends to sell the impaired security or it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. Credit-related impairments are recognized immediately as an adjustment to earnings, regardless of whether the Company has the ability or intent to hold the security to maturity, and are limited to the difference between fair value and the amortized cost basis. As of and for the three and six months ended June 30, 2020, the Company’s allowance for credit losses and provision for credit losses on its available-for-sale securities were immaterial. The components of investment securities are as follows (in millions): Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized June 30, 2020 Cost Value Gains Losses Gains/(Losses) Settlement assets: Cash and cash equivalents: Money market funds $ 22.9 $ 22.9 $ — $ — $ — Available-for-sale securities: State and municipal debt securities (a) 1,274.2 1,333.8 60.1 (0.5) 59.6 State and municipal variable-rate demand notes 441.3 441.3 — — — Corporate debt securities 65.4 66.5 1.1 — 1.1 United States government agency mortgage-backed securities 58.7 60.4 1.7 — 1.7 Total available-for-sale securities 1,839.6 1,902.0 62.9 (0.5) 62.4 Total investment securities $ 1,862.5 $ 1,924.9 $ 62.9 $ (0.5) $ 62.4 Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2019 Cost Value Gains Losses Gains/(Losses) Settlement assets: Cash and cash equivalents: Money market funds $ 24.6 $ 24.6 $ — $ — $ — Available-for-sale securities: State and municipal debt securities (a) 1,227.4 1,257.8 31.0 (0.6) 30.4 State and municipal variable-rate demand notes 276.1 276.1 — — — United States government agency mortgage-backed securities 66.3 67.2 0.9 — 0.9 Corporate debt securities 52.3 52.4 0.1 — 0.1 Other United States government agency debt securities 34.9 34.9 — — — United States Treasury securities 9.8 10.0 0.2 — 0.2 Total available-for-sale securities 1,666.8 1,698.4 32.2 (0.6) 31.6 Total investment securities $ 1,691.4 $ 1,723.0 $ 32.2 $ (0.6) $ 31.6 (a) The majority of these securities are fixed-rate instruments. The following summarizes the contractual maturities of available-for-sale securities within Settlement assets as of June 30, 2020 (in millions): Fair Value Due within 1 year $ 163.8 Due after 1 year through 5 years 680.4 Due after 5 years through 10 years 463.7 Due after 10 years 594.1 Total $ 1,902.0 Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable-rate demand notes. Variable-rate demand notes, having a fair value of $15.0 million, $1.0 million, and $425.3 million were included in the categories "Due after 1 year through 5 years," "Due after 5 years through 10 years," and "Due after 10 years," respectively, in the table above. In addition, from time to time, the Company has made advances to its agents. We generally owe settlement funds payable to these agents that offset these advances. These amounts advanced to agents are included within Other assets in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2020, amounts advanced to agents were $117.9 million, and the related allowance for credit losses was immaterial. |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Deficit | |
Stockholders' Deficit | 11. Stockholders’ Deficit Accumulated Other Comprehensive Loss The following table details reclassifications out of Accumulated other comprehensive loss (“AOCL”) and into Net income. All amounts reclassified from AOCL affect the line items as indicated below and the amounts in parentheses indicate decreases to Net income in the Condensed Consolidated Statements of Income. Amounts Reclassified from AOCL to Net Income Three Months Ended Six Months Ended Income Statement June 30, June 30, Income for the period (in millions) Location 2020 2019 2020 2019 Accumulated other comprehensive loss components: Gains/(losses) on investment securities: Available-for-sale securities Revenues $ 0.3 $ 0.6 $ 0.9 $ 0.6 Income tax expense Provision for income taxes — (0.2) (0.2) (0.2) Total reclassification adjustments related to investment securities, net of tax 0.3 0.4 0.7 0.4 Gains/(losses) on cash flow hedges: Foreign currency contracts Revenues 4.2 2.1 10.8 3.5 Interest rate contracts Interest expense (0.1) — (0.3) — Income tax expense Provision for income taxes — — (0.1) — Total reclassification adjustments related to cash flow hedges, net of tax 4.1 2.1 10.4 3.5 Amortization of components of defined benefit plans: Actuarial loss Other income/(expense), net (3.1) (2.7) (6.1) (5.4) Income tax benefit Provision for income taxes 1.0 0.8 1.7 1.0 Total reclassification adjustments related to defined benefit plans, net of tax (2.1) (1.9) (4.4) (4.4) Total reclassifications, net of tax $ 2.3 $ 0.6 $ 6.7 $ (0.5) The following tables summarize the components of AOCL, net of tax on the accompanying Condensed Consolidated Balance Sheets were as follows (in millions): Investment Hedging Foreign Currency Defined Benefit Securities Activities Translation Pension Plan Total As of December 31, 2019 $ 24.7 $ (3.6) $ (101.2) $ (128.9) $ (209.0) Unrealized gains 7.2 27.3 — — 34.5 Tax expense (1.1) (0.3) — — (1.4) Amounts reclassified from AOCL into earnings, net of tax (0.4) (6.3) — 2.3 (4.4) As of March 31, 2020 30.4 17.1 (101.2) (126.6) (180.3) Unrealized gains/(losses) 24.6 (15.1) — — 9.5 Tax benefit/(expense) (4.8) 0.1 — — (4.7) Amounts reclassified from AOCL into earnings, net of tax (0.3) (4.1) — 2.1 (2.3) As of June 30, 2020 $ 49.9 $ (2.0) $ (101.2) $ (124.5) $ (177.8) Investment Hedging Foreign Currency Defined Benefit Securities Activities Translation Pension Plan Total As of December 31, 2018 $ (1.1) $ 7.4 $ (101.2) $ (136.1) $ (231.0) Unrealized gains 16.8 4.4 — — 21.2 Tax benefit/(expense) (3.8) 0.9 — — (2.9) Amounts reclassified from AOCL into earnings, net of tax — (1.4) — 2.5 1.1 As of March 31, 2019 11.9 11.3 (101.2) (133.6) (211.6) Unrealized gains/(losses) 13.0 (3.9) — — 9.1 Tax benefit/(expense) (2.7) 0.1 — — (2.6) Amounts reclassified from AOCL into earnings, net of tax (0.4) (2.1) — 1.9 (0.6) As of June 30, 2019 $ 21.8 $ 5.4 $ (101.2) $ (131.7) $ (205.7) Cash Dividends Paid The Company’s Board of Directors declared quarterly cash dividends of $0.225 per common share in the first and second quarters of 2020, representing $184.9 million in total dividends. Of this amount, $92.5 million was paid on June 30, 2020 and $92.4 million was paid on March 31, 2020. The Company’s Board of Directors declared quarterly cash dividends of $0.20 per common share in the first and second quarters of 2019, representing $172.9 million in total dividends. Of this amount, $85.5 million was paid on June 28, 2019 and $87.4 million was paid on March 29, 2019. On July 15, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.225 per common share payable on September 30, 2020. Share Repurchases During the six months ended June 30, 2020 and 2019, 8.5 million and 17.9 million shares were repurchased for $217.4 million and $335.5 million, respectively, excluding commissions, at an average cost of $25.45 and $18.73, respectively. These amounts represent shares authorized by the Board of Directors for repurchase under publicly announced authorizations. During the first quarter of 2020, the Company temporarily paused and has not resumed share repurchases, and as of June 30, 2020, $782.6 million remains available |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2020 | |
Derivatives | |
Derivatives | 12. Derivatives The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the euro, and, to a lesser degree, the Canadian dollar, British pound, and other currencies, related to forecasted revenues and settlement assets and obligations, as well as on certain foreign currency denominated cash and other asset and liability positions. The Company is also exposed to risk from derivative contracts, primarily from customer derivatives, arising from its cross-currency Business Solutions payment operations. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company has used derivatives to (i) minimize its exposures related to changes in foreign currency exchange rates and interest rates, and (ii) facilitate cross-currency Business Solutions payments by writing derivatives to customers. The Company executes derivatives with established financial institutions; the substantial majority of these financial institutions have a credit rating of "A-" or higher from a major credit rating agency. Customer derivatives written by the Company’s Business Solutions operations primarily involve small and medium size enterprises. The primary credit risk inherent in derivative agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis, while also monitoring the concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action when doubt arises about the counterparties’ ability to perform. These actions may include requiring Business Solutions customers to post or increase collateral, and for all counterparties, the possible termination of the related contracts. The Company’s hedged foreign currency exposures are in liquid currencies; consequently, there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future. Foreign Currency Derivatives The Company’s policy is to use longer duration foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of June 30, 2020, these foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness. The initial value of the excluded components is amortized into Revenues within the Company’s Condensed Consolidated Statements of Income. The Company also uses short duration foreign currency forward contracts, generally with maturities ranging from a few days The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of June 30, 2020 and December 31, 2019 were as follows (in millions): June 30, 2020 Contracts designated as hedges: Euro $ 320.2 Canadian dollar 81.8 British pound 44.9 Australian dollar 29.0 Swiss franc 26.0 Other (a) 39.9 Contracts not designated as hedges: Euro $ 329.7 Indian rupee 79.2 British pound 65.4 Mexican peso 60.1 Qatari riyal 54.4 Canadian dollar 45.5 Australian dollar 29.8 Japanese yen 27.7 Other (a) 170.9 (a) Comprised of exposures to various currencies as of June 30, 2020. None of these individual currency exposures is greater than $25 million. December 31, 2019 Contracts designated as hedges: Euro $ 391.9 Canadian dollar 99.0 British pound 57.2 Australian dollar 36.1 Swiss franc 28.9 Other (a) 50.9 Contracts not designated as hedges: Euro $ 289.0 Canadian dollar 110.3 British pound 78.1 Indian rupee 61.0 Mexican peso 52.3 Japanese yen 37.7 Australian dollar 35.2 Brazilian real 32.5 Other (a) 145.6 (a) Comprised of exposures to various currencies as of December 31, 2019. None of these individual currency exposures is greater than $25 million. Business Solutions Operations The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company’s cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $70.0 million and $84.2 million for the three months ended June 30, 2020 and 2019, respectively, and $157.5 million and $168.9 million for the six months ended June 30, 2020 and 2019, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges and the duration of these derivative contracts at inception is generally less than one year. The aggregate equivalent United States dollar notional amount of derivative customer contracts held by the Company in its Business Solutions operations as of June 30, 2020 and December 31, 2019 was approximately $7.5 billion. The significant majority of customer contracts are written in the following currencies: the United States dollar, the Canadian dollar, and the euro. Interest Rate Hedging From time to time, the Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term, variable rate payments in order to manage its overall exposure to interest rate fluctuations. The Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within Borrowings in the Condensed Consolidated Balance Sheets. Interest expense in the Condensed Consolidated Statements of Income has been adjusted to include the effects of interest accrued on the swaps. On November 15, 2019, the Company terminated its interest rate swaps designated as fair value hedges in connection with the repayment of $324.9 million of aggregate principal amount unsecured notes in the fourth quarter of 2019 and received cash of $0.9 million. Therefore, as of June 30, 2020 and December 31, 2019, the Company did not have any interest rate swaps designated as fair value hedges. Balance Sheet The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (in millions): Derivative Assets Derivative Liabilities Fair Value Fair Value Balance Sheet June 30, December 31, Balance Sheet June 30, December 31, Location 2020 2019 Location 2020 2019 Derivatives designated as hedges: Foreign currency cash flow hedges Other assets $ 17.7 $ 21.0 Other liabilities $ 1.3 $ 4.8 Total derivatives designated as hedges $ 17.7 $ 21.0 $ 1.3 $ 4.8 Derivatives not designated as hedges: Business Solutions operations - foreign currency (a) Other assets $ 245.8 $ 182.0 Other liabilities $ 202.9 $ 151.0 Foreign currency Other assets 3.0 1.5 Other liabilities 2.1 3.7 Total derivatives not designated as hedges $ 248.8 $ 183.5 $ 205.0 $ 154.7 Total derivatives $ 266.5 $ 204.5 $ 206.3 $ 159.5 (a) In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with financial institution counterparties to offset the original economic hedge contracts. This frequently results in changes in the Company’s derivative assets and liabilities that may not directly align with the performance in the underlying derivatives business. The fair values of derivative assets and liabilities associated with contracts that include netting language that the Company believes to be enforceable have been netted in the following tables to present the Company’s net exposure with these counterparties. The Company’s rights under these agreements generally allow for transactions to be settled on a net basis, including upon early termination, which could occur upon the counterparty’s default, a change in control, or other conditions. In addition, certain of the Company’s other agreements include netting provisions, the enforceability of which may vary from jurisdiction to jurisdiction and depending on the circumstances. Due to the uncertainty related to the enforceability of these provisions, the derivative balances associated with these agreements are included within "Derivatives that are not or may not be subject to master netting arrangement or similar agreement" in the following tables. In certain circumstances, the Company may require its Business Solutions customers to maintain collateral balances which may mitigate the risk associated with potential customer defaults. The following tables summarize the gross and net fair value of derivative assets and liabilities as of June 30, 2020 and December 31, 2019 (in millions): Offsetting of Derivative Assets Gross Net Amounts Derivatives Gross Amounts Offset Presented Not Offset Amounts of in the Condensed in the Condensed in the Condensed Recognized Consolidated Consolidated Consolidated June 30, 2020 Assets Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 117.6 $ — $ 117.6 $ (84.8) $ 32.8 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 148.9 Total $ 266.5 December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ 95.3 $ — $ 95.3 $ (74.7) $ 20.6 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 109.2 Total $ 204.5 Offsetting of Derivative Liabilities Gross Net Amounts Derivatives Gross Amounts Offset Presented Not Offset Amounts of in the Condensed in the Condensed in the Condensed Recognized Consolidated Consolidated Consolidated June 30, 2020 Liabilities Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 160.5 $ — $ 160.5 $ (84.8) $ 75.7 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 45.8 Total $ 206.3 December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ 121.8 $ — $ 121.8 $ (74.7) $ 47.1 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 37.7 Total $ 159.5 Income Statement Cash Flow and Fair Value Hedges The effective portion of the change in fair value of derivatives that qualify as cash flow hedges is recorded in AOCL in the Company’s Condensed Consolidated Balance Sheets. Generally, amounts are recognized in income when the related forecasted transaction affects earnings. The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Foreign currency derivatives (a) $ (15.1) $ (3.9) $ 12.2 $ 0.5 (a) Gains/(losses) of $(0.7) million and $1.2 million, for the three months ended June 30, 2020 and 2019, respectively, and $2.8 million and $1.7 million for the six months ended June 30, 2020 and 2019, respectively, represent amounts excluded from the assessment of effectiveness that were recognized in other comprehensive income, for which an amortization approach is applied. The following table presents the location and amounts of pre-tax gains/(losses) from fair value and cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three months ended June 30, 2020 and 2019 (in millions): Three Months Ended June 30, 2020 2019 Interest Interest Revenues Expense Revenues Expense Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded $ 1,114.7 $ (29.3) $ 1,340.5 $ (38.6) The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate derivatives: Hedged items — — — (0.6) Derivatives designated as hedging instruments — — — 0.6 Gain/(loss) on cash flow hedges: Foreign currency derivatives: Gains/(losses) reclassified from AOCL into earnings 4.2 — 2.1 — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 2.8 — 2.8 — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value — — 1.0 — Interest rate derivatives: Gains/(losses) reclassified from AOCL into earnings — (0.1) — — The following table presents the location and amounts of pre-tax gains/(losses) from fair value and cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the six months ended June 30, 2020 and 2019 (in millions): Six Months Ended June 30, 2020 2019 Interest Interest Revenues Expense Revenues Expense Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded $ 2,304.7 $ (62.2) $ 2,677.5 $ (78.3) The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate derivatives: Hedged items — — — (0.9) Derivatives designated as hedging instruments — — — 1.0 Gain/(loss) on cash flow hedges: Foreign currency derivatives: Gains/(losses) reclassified from AOCL into earnings 10.8 — 3.5 — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 6.3 — 5.1 — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value — — 2.3 — Interest rate derivatives: Gains/(losses) reclassified from AOCL into earnings — (0.3) — — Undesignated Hedges The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, Derivatives (a) Location 2020 2019 2020 2019 Foreign currency derivatives (b) Selling, general, and administrative $ (3.1) $ 1.0 $ 26.1 $ 7.6 Foreign currency derivatives Revenues — — — 0.2 Total gain/(loss) $ (3.1) $ 1.0 $ 26.1 $ 7.8 (a) The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. (b) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $3.0 million and $(4.3) million for the three months ended June 30, 2020 and 2019, respectively, and $(48.0) million and $(15.1) million for the six months ended June 30, 2020 and 2019, respectively. All cash flows associated with derivatives are included in Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Based on June 30, 2020 foreign exchange rates, an accumulated other comprehensive pre-tax gain of $5.1 million related to the foreign currency forward contracts is expected to be reclassified into Revenues within the next 12 months. |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2020 | |
Borrowings | |
Borrowings | 13. Borrowings The Company’s outstanding borrowings consisted of the following (in millions): June 30, 2020 December 31, 2019 Commercial paper (a) $ 100.0 $ 245.0 Notes: 3.600% notes due 2022 (b) 500.0 500.0 4.250% notes due 2023 (b) 300.0 300.0 2.850% notes due 2025 (b) 500.0 500.0 6.200% notes due 2036 (b) 500.0 500.0 6.200% notes due 2040 (b) 250.0 250.0 Term loan facility borrowing (effective rate of 1.5%) 950.0 950.0 Total borrowings at par value 3,100.0 3,245.0 Debt issuance costs and unamortized discount, net (14.2) (15.7) Total borrowings at carrying value (c) $ 3,085.8 $ 3,229.3 (a) Pursuant to the Company’s commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company’s revolving credit facility. The commercial paper notes may have maturities of up to 397 days from date of issuance. The Company’s commercial paper borrowings as of June 30, 2020 had a weighted-average annual interest rate of approximately 0.4% and a weighted-average term of approximately 1 day . (b) The difference between the stated interest rate and the effective interest rate is not significant. (c) As of June 30, 2020, the Company’s weighted-average effective rate on total borrowings was approximately 3.5% . The following summarizes the Company’s maturities of notes and term loan at par value as of June 30, 2020 (in millions): Due within 1 year $ 23.8 Due after 1 year through 2 years 547.5 Due after 2 years through 3 years 371.3 Due after 3 years through 4 years 807.4 Due after 4 years through 5 years 500.0 Due after 5 years 750.0 The Company’s obligations with respect to its outstanding borrowings, as described above, rank equally. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | 14. Income Taxes The Company’s provision for income taxes for the three and six months ended June 30, 2020 and 2019 is based on the estimated annual effective tax rate, in addition to discrete items. The Company’s effective tax rates on pre-tax income were 16.2% and 17.5% for the three months ended June 30, 2020 and 2019, respectively, and 14.3% and 18.1% for the six months ended June 30, 2020 and 2019, respectively. The decrease in the Company’s effective tax rate for the three months ended June 30, 2020 compared to the prior period was primarily due to an increase in prior period domestic pre-tax income due to the sales of the Speedpay and Paymap businesses, partially offset by increased discrete expenses in the current period. The decrease in the Company’s effective tax rate for the six months ended June 30, 2020 compared to the prior period was primarily due to an increase in prior period domestic pre-tax income due to the net gain on the sales of Speedpay and Paymap. The Company derives its pre-tax income from both foreign and domestic sources. Uncertain Tax Positions The Company has established contingency reserves for a variety of material, known tax exposures. The Company’s tax reserves reflect management’s judgment as to the resolution of the issues involved if subject to judicial review or other settlement. While the Company believes its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to these reserves, the Company’s income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e. new information) surrounding a tax issue and (ii) any difference from the Company’s tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in the Company’s consolidated financial statements in future periods and could impact operating cash flows. Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the Company’s consolidated financial statements and are reflected in Income taxes payable in the Condensed Consolidated Balance Sheets. The total amount of unrecognized tax benefits as of June 30, 2020 and December 31, 2019 was $292.0 million and $293.9 million, respectively, excluding interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $281.9 million and $283.4 million as of June 30, 2020 and December 31, 2019, respectively, excluding interest and penalties. The Company recognizes interest and penalties with respect to unrecognized tax benefits in Provision for income taxes in its Condensed Consolidated Statements of Income and records the associated liability in Income taxes payable in its Condensed Consolidated Balance Sheets. The Company recognized $1.9 million and $2.5 million of interest and penalties during the three months ended June 30, 2020 and 2019, respectively, and $0.7 million and $3.4 million during the six months ended June 30, 2020 and 2019. The Company has accrued $27.8 million and $27.1 million for the payment of interest and penalties as of June 30, 2020 and December 31, 2019, respectively. The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and for various non-United States jurisdictions, and the Company has identified the United States as its major tax jurisdiction, as the income tax imposed by any one foreign country is not material to the Company. The Company’s United States federal income tax returns since 2016 are eligible to be examined. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2020 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | 15. Stock-Based Compensation Plans For the three months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $5.3 million and $11.6 million, respectively, resulting from stock options, restricted stock units, performance-based restricted stock units and deferred stock units in the Condensed Consolidated Statements of Income. For the six months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $17.8 million and $25.3 million, respectively. During the six months ended June 30, 2020, the Company granted 0.5 million options at a weighted-average exercise price of $26.20 and 2.4 million performance-based restricted stock units and restricted stock units at a weighted-average grant date fair value of $25.93. As of June 30, 2020, the Company had 4.9 million outstanding options at a weighted-average exercise price of $19.13, of which 3.8 million options were exercisable at a weighted-average exercise price of $18.41. The Company had 7.1 million performance-based restricted stock units (based on target performance) and restricted stock units at a weighted-average grant date fair value of $20.83 as of June 30, 2020. |
Segments
Segments | 6 Months Ended |
Jun. 30, 2020 | |
Segments | |
Segments | 16. Segments As described in Note 1, the Company classifies its business into two segments: Consumer-to-Consumer and Business Solutions. Operating segments are defined as components of an enterprise that engage in business activities, about which separate financial information is available that is evaluated regularly by the Company’s CODM in allocating resources and assessing performance. The Consumer-to-Consumer operating segment facilitates money transfers between two consumers. The Company’s multi-currency money transfer service is provided through one interconnected global network where a money transfer can be sent from one location to another around the world. The segment includes five geographic regions whose functions are primarily related to generating, managing, and maintaining agent relationships and localized marketing activities. The Company includes Digital Money Transfer transactions in its regions. By means of common processes and systems, these regions, including Digital Money Transfer transactions, create an interconnected network for consumer transactions, thereby constituting one global Consumer-to-Consumer money transfer business and one operating segment. The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises, and other organizations and individuals. All businesses and other services that have not been classified in the above segments are reported as Other, which primarily includes the Company’s cash-based and electronic-based bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services. In May 2019, the Company sold Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue. The following table presents the Company’s reportable segment results for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Revenues: Consumer-to-Consumer $ 976.6 $ 1,112.9 $ 1,992.0 $ 2,169.8 Business Solutions 79.4 95.6 177.8 191.2 Other (a) 58.7 132.0 134.9 316.5 Total consolidated revenues $ 1,114.7 $ 1,340.5 $ 2,304.7 $ 2,677.5 Operating income: Consumer-to-Consumer $ 212.8 $ 250.2 $ 422.7 $ 483.5 Business Solutions 1.3 10.5 15.2 19.1 Other (a) 12.9 5.6 32.8 14.9 Total segment operating income (b) 227.0 266.3 470.7 517.5 Restructuring-related expenses (Note 5) (5.2) (7.4) (15.7) (7.4) Total consolidated operating income $ 221.8 $ 258.9 $ 455.0 $ 510.1 (a) Other primarily includes the Company’s cash-based and electronic-based bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services . In May 2019, the Company sold a substantial majority of its United States based electronic bill payments services, as discussed in Note 4. Speedpay revenues and direct operating expenses included in the Company’s results were $37.2 million and $30.6 million, respectively, for the three months ended June 30, 2019 and $125.4 million and $98.2 million, respectively, for the six months ended June 30, 2019. Paymap revenues and direct operating expenses included in the Company’s results were $1.6 million and $0.5 million, respectively, for the three months ended June 30, 2019 and $5.3 million and $2.2 million, respectively, for the six months ended June 30, 2019. (b) In the first quarter of 2020, the Company changed its expense allocation method so that its corporate data center and network engineering information technology expenses are allocated based on a percentage of relative revenue. In 2019, these costs had been allocated based in part on a percentage of relative transactions. The Company believes that an allocation method based fully on relative revenue presents a more representative view of segment profitability, as certain of the Company’s services, particularly some of its bill payment services and its money order services, have much lower revenues per transaction than the Company’s other services. Further, these technology expenses are becoming increasingly based on data storage utilized and less based on the number of transactions processed. For the three and six months ended June 30, 2019, this change would have decreased Consumer-to-Consumer operating income and increased Other operating income by $11.7 million and $24.8 million, respectively. Business Solutions was not materially impacted by the change in the allocation method. |
Business and Basis of Present_2
Business and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Business and Basis of Presentation | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted. The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts were eliminated as of June 30, 2020 and December 31, 2019 and for all periods presented. In the opinion of management, these condensed consolidated financial statements include all the normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of June 30, 2020 and for all periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Consistent with industry practice, the accompanying Condensed Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. In March 2020, the World Health Organization declared the outbreak associated with a novel coronavirus a pandemic (“COVID-19”), and governments throughout the world instituted various actions such as lockdowns, stay-at-home orders, travel restrictions, and closures of non-essential businesses in an effort to reduce the spread of COVID-19. These actions have negatively impacted the Company’s ability to offer its services through a portion of its locations and its retail agent locations, at least temporarily. As a result, the Company’s revenues for the second quarter of 2020 were negatively impacted by the effects of COVID-19. Beginning in March 2020, the Company experienced a decrease in transaction volumes, which continued into the second quarter of 2020. The Company believes this decrease is due in part to economic decline and uncertainty resulting from the outbreak. The extent to which the COVID-19 outbreak continues to impact the Company’s business, financial condition, results of operations or cash flows will depend on future developments, which are highly uncertain and are difficult to predict. |
New Accounting Pronouncements | Recently Adopted Accounting Pronouncements modified retrospective |
Revenue Recognition | The Company’s revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon factors such as channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, and speed of service, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. For the substantial majority of the Company’s revenues, the Company acts as the principal in transactions and reports revenue on a gross basis, as the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. |
Earnings Per Share | The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect. |
Leases | The Company leases real properties for use as administrative and sales offices, in addition to automobiles and office equipment. The Company determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Company is the lessee, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Operating lease right-of-use (“ROU”) assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the future lease payments. Lease and variable non-lease components within the Company’s lease agreements are accounted for separately. The Company has no material leases in which the Company is the lessor. |
Investment Securities | Investment securities included in Settlement assets in the Company’s Condensed Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed-rate term notes and variable-rate demand notes. Variable-rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week but have varying maturities through 2050. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. Investment securities are exposed to market risk due to changes in interest rates and credit risk. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable regulatory requirements. The Company’s investment securities are classified as available-for-sale and recorded at fair value. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification. Unrealized gains on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Available-for-sale securities with a fair value below the amortized cost basis are evaluated on an individual basis to determine whether the impairment is due to credit-related factors or noncredit-related factors. Factors that could indicate a credit loss exists include but are not limited to: (i) negative earnings performance, (ii) credit rating downgrades, or (iii) adverse changes in the regulatory or economic environment of the asset. Any impairment that is not credit-related is excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes, unless the Company intends to sell the impaired security or it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. Credit-related impairments are recognized immediately as an adjustment to earnings, regardless of whether the Company has the ability or intent to hold the security to maturity, and are limited to the difference between fair value and the amortized cost basis. As of and for the three and six months ended June 30, 2020, the Company’s allowance for credit losses and provision for credit losses on its available-for-sale securities were immaterial. |
Foreign Currency - Derivatives | Foreign Currency Derivatives The Company’s policy is to use longer duration foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of June 30, 2020, these foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness. The initial value of the excluded components is amortized into Revenues within the Company’s Condensed Consolidated Statements of Income. The Company also uses short duration foreign currency forward contracts, generally with maturities ranging from a few days |
Foreign Currency - Business Solutions | Business Solutions Operations The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising from the Company’s cross-currency payments operations, which primarily include spot exchanges of currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions were $70.0 million and $84.2 million for the three months ended June 30, 2020 and 2019, respectively, and $157.5 million and $168.9 million for the six months ended June 30, 2020 and 2019, respectively. None of the derivative contracts used in Business Solutions operations are designated as accounting hedges and the duration of these derivative contracts at inception is generally less than one year. |
Interest Rate Hedging | Interest Rate Hedging From time to time, the Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term, variable rate payments in order to manage its overall exposure to interest rate fluctuations. The Company designates these derivatives as fair value hedges. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within Borrowings in the Condensed Consolidated Balance Sheets. Interest expense in the Condensed Consolidated Statements of Income has been adjusted to include the effects of interest accrued on the swaps. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Disaggregation of revenue earned from contracts with customers | Management has determined that the significant majority of the Company’s revenue is recognized at a point in time. The following tables represent the disaggregation of revenue earned from contracts with customers by product type and region for the three and six months ended June 30, 2020 and 2019 (in millions). The regional split of revenue shown in the tables below is based upon where transactions are initiated. Three Months Ended June 30, 2020 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 399.6 $ 17.0 $ 17.1 $ 14.3 $ 448.0 Europe and Russia/CIS 301.2 26.2 0.5 0.2 328.1 Middle East, Africa, and South Asia 137.7 0.3 — — 138.0 Latin America and the Caribbean 54.3 0.6 15.8 2.0 72.7 East Asia and Oceania 55.5 12.9 0.4 — 68.8 Revenues from contracts with customers $ 948.3 $ 57.0 $ 33.8 $ 16.5 $ 1,055.6 Other revenues (a) 28.3 22.4 2.6 5.8 59.1 Total revenues (b) $ 976.6 $ 79.4 $ 36.4 $ 22.3 $ 1,114.7 Six Months Ended June 30, 2020 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments Services Total Regions: North America $ 784.4 $ 39.2 $ 39.8 $ 28.7 $ 892.1 Europe and Russia/CIS 602.1 57.7 1.3 0.9 662.0 Middle East, Africa, and South Asia 294.6 0.8 0.1 — 295.5 Latin America and the Caribbean 138.7 1.2 39.6 4.1 183.6 East Asia and Oceania 114.6 29.7 0.7 — 145.0 Revenues from contracts with customers $ 1,934.4 $ 128.6 $ 81.5 $ 33.7 $ 2,178.2 Other revenues (a) 57.6 49.2 7.9 11.8 126.5 Total revenues (b) $ 1,992.0 $ 177.8 $ 89.4 $ 45.5 $ 2,304.7 Three Months Ended June 30, 2019 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments (c) Services Total Regions: North America $ 424.3 $ 23.3 $ 61.1 $ 14.1 $ 522.8 Europe and Russia/CIS 339.8 31.6 0.9 1.0 373.3 Middle East, Africa, and South Asia 159.9 0.5 0.1 — 160.5 Latin America and the Caribbean 98.8 1.0 32.3 4.1 136.2 East Asia and Oceania 65.4 16.4 0.4 — 82.2 Revenues from contracts with customers $ 1,088.2 $ 72.8 $ 94.8 $ 19.2 $ 1,275.0 Other revenues (a) 24.7 22.8 11.3 6.7 65.5 Total revenues (b) $ 1,112.9 $ 95.6 $ 106.1 $ 25.9 $ 1,340.5 Six Months Ended June 30, 2019 Foreign Consumer Exchange Money and Payment Consumer Other Transfers Services Bill Payments (c) Services Total Regions: North America $ 819.8 $ 45.4 $ 176.2 $ 28.6 $ 1,070.0 Europe and Russia/CIS 663.0 63.5 1.5 1.9 729.9 Middle East, Africa, and South Asia 313.2 1.0 0.2 — 314.4 Latin America and the Caribbean 194.1 2.0 65.9 7.6 269.6 East Asia and Oceania 131.9 33.9 0.7 — 166.5 Revenues from contracts with customers $ 2,122.0 $ 145.8 $ 244.5 $ 38.1 $ 2,550.4 Other revenues (a) 47.8 45.4 20.8 13.1 127.1 Total revenues (b) $ 2,169.8 $ 191.2 $ 265.3 $ 51.2 $ 2,677.5 (a) Includes revenue from the sale of derivative financial instruments, investment income generated on settlement assets primarily related to money transfer and money order services, and other sources. (b) Revenues from "Consumer money transfers" are included in the Company’s Consumer-to-Consumer segment, revenues from "Foreign exchange and payment services" are included in the Company’s Business Solutions segment, and revenues from "Consumer bill payments" and "Other services" are not included in the Company’s segments and are reported as Other. See Note 16 for further information on the Company’s segments. (c) On February 28, 2019, the Company entered into an agreement with ACI Worldwide Corp. and ACW Worldwide, Inc. to sell its United States based electronic bill payments business known as “Speedpay,” and closed the transaction on May 9, 2019. Included within North America revenues are Speedpay revenues of $37.2 million and $125.4 million for the three and six months ended June 30, 2019, respectively. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share | |
Schedule of diluted weighted-average shares outstanding | The following table provides the calculation of diluted weighted-average shares outstanding (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Basic weighted-average shares outstanding 411.5 430.0 412.9 433.8 Common stock equivalents 2.1 2.3 3.0 2.3 Diluted weighted-average shares outstanding 413.6 432.3 415.9 436.1 |
Restructuring-Related Expenses
Restructuring-Related Expenses and Business Transformation Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring-Related Expenses | |
Schedule of restructuring accruals | The following table summarizes the activity for the six months ended June 30, 2020 for expenses related to the restructuring accruals, which are included in Accounts payable and accrued liabilities in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020, and the total expenses incurred since the inception of the restructuring plan (in millions): Severance and Facility Relocations Related and Closures, Employee Consulting, Benefits and Other Total Balance, December 31, 2019 $ 71.2 $ 2.1 $ 73.3 Expenses (a) 3.4 12.3 15.7 Cash payments (32.8) (10.9) (43.7) Non-cash benefits/(charges) (a) 0.1 (1.6) (1.5) Balance, June 30, 2020 $ 41.9 $ 1.9 $ 43.8 Total expenses incurred-to-date $ 101.4 $ 29.8 $ 131.2 (a) Non-cash benefits/(charges) include non-cash write-offs and accelerated depreciation of right-of-use assets and leasehold improvements and a non-cash benefit for adjustments to stock compensation for awards forfeited by employees. These amounts have been removed from the liability balance in the table above as they do not impact the restructuring accruals. |
Schedule of restructuring-related expenses | The following table presents restructuring-related expenses as reflected in the Condensed Consolidated Statements of Income (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Cost of services $ 0.8 $ — $ 1.7 $ — Selling, general, and administrative 4.4 7.4 14.0 7.4 Total expenses, pre-tax $ 5.2 $ 7.4 $ 15.7 $ 7.4 Total expenses, net of tax $ 5.5 $ 6.0 $ 14.7 $ 6.0 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of weighted average lease terms and discount rates | The following table summarizes the weighted-average lease term and discount rate for operating lease liabilities: June 30, 2020 Weighted-average remaining lease term (in years) 7.6 Weighted-average discount rate 6.2 % |
Schedule of maturities of operating lease liabilities | The following table represents maturities of operating lease liabilities as of June 30, 2020 (in millions): Due within 1 year $ 49.7 Due after 1 year through 2 years 43.0 Due after 2 years through 3 years 36.4 Due after 3 years through 4 years 32.7 Due after 4 years through 5 years 29.8 Due after 5 years 98.1 Total lease payments 289.7 Less imputed interest (54.8) Total operating lease liabilities $ 234.9 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Schedule of assets and liabilities by balance sheet line item measured on a recurring basis | The following tables present the Company’s assets and liabilities which are measured at fair value on a recurring basis, by balance sheet line item (in millions): Fair Value Measurement Using Total June 30, 2020 Level 1 Level 2 Fair Value Assets: Settlement assets: Measured at fair value through net income: Money market funds $ 22.9 $ — $ 22.9 Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income): State and municipal debt securities — 1,333.8 1,333.8 State and municipal variable-rate demand notes — 441.3 441.3 Corporate debt securities — 66.5 66.5 United States government agency mortgage-backed securities — 60.4 60.4 Other assets: Derivatives — 266.5 266.5 Total assets $ 22.9 $ 2,168.5 $ 2,191.4 Liabilities: Other liabilities: Derivatives $ — $ 206.3 $ 206.3 Total liabilities $ — $ 206.3 $ 206.3 Fair Value Measurement Using Total December 31, 2019 Level 1 Level 2 Fair Value Assets: Settlement assets: Measured at fair value through net income: Money market funds $ 24.6 $ — $ 24.6 Measured at fair value through other comprehensive income: State and municipal debt securities — 1,257.8 1,257.8 State and municipal variable-rate demand notes — 276.1 276.1 United States government agency mortgage-backed securities — 67.2 67.2 Corporate debt securities — 52.4 52.4 Other United States government agency debt securities — 34.9 34.9 United States Treasury securities 10.0 — 10.0 Other assets: Derivatives — 204.5 204.5 Total assets $ 34.6 $ 1,892.9 $ 1,927.5 Liabilities: Other liabilities: Derivatives $ — $ 159.5 $ 159.5 Total liabilities $ — $ 159.5 $ 159.5 |
Settlement Assets and Obligat_2
Settlement Assets and Obligations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Settlement Assets and Obligations | |
Schedule of settlement assets and obligations | Settlement assets and obligations consisted of the following (in millions): June 30, 2020 Settlement assets: Cash and cash equivalents $ 386.7 Receivables from agents and Business Solutions customers 1,274.3 Less: Allowance for credit losses (40.7) Receivables from agents and Business Solutions customers, net 1,233.6 Investment securities 1,902.0 Total settlement assets $ 3,522.3 Settlement obligations: Money transfer, money order, and payment service payables $ 2,760.9 Payables to agents 761.4 Total settlement obligations $ 3,522.3 December 31, 2019 Settlement assets: Cash and cash equivalents $ 368.2 Receivables from agents and Business Solutions customers, net 1,230.1 Investment securities 1,698.4 Total settlement assets $ 3,296.7 Settlement obligations: Money transfer, money order, and payment service payables $ 2,571.5 Payables to agents 725.2 Total settlement obligations $ 3,296.7 |
Schedule of activity in the allowance for credit losses | The following table summarizes activity in the allowance for credit losses on receivables from agents and Business Solutions customers (in millions): Business Solutions Agents Customers Allowance for credit losses as of January 1, 2020 $ 20.4 $ 4.5 Current period provision for expected credit losses (a) 19.9 1.4 Write-offs charged against the allowance (4.7) (1.7) Recoveries of amounts previously written off 1.2 — Impacts of foreign currency exchange rates and other (0.9) 0.6 Allowance for credit losses as of June 30, 2020 $ 35.9 $ 4.8 (a) Provision does not include losses from chargebacks or fraud associated with transactions initiated through our electronic channels, as these losses are not credit-related. |
Components of investment securities, available-for-sale | The components of investment securities are as follows (in millions): Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized June 30, 2020 Cost Value Gains Losses Gains/(Losses) Settlement assets: Cash and cash equivalents: Money market funds $ 22.9 $ 22.9 $ — $ — $ — Available-for-sale securities: State and municipal debt securities (a) 1,274.2 1,333.8 60.1 (0.5) 59.6 State and municipal variable-rate demand notes 441.3 441.3 — — — Corporate debt securities 65.4 66.5 1.1 — 1.1 United States government agency mortgage-backed securities 58.7 60.4 1.7 — 1.7 Total available-for-sale securities 1,839.6 1,902.0 62.9 (0.5) 62.4 Total investment securities $ 1,862.5 $ 1,924.9 $ 62.9 $ (0.5) $ 62.4 Gross Gross Net Amortized Fair Unrealized Unrealized Unrealized December 31, 2019 Cost Value Gains Losses Gains/(Losses) Settlement assets: Cash and cash equivalents: Money market funds $ 24.6 $ 24.6 $ — $ — $ — Available-for-sale securities: State and municipal debt securities (a) 1,227.4 1,257.8 31.0 (0.6) 30.4 State and municipal variable-rate demand notes 276.1 276.1 — — — United States government agency mortgage-backed securities 66.3 67.2 0.9 — 0.9 Corporate debt securities 52.3 52.4 0.1 — 0.1 Other United States government agency debt securities 34.9 34.9 — — — United States Treasury securities 9.8 10.0 0.2 — 0.2 Total available-for-sale securities 1,666.8 1,698.4 32.2 (0.6) 31.6 Total investment securities $ 1,691.4 $ 1,723.0 $ 32.2 $ (0.6) $ 31.6 (a) The majority of these securities are fixed-rate instruments. |
Schedule of contractual maturities of investment securities within Settlement assets | The following summarizes the contractual maturities of available-for-sale securities within Settlement assets as of June 30, 2020 (in millions): Fair Value Due within 1 year $ 163.8 Due after 1 year through 5 years 680.4 Due after 5 years through 10 years 463.7 Due after 10 years 594.1 Total $ 1,902.0 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' Deficit | |
Schedule of reclassifications out of Accumulated other comprehensive loss | The following table details reclassifications out of Accumulated other comprehensive loss (“AOCL”) and into Net income. All amounts reclassified from AOCL affect the line items as indicated below and the amounts in parentheses indicate decreases to Net income in the Condensed Consolidated Statements of Income. Amounts Reclassified from AOCL to Net Income Three Months Ended Six Months Ended Income Statement June 30, June 30, Income for the period (in millions) Location 2020 2019 2020 2019 Accumulated other comprehensive loss components: Gains/(losses) on investment securities: Available-for-sale securities Revenues $ 0.3 $ 0.6 $ 0.9 $ 0.6 Income tax expense Provision for income taxes — (0.2) (0.2) (0.2) Total reclassification adjustments related to investment securities, net of tax 0.3 0.4 0.7 0.4 Gains/(losses) on cash flow hedges: Foreign currency contracts Revenues 4.2 2.1 10.8 3.5 Interest rate contracts Interest expense (0.1) — (0.3) — Income tax expense Provision for income taxes — — (0.1) — Total reclassification adjustments related to cash flow hedges, net of tax 4.1 2.1 10.4 3.5 Amortization of components of defined benefit plans: Actuarial loss Other income/(expense), net (3.1) (2.7) (6.1) (5.4) Income tax benefit Provision for income taxes 1.0 0.8 1.7 1.0 Total reclassification adjustments related to defined benefit plans, net of tax (2.1) (1.9) (4.4) (4.4) Total reclassifications, net of tax $ 2.3 $ 0.6 $ 6.7 $ (0.5) |
Schedule of components of accumulated other comprehensive income/(loss), net of tax | The following tables summarize the components of AOCL, net of tax on the accompanying Condensed Consolidated Balance Sheets were as follows (in millions): Investment Hedging Foreign Currency Defined Benefit Securities Activities Translation Pension Plan Total As of December 31, 2019 $ 24.7 $ (3.6) $ (101.2) $ (128.9) $ (209.0) Unrealized gains 7.2 27.3 — — 34.5 Tax expense (1.1) (0.3) — — (1.4) Amounts reclassified from AOCL into earnings, net of tax (0.4) (6.3) — 2.3 (4.4) As of March 31, 2020 30.4 17.1 (101.2) (126.6) (180.3) Unrealized gains/(losses) 24.6 (15.1) — — 9.5 Tax benefit/(expense) (4.8) 0.1 — — (4.7) Amounts reclassified from AOCL into earnings, net of tax (0.3) (4.1) — 2.1 (2.3) As of June 30, 2020 $ 49.9 $ (2.0) $ (101.2) $ (124.5) $ (177.8) Investment Hedging Foreign Currency Defined Benefit Securities Activities Translation Pension Plan Total As of December 31, 2018 $ (1.1) $ 7.4 $ (101.2) $ (136.1) $ (231.0) Unrealized gains 16.8 4.4 — — 21.2 Tax benefit/(expense) (3.8) 0.9 — — (2.9) Amounts reclassified from AOCL into earnings, net of tax — (1.4) — 2.5 1.1 As of March 31, 2019 11.9 11.3 (101.2) (133.6) (211.6) Unrealized gains/(losses) 13.0 (3.9) — — 9.1 Tax benefit/(expense) (2.7) 0.1 — — (2.6) Amounts reclassified from AOCL into earnings, net of tax (0.4) (2.1) — 1.9 (0.6) As of June 30, 2019 $ 21.8 $ 5.4 $ (101.2) $ (131.7) $ (205.7) |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivatives | |
Schedule of notional amounts of foreign currency forward contracts | The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of June 30, 2020 and December 31, 2019 were as follows (in millions): June 30, 2020 Contracts designated as hedges: Euro $ 320.2 Canadian dollar 81.8 British pound 44.9 Australian dollar 29.0 Swiss franc 26.0 Other (a) 39.9 Contracts not designated as hedges: Euro $ 329.7 Indian rupee 79.2 British pound 65.4 Mexican peso 60.1 Qatari riyal 54.4 Canadian dollar 45.5 Australian dollar 29.8 Japanese yen 27.7 Other (a) 170.9 (a) Comprised of exposures to various currencies as of June 30, 2020. None of these individual currency exposures is greater than $25 million. December 31, 2019 Contracts designated as hedges: Euro $ 391.9 Canadian dollar 99.0 British pound 57.2 Australian dollar 36.1 Swiss franc 28.9 Other (a) 50.9 Contracts not designated as hedges: Euro $ 289.0 Canadian dollar 110.3 British pound 78.1 Indian rupee 61.0 Mexican peso 52.3 Japanese yen 37.7 Australian dollar 35.2 Brazilian real 32.5 Other (a) 145.6 (a) Comprised of exposures to various currencies as of December 31, 2019. None of these individual currency exposures is greater than $25 million. |
Schedule of fair value of derivatives | The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (in millions): Derivative Assets Derivative Liabilities Fair Value Fair Value Balance Sheet June 30, December 31, Balance Sheet June 30, December 31, Location 2020 2019 Location 2020 2019 Derivatives designated as hedges: Foreign currency cash flow hedges Other assets $ 17.7 $ 21.0 Other liabilities $ 1.3 $ 4.8 Total derivatives designated as hedges $ 17.7 $ 21.0 $ 1.3 $ 4.8 Derivatives not designated as hedges: Business Solutions operations - foreign currency (a) Other assets $ 245.8 $ 182.0 Other liabilities $ 202.9 $ 151.0 Foreign currency Other assets 3.0 1.5 Other liabilities 2.1 3.7 Total derivatives not designated as hedges $ 248.8 $ 183.5 $ 205.0 $ 154.7 Total derivatives $ 266.5 $ 204.5 $ 206.3 $ 159.5 (a) In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with financial institution counterparties to offset the original economic hedge contracts. This frequently results in changes in the Company’s derivative assets and liabilities that may not directly align with the performance in the underlying derivatives business. |
Schedule of gross and net fair value of derivative assets | The following tables summarize the gross and net fair value of derivative assets and liabilities as of June 30, 2020 and December 31, 2019 (in millions): Offsetting of Derivative Assets Gross Net Amounts Derivatives Gross Amounts Offset Presented Not Offset Amounts of in the Condensed in the Condensed in the Condensed Recognized Consolidated Consolidated Consolidated June 30, 2020 Assets Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 117.6 $ — $ 117.6 $ (84.8) $ 32.8 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 148.9 Total $ 266.5 December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ 95.3 $ — $ 95.3 $ (74.7) $ 20.6 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 109.2 Total $ 204.5 |
Schedule of gross and net fair value of derivative liabilities | Offsetting of Derivative Liabilities Gross Net Amounts Derivatives Gross Amounts Offset Presented Not Offset Amounts of in the Condensed in the Condensed in the Condensed Recognized Consolidated Consolidated Consolidated June 30, 2020 Liabilities Balance Sheets Balance Sheets Balance Sheets Net Amounts Derivatives subject to a master netting arrangement or similar agreement $ 160.5 $ — $ 160.5 $ (84.8) $ 75.7 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 45.8 Total $ 206.3 December 31, 2019 Derivatives subject to a master netting arrangement or similar agreement $ 121.8 $ — $ 121.8 $ (74.7) $ 47.1 Derivatives that are not or may not be subject to master netting arrangement or similar agreement 37.7 Total $ 159.5 |
Schedule of amount and location of gains/(losses) from hedging activities | The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Foreign currency derivatives (a) $ (15.1) $ (3.9) $ 12.2 $ 0.5 (a) Gains/(losses) of $(0.7) million and $1.2 million, for the three months ended June 30, 2020 and 2019, respectively, and $2.8 million and $1.7 million for the six months ended June 30, 2020 and 2019, respectively, represent amounts excluded from the assessment of effectiveness that were recognized in other comprehensive income, for which an amortization approach is applied. The following table presents the location and amounts of pre-tax gains/(losses) from fair value and cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three months ended June 30, 2020 and 2019 (in millions): Three Months Ended June 30, 2020 2019 Interest Interest Revenues Expense Revenues Expense Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded $ 1,114.7 $ (29.3) $ 1,340.5 $ (38.6) The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate derivatives: Hedged items — — — (0.6) Derivatives designated as hedging instruments — — — 0.6 Gain/(loss) on cash flow hedges: Foreign currency derivatives: Gains/(losses) reclassified from AOCL into earnings 4.2 — 2.1 — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 2.8 — 2.8 — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value — — 1.0 — Interest rate derivatives: Gains/(losses) reclassified from AOCL into earnings — (0.1) — — The following table presents the location and amounts of pre-tax gains/(losses) from fair value and cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the six months ended June 30, 2020 and 2019 (in millions): Six Months Ended June 30, 2020 2019 Interest Interest Revenues Expense Revenues Expense Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded $ 2,304.7 $ (62.2) $ 2,677.5 $ (78.3) The effects of fair value and cash flow hedging: Gain/(loss) on fair value hedges: Interest rate derivatives: Hedged items — — — (0.9) Derivatives designated as hedging instruments — — — 1.0 Gain/(loss) on cash flow hedges: Foreign currency derivatives: Gains/(losses) reclassified from AOCL into earnings 10.8 — 3.5 — Amount excluded from effectiveness testing recognized in earnings based on an amortization approach 6.3 — 5.1 — Amount excluded from effectiveness testing recognized in earnings based on changes in fair value — — 2.3 — Interest rate derivatives: Gains/(losses) reclassified from AOCL into earnings — (0.3) — — Undesignated Hedges The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, Derivatives (a) Location 2020 2019 2020 2019 Foreign currency derivatives (b) Selling, general, and administrative $ (3.1) $ 1.0 $ 26.1 $ 7.6 Foreign currency derivatives Revenues — — — 0.2 Total gain/(loss) $ (3.1) $ 1.0 $ 26.1 $ 7.8 (a) The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. (b) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $3.0 million and $(4.3) million for the three months ended June 30, 2020 and 2019, respectively, and $(48.0) million and $(15.1) million for the six months ended June 30, 2020 and 2019, respectively. |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Borrowings | |
Schedule of outstanding borrowings | The Company’s outstanding borrowings consisted of the following (in millions): June 30, 2020 December 31, 2019 Commercial paper (a) $ 100.0 $ 245.0 Notes: 3.600% notes due 2022 (b) 500.0 500.0 4.250% notes due 2023 (b) 300.0 300.0 2.850% notes due 2025 (b) 500.0 500.0 6.200% notes due 2036 (b) 500.0 500.0 6.200% notes due 2040 (b) 250.0 250.0 Term loan facility borrowing (effective rate of 1.5%) 950.0 950.0 Total borrowings at par value 3,100.0 3,245.0 Debt issuance costs and unamortized discount, net (14.2) (15.7) Total borrowings at carrying value (c) $ 3,085.8 $ 3,229.3 (a) Pursuant to the Company’s commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company’s revolving credit facility. The commercial paper notes may have maturities of up to 397 days from date of issuance. The Company’s commercial paper borrowings as of June 30, 2020 had a weighted-average annual interest rate of approximately 0.4% and a weighted-average term of approximately 1 day . (b) The difference between the stated interest rate and the effective interest rate is not significant. (c) As of June 30, 2020, the Company’s weighted-average effective rate on total borrowings was approximately 3.5% . |
Schedule of maturities of borrowings | The following summarizes the Company’s maturities of notes and term loan at par value as of June 30, 2020 (in millions): Due within 1 year $ 23.8 Due after 1 year through 2 years 547.5 Due after 2 years through 3 years 371.3 Due after 3 years through 4 years 807.4 Due after 4 years through 5 years 500.0 Due after 5 years 750.0 |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segments | |
Schedule of segment results | The following table presents the Company’s reportable segment results for the three and six months ended June 30, 2020 and 2019 (in millions): Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Revenues: Consumer-to-Consumer $ 976.6 $ 1,112.9 $ 1,992.0 $ 2,169.8 Business Solutions 79.4 95.6 177.8 191.2 Other (a) 58.7 132.0 134.9 316.5 Total consolidated revenues $ 1,114.7 $ 1,340.5 $ 2,304.7 $ 2,677.5 Operating income: Consumer-to-Consumer $ 212.8 $ 250.2 $ 422.7 $ 483.5 Business Solutions 1.3 10.5 15.2 19.1 Other (a) 12.9 5.6 32.8 14.9 Total segment operating income (b) 227.0 266.3 470.7 517.5 Restructuring-related expenses (Note 5) (5.2) (7.4) (15.7) (7.4) Total consolidated operating income $ 221.8 $ 258.9 $ 455.0 $ 510.1 (a) Other primarily includes the Company’s cash-based and electronic-based bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services . In May 2019, the Company sold a substantial majority of its United States based electronic bill payments services, as discussed in Note 4. Speedpay revenues and direct operating expenses included in the Company’s results were $37.2 million and $30.6 million, respectively, for the three months ended June 30, 2019 and $125.4 million and $98.2 million, respectively, for the six months ended June 30, 2019. Paymap revenues and direct operating expenses included in the Company’s results were $1.6 million and $0.5 million, respectively, for the three months ended June 30, 2019 and $5.3 million and $2.2 million, respectively, for the six months ended June 30, 2019. (b) In the first quarter of 2020, the Company changed its expense allocation method so that its corporate data center and network engineering information technology expenses are allocated based on a percentage of relative revenue. In 2019, these costs had been allocated based in part on a percentage of relative transactions. The Company believes that an allocation method based fully on relative revenue presents a more representative view of segment profitability, as certain of the Company’s services, particularly some of its bill payment services and its money order services, have much lower revenues per transaction than the Company’s other services. Further, these technology expenses are becoming increasingly based on data storage utilized and less based on the number of transactions processed. For the three and six months ended June 30, 2019, this change would have decreased Consumer-to-Consumer operating income and increased Other operating income by $11.7 million and $24.8 million, respectively. Business Solutions was not materially impacted by the change in the allocation method. |
Business and Basis of Present_3
Business and Basis of Presentation - Narrative (Details) $ in Millions | Jun. 30, 2020country | Dec. 31, 2019USD ($) |
Business and Basis of Presentation | ||
Number of countries and territories where services are primarily available through a network of agent locations (more than) | country | 200 | |
Net assets subject to limitations | $ | $ 610 | |
ASU 2016-13 | ||
Business and Basis of Presentation | ||
Change in accounting principle due to adopted Accounting Standards Update | true | |
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Fixed List] | Modified Retrospective |
Revenue - Narrative - (Details)
Revenue - Narrative - (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | |
Revenue | ||||
Revenues from contracts with customers | $ | $ 1,055.6 | $ 1,275 | $ 2,178.2 | $ 2,550.4 |
Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | $ | $ 948.3 | 1,088.2 | $ 1,934.4 | 2,122 |
Number of performance obligations | item | 1 | 1 | ||
Number of integrated services involved in a transaction | item | 1 | 1 | ||
Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | $ | $ 33.8 | $ 94.8 | $ 81.5 | $ 244.5 |
Number of integrated services involved in a transaction | item | 1 | 1 |
Revenue - Disaggregation of rev
Revenue - Disaggregation of revenue - (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | ||||
Revenues from contracts with customers | $ 1,055.6 | $ 1,275 | $ 2,178.2 | $ 2,550.4 |
Other revenues | 59.1 | 65.5 | 126.5 | 127.1 |
Revenues | 1,114.7 | 1,340.5 | 2,304.7 | 2,677.5 |
Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 948.3 | 1,088.2 | 1,934.4 | 2,122 |
Other revenues | 28.3 | 24.7 | 57.6 | 47.8 |
Revenues | 976.6 | 1,112.9 | 1,992 | 2,169.8 |
Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 57 | 72.8 | 128.6 | 145.8 |
Other revenues | 22.4 | 22.8 | 49.2 | 45.4 |
Revenues | 79.4 | 95.6 | 177.8 | 191.2 |
Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | 33.8 | 94.8 | 81.5 | 244.5 |
Other revenues | 2.6 | 11.3 | 7.9 | 20.8 |
Revenues | 36.4 | 106.1 | 89.4 | 265.3 |
Other services | ||||
Revenue | ||||
Revenues from contracts with customers | 16.5 | 19.2 | 33.7 | 38.1 |
Other revenues | 5.8 | 6.7 | 11.8 | 13.1 |
Revenues | 22.3 | 25.9 | 45.5 | 51.2 |
North America | ||||
Revenue | ||||
Revenues from contracts with customers | 448 | 522.8 | 892.1 | 1,070 |
North America | Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 399.6 | 424.3 | 784.4 | 819.8 |
North America | Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 17 | 23.3 | 39.2 | 45.4 |
North America | Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | 17.1 | 61.1 | 39.8 | 176.2 |
North America | Consumer bill payments | Speedpay | Divestitures | ||||
Revenue | ||||
Revenues | 37.2 | 125.4 | ||
North America | Other services | ||||
Revenue | ||||
Revenues from contracts with customers | 14.3 | 14.1 | 28.7 | 28.6 |
Europe and Russia/CIS | ||||
Revenue | ||||
Revenues from contracts with customers | 328.1 | 373.3 | 662 | 729.9 |
Europe and Russia/CIS | Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 301.2 | 339.8 | 602.1 | 663 |
Europe and Russia/CIS | Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 26.2 | 31.6 | 57.7 | 63.5 |
Europe and Russia/CIS | Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | 0.5 | 0.9 | 1.3 | 1.5 |
Europe and Russia/CIS | Other services | ||||
Revenue | ||||
Revenues from contracts with customers | 0.2 | 1 | 0.9 | 1.9 |
Middle East, Africa, and South Asia | ||||
Revenue | ||||
Revenues from contracts with customers | 138 | 160.5 | 295.5 | 314.4 |
Middle East, Africa, and South Asia | Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 137.7 | 159.9 | 294.6 | 313.2 |
Middle East, Africa, and South Asia | Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 0.3 | 0.5 | 0.8 | 1 |
Middle East, Africa, and South Asia | Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | 0.1 | 0.1 | 0.2 | |
Latin America and the Caribbean | ||||
Revenue | ||||
Revenues from contracts with customers | 72.7 | 136.2 | 183.6 | 269.6 |
Latin America and the Caribbean | Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 54.3 | 98.8 | 138.7 | 194.1 |
Latin America and the Caribbean | Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 0.6 | 1 | 1.2 | 2 |
Latin America and the Caribbean | Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | 15.8 | 32.3 | 39.6 | 65.9 |
Latin America and the Caribbean | Other services | ||||
Revenue | ||||
Revenues from contracts with customers | 2 | 4.1 | 4.1 | 7.6 |
East Asia and Oceania | ||||
Revenue | ||||
Revenues from contracts with customers | 68.8 | 82.2 | 145 | 166.5 |
East Asia and Oceania | Consumer money transfers | ||||
Revenue | ||||
Revenues from contracts with customers | 55.5 | 65.4 | 114.6 | 131.9 |
East Asia and Oceania | Foreign exchange and payment services | ||||
Revenue | ||||
Revenues from contracts with customers | 12.9 | 16.4 | 29.7 | 33.9 |
East Asia and Oceania | Consumer bill payments | ||||
Revenue | ||||
Revenues from contracts with customers | $ 0.4 | $ 0.4 | $ 0.7 | $ 0.7 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share | ||||
Outstanding options to purchase shares of stock excluded from the diluted earnings per share calculation | 2.6 | 2.3 | 1.8 | 3.4 |
Calculation of diluted weighted-average shares outstanding | ||||
Basic weighted-average shares outstanding | 411.5 | 430 | 412.9 | 433.8 |
Common stock equivalents | 2.1 | 2.3 | 3 | 2.3 |
Diluted weighted-average shares outstanding | 413.6 | 432.3 | 415.9 | 436.1 |
Divestitures (Details)
Divestitures (Details) - USD ($) $ in Millions | May 09, 2019 | Jun. 30, 2019 | Jun. 30, 2019 |
Divestitures and Assets Held For Sale | |||
Gain on sale | $ 524.6 | $ 524.6 | |
Speedpay | Divestitures | |||
Divestitures and Assets Held For Sale | |||
Consideration from sale of business | $ 750 | ||
Speedpay | Divestitures | Consumer bill payments | North America | |||
Divestitures and Assets Held For Sale | |||
Revenues | 37.2 | 125.4 | |
Operating expenses | $ 30.6 | $ 98.2 | |
Speedpay | Divestitures | Other services | |||
Divestitures and Assets Held For Sale | |||
Gain on sale | $ 523 |
Restructuring-Related Expense_2
Restructuring-Related Expenses - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 11 Months Ended | 24 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Dec. 31, 2020 | |
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | $ 5.2 | $ 7.4 | $ 15.7 | $ 7.4 | $ 131.2 | |
Productivity and Cost-Savings Initiatives | ||||||
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | 3.4 | 101.4 | ||||
Facility Relocations and Closures, Consulting, and Other | ||||||
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | $ 12.3 | $ 29.8 | ||||
Forecast | ||||||
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | $ 150 | |||||
Forecast | Productivity and Cost-Savings Initiatives | ||||||
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | 110 | |||||
Forecast | Facility Relocations and Closures, Consulting, and Other | ||||||
Restructuring-Related Expenses | ||||||
Restructuring-related expenses and business transformation expenses | $ 40 |
Restructuring-Related Expense_3
Restructuring-Related Expenses - Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 11 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | |
Summary of activity for expenses related to the restructuring accruals | |||||
Beginning balance | $ 73.3 | ||||
Expenses | $ 5.2 | $ 7.4 | 15.7 | $ 7.4 | $ 131.2 |
Cash payments | (43.7) | ||||
Non-cash benefits/(charges) | (1.5) | ||||
Ending balance | 43.8 | 43.8 | 43.8 | ||
Productivity and Cost-Savings Initiatives | |||||
Summary of activity for expenses related to the restructuring accruals | |||||
Beginning balance | 71.2 | ||||
Expenses | 3.4 | 101.4 | |||
Cash payments | (32.8) | ||||
Non-cash benefits/(charges) | 0.1 | ||||
Ending balance | 41.9 | 41.9 | 41.9 | ||
Facility Relocations and Closures, Consulting, and Other | |||||
Summary of activity for expenses related to the restructuring accruals | |||||
Beginning balance | 2.1 | ||||
Expenses | 12.3 | 29.8 | |||
Cash payments | (10.9) | ||||
Non-cash benefits/(charges) | (1.6) | ||||
Ending balance | $ 1.9 | $ 1.9 | $ 1.9 |
Restructuring-Related Expense_4
Restructuring-Related Expenses - Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 11 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | |
Restructuring-related expenses | |||||
Expenses | $ 5.2 | $ 7.4 | $ 15.7 | $ 7.4 | $ 131.2 |
Total expenses, net of tax | 5.5 | 6 | 14.7 | 6 | |
Cost of services | |||||
Restructuring-related expenses | |||||
Expenses | 0.8 | 1.7 | |||
Selling, general and administrative | |||||
Restructuring-related expenses | |||||
Expenses | $ 4.4 | $ 7.4 | $ 14 | $ 7.4 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Leases | |||||
ROU asset | $ 195 | $ 195 | $ 199.7 | ||
Balance sheet location of ROU asset | us-gaap:OtherAssets | us-gaap:OtherAssets | us-gaap:OtherAssets | ||
Lease liability | $ 234.9 | $ 234.9 | $ 242.3 | ||
Balance sheet location of lease liability | us-gaap:OtherLiabilities | us-gaap:OtherLiabilities | us-gaap:OtherLiabilities | ||
Operating lease costs | $ 12.8 | $ 14.3 | $ 26 | $ 29.3 | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | ||||
Minimum | |||||
Leases | |||||
Lease terms | 1 year | 1 year | |||
Maximum | |||||
Leases | |||||
Lease terms | 11 years | 11 years | |||
Lease extension terms | 10 years | 10 years |
Leases - Weighted Average Lease
Leases - Weighted Average Lease Terms and Discount Rate (Details) | Jun. 30, 2020 |
Weighted Average Lease Terms and Discount Rates | |
Weighted average remaining lease term | 7 years 7 months 6 days |
Weighted average discount rate | 6.20% |
Leases - Maturities (Details)
Leases - Maturities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Maturities of Operating Lease Liabilities | ||
Due within 1 year | $ 49.7 | |
Due after 1 year through 2 years | 43 | |
Due after 2 years through 3 years | 36.4 | |
Due after 3 years through 4 years | 32.7 | |
Due after 4 years through 5 years | 29.8 | |
Due after 5 years | 98.1 | |
Total lease payments | 289.7 | |
Less imputed interest | (54.8) | |
Operating lease liabilities | $ 234.9 | $ 242.3 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Settlement assets | $ 3,522.3 | $ 3,296.7 |
Derivatives | 266.5 | 204.5 |
Liabilities: | ||
Derivatives | 206.3 | 159.5 |
Recurring | ||
Assets: | ||
Derivatives | 266.5 | 204.5 |
Total assets | 2,191.4 | 1,927.5 |
Liabilities: | ||
Derivatives | 206.3 | 159.5 |
Total liabilities | 206.3 | 159.5 |
Recurring | Money market funds | ||
Assets: | ||
Settlement assets | 22.9 | 24.6 |
Recurring | State and municipal debt securities | ||
Assets: | ||
Settlement assets | 1,333.8 | 1,257.8 |
Recurring | State and municipal variable rate demand notes | ||
Assets: | ||
Settlement assets | 441.3 | 276.1 |
Recurring | Corporate debt securities | ||
Assets: | ||
Settlement assets | 66.5 | 52.4 |
Recurring | United States government agency mortgage-backed securities | ||
Assets: | ||
Settlement assets | 60.4 | 67.2 |
Recurring | Other United States government agency debt securities | ||
Assets: | ||
Settlement assets | 34.9 | |
Recurring | United States Treasury securities | ||
Assets: | ||
Settlement assets | 10 | |
Recurring | Level 1 | ||
Assets: | ||
Total assets | 22.9 | 34.6 |
Recurring | Level 1 | Money market funds | ||
Assets: | ||
Settlement assets | 22.9 | 24.6 |
Recurring | Level 1 | United States Treasury securities | ||
Assets: | ||
Settlement assets | 10 | |
Recurring | Level 2 | ||
Assets: | ||
Derivatives | 266.5 | 204.5 |
Total assets | 2,168.5 | 1,892.9 |
Liabilities: | ||
Derivatives | 206.3 | 159.5 |
Total liabilities | 206.3 | 159.5 |
Recurring | Level 2 | State and municipal debt securities | ||
Assets: | ||
Settlement assets | 1,333.8 | 1,257.8 |
Recurring | Level 2 | State and municipal variable rate demand notes | ||
Assets: | ||
Settlement assets | 441.3 | 276.1 |
Recurring | Level 2 | Corporate debt securities | ||
Assets: | ||
Settlement assets | 66.5 | 52.4 |
Recurring | Level 2 | United States government agency mortgage-backed securities | ||
Assets: | ||
Settlement assets | $ 60.4 | 67.2 |
Recurring | Level 2 | Other United States government agency debt securities | ||
Assets: | ||
Settlement assets | $ 34.9 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Fair Value Adjustments | |||||
Amount of assets transferred from Level 1 to Level 2 within Fair Value Measurements | $ 0 | $ 0 | $ 0 | $ 0 | |
Amount of assets transferred from Level 2 to Level 1 within Fair Value Measurements | 0 | 0 | 0 | 0 | |
Amount of liabilities transferred from Level 1 to Level 2 within Fair Value Measurements | 0 | 0 | 0 | 0 | |
Amount of liabilities transferred from Level 2 to Level 1 within Fair Value Measurements | 0 | 0 | 0 | 0 | |
Carrying Value | |||||
Other Fair Value Measurements | |||||
Borrowings | 3,085.8 | 3,085.8 | $ 3,229.3 | ||
Level 2 | Fair Value | |||||
Other Fair Value Measurements | |||||
Borrowings | 3,256.1 | 3,256.1 | $ 3,372.2 | ||
Non-recurring | |||||
Fair Value Adjustments | |||||
Non-recurring asset fair value adjustments | 0 | 0 | 0 | 0 | |
Non-recurring liability fair value adjustments | $ 0 | $ 0 | $ 0 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) € in Millions, $ in Millions | Jan. 04, 2018USD ($) | Nov. 06, 2017defendant | May 03, 2017lawsuit | Mar. 31, 2017item | Feb. 22, 2017lawsuit | Feb. 13, 2017item | Jan. 31, 2017USD ($)itemstate | Mar. 31, 2015USD ($) | Jun. 30, 2020USD ($) | Jan. 04, 2018EUR (€) | Apr. 12, 2017state |
Commitments and Contingencies | |||||||||||
Letters of credit outstanding and bank guarantees | $ 360 | ||||||||||
Maximum maturity year for letters of credit | 2024 | ||||||||||
Letters of credit renewal option | 1 year | ||||||||||
Pending Litigation | |||||||||||
Commitments and Contingencies | |||||||||||
Range of possible loss, portion not accrued | $ 30 | ||||||||||
Pending Litigation | Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust | |||||||||||
Commitments and Contingencies | |||||||||||
Number of purported class action lawsuits | lawsuit | 2 | ||||||||||
Number of claims consolidated | lawsuit | 2 | ||||||||||
Pending Litigation | Lawrence Henry Smallen and Laura Anne Smallen Revocable Living Trust | Executive Officer | |||||||||||
Commitments and Contingencies | |||||||||||
Number of defendants | defendant | 2 | ||||||||||
Number of defendants voluntarily dismissed | defendant | 1 | ||||||||||
Pending Litigation | National Court of Spain | |||||||||||
Commitments and Contingencies | |||||||||||
Guaranty liabilities | € | € 23 | ||||||||||
Pending Litigation | National Court of Spain | Former Agent | |||||||||||
Commitments and Contingencies | |||||||||||
Number of agents | item | 98 | ||||||||||
Settled Litigation | Joint Settlement Agreements | |||||||||||
Commitments and Contingencies | |||||||||||
Number of state attorneys general | state | 49 | 1 | |||||||||
Count- criminal information | item | 2 | ||||||||||
Compensation payment | $ 586 | ||||||||||
State attorneys general payment | $ 5 | ||||||||||
Period to retain an independent compliance auditor | 3 years | ||||||||||
Civil penalty assessed by the FinCEN agreement | $ 184 | ||||||||||
Settled Litigation | Northern District of Illinois | |||||||||||
Commitments and Contingencies | |||||||||||
Litigation settlement awarded to other party | $ 8.5 | ||||||||||
Settled Litigation | NYDFS Consent Order | |||||||||||
Commitments and Contingencies | |||||||||||
Damages awarded | $ 60 | ||||||||||
Settled Litigation | NYDFS Consent Order | Current Agent | |||||||||||
Commitments and Contingencies | |||||||||||
Number of agents | item | 1 | ||||||||||
Settled Litigation | NYDFS Consent Order | Former Agent | |||||||||||
Commitments and Contingencies | |||||||||||
Number of agents | item | 2 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Equity Method Investee | ||||
Related Party Transactions | ||||
Commission expense | $ 12.9 | $ 14.4 | $ 25.5 | $ 27.4 |
Settlement Assets and Obligat_3
Settlement Assets and Obligations - Settlement Assets and Obligations (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Settlement assets: | ||
Cash and cash equivalents | $ 386.7 | $ 368.2 |
Receivables from agents and Business Solutions customers | 1,274.3 | |
Less: Allowance for credit losses | (40.7) | |
Receivables from agents and Business Solutions customers, net | 1,233.6 | 1,230.1 |
Investment securities | 1,902 | 1,698.4 |
Total settlement assets | 3,522.3 | 3,296.7 |
Settlement obligations: | ||
Money transfer, money order, and payment service payables | 2,760.9 | 2,571.5 |
Payables to agents | 761.4 | 725.2 |
Total settlement obligations | $ 3,522.3 | $ 3,296.7 |
Settlement Assets and Obligat_4
Settlement Assets and Obligations - Receivables from selling agents and Business Solutions customers (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Receivables | |
Receivables from agents and Business Solutions customers | $ 1,274.3 |
Summary of activity in allowance for credit losses | |
Allowance for credit losses, Ending Balance | 40.7 |
Receivables from agents | |
Receivables | |
Receivables from agents and Business Solutions customers | 1,171.7 |
Summary of activity in allowance for credit losses | |
Allowance for credit losses, Beginning Balance | 20.4 |
Current period provision for expected credit losses | 19.9 |
Write-offs charged against the allowance | (4.7) |
Recoveries of amounts previously written off | 1.2 |
Impacts of foreign currency exchange rates and other | (0.9) |
Allowance for credit losses, Ending Balance | 35.9 |
Receivables from Business Solutions customers | |
Receivables | |
Receivables from agents and Business Solutions customers | 61.9 |
Summary of activity in allowance for credit losses | |
Allowance for credit losses, Beginning Balance | 4.5 |
Current period provision for expected credit losses | 1.4 |
Write-offs charged against the allowance | (1.7) |
Impacts of foreign currency exchange rates and other | 0.6 |
Allowance for credit losses, Ending Balance | $ 4.8 |
Settlement Assets and Obligat_5
Settlement Assets and Obligations - Components of Investment Securities (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Investment Securities | ||
Variable rate demand notes, maximum maturity year | 2050 | |
Cash and cash equivalents | ||
Amortized Cost | $ 1,181.6 | $ 1,450.5 |
Settlement assets: | ||
Amortized Cost | 1,839.6 | 1,666.8 |
Fair Value | 1,902 | 1,698.4 |
Gross Unrealized Gains | 62.9 | 32.2 |
Gross Unrealized Losses | (0.5) | (0.6) |
Net Unrealized Gains/ (Losses) | 62.4 | 31.6 |
Amortized Cost | 1,862.5 | 1,691.4 |
Fair Value | 1,924.9 | 1,723 |
Gross Unrealized Gains | 62.9 | 32.2 |
Gross Unrealized Losses | (0.5) | (0.6) |
Net Unrealized Gains/ (Losses) | 62.4 | 31.6 |
Money market funds | Settlement Assets | ||
Cash and cash equivalents | ||
Amortized Cost | 22.9 | 24.6 |
Fair Value | 22.9 | 24.6 |
State and municipal debt securities | ||
Settlement assets: | ||
Amortized Cost | 1,274.2 | 1,227.4 |
Fair Value | 1,333.8 | 1,257.8 |
Gross Unrealized Gains | 60.1 | 31 |
Gross Unrealized Losses | (0.5) | (0.6) |
Net Unrealized Gains/ (Losses) | 59.6 | 30.4 |
State and municipal variable rate demand notes | ||
Settlement assets: | ||
Amortized Cost | 441.3 | 276.1 |
Fair Value | 441.3 | 276.1 |
Corporate debt securities | ||
Settlement assets: | ||
Amortized Cost | 65.4 | 52.3 |
Fair Value | 66.5 | 52.4 |
Gross Unrealized Gains | 1.1 | 0.1 |
Net Unrealized Gains/ (Losses) | 1.1 | 0.1 |
United States government agency mortgage-backed securities | ||
Settlement assets: | ||
Amortized Cost | 58.7 | 66.3 |
Fair Value | 60.4 | 67.2 |
Gross Unrealized Gains | 1.7 | 0.9 |
Net Unrealized Gains/ (Losses) | $ 1.7 | 0.9 |
Other United States government agency debt securities | ||
Settlement assets: | ||
Amortized Cost | 34.9 | |
Fair Value | 34.9 | |
United States Treasury securities | ||
Settlement assets: | ||
Amortized Cost | 9.8 | |
Fair Value | 10 | |
Gross Unrealized Gains | 0.2 | |
Net Unrealized Gains/ (Losses) | $ 0.2 |
Settlement Assets and Obligat_6
Settlement Assets and Obligations - Contractual Maturities of Debt Securities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value | ||
Due within 1 year | $ 163.8 | |
Due after 1 year through 5 years | 680.4 | |
Due after 5 years through 10 years | 463.7 | |
Due after 10 years | 594.1 | |
Total | 1,902 | $ 1,698.4 |
Advances to agents | 117.9 | |
State and municipal variable rate demand notes | ||
Fair Value | ||
Due after 1 year through 5 years | 15 | |
Due after 5 years through 10 years | 1 | |
Due after 10 years | 425.3 | |
Total | $ 441.3 | $ 276.1 |
Stockholders' Deficit - Amounts
Stockholders' Deficit - Amounts Reclassified from AOCL (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, net of tax | $ 2.3 | $ 0.6 | $ 6.7 | $ (0.5) | ||
Investment Securities | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, Provision for income taxes | (0.2) | (0.2) | (0.2) | |||
Reclassification from AOCL, net of tax | 0.3 | $ 0.4 | 0.4 | 0.7 | 0.4 | |
Investment Securities | Revenue | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, before tax | 0.3 | 0.6 | 0.9 | 0.6 | ||
Hedging Activities | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, Provision for income taxes | (0.1) | |||||
Reclassification from AOCL, net of tax | 4.1 | 6.3 | 2.1 | $ 1.4 | 10.4 | 3.5 |
Hedging Activities | Foreign currency contracts | Revenue | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, before tax | 4.2 | 2.1 | 10.8 | 3.5 | ||
Hedging Activities | Interest rate contracts | Interest Expense | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, before tax | (0.1) | (0.3) | ||||
Defined benefit plans | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, Provision for income taxes | 1 | 0.8 | 1.7 | 1 | ||
Reclassification from AOCL, net of tax | (2.1) | $ (2.3) | (1.9) | $ (2.5) | (4.4) | (4.4) |
Defined benefit plans | Other income, net | ||||||
Accumulated other comprehensive income (loss) | ||||||
Reclassification from AOCL, before tax | $ (3.1) | $ (2.7) | $ (6.1) | $ (5.4) |
Stockholders' Deficit - Compone
Stockholders' Deficit - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | $ (149.7) | $ (39.5) | $ (374.2) | $ (309.8) | $ (39.5) | $ (309.8) |
Amounts reclassified from AOCL into earnings, net of tax | (2.3) | (0.6) | (6.7) | 0.5 | ||
Ending balance | (73.4) | (149.7) | 30.2 | (374.2) | (73.4) | 30.2 |
Investment Securities | ||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | 30.4 | 24.7 | 11.9 | (1.1) | 24.7 | (1.1) |
Unrealized gains/(losses) | 24.6 | 7.2 | 13 | 16.8 | ||
Tax benefit/(expense) | (4.8) | (1.1) | (2.7) | (3.8) | ||
Amounts reclassified from AOCL into earnings, net of tax | (0.3) | (0.4) | (0.4) | (0.7) | (0.4) | |
Ending balance | 49.9 | 30.4 | 21.8 | 11.9 | 49.9 | 21.8 |
Hedging Activities | ||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | 17.1 | (3.6) | 11.3 | 7.4 | (3.6) | 7.4 |
Unrealized gains/(losses) | (15.1) | 27.3 | (3.9) | 4.4 | ||
Tax benefit/(expense) | 0.1 | (0.3) | 0.1 | 0.9 | ||
Amounts reclassified from AOCL into earnings, net of tax | (4.1) | (6.3) | (2.1) | (1.4) | (10.4) | (3.5) |
Ending balance | (2) | 17.1 | 5.4 | 11.3 | (2) | 5.4 |
Foreign Currency Translation | ||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | (101.2) | (101.2) | (101.2) | (101.2) | (101.2) | (101.2) |
Ending balance | (101.2) | (101.2) | (101.2) | (101.2) | (101.2) | (101.2) |
Defined benefit plans | ||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | (126.6) | (128.9) | (133.6) | (136.1) | (128.9) | (136.1) |
Amounts reclassified from AOCL into earnings, net of tax | 2.1 | 2.3 | 1.9 | 2.5 | 4.4 | 4.4 |
Ending balance | (124.5) | (126.6) | (131.7) | (133.6) | (124.5) | (131.7) |
Total AOCL | ||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||
Beginning balance | (180.3) | (209) | (211.6) | (231) | (209) | (231) |
Unrealized gains/(losses) | 9.5 | 34.5 | 9.1 | 21.2 | ||
Tax benefit/(expense) | (4.7) | (1.4) | (2.6) | (2.9) | ||
Amounts reclassified from AOCL into earnings, net of tax | (2.3) | (4.4) | (0.6) | 1.1 | ||
Ending balance | $ (177.8) | $ (180.3) | $ (205.7) | $ (211.6) | $ (177.8) | $ (205.7) |
Stockholders' Deficit - Cash Di
Stockholders' Deficit - Cash Dividends Paid (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Dividends Paid | |||||||
Common stock dividends (USD per share) | $ 0.225 | $ 0.225 | $ 0.20 | $ 0.20 | |||
Cash dividends paid | $ 92.5 | $ 92.4 | $ 85.5 | $ 87.4 | $ 184.9 | $ 172.9 | |
Subsequent Event | |||||||
Cash Dividends Paid | |||||||
Common stock dividends (USD per share) | $ 0.225 |
Stockholders' Deficit - Share R
Stockholders' Deficit - Share Repurchases (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Share Repurchases | ||
Stock repurchased and retired, publicly announced authorizations (shares) | 8.5 | 17.9 |
Stock repurchased and retired, publicly announced authorizations, value excluding commissions | $ 217.4 | $ 335.5 |
Stock repurchased and retired, publicly announced authorizations, average cost per share excluding commissions (USD per share) | $ 25.45 | $ 18.73 |
Authorized through December 31, 2021 | ||
Share Repurchases | ||
Remaining amount available under share repurchase authorization through December 31, 2021 | $ 782.6 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Millions | Nov. 15, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Derivatives | ||||||
Accumulated other comprehensive pre-tax gain to be reclassified into revenue within the next 12 months | $ 5.1 | $ 5.1 | ||||
Notes due 2020 | ||||||
Derivatives | ||||||
Repayment of unsecured notes | $ 324.9 | |||||
Business Solutions | ||||||
Derivatives | ||||||
Foreign exchange revenues | 70 | $ 84.2 | $ 157.5 | $ 168.9 | ||
Interest rate contracts | Notes due 2020 | ||||||
Derivatives | ||||||
Cash payment received for terminated swap agreement | $ 0.9 | |||||
Designated as hedges | Foreign currency contracts | ||||||
Derivatives | ||||||
Derivative policy - contract maturity period maximum | 36 months | |||||
Derivative policy - targeted weighted-average maturity | 1 year | |||||
Maximum remaining maturity of foreign currency derivatives | 24 months | |||||
Derivative weighted-average maturity | 1 year | |||||
Not designated as hedges | Foreign currency contracts | Business Solutions | ||||||
Derivatives | ||||||
Notional amounts | $ 7,500 | $ 7,500 | $ 7,500 | |||
Minimum | Not designated as hedges | Uncollected settlement assets and obligations | ||||||
Derivatives | ||||||
Foreign currency forward contracts maturity range | 2 days | |||||
Maximum | Not designated as hedges | Uncollected settlement assets and obligations | ||||||
Derivatives | ||||||
Foreign currency forward contracts maturity range | 1 month | |||||
Maximum | Not designated as hedges | Foreign currency contracts | Business Solutions | ||||||
Derivatives | ||||||
Foreign currency forward contracts maturity range | 1 year | |||||
Maximum | Not designated as hedges | Foreign currency denominated cash and other asset and other liability positions | ||||||
Derivatives | ||||||
Foreign currency forward contracts maturity range | 1 year |
Derivatives - Notional Amounts
Derivatives - Notional Amounts of Foreign Currency Forward Contracts (Details) - Foreign currency contracts - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Designated as hedges | Euro | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | $ 320.2 | $ 391.9 |
Designated as hedges | Canadian dollar | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 81.8 | 99 |
Designated as hedges | British pound | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 44.9 | 57.2 |
Designated as hedges | Australian dollar | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 29 | 36.1 |
Designated as hedges | Swiss franc | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 26 | 28.9 |
Designated as hedges | Other | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 39.9 | 50.9 |
Not designated as hedges | Euro | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 329.7 | 289 |
Not designated as hedges | Indian rupee | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 79.2 | 61 |
Not designated as hedges | Canadian dollar | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 45.5 | 110.3 |
Not designated as hedges | British pound | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 65.4 | 78.1 |
Not designated as hedges | Mexican peso | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 60.1 | 52.3 |
Not designated as hedges | Japanese yen | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 27.7 | 37.7 |
Not designated as hedges | Qatari riyal | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 54.4 | |
Not designated as hedges | Australian dollar | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 29.8 | 35.2 |
Not designated as hedges | Brazilian real | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 32.5 | |
Not designated as hedges | Other | ||
Notional amounts of foreign currency forward contracts | ||
Notional amounts | 170.9 | 145.6 |
Maximum individual currency exposure within various other currencies | $ 25 | $ 25 |
Derivatives - Fair Value of Der
Derivatives - Fair Value of Derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Fair Value of Derivatives | ||
Derivative Assets | $ 266.5 | $ 204.5 |
Derivative Liabilities | 206.3 | 159.5 |
Designated as hedges | ||
Fair Value of Derivatives | ||
Derivative Assets | 17.7 | 21 |
Derivative Liabilities | 1.3 | 4.8 |
Designated as hedges | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 17.7 | 21 |
Designated as hedges | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | 1.3 | 4.8 |
Not designated as hedges | ||
Fair Value of Derivatives | ||
Derivative Assets | 248.8 | 183.5 |
Derivative Liabilities | 205 | 154.7 |
Not designated as hedges | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 3 | 1.5 |
Not designated as hedges | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | 2.1 | 3.7 |
Not designated as hedges | Business Solutions | Other assets | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Assets | 245.8 | 182 |
Not designated as hedges | Business Solutions | Other liabilities | Foreign currency contracts | ||
Fair Value of Derivatives | ||
Derivative Liabilities | $ 202.9 | $ 151 |
Derivatives - Gross and Net Fai
Derivatives - Gross and Net Fair Value of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Offsetting of Derivative Assets | ||
Gross Amounts of Recognized Assets | $ 117.6 | $ 95.3 |
Net Amounts Presented in the Consolidated Balance Sheets | 117.6 | 95.3 |
Derivatives Not Offset in the Consolidated Balance Sheets | (84.8) | (74.7) |
Net Amounts | 32.8 | 20.6 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 148.9 | 109.2 |
Total | 266.5 | 204.5 |
Offsetting of Derivative Liabilities | ||
Gross Amounts of Recognized Liabilities | 160.5 | 121.8 |
Net Amounts Presented in the Consolidated Balance Sheets | 160.5 | 121.8 |
Derivatives Not Offset in the Consolidated Balance Sheets | (84.8) | (74.7) |
Net Amounts | 75.7 | 47.1 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement | 45.8 | 37.7 |
Total | $ 206.3 | $ 159.5 |
Derivatives - Unrealized Gains_
Derivatives - Unrealized Gains/(Losses) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivatives | ||||
Gain/(Loss) recognized in OCI on Foreign currency derivatives | $ (15.1) | $ (3.9) | $ 12.2 | $ 0.5 |
Gains/(losses) excluded from effectiveness testing recognized in other comprehensive income | $ (0.7) | $ 1.2 | $ 2.8 | $ 1.7 |
Derivatives - Gains_(Losses) fr
Derivatives - Gains/(Losses) from Hedging Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Gains/(Losses) from Derivatives | ||||
Revenues | $ 1,114.7 | $ 1,340.5 | $ 2,304.7 | $ 2,677.5 |
Interest expense | (29.3) | (38.6) | (62.2) | (78.3) |
Fair Value Hedges | Interest rate contracts | Interest Expense | ||||
Cash Flow and Fair Value Hedges | ||||
Hedged items | (0.6) | (0.9) | ||
Derivatives designated as hedging instruments | 0.6 | 1 | ||
Cash Flow Hedges | Foreign currency contracts | Revenue | ||||
Cash Flow and Fair Value Hedges | ||||
Gains/(losses) reclassified from AOCL into earnings | 4.2 | 2.1 | 10.8 | 3.5 |
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach | 2.8 | 2.8 | 6.3 | 5.1 |
Amount excluded from effectiveness testing recognized in earnings based on changes in fair value | $ 1 | $ 2.3 | ||
Cash Flow Hedges | Interest rate contracts | Interest Expense | ||||
Cash Flow and Fair Value Hedges | ||||
Gains/(losses) reclassified from AOCL into earnings | $ (0.1) | $ (0.3) |
Derivatives - Undesignated Hedg
Derivatives - Undesignated Hedges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flow and Fair Value Hedges | ||||
Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities | $ 3 | $ (4.3) | $ (48) | $ (15.1) |
Not designated as hedges | ||||
Cash Flow and Fair Value Hedges | ||||
Gain/(Loss) recognized in Income on Foreign currency derivatives | (3.1) | 1 | 26.1 | 7.8 |
Not designated as hedges | Selling, general and administrative | ||||
Cash Flow and Fair Value Hedges | ||||
Gain/(Loss) recognized in Income on Foreign currency derivatives | $ (3.1) | $ 1 | $ 26.1 | 7.6 |
Not designated as hedges | Revenue | ||||
Cash Flow and Fair Value Hedges | ||||
Gain/(Loss) recognized in Income on Foreign currency derivatives | $ 0.2 |
Borrowings - Outstanding Borrow
Borrowings - Outstanding Borrowings (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Outstanding Borrowings | ||
Total borrowings at par value | $ 3,100 | $ 3,245 |
Debt issuance costs and unamortized discount, net | (14.2) | (15.7) |
Total borrowings at carrying value | $ 3,085.8 | 3,229.3 |
Weighted-average effective interest rate (as a percent) | 3.50% | |
Commercial paper | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 100 | 245 |
Maximum borrowing capacity | $ 1,500 | |
Maximum days to maturity | 397 days | |
Weighted-average effective interest rate (as a percent) | 0.40% | |
Weighted-average term | 1 day | |
3.600% notes due 2022 | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 500 | $ 500 |
Stated interest rate (as a percent) | 3.60% | 3.60% |
4.250% notes due 2023 | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 300 | $ 300 |
Stated interest rate (as a percent) | 4.25% | 4.25% |
2.850% notes due 2025 | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 500 | $ 500 |
Stated interest rate (as a percent) | 2.85% | 2.85% |
6.200% notes due 2036 | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 500 | $ 500 |
Stated interest rate (as a percent) | 6.20% | 6.20% |
6.200% notes due 2040 | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 250 | $ 250 |
Stated interest rate (as a percent) | 6.20% | 6.20% |
Term loan facility borrowing (effective rate of 1.5%) | ||
Outstanding Borrowings | ||
Total borrowings at par value | $ 950 | $ 950 |
Effective interest rate (as a percent) | 1.50% |
Borrowings - Maturity Schedule
Borrowings - Maturity Schedule of Borrowings (Details) $ in Millions | Jun. 30, 2020USD ($) |
Borrowings maturities at par value | |
Due within 1 year | $ 23.8 |
Due after 1 year through 2 years | 547.5 |
Due after 2 years through 3 years | 371.3 |
Due after 3 years through 4 years | 807.4 |
Due after 4 years through 5 years | 500 |
Due after 5 years | $ 750 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Unrecognized Tax Benefits | |||||
Effective tax rate | 16.20% | 17.50% | 14.30% | 18.10% | |
Unrecognized tax benefits, excluding interest and penalties | $ 292 | $ 292 | $ 293.9 | ||
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | 281.9 | 281.9 | 283.4 | ||
Interest and penalties, recognized | 1.9 | $ 2.5 | 0.7 | $ 3.4 | |
Interest and penalties, accrued | $ 27.8 | $ 27.8 | $ 27.1 |
Stock Compensation Plans (Detai
Stock Compensation Plans (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock-Based Compensation Plans | ||||
Stock-based compensation expense | $ 5.3 | $ 11.6 | $ 17.8 | $ 25.3 |
Options granted (shares) | 0.5 | |||
Options granted exercise price (in dollars per share) | $ 26.20 | |||
Performance-based restricted stock units and Restricted stock units granted (in shares) | 2.4 | |||
Performance-based restricted stock units and Restricted stock units weighted average grant date fair value (in dollars per share) | $ 25.93 | |||
Number of options outstanding (in shares) | 4.9 | 4.9 | ||
Exercise price of options outstanding (in dollars per share) | $ 19.13 | $ 19.13 | ||
Number of options exercisable (in shares) | 3.8 | 3.8 | ||
Exercise price of options exercisable (in dollars per share) | $ 18.41 | $ 18.41 | ||
Number of non-vested Performance-based restricted stock units and Restricted stock units (in shares) | 7.1 | 7.1 | ||
Grant date fair value of Performance-based restricted stock units and Restricted stock units (in dollars per share) | $ 20.83 | $ 20.83 |
Segments - Narrative (Details)
Segments - Narrative (Details) - Operating Segments | 6 Months Ended |
Jun. 30, 2020regionsegmentcustomer | |
Segments | |
Number of operating segments | segment | 2 |
Consumer-to-Consumer | |
Segments | |
Number of consumers in money transfer | customer | 2 |
Number of geographic regions in segment | region | 5 |
Segments - Reportable Segments
Segments - Reportable Segments Results (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 11 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | |
Revenues: | |||||
Total consolidated revenues | $ 1,114.7 | $ 1,340.5 | $ 2,304.7 | $ 2,677.5 | |
Operating income: | |||||
Total operating income | 221.8 | 258.9 | 455 | 510.1 | |
Restructuring-related expenses and business transformation expenses | (5.2) | (7.4) | (15.7) | (7.4) | $ (131.2) |
Consumer-to-Consumer | Change in Accounting Method | |||||
Operating income: | |||||
Total operating income | (11.7) | (24.8) | |||
Other | Change in Accounting Method | |||||
Operating income: | |||||
Total operating income | 11.7 | 24.8 | |||
Operating Segments | |||||
Operating income: | |||||
Total operating income | 227 | 266.3 | 470.7 | 517.5 | |
Operating Segments | Consumer-to-Consumer | |||||
Revenues: | |||||
Total consolidated revenues | 976.6 | 1,112.9 | 1,992 | 2,169.8 | |
Operating income: | |||||
Total operating income | 212.8 | 250.2 | 422.7 | 483.5 | |
Operating Segments | Business Solutions | |||||
Revenues: | |||||
Total consolidated revenues | 79.4 | 95.6 | 177.8 | 191.2 | |
Operating income: | |||||
Total operating income | 1.3 | 10.5 | 15.2 | 19.1 | |
Operating Segments | Other | |||||
Revenues: | |||||
Total consolidated revenues | 58.7 | 132 | 134.9 | 316.5 | |
Operating income: | |||||
Total operating income | $ 12.9 | 5.6 | $ 32.8 | 14.9 | |
Operating Segments | Other | Speedpay | Divestitures | |||||
Revenues: | |||||
Revenues | 37.2 | 125.4 | |||
Operating income: | |||||
Operating expenses | 30.6 | 98.2 | |||
Operating Segments | Other | Paymap | Divestitures | |||||
Revenues: | |||||
Revenues | 1.6 | 5.3 | |||
Operating income: | |||||
Operating expenses | $ 0.5 | $ 2.2 |