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SUPPLEMENTAL CASH FLOW INFORMATION

12 Months Ended

Dec. 31, 2019

26. SUPPLEMENTAL CASH FLOW INFORMATION

The consolidated statements of cash flows are presented with the combined cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category. The following table provides a reconciliation of cash and cash equivalents to the total of the amounts reported in the consolidated statements of cash flows:


	December 31,		December 31,		December 31,
	2019		2018		2017
	(in millions)
Cash and cash equivalents	$	3,874.4	$	3,863.1	$	4,190.0
Restricted cash included within other current assets ⁽¹⁾		44.4		60.7		50.4
Restricted cash included within redemption settlement assets, restricted⁽²⁾		39.3		43.9		74.3
Total cash, cash equivalents and restricted cash	$	3,958.1	$	3,967.7	$	4,314.7

(1)	Includes cash restricted for principal and interest repayments of non-recourse borrowings of consolidated securitized debt and other restricted cash within other current assets.

(2)	See Note 10, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets.

Non-cash financing activities for the year ended December 31, 2019 included an exchange agreement with ValueAct Holdings, L.P. pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of preferred stock, and ValueAct’s subsequent exchange of all 150,000 shares of preferred stock back to common stock. For more information, see Note 19, “Stockholders’ Equity.”

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and cash equivalents	$ 3,874.4	$ 3,817.4
Accounts receivable, net, less allowance for doubtful accounts ($3.4 and $0.4 at December 31, 2019 and December 31, 2018, respectively)	451.1	404.0
Credit card and loan receivables:
Credit card receivables - restricted for securitization investors	13,504.2	13,418.3
Other credit card and loan receivables	5,958.9	4,436.7
Total credit card and loan receivables	19,463.1	17,855.0
Allowance for loan loss	(1,171.1)	(1,038.3)
Credit card and loan receivables, net	18,292.0	16,816.7
Credit card receivables held for sale	408.0	1,951.6
Inventories, net	218.0	248.0
Other current assets	268.4	293.2
Redemption settlement assets, restricted	600.8	558.6
Current assets of discontinued operations		622.2
Total current assets	24,112.7	24,711.7
Property and equipment, net	282.3	288.2
Right of use assets - operating	264.3
Deferred tax asset, net	45.2	44.0
Intangible assets, net	153.3	217.4
Goodwill	954.9	954.8
Other non-current assets	682.1	636.4
Long-term assets of discontinued operations		3,535.2
Total assets	26,494.8	30,387.7
LIABILITIES AND EQUITY
Accounts payable	300.8	486.2
Accrued expenses	327.8	322.2
Current operating lease liabilities	22.6
Current portion of deposits	6,942.4	6,537.7
Current portion of non-recourse borrowings of consolidated securitization entities	3,030.8	2,717.6
Current portion of long-term and other debt	101.4	138.9
Other current liabilities	338.3	291.8
Deferred revenue	807.9	766.1
Current liabilities of discontinued operations		223.5
Total current liabilities	11,872.0	11,484.0
Deferred revenue	114.1	109.2
Deferred tax liability, net	80.0	256.5
Long-term operating lease liabilities	291.7
Deposits	5,209.3	5,256.0
Non-recourse borrowings of consolidated securitization entities	4,253.2	4,934.1
Long-term and other debt	2,748.5	5,586.5
Other liabilities	337.7	392.4
Long-term liabilities of discontinued operations		36.9
Total liabilities	24,906.5	28,055.6
Commitments and contingencies (Note 18)
Stockholders' equity:
Common stock, $0.01 par value; authorized, 200.0 shares; issued, 115.0 shares and 113.0 shares at December 31, 2019 and December 31, 2018, respectively	1.1	1.1
Additional paid-in capital	3,257.7	3,172.4
Treasury stock, at cost, 67.4 shares and 59.6 shares at December 31, 2019 and December 31, 2018, respectively	(6,733.9)	(5,715.7)
Retained earnings	5,163.3	5,012.4
Accumulated other comprehensive loss	(99.9)	(138.1)
Total stockholders' equity	1,588.3	2,332.1
Total liabilities and equity	$ 26,494.8	$ 30,387.7

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 278.0	$ 963.1	$ 788.7
Other comprehensive income:
Unrealized gain (loss) on securities available-for-sale	15.5	(3.1)	(7.3)
Tax benefit (expense)	(2.3)	1.1	0.2
Unrealized gain (loss) on securities available-for-sale, net of tax	13.2	(2.0)	(7.1)
Unrealized gain (loss) on cash flow hedges	0.1	(0.1)	(0.7)
Tax benefit			0.2
Unrealized gain (loss) on cash flow hedges, net of tax	0.1	(0.1)	(0.5)
Unrealized gain (loss) on net investment hedge	6.5	39.1	(72.3)
Tax benefit (expense)	(1.6)	(9.5)	26.2
Unrealized gain (loss) on net investment hedge, net of tax	4.9	29.6	(46.1)
Foreign currency translation adjustments (inclusive of deconsolidation of $26.8 million related to sale of business for the year ended December 31, 2019)	20.0	(25.4)	64.2
Other comprehensive income, net of tax	38.2	2.1	10.5
Total comprehensive income, net of tax	$ 316.2	$ 965.2	$ 799.2

ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

Schedule of accrued expenses


	December 31,
	2019		2018
	(in millions)
Accrued payroll and benefits	$	133.4	$	187.1
Accrued taxes		18.1		22.6
Accrued other liabilities		176.3		112.5
Accrued expenses	$	327.8	$	322.2

ACQUISITIONS (Details) $ in Millions	Feb. 07, 2019 USD ($)	Oct. 20, 2017 USD ($) item	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Fair values of assets acquired and liabilities assumed in acquisition
Goodwill			$ 954.9	$ 954.8	$ 992.8
Blispay
Components of consideration
Cash consideration	$ 6.7
Contingent consideration, guarantee	1.0
Fair values of assets acquired and liabilities assumed in acquisition
Capitalized software	5.0
Goodwill	2.3
Total assets acquired	7.3
Guarantee, fair value	$ 0.6
Signet
Acquisition
Number of employees \| item		250
Components of consideration
Total consideration paid		$ 945.6
Gain on business combination		7.9
Fair values of assets acquired and liabilities assumed in acquisition
Credit card receivables		906.3
Intangible assets		52.3
Total assets acquired		958.6
Other liabilities		0.2
Deferred tax liability		4.9
Total liabilities assumed		5.1
Net assets acquired		$ 953.5

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares		12 Months Ended
	Jan. 30, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.63	$ 0.63	$ 0.57	$ 0.52

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Marketing Costs and Other (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Currency Translation
Foreign currency transaction (losses) gains recognized	$ 1.3	$ 0.6	$ (9.1)
Marketing and Advertising Costs
Marketing and advertising expense	$ 229.4	$ 244.5	$ 236.8

CREDIT CARD AND LOAN RECEIVABLES - Credit Quality (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 18,413.1	$ 16,869.9
Percentage of Principal Receivables Outstanding	100.00%	100.00%
No Score
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 290.0	$ 249.0
Percentage of Principal Receivables Outstanding	1.60%	1.50%
27.1% and higher
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 1,591.4	$ 1,394.0
Percentage of Principal Receivables Outstanding	8.60%	8.20%
17.1% - 27.0%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 1,065.4	$ 770.1
Percentage of Principal Receivables Outstanding	5.80%	4.60%
12.6% - 17.0%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 1,127.7	$ 1,047.6
Percentage of Principal Receivables Outstanding	6.10%	6.20%
3.7% - 12.5%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 7,985.8	$ 6,877.6
Percentage of Principal Receivables Outstanding	43.40%	40.80%
1.9% - 3.6%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 3,285.3	$ 3,060.7
Percentage of Principal Receivables Outstanding	17.80%	18.10%
Lower than 1.9%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Principal Receivables Outstanding	$ 3,067.5	$ 3,470.9
Percentage of Principal Receivables Outstanding	16.70%	20.60%

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT

Schedule of property and equipment


	December 31,
	2019		2018
	(in millions)
Computer software and development	$	327.1	$	331.9
Furniture and equipment		164.3		166.4
Land, buildings and leasehold improvements		126.0		128.1
Construction in progress		46.2		22.7
Total		663.6		649.1
Accumulated depreciation and amortization		(381.3)		(360.9)
Property and equipment, net	$	282.3	$	288.2

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2019

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

6. DISCONTINUED OPERATIONS

Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4.4 billion in cash, subject to certain specified adjustments. Beginning in the first quarter of 2019, Epsilon met the criteria set forth in ASC 205-20, “Presentation of Financial Statements — Discontinued Operations.”

The sale of Epsilon was completed on July 1, 2019, and the pre-tax gain is shown in the table below.


	July 1,
	2019
	(in millions)
Consideration received ⁽¹⁾	$	4,451.9
Net carrying value of assets and liabilities (including other comprehensive income)		3,939.7
Pre-tax gain on deconsolidation	$	512.2

(1)	Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million.

The Company recorded transaction costs of approximately $79.0 million for the year ended December 31, 2019 and recorded an after-tax loss on sale of $252.1 million, which is included in loss from discontinued operations, net of taxes. Following the sale of Epsilon, Card Services has continued its existing contractual relationships with Epsilon for digital marketing services.

The following table summarizes the results of discontinued operations for the periods presented:



	Years Ended December 31,
	2019		2018		2017
	(in millions)
Revenue	$	999.6	$	2,175.1	$	2,272.1
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		993.9		1,744.4		1,834.8
Depreciation and other amortization		29.7		115.4		109.4
Amortization of purchased intangibles		43.5		178.3		200.3
Interest expense ⁽¹⁾		64.1		128.3		109.0
Gain on sale of Epsilon		(512.2)		—		—
Income before provision (benefit) from income taxes		380.6		8.7		18.6
Provision (benefit) for income taxes		675.2		(8.9)		(0.9)
(Loss) income from discontinued operations, net of taxes ⁽²⁾	$	(294.6)	$	17.6	$	19.5

(1)

The Company’s credit agreement, as amended, provided that upon consummation of the sale of Epsilon, a mandatory payment of $500.0 million of the revolving credit facility was required and all of the Company’s outstanding senior notes were required to be redeemed. As such, interest expense has been allocated to discontinued operations on the basis of the Company’s $500.0 million mandatory repayment of its revolving line of credit and redemption of its $1.9 billion in senior notes outstanding.

(2)

Reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment including a loss contingency associated with indemnification issues with the purchaser as described in Note 18, “Commitments and Contingencies,” and the allocation of interest expense on corporate debt.

The following table summarizes the assets and liabilities of discontinued operations at December 31, 2018:


	December 31,
	2018
	(in millions)
Assets:
Cash and cash equivalents	$	45.7
Accounts receivable, net		519.9
Other current assets		56.6
Property and equipment, net		306.9
Intangible assets, net		322.3
Goodwill		2,886.2
Other assets		19.8
Total assets of discontinued operations	$	4,157.4

Liabilities:
Accounts payable	$	72.2
Accrued expenses		98.8
Other current liabilities		52.5
Other liabilities		36.9
Total liabilities of discontinued operations	$	260.4

Depreciation and amortization and capital expenditures from discontinued operations for the periods presented are as follows:


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Depreciation and amortization	$	73.2	$	293.7	$	309.7
Capital expenditures	$	55.8	$	106.5	$	107.2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for Loan Loss (Details)	12 Months Ended
	Dec. 31, 2019
Allowance for Loan Loss
Period considered for charge-off trends utilized for analyzing actual charge-offs	3 months

LEASES - Lease expense (Details) - USD ($) $ in Millions	12 Months Ended
LEASES - Lease expense (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Lease expense
Operating lease cost	$ 41.1
Short-term lease cost	2.7
Variable lease cost	6.8
Total	$ 50.6
Lease expense		$ 47.5	$ 67.3
Remaining lease term - operating leases	11 years 6 months
Discount rate - operating leases	5.20%
Supplemental cash flow information related to leases was as follows:
Operating cash flows from operating leases	$ 46.6
Operating leases - Right-of-use assets obtained in exchange for lease obligations	$ 28.4

INTANGIBLE ASSETS AND GOODWILL - Goodwill Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill
Beginning Balance	$ 954.8	$ 992.8
Goodwill acquired during the year	2.3
Effects of foreign currency translation	(2.2)	(38.0)
Ending Balance	954.9	954.8	$ 992.8
Goodwill impairment	0.0	0.0	0.0
Operating segment \| LoyaltyOne
Goodwill
Beginning Balance	693.1	731.1
Effects of foreign currency translation	(2.2)	(38.0)
Ending Balance	690.9	693.1	731.1
Operating segment \| Card Services
Goodwill
Beginning Balance	261.7	261.7
Goodwill acquired during the year	2.3
Ending Balance	$ 264.0	$ 261.7	$ 261.7

OTHER INVESTMENTS (Details) - USD ($) $ in Millions	12 Months Ended
OTHER INVESTMENTS (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Marketable securities
Amortized Cost	$ 257.2	$ 272.8
Unrealized Gains	3.0	0.1
Unrealized Losses	(0.4)	(6.5)
Fair Value	259.8	266.4
U.S. Treasury bonds
Amortized Cost		25.0
Unrealized Losses		(0.1)
Fair Value		24.9
Other Investments, Total
Amortized Cost	257.2	297.8
Unrealized Gains	3.0	0.1
Unrealized Losses	(0.4)	(6.6)
Fair Value	259.8	291.3
Fair Value, Marketable securities
Less than 12 months	18.8	57.3
12 Months or Greater	13.1	164.0
Total	31.9	221.3
Unrealized Losses, Marketable securities
Less than 12 months	(0.2)	(0.5)
12 Months or Greater	(0.2)	(6.0)
Total	(0.4)	(6.5)
Fair Value, U.S. Treasury bonds
12 Months or Greater		24.9
Total		24.9
Unrealized Losses, U.S. Treasury bonds
12 Months or Greater		(0.1)
Total		(0.1)
Fair Value, Total
Less than 12 months	18.8	57.3
12 Months or Greater	13.1	188.9
Total	31.9	246.2
Unrealized Losses, Total
Less than 12 months	(0.2)	(0.5)
12 Months or Greater	(0.2)	(6.1)
Total	(0.4)	(6.6)
Amortized Cost
Due in one year or less	31.3
Due after one year through five years	1.7
Due after ten years	224.2
Total	257.2
Fair Value
Due in one year or less	31.3
Due after one year through five years	1.7
Due after ten years	226.8
Fair Value	259.8
Realized gains or losses
Realized gains or losses from the sale of investment securities	$ 0.0	$ 0.0	$ 0.0

SEGMENT INFORMATION - Geographic Information (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Information concerning principal geographic areas
Revenues	$ 1,461.0	$ 1,437.6	$ 1,348.5	$ 1,334.2	$ 1,464.5	$ 1,423.2	$ 1,397.2	$ 1,381.7	$ 5,581.3	$ 5,666.6	$ 5,474.7
Long-lived assets	2,382.1				5,676.0				$ 2,382.1	$ 5,676.0
Revenues \| Customer Concentration Risk \| L Brands
Concentration risk
Concentration Risk, Percentage									10.60%	10.80%	12.00%
United States
Information concerning principal geographic areas
Revenues									$ 4,588.3	$ 4,621.3	$ 4,192.5
Long-lived assets	1,361.1				4,693.1				1,361.1	4,693.1
Canada
Information concerning principal geographic areas
Revenues									352.2	411.3	726.6
Long-lived assets	311.1				261.0				311.1	261.0
Europe, Middle East and Africa
Information concerning principal geographic areas
Revenues									449.1	463.2	411.4
Long-lived assets	696.2				698.6				696.2	698.6
Asia Pacific
Information concerning principal geographic areas
Revenues									121.7	122.0	129.2
Long-lived assets	12.8				22.5				12.8	22.5
Other
Information concerning principal geographic areas
Revenues									70.0	48.8	$ 15.0
Long-lived assets	$ 0.9				$ 0.8				$ 0.9	$ 0.8

DEBT (Tables)

12 Months Ended

Dec. 31, 2019

DEBT

Schedule of debt


	December 31,		December 31,
Description	2019		2018		Maturity	Interest Rate
	(Dollars in millions)
Long-term and other debt:
2017 revolving line of credit	$	—	$	740.0	December 2022	⁽¹⁾
2017 term loans		2,028.8		2,938.1	December 2022	⁽²⁾
BrandLoyalty credit agreement		—		183.7	June 2020	⁽³⁾
Senior notes due 2021		—		500.0
Senior notes due 2022		—		600.0
Senior notes due 2022 (€400.0 million)		—		458.8
Senior notes due 2023 (€300.0 million)		—		344.1
Senior notes due 2024		850.0		—	December 2024	4.750%
Total long-term and other debt		2,878.8		5,764.7
Less: Unamortized debt issuance costs		28.9		39.3
Less: Current portion		101.4		138.9
Long-term portion	$	2,748.5	$	5,586.5

Deposits:
Certificates of deposit	$	8,585.2	$	8,395.1	Various – Jan 2020 to Dec 2024	1.33% to 4.00%
Money market deposits		3,589.8		3,424.3	Non-maturity	⁽⁴⁾
Total deposits		12,175.0		11,819.4
Less: Unamortized debt issuance costs		23.3		25.7
Less: Current portion		6,942.4		6,537.7
Long-term portion	$	5,209.3	$	5,256.0

Non-recourse borrowings of consolidated securitization entities:
Fixed rate asset-backed term note securities	$	4,891.0	$	4,893.3	Various – May 2020 to Sep 2022	2.03% to 3.95%
Conduit asset-backed securities		2,405.0		2,770.0	Various – Sep 2020 to Apr 2021	⁽⁵⁾
Total non-recourse borrowings of consolidated securitization entities		7,296.0		7,663.3
Less: Unamortized debt issuance costs		12.0		11.6
Less: Current portion		3,030.8		2,717.6
Long-term portion	$	4,253.2	$	4,934.1

(1)	The interest rate is based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin. At December 31, 2018, the weighted average interest rate for the revolving line of credit was 4.22%.

(2)	The interest rate is based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin. The weighted average interest rate for the term loans was 3.30% and 4.27% at December 31, 2019 and 2018, respectively.

(3)	The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin. At December 31, 2018, the weighted average interest rate was 1.22% and 1.65% for the BrandLoyalty revolving line of credit and term loans, respectively.

(4)	The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2019, the interest rates ranged from 1.84% to 3.50%. At December 31, 2018, the interest rates ranged from 1.90% to 2.71%.

(5)	The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2019, the interest rates ranged from 2.79% to 2.96%. At December 31, 2018, the interest rates ranged from 3.48% to 3.79%.

Schedule of maturity of debt

The future principal payments for the Company’s debt as of December 31, 2019 are as follows:


					Non-Recourse
					Borrowings of
	Long-Term				Consolidated
	and				Securitization
Year	Other Debt		Deposits		Entities
	(in millions)
2020	$	101.4	$	6,944.8	$	3,032.2
2021		101.4		2,193.9		2,692.1
2022		1,826.0		1,574.0		1,571.7
2023		—		935.0		—
2024		850.0		527.3		—
Thereafter		—		—		—
Total maturities		2,878.8		12,175.0		7,296.0
Unamortized debt issuance costs		(28.9)		(23.3)		(12.0)
	$	2,849.9	$	12,151.7	$	7,284.0

REVENUE (Details) $ in Millions	3 Months Ended								12 Months Ended
REVENUE (Details) $ in Millions	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) item segment	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016
Disaggregation of revenue
Number of segments \| segment									2
Revenue from contracts with customers									$ 840.2	$ 960.1
Finance charges, net									4,728.5	4,694.9	$ 4,171.9
Investment income									12.6	11.6
Total revenue	$ 1,461.0	$ 1,437.6	$ 1,348.5	$ 1,334.2	$ 1,464.5	$ 1,423.2	$ 1,397.2	$ 1,381.7	$ 5,581.3	$ 5,666.6	$ 5,474.7
Number of performance obligations \| item									3
Estimated breakage rate	20.00%				20.00%				20.00%	20.00%	20.00%
Estimated Life of an AIR MILES reward mile									38 months	38 months	38 months	42 months
Coalition loyalty program
Disaggregation of revenue
Revenue from contracts with customers									$ 290.1	$ 352.3
Short-term loyalty programs
Disaggregation of revenue
Revenue from contracts with customers									635.5	613.8
Servicing fees, net
Disaggregation of revenue
Revenue from contracts with customers									(180.7)	(97.3)
Other
Disaggregation of revenue
Revenue from contracts with customers									95.3	91.3
United States
Disaggregation of revenue
Total revenue									4,588.3	4,621.3	$ 4,192.5
Canada
Disaggregation of revenue
Total revenue									352.2	411.3	726.6
Europe, Middle East and Africa
Disaggregation of revenue
Total revenue									449.1	463.2	411.4
Asia Pacific
Disaggregation of revenue
Total revenue									121.7	122.0	129.2
Other
Disaggregation of revenue
Total revenue									70.0	48.8	15.0
Operating segment \| LoyaltyOne
Disaggregation of revenue
Revenue from contracts with customers									1,020.5	1,056.8
Investment income									12.6	11.6
Total revenue									1,033.1	1,068.4	1,303.5
Operating segment \| LoyaltyOne \| Coalition loyalty program
Disaggregation of revenue
Revenue from contracts with customers									290.1	352.3
Operating segment \| LoyaltyOne \| Short-term loyalty programs
Disaggregation of revenue
Revenue from contracts with customers									635.5	613.8
Operating segment \| LoyaltyOne \| Other
Disaggregation of revenue
Revenue from contracts with customers									94.9	90.7
Operating segment \| LoyaltyOne \| United States
Disaggregation of revenue
Total revenue									40.1	23.1
Operating segment \| LoyaltyOne \| Canada
Disaggregation of revenue
Total revenue									352.2	411.3
Operating segment \| LoyaltyOne \| Europe, Middle East and Africa
Disaggregation of revenue
Total revenue									449.1	463.2
Operating segment \| LoyaltyOne \| Asia Pacific
Disaggregation of revenue
Total revenue									121.7	122.0
Operating segment \| LoyaltyOne \| Other
Disaggregation of revenue
Total revenue									70.0	48.8
Operating segment \| Card Services
Disaggregation of revenue
Revenue from contracts with customers									(180.7)	(97.3)
Finance charges, net									4,728.5	4,694.9
Total revenue									4,547.8	4,597.6	4,170.6
Operating segment \| Card Services \| Servicing fees, net
Disaggregation of revenue
Revenue from contracts with customers									(180.7)	(97.3)
Operating segment \| Card Services \| United States
Disaggregation of revenue
Total revenue									4,547.8	4,597.6
Corporate/Other
Disaggregation of revenue
Revenue from contracts with customers									0.4	0.6
Total revenue									0.4	0.6	$ 0.6
Corporate/Other \| Other
Disaggregation of revenue
Revenue from contracts with customers									0.4	0.6
Corporate/Other \| United States
Disaggregation of revenue
Total revenue									$ 0.4	$ 0.6
Minimum \| Short-term loyalty programs
Disaggregation of revenue
Typical term of short-term loyalty programs									84 days
Maximum \| Short-term loyalty programs
Disaggregation of revenue
Typical term of short-term loyalty programs									140 days
Typical contract term of the short-term loyalty programs									1 year

ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES

ACCRUED EXPENSES

15. ACCRUED EXPENSES

Accrued expenses consist of the following:


	December 31,
	2019		2018
	(in millions)
Accrued payroll and benefits	$	133.4	$	187.1
Accrued taxes		18.1		22.6
Accrued other liabilities		176.3		112.5
Accrued expenses	$	327.8	$	322.2

CREDIT CARD AND LOAN RECEIVABLES (Tables)

12 Months Ended

Dec. 31, 2019

CREDIT CARD AND LOAN RECEIVABLES

Schedule of components of total credit card and loan receivables


	December 31,		December 31,
	2019		2018
	(in millions)
Principal receivables	$	18,413.1	$	16,869.9
Billed and accrued finance charges		977.3		898.3
Other		72.7		86.8
Total credit card and loan receivables		19,463.1		17,855.0
Less: Credit card receivables – restricted for securitization investors		13,504.2		13,418.3
Other credit card and loan receivables	$	5,958.9	$	4,436.7

Schedule of Company's allowance for loan loss



	Years Ended December 31,
	2019		2018		2017
	(in millions)
Balance at beginning of year	$	1,038.3	$	1,119.3	$	948.0
Provision for loan loss		1,187.5		1,016.0		1,140.1
Allowance associated with credit card and loan receivables transferred to held for sale		—		(54.8)		(27.9)
Change in estimate for uncollectible unpaid interest and fees		—		25.0		30.0
Recoveries		234.5		214.2		196.6
Principal charge-offs		(1,289.2)		(1,281.4)		(1,167.5)
Balance at end of year	$	1,171.1	$	1,038.3	$	1,119.3

Schedule of delinquency trends of the Company's credit card and loan receivables portfolio


	December 31,		% of		December 31,		% of
	2019		Total		2018		Total
	(in millions, except percentages)
Receivables outstanding - principal	$	18,413.1	100.0	%	$	16,869.9	100.0	%
Principal receivables balances contractually delinquent:
31 to 60 days	$	337.4	1.8	%	$	303.2	1.8	%
61 to 90 days		233.6	1.3			207.9	1.3
91 or more days		496.5	2.7			443.4	2.6
Total	$	1,067.5	5.8	%	$	954.5	5.7	%

Schedule of information on credit card and loan receivables that are considered troubled debt restructurings, which entered into a modification program

Year Ended December 31, 2019

Year Ended December 31, 2018

Pre-

Post-

Pre-

Post-

modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card receivables

259,311

381.4

380.8

501,906

621.4

620.7

The tables below summarize troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date:


	Year Ended December 31, 2019			Year Ended December 31, 2018
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance
	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted – credit card receivables	126,476	$	170.8	293,591	$	340.5

Schedule of number of active credit card and loan accounts with balances and the related principal balances outstanding, based upon the age of the active credit card accounts from origination


	December 31, 2019
						Percentage of
	Number of	Percentage of		Principal		Principal
	Active Accounts	Active Accounts		Receivables		Receivables
Age of Accounts Since Origination	with Balances	with Balances		Outstanding		Outstanding
	(in millions, except percentages)
0-12 Months	7.1	27.8	%	$	4,585.1	24.9	%
13-24 Months	3.9	15.3			2,826.6	15.4
25-36 Months	3.2	12.6			2,423.1	13.2
37-48 Months	2.5	9.7			2,051.7	11.1
49-60 Months	1.8	7.0			1,509.7	8.2
Over 60 Months	7.0	27.6			5,016.9	27.2
Total	25.5	100.0	%	$	18,413.1	100.0	%


	December 31, 2018
						Percentage of
	Number of	Percentage of		Principal		Principal
	Active Accounts	Active Accounts		Receivables		Receivables
Age of Accounts Since Origination	with Balances	with Balances		Outstanding		Outstanding
	(in millions, except percentages)
0-12 Months	6.5	26.7	%	$	4,099.9	24.3	%
13-24 Months	4.2	17.1			2,887.8	17.1
25-36 Months	3.1	13.0			2,428.9	14.4
37-48 Months	2.2	9.1			1,795.0	10.7
49-60 Months	1.7	7.1			1,367.2	8.1
Over 60 Months	6.5	27.0			4,291.1	25.4
Total	24.2	100.0	%	$	16,869.9	100.0	%

Schedule of composition of obligor credit quality


	December 31, 2019				December 31, 2018
			Percentage of				Percentage of
	Total Principal		Principal		Total Principal		Principal
Probability of an Account Becoming 91 or More Days Past	Receivables		Receivables		Receivables		Receivables
Due or Becoming Charged-off (within the next 12 months)	Outstanding		Outstanding		Outstanding		Outstanding
	(in millions, except percentages)
No Score	$	290.0	1.6	%	$	249.0	1.5	%
27.1% and higher		1,591.4	8.6			1,394.0	8.2
17.1% - 27.0%		1,065.4	5.8			770.1	4.6
12.6% - 17.0%		1,127.7	6.1			1,047.6	6.2
3.7% - 12.5%		7,985.8	43.4			6,877.6	40.8
1.9% - 3.6%		3,285.3	17.8			3,060.7	18.1
Lower than 1.9%		3,067.5	16.7			3,470.9	20.6
Total	$	18,413.1	100.0	%	$	16,869.9	100.0	%

Schedule of securitized credit card receivables, delinquencies and net charge-offs


	December 31,		December 31,
	2019		2018
	(in millions)
Total credit card receivables – restricted for securitization investors	$	13,504.2	$	13,418.3
Principal amount of credit card receivables – restricted for securitization investors, 91 days or more past due	$	321.8	$	301.6


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net charge-offs of securitized principal	$	907.7	$	927.0	$	741.1

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Property, plant and equipment other than software development and conversion cost \| Minimum
Property and Equipment
Estimated useful life	1 year
Property, plant and equipment other than software development and conversion cost \| Maximum
Property and Equipment
Estimated useful life	21 years
Software Development and Conversion Costs \| Minimum
Property and Equipment
Estimated useful life	1 year
Software Development and Conversion Costs \| Maximum
Property and Equipment
Estimated useful life	7 years

RESTRUCTURING AND OTHER CHARGES

12 Months Ended

Dec. 31, 2019

RESTRUCTURING AND OTHER CHARGES

RESTRUCTURING AND OTHER CHARGES

14. RESTRUCTURING AND OTHER CHARGES

In 2019, the Company, under the direction of the Board of Directors, evaluated the cost structure and executed on certain cost saving initiatives at each segment. As a result, the Company incurred restructuring and other charges of $118.1 million. These charges included restructuring and other exit activities related to reductions in force, terminations of certain product lines, reduction or closure of certain leased office space, asset impairments, changes in management structure and fundamental reorganizations that affect the nature and focus of operations. Restructuring and other charges incurred at the Corporate segment of $37.9 million were recorded to general and administrative expense in the Company’s consolidated statements of income. Restructuring and other charges incurred in the LoyaltyOne and Card Services segments of $50.8 million and $29.4 million, respectively, were recorded to cost of operations in the Company’s consolidated statements of income. These charges are not expected to continue in 2020.

LoyaltyOne

In the first quarter of 2019, BrandLoyalty incurred $7.9 million in restructuring charges associated with the wind-down of Merison, a retail marketing division included in the LoyaltyOne segment. The restructuring charges consisted of inventory impairment charges of $3.4 million, contract termination costs of $2.1 million, fixed asset impairment charges of $1.2 million and termination benefits of $1.2 million. In the third quarter of 2019, asset impairment charges of $33.5 million were recorded related to the discontinuance of certain product lines within inventory and the impairment of certain prepaid assets and fixed assets, and termination benefits of $8.1 million were incurred, primarily related to changes in management structure. LoyaltyOne also incurred lease termination costs of $0.2 million related to the closure of leased office space and contract termination costs of $0.2 million. In the fourth quarter of 2019, as a result of certain changes in estimates, LoyaltyOne incurred an additional $2.6 million of impairment charges and decreased its termination benefits accrual by $1.7 million.

Corporate/Other

Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4.4 billion in cash, subject to certain specified adjustments. Due to the pending sale of Epsilon, in the second quarter of 2019, the Company incurred restructuring charges at Corporate as a result of efforts to realign the organization, including termination benefits of $11.3 million and asset impairment charges of $11.1 million related to assets primarily utilized to support the Epsilon segment. Subsequent to the sale of Epsilon, the Company further sought to eliminate redundancies and executed a second reduction in force with further management changes and incurred $3.3 million and $4.0 million in termination benefits in the third and fourth quarters of 2019, respectively. Additionally, the Company incurred lease termination costs of $7.0 million related to the reduction of its leased office space, as well as other exit costs of $1.2 million.

Card Services

In the fourth quarter of 2019, the Company executed a significant reduction in force in its Card Services segment and incurred $27.3 million in termination benefits. For the year ended December 31, 2019, Card Services also incurred lease termination costs of $1.9 million related to the reduction of its leased office space as well as the related impairment of certain assets of $0.2 million.

Restructuring and other charges incurred by reportable segment for all restructuring activities for the year ended December 31, 2019 are as follows:


	Termination		Asset		Lease		Other
Year Ended December 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	18.6	$	11.1	$	7.0	$	1.2	$	37.9
LoyaltyOne		7.6		40.7		0.2		2.3		50.8
Card Services		27.3		0.2		1.9		—		29.4
Total	$	53.5	$	52.0	$	9.1	$	3.5	$	118.1

The Company’s liability for restructuring and other charges is recognized in accrued expenses and other liabilities in its consolidated balance sheets. The following table summarizes the activities related to the restructuring and other charges, as discussed above, for the year ended December 31, 2019:


	Termination		Asset		Lease		Other
Year Ended December 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Liability as of December 31, 2018	$	—	$	—	$	—	$	—	$	—
Charged to expense		53.5		52.0		9.1		3.5		118.1
Adjustments for non-cash charges ⁽¹⁾		—		(52.0)		0.7		(0.1)		(51.4)
Cash payments		(18.8)		—		(9.8)		(3.3)		(31.9)
Liability as of December 31, 2019	$	34.7	$	—	$	—	$	0.1	$	34.8

(1)

Adjustments for non-cash charges primarily relate to asset impairments. For the year ended December 31, 2019, lease termination costs were netted against a $0.7 million gain upon derecognition of right-of-use assets and related liabilities.

The Company’s outstanding liability related to restructuring and other charges is expected to be settled by the end of 2021, with the majority settled in 2020.

INTANGIBLE ASSETS AND GOODWILL (Tables)

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS AND GOODWILL

Schedule of intangible assets


	December 31, 2019
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	325.1	$	(278.7)	$	46.4	7 years—straight line
Premium on purchased credit card portfolios		192.6		(93.2)		99.4	1-13 years—straight line
Collector database		53.9		(52.9)		1.0	5 years—straight line
Tradenames		31.8		(26.5)		5.3	8-15 years—straight line
	$	603.4	$	(451.3)	$	152.1
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	604.6	$	(451.3)	$	153.3


	December 31, 2018
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	339.5	$	(244.4)	$	95.1	3-7 years—straight line
Premium on purchased credit card portfolios		286.0		(172.9)		113.1	3-13 years—straight line
Collector database		51.3		(49.9)		1.4	5 years—straight line
Tradenames		32.5		(25.9)		6.6	8-15 years—straight line
	$	709.3	$	(493.1)	$	216.2
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	710.5	$	(493.1)	$	217.4

Schedule of estimated amortization expense related to intangible assets


	For the Years Ending
	December 31,
	(in millions)
2020	$	82.7
2021		22.4
2022		17.6
2023		12.9
2024		10.7
Thereafter		5.8

Schedule of changes in carrying amount of goodwill



	LoyaltyOne		Card Services		Total
	(in millions)
Balance at January 1, 2018	$	731.1	$	261.7	$	992.8
Effects of foreign currency translation		(38.0)		—		(38.0)
Balance at December 31, 2018	$	693.1	$	261.7	$	954.8
Goodwill acquired during the period		—		2.3		2.3
Effects of foreign currency translation		(2.2)		—		(2.2)
Balance at December 31, 2019	$	690.9	$	264.0	$	954.9

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENCIES.

Schedule of actual capital ratios and minimum ratios

The actual capital ratios and minimum ratios as of December 31, 2019 are as follows:


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets	12.9	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.6		4.5		6.5
Tier 1 capital to risk-weighted assets	14.6		6.0		8.0
Total capital to risk-weighted assets	15.9		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets	11.9	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.4		4.5		6.5
Tier 1 capital to risk-weighted assets	14.4		6.0		8.0
Total capital to risk-weighted assets	15.7		8.0		10.0

The actual capital ratios and minimum ratios as of December 31, 2018 are as follows:


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets	13.1	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.6		4.5		6.5
Tier 1 capital to risk-weighted assets	14.6		6.0		8.0
Total capital to risk-weighted assets	15.9		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets	12.1	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.4		4.5		6.5
Tier 1 capital to risk-weighted assets	14.4		6.0		8.0
Total capital to risk-weighted assets	15.7		8.0		10.0

DERIVATIVE INSTRUMENTS - Designated and Not Designated Instruments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Notional amount, fair value and classification of the company's outstanding derivative contracts
Maximum length of time, foreign currency cash flow hedge	12 months
Designated as hedging instrument \| Foreign currency exchange hedges \| Other current assets
Notional amount, fair value and classification of the company's outstanding derivative contracts
Notional Amount	$ 5.5	$ 5.2
Fair Value	0.2	0.3
Designated as hedging instrument \| Foreign currency exchange hedges \| Other current liabilities
Notional amount, fair value and classification of the company's outstanding derivative contracts
Notional Amount	7.8	20.3
Fair Value	$ 0.3	0.3
Not designated as hedging instrument \| Foreign currency exchange hedges \| Other current liabilities
Notional amount, fair value and classification of the company's outstanding derivative contracts
Notional Amount		61.6
Fair Value		$ 3.5

STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2019

STOCKHOLDERS' EQUITY

Schedule of stock-based compensation expense


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Cost of operations	$	16.5	$	23.3	$	18.8
General and administrative		8.6		21.1		22.5
Total	$	25.1	$	44.4	$	41.3

Summary of stock option activity


	Outstanding			Exercisable
		Weighted			Weighted
		Average			Average
	Options	Exercise Price		Options	Exercise Price
Balance at January 1, 2017	18,866	$	37.60	18,864	$	37.60
Options granted	—		—
Options exercised	(7,004)		60.85
Options forfeited	(3)		35.56
Balance at December 31, 2017	11,859	$	23.87	11,859	$	23.87
Options granted	—		—
Options exercised	(886)		12.70
Options forfeited	(119)		2.74
Balance at December 31, 2018	10,854	$	25.01	10,854	$	25.01
Options granted	—		—
Options exercised	(10,854)		25.01
Options forfeited	—		—
Balance at December 31, 2019	—	$	—	—	$	—

REDEMPTION SETTLEMENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2019

REDEMPTION SETTLEMENT ASSETS

Schedule of redemption settlement assets


	December 31, 2019								December 31, 2018
		Amortized	Unrealized		Unrealized					Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Restricted cash	$	39.3	$	—	$	—	$	39.3	$	43.9	$	—	$	—	$	43.9
Mutual funds		25.1		—		—		25.1		23.2		—		—		23.2
Corporate bonds		536.0		2.4		(2.0)		536.4		497.5		0.1		(6.1)		491.5
Total	$	600.4	$	2.4	$	(2.0)	$	600.8	$	564.6	$	0.1	$	(6.1)	$	558.6

Schedule of unrealized losses and fair value for investments that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position


	December 31, 2019
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	166.6	$	(1.3)	$	155.1	$	(0.7)	$	321.7	$	(2.0)
Total	$	166.6	$	(1.3)	$	155.1	$	(0.7)	$	321.7	$	(2.0)


	December 31, 2018
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	31.2	$	(0.1)	$	414.4	$	(6.0)	$	445.6	$	(6.1)
Total	$	31.2	$	(0.1)	$	414.4	$	(6.0)	$	445.6	$	(6.1)

Schedule of redemption settlement assets by contractual maturity date


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	129.5	$	129.4
Due after one year through five years		427.8		428.2
Due after five year through ten years		3.8		3.9
Total	$	561.1	$	561.5

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

12 Months Ended

Dec. 31, 2019

SUPPLEMENTAL CASH FLOW INFORMATION

Schedule of reconciliation of cash and cash equivalents


	December 31,		December 31,		December 31,
	2019		2018		2017
	(in millions)
Cash and cash equivalents	$	3,874.4	$	3,863.1	$	4,190.0
Restricted cash included within other current assets ⁽¹⁾		44.4		60.7		50.4
Restricted cash included within redemption settlement assets, restricted⁽²⁾		39.3		43.9		74.3
Total cash, cash equivalents and restricted cash	$	3,958.1	$	3,967.7	$	4,314.7

(1)	Includes cash restricted for principal and interest repayments of non-recourse borrowings of consolidated securitized debt and other restricted cash within other current assets.

(2)	See Note 10, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets.

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	3 Months Ended								12 Months Ended
	Apr. 25, 2019	Oct. 31, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Numerator:
Income from continuing operations			$ 130.4	$ 121.6	$ 142.4	$ 178.2	$ 253.1	$ 288.7	$ 223.8	$ 179.9	$ 572.6	$ 945.5	$ 769.2
Less: Dividends declared on preferred stock											2.8
Less: Allocation of undistributed earnings											6.8
Income from continuing operations - basic											563.0	945.5	769.2
(Loss) income from discontinued operations, net of tax			$ (32.9)	$ (229.2)	$ (3.4)	$ (29.1)	$ 31.8	$ 7.8	$ (6.0)	$ (16.0)	(294.6)	17.6	19.5
Net income - basic											$ 268.4	$ 963.1	$ 788.7
Denominator:
Weighted average shares, basic											50,000,000.0	54,900,000	55,700,000
Basic income (loss) attributable to common stockholders per share:
Income from continuing operations (in dollars per share)			$ 2.73	$ 2.47	$ 2.72	$ 3.36	$ 4.69	$ 5.27	$ 4.05	$ 3.25	$ 11.25	$ 17.24	$ 13.82
(Loss) income from discontinued operations (in dollars per share)			(0.70)	(4.69)	(0.07)	(0.55)	0.59	0.14	(0.11)	(0.29)	(5.89)	0.32	0.35
Net income per share (in dollars per share)			$ 2.03	$ (2.22)	$ 2.65	$ 2.81	$ 5.28	$ 5.41	$ 3.94	$ 2.96	$ 5.36	$ 17.56	$ 14.17
Diluted income per share:
Income from continuing operations			$ 130.4	$ 121.6	$ 142.4	$ 178.2	$ 253.1	$ 288.7	$ 223.8	$ 179.9	$ 572.6	$ 945.5	$ 769.2
(Loss) income from discontinued operations, net of tax			$ (32.9)	$ (229.2)	$ (3.4)	$ (29.1)	$ 31.8	$ 7.8	$ (6.0)	$ (16.0)	(294.6)	17.6	19.5
Net income											$ 278.0	$ 963.1	$ 788.7
Denominator:
Weighted average shares, basic											50,000,000.0	54,900,000	55,700,000
Weighted average effect of dilutive securities:
Shares from assumed conversion of preferred stock (in shares)											800,000
Net effect of dilutive stock options and unvested restricted stock (in shares)											100,000	200,000	200,000
Denominator for diluted calculations (in shares)											50,900,000	55,100,000	55,900,000
Diluted income (loss) attributable to common stockholders per share:
Income from continuing operations (in dollars per share)			$ 2.74	$ 2.41	$ 2.71	$ 3.35	$ 4.67	$ 5.25	$ 4.04	$ 3.23	$ 11.24	$ 17.17	$ 13.75
(Loss) income from discontinued operations (in dollars per share)			(0.69)	(4.54)	(0.07)	(0.55)	0.58	0.14	(0.11)	(0.28)	(5.78)	0.32	0.35
Net income per share (in dollars per share)			$ 2.05	$ (2.13)	$ 2.64	$ 2.80	$ 5.25	$ 5.39	$ 3.93	$ 2.95	$ 5.46	$ 17.49	$ 14.10
Series A Non-Voting Convertible Preferred Stock
Diluted income (loss) attributable to common stockholders per share:
Conversion of stock, shares converted		150,000
Conversion of stock, shares issued	150,000
Value Act Holdings, L.P. \| Series A Non-Voting Convertible Preferred Stock
Diluted income (loss) attributable to common stockholders per share:
Conversion of stock, shares converted		150,000									150,000
Conversion of stock, shares issued	150,000										150,000
Value Act Holdings, L.P. \| Common Stock
Diluted income (loss) attributable to common stockholders per share:
Conversion of stock, shares converted	1,500,000										1,500,000

EMPLOYEE BENEFIT PLANS (Details) - USD ($)		3 Months Ended	12 Months Ended
EMPLOYEE BENEFIT PLANS (Details) - USD ($)	Jun. 05, 2015	Jun. 30, 2015	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jul. 01, 2015	Jul. 20, 2001
2015 Omnibus Incentive Plan
Maximum cash amount that may be awarded to any single participant			$ 7,500,000
EDCP
2015 Omnibus Incentive Plan
Vested percentage			100.00%
Retirement Savings Plan
Retirement Plans
Number of shares registered for issuance							1,500,000
Number of shares available for issuance			462,101
Minimum age limit of employees covered by the plan			18 years
Service period after which seasonal employees begin receiving employer matching contribution			12 months
Service period after which employees begin receiving employer matching contribution			180 days
Percentage of employees' contribution matched by dollar-to-dollar contribution by employer			5.00%
Company's matching and discretionary contributions			$ 35,300,000	$ 44,800,000	$ 41,600,000
Group Retirement Savings Plan And Deferred Profit Sharing Plan \| LoyaltyOne
Retirement Plans
Company's matching and discretionary contributions			$ 1,800,000	1,700,000	$ 1,900,000
Group Retirement Savings Plan \| LoyaltyOne
Retirement Plans
Service period after which full-time employees begin receiving company matching contribution			3 months
Service period after which part-time employees begin receiving company matching contribution			6 months
Deferred Profit Sharing Plan \| LoyaltyOne
Retirement Plans
Service period after which contributions vest			1 year
Service period after which employees begin receiving employer matching contribution			12 months
Percentage of employees' contribution matched by dollar-to-dollar contribution by employer			5.00%
Executive Deferred Compensastion Plan
Retirement Plans
Deferred compensation liability			$ 33,300,000	$ 63,200,000
2005 Employee Stock Purchase Plan \| Retirement Savings Plan
Retirement Plans
Number of shares available for issuance		441,327
2015 Employee Stock Purchase Plan
Employee Stock Purchase Plan
Maximum amount of common stock permitted to be purchased annually per employee			$ 25,000
Maximum percentage of voting power after purchase of common stock under ESPP			5.00%
Offering period under ESPP			6 months
Purchase price of common stock as a percentage of fair market value of shares			85.00%
Maximum number of shares reserved for issuance under the ESPP		1,441,327
Number of shares registered for issuance	1,441,327
Number of shares issued under the ESPP			107,167
Weighted-average issue price of shares issued under the ESPP (in dollars per share)			$ 113.17
Number of shares issued under the ESPP since the inception of the plan			448,682
Retirement Plans
Number of shares available for issuance			992,645			1,000,000

OTHER INVESTMENTS

12 Months Ended

Dec. 31, 2019

OTHER INVESTMENTS

OTHER INVESTMENTS

9. OTHER INVESTMENTS

Other investments consist of marketable securities and U.S. Treasury bonds and are included in other current assets and other non-current assets in the Company’s consolidated balance sheets. Marketable securities include available for sale debt securities, mutual funds and domestic certificate of deposit investments. The principal components of other investments, which are carried at fair value, are as follows:


	December 31, 2019								December 31, 2018
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Marketable securities	$	257.2	$	3.0	$	(0.4)	$	259.8	$	272.8	$	0.1	$	(6.5)	$	266.4
U.S. Treasury bonds		—		—		—		—		25.0		—		(0.1)		24.9
Total	$	257.2	$	3.0	$	(0.4)	$	259.8	$	297.8	$	0.1	$	(6.6)	$	291.3

The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of December 31, 2019 and 2018, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:


	December 31, 2019
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	18.8	$	(0.2)	$	13.1	$	(0.2)	$	31.9	$	(0.4)
Total	$	18.8	$	(0.2)	$	13.1	$	(0.2)	$	31.9	$	(0.4)


	December 31, 2018
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	57.3	$	(0.5)	$	164.0	$	(6.0)	$	221.3	$	(6.5)
U.S. Treasury bonds		—		—		24.9		(0.1)		24.9		(0.1)
Total	$	57.3	$	(0.5)	$	188.9	$	(6.1)	$	246.2	$	(6.6)

The amortized cost and estimated fair value of the marketable securities and U.S. Treasury bonds at December 31, 2019 by contractual maturity are as follows:


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	31.3	$	31.3
Due after one year through five years		1.7		1.7
Due after five years through ten years		—		—
Due after ten years		224.2		226.8
Total	$	257.2	$	259.8

Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the security's issuer, and the Company's intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. The Company typically invests in highly-rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity. As of December 31, 2019, the Company does not consider the investments to be other-than-temporarily impaired.

There were no realized gains or losses from the sale of investment securities for the years ended December 31, 2019, 2018 and 2017.

REDEMPTION SETTLEMENT ASSETS (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	$ 600.4	$ 564.6
Unrealized Gains	2.4	0.1
Unrealized Losses	(2.0)	(6.1)
Fair Value	600.8	558.6
Fair Value
Less than 12 months	166.6	31.2
12 Months or Greater	155.1	414.4
Total	321.7	445.6
Unrealized Losses
Less than 12 months	(1.3)	(0.1)
12 Months or Greater	(0.7)	(6.0)
Total	(2.0)	(6.1)
Amortized cost of the redemption settlement assets by contractual maturity
Due in one year or less	129.5
Due after one year through five years	427.8
Due after five year through ten years	3.8
Total	561.1
Estimated fair value of the redemption settlement assets by contractual maturity
Due in one year or less	129.4
Due after one year through five years	428.2
Due after five year through ten years	3.9
Total	561.5
Restricted cash
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	39.3	43.9
Fair Value	39.3	43.9
Mutual funds
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	25.1	23.2
Fair Value	25.1	23.2
Corporate bonds
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	536.0	497.5
Unrealized Gains	2.4	0.1
Unrealized Losses	(2.0)	(6.1)
Fair Value	536.4	491.5
Fair Value
Less than 12 months	166.6	31.2
12 Months or Greater	155.1	414.4
Total	321.7	445.6
Unrealized Losses
Less than 12 months	(1.3)	(0.1)
12 Months or Greater	(0.7)	(6.0)
Total	$ (2.0)	$ (6.1)

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions		1 Months Ended	12 Months Ended
	Apr. 25, 2019	Oct. 31, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash and cash equivalents			$ 3,874.4	$ 3,863.1	$ 4,190.0
Restricted cash included within other current assets (1)			44.4	60.7	50.4
Restricted cash included within redemption settlement assets, restricted			39.3	43.9	74.3
Total cash, cash equivalents and restricted cash			$ 3,958.1	$ 3,967.7	$ 4,314.7	$ 1,968.5
Series A Non-Voting Convertible Preferred Stock
Conversion of stock, shares converted		150,000
Conversion of stock, shares issued	150,000
Value Act Holdings, L.P. \| Common Stock
Conversion of stock, shares converted	1,500,000		1,500,000
Value Act Holdings, L.P. \| Series A Non-Voting Convertible Preferred Stock
Conversion of stock, shares converted		150,000	150,000
Conversion of stock, shares issued	150,000		150,000

FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Financial assets
Credit card and loan receivables, net	$ 18,292.0	$ 16,816.7
Credit card receivables held for sale	408.0	1,951.6
Redemption settlement assets, restricted	600.8	558.6
Other investments	259.8	291.3
Financial liabilities
Deposits	12,303.6	11,768.7
Non-recourse borrowings of consolidated securitization entities	7,333.6	7,626.9
Long-term and other debt	2,878.8	5,755.3
Carrying Amount
Financial assets
Credit card and loan receivables, net	18,292.0	16,816.7
Credit card receivables held for sale	408.0	1,951.6
Redemption settlement assets, restricted	600.8	558.6
Other investments	259.8	291.3
Derivative instruments	0.2	3.8
Financial liabilities
Derivative instruments	0.3	0.3
Deposits	12,151.7	11,793.7
Non-recourse borrowings of consolidated securitization entities	7,284.0	7,651.7
Long-term and other debt	2,849.9	5,725.4
Fair Value.
Financial assets
Credit card and loan receivables, net	19,126.0	17,472.7
Credit card receivables held for sale	436.2	1,995.5
Redemption settlement assets, restricted	600.8	558.6
Other investments	259.8	291.3
Derivative instruments	0.2	3.8
Financial liabilities
Derivative instruments	0.3	0.3
Deposits	12,303.6	11,768.7
Non-recourse borrowings of consolidated securitization entities	7,333.6	7,626.9
Long-term and other debt	$ 2,878.8	$ 5,755.3

LEASES (Tables)

12 Months Ended

Dec. 31, 2019

LEASES

Schedule of lease cost

The components of lease expense were as follows:


	Year Ended
	December 31, 2019
	(in millions)
Operating lease cost	$	41.1
Short-term lease cost		2.7
Variable lease cost		6.8
Total	$	50.6

Other information related to leases was as follows:


	December 31,
	2019
Weighted-average remaining lease term (in years):
Operating leases		11.5
Weighted-average discount rate:
Operating leases		5.2%

Supplemental cash flow information related to leases was as follows:


	Year Ended
	December 31, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46.6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	28.4

Schedule of maturities of lease liabilities

Maturities of the lease liabilities as of December 31, 2019 were as follows:


	Operating
Year	Leases
	(in millions)
2020	$	38.4
2021		39.6
2022		38.6
2023		36.8
2024		35.6
Thereafter		237.4
Total undiscounted lease liabilities		426.4
Less: Amount representing interest		(112.1)
Total present value of minimum lease payments	$	314.3

Amounts recognized in the December 31, 2019 consolidated balance sheet:
Current operating lease liabilities	$	22.6
Long-term operating lease liabilities		291.7
Total	$	314.3

Under ASC 840, future annual minimum rental payments required under noncancellable operating leases as of December 31, 2018 were as follows:


	Operating
Year	Leases
	(in millions)
2019	$	42.0
2020		39.9
2021		37.7
2022		36.8
2023		35.6
Thereafter		256.4
Total	$	448.4

PROPERTY AND EQUIPMENT (Details) $ in Millions	1 Months Ended	12 Months Ended
PROPERTY AND EQUIPMENT (Details) $ in Millions	Oct. 31, 2019 USD ($) item	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Property and equipment
Total		$ 663.6	$ 649.1
Accumulated depreciation		(381.3)	(360.9)
Property and equipment, net		282.3	288.2
Depreciation
Depreciation		40.6	41.2	$ 40.8
Amortization on capitalized software		39.3	39.5	$ 32.9
Unamortized capitalized software costs		74.0	87.5
Proceeds from sale of building and land	$ 15.1	15.1
Gain on sale of building and land	$ 6.1
Lease term	15 years
Number of tenant options \| item	4
Term per each option to extend	5 years
Computer software and development
Property and equipment
Total		327.1	331.9
Furniture and equipment
Property and equipment
Total		164.3	166.4
Land, buildings and leasehold improvements
Property and equipment
Total		126.0	128.1
Construction in progress
Property and equipment
Total		$ 46.2	$ 22.7

DEBT (Details) € in Millions		1 Months Ended									12 Months Ended
DEBT (Details) € in Millions	Dec. 20, 2019 USD ($)	Oct. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2019 EUR (€)	Aug. 31, 2019 USD ($)	Jul. 31, 2019 USD ($)	Jul. 31, 2019 EUR (€)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Feb. 28, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2019 EUR (€)	Dec. 19, 2019 USD ($)	May 31, 2019 USD ($)	Apr. 30, 2019 USD ($)	Dec. 31, 2018 EUR (€)	Jun. 30, 2016 EUR (€)
Debt
Total long-term and other debt											$ 2,878,800,000
Less: Unamortized discount and debt issuance costs											28,900,000
Less: Current portion											6,942,400,000	$ 6,537,700,000
Long-term portion											5,209,300,000	5,256,000,000.0
Less: Current portion											3,030,800,000	2,717,600,000
Long-term portion											4,253,200,000	4,934,100,000
Mandatory payment per credit agreement																$ 500,000,000
Loss from extinguishment of debt											(71,900,000)
Maturities of long-term and other debt
2020											101,400,000
2021											101,400,000
2022											1,826,000,000.0
2024											850,000,000.0
Long-Term and Other Debt											2,849,900,000
Maturities Of Deposits
2020											6,944,800,000
2021											2,193,900,000
2022											1,574,000,000.0
2023											935,000,000.0
2024											527,300,000
Total maturities											12,175,000,000.0
Unamortized discount											(23,300,000)
Total Deposits											12,151,700,000
Maturities Of Non Recourse Borrowings Of Consolidated Securitization Entities
2020											3,032,200,000
2021											2,692,100,000
2022											1,571,700,000
Total maturities											7,296,000,000.0
Unamortized discount											(12,000,000.0)
Total non-recourse borrowings of consolidated securitization entities											7,284,000,000.0
Series 2016-C asset backed term notes
Debt
Debt repaid by the company		$ 460,500,000
Retained amount of subordinated class of notes		$ 88,700,000
Series 2012-A asset backed term notes
Debt
Debt repaid by the company									$ 550,000,000.0
Retained amount of subordinated class of notes									$ 137,500,000
Series 2012-D asset backed term notes
Debt
Debt repaid by the company								$ 466,700,000
Retained amount of subordinated class of notes								77,000,000.0
Series 2017-B asset backed term notes
Debt
Debt repaid by the company					$ 444,700,000
Retained amount of subordinated class of notes					$ 44,700,000
Total deposits
Debt
Less: Unamortized discount and debt issuance costs											23,300,000	25,700,000
Deposits											12,175,000,000.0	11,819,400,000
Less: Current portion											6,942,400,000	6,537,700,000
Long-term portion											5,209,300,000	5,256,000,000.0
Certificates of deposit
Debt
Deposits											$ 8,585,200,000	$ 8,395,100,000
Certificates of deposit \| Comenity Bank and Comenity Capital Bank
Debt
Weighted average interest rate (as a percent)											2.66%	2.44%	2.66%				2.44%
Money market deposits
Debt
Money market deposits											$ 3,589,800,000	$ 3,424,300,000
Debt instrument description of Variable rate basis											Federal Funds rate
Money market deposits \| Comenity Bank and Comenity Capital Bank
Debt
Money market deposits											$ 3,600,000,000	$ 3,400,000
Weighted average interest rate (as a percent)											2.05%	2.59%	2.05%				2.59%
Non-recourse borrowings of consolidated securitization entities
Debt
Less: Unamortized discount and debt issuance costs											$ 12,000,000.0	$ 11,600,000
Total non-recourse borrowings of consolidated securitization entities											7,296,000,000.0	7,663,300,000
Less: Current portion											3,030,800,000	2,717,600,000
Long-term portion											4,253,200,000	4,934,100,000
Fixed rate asset-backed term note securities
Debt
Total non-recourse borrowings of consolidated securitization entities											4,891,000,000.0	4,893,300,000
Conduit asset-backed securities
Debt
Maximum borrowing capacity											4,700,000,000				$ 2,175,000,000.0	1,975,000,000.0
Total non-recourse borrowings of consolidated securitization entities											2,405,000,000.0	$ 2,770,000,000.0
Line of credit amount outstanding											$ 2,400,000,000
Debt instrument description of Variable rate basis											LIBOR	LIBOR
Number of facilities \| item											3
Master Trust I \| Series 2019-A asset backed term notes
Debt
Principal amount of debt										$ 562,500,000
Retained amount of subordinated class of notes										25,300,000
Master Trust I \| Series 2019-B asset backed term notes
Debt
Principal amount of debt								399,200,000
Retained amount of subordinated class of notes								18,000,000.0
Master Trust I \| Series 2019-C asset backed term notes
Debt
Principal amount of debt			$ 684,200,000
Retained amount of subordinated class of notes			30,800,000
Master Trust I \| Class A notes
Debt
Principal amount of debt			$ 600,000,000.0					$ 350,000,000.0		$ 500,000,000.0
Interest Rate (as a percent)			2.21%					2.49%		3.14%
Master Trust I \| Class M notes
Debt
Principal amount of debt			$ 53,400,000					$ 31,200,000		$ 37,200,000
Interest Rate (as a percent)			2.71%					3.04%		3.61%
Long-term and other debt
Debt
Total long-term and other debt											$ 2,878,800,000	$ 5,764,700,000
Less: Unamortized discount and debt issuance costs											28,900,000	39,300,000
Less: Current portion											101,400,000	138,900,000
Long-term and other debt											$ 2,748,500,000	5,586,500,000
Senior Notes
Debt
Extinguishment of debt						$ 1,900,000,000
Loss from extinguishment of debt						(71,900,000)
Loss from extinguishment of debt, before write-off of deferred issuance costs						(49,900,000)
Write-off of deferred issuance costs						$ 22,000,000.0
Senior Notes Due 2021
Debt
Total long-term and other debt												500,000,000.0
Interest Rate (as a percent)						5.875%
Debt repaid by the company						$ 500,000,000.0
Senior Notes Due 2022
Debt
Total long-term and other debt												600,000,000.0
Interest Rate (as a percent)						5.375%
Debt repaid by the company						$ 600,000,000.0
Senior Notes Due March 2022
Debt
Principal amount of debt \| €													€ 400.0
Total long-term and other debt												458,800,000
Interest Rate (as a percent)						4.50%					4.50%		4.50%
Debt repaid by the company \| €							€ 400.0
Senior Notes Due 2023
Debt
Principal amount of debt \| €													€ 300.0
Total long-term and other debt												344,100,000
Interest Rate (as a percent)						5.25%					5.25%		5.25%
Debt repaid by the company \| €							€ 300.0
Senior Notes Due 2024
Debt
Principal amount of debt	$ 850,000,000.0
Total long-term and other debt											$ 850,000,000.0
Interest Rate (as a percent)	4.75%										4.75%		4.75%
2017 revolving line of credit
Debt
Maximum borrowing capacity	$ 750,000,000.0					$ 1,072,400,000					$ 750,000,000.0	1,572,400,000		$ 1,072,400,000		1,072,400,000
Total long-term and other debt												$ 740,000,000.0
Debt repaid by the company						$ 500,000,000.0
Weighted average interest rate (as a percent)												4.22%					4.22%
Threshold amount for future asset sales																$ 50,000,000
Total availability under Credit Facility											$ 750,000,000.0	$ 832,400,000
Debt instrument description of Variable rate basis											LIBOR
2017 Term Loans
Debt
Principal amount of debt	2,028,800,000										$ 2,028,800,000	3,052,600,000
Total long-term and other debt											$ 2,028,800,000	$ 2,938,100,000
Debt repaid by the company	$ 833,000,000.0
Weighted average interest rate (as a percent)											3.30%	4.27%	3.30%				4.27%
Aggregate principal payments as a percentage of the initial term loan amount in each of the first and second year payable in equal quarterly installments											1.25%
Debt instrument description of Variable rate basis											LIBOR	LIBOR
BrandLoyalty credit facility
Debt
Total long-term and other debt												$ 183,700,000
Debt instrument description of Variable rate basis												Euro Interbank Offered Rate
BrandLoyalty revolving line of credit
Debt
Debt repaid by the company \| €				€ 32.5
Weighted average interest rate (as a percent)												1.22%					1.22%
BrandLoyalty revolving line of credit \| Committed revolving credit facility
Debt
Maximum borrowing capacity \| €																	€ 37.5
BrandLoyalty revolving line of credit \| Uncommitted revolving credit facility
Debt
Maximum borrowing capacity \| €																	€ 37.5
BrandLoyalty term loans
Debt
Debt repaid by the company \| €				€ 115.0
Weighted average interest rate (as a percent)												1.65%					1.65%
BrandLoyalty term loans \| A-1 Term loan facility
Debt
Principal amount of debt \| €																		€ 90.0
BrandLoyalty term loans \| A-2 term loan facility
Debt
Principal amount of debt \| €																		€ 100.0
Minimum \| Certificates of deposit
Debt
Interest Rate (as a percent)											1.33%		1.33%
Minimum \| Certificates of deposit \| Comenity Bank and Comenity Capital Bank
Debt
Interest Rate (as a percent)											1.33%	1.25%	1.33%				1.25%
Denomination amount of certificate of deposits											$ 1,000
Minimum \| Money market deposits
Debt
Interest Rate (as a percent)											1.84%	1.90%	1.84%				1.90%
Minimum \| Money market deposits \| Comenity Bank and Comenity Capital Bank
Debt
Interest Rate (as a percent)											1.84%	1.90%	1.84%				1.90%
Minimum \| Fixed rate asset-backed term note securities
Debt
Interest Rate (as a percent)											2.03%		2.03%
Minimum \| Conduit asset-backed securities
Debt
Interest Rate (as a percent)											2.79%	3.48%	2.79%				3.48%
Maximum \| Certificates of deposit
Debt
Interest Rate (as a percent)											4.00%		4.00%
Maximum \| Certificates of deposit \| Comenity Bank and Comenity Capital Bank
Debt
Interest Rate (as a percent)											4.00%	4.00%	4.00%				4.00%
Denomination amount of certificate of deposits											$ 100,000
Maximum \| Money market deposits
Debt
Interest Rate (as a percent)											3.50%	2.71%	3.50%				2.71%
Maximum \| Money market deposits \| Comenity Bank and Comenity Capital Bank
Debt
Interest Rate (as a percent)											3.50%	2.71%	3.50%				2.71%
Maximum \| Fixed rate asset-backed term note securities
Debt
Interest Rate (as a percent)											3.95%		3.95%
Maximum \| Conduit asset-backed securities
Debt
Interest Rate (as a percent)											2.96%	3.79%	2.96%				3.79%

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

EARNINGS PER SHARE

4. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net income per share of common stock for the periods indicated:


	Years Ended December 31,
	2019		2018		2017
	(in millions, except per share amounts)
Basic income per share:
Numerator:
Income from continuing operations	$	572.6	$	945.5	$	769.2
Less: Dividends declared on preferred stock		2.8		—		—
Less: Allocation of undistributed earnings		6.8		—		—
Income from continuing operations - basic		563.0		945.5		769.2
(Loss) income from discontinued operations, net of tax		(294.6)		17.6		19.5
Net income - basic	$	268.4	$	963.1	$	788.7

Denominator:
Weighted average shares, basic		50.0		54.9		55.7

Basic income (loss) attributable to common stockholders per share:
Income from continuing operations	$	11.25	$	17.24	$	13.82
(Loss) income from discontinued operations	$	(5.89)	$	0.32	$	0.35
Net income per share	$	5.36	$	17.56	$	14.17

Diluted income per share ⁽¹⁾:
Numerator:
Income from continuing operations	$	572.6	$	945.5	$	769.2
(Loss) income from discontinued operations, net of tax		(294.6)		17.6		19.5
Net income	$	278.0	$	963.1	$	788.7

Denominator:
Weighted average shares, basic		50.0		54.9		55.7
Weighted average effect of dilutive securities:
Shares from assumed conversion of preferred stock		0.8		—		—
Net effect of dilutive stock options and unvested restricted stock ⁽²⁾		0.1		0.2		0.2
Denominator for diluted calculation		50.9		55.1		55.9

Diluted income (loss) attributable to common stockholders per share:
Income from continuing operations	$	11.24	$	17.17	$	13.75
(Loss) income from discontinued operations	$	(5.78)	$	0.32	$	0.35
Net income per share	$	5.46	$	17.49	$	14.10

(1)	Computed using the if-converted method, as the result was more dilutive.

(2)	For the years ended December 31, 2019, 2018 and 2017, a de minimis amount of restricted stock units was excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive.

On April 25, 2019, the Company entered into an exchange agreement with ValueAct Holdings, L.P. pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of Series A Non-Voting Convertible Preferred Stock (“preferred stock”). In October 2019, ValueAct exchanged all 150,000 shares of preferred stock back to common stock. See Note 19, “Stockholders’ Equity,” for more information. At December 31, 2019, the Company did not have any shares of preferred stock outstanding.

For the year ended December 31, 2019, the Company’s calculation of basic and diluted EPS was computed using the two-class method for those periods in which participating securities were outstanding. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

INTANGIBLE ASSETS AND GOODWILL - Finite Lived Assets and Indefinite Lived Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	$ 603.4	$ 709.3
Accumulated Amortization	(451.3)	(493.1)
Finite lived assets, net	152.1	216.2
Total Intangible Assets
Gross Assets	604.6	710.5
Accumulated Amortization	(451.3)	(493.1)
Net	153.3	217.4
Tradenames
Indefinite Lived Assets
Indefinite lived assets	1.2	1.2
Total Intangible Assets
Net	1.2	1.2
Customer contracts and lists
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	325.1	339.5
Accumulated Amortization	(278.7)	(244.4)
Finite lived assets, net	$ 46.4	95.1
Amortization Life and Method
Useful life	7 years
Total Intangible Assets
Accumulated Amortization	$ (278.7)	$ (244.4)
Customer contracts and lists \| Minimum
Amortization Life and Method
Useful life		3 years
Customer contracts and lists \| Maximum
Amortization Life and Method
Useful life		7 years
Premium on purchased credit card portfolios
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	192.6	$ 286.0
Accumulated Amortization	(93.2)	(172.9)
Finite lived assets, net	99.4	113.1
Total Intangible Assets
Accumulated Amortization	$ (93.2)	$ (172.9)
Premium on purchased credit card portfolios \| Minimum
Amortization Life and Method
Useful life	1 year	3 years
Premium on purchased credit card portfolios \| Maximum
Amortization Life and Method
Useful life	13 years	13 years
Collector database
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	$ 53.9	$ 51.3
Accumulated Amortization	(52.9)	(49.9)
Finite lived assets, net	$ 1.0	$ 1.4
Amortization Life and Method
Useful life	5 years	5 years
Total Intangible Assets
Accumulated Amortization	$ (52.9)	$ (49.9)
Tradenames
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	31.8	32.5
Accumulated Amortization	(26.5)	(25.9)
Finite lived assets, net	5.3	6.6
Total Intangible Assets
Accumulated Amortization	$ (26.5)	$ (25.9)
Tradenames \| Minimum
Amortization Life and Method
Useful life	8 years	8 years
Tradenames \| Maximum
Amortization Life and Method
Useful life	15 years	15 years

INVENTORIES, NET (Details) - USD ($) $ in Millions	12 Months Ended
INVENTORIES, NET (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
INVENTORIES, NET
Inventories, net	$ 218.0	$ 248.0
Inventory write-down	$ 18.4

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

12. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:


	December 31,
	2019		2018
	(in millions)
Computer software and development	$	327.1	$	331.9
Furniture and equipment		164.3		166.4
Land, buildings and leasehold improvements		126.0		128.1
Construction in progress		46.2		22.7
Total		663.6		649.1
Accumulated depreciation and amortization		(381.3)		(360.9)
Property and equipment, net	$	282.3	$	288.2

Depreciation expense totaled $40.6 million, $41.2 million and $40.8 million for the years ended December 31, 2019, 2018 and 2017, respectively, and includes purchased software. Amortization expense on capitalized software totaled $39.3 million, $39.5 million and $32.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

As of December 31, 2019 and 2018, the net amount of unamortized capitalized software costs included in the consolidated balance sheets was $74.0 million and $87.5 million, respectively.

Sale of Real Estate

In October 2019, the Company sold a building and land for cash proceeds of $15.1 million and simultaneously entered into a new 15 year lease agreement for the building, with four consecutive tenant options to extend the lease for five-year terms. Under the criteria of ASC 842, the transaction met the definition of a sale and the Company recognized a $6.1 million gain on the transaction, which was included in cost of operations in the Company’s consolidated statement of income for the year ended December 31, 2019.

RESTRUCTURING AND OTHER CHARGES (Details) - USD ($) $ in Millions	3 Months Ended				12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2019	Apr. 12, 2019
Restructuring costs and reserve
Restructuring charges					$ 118.1
Asset impairment charges					52.0
Epsilon \| Discontinued Operations, Held-for-sale
Restructuring costs and reserve
Consideration						$ 4,400.0
Termination Benefits
Restructuring costs and reserve
Restructuring charges					53.5
Asset Impairments
Restructuring costs and reserve
Restructuring charges					52.0
Lease Termination Costs
Restructuring costs and reserve
Restructuring charges					9.1
Other Exit Costs
Restructuring costs and reserve
Restructuring charges					3.5
Corporate/Other
Restructuring costs and reserve
Restructuring charges					37.9
Corporate/Other \| Termination Benefits
Restructuring costs and reserve
Restructuring charges	$ 4.0	$ 3.3	$ 11.3		18.6
Corporate/Other \| Asset Impairments
Restructuring costs and reserve
Restructuring charges			$ 11.1		11.1
Corporate/Other \| Lease Termination Costs
Restructuring costs and reserve
Restructuring charges	7.0				7.0
Corporate/Other \| Other Exit Costs
Restructuring costs and reserve
Restructuring charges	1.2				1.2
Corporate/Other \| General and administrative
Restructuring costs and reserve
Restructuring charges					37.9
LoyaltyOne
Restructuring costs and reserve
Restructuring charges					50.8
LoyaltyOne \| Termination Benefits
Restructuring costs and reserve
Restructuring charges		8.1			7.6
Decrease in restructuring accrual	1.7
LoyaltyOne \| Asset Impairments
Restructuring costs and reserve
Restructuring charges	2.6	33.5			40.7
LoyaltyOne \| Lease Termination Costs
Restructuring costs and reserve
Restructuring charges		0.2			0.2
LoyaltyOne \| Other Exit Costs
Restructuring costs and reserve
Restructuring charges					2.3
LoyaltyOne \| Contract Termination
Restructuring costs and reserve
Restructuring charges		0.2
LoyaltyOne \| Brand Loyalty
Restructuring costs and reserve
Restructuring charges				$ 7.9
LoyaltyOne \| Brand Loyalty \| Termination Benefits
Restructuring costs and reserve
Restructuring charges				1.2
LoyaltyOne \| Brand Loyalty \| Inventory Impairment
Restructuring costs and reserve
Restructuring charges				3.4
LoyaltyOne \| Brand Loyalty \| Contract Termination
Restructuring costs and reserve
Restructuring charges				2.1
LoyaltyOne \| Brand Loyalty \| Fixed Asset Impairment
Restructuring costs and reserve
Restructuring charges				$ 1.2
Card Services
Restructuring costs and reserve
Restructuring charges					29.4
Card Services \| Termination Benefits
Restructuring costs and reserve
Restructuring charges	$ 27.3				27.3
Card Services \| Asset Impairments
Restructuring costs and reserve
Restructuring charges		$ 0.2			0.2
Card Services \| Lease Termination Costs
Restructuring costs and reserve
Restructuring charges					$ 1.9

ACQUISITIONS

12 Months Ended

Dec. 31, 2019

ACQUISITIONS

ACQUISITIONS

5. ACQUISITIONS

2019 Acquisitions:

On February 7, 2019, the Company acquired certain assets as well as the assembled workforce and related office lease agreements of blispay inc. (“Blispay”), a financial technology company, for cash consideration of $6.7 million, and a $1.0 million limited guarantee was issued by the Company as part of the transaction. The acquisition was determined to constitute a business combination under ASC 805, “Business Combinations.” Total assets acquired were $7.3 million, including $5.0 million of capitalized software and $2.3 million of goodwill, with the fair value of the guarantee determined to be approximately $0.6 million on the acquisition date.

2017 Acquisitions:

On October 20, 2017, the Company acquired credit card receivables and the associated accounts and assumed a portion of an existing customer care operation, including a facility sublease agreement and approximately 250 employees, from Signet Jewelers Limited (“Signet”) for cash consideration of approximately $945.6 million. This acquisition increases the Company’s presence in the jewelry vertical. The Company determined these acquired activities and assets constituted a business under ASC 805, “Business Combinations,” based on the nature of the inputs, processes and outputs acquired from the transaction. In addition, the parties entered into a long-term agreement under which the Company became the primary issuer of private-label credit cards and related marketing services for Signet. The Company obtained control of the assets and assumed the liabilities on October 20, 2017, and the results of operations have been included since the date of acquisition in the Company’s Card Services segment.

The Company engaged a third party specialist to assist it in the measurement of the fair value of the assets acquired. The fair value of the assets acquired exceeded the cost of the acquisition. Consequently, the Company reassessed the recognition and measurement of the identifiable assets acquired and liabilities assumed and concluded that the valuation procedures and resulting measures were appropriate. The excess value of the net assets acquired over the purchase price of $7.9 million was recorded as a bargain purchase gain, which was included in cost of operations in the Company’s consolidated statement of income for the year ended December 31, 2017.

The following table summarizes the fair values of the assets acquired and the liabilities assumed in the Signet acquisition as of October 20, 2017:


	As of October 20, 2017
	(in millions)
Credit card receivables	$	906.3
Intangible assets		52.3
Total assets acquired		958.6

Other liabilities		0.2
Deferred tax liability		4.9
Total liabilities assumed		5.1

Net assets acquired	$	953.5
Total consideration paid		945.6
Gain on business combination	$	7.9

CREDIT CARD AND LOAN RECEIVABLES - Troubled Debt Restructurings (Details) - Consumer Portfolio $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Credit Card Receivables
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	259,311	501,906
Pre-modification Outstanding Balance	$ 381.4	$ 621.4
Post-modification Outstanding Balance	$ 380.8	$ 620.7
Troubled debt restructurings that subsequently defaulted - credit card receivables
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	126,476	293,591
Outstanding Balance	$ 170.8	$ 340.5

FINANCIAL INSTRUMENTS - Significant Unobservable Input Information (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Changes in fair value of the Company's asset and liability measured on a recurring basis using significant unobservable inputs (Level 3)
Fair value assets amount transfer from level 1 to level 2	$ 0.0	$ 0.0
Fair value assets amount transfer from level 2 to level 1	0.0	0.0
Fair value liabilities amount transfer from level 1 to level 2	0.0	0.0
Fair value liabilities amount transfer from level 2 to level 1	$ 0.0	$ 0.0

DERIVATIVE INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

DERIVATIVE INSTRUMENTS

Schedule of fair value of derivative instruments


	December 31, 2019
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	5.5	$	0.2	Other current assets	January 2020 to February 2020
Foreign currency exchange hedges	$	7.8	$	0.3	Other current liabilities	February 2020 to July 2020


	December 31, 2018
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	5.2	$	0.3	Other current assets	January 2019 to April 2019
Foreign currency exchange hedges	$	20.3	$	0.3	Other current liabilities	March 2019 to November 2019

Not designated as hedging instruments:
Foreign currency exchange forward contract	$	61.6	$	3.5	Other current assets	January 2019 to February 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation	Principles of Consolidation—The accompanying consolidated financial statements include the accounts of ADSC and all subsidiaries in which the Company has a controlling financial interest. Controlling financial interest is determined by a majority ownership interest and the absence of substantive third party participating rights. All intercompany transactions have been eliminated. In accordance with Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing,” and ASC 810, “Consolidation,” the Company is the primary beneficiary of World Financial Network Credit Card Master Trust (“Master Trust”), World Financial Network Credit Card Master Note Trust (“Master Trust I”) and World Financial Network Credit Card Master Trust III (“Master Trust III”) (collectively, the “WFN Trusts”), and World Financial Capital Master Note Trust (the “WFC Trust”). The Company is deemed to be the primary beneficiary for the WFN Trusts and the WFC Trust, as it is the servicer for each of the trusts and is a holder of the residual interest. The Company, through its involvement in the activities of these trusts, has the power to direct the activities that most significantly impact the economic performance of such trusts, and the obligation (or right) to absorb losses (or receive benefits) of the trusts that could potentially be significant. As such, the Company consolidates these trusts in its consolidated financial statements. For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. In cases where the Company's equity investment is less than 20% and significant influence does not exist, such investments are carried at cost.
Cash and Cash Equivalents	Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Accounts Receivable, net	Accounts Receivable, net—Accounts receivable, net consist primarily of amounts receivable from customers, which are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company analyzes the appropriateness of its allowance for doubtful accounts based on its assessment of various factors, including historical experience, the age of the accounts receivable balance, customer creditworthiness, current economic trends, and changes in its customer payment terms and collection trends. Account balances are charged-off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote.
Credit Card and Loan Receivables	Credit Card and Loan Receivables— Credit card and loan receivables consist of credit card and loan receivables held for investment. The Company sells a majority of the credit card receivables originated by Comenity Bank to WFN Credit Company, LLC, which in turn sells them to the WFN Trusts as part of a securitization program. The Company also sells certain of its credit card receivables originated by Comenity Capital Bank to World Financial Capital Credit Company, LLC, which in turn sells them to the WFC Trust. The credit card receivables sold to each of the trusts are restricted for securitization investors. All new originations of credit card and loan receivables are deemed to be held for investment at origination because management has the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, management considers the short average life and homogenous nature of the Company’s credit card and loan receivables. In assessing whether these credit card and loan receivables continue to be held for investment, management also considers capital levels and scheduled maturities of funding instruments used. Management believes that the assertion regarding its intent and ability to hold credit card and loan receivables for the foreseeable future can be made with a high degree of certainty given the maturity distribution of the Company’s money market deposits, certificates of deposit and other funding instruments; the historic ability to replace maturing certificates of deposits and other borrowings with new deposits or borrowings; and historic credit card payment activity. Due to the homogenous nature of the Company’s credit card and loan receivables, amounts are classified as held for investment on an individual client portfolio basis.
Credit Card and Loan Receivables Held for Sale	Credit Card and Loan Receivables Held for Sale—Credit card and loan receivables held for sale are determined on an individual client portfolio basis. The Company carries these assets at the lower of aggregate cost or fair value. The fair value of the credit card and loan receivables held for sale is determined on an aggregate homogeneous portfolio basis. The Company continues to recognize finance fees on these credit card and loan receivables on the accrual basis. Cash flows associated with credit card portfolios that are purchased with the intent to sell are included in cash flows from operating activities. Cash flows associated with credit card and loan receivables originated or purchased for investment are classified as investing cash flows, regardless of a subsequent change in intent.
Transfers of Financial Assets	Transfers of Financial Assets—The Company accounts for transfers of financial assets under ASC 860, “Transfers and Servicing,” as either sales or financings. Transfers of financial assets that result in sales accounting are those in which (1) the transfer legally isolates the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the assets and provides more than a trivial benefit to the transferor and (3) the transferor does not maintain effective control over the transferred assets. If the transfer of financial assets does not meet these criteria, the transfer is accounted for as a financing. Transfers of financial assets that are treated as sales are removed from the Company’s accounts with any realized gain or loss reflected in income during the period of sale.
Allowance for Loan Loss	Allowance for Loan Loss—The Company maintains an allowance for loan loss at a level that is appropriate to absorb probable losses inherent in credit card and loan receivables. The estimate of the allowance for loan loss covers uncollectible principal as well as unpaid interest and fees. The allowance for loan loss is evaluated monthly for appropriateness. In estimating the allowance for principal loan losses, management utilizes a migration analysis of delinquent and current credit card and loan receivables. Migration analysis is a technique used to estimate the likelihood that a credit card or loan receivable will progress through the various stages of delinquency and to charge-off. The allowance is maintained through an adjustment to the provision for loan loss. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. In estimating the allowance for uncollectible unpaid interest and fees, the Company utilizes historical charge-off trends, analyzing actual charge-offs for the prior three months. The allowance is maintained through an adjustment to finance charges, net. In evaluating the allowance for loan loss for both principal and unpaid interest and fees, management also considers factors that may impact loan loss experience, including seasoning and growth, account collection strategies, economic conditions, bankruptcy filings, policy changes, payment rates and forecasting uncertainties. Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Measurement of Credit Losses on Financial Instruments.” For additional information regarding the impact of the new standard, see “Recently Issued Accounting Standards” below.
Inventories, net	Inventories, net—Inventories, net are stated at the lower of cost and net realizable value and valued primarily on a first-in-first-out basis. The Company records valuation adjustments to its inventories if the cost of inventory exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future market conditions and an analysis of historical experience.
Redemption Settlement Assets, Restricted	Redemption Settlement Assets, Restricted—The cash and investments related to the redemption fund for the AIR MILES Reward Program are subject to a security interest which is held in trust for the benefit of funding redemptions by collectors. These assets are restricted to funding rewards for the collectors by certain of the Company’s sponsor contracts. Investments in equity securities are stated at fair value, with holding gains and losses recognized through net income. Investments in debt securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income (loss), as the investments are classified as available-for-sale.
Property and Equipment	Property and Equipment—Furniture, equipment, computer software and development, buildings and leasehold improvements are carried at cost, less accumulated depreciation and amortization. Land is carried at cost and is not depreciated. Depreciation and amortization for furniture, equipment and buildings are computed on a straight-line basis, using estimated lives ranging from one to twenty-one years. Software development is capitalized in accordance with ASC 350-40, “Intangibles – Goodwill and Other – Internal–Use Software,” and is amortized on a straight-line basis over the expected benefit period, which ranges from one to seven years. Leasehold improvements are amortized over the remaining lives of the respective leases or the remaining useful lives of the improvements, whichever is shorter. Long-lived assets are tested for impairment when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows.
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets—Goodwill and indefinite lived intangible assets are not amortized, but are reviewed at least annually for impairment or more frequently if circumstances indicate that an impairment is probable, using qualitative or quantitative analysis. Separable intangible assets that have finite useful lives are amortized over their respective useful lives.
Income Taxes	Income Taxes— Income tax returns are filed in federal, state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions. Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets when realization is less than more likely than not. Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may be established for uncertain tax positions when, in our judgement, the more-likely-than-not threshold is met, but the position does not rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense.
Derivative Instruments	Derivative Instruments—The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or other speculative purposes. Certain derivatives used to manage the Company’s exposure to foreign currency exchange rate movements are not designated as hedges and do not qualify for hedge accounting. Derivatives Designated as Hedging Instruments—The Company assesses both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transaction, including net investment hedges, have been highly effective in offsetting changes in the cash flows or remeasurement of the hedged items and whether the derivatives may be expected to remain highly effective in future periods. The Company discontinues hedge accounting prospectively when (1) it determines that the derivative is no longer highly effective in offsetting changes in cash flow of the hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) it determines that designating the derivative as a hedging instrument is no longer appropriate. Changes in the fair value of derivative instruments designated as hedging instruments, excluding any ineffective portion, are recorded in other comprehensive income (loss) until the hedged transactions affect net income. The ineffective portion of this hedging instrument is recognized through net income when the ineffectiveness occurs. Derivatives not Designated as Hedging Instruments—Certain foreign currency exchange forward contracts are not designated as hedges as they do not meet the specific hedge accounting requirements of ASC 815, “Derivatives and Hedging.” Changes in the fair value of the derivative instruments not designated as hedging instruments are recorded in the consolidated statements of income as they occur. Net Investment Hedges—The Company used Euro-denominated debt to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the foreign currency gains and losses related to the Euro-denominated debt is reported in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The gains or losses will be subsequently reclassified into net income when the hedged net investment is either sold or substantially liquidated.
Other Investments	Other Investments—Other investments consist of marketable securities and U.S. Treasury bonds and are included in other current assets and other non-current assets in the Company’s consolidated balance sheets. Investments in equity securities are stated at fair value, with holding gains and losses recognized through net income. Investments in debt securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income (loss), as the investments are classified as available-for-sale.
Revenue Recognition	Revenue Recognition—Effective January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers,” applying the modified retrospective method to those contracts that were not completed as of January 1, 2018. The Company recognizes revenues when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In that determination, under ASC 606, the Company follows a five-step model that includes: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605. ASC 606 does not apply to financial instruments and other contractual rights or obligations. See Note 3, “Revenue,” for more information about the Company’s revenue and the associated timing and basis of revenue recognition.
Earnings Per Share	Earnings Per Share—Basic earnings per share is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of options or other dilutive securities. Diluted earnings per share is based on the weighted average number of common and potentially dilutive common shares (dilutive stock options, unvested restricted stock units and other dilutive securities outstanding during the year), pursuant to the treasury stock method. For periods with participating securities, the Company computes earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders.
Currency Translation	Currency Translation—The assets and liabilities of the Company’s subsidiaries outside the U.S. are translated into U.S. dollars at the rates of exchange in effect at the balance sheet dates, primarily from Canadian dollars and Euros. Income and expense items are translated at the average exchange rates prevailing during the period. Gains and losses resulting from currency transactions are recognized currently in income and those resulting from translation of financial statements are included in accumulated other comprehensive income (loss). The Company recognized net foreign transaction gains of $1.3 million for the year ended December 31, 2019, gains of $0.6 million for the year ended December 31, 2018, and losses of $9.1 million for the year ended December 31, 2017.
Leases	Leases —The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. As the implicit rate is typically not readily determinable in the Company’s lease agreements, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and nonlease components as a single lease component for its identified asset classes. As of December 31, 2019, the Company does not have any finance leases.
Marketing and Advertising Costs	Marketing and Advertising Costs—The Company participates in various marketing and advertising programs, including collaborative arrangements with certain clients. The cost of marketing and advertising programs is expensed in the period incurred. The Company has recognized marketing and advertising expenses, including on behalf of its clients, of $229.4 million, $244.5 million and $236.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Stock Compensation Expense	Stock Compensation Expense—The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period.
Management Estimates	Management Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued and Adopted Accounting Standards	Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the current expected credit loss model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance. In addition, ASU 2016-13 modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted beginning after December 15, 2018. The Company formed a cross-functional implementation team to oversee the implementation of the standard, developed loss forecasting models and processes to satisfy the requirements of ASU 2016-13. The Company adopted the standard effective January 1, 2020. Management expects an increase in the allowance for loan loss at adoption of $644.0 million, which will be recorded through a cumulative-effect adjustment to retained earnings, net of taxes. The scope of this standard also impacts the Company’s accounts receivable and available-for-sale debt securities, for which the Company’s adoption did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements from Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement.” ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The effect of the adoption of ASU 2018-13 will be a change to the disclosure requirements for certain fair value measurements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The amendments in ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect the adoption of ASU 2018-15 to have a material impact on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is evaluating the impact that adoption of ASU 2019-12 will have on its consolidated financial statements. Recently Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, “Leases,” ASC 842, that replaced previous lease guidance and required lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Companies continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statements of income. Companies were permitted to adopt ASC 842 using a modified retrospective approach or transition relief provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” that removed certain comparative period requirements and required a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard on January 1, 2019 using the transition relief provided by ASU 2018-11. During 2018, the Company completed its evaluation of ASC 842, including the impact on its policies, processes, systems and controls. As a result, the Company identified changes to and modified certain of its accounting policies and practices, including the implementation of new lease accounting software. Although there were no significant changes to the Company’s accounting systems or controls upon adoption of ASC 842, the Company modified certain of its existing controls and added new controls to incorporate the revisions made to its accounting policies and practices. The Company elected the transition practical expedients permitted under ASC 842-10-65-1 under which it was not required to reassess (i) whether expired or existing contracts were or contained leases as defined by ASC 842, (ii) the classification of such leases, and (iii) whether previously capitalized initial direct costs qualified for capitalization under ASC 842. The Company also elected the practical expedient to use hindsight in determining the lease term. Additionally, the Company made the accounting policy election to account for lease and nonlease components as a single lease component for its identified asset classes. The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of ASC 842 established operating lease liabilities of approximately $324.5 million and corresponding right-of-use assets of approximately $269.9 million, based upon the operating lease liabilities adjusted for deferred rent and lease incentives, which resulted in the reclassification of approximately $54.6 million in liabilities to the right-of-use asset. There was no cumulative-effect adjustment to retained earnings as a result of the adoption of ASC 842. Additionally, the cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of ASC 842 for the Epsilon segment, presented as a discontinued operation for the periods presented, established operating lease liabilities of approximately $208.7 million and corresponding right-of-use assets of approximately $181.1 million, based upon the operating lease liabilities adjusted for prepaid and deferred rent, unamortized initial direct costs, and lease incentives, which resulted in the reclassification of approximately $30.5 million in liabilities and $2.9 million in assets to the right-of-use asset. As part of the adoption of ASC 842, capital leases were recognized as finance leases at their existing carrying amounts effective January 1, 2019, and the accounting remained substantially unchanged, with capital lease assets totaling $13.0 million and capital lease liabilities totaling $12.6 million. The Company’s adoption of ASC 842 had no significant impact to our consolidated statements of income or consolidated statements of cash flows. Based on the evaluation of ASC 842, the Company does not expect it to have a material impact on its results of operations or cash flows in the periods after adoption. ASC 842 also requires expanded qualitative and quantitative disclosure regarding the Company’s leasing activities. See Note 11, “Leases,” for the Company’s ASC 842 disclosures. In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 expanded and refined the hedge accounting model for both financial and non-financial risk components, aligned the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and made certain targeted improvements to simplify the application of hedge accounting guidance related to the assessment of hedge effectiveness. The Company’s adoption of this standard on January 1, 2019 did not have a material impact on its consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allowed for reclassification of stranded tax effects on items resulting from the change in the corporate tax rate as a result of H.R. 1, originally known as the Tax Cuts and Jobs Act of 2017, from accumulated other comprehensive income to retained earnings. Tax effects unrelated to H.R. 1 were permitted to be released from accumulated other comprehensive income using either the specific identification approach or the portfolio approach, based on the nature of the underlying item. The Company adopted this standard on January 1, 2019 using the portfolio approach and did not reclassify the stranded tax effects to retained earnings as these amounts did not have a material impact on its consolidated financial statements.

STOCKHOLDERS' EQUITY - Preferred Stock (Details) - shares		1 Months Ended		12 Months Ended
	Apr. 25, 2019	Oct. 31, 2019	Apr. 30, 2019	Dec. 31, 2019
Number of shares of preferred stock designated			300,000
Series A Non-Voting Convertible Preferred Stock
Shares authorized			300,000
Convertible preferred stock, shares issued upon conversion			10
Conversion limitation, ownership percentage			9.90%
Conversion limitation for one transferee, percent of any class of voting securities			2.00%
Conversion limitation for one transferre, ownership percentage			50.00%
Conversion of stock, shares converted		150,000
Conversion of stock, shares issued	150,000
Value Act Holdings, L.P. \| Series A Non-Voting Convertible Preferred Stock
Conversion of stock, shares converted		150,000		150,000
Conversion of stock, shares issued	150,000			150,000
Value Act Holdings, L.P. \| Common Stock
Conversion of stock, shares converted	1,500,000			1,500,000

SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2019

SEGMENT INFORMATION

SEGMENT INFORMATION

25. SEGMENT INFORMATION

Operating segments are defined by ASC 280, “Segment Reporting,” as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and services.

As discussed in Note 6, “Discontinued Operations,” in the first quarter of 2019 the Company’s Epsilon segment was classified as a discontinued operation and was sold on July 1, 2019. The Company operates in the LoyaltyOne and Card Services reportable segments, which consist of the following:

●

LoyaltyOne provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty; and

●

Card Services provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand credit card programs.

Corporate and other immaterial businesses are reported collectively as an “all other” category labeled “Corporate/Other.” Income taxes are not allocated to the segments in the computation of segment operating profit for internal evaluation purposes and have also been included in “Corporate/Other.”


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3

Income (loss) before income taxes	$	103.1	$	991.7	$	(356.4)	$	738.4
Interest expense, net		2.3		439.0		127.7		569.0
Operating income (loss)		105.4		1,430.7		(228.7)		1,307.4
Depreciation and amortization		80.1		89.3		6.7		176.1
Stock compensation expense		7.2		9.3		8.6		25.1
Strategic transaction costs		1.0		—		10.7		11.7
Restructuring and other charges		50.8		29.4		37.9		118.1
Loss on extinguishment of debt		—		—		71.9		71.9
Adjusted EBITDA ⁽¹⁾		244.5		1,558.7		(92.9)		1,710.3
Less: Securitization funding costs		—		213.4		—		213.4
Less: Interest expense on deposits		—		225.6		—		225.6
Adjusted EBITDA, net ⁽¹⁾	$	244.5	$	1,119.7	$	(92.9)	$	1,271.3

Capital expenditures	$	41.5	$	44.2	$	0.8	$	86.5


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6

Income (loss) before income taxes	$	153.8	$	1,381.6	$	(320.4)	$	1,215.0
Interest expense, net		5.6		385.9		150.8		542.3
Operating income (loss)		159.4		1,767.5		(169.6)		1,757.3
Depreciation and amortization		84.8		101.1		7.7		193.6
Stock compensation expense		10.0		13.3		21.1		44.4
Adjusted EBITDA ⁽¹⁾		254.2		1,881.9		(140.8)		1,995.3
Less: Securitization funding costs		—		220.2		—		220.2
Less: Interest expense on deposits		—		165.7		—		165.7
Adjusted EBITDA, net ⁽¹⁾	$	254.2	$	1,496.0	$	(140.8)	$	1,609.4

Capital expenditures	$	34.0	$	53.8	$	5.5	$	93.3



					Corporate/
Year Ended December 31, 2017	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,303.5	$	4,170.6	$	0.6	$	5,474.7

Income (loss) before income taxes	$	161.6	$	1,235.7	$	(334.8)	$	1,062.5
Interest expense, net		5.4		281.7		168.3		455.4
Operating income (loss)		167.0		1,517.4		(166.5)		1,517.9
Depreciation and amortization		81.7		98.4		7.8		187.9
Stock compensation expense		8.0		10.8		22.5		41.3
Adjusted EBITDA ⁽¹⁾		256.7		1,626.6		(136.2)		1,747.1
Less: Securitization funding costs		—		156.6		—		156.6
Less: Interest expense on deposits		—		125.1		—		125.1
Adjusted EBITDA, net ⁽¹⁾	$	256.7	$	1,344.9	$	(136.2)	$	1,465.4

Capital expenditures	$	55.2	$	54.2	$	8.8	$	118.2

(1)

Adjusted EBITDA is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable financial measure based on GAAP plus stock compensation expense, provision for income taxes, interest expense, net, depreciation and other amortization, and amortization of purchased intangibles. In 2019, adjusted EBITDA also excluded costs for professional services associated with strategic initiatives, restructuring and other charges as detailed in Note 14, “Restructuring and Other Charges,” and loss related to the Company’s extinguishment of debt in July 2019.

Adjusted EBITDA, net is also a non-GAAP financial measure equal to adjusted EBITDA less securitization funding costs and interest expense on deposits. Adjusted EBITDA and adjusted EBITDA, net are presented in accordance with ASC 280 as they are the primary performance metrics utilized to assess performance of the segments.

The table below reconciles the reportable segments’ total assets to consolidated total assets:


		LoyaltyOne		Card Services		Corporate/ Other		Discontinued Operations		Total
		(in millions)
Total Assets
December 31, 2019	$	2,338.0	$	23,931.1	$	225.7	$	—	$	26,494.8
December 31, 2018	$	2,200.2	$	23,904.2	$	125.9	$	4,157.4	$	30,387.7

With respect to information concerning principal geographic areas, revenues are based on the location of the subsidiary that generally correlates with the location of the customer. Effective January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers,” applying the modified retrospective method to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605. Information concerning principal geographic areas is as follows:


					Europe,
	United				Middle East
	States		Canada		and Africa		Asia Pacific		Other		Total
	(in millions)
Revenues
Year Ended December 31, 2019	$	4,588.3	$	352.2	$	449.1	$	121.7	$	70.0	$	5,581.3
Year Ended December 31, 2018	$	4,621.3	$	411.3	$	463.2	$	122.0	$	48.8	$	5,666.6
Year Ended December 31, 2017	$	4,192.5	$	726.6	$	411.4	$	129.2	$	15.0	$	5,474.7

Long Lived Assets
December 31, 2019	$	1,361.1	$	311.1	$	696.2	$	12.8	$	0.9	$	2,382.1
December 31, 2018	$	4,693.1	$	261.0	$	698.6	$	22.5	$	0.8	$	5,676.0

As of December 31, 2019, 2018 and 2017, revenues from L Brands and its affiliates represented approximately 10.6%, 10.8% and 12.0%, respectively, of consolidated revenues and are included in the Card Services segment.

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 01, 2018
Accumulated Other Comprehensive Income
Balance at the beginning of the period	$ (138.1)
Changes in other comprehensive income (loss)	38.2	$ 2.1	$ 10.5
Recognition resulting from the sale of Epsilon's foreign subsidiaries	26.8
Balance at the end of the period	(99.9)	(138.1)
Accounting Standards Update ASU 2016-01
Accumulated Other Comprehensive Income
Cumulative effect adjustment to retained earnings				$ (1.5)
Net Unrealized Gains (Losses) on Securities.
Accumulated Other Comprehensive Income
Balance at the beginning of the period	(10.7)	(8.7)	(1.6)
Changes in other comprehensive income (loss)		(2.0)	(7.1)
Changes in other comprehensive income (loss)	13.2
Balance at the end of the period	2.5	(10.7)	(8.7)
Unrealized Gains (Losses) on Cash Flow Hedges.
Accumulated Other Comprehensive Income
Balance at the beginning of the period	(0.2)	(0.1)	0.4
Changes in other comprehensive income (loss)		(0.1)	(0.5)
Changes in other comprehensive income (loss)	0.1
Balance at the end of the period	(0.1)	(0.2)	(0.1)
Unrealized Gains (Losses) on Net Investment Hedge.
Accumulated Other Comprehensive Income
Balance at the beginning of the period	(12.4)	(42.0)	4.1
Changes in other comprehensive income (loss)		29.6	(46.1)
Changes in other comprehensive income (loss)	4.9
Balance at the end of the period	(7.5)	(12.4)	(42.0)
Foreign Currency Translation Adjustments.
Accumulated Other Comprehensive Income
Balance at the beginning of the period	(114.8)	(89.4)	(153.6)
Changes in other comprehensive income (loss)		(25.4)	64.2
Changes in other comprehensive income (loss)	(6.8)
Recognition resulting from the sale of Epsilon's foreign subsidiaries	26.8
Balance at the end of the period	(94.8)	(114.8)	(89.4)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income
Balance at the beginning of the period	(138.1)	(140.2)	(150.7)
Changes in other comprehensive income (loss)	38.2	2.1	10.5
Changes in other comprehensive income (loss)	11.4
Recognition resulting from the sale of Epsilon's foreign subsidiaries	26.8
Balance at the end of the period	$ (99.9)	$ (138.1)	$ (140.2)

LEASES (Details)	12 Months Ended
LEASES (Details)	Dec. 31, 2019
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	19 years

STOCKHOLDERS' EQUITY - Restricted Stock Unit Awards and Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Jan. 30, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Weighted Average Exercise Price
Outstanding beginning of period (in dollars per share)		$ 25.01	$ 23.87	$ 37.60
Options exercised (in dollars per share)		25.01	12.70	60.85
Options forfeited (in dollars per share)			2.74	35.56
Balance at end of period (in dollars per share)			25.01	23.87
Dividends
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.63	$ 0.63	$ 0.57	$ 0.52
Dividends declared		$ 127.1	$ 125.9	$ 116.4
Dividends paid		127.4	125.2	115.5
Dividend equivalents accrued but not yet paid		$ 1.2	$ 0.7	$ 0.9
Restricted stock units
Fair Value Assumptions
Price correlation		(0.55%)
Expected volatility		29.20%
Risk-free interest rate		2.50%
Risk-free interest rate time period		2 years
Number of Shares
Balance at the beginning of the period (in shares)		796,912	807,810	776,697
Shares granted (in shares)		704,235	429,759	436,534
Shares vested (in shares)		(441,503)	(319,503)	(285,652)
Shares forfeited (in shares)		(546,512)	(121,154)	(119,769)
Balance at the end of the period (in shares)		513,132	796,912	807,810
Outstanding and Expected to Vest (in shares)		271,685
Weighted Average Fair Value
Balance at the beginning of the period (in dollars per share)		$ 218.81	$ 207.45	$ 216.89
Shares granted (in dollars per share)		161.05	233.98	229.37
Shares vested (in dollars per share)		218.45	224.62	248.70
Shares forfeited (in dollars per share)		188.40	227.66	211.69
Balance at the end of the period (in dollars per share)		172.06	$ 218.81	$ 207.45
Outstanding and Expected to Vest (in dollars per share)		$ 200.63
Restricted stock, additional disclosures
Total fair value of units vested		$ 96.4	$ 71.8	$ 71.0
Aggregate intrinsic value of units outstanding and expected to vest		$ 30.5
Weighted-average remaining contractual life		1 year 3 months 18 days
Market-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)		56,229	28,172
Shares granted (in shares)		37,878	28,057	28,172
Shares forfeited (in shares)		(69,819)
Balance at the end of the period (in shares)		24,288	56,229	28,172
Performance-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)		423,242	450,579	444,319
Shares granted (in shares)		420,239	263,542	282,311
Shares vested (in shares)		(262,773)	(188,680)	(188,929)
Shares forfeited (in shares)		(350,436)	(102,199)	(87,122)
Balance at the end of the period (in shares)		230,272	423,242	450,579
Stock Compensation Plans, Additional Disclosures
Award vesting period		3 years
Service-based restricted stock unit awards
Number of Shares
Balance at the beginning of the period (in shares)		317,441	329,059	332,378
Shares granted (in shares)		246,118	138,160	126,051
Shares vested (in shares)		(178,730)	(130,823)	(96,723)
Shares forfeited (in shares)		(126,257)	(18,955)	(32,647)
Balance at the end of the period (in shares)		258,572	317,441	329,059
Stock Compensation Plans, Additional Disclosures
Award vesting period		3 years
Employee Stock Options
Stock Compensation Plans, Additional Disclosures
Award vesting period		3 years
Expiration period for awards granted		10 years
Stock option activity
Balance at the beginning of the period (in shares)		10,854	11,859	18,866
Options exercised (in shares)		(10,854)	(886)	(7,004)
Options forfeited (in shares)			(119)	(3)
Balance at the end of the period (in shares)			10,854	11,859
Exercisable, Options (in shares)			10,854	11,859	18,864
Weighted Average Exercise Price
Exercisable (in dollars per share)			$ 25.01	$ 23.87	$ 37.60
Stock options activity, additional disclosures
Total intrinsic value of stock options exercised		$ 1.3	$ 0.2	$ 1.2
Cash proceeds from stock options exercised		$ 0.3

STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	6 Months Ended	12 Months Ended
	Aug. 15, 2019	Jul. 31, 2017	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jul. 31, 2019	Jul. 19, 2019	Jul. 31, 2018	Jul. 26, 2018	Jan. 31, 2017	Jul. 01, 2015	Jul. 01, 2010
Stock Repurchase Programs
Number of shares repurchased				6,300,000	2,200,000	2,300,000
Total cost of shares repurchased				$ 976.1	$ 443.2	$ 553.7
2017 Stock Repurchase Program
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased						$ 1,000.0					$ 500.0
Increase to authorized amount under stock repurchase program		$ 500.0
Number of shares repurchased					800,000
Total cost of shares repurchased					$ 166.0
Amount remaining of a stock repurchase plan that expired									$ 280.3
2018 Stock Repurchase Program
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased										$ 500.0
Number of shares repurchased			1,300,000		1,400,000
Total cost of shares repurchased			$ 222.8		$ 277.2
2019 Stock Repurchase Program
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased							$ 1,100.0
Number of shares repurchased	5,050,505
Average cost per share (in dollars per share)	$ 148.50
Total cost of shares repurchased	$ 750.0
Available balance under stock repurchase program				$ 347.8
Total direct costs	3.3
Commission expense	$ 2.2
Modified Dutch Auction
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased								$ 750.0
Modified Dutch Auction \| Minimum
Stock Repurchase Programs
Share price (in dollars per share)								$ 144.00
Modified Dutch Auction \| Maximum
Stock Repurchase Programs
Share price (in dollars per share)								$ 162.00
2010 Omnibus Incentive Plan
Stock Compensation Plans
Shares of common stock reserved for grant													3,000,000
2015 Omnibus Incentive Plan
Stock Compensation Plans
Shares of common stock reserved for grant												5,100,000

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

Schedule of computation of basic and diluted net income per share


	Years Ended December 31,
	2019		2018		2017
	(in millions, except per share amounts)
Basic income per share:
Numerator:
Income from continuing operations	$	572.6	$	945.5	$	769.2
Less: Dividends declared on preferred stock		2.8		—		—
Less: Allocation of undistributed earnings		6.8		—		—
Income from continuing operations - basic		563.0		945.5		769.2
(Loss) income from discontinued operations, net of tax		(294.6)		17.6		19.5
Net income - basic	$	268.4	$	963.1	$	788.7

Denominator:
Weighted average shares, basic		50.0		54.9		55.7

Basic income (loss) attributable to common stockholders per share:
Income from continuing operations	$	11.25	$	17.24	$	13.82
(Loss) income from discontinued operations	$	(5.89)	$	0.32	$	0.35
Net income per share	$	5.36	$	17.56	$	14.17

Diluted income per share ⁽¹⁾:
Numerator:
Income from continuing operations	$	572.6	$	945.5	$	769.2
(Loss) income from discontinued operations, net of tax		(294.6)		17.6		19.5
Net income	$	278.0	$	963.1	$	788.7

Denominator:
Weighted average shares, basic		50.0		54.9		55.7
Weighted average effect of dilutive securities:
Shares from assumed conversion of preferred stock		0.8		—		—
Net effect of dilutive stock options and unvested restricted stock ⁽²⁾		0.1		0.2		0.2
Denominator for diluted calculation		50.9		55.1		55.9

Diluted income (loss) attributable to common stockholders per share:
Income from continuing operations	$	11.24	$	17.17	$	13.75
(Loss) income from discontinued operations	$	(5.78)	$	0.32	$	0.35
Net income per share	$	5.46	$	17.49	$	14.10

(1)	Computed using the if-converted method, as the result was more dilutive.

(2)	For the years ended December 31, 2019, 2018 and 2017, a de minimis amount of restricted stock units was excluded from each calculation of weighted average dilutive common shares as the effect would have been anti-dilutive.

Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2019	Feb. 20, 2020	Jun. 30, 2019
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2019
Entity File Number	001-15749
Entity Registrant Name	ALLIANCE DATA SYSTEMS CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	31-1429215
Entity Address, Address Line One	3075 Loyalty Circle
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43219
City Area Code	614
Local Phone Number	729-4000
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	ADS
Security Exchange Name	NYSE
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		47,627,611
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Entity Central Index Key	0001101215
Amendment Flag	false
Entity Public Float			$ 7.0

INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES

INCOME TAXES

22. INCOME TAXES

The components of income from continuing operations before income taxes and income tax expense are as follows:


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Components of income from continuing operations before income taxes:
Domestic	$	591.9	$	1,052.7	$	883.8
Foreign		146.5		162.3		178.7
Total	$	738.4	$	1,215.0	$	1,062.5
Components of income tax expense:
Current
Federal	$	126.0	$	152.2	$	295.0
State		35.8		58.0		17.5
Foreign		11.5		52.8		56.7
Total current		173.3		263.0		369.2
Deferred
Federal		(11.8)		48.0		(65.3)
State		6.7		14.7		6.2
Foreign		(2.4)		(56.2)		(16.8)
Total deferred		(7.5)		6.5		(75.9)
Total provision for income taxes	$	165.8	$	269.5	$	293.3

A reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate for all periods to income from continuing operations before income taxes is as follows:


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Expected expense at statutory rate	$	155.1	$	255.1	$	371.9
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit		33.6		57.4		14.5
Foreign rate differential		(2.3)		11.6		(26.0)
Foreign restructuring		—		(48.0)		—
Impact of 2017 Tax Reform		(30.2)		(29.7)		(64.9)
Global intangible low-taxed income		8.7		15.5		—
Non-deductible expenses (non-taxable income)		9.1		3.7		(4.6)
Other		(8.2)		3.9		2.4
Total	$	165.8	$	269.5	$	293.3

H.R. 1, originally known as the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Reform”) was enacted on December 22, 2017. The 2017 Tax Reform permanently reduced the corporate tax rate to 21% from 35%, effective January 1, 2018 and implemented a change from a system of worldwide taxation with deferral to a hybrid territorial system. This system taxes excess foreign profits above a deemed routine return through the Global Intangible Low-Taxed Income (“GILTI”) regime. The Company recognizes tax on GILTI as an expense in the period incurred. For the year ended December 31, 2019, the Company recorded an income tax benefit of approximately $30.2 million related to a decrease in unrecognized tax benefits as a result of a tax accounting method change required by the 2017 Tax Reform.

Deferred tax assets and liabilities consist of the following:


	December 31,
	2019		2018
	(in millions)
Deferred tax assets
Deferred revenue	$	9.5	$	10.6
Allowance for doubtful accounts		267.6		267.0
Net operating loss carryforwards and other carryforwards		69.0		57.8
Stock-based compensation and other employee benefits		13.7		24.4
Lease liabilities		74.4		—
Accrued expenses and other		40.3		66.2
Intangible assets		23.2		—
Total deferred tax assets		497.7		426.0
Valuation allowance		(64.0)		(36.3)
Deferred tax assets, net of valuation allowance		433.7		389.7
Deferred tax liabilities
Deferred income	$	365.6	$	409.8
Depreciation		41.8		79.0
Right of use assets		61.1		—
Intangible assets		—		113.4
Total deferred tax liabilities		468.5		602.2

Net deferred tax liability	$	(34.8)	$	(212.5)

Amounts recognized in the consolidated balance sheets:
Non-current assets	$	45.2	$	44.0
Non-current liabilities		(80.0)		(256.5)
Total – Net deferred tax liability	$	(34.8)	$	(212.5)

At December 31, 2019, included in the Company’s U.S. tax returns are approximately $20.1 million of U.S. federal net operating loss carryovers (“NOLs”) and approximately $33.8 million of foreign tax credits. With the exception of NOLs generated after December 31, 2017, these attributes expire at various times through the year 2037. Pursuant to Section 382 of the Internal Revenue Code, the Company’s utilization of a portion of such NOLs is subject to an annual limitation. The Company does not believe it is more likely than not that all of its NOLs will be utilized and has therefore, in accordance with ASC 740-10-30, “Income Taxes-Overall-Initial Measurement,” established a valuation allowance against a portion of the NOLs. At December 31, 2019, the Company has state income tax NOLs of approximately $175.4 million and state credits of approximately $5.9 million available to offset future state taxable income. The state NOLs and credits will expire at various times through the year 2038. The Company believes a majority of these NOLs will expire before utilization and has therefore established a valuation allowance against those NOLs expected to expire unutilized. The Company has $216.3 million of foreign NOLs and $5.6 million of foreign capital losses at December 31, 2019. The foreign NOLs and capital losses have an unlimited carryforward period. The Company does not believe it is more likely than not that the NOLs or capital losses will be utilized and has therefore, in accordance with ASC 740-10-30, “Income Taxes—Overall—Initial Measurement,” established a full valuation allowance against them. The Company’s valuation allowance increased $27.7 million during the year ended December 31, 2019, due primarily to an increase in the amount of state and foreign NOLs that the Company does not believe will be utilized. The Company’s valuation allowance decreased $40.1 million during the year ended December 31, 2018 and increased $31.7 million during the year ended December 31, 2017.

Should certain substantial changes in the Company’s ownership occur, there could be an annual limitation on the amount of carryovers and credits that can be utilized. The impact of such a limitation would likely not be significant.

At December 31, 2019, the Company did not have any excess financial reporting basis over tax basis from a U.S. federal tax perspective primarily as a result of the GILTI regime pursuant to the 2017 Tax Reform. The Company may

have, in certain state or foreign jurisdictions, amounts of financial reporting basis that exceeds tax basis as of December 31, 2019. However, these amounts are immaterial and no additional state or foreign tax liability has been recorded. Finally, despite the immaterial nature, the Company intends to permanently reinvest any previously undistributed earnings of our foreign subsidiaries in the operations outside the United States to support its international growth.

The net tax impact of the change in the carrying value of the Euro-denominated Senior Notes due 2022 and 2023 due to foreign exchange fluctuations that was recorded directly to other comprehensive income was an expense of $1.6 million, an expense of $9.5 million and a benefit of $26.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. These notes were repaid in July 2019.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):


Balance at January 1, 2017	$	192.0
Increases related to prior years’ tax positions		9.3
Decreases related to prior years’ tax positions		(15.7)
Increases related to current year tax positions		33.0
Settlements during the period		(6.7)
Lapses of applicable statutes of limitation		(3.6)
Balance at December 31, 2017	$	208.3
Increases related to prior years’ tax positions		41.3
Decreases related to prior years’ tax positions		(9.6)
Increases related to current year tax positions		61.5
Settlements during the period		(1.0)
Lapses of applicable statutes of limitation		(4.2)
Balance at December 31, 2018	$	296.3
Increases related to prior years’ tax positions		2.7
Decreases related to prior years’ tax positions		(76.6)
Increases related to current year tax positions		58.3
Settlements during the period		(0.6)
Lapses of applicable statutes of limitation		(5.8)
Balance at December 31, 2019	$	274.3

Included in the balance at December 31, 2019 are tax positions reclassified from deferred income taxes. Deductibility or taxability is highly certain for these tax positions but there is uncertainty about the timing of such deductibility or taxability. Because of the impact of deferred tax accounting, other than interest and penalties, this timing uncertainty, if realized, would not have a material effect on the annual effective tax rate but could accelerate the payment of cash to the taxing authority to an earlier period.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company has potential cumulative interest and penalties with respect to unrecognized tax benefits of approximately $67.0 million, $66.7 million and $41.6 million at December 31, 2019, 2018 and 2017, respectively. For the years ended December 31, 2019, 2018 and 2017, the Company recorded approximately an $0.8 million benefit, a $24.5 million expense and a $5.7 million expense, respectively, for potential interest and penalties with respect to unrecognized tax benefits.

At December 31, 2019, 2018 and 2017, the Company had unrecognized tax benefits of approximately $255.1 million, $247.7 million and $170.0 million, respectively, that, if recognized, would impact the effective tax rate. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits over the next twelve months.

The Company files income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. With some exceptions, the tax returns filed by the Company are no longer subject to U.S. federal income tax examinations for the years before 2015, state and local examinations for years before 2014 or foreign income tax examinations for years before 2013.

LEASES

12 Months Ended

Dec. 31, 2019

LEASES

LEASES

11. LEASES

The Company has operating leases for general office properties, warehouses, data centers, call centers, automobiles and certain equipment. As of December 31, 2019, the Company’s leases have remaining lease terms of less than 1 year to 19 years, some of which may include renewal options. For leases in which the implicit rate is not readily determinable, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease.

Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and nonlease components as a single lease component for its identified asset classes.

The components of lease expense were as follows:


	Year Ended
	December 31, 2019
	(in millions)
Operating lease cost	$	41.1
Short-term lease cost		2.7
Variable lease cost		6.8
Total	$	50.6

Lease expense was $47.5 million and $67.3 million for the years ended December 31, 2018 and 2017, respectively.

Other information related to leases was as follows:


	December 31,
	2019
Weighted-average remaining lease term (in years):
Operating leases		11.5
Weighted-average discount rate:
Operating leases		5.2%

Supplemental cash flow information related to leases was as follows:


	Year Ended
	December 31, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46.6
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	28.4

Maturities of the lease liabilities as of December 31, 2019 were as follows:


	Operating
Year	Leases
	(in millions)
2020	$	38.4
2021		39.6
2022		38.6
2023		36.8
2024		35.6
Thereafter		237.4
Total undiscounted lease liabilities		426.4
Less: Amount representing interest		(112.1)
Total present value of minimum lease payments	$	314.3

Amounts recognized in the December 31, 2019 consolidated balance sheet:
Current operating lease liabilities	$	22.6
Long-term operating lease liabilities		291.7
Total	$	314.3

Under ASC 840, future annual minimum rental payments required under noncancellable operating leases as of December 31, 2018 were as follows:


	Operating
Year	Leases
	(in millions)
2019	$	42.0
2020		39.9
2021		37.7
2022		36.8
2023		35.6
Thereafter		256.4
Total	$	448.4

CREDIT CARD AND LOAN RECEIVABLES - Age of Credit Card and Loan Receivable Accounts (Details) item in Millions, $ in Millions	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	25.5	24.2
Percentage of Active Accounts with Balances	100.00%	100.00%
Principal Receivables Outstanding \| $	$ 18,413.1	$ 16,869.9
Percentage of Principal Receivables Outstanding	100.00%	100.00%
0-12 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	7.1	6.5
Percentage of Active Accounts with Balances	27.80%	26.70%
Principal Receivables Outstanding \| $	$ 4,585.1	$ 4,099.9
Percentage of Principal Receivables Outstanding	24.90%	24.30%
13-24 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	3.9	4.2
Percentage of Active Accounts with Balances	15.30%	17.10%
Principal Receivables Outstanding \| $	$ 2,826.6	$ 2,887.8
Percentage of Principal Receivables Outstanding	15.40%	17.10%
25-36 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	3.2	3.1
Percentage of Active Accounts with Balances	12.60%	13.00%
Principal Receivables Outstanding \| $	$ 2,423.1	$ 2,428.9
Percentage of Principal Receivables Outstanding	13.20%	14.40%
37-48 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	2.5	2.2
Percentage of Active Accounts with Balances	9.70%	9.10%
Principal Receivables Outstanding \| $	$ 2,051.7	$ 1,795.0
Percentage of Principal Receivables Outstanding	11.10%	10.70%
49-60 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	1.8	1.7
Percentage of Active Accounts with Balances	7.00%	7.10%
Principal Receivables Outstanding \| $	$ 1,509.7	$ 1,367.2
Percentage of Principal Receivables Outstanding	8.20%	8.10%
Over 60 Months
Age of Accounts Since Origination
Number of Active Accounts with Balances \| item	7.0	6.5
Percentage of Active Accounts with Balances	27.60%	27.00%
Principal Receivables Outstanding \| $	$ 5,016.9	$ 4,291.1
Percentage of Principal Receivables Outstanding	27.20%	25.40%

STOCKHOLDERS' EQUITY - Stock Compensation Plans (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Apr. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Apr. 12, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense		$ 25.1	$ 44.4	$ 41.3
Forfeiture rate (as a percent)		5.00%	5.00%	5.00%
Unrecognized expenses		$ 29.4
Approximate weighted average period for recognizing expenses		1 year 3 months 18 days
Income tax benefits related to stock-based compensation expense		$ 3.6	$ 7.3	$ 5.4
Cost of operations.
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense		16.5	23.3	18.8
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense		8.6	21.1	22.5
Discontinued Operations, Held-for-sale \| Epsilon
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 19.4	$ 29.7	$ 36.4	$ 33.8
Consideration					$ 4,400.0

SUBSEQUENT EVENTS (Details) - Subsequent event $ in Millions	Jan. 10, 2020 USD ($)
Subsequent Events
Consideration	$ 40.0
Contingent Payment Based on Performance and Other Events
Subsequent Events
Consideration	$ 10.0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Accounts receivable, net, allowance for doubtful accounts (in dollars)	$ 3.4	$ 0.4
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	200.0	200.0
Common stock, issued shares	115.0	113.0
Treasury stock, shares	67.4	59.6

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Common Stock	Preferred Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2016	$ 1.1		$ 3,046.1	$ (4,733.1)	$ 3,494.8	$ (150.7)	$ 1,658.2
Balance (in shares) at Dec. 31, 2016	112.5
Increase (Decrease) in Stockholders' Equity
Net income					788.7		788.7
Other comprehensive income						10.5	10.5
Stock-based compensation			75.1				75.1
Repurchases of common stock			(14.3)	(539.4)			(553.7)
Dividends and dividend equivalent rights declared					(116.4)		(116.4)
Other			(7.1)				(7.1)
Other (in shares)	0.3
Balance at Dec. 31, 2017	$ 1.1		3,099.8	(5,272.5)	4,167.1	(140.2)	1,855.3
Balance (in shares) at Dec. 31, 2017	112.8
Increase (Decrease) in Stockholders' Equity
Net income					963.1		963.1
Other comprehensive income						2.1	2.1
Stock-based compensation			80.8				80.8
Repurchases of common stock				(443.2)			(443.2)
Dividends and dividend equivalent rights declared					(125.9)		(125.9)
Cumulative effect adjustment to retained earnings \| Accounting Standards Update ASC 606					9.6		9.6
Cumulative effect adjustment to retained earnings \| Accounting Standards Update ASU 2016-01					(1.5)		(1.5)
Other			(8.2)				(8.2)
Other (in shares)	0.2
Balance at Dec. 31, 2018	$ 1.1		3,172.4	(5,715.7)	5,012.4	(138.1)	2,332.1
Balance (in shares) at Dec. 31, 2018	113.0
Increase (Decrease) in Stockholders' Equity
Net income					278.0		278.0
Recognition resulting from the sale of Epsilon's foreign subsidiaries						26.8	26.8
Other comprehensive income						38.2	38.2
Stock-based compensation			54.5				54.5
Issuance of stock			42.1	(42.1)
Issuance of stock (in shares)		0.2
Covnersion of preferred stock to common stock (in shares)	1.5	(0.2)
Repurchases of common stock				(976.1)			(976.1)
Dividends and dividend equivalent rights declared					(127.1)		(127.1)
Other			(11.3)				(11.3)
Other (in shares)	0.5
Balance at Dec. 31, 2019	$ 1.1		$ 3,257.7	$ (6,733.9)	$ 5,163.3	$ (99.9)	$ 1,588.3
Balance (in shares) at Dec. 31, 2019	115.0

SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2019

SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II

ALLIANCE DATA SYSTEMS CORPORATION

CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS


	Balance at		Charged to		Charged to		Write-Offs		Balance at
	Beginning of		Costs and		Other		Net of		End of
Description	Year		Expenses		Accounts		Recoveries⁽¹⁾		Year
	(in millions)
Allowance for Doubtful Accounts—Accounts receivable:
Year Ended December 31, 2019	$	0.4	$	3.5	$	—	$	(0.5)	$	3.4
Year Ended December 31, 2018	$	0.1	$	0.4	$	—	$	(0.1)	$	0.4
Year Ended December 31, 2017	$	0.3	$	0.1	$	(0.1)	$	(0.2)	$	0.1

(1)	Accounts written off during the year, net of recoveries and foreign exchange impact.

DEBT

12 Months Ended

Dec. 31, 2019

DEBT

DEBT

16. DEBT

Debt consists of the following:


	December 31,		December 31,
Description	2019		2018		Maturity	Interest Rate
	(Dollars in millions)
Long-term and other debt:
2017 revolving line of credit	$	—	$	740.0	December 2022	⁽¹⁾
2017 term loans		2,028.8		2,938.1	December 2022	⁽²⁾
BrandLoyalty credit agreement		—		183.7	June 2020	⁽³⁾
Senior notes due 2021		—		500.0
Senior notes due 2022		—		600.0
Senior notes due 2022 (€400.0 million)		—		458.8
Senior notes due 2023 (€300.0 million)		—		344.1
Senior notes due 2024		850.0		—	December 2024	4.750%
Total long-term and other debt		2,878.8		5,764.7
Less: Unamortized debt issuance costs		28.9		39.3
Less: Current portion		101.4		138.9
Long-term portion	$	2,748.5	$	5,586.5

Deposits:
Certificates of deposit	$	8,585.2	$	8,395.1	Various – Jan 2020 to Dec 2024	1.33% to 4.00%
Money market deposits		3,589.8		3,424.3	Non-maturity	⁽⁴⁾
Total deposits		12,175.0		11,819.4
Less: Unamortized debt issuance costs		23.3		25.7
Less: Current portion		6,942.4		6,537.7
Long-term portion	$	5,209.3	$	5,256.0

Non-recourse borrowings of consolidated securitization entities:
Fixed rate asset-backed term note securities	$	4,891.0	$	4,893.3	Various – May 2020 to Sep 2022	2.03% to 3.95%
Conduit asset-backed securities		2,405.0		2,770.0	Various – Sep 2020 to Apr 2021	⁽⁵⁾
Total non-recourse borrowings of consolidated securitization entities		7,296.0		7,663.3
Less: Unamortized debt issuance costs		12.0		11.6
Less: Current portion		3,030.8		2,717.6
Long-term portion	$	4,253.2	$	4,934.1

(1)	The interest rate is based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin. At December 31, 2018, the weighted average interest rate for the revolving line of credit was 4.22%.

(2)	The interest rate is based upon the London Interbank Offered Rate (“LIBOR”) plus an applicable margin. The weighted average interest rate for the term loans was 3.30% and 4.27% at December 31, 2019 and 2018, respectively.

(3)	The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin. At December 31, 2018, the weighted average interest rate was 1.22% and 1.65% for the BrandLoyalty revolving line of credit and term loans, respectively.

(4)	The interest rates are based on the Federal Funds rate plus an applicable margin. At December 31, 2019, the interest rates ranged from 1.84% to 3.50%. At December 31, 2018, the interest rates ranged from 1.90% to 2.71%.

(5)	The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At December 31, 2019, the interest rates ranged from 2.79% to 2.96%. At December 31, 2018, the interest rates ranged from 3.48% to 3.79%.

At December 31, 2019, the Company was in compliance with its financial covenants.

Long-term and Other Debt

Credit Agreement

The Company, as borrower, and ADS Alliance Data Systems, Inc., ADS Foreign Holdings, Inc., Alliance Data Foreign Holdings, Inc., Alliance Data International LLC, Comenity LLC and Comenity Servicing LLC, as guarantors, are party to a credit agreement with various agents and lenders dated June 14, 2017 (the “2017 Credit Agreement”).

At December 31, 2018, the 2017 Credit Agreement provided for $3,052.6 million in term loans (the “2017 Term Loans”) and a $1,572.4 million revolving credit facility (the “2017 Credit Facility”), with total availability under the 2017 Credit Facility of $832.4 million.

On April 30, 2019, the Company amended its credit agreement to provide that, upon consummation of the sale of Epsilon, the maturity date of the credit agreement would be reduced by one year from June 14, 2022 to June 14, 2021, a mandatory payment of $500 million of the revolving credit facility would be required, the aggregate revolving credit commitments would be reduced in the same amount (to $1,072.4 million), all of the Company’s outstanding senior notes would be required to be redeemed, net proceeds from future asset sales in excess of $50 million must be applied to repayment of the credit agreement and certain other minor amendments.

In July 2019, the Company made a mandatory payment of $500.0 million of the revolving credit facility, with the aggregate revolving credit commitments reduced to $1,072.4 million.

On December 20, 2019, the Company amended its credit agreement to extend the maturity date from June 14, 2021 to December 31, 2022, reduce the aggregate revolving credit commitments from $1,072.4 million to $750.0 million, add a consolidated minimum tangible net worth covenant upon certain triggering events and make certain other amendments. The amendment also required the Company to prepay the term loans to $2,028.8 million upon consummation of the offering of the $850.0 million aggregate principal amount of 4.750% senior notes due December 15, 2024 (“Senior Notes due 2024”), which obligation was satisfied in full with a prepayment of $833.0 million, representing the net proceeds from the offering of the Senior Notes due 2024.

At December 31, 2019, the credit agreement, as amended, provided for a $2,028.8 million term loan, subject to certain principal repayments, and a $750.0 million revolving credit facility.

Total availability under the 2017 Credit Facility at December 31, 2019 was $750.0 million.

The loans under the credit agreement are scheduled to mature on December 31, 2022. The 2017 Term Loan provides for aggregate principal payments of 1.25% of the $2,028.8 million term loan amount, payable in equal quarterly installments beginning on March 31, 2020. The credit agreement is unsecured.

The credit agreement contains the usual and customary negative covenants for transactions of this type, including, but not limited to, restrictions on the Company’s ability and in certain instances, its subsidiaries’ ability to consolidate or merge; substantially change the nature of its business; sell, lease, or otherwise transfer any substantial part of its assets; create or incur indebtedness; create liens; and make acquisitions. The negative covenants are subject to certain exceptions as specified in the credit agreement. The credit agreement also requires the Company to satisfy certain financial covenants, including a maximum total leverage ratio and a minimum ratio of consolidated operating EBITDA to consolidated interest expense, each as determined in accordance with the credit agreement. The credit agreement also includes customary events of default.

BrandLoyalty Credit Agreement

BrandLoyalty and certain of its subsidiaries, as borrower and guarantors, are parties to a credit agreement that provides for an A-1 term loan facility of €90.0 million and an A-2 term loan facility of €100.0 million, subject to certain principal repayments, a committed revolving line of credit of €37.5 million and an uncommitted revolving line of credit of €37.5 million, all of which mature in June 2020.

In September 2019, the Company repaid the €115.0 million in term loans outstanding under the BrandLoyalty credit agreement, originally scheduled to mature in June 2020, and repaid the €32.5 million amount outstanding under the revolving line of credit.

Senior Notes

In July 2019, with the proceeds from the Epsilon transaction, the Company extinguished all of its senior notes, which had an outstanding balance of $1.9 billion. The Company incurred a loss from the extinguishment of debt of approximately $71.9 million, resulting from the redemption price of each of the notes of $49.9 million and the write-off of deferred issuance costs of $22.0 million. The senior notes extinguished were as follows:

●

$500.0 million aggregate principal amount of 5.875% senior notes due November 1, 2021

●

$600.0 million aggregate principal amount of 5.375% senior notes due August 1, 2022

●

€400.0 million aggregate principal amount of 4.500% senior notes due March 15, 2022

●

€300.0 million aggregate principal amount of 5.2500% senior notes due November 15, 2023

In December 2019, the Company issued and sold $850.0 million aggregate principal amount of 4.750% senior notes due December 15, 2024. The Senior Notes due 2024 accrue interest on the principal amount at the rate of 4.750% per annum from December 20, 2019, payable semi-annually in arrears, on June 15 and December 15 of each year, beginning on June 15, 2020. The Senior Notes due 2024 will mature on December 15, 2024, subject to earlier repurchase or redemption.

The Senior Notes due 2024 are governed by an indenture that includes usual and customary negative covenants and events of default. The Senior Notes due 2024 are guaranteed on a senior unsecured basis by each of the Company’s existing and future domestic restricted subsidiaries that incurs or in any other manner becomes liable for any debt under the Company’s domestic credit facilities, including the credit agreement.

Deposits

Comenity Bank and Comenity Capital Bank issue certificates of deposit in denominations of at least $100,000 and $1,000, respectively, in various maturities ranging between January 2020 and December 2024 and with effective annual interest rates ranging from 1.33% to 4.00%, with a weighted average interest rate of 2.66%, at December 31, 2019. At December 31, 2018, interest rates ranged from 1.25% to 4.00%, with a weighted average interest rate of 2.44%. Interest is paid monthly and at maturity.

Comenity Bank and Comenity Capital Bank offer non-maturity deposit programs through contractual arrangements with various financial counterparties. Money market deposits are redeemable on demand by the customer and, as such, have no scheduled maturity date. As of December 31, 2019, Comenity Bank and Comenity Capital Bank had $3.6 billion in money market deposits outstanding with annual interest rates ranging from 1.84% to 3.50%, with a weighted average interest rate of 2.05%. As of December 31, 2018, Comenity Bank and Comenity Capital Bank had $3.4 billion in money market deposits outstanding with annual interest rates ranging from 1.90% to 2.71%, with a weighted average interest rate of 2.59%.

Non-Recourse Borrowings of Consolidated Securitization Entities

An asset-backed security is a security whose value and income payments are derived from and collateralized (or “backed”) by a specified pool of underlying assets. The sale of the pool of underlying assets to general investors is accomplished through a securitization process. The Company regularly sells its credit card receivables to its credit card securitization trusts, the WFN Trusts and the WFC Trust, which are consolidated on the balance sheets of the Company under ASC 860 and ASC 810. The liabilities of the consolidated VIEs include asset-backed securities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company.

Asset-Backed Term Notes

For the year ended December 31, 2019, the following asset-backed term notes were issued by Master Trust I:

●

In February 2019, the Company issued $562.5 million of Series 2019-A asset-backed term notes, which mature in February 2022. The offering consisted of $500.0 million of Class A notes with a fixed interest rate of 3.14% per year, $37.2 million of Class M Notes with a fixed interest rate of 3.61% per year and $25.3 million of notes that were retained by the Company and eliminated from the Company’s consolidated balance sheets.

●

In June 2019, the Company issued $399.2 million of Series 2019-B asset-backed term notes, which mature in June 2022. The offering consisted of $350.0 million of Class A notes with a fixed interest rate of 2.49% per year, $31.2 million of Class M notes with a fixed interest rate of 3.04% per year and $18.0 million of notes which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

●

In September 2019, the Company issued $684.2 million of Series 2019-C asset-backed term notes, which mature in September 2022. The offering consisted of $600.0 million of Class A notes with a fixed interest rate of 2.21% per year, $53.4 million of Class M notes with a fixed interest rate of 2.71% per year and $30.8 million of notes which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

For the year ended December 31, 2019, the following asset-backed term notes from Master Trust I matured and were repaid:

●

In March 2019, $550.0 million of Series 2012-A asset-backed term notes, $137.5 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

●

In June 2019, $466.7 million of Series 2012-D asset-backed term notes, $77.0 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

●

In August 2019, $444.7 million of Series 2017-B asset-backed term notes, $44.7 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

●

In October 2019, $460.5 million of Series 2016-C asset-backed term notes, $88.7 million of which were retained by the Company and eliminated from the Company’s consolidated balance sheets.

Conduit Facilities

The Company has access to committed undrawn capacity through three conduit facilities to support the funding of its credit card receivables through Master Trust I, Master Trust III and the WFC Trust. Borrowings outstanding under each facility bear interest at a margin above LIBOR or the asset-backed commercial paper costs of each individual conduit provider.

In May 2019, the WFC Trust amended its 2009-VFN conduit facility, increasing the capacity from $1,975.0 million to $2,175.0 million and extending the maturity to April 2021.

As of December 31, 2019, the conduits have varying maturities from September 2020 to April 2021 with variable interest rates ranging from 2.79% to 2.96%. Total capacity under the conduit facilities was $4.7 billion, of which $2.4 billion had been drawn and was included in non-recourse borrowings of consolidated securitization entities in the consolidated balance sheets.

Maturities

The future principal payments for the Company’s debt as of December 31, 2019 are as follows:


					Non-Recourse
					Borrowings of
	Long-Term				Consolidated
	and				Securitization
Year	Other Debt		Deposits		Entities
	(in millions)
2020	$	101.4	$	6,944.8	$	3,032.2
2021		101.4		2,193.9		2,692.1
2022		1,826.0		1,574.0		1,571.7
2023		—		935.0		—
2024		850.0		527.3		—
Thereafter		—		—		—
Total maturities		2,878.8		12,175.0		7,296.0
Unamortized debt issuance costs		(28.9)		(23.3)		(12.0)
	$	2,849.9	$	12,151.7	$	7,284.0

PARENT-ONLY FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2019

PARENT-ONLY FINANCIAL STATEMENTS

PARENT-ONLY FINANCIAL STATEMENTS

24. PARENT-ONLY FINANCIAL STATEMENTS

The following ADSC financial statements are provided in accordance with the rules of the Securities and Exchange Commission, which require such disclosure when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets. Certain of the Company’s subsidiaries may be restricted in distributing cash or other assets to ADSC, which could be utilized to service its indebtedness. The stand-alone parent-only financial statements are presented below.

Balance Sheets


	December 31,
	2019		2018
	(in millions)
Assets:
Cash and cash equivalents	$	0.2	$	0.1
Investment in subsidiaries		5,326.2		8,606.0
Other assets		3.4		20.1
Total assets	$	5,329.8	$	8,626.2
Liabilities:
Current portion of long-term and other debt	$	101.4	$	114.4
Long-term and other debt		2,748.5		5,427.7
Intercompany liabilities		806.7		395.9
Other liabilities		84.9		356.1
Total liabilities		3,741.5		6,294.1
Stockholders’ equity		1,588.3		2,332.1
Total liabilities and stockholders’ equity	$	5,329.8	$	8,626.2

See Note 16, “Debt,” for more information regarding the Company’s long-term and other debt.

Statements of Income


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Interest from loans to subsidiaries	$	19.2	$	17.9	$	13.8
Dividends from subsidiaries		922.6		810.1		360.6
Total revenue		941.8		828.0		374.4
Loss on extinguishment of debt		71.9		—		—
Interest expense, net		130.0		281.2		278.9
Other expenses, net		(0.7)		(0.4)		12.9
Total expenses		201.2		280.8		291.8
Income before income taxes and equity in undistributed net income of subsidiaries		740.6		547.2		82.6
Benefit for income taxes		42.1		7.0		322.7
Income before equity in undistributed net (loss) income of subsidiaries		782.7		554.2		405.3
Equity in undistributed net (loss) income of subsidiaries⁽¹⁾		(504.7)		408.9		383.4
Net income	$	278.0	$	963.1	$	788.7

(1)	Includes $252.1 million after-tax loss on sale of Epsilon.

Statements of Comprehensive Income


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net income	$	278.0	$	963.1	$	788.7
Other comprehensive income (loss), net of tax		4.9		29.6		(46.1)
Total comprehensive income, net of tax	$	282.9	$	992.7	$	742.6

Statements of Cash Flows


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net cash (used in) provided by operating activities	$	(1,029.1)	$	82.3	$	72.3
Investing activities:
Investment in subsidiaries		(135.0)		—		(164.0)
Proceeds from sale of business		4,118.3		—		—
Dividends received		922.6		810.1		360.6
Net cash provided by investing activities		4,905.9		810.1		196.6
Financing activities:
Borrowings under debt agreements		3,083.0		4,527.0		7,673.6
Repayments of borrowings		(5,778.2)		(4,838.3)		(7,232.4)
Payment of debt extinguishment costs		(46.1)		—		—
Payment of deferred financing costs		(20.7)		(4.6)		(33.7)
Purchase of treasury shares		(976.1)		(443.2)		(553.7)
Dividends paid		(127.4)		(125.2)		(115.5)
Proceeds from issuance of common stock		12.4		17.6		18.4
Other		(23.6)		(25.7)		(25.6)
Net cash used in financing activities		(3,876.7)		(892.4)		(268.9)
Change in cash, cash equivalents and restricted cash		0.1		—		—
Cash, cash equivalents and restricted cash at beginning of year		0.1		0.1		0.1
Cash, cash equivalents and restricted cash at end of year	$	0.2	$	0.1	$	0.1

Non-cash investing activities related to the parent-only statement of cash flows for the year ended December 31, 2019 included a $3.0 billion non-cash dividend in the form of an intercompany return of capital from ADS Alliance Data Systems, Inc. to ADSC.

INVENTORIES, NET

12 Months Ended

Dec. 31, 2019

INVENTORIES, NET

INVENTORIES, NET

8. INVENTORIES, NET

Inventories, net of $218.0 million and $248.0 million at December 31, 2019 and 2018, respectively, primarily consist of finished goods to be utilized as rewards in the Company’s loyalty programs. For the year ended December 31, 2019, the Company recorded an inventory write-down of $18.4 million on certain discontinued product lines. See Note 14, “Restructuring and Other Charges,” for more information.

DERIVATIVE INSTRUMENTS

12 Months Ended

Dec. 31, 2019

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

17. DERIVATIVE INSTRUMENTS

The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in interest rates and foreign currency exchange rates.

The Company limits its exposure on derivatives by entering into contracts with institutions that are established dealers who maintain certain minimum credit criteria established by the Company. At December 31, 2019, the Company does not maintain any derivative instruments subject to master agreements that would require the Company to post collateral or that contain any credit-risk related contingent features.

The Company enters into foreign currency derivatives to reduce the volatility of the Company’s cash flows resulting from changes in foreign currency exchange rates associated with certain inventory transactions, some of which are designated as cash flow hedges. The Company generally hedges foreign currency exchange rate risks for periods of 12 months or less. As of December 31, 2019, the maximum term over which the Company is hedging its exposure to the variability of future cash flows associated with certain inventory transactions is 7 months.

The following tables present the fair values of the derivative instruments included within the Company’s consolidated balance sheets as of December 31, 2019 and 2018:


	December 31, 2019
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	5.5	$	0.2	Other current assets	January 2020 to February 2020
Foreign currency exchange hedges	$	7.8	$	0.3	Other current liabilities	February 2020 to July 2020


	December 31, 2018
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	5.2	$	0.3	Other current assets	January 2019 to April 2019
Foreign currency exchange hedges	$	20.3	$	0.3	Other current liabilities	March 2019 to November 2019

Not designated as hedging instruments:
Foreign currency exchange forward contract	$	61.6	$	3.5	Other current assets	January 2019 to February 2019

Derivatives Designated as Hedging Instruments

For the year ended December 31, 2019, gains of $0.1 million, net of tax, were recognized in other comprehensive income related to foreign currency exchange hedges designated as effective, losses of $0.1 million, net of tax, were reclassified from accumulated other comprehensive income into net income (cost of operations), and a de minimis amount of ineffectiveness was recorded. Changes in the fair value of these hedges, excluding any ineffective portion are recorded in other comprehensive income until the hedged transactions affect net income. The ineffective portion of these cash flow hedges impacts net income when the ineffectiveness occurs. At December 31, 2019, $0.1 million is expected to be reclassified from accumulated other comprehensive income into net income in the coming 12 months.

For the year ended December 31, 2018, losses of $0.1 million, net of tax, were recognized in other comprehensive income related to foreign currency exchange hedges designated as effective, gains of $0.2 million, net of tax, were reclassified from accumulated other comprehensive income into net income (cost of operations), and a de minimis amount of ineffectiveness was recorded.

For the year ended December 31, 2017, losses of $0.5 million, net of tax, were recognized in other comprehensive income related to foreign currency exchange hedges designated as effective, gains of $0.2 million, net of tax, were reclassified from accumulated other comprehensive income into net income (cost of operations), and $0.1 million of ineffectiveness was recorded.

Derivatives Not Designated as Hedging Instruments

For the years ended December 31, 2019, 2018 and 2017, the Company recognized losses of $1.4 million, gains of $10.6 million, and gains of $12.5 million, respectively, related to foreign currency exchange forward contracts not designated as hedging instruments in general and administrative expense in the Company’s consolidated statements of income.

As of December 31, 2019, the Company did not hold any derivatives not designated as hedging instruments.

Net Investment Hedges

The Company previously designated its Euro-denominated 5.250% senior notes due 2023 (€300.0 million) and €340.0 million of its Euro-denominated 4.500% senior notes due 2022 (€400.0 million) as a net investment hedge of its investment in BrandLoyalty on an after-tax basis. The net investment hedge was intended to reduce the volatility in stockholders’ equity caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. dollar.

On July 1, 2019, the Company dedesignated its net investment hedge, and the Euro-denominated senior notes were repaid in July 2019. The $7.5 million unamortized amount of the net investment hedge will remain in accumulated other comprehensive loss until the Company’s investment in BrandLoyalty is disposed of or substantially liquidated.

For the years ended December 31, 2019, 2018 and 2017, the Company recorded unrealized gains of $4.9 million, unrealized gains of $29.6 million, and unrealized losses of $46.1 million, net of tax, respectively, in other comprehensive income and no ineffectiveness was recorded on the net investment hedges.

CREDIT CARD AND LOAN RECEIVABLES

12 Months Ended

Dec. 31, 2019

CREDIT CARD AND LOAN RECEIVABLES

CREDIT CARD AND LOAN RECEIVABLES

7. CREDIT CARD AND LOAN RECEIVABLES

The Company’s credit card and loan receivables are the only portfolio segment or class of financing receivables. Quantitative information about the components of credit card and loan receivables is presented in the table below:


	December 31,		December 31,
	2019		2018
	(in millions)
Principal receivables	$	18,413.1	$	16,869.9
Billed and accrued finance charges		977.3		898.3
Other		72.7		86.8
Total credit card and loan receivables		19,463.1		17,855.0
Less: Credit card receivables – restricted for securitization investors		13,504.2		13,418.3
Other credit card and loan receivables	$	5,958.9	$	4,436.7

Allowance for Loan Loss

The Company maintains an allowance for loan loss at a level that is appropriate to absorb probable losses inherent in credit card and loan receivables. The estimate of the allowance for loan loss covers uncollectible principal as well as unpaid interest and fees. The allowance for loan loss is evaluated monthly for appropriateness.

The following table presents the Company’s allowance for loan loss for the years indicated:



	Years Ended December 31,
	2019		2018		2017
	(in millions)
Balance at beginning of year	$	1,038.3	$	1,119.3	$	948.0
Provision for loan loss		1,187.5		1,016.0		1,140.1
Allowance associated with credit card and loan receivables transferred to held for sale		—		(54.8)		(27.9)
Change in estimate for uncollectible unpaid interest and fees		—		25.0		30.0
Recoveries		234.5		214.2		196.6
Principal charge-offs		(1,289.2)		(1,281.4)		(1,167.5)
Balance at end of year	$	1,171.1	$	1,038.3	$	1,119.3

Net charge-offs include the principal amount of losses from credit cardholders unwilling or unable to pay their account balances, as well as bankrupt and deceased credit cardholders, less recoveries and exclude charged-off interest, fees and fraud losses. Charged-off interest and fees reduce finance charges, net while fraud losses are recorded as a cost of operations expense. Credit card and loan receivables, including unpaid interest and fees, are charged-off in the month during which an account becomes 180 days contractually past due, except in the case of customer bankruptcies or death. Credit card and loan receivables, including unpaid interest and fees, associated with customer bankruptcies or death are charged-off in each month subsequent to 60 days after the receipt of notification of the bankruptcy or death, but in any case, not later than the 180-day contractual time frame.

The Company records the actual charge-offs for unpaid interest and fees as a reduction to finance charges, net. For the years ended December 31, 2019, 2018 and 2017, actual charge-offs for unpaid interest and fees were $808.6 million, $803.1 million and $653.2 million, respectively.

Delinquencies

A credit card account is contractually delinquent if the Company does not receive the minimum payment by the specified due date on the cardholder’s statement. It is the Company’s policy to continue to accrue interest and fee income on all credit card accounts beyond 90 days, except in limited circumstances, until the credit card account balance and all related interest and other fees are paid or charged-off, typically at 180 days delinquent. When an account becomes delinquent, a message is printed on the credit cardholder’s billing statement requesting payment. After an account becomes 30 days past due, a proprietary collection scoring algorithm automatically scores the risk of the account becoming further delinquent. The collection system then recommends a collection strategy for the past due account based on the collection score and account balance and dictates the contact schedule and collections priority for the account. If the Company is unable to make a collection after exhausting all in-house collection efforts, the Company may engage collection agencies and outside attorneys to continue those efforts.

The following table presents the delinquency trends of the Company’s credit card and loan receivables portfolio:


	December 31,		% of		December 31,		% of
	2019		Total		2018		Total
	(in millions, except percentages)
Receivables outstanding - principal	$	18,413.1	100.0	%	$	16,869.9	100.0	%
Principal receivables balances contractually delinquent:
31 to 60 days	$	337.4	1.8	%	$	303.2	1.8	%
61 to 90 days		233.6	1.3			207.9	1.3
91 or more days		496.5	2.7			443.4	2.6
Total	$	1,067.5	5.8	%	$	954.5	5.7	%

The practice of re-aging an account may affect credit card loan delinquencies and charge-offs. A re-age of an account is intended to assist delinquent cardholders who have experienced financial difficulties but who demonstrate both an ability and willingness to repay the amounts due. Accounts meeting specific defined criteria are re-aged when the cardholder makes one or more consecutive payments aggregating a certain pre-defined amount of their account balance. With re-aging, the outstanding balance of a delinquent account is returned to a current status. For the years ended December 31, 2019, 2018 and 2017, the Company’s re-aged accounts represented 2.4%, 2.1% and 1.4%, respectively, of total credit card and loan receivables for each period and thus do not have a significant impact on the Company’s delinquencies or net charge-offs. The Company’s re-aging practices comply with regulatory guidelines.

Modified Credit Card Receivables

The Company holds certain credit card receivables for which the terms have been modified. The Company’s modified credit card receivables include credit card receivables for which temporary hardship concessions have been granted and credit card receivables in permanent workout programs. These modified credit card receivables include concessions consisting primarily of a reduced minimum payment and an interest rate reduction. The temporary programs’ concessions remain in place for a period no longer than twelve months, while the permanent programs remain in place through the payoff of the credit card receivables if the credit cardholder complies with the terms of the program. These concessions do not include the forgiveness of unpaid principal, but may involve the reversal of certain unpaid interest or fee assessments. In the case of the temporary programs, at the end of the concession period, credit card receivable terms revert to standard rates. These arrangements are automatically terminated if the customer fails to make payments in accordance with the terms of the program, at which time their account reverts back to its original terms.

Credit card receivables for which temporary hardship and permanent concessions were granted are each considered troubled debt restructurings and are collectively evaluated for impairment. Modified credit card receivables are evaluated at their present value with impairment measured as the difference between the credit card receivable balance and the discounted present value of cash flows expected to be collected. Consistent with the Company’s measurement of impairment of modified credit card receivables on a pooled basis, the discount rate used for credit card receivables is the average current annual percentage rate the Company applies to non-impaired credit card receivables, which approximates what would have been applied to the pool of modified credit card receivables prior to impairment. In assessing the appropriate allowance for loan loss, these modified credit card receivables are included in the general pool of credit card receivables with the allowance determined under the contingent loss model of ASC 450-20, “Loss Contingencies.” If the Company applied accounting under ASC 310-40, “Troubled Debt Restructurings by Creditors,” to the modified credit card receivables in these programs, there would not be a material difference in the allowance for loan loss.

The Company had $308.7 million and $292.4 million, respectively, as a recorded investment in impaired credit card receivables with an associated allowance for loan loss of $75.4 million and $101.3 million, respectively, as of December 31, 2019 and 2018. These modified credit card receivables represented less than 2% of the Company’s total credit card receivables as of both December 31, 2019 and 2018.

The average recorded investment in the impaired credit card receivables was $295.4 million and $340.9 million for the years ended December 31, 2019 and 2018, respectively.

Interest income on these modified credit card receivables is accounted for in the same manner as other accruing credit card receivables. Cash collections on these modified credit card receivables are allocated according to the same payment hierarchy methodology applied to credit card receivables that are not in such programs. The Company recognized $22.6 million, $27.9 million and $19.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, in interest income associated with modified credit card receivables during the period that such credit card receivables were impaired.

The following tables provide information on credit card receivables that are considered troubled debt restructurings as described above, which entered into a modification program during the specified periods:

Year Ended December 31, 2019

Year Ended December 31, 2018

Pre-

Post-

Pre-

Post-

modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card receivables

259,311

381.4

380.8

501,906

621.4

620.7

The tables below summarize troubled debt restructurings that have defaulted in the specified periods where the default occurred within 12 months of their modification date:


	Year Ended December 31, 2019			Year Ended December 31, 2018
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance
	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted – credit card receivables	126,476	$	170.8	293,591	$	340.5

Age of Credit Card and Loan Receivable Accounts

The following tables set forth, as of December 31, 2019 and 2018, the number of active credit card and loan receivable accounts with balances and the related principal balances outstanding, based upon the age of the active credit card and loan receivable accounts from origination:


	December 31, 2019
						Percentage of
	Number of	Percentage of		Principal		Principal
	Active Accounts	Active Accounts		Receivables		Receivables
Age of Accounts Since Origination	with Balances	with Balances		Outstanding		Outstanding
	(in millions, except percentages)
0-12 Months	7.1	27.8	%	$	4,585.1	24.9	%
13-24 Months	3.9	15.3			2,826.6	15.4
25-36 Months	3.2	12.6			2,423.1	13.2
37-48 Months	2.5	9.7			2,051.7	11.1
49-60 Months	1.8	7.0			1,509.7	8.2
Over 60 Months	7.0	27.6			5,016.9	27.2
Total	25.5	100.0	%	$	18,413.1	100.0	%


	December 31, 2018
						Percentage of
	Number of	Percentage of		Principal		Principal
	Active Accounts	Active Accounts		Receivables		Receivables
Age of Accounts Since Origination	with Balances	with Balances		Outstanding		Outstanding
	(in millions, except percentages)
0-12 Months	6.5	26.7	%	$	4,099.9	24.3	%
13-24 Months	4.2	17.1			2,887.8	17.1
25-36 Months	3.1	13.0			2,428.9	14.4
37-48 Months	2.2	9.1			1,795.0	10.7
49-60 Months	1.7	7.1			1,367.2	8.1
Over 60 Months	6.5	27.0			4,291.1	25.4
Total	24.2	100.0	%	$	16,869.9	100.0	%

Credit Quality

The Company uses proprietary scoring models developed specifically for the purpose of monitoring the Company’s obligor credit quality. The proprietary scoring models are used as a tool in the underwriting process and for making credit decisions. The proprietary scoring models are based on historical data and require various assumptions about future performance, which the Company updates periodically. Information regarding customer performance is factored into these proprietary scoring models to determine the probability of an account becoming 91 or more days past due at any time within the next 12 months. Obligor credit quality is monitored at least monthly during the life of an account. The following table reflects the composition of the Company’s credit card and loan receivables by obligor credit quality as of December 31, 2019 and 2018:


	December 31, 2019				December 31, 2018
			Percentage of				Percentage of
	Total Principal		Principal		Total Principal		Principal
Probability of an Account Becoming 91 or More Days Past	Receivables		Receivables		Receivables		Receivables
Due or Becoming Charged-off (within the next 12 months)	Outstanding		Outstanding		Outstanding		Outstanding
	(in millions, except percentages)
No Score	$	290.0	1.6	%	$	249.0	1.5	%
27.1% and higher		1,591.4	8.6			1,394.0	8.2
17.1% - 27.0%		1,065.4	5.8			770.1	4.6
12.6% - 17.0%		1,127.7	6.1			1,047.6	6.2
3.7% - 12.5%		7,985.8	43.4			6,877.6	40.8
1.9% - 3.6%		3,285.3	17.8			3,060.7	18.1
Lower than 1.9%		3,067.5	16.7			3,470.9	20.6
Total	$	18,413.1	100.0	%	$	16,869.9	100.0	%

Transfer of Financial Assets

During 2018, the Company originated loan receivables under one previous client agreement, and after origination, these loan receivables were sold to the client at par value plus accrued interest. These transfers qualified for sale treatment as they met the conditions established in ASC 860-10, “Transfers and Servicing.” Following the sale, the client owned the loan receivables, assumed the risk of loss in the event of loan defaults and was responsible for all servicing functions related to the loan receivables. Effective July 2, 2018, the Company no longer originates loan receivables for this client. Originations and sales of these loan receivables held for sale were reflected as operating activities in the Company’s consolidated statements of cash flows.

Portfolios Held for Sale

The Company has certain credit card portfolios held for sale, which are carried at the lower of cost or fair value, of $408.0 million and $1,951.6 million as of December 31, 2019 and 2018, respectively.

During the year ended December 31, 2019, the Company transferred one credit card portfolio totaling approximately $510.3 million into credit card receivables held for sale, and sold 13 credit card portfolios for cash consideration of approximately $2.1 billion and recognized approximately $43.9 million in net gains on the transactions. The Company recorded portfolio valuation adjustments, which are reflected in cost of operations expense, of $189.8 million for the year ended December 31, 2019.

For the year ended December 31, 2019, the portfolio sales were as follows:

●

In April 2019, the Company sold one credit card portfolio for final cash consideration of approximately $356.6 million and recognized a $0.4 million loss on the transaction.

●

In June 2019, the Company sold three credit card portfolios for final cash consideration of approximately $217.7 million and recognized approximately $2.9 million in gains on the transactions.

●

In August 2019, the Company sold one credit card portfolio for final cash consideration of approximately $70.4 million and recognized a $1.7 million gain on the transaction.

●

In September 2019, the Company sold one credit card portfolio for final cash consideration of approximately $334.7 million and recognized a $15.2 million gain on the transaction.

●

In December 2019, the Company sold seven credit card portfolios for preliminary cash consideration of approximately $1,082.4 million, subject to customary sale price adjustments, and recognized approximately $24.5 million in net gains on the transactions.

During the year ended December 31, 2018, the Company transferred 11 credit card portfolios totaling approximately $2.3 billion into credit card receivables held for sale, and sold six credit card portfolios for cash consideration of approximately $1.2 billion and recognized approximately $29.2 million in net gains on the transactions. The Company recorded portfolio valuation adjustments of $101.6 million for the year ended December 31, 2018.

In February 2020, the Company sold one credit card portfolio, subject to certain conditions as defined in the purchase and sale agreement. At December 31, 2019, the carrying value of this portfolio was $313.9 million and included in credit card receivables held for sale in the Company’s consolidated December 31, 2019 balance sheet.

Portfolio Acquisitions

During the year ended December 31, 2019, the Company acquired four credit card portfolios for cash consideration of approximately $924.8 million, which consisted of approximately $843.5 million of credit card receivables, $35.7 million of intangible assets and $45.6 million of other non-current assets, subject to customary purchase price adjustments.

During the year ended December 31, 2017, the Company acquired approximately $906.3 million of credit card receivables in connection with the Signet acquisition. For more information, see Note 5, “Acquisitions.”

Securitized Credit Card Receivables

The Company regularly securitizes its credit card receivables through its credit card securitization trusts, consisting of the WFN Trusts and the WFC Trust. The Company continues to own and service the accounts that generate credit card receivables held by the WFN Trusts and the WFC Trust. In its capacity as a servicer, each of the respective banks earns a fee from the WFN Trusts and the WFC Trust to service and administer the credit card receivables, collect payments and charge-off uncollectible receivables. These fees are eliminated and therefore are not reflected in the consolidated statements of income for the years ended December 31, 2019, 2018 and 2017.

The WFN Trusts and the WFC Trust are VIEs and the assets of these consolidated VIEs include certain credit card receivables that are restricted to settle the obligations of those entities and are not expected to be available to the Company or its creditors. The liabilities of the consolidated VIEs include non-recourse secured borrowings and other liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company.

During the initial phase of a securitization reinvestment period, the Company generally retains principal collections in exchange for the transfer of additional credit card receivables into the securitized pool of assets. During the amortization or accumulation period of a securitization, the investors’ share of principal collections (in certain cases, up to a maximum specified amount each month) is either distributed to the investors or held in an account until it accumulates to the total amount due, at which time it is paid to the investors in a lump sum.

The Company is required to maintain minimum interests ranging from 4% to 10% of the securitized credit card receivables. This requirement is met through transferor’s interest and is supplemented through excess funding deposits. Excess funding deposits represent cash amounts deposited with the trustee of the securitizations. Cash collateral, restricted deposits are generally released proportionately as investors are repaid, although some cash collateral, restricted deposits are released only when investors have been paid in full. No cash collateral, restricted deposits were required to be used to cover losses on securitized credit card receivables in the years ended December 31, 2019, 2018 and 2017.

The tables below present quantitative information about the components of total securitized credit card receivables, delinquencies and net charge-offs:


	December 31,		December 31,
	2019		2018
	(in millions)
Total credit card receivables – restricted for securitization investors	$	13,504.2	$	13,418.3
Principal amount of credit card receivables – restricted for securitization investors, 91 days or more past due	$	321.8	$	301.6


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net charge-offs of securitized principal	$	907.7	$	927.0	$	741.1

INTANGIBLE ASSETS AND GOODWILL

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL

13. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consist of the following:


	December 31, 2019
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	325.1	$	(278.7)	$	46.4	7 years—straight line
Premium on purchased credit card portfolios		192.6		(93.2)		99.4	1-13 years—straight line
Collector database		53.9		(52.9)		1.0	5 years—straight line
Tradenames		31.8		(26.5)		5.3	8-15 years—straight line
	$	603.4	$	(451.3)	$	152.1
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	604.6	$	(451.3)	$	153.3


	December 31, 2018
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	339.5	$	(244.4)	$	95.1	3-7 years—straight line
Premium on purchased credit card portfolios		286.0		(172.9)		113.1	3-13 years—straight line
Collector database		51.3		(49.9)		1.4	5 years—straight line
Tradenames		32.5		(25.9)		6.6	8-15 years—straight line
	$	709.3	$	(493.1)	$	216.2
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	710.5	$	(493.1)	$	217.4

As part of the portfolio acquisitions during the year ended December 31, 2019, the Company acquired $35.7 million of intangible assets, consisting of $21.8 million of customer relationships being amortized over a life of 2.7 years and $13.9 million of marketing relationships being amortized over a life of 5.9 years.

As part of the Signet acquisition in October 2017, the Company acquired $52.3 million of intangible assets, consisting of $35.9 million of customer relationships being amortized over a life of 3.0 years and $16.4 million of marketing relationships being amortized over a life of 7.0 years. For more information on this acquisition, see Note 5, “Acquisitions.”

Amortization expense related to the intangible assets was approximately $96.2 million, $112.9 million and $114.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows:


	For the Years Ending
	December 31,
	(in millions)
2020	$	82.7
2021		22.4
2022		17.6
2023		12.9
2024		10.7
Thereafter		5.8

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018, respectively, are as follows:



	LoyaltyOne		Card Services		Total
	(in millions)
Balance at January 1, 2018	$	731.1	$	261.7	$	992.8
Effects of foreign currency translation		(38.0)		—		(38.0)
Balance at December 31, 2018	$	693.1	$	261.7	$	954.8
Goodwill acquired during the period		—		2.3		2.3
Effects of foreign currency translation		(2.2)		—		(2.2)
Balance at December 31, 2019	$	690.9	$	264.0	$	954.9

The Company completed annual impairment tests for goodwill on July 31, 2019, 2018 and 2017 and determined at each date that no impairment exists. No further testing of goodwill impairments will be performed until July 31, 2020, unless events occur or circumstances indicate an impairment is probable.

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues
Services	$ 215.5	$ 295.4	$ 367.5
Redemption, net	637.3	676.3	935.3
Finance charges, net	4,728.5	4,694.9	4,171.9
Total revenue	5,581.3	5,666.6	5,474.7
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)	2,687.8	2,537.2	2,469.5
Provision for loan loss	1,187.5	1,016.0	1,140.1
General and administrative	150.6	162.5	159.3
Depreciation and other amortization	79.9	80.7	73.7
Amortization of purchased intangibles	96.2	112.9	114.2
Loss on extinguishment of debt	71.9
Total operating expenses	4,273.9	3,909.3	3,956.8
Operating income	1,307.4	1,757.3	1,517.9
Interest expense
Securitization funding costs	213.4	220.2	156.6
Interest expense on deposits	225.6	165.7	125.1
Interest expense on long-term and other debt, net	130.0	156.4	173.7
Total interest expense, net	569.0	542.3	455.4
Income from continuing operations before income taxes	738.4	1,215.0	1,062.5
Provision for income taxes	165.8	269.5	293.3
Income from continuing operations	572.6	945.5	769.2
(Loss) income from discontinued operations, net of taxes	(294.6)	17.6	19.5
Net income	$ 278.0	$ 963.1	$ 788.7
Basic income (loss) per share (Note 4):
Income from continuing operations (in dollars per share)	$ 11.25	$ 17.24	$ 13.82
(Loss) income from discontinued operations (in dollars per share)	(5.89)	0.32	0.35
Net income per share (in dollars per share)	5.36	17.56	14.17
Diluted income (loss) per share (Note 4):
Income from continuing operations (in dollars per share)	11.24	17.17	13.75
(Loss) income from discontinued operations (in dollars per share)	(5.78)	0.32	0.35
Net income per share (in dollars per share)	$ 5.46	$ 17.49	$ 14.10
Weighted average shares (Note 4):
Basic (in shares)	50.0	54.9	55.7
Diluted (in shares)	50.9	55.1	55.9

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAXES

Schedule of components of income before income taxes and components of income tax expense


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Components of income from continuing operations before income taxes:
Domestic	$	591.9	$	1,052.7	$	883.8
Foreign		146.5		162.3		178.7
Total	$	738.4	$	1,215.0	$	1,062.5
Components of income tax expense:
Current
Federal	$	126.0	$	152.2	$	295.0
State		35.8		58.0		17.5
Foreign		11.5		52.8		56.7
Total current		173.3		263.0		369.2
Deferred
Federal		(11.8)		48.0		(65.3)
State		6.7		14.7		6.2
Foreign		(2.4)		(56.2)		(16.8)
Total deferred		(7.5)		6.5		(75.9)
Total provision for income taxes	$	165.8	$	269.5	$	293.3

Summary of reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Expected expense at statutory rate	$	155.1	$	255.1	$	371.9
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit		33.6		57.4		14.5
Foreign rate differential		(2.3)		11.6		(26.0)
Foreign restructuring		—		(48.0)		—
Impact of 2017 Tax Reform		(30.2)		(29.7)		(64.9)
Global intangible low-taxed income		8.7		15.5		—
Non-deductible expenses (non-taxable income)		9.1		3.7		(4.6)
Other		(8.2)		3.9		2.4
Total	$	165.8	$	269.5	$	293.3

Summary of deferred tax assets and liabilities


	December 31,
	2019		2018
	(in millions)
Deferred tax assets
Deferred revenue	$	9.5	$	10.6
Allowance for doubtful accounts		267.6		267.0
Net operating loss carryforwards and other carryforwards		69.0		57.8
Stock-based compensation and other employee benefits		13.7		24.4
Lease liabilities		74.4		—
Accrued expenses and other		40.3		66.2
Intangible assets		23.2		—
Total deferred tax assets		497.7		426.0
Valuation allowance		(64.0)		(36.3)
Deferred tax assets, net of valuation allowance		433.7		389.7
Deferred tax liabilities
Deferred income	$	365.6	$	409.8
Depreciation		41.8		79.0
Right of use assets		61.1		—
Intangible assets		—		113.4
Total deferred tax liabilities		468.5		602.2

Net deferred tax liability	$	(34.8)	$	(212.5)

Amounts recognized in the consolidated balance sheets:
Non-current assets	$	45.2	$	44.0
Non-current liabilities		(80.0)		(256.5)
Total – Net deferred tax liability	$	(34.8)	$	(212.5)

Summary of reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):


Balance at January 1, 2017	$	192.0
Increases related to prior years’ tax positions		9.3
Decreases related to prior years’ tax positions		(15.7)
Increases related to current year tax positions		33.0
Settlements during the period		(6.7)
Lapses of applicable statutes of limitation		(3.6)
Balance at December 31, 2017	$	208.3
Increases related to prior years’ tax positions		41.3
Decreases related to prior years’ tax positions		(9.6)
Increases related to current year tax positions		61.5
Settlements during the period		(1.0)
Lapses of applicable statutes of limitation		(4.2)
Balance at December 31, 2018	$	296.3
Increases related to prior years’ tax positions		2.7
Decreases related to prior years’ tax positions		(76.6)
Increases related to current year tax positions		58.3
Settlements during the period		(0.6)
Lapses of applicable statutes of limitation		(5.8)
Balance at December 31, 2019	$	274.3

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Apr. 30, 2019
Revenues	$ 1,461.0	$ 1,437.6	$ 1,348.5	$ 1,334.2	$ 1,464.5	$ 1,423.2	$ 1,397.2	$ 1,381.7	$ 5,581.3	$ 5,666.6	$ 5,474.7
Operating expenses	1,152.0	1,133.4	1,011.2	977.3	956.0	943.4	1,000.5	1,009.4	4,273.9	3,909.3	3,956.8
Operating income	309.0	304.2	337.3	356.9	508.5	479.8	396.7	372.3	1,307.4	1,757.3	1,517.9
Interest expense, net	141.6	140.0	143.5	143.9	144.7	136.8	133.6	127.2	569.0	542.3	455.4
Income from continuing operations before income taxes	167.4	164.2	193.8	213.0	363.8	343.0	263.1	245.1	738.4	1,215.0	1,062.5
Provision for income taxes	37.0	42.6	51.4	34.8	110.7	54.3	39.3	65.2	165.8	269.5	293.3
Income from continuing operations	130.4	121.6	142.4	178.2	253.1	288.7	223.8	179.9	572.6	945.5	769.2
(Loss) income from discontinued operations, net of taxes	(32.9)	(229.2)	(3.4)	(29.1)	31.8	7.8	(6.0)	(16.0)	(294.6)	17.6	19.5
Net income	$ 97.5	$ (107.6)	$ 139.0	$ 149.1	$ 284.9	$ 296.5	$ 217.8	$ 163.9	$ 278.0	$ 963.1	$ 788.7
Basic income (loss) per share (Note 4):
Income from continuing operations (in dollars per share)	$ 2.73	$ 2.47	$ 2.72	$ 3.36	$ 4.69	$ 5.27	$ 4.05	$ 3.25	$ 11.25	$ 17.24	$ 13.82
(Loss) income from discontinued operations (in dollars per share)	(0.70)	(4.69)	(0.07)	(0.55)	0.59	0.14	(0.11)	(0.29)	(5.89)	0.32	0.35
Net income (loss) per share (in dollars per share)	2.03	(2.22)	2.65	2.81	5.28	5.41	3.94	2.96	5.36	17.56	14.17
Diluted income (loss) per share (Note 4):
Income from continuing operations (in dollars per share)	2.74	2.41	2.71	3.35	4.67	5.25	4.04	3.23	11.24	17.17	13.75
(Loss) income from discontinued operations (in dollars per share)	(0.69)	(4.54)	(0.07)	(0.55)	0.58	0.14	(0.11)	(0.28)	(5.78)	0.32	0.35
Net income (loss) per share (in dollars per share)	$ 2.05	$ (2.13)	$ 2.64	$ 2.80	$ 5.25	$ 5.39	$ 3.93	$ 2.95	$ 5.46	$ 17.49	$ 14.10
Mandatory payment per credit agreement												$ 500.0
Long-term Debt	$ 2,849.9								$ 2,849.9
Epsilon
Diluted income (loss) per share (Note 4):
Mandatory payment per credit agreement	500.0			$ 500.0					500.0			$ 500.0
Epsilon \| Senior Notes
Interest expense, net				5.6
Provision for income taxes				(1.7)
Diluted income (loss) per share (Note 4):
Long-term Debt	$ 1,900.0			$ 1,900.0					$ 1,900.0

CREDIT CARD AND LOAN RECEIVABLES - Allowance for Loan Loss and Delinquencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Billed and accrued finance charges	$ 977.3	$ 898.3
Total credit card and loan receivables	19,463.1	17,855.0
Less: Credit card receivables - restricted for securitization investors	13,504.2	13,418.3
Other credit card and loan receivables	5,958.9	4,436.7
Allowance for Loan Loss
Balance at beginning of period	1,038.3	1,119.3	$ 948.0
Provision for loan loss	1,187.5	1,016.0	1,140.1
Allowance associated with credit card and loan receivables transferred to held for sale		(54.8)	(27.9)
Change in estimate for uncollectible unpaid interest and fees		25.0	30.0
Recoveries	234.5	214.2	196.6
Principal charge-offs	(1,289.2)	(1,281.4)	(1,167.5)
Balance at end of period	$ 1,171.1	1,038.3	1,119.3
Number of days a loan is contractually past due before resulting in charge-off	180 days
Number of days after notification of creditor's bankruptcy or death when an account is charged-off	60 days
Actual charge-offs for unpaid interest and fees	$ 808.6	$ 803.1	$ 653.2
Period beyond which interest and fee income accrue on credit card accounts	90 days
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
Period an account becomes past due before a proprietary collection scoring algorithm automatically scores the risk of an account becoming further delinquent	30 days
Principal receivables balances contractually delinquent:
Re-aged accounts as percentage of total credit card and loan receivables	2.40%	2.10%	1.40%
Modified Credit Card Receivables
Maximum period of time temporary programs' concessions remain in place	12 months
Impaired credit card and loan receivables	$ 308.7	$ 292.4
Allowance for loan loss on impaired credit card receivables	$ 75.4	$ 101.3
Maximum percentage of credit card receivables to total portfolio	2.00%	2.00%
Average recorded investment in impaired credit card receivables	$ 295.4	$ 340.9
Interest income on modified credit card receivables	22.6	27.9	$ 19.7
Credit Card and Loan Receivables
Principal receivables	18,413.1	16,869.9
Credit card and loan receivables portfolio delinquency trend
Principal receivables	18,413.1	16,869.9
Principal receivables balances contractually delinquent:
31 to 60 days	337.4	303.2
61 to 90 days	233.6	207.9
91 or more days	496.5	443.4
Total	$ 1,067.5	$ 954.5
Percentage Principal receivables balances contractually delinquent :
Receivables outstanding - principal (as a percent)	100.00%	100.00%
Principal receivables balances contractually delinquent:
31 to 60 days (as a percent)	1.80%	1.80%
61 to 90 days (as a percent)	1.30%	1.30%
91 or more days (as a percent)	2.70%	2.60%
Total (as a percent)	5.80%	5.70%
Other
Principal receivables	$ 72.7	$ 86.8
Credit card and loan receivables portfolio delinquency trend
Principal receivables	$ 72.7	$ 86.8

REVENUE - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2019	Jan. 01, 2018	Dec. 31, 2017
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$ 807.9	$ 766.1
Deferred revenue (non-current)	$ 114.1	109.2
Period beyond which interest and fee income accrue on credit card accounts	90 days
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
LoyaltyOne
Change in Contract with Customer, Liability
Deferred revenue	$ 922.0	875.3			$ 966.9
Cash proceeds	505.3	519.5
Revenue recognized	(502.9)	(537.6)
Other	0.6	0.7
Effects of foreign currency translation	43.7	(74.2)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	807.9
Deferred revenue (non-current)	114.1
LoyaltyOne \| Other current liabilities
Change in Contract with Customer, Liability
Deferred revenue	122.8	110.2	$ 110.2	$ 87.5
Revenue recognized	(526.6)	(506.5)
Service
Change in Contract with Customer, Liability
Deferred revenue	258.6	248.0			283.8
Cash proceeds	192.0	194.7
Revenue recognized	(193.7)	(209.2)
Effects of foreign currency translation	12.3	(21.3)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	144.5
Deferred revenue (non-current)	114.1
Redemption
Change in Contract with Customer, Liability
Deferred revenue	663.4	627.3			$ 683.1
Cash proceeds	313.3	324.8
Revenue recognized	(309.2)	(328.4)
Other	0.6	0.7
Effects of foreign currency translation	31.4	(52.9)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	663.4
Card Services
Amounts recognized in the consolidated balance sheets:
Unamortized contract costs	406.8	372.5
Amortization of contract costs	71.8	68.7
Impairment of contract costs	$ 0.0
Amortization term of direct loan amortization costs	1 year
Unamortized deferred costs related to loan origination	$ 47.1	40.6
Period beyond which interest and fee income accrue on credit card accounts	90 days
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
Card Services \| Cost of operations
Amounts recognized in the consolidated balance sheets:
Amortization of contract costs	$ 11.9	$ 9.8

REDEMPTION SETTLEMENT ASSETS

12 Months Ended

Dec. 31, 2019

REDEMPTION SETTLEMENT ASSETS

REDEMPTION SETTLEMENT ASSETS

10. REDEMPTION SETTLEMENT ASSETS

Redemption settlement assets consist of restricted cash and securities available-for-sale and are designated for settling redemptions by collectors of the AIR MILES Reward Program in Canada under certain contractual relationships with sponsors of the AIR MILES Reward Program. The principal components of redemption settlement assets, which are carried at fair value, are as follows:


	December 31, 2019								December 31, 2018
		Amortized	Unrealized		Unrealized					Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Restricted cash	$	39.3	$	—	$	—	$	39.3	$	43.9	$	—	$	—	$	43.9
Mutual funds		25.1		—		—		25.1		23.2		—		—		23.2
Corporate bonds		536.0		2.4		(2.0)		536.4		497.5		0.1		(6.1)		491.5
Total	$	600.4	$	2.4	$	(2.0)	$	600.8	$	564.6	$	0.1	$	(6.1)	$	558.6

The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of December 31, 2019 and 2018, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:


	December 31, 2019
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	166.6	$	(1.3)	$	155.1	$	(0.7)	$	321.7	$	(2.0)
Total	$	166.6	$	(1.3)	$	155.1	$	(0.7)	$	321.7	$	(2.0)


	December 31, 2018
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	31.2	$	(0.1)	$	414.4	$	(6.0)	$	445.6	$	(6.1)
Total	$	31.2	$	(0.1)	$	414.4	$	(6.0)	$	445.6	$	(6.1)

The amortized cost and estimated fair value of the securities at December 31, 2019 by contractual maturity are as follows:


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	129.5	$	129.4
Due after one year through five years		427.8		428.2
Due after five year through ten years		3.8		3.9
Total	$	561.1	$	561.5

Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the security’s issuer, and the Company’s intent to sell the security and whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. The Company typically invests in highly-rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity. As of December 31, 2019, the Company does not consider the investments to be other-than-temporarily impaired.

For the years ended December 31, 2019, 2018, and 2017, realized gains and losses from the sale of investment securities were de minimis.

PARENT-ONLY FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

PARENT-ONLY FINANCIAL STATEMENTS

Schedule of balance sheets


	December 31,
	2019		2018
	(in millions)
Assets:
Cash and cash equivalents	$	0.2	$	0.1
Investment in subsidiaries		5,326.2		8,606.0
Other assets		3.4		20.1
Total assets	$	5,329.8	$	8,626.2
Liabilities:
Current portion of long-term and other debt	$	101.4	$	114.4
Long-term and other debt		2,748.5		5,427.7
Intercompany liabilities		806.7		395.9
Other liabilities		84.9		356.1
Total liabilities		3,741.5		6,294.1
Stockholders’ equity		1,588.3		2,332.1
Total liabilities and stockholders’ equity	$	5,329.8	$	8,626.2

Schedule of statements of income

Statements of Income


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Interest from loans to subsidiaries	$	19.2	$	17.9	$	13.8
Dividends from subsidiaries		922.6		810.1		360.6
Total revenue		941.8		828.0		374.4
Loss on extinguishment of debt		71.9		—		—
Interest expense, net		130.0		281.2		278.9
Other expenses, net		(0.7)		(0.4)		12.9
Total expenses		201.2		280.8		291.8
Income before income taxes and equity in undistributed net income of subsidiaries		740.6		547.2		82.6
Benefit for income taxes		42.1		7.0		322.7
Income before equity in undistributed net (loss) income of subsidiaries		782.7		554.2		405.3
Equity in undistributed net (loss) income of subsidiaries⁽¹⁾		(504.7)		408.9		383.4
Net income	$	278.0	$	963.1	$	788.7

(1)	Includes $252.1 million after-tax loss on sale of Epsilon.

Schedule of statements of comprehensive income

Statements of Comprehensive Income


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net income	$	278.0	$	963.1	$	788.7
Other comprehensive income (loss), net of tax		4.9		29.6		(46.1)
Total comprehensive income, net of tax	$	282.9	$	992.7	$	742.6

Schedule of statements of cash flows

Statements of Cash Flows


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Net cash (used in) provided by operating activities	$	(1,029.1)	$	82.3	$	72.3
Investing activities:
Investment in subsidiaries		(135.0)		—		(164.0)
Proceeds from sale of business		4,118.3		—		—
Dividends received		922.6		810.1		360.6
Net cash provided by investing activities		4,905.9		810.1		196.6
Financing activities:
Borrowings under debt agreements		3,083.0		4,527.0		7,673.6
Repayments of borrowings		(5,778.2)		(4,838.3)		(7,232.4)
Payment of debt extinguishment costs		(46.1)		—		—
Payment of deferred financing costs		(20.7)		(4.6)		(33.7)
Purchase of treasury shares		(976.1)		(443.2)		(553.7)
Dividends paid		(127.4)		(125.2)		(115.5)
Proceeds from issuance of common stock		12.4		17.6		18.4
Other		(23.6)		(25.7)		(25.6)
Net cash used in financing activities		(3,876.7)		(892.4)		(268.9)
Change in cash, cash equivalents and restricted cash		0.1		—		—
Cash, cash equivalents and restricted cash at beginning of year		0.1		0.1		0.1
Cash, cash equivalents and restricted cash at end of year	$	0.2	$	0.1	$	0.1

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

19. STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

During the years ended December 31, 2019, 2018 and 2017, the Company repurchased approximately 6.3 million, 2.2 million and 2.3 million shares of its common stock, respectively, for an aggregate amount of $976.1 million, $443.2 million and $553.7 million, respectively.

2017 Authorization

In January 2017, the Company’s Board of Directors authorized a stock repurchase program to acquire up to $500.0 million of the Company’s outstanding common stock from January 1, 2017 through December 31, 2017. In July 2017, the Company's Board of Directors authorized an increase to the stock repurchase program originally approved on January 1, 2017 to acquire an additional $500.0 million of the Company’s outstanding common stock through July 31, 2018, for a total stock repurchase authorization of up to $1.0 billion. At July 31, 2018, $280.3 million of this program expired unused.

2018 Authorization

On July 26, 2018, the Company’s Board of Directors authorized a new stock repurchase program to acquire up to $500.0 million of the Company’s outstanding common stock from August 1, 2018 through July 31, 2019.

For the year ended December 31, 2018, the Company acquired approximately 0.8 million shares of its common stock for $166.0 million under its previous stock repurchase program and acquired approximately 1.4 million shares of its common stock for $277.2 million under its current stock repurchase program.

For the six months ended June 30, 2019, the Company acquired a total of 1.3 million shares of its common stock for $222.8 million under its stock repurchase program. As of June 30, 2019, the Company did not have any amounts remaining under its authorized stock repurchase program.

2019 Authorization

In July 2019, the Company’s Board of Directors authorized a new stock repurchase program to acquire up to $1.1 billion of its outstanding common stock from July 5, 2019 through June 30, 2020.

On July 19, 2019, the Company commenced a “modified Dutch Auction” tender offer to acquire up to $750.0 million in aggregate purchase price of its issued and outstanding common stock at a price not greater than $162.00 nor less than $144.00 per share, to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions described in the Offer to Purchase dated July 19, 2019 and in the related Letter of Transmittal. The tender offer expired on August 15, 2019, and the Company repurchased 5,050,505 shares of its issued and outstanding common stock at a price of $148.50 per share, for an aggregate cost of approximately $750.0 million. Additionally, the Company incurred approximately $3.3 million of direct costs related to the repurchase, including $2.2 million in commissions, which have been recorded to treasury stock in the Company’s consolidated balance sheets.

As of December 31, 2019, the Company had $347.8 million remaining under its authorized stock repurchase program.

Stock Compensation Plans

The Company has adopted equity compensation plans to advance the interests of the Company by rewarding certain employees for their contributions to the financial success of the Company and thereby motivating them to continue to make such contributions in the future.

The 2010 Omnibus Incentive Plan became effective July 1, 2010 and reserved 3,000,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants who performed services for the Company or its affiliates, with only employees eligible to receive incentive stock options. The 2010 Omnibus Incentive Plan expired on June 30, 2015.

In March 2015, the Company’s Board of Directors adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”), which was subsequently approved by the Company’s stockholders on June 3, 2015. The 2015 Plan became effective July 1, 2015 and expires on June 30, 2020. The 2015 Plan reserves 5,100,000 shares of common stock for grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance share awards, cash incentive awards, deferred stock units, and other stock-based and cash-based awards to selected officers, employees, non-employee directors and consultants performing services for the Company or its affiliates, with only employees being eligible to receive incentive stock options.

On June 5, 2015, the Company registered 5,100,000 shares of its common stock for issuance in accordance with the 2015 Plan pursuant to a Registration Statement on Form S-8, File No. 333-204758.

Beginning February 15, 2017, the restricted stock unit award agreements under the 2015 Plan provide for dividend equivalent rights (“DERs”), which entitle holders of restricted stock units to the same dividend value per share as holders of common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested restricted stock units. DERs are paid only when the underlying shares vest.

Terms of all awards under the 2015 Plan are determined by the Board of Directors or the compensation committee of the Board of Directors or its designee at the time of award.

Stock Compensation Expense

Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period.

Stock-based compensation expense recognized in the Company’s consolidated statements of income for the years ended December 31, 2019, 2018 and 2017, is as follows:


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Cost of operations	$	16.5	$	23.3	$	18.8
General and administrative		8.6		21.1		22.5
Total	$	25.1	$	44.4	$	41.3

Effective April 12, 2019, the Company entered into a definitive agreement to sell its Epsilon segment to Publicis Groupe S.A. for $4.4 billion in cash, subject to certain specified adjustments. The agreement provided for certain unvested restricted stock units held by Epsilon employees to be modified, with original vesting conditions to be accelerated upon consummation of the sale of Epsilon. Additionally, the agreement provided for certain other awards held by Epsilon employees to be forfeited upon consummation of the sale of Epsilon, which occurred July 1, 2019. As a result, in April 2019 the Company recorded $19.4 million of incremental stock-based compensation expense in discontinued operations related to the modifications, net of forfeitures. Stock-based compensation expense included in

loss from discontinued operations totaled $29.7 million, $36.4 million and $33.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

The income tax benefits related to stock-based compensation expense for the years ended December 31, 2019, 2018 and 2017 were $3.6 million, $7.3 million and $5.4 million, respectively.

As the amount of stock-based compensation expense recognized is based on awards ultimately expected to vest, the amount recognized in the Company’s results of operations has been reduced for estimated forfeitures. In connection with the Company’s adoption of ASU 2016-09, the Company elected to continue to estimate forfeitures at each grant date, with forfeiture estimates to be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience, with a forfeiture rate of 5% for the years ended December 31, 2019, 2018 and 2017.

As of December 31, 2019, there was approximately $29.4 million of unrecognized expense, adjusted for estimated forfeitures, related to non-vested, stock-based equity awards granted to employees, which is expected to be recognized over a weighted average period of approximately 1.3 years.

Restricted Stock Unit Awards

During 2019, the Company awarded service-based, performance-based and market-based restricted stock units. In accordance with ASC 718, the Company recognizes the estimated stock-based compensation expense, net of estimated forfeitures, over the applicable service period.

For service-based and performance-based awards, the fair value of the restricted stock units was estimated using the Company’s closing share price on the date of grant. Service-based restricted stock unit awards typically vest ratably over a three year period. Performance-based restricted stock unit awards typically vest ratably over a three year period if specified performance measures tied to the Company’s financial performance are met.

For the market-based award granted in 2019, the fair value of the restricted stock units was estimated utilizing Monte Carlo simulations of the Company’s stock price correlation (0.55), expected volatility (29.2%) and risk-free rate (2.5%) over two-year time horizons matching the performance period. Upon determination of the market condition, the restrictions will lapse with respect to the entire award on February 15, 2021, provided that the participant is employed by the Company on such vesting date.

The following table summarizes restricted stock unit activity under the Company’s equity compensation plans:


					Weighted
	Market-	Performance-	Service-		Average
	Based ⁽¹⁾	Based ⁽¹⁾	Based	Total	Fair Value
Balance at January 1, 2017	—	444,319	332,378	776,697	$	216.89
Shares granted	28,172	282,311	126,051	436,534		229.37
Shares vested	—	(188,929)	(96,723)	(285,652)		248.70
Shares forfeited	—	(87,122)	(32,647)	(119,769)		211.69
Balance at December 31, 2017	28,172	450,579	329,059	807,810	$	207.45
Shares granted	28,057	263,542	138,160	429,759		233.98
Shares vested	—	(188,680)	(130,823)	(319,503)		224.62
Shares forfeited	—	(102,199)	(18,955)	(121,154)		227.66
Balance at December 31, 2018	56,229	423,242	317,441	796,912	$	218.81
Shares granted	37,878	420,239	246,118	704,235		161.05
Shares vested	—	(262,773)	(178,730)	(441,503)		218.45
Shares forfeited	(69,819)	(350,436)	(126,257)	(546,512)		188.40
Balance at December 31, 2019	24,288	230,272	258,572	513,132	$	172.06
Outstanding and Expected to Vest				271,685	$	200.63

(1)	Shares granted reflects a 100% target attainment of the respective market-based or performance-based metric. Shares forfeited include those restricted stock units forfeited as a result of the Company not meeting the respective market-based or performance-based metric conditions.

The total fair value of restricted stock units vested was $96.4 million, $71.8 million and $71.0 million for the years ended December 31, 2019, 2018 and 2017, respectively. The aggregate intrinsic value of restricted stock units outstanding and expected to vest was $30.5 million at December 31, 2019. The weighted-average remaining contractual life for unvested restricted stock units was 1.3 years at December 31, 2019.

Stock Options

Stock option awards are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. Options typically vest ratably over three years and expire ten years after the date of grant. There were no stock options outstanding as of December 31, 2019.

The following table summarizes stock option activity under the Company’s equity compensation plans:


	Outstanding			Exercisable
		Weighted			Weighted
		Average			Average
	Options	Exercise Price		Options	Exercise Price
Balance at January 1, 2017	18,866	$	37.60	18,864	$	37.60
Options granted	—		—
Options exercised	(7,004)		60.85
Options forfeited	(3)		35.56
Balance at December 31, 2017	11,859	$	23.87	11,859	$	23.87
Options granted	—		—
Options exercised	(886)		12.70
Options forfeited	(119)		2.74
Balance at December 31, 2018	10,854	$	25.01	10,854	$	25.01
Options granted	—		—
Options exercised	(10,854)		25.01
Options forfeited	—		—
Balance at December 31, 2019	—	$	—	—	$	—

Based on the market value on their respective exercise dates, the total intrinsic value of stock options exercised was approximately $1.3 million, $0.2 million and $1.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company received $0.3 million of cash proceeds from stock options exercised during the year ended December 31, 2019.

Dividends

During the year ended December 31, 2019, the Company declared quarterly cash dividends of $0.63 per share, for a total of $127.1 million. The Company paid cash dividends and dividend equivalents aggregating $127.4 million for the year ended December 31, 2019, and $1.2 million of dividend equivalents were accrued but not yet paid at December 31, 2019.

During the year ended December 31, 2018, the Company declared quarterly cash dividends of $0.57 per share, for a total of $125.9 million. The Company paid cash dividends and dividend equivalents aggregating $125.2 million for the year ended December 31, 2018, and $0.7 million of dividend equivalents were accrued but not yet paid at December 31, 2018.

During the year ended December 31, 2017, the Company declared quarterly cash dividends of $0.52 per share, for a total of $116.4 million. The Company paid cash dividends and dividend equivalents aggregating $115.5 million for the year ended December 31, 2017, and $0.9 million of dividend equivalents were accrued but not yet paid at December 31, 2017.

On January 30, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $0.63 per share on the Company’s common stock, payable on March 19, 2020 to stockholders of record at the close of business on February 14, 2020.

Preferred Stock

In April 2019, the Company’s Board of Directors designated 300,000 shares of its authorized and unissued preferred stock as Series A Non-Voting Convertible Preferred Stock and the Company filed with the Delaware Secretary of State a Certificate of Designations of Series A Non-Voting Convertible Preferred Stock to create the new Series A Non-Voting Convertible Preferred Stock, authorized 300,000 shares and designated the preferences, rights and limitations of the Series A Non-Voting Convertible Preferred Stock. Each share of preferred stock will initially be convertible into ten shares of common stock (subject to adjustment and the other terms described in the Certificate of Designations) at the holder’s election or upon the Company’s written request, provided that upon such conversion the holder, together with its affiliates, will not own or control in the aggregate more than 9.9% of the Company’s outstanding common stock (or any class of the Company’s voting securities). Shares of preferred stock will also be subject to automatic conversion if a holder transfers such shares pursuant to a transfer (a) to the Company, (b) in a widespread public distribution of common stock or preferred stock, (c) in which no one transferee (or group of associated transferees) would receive 2% or more of any class of the Company’s voting securities then outstanding (including pursuant to a related series of such transfers), or (d) to a transferee that would control more than 50% of the Company voting securities (not including voting securities such person is acquiring from the transferor). Upon such a transaction, the transferred shares of preferred stock will automatically be converted into shares of common stock on a ten-for-one basis (subject to adjustment as described in the Certificate of Designations).

The shares of preferred stock have no voting rights, except as otherwise required by the General Corporation Law of the State of Delaware. The preferred stock will, with respect to rights upon liquidation, winding up and dissolution, rank (i) subordinate and junior in right of payment to all other securities of the Company that, by their respective terms, are senior to the preferred stock, and (ii) pari passu with the common stock.

On April 25, 2019, the Company entered into an exchange agreement with ValueAct Holdings, L.P. (“ValueAct”) pursuant to which ValueAct exchanged an aggregate of 1,500,000 shares of the Company’s common stock for an aggregate of 150,000 shares of preferred stock. The issuance to ValueAct of the shares of preferred stock was, and the

issuance of the shares of common stock issuable upon conversion of the preferred stock was, made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

In October 2019, ValueAct exchanged all 150,000 shares of preferred stock back to common stock. At December 31, 2019, the Company did not have any shares of preferred stock outstanding.

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 278.0	$ 963.1	$ 788.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	249.3	487.3	497.6
Deferred income taxes	(186.1)	16.3	(113.8)
Provision for loan loss	1,187.5	1,016.0	1,140.1
Non-cash stock compensation	54.8	80.8	75.1
Amortization of deferred financing costs	43.4	47.3	44.0
Gain on sale of business	(512.2)
Loss on extinguishment of debt	71.9
Asset impairment charges	52.0
Change in other operating assets and liabilities, net of sale of business:
Change in deferred revenue	2.9	(17.5)	(27.0)
Change in accounts receivable	4.1	(93.0)	(10.3)
Change in accounts payable and accrued expenses	(255.0)	(93.7)	167.4
Change in other assets	(46.8)	(29.8)	(20.9)
Change in other liabilities	32.9	49.8	(24.9)
Originations of credit card and loan receivables held for sale		(4,799.0)	(8,709.4)
Sales of credit card and loan receivables held for sale		4,928.8	8,651.9
Other	241.0	198.5	140.6
Net cash provided by operating activities	1,217.7	2,754.9	2,599.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in redemption settlement assets	(9.5)	(42.2)	(231.3)
Change in credit card and loan receivables	(2,586.8)	(2,749.6)	(3,600.2)
Proceeds from sale of business	4,409.7
Purchase of credit card portfolios	(924.8)
Proceeds from sale of credit card portfolios	2,061.8	1,153.5	797.7
Proceeds from sale of real estate	15.1
Payments for acquired businesses, net of cash	(6.7)		(945.6)
Capital expenditures	(142.3)	(199.8)	(225.4)
Purchases of other investments	(20.2)	(89.5)	(101.4)
Maturities/sales of other investments	60.0	47.4	42.5
Other	4.5	8.2	(4.4)
Net cash provided by (used in) investing activities	2,860.8	(1,872.0)	(4,268.1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under debt agreements	3,111.3	4,575.3	7,696.7
Repayments of borrowings	(5,981.8)	(4,893.0)	(7,341.4)
Non-recourse borrowings of consolidated securitization entities	4,851.8	3,714.6	5,172.5
Repayments/maturities of non-recourse borrowings of consolidated securitization entities	(5,219.0)	(4,871.0)	(3,320.3)
Net increase in deposits	355.6	864.1	2,543.2
Payment of debt extinguishment costs	(46.1)
Payment of deferred financing costs	(45.4)	(25.8)	(65.7)
Proceeds from issuance of common stock	12.4	17.6	18.4
Dividends paid	(127.4)	(125.2)	(115.5)
Purchase of treasury shares	(976.1)	(443.2)	(553.7)
Other	(27.0)	(31.3)	(29.3)
Net cash (used in) provided by financing activities	(4,091.7)	(1,217.9)	4,004.9
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3.6	(12.0)	10.3
Change in cash, cash equivalents and restricted cash	(9.6)	(347.0)	2,346.2
Cash, cash equivalents and restricted cash at beginning of year	3,967.7	4,314.7	1,968.5
Cash, cash equivalents and restricted cash at end of year	3,958.1	3,967.7	4,314.7
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	671.9	719.8	551.4
Income taxes paid, net	$ 1,070.6	$ 234.0	$ 344.1

FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Assets disclosed at fair value
Marketable securities	$ 259.8	$ 266.4
U.S. Treasury bonds		24.9
Total assets measured at fair value	19,562.2	19,468.2
Liabilities disclosed at fair value
Total liabilities measured at fair value	22,516.0	25,150.9
Level 2
Liabilities disclosed at fair value
Total liabilities measured at fair value	22,516.0	25,150.9
Level 3
Assets disclosed at fair value
Total assets measured at fair value	19,562.2	19,468.2
Recurring
Assets disclosed at fair value
Mutual funds	25.1	23.2
Corporate bonds	536.4	491.5
Marketable securities	259.8	266.4
U.S. Treasury bonds		24.9
Derivative instruments	0.2	3.8
Total assets measured at fair value	821.5	809.8
Liabilities disclosed at fair value
Derivative instruments	0.3	0.3
Total liabilities measured at fair value	0.3	0.3
Recurring \| Level 1
Assets disclosed at fair value
Mutual funds	25.1	23.2
Marketable securities	26.2	25.0
U.S. Treasury bonds		24.9
Total assets measured at fair value	51.3	73.1
Recurring \| Level 2
Assets disclosed at fair value
Corporate bonds	536.4	491.5
Marketable securities	233.6	241.4
Derivative instruments	0.2	3.8
Total assets measured at fair value	770.2	736.7
Liabilities disclosed at fair value
Derivative instruments	0.3	0.3
Total liabilities measured at fair value	$ 0.3	$ 0.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation—The accompanying consolidated financial statements include the accounts of ADSC and all subsidiaries in which the Company has a controlling financial interest. Controlling financial interest is determined by a majority ownership interest and the absence of substantive third party participating rights. All intercompany transactions have been eliminated.

In accordance with Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing,” and ASC 810, “Consolidation,” the Company is the primary beneficiary of World Financial Network Credit Card Master Trust (“Master Trust”), World Financial Network Credit Card Master Note Trust (“Master Trust I”) and World Financial Network Credit Card Master Trust III (“Master Trust III”) (collectively, the “WFN Trusts”), and World Financial Capital Master Note Trust (the “WFC Trust”). The Company is deemed to be the primary beneficiary for the WFN Trusts and the WFC Trust, as it is the servicer for each of the trusts and is a holder of the residual interest. The Company, through its involvement in the activities of these trusts, has the power to direct the activities that most significantly impact the economic performance of such trusts, and the obligation (or right) to absorb losses (or receive benefits) of the trusts that could potentially be significant. As such, the Company consolidates these trusts in its consolidated financial statements.

For investments in any entities in which the Company owns 50% or less of the outstanding voting stock but in which the Company has significant influence over operating and financial decisions, the Company applies the equity method of accounting. In cases where the Company's equity investment is less than 20% and significant influence does not exist, such investments are carried at cost.

Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts Receivable, net—Accounts receivable, net consist primarily of amounts receivable from customers, which are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company analyzes the appropriateness of its allowance for doubtful accounts based on its assessment of various factors, including historical experience, the age of the accounts receivable balance, customer creditworthiness, current economic trends, and changes in its customer payment terms and collection trends. Account balances are charged-off against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote.

Credit Card and Loan Receivables— Credit card and loan receivables consist of credit card and loan receivables held for investment. The Company sells a majority of the credit card receivables originated by Comenity Bank to WFN Credit Company, LLC, which in turn sells them to the WFN Trusts as part of a securitization program. The Company also sells certain of its credit card receivables originated by Comenity Capital Bank to World Financial Capital Credit Company, LLC, which in turn sells them to the WFC Trust. The credit card receivables sold to each of the trusts are restricted for securitization investors. All new originations of credit card and loan receivables are deemed to be held for investment at origination because management has the intent and ability to hold them for the foreseeable future. In determining what constitutes the foreseeable future, management considers the short average life and homogenous nature of the Company’s credit card and loan receivables. In assessing whether these credit card and loan receivables continue to be held for investment, management also considers capital levels and scheduled maturities of funding instruments used. Management believes that the assertion regarding its intent and ability to hold credit card and loan receivables for the foreseeable future can be made with a high degree of certainty given the maturity distribution of the Company’s money market deposits, certificates of deposit and other funding instruments; the historic ability to replace maturing certificates of deposits and other borrowings with new deposits or borrowings; and historic credit card payment activity. Due to the homogenous nature of the Company’s credit card and loan receivables, amounts are classified as held for investment on an individual client portfolio basis.

Credit Card and Loan Receivables Held for Sale—Credit card and loan receivables held for sale are determined on an individual client portfolio basis. The Company carries these assets at the lower of aggregate cost or fair value. The fair value of the credit card and loan receivables held for sale is determined on an aggregate homogeneous portfolio basis. The Company continues to recognize finance fees on these credit card and loan receivables on the accrual basis. Cash flows associated with credit card portfolios that are purchased with the intent to sell are included in cash flows from operating activities. Cash flows associated with credit card and loan receivables originated or purchased for investment are classified as investing cash flows, regardless of a subsequent change in intent.

Transfers of Financial Assets—The Company accounts for transfers of financial assets under ASC 860, “Transfers and Servicing,” as either sales or financings. Transfers of financial assets that result in sales accounting are those in which (1) the transfer legally isolates the transferred assets from the transferor, (2) the transferee has the right to pledge or exchange the transferred assets and no condition both constrains the transferee’s right to pledge or exchange the assets and provides more than a trivial benefit to the transferor and (3) the transferor does not maintain effective control over the transferred assets. If the transfer of financial assets does not meet these criteria, the transfer is accounted for as a financing. Transfers of financial assets that are treated as sales are removed from the Company’s accounts with any realized gain or loss reflected in income during the period of sale.

Allowance for Loan Loss—The Company maintains an allowance for loan loss at a level that is appropriate to absorb probable losses inherent in credit card and loan receivables. The estimate of the allowance for loan loss covers uncollectible principal as well as unpaid interest and fees. The allowance for loan loss is evaluated monthly for appropriateness.

In estimating the allowance for principal loan losses, management utilizes a migration analysis of delinquent and current credit card and loan receivables. Migration analysis is a technique used to estimate the likelihood that a credit card or loan receivable will progress through the various stages of delinquency and to charge-off. The allowance is maintained through an adjustment to the provision for loan loss. Charge-offs of principal amounts, net of recoveries are deducted from the allowance.

In estimating the allowance for uncollectible unpaid interest and fees, the Company utilizes historical charge-off trends, analyzing actual charge-offs for the prior three months. The allowance is maintained through an adjustment to finance charges, net.

In evaluating the allowance for loan loss for both principal and unpaid interest and fees, management also considers factors that may impact loan loss experience, including seasoning and growth, account collection strategies, economic conditions, bankruptcy filings, policy changes, payment rates and forecasting uncertainties.

Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, “Measurement of Credit Losses on Financial Instruments.” For additional information regarding the impact of the new standard, see “Recently Issued Accounting Standards” below.

Inventories, net—Inventories, net are stated at the lower of cost and net realizable value and valued primarily on a first-in-first-out basis. The Company records valuation adjustments to its inventories if the cost of inventory exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future market conditions and an analysis of historical experience.

Redemption Settlement Assets, Restricted—The cash and investments related to the redemption fund for the AIR MILES Reward Program are subject to a security interest which is held in trust for the benefit of funding redemptions by collectors. These assets are restricted to funding rewards for the collectors by certain of the Company’s sponsor contracts. Investments in equity securities are stated at fair value, with holding gains and losses recognized through net income. Investments in debt securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income (loss), as the investments are classified as available-for-sale.

Property and Equipment—Furniture, equipment, computer software and development, buildings and leasehold improvements are carried at cost, less accumulated depreciation and amortization. Land is carried at cost and is not depreciated. Depreciation and amortization for furniture, equipment and buildings are computed on a straight-line basis, using estimated lives ranging from one to twenty-one years. Software development is capitalized in accordance with ASC 350-40, “Intangibles – Goodwill and Other – Internal–Use Software,” and is amortized on a straight-line basis over the expected benefit period, which ranges from one to seven years. Leasehold improvements are amortized over the remaining lives of the respective leases or the remaining useful lives of the improvements, whichever is shorter. Long-lived assets are tested for impairment when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows.

Goodwill and Other Intangible Assets—Goodwill and indefinite lived intangible assets are not amortized, but are reviewed at least annually for impairment or more frequently if circumstances indicate that an impairment is probable, using qualitative or quantitative analysis. Separable intangible assets that have finite useful lives are amortized over their respective useful lives.

Income Taxes— Income tax returns are filed in federal, state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions.

Deferred income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain deferred tax assets when realization is less than more likely than not.

Liabilities are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may be established for uncertain tax positions when, in our judgement, the more-likely-than-not threshold is met, but the position does not rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of income tax expense.

Derivative Instruments—The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or other speculative purposes. Certain derivatives used to manage

the Company’s exposure to foreign currency exchange rate movements are not designated as hedges and do not qualify for hedge accounting.

Derivatives Designated as Hedging Instruments—The Company assesses both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in the hedging transaction, including net investment hedges, have been highly effective in offsetting changes in the cash flows or remeasurement of the hedged items and whether the derivatives may be expected to remain highly effective in future periods.

The Company discontinues hedge accounting prospectively when (1) it determines that the derivative is no longer highly effective in offsetting changes in cash flow of the hedged item; (2) the derivative expires or is sold, terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) it determines that designating the derivative as a hedging instrument is no longer appropriate.

Changes in the fair value of derivative instruments designated as hedging instruments, excluding any ineffective portion, are recorded in other comprehensive income (loss) until the hedged transactions affect net income. The ineffective portion of this hedging instrument is recognized through net income when the ineffectiveness occurs.

Derivatives not Designated as Hedging Instruments—Certain foreign currency exchange forward contracts are not designated as hedges as they do not meet the specific hedge accounting requirements of ASC 815, “Derivatives and Hedging.” Changes in the fair value of the derivative instruments not designated as hedging instruments are recorded in the consolidated statements of income as they occur.

Net Investment Hedges—The Company used Euro-denominated debt to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the foreign currency gains and losses related to the Euro-denominated debt is reported in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets. The gains or losses will be subsequently reclassified into net income when the hedged net investment is either sold or substantially liquidated.

Other Investments—Other investments consist of marketable securities and U.S. Treasury bonds and are included in other current assets and other non-current assets in the Company’s consolidated balance sheets. Investments in equity securities are stated at fair value, with holding gains and losses recognized through net income. Investments in debt securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive income (loss), as the investments are classified as available-for-sale.

Revenue Recognition—Effective January 1, 2018, the Company adopted ASC 606, “Revenue from Contracts with Customers,” applying the modified retrospective method to those contracts that were not completed as of January 1, 2018. The Company recognizes revenues when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In that determination, under ASC 606, the Company follows a five-step model that includes: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied.

Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605. ASC 606 does not apply to financial instruments and other contractual rights or obligations.

See Note 3, “Revenue,” for more information about the Company’s revenue and the associated timing and basis of revenue recognition.

Earnings Per Share—Basic earnings per share is based only on the weighted average number of common shares outstanding, excluding any dilutive effects of options or other dilutive securities. Diluted earnings per share is based on the weighted average number of common and potentially dilutive common shares (dilutive stock options, unvested

restricted stock units and other dilutive securities outstanding during the year), pursuant to the treasury stock method. For periods with participating securities, the Company computes earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders.

Currency Translation—The assets and liabilities of the Company’s subsidiaries outside the U.S. are translated into U.S. dollars at the rates of exchange in effect at the balance sheet dates, primarily from Canadian dollars and Euros. Income and expense items are translated at the average exchange rates prevailing during the period. Gains and losses resulting from currency transactions are recognized currently in income and those resulting from translation of financial statements are included in accumulated other comprehensive income (loss). The Company recognized net foreign transaction gains of $1.3 million for the year ended December 31, 2019, gains of $0.6 million for the year ended December 31, 2018, and losses of $9.1 million for the year ended December 31, 2017.

Leases —The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. As the implicit rate is typically not readily determinable in the Company’s lease agreements, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and nonlease components as a single lease component for its identified asset classes. As of December 31, 2019, the Company does not have any finance leases.

Marketing and Advertising Costs—The Company participates in various marketing and advertising programs, including collaborative arrangements with certain clients. The cost of marketing and advertising programs is expensed in the period incurred. The Company has recognized marketing and advertising expenses, including on behalf of its clients, of $229.4 million, $244.5 million and $236.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Stock Compensation Expense—The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period.

Management Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the current expected credit loss model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio. ASU 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance. In addition, ASU 2016-13 modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted beginning after December 15, 2018. The Company formed a cross-functional implementation team to oversee the implementation of the standard, developed loss forecasting models and processes to satisfy the requirements of ASU 2016-13. The Company adopted the standard effective January 1, 2020. Management expects an increase in the allowance for loan loss at adoption of $644.0 million,

which will be recorded through a cumulative-effect adjustment to retained earnings, net of taxes. The scope of this standard also impacts the Company’s accounts receivable and available-for-sale debt securities, for which the Company’s adoption did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements from Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement.” ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The effect of the adoption of ASU 2018-13 will be a change to the disclosure requirements for certain fair value measurements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. ASU 2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The amendments in ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect the adoption of ASU 2018-15 to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is evaluating the impact that adoption of ASU 2019-12 will have on its consolidated financial statements.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, “Leases,” ASC 842, that replaced previous lease guidance and required lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Companies continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statements of income. Companies were permitted to adopt ASC 842 using a modified retrospective approach or transition relief provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” that removed certain comparative period requirements and required a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard on January 1, 2019 using the transition relief provided by ASU 2018-11.

During 2018, the Company completed its evaluation of ASC 842, including the impact on its policies, processes, systems and controls. As a result, the Company identified changes to and modified certain of its accounting policies and practices, including the implementation of new lease accounting software. Although there were no significant changes to the Company’s accounting systems or controls upon adoption of ASC 842, the Company modified certain of its existing controls and added new controls to incorporate the revisions made to its accounting policies and practices.

The Company elected the transition practical expedients permitted under ASC 842-10-65-1 under which it was not required to reassess (i) whether expired or existing contracts were or contained leases as defined by ASC 842, (ii) the classification of such leases, and (iii) whether previously capitalized initial direct costs qualified for capitalization under ASC 842. The Company also elected the practical expedient to use hindsight in determining the lease term. Additionally, the Company made the accounting policy election to account for lease and nonlease components as a single lease component for its identified asset classes.

The cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of ASC 842 established operating lease liabilities of approximately $324.5 million and corresponding right-of-use assets of approximately $269.9 million, based upon the operating lease liabilities adjusted for deferred rent and lease incentives,

which resulted in the reclassification of approximately $54.6 million in liabilities to the right-of-use asset. There was no cumulative-effect adjustment to retained earnings as a result of the adoption of ASC 842.

Additionally, the cumulative effect of the changes made to the consolidated January 1, 2019 balance sheet for the adoption of ASC 842 for the Epsilon segment, presented as a discontinued operation for the periods presented, established operating lease liabilities of approximately $208.7 million and corresponding right-of-use assets of approximately $181.1 million, based upon the operating lease liabilities adjusted for prepaid and deferred rent, unamortized initial direct costs, and lease incentives, which resulted in the reclassification of approximately $30.5 million in liabilities and $2.9 million in assets to the right-of-use asset. As part of the adoption of ASC 842, capital leases were recognized as finance leases at their existing carrying amounts effective January 1, 2019, and the accounting remained substantially unchanged, with capital lease assets totaling $13.0 million and capital lease liabilities totaling $12.6 million.

The Company’s adoption of ASC 842 had no significant impact to our consolidated statements of income or consolidated statements of cash flows. Based on the evaluation of ASC 842, the Company does not expect it to have a material impact on its results of operations or cash flows in the periods after adoption.

ASC 842 also requires expanded qualitative and quantitative disclosure regarding the Company’s leasing activities. See Note 11, “Leases,” for the Company’s ASC 842 disclosures.

In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” ASU 2017-12 expanded and refined the hedge accounting model for both financial and non-financial risk components, aligned the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and made certain targeted improvements to simplify the application of hedge accounting guidance related to the assessment of hedge effectiveness. The Company’s adoption of this standard on January 1, 2019 did not have a material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allowed for reclassification of stranded tax effects on items resulting from the change in the corporate tax rate as a result of H.R. 1, originally known as the Tax Cuts and Jobs Act of 2017, from accumulated other comprehensive income to retained earnings. Tax effects unrelated to H.R. 1 were permitted to be released from accumulated other comprehensive income using either the specific identification approach or the portfolio approach, based on the nature of the underlying item. The Company adopted this standard on January 1, 2019 using the portfolio approach and did not reclassify the stranded tax effects to retained earnings as these amounts did not have a material impact on its consolidated financial statements.

FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

FINANCIAL INSTRUMENTS

Schedule of estimated fair value of Company's financial instruments


	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in millions)
Financial assets
Credit card and loan receivables, net	$	18,292.0	$	19,126.0	$	16,816.7	$	17,472.7
Credit card receivables held for sale		408.0		436.2		1,951.6		1,995.5
Redemption settlement assets, restricted		600.8		600.8		558.6		558.6
Other investments		259.8		259.8		291.3		291.3
Derivative instruments		0.2		0.2		3.8		3.8
Financial liabilities
Derivative instruments		0.3		0.3		0.3		0.3
Deposits		12,151.7		12,303.6		11,793.7		11,768.7
Non-recourse borrowings of consolidated securitization entities		7,284.0		7,333.6		7,651.7		7,626.9
Long-term and other debt		2,849.9		2,878.8		5,725.4		5,755.3

Schedule of assets and liabilities carried at fair value measured on recurring basis


			Fair Value Measurements at
			December 31, 2019 Using
	Balance at
	December 31,
	2019		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	25.1	$	25.1	$	—	$	—
Corporate bonds ⁽¹⁾		536.4		—		536.4		—
Marketable securities ⁽²⁾		259.8		26.2		233.6		—
Derivative instruments ⁽³⁾		0.2		—		0.2		—
Total assets measured at fair value	$	821.5	$	51.3	$	770.2	$	—

Derivative instruments ⁽³⁾	$	0.3	$	—	$	0.3	$	—
Total liabilities measured at fair value	$	0.3	$	—	$	0.3	$	—


			Fair Value Measurements at
			December 31, 2018 Using
	Balance at
	December 31,
	2018		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	23.2	$	23.2	$	—	$	—
Corporate bonds ⁽¹⁾		491.5		—		491.5		—
Marketable securities ⁽²⁾		266.4		25.0		241.4		—
U.S. Treasury bonds ⁽²⁾		24.9		24.9		—		—
Derivative instruments ⁽³⁾		3.8		—		3.8		—
Total assets measured at fair value	$	809.8	$	73.1	$	736.7	$	—

Derivative instruments ⁽³⁾	$	0.3	$	—	$	0.3	$	—
Total liabilities measured at fair value	$	0.3	$	—	$	0.3	$	—

(1)	Amounts are included in redemption settlement assets in the consolidated balance sheets.

(2)	Amounts are included in other current assets and other non-current assets in the consolidated balance sheets.

(3)	Amounts are included in other current assets and other current liabilities in the consolidated balance sheets.

Schedule of assets and liabilities disclosed but not carried at fair value


	Fair Value Measurements at
	December 31, 2019
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	19,126.0	$	—	$	—	$	19,126.0
Credit card receivables held for sale		436.2		—		—		436.2
Total	$	19,562.2	$	—	$	—	$	19,562.2

Financial liabilities:
Deposits	$	12,303.6	$	—	$	12,303.6	$	—
Non-recourse borrowings of consolidated securitization entities		7,333.6		—		7,333.6		—
Long-term and other debt		2,878.8		—		2,878.8		—
Total	$	22,516.0	$	—	$	22,516.0	$	—


	Fair Value Measurements at
	December 31, 2018
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	17,472.7	$	—	$	—	$	17,472.7
Credit card receivables held for sale		1,995.5		—		—		1,995.5
Total	$	19,468.2	$	—	$	—	$	19,468.2

Financial liabilities:
Deposits	$	11,768.7	$	—	$	11,768.7	$	—
Non-recourse borrowings of consolidated securitization entities		7,626.9		—		7,626.9		—
Long-term and other debt		5,755.3		—		5,755.3		—
Total	$	25,150.9	$	—	$	25,150.9	$	—

ACCRUED EXPENSES (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
ACCRUED EXPENSES
Accrued payroll and benefits	$ 133.4	$ 187.1
Accrued taxes	18.1	22.6
Accrued other liabilities	176.3	112.5
Accrued expenses	$ 327.8	$ 322.2

OTHER INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2019

OTHER INVESTMENTS

Schedule of principal components of other investments, which are carried at fair value


	December 31, 2019								December 31, 2018
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Marketable securities	$	257.2	$	3.0	$	(0.4)	$	259.8	$	272.8	$	0.1	$	(6.5)	$	266.4
U.S. Treasury bonds		—		—		—		—		25.0		—		(0.1)		24.9
Total	$	257.2	$	3.0	$	(0.4)	$	259.8	$	297.8	$	0.1	$	(6.6)	$	291.3


	December 31, 2019
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	18.8	$	(0.2)	$	13.1	$	(0.2)	$	31.9	$	(0.4)
Total	$	18.8	$	(0.2)	$	13.1	$	(0.2)	$	31.9	$	(0.4)


	December 31, 2018
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	57.3	$	(0.5)	$	164.0	$	(6.0)	$	221.3	$	(6.5)
U.S. Treasury bonds		—		—		24.9		(0.1)		24.9		(0.1)
Total	$	57.3	$	(0.5)	$	188.9	$	(6.1)	$	246.2	$	(6.6)

Schedule of securities by contractual maturity date

The amortized cost and estimated fair value of the marketable securities and U.S. Treasury bonds at December 31, 2019 by contractual maturity are as follows:


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	31.3	$	31.3
Due after one year through five years		1.7		1.7
Due after five years through ten years		—		—
Due after ten years		224.2		226.8
Total	$	257.2	$	259.8

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2019

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

20. EMPLOYEE BENEFIT PLANS

Employee Stock Purchase Plan

In March 2015, the Company’s Board of Directors adopted the 2015 Employee Stock Purchase Plan (the “2015 ESPP”), which was subsequently approved by the Company’s stockholders on June 3, 2015. The 2015 ESPP became effective July 1, 2015 with no definitive expiration date. The Company’s Board of Directors may at any time and for any reason terminate or amend the 2015 ESPP. No employee may purchase more than $25,000 in stock under the 2015 ESPP in any calendar year, and no employee may purchase stock under the 2015 ESPP if such purchase would cause the employee to own more than 5% of the voting power or value of the Company’s common stock. The 2015 ESPP provides for six month offering periods, commencing on the first trading day of the first and third calendar quarter of each year and ending on the last trading day of each subsequent calendar quarter. The purchase price of the common stock upon exercise shall be 85% of the fair market value of shares on the applicable purchase date as determined by averaging the high and low trading prices of the last trading day of the six-month period. An employee may elect to pay the purchase price of such common stock through payroll deductions. The 2015 ESPP provides for the issuance of any remaining shares available for issuance under the 2005 ESPP, which were 441,327 shares at June 30, 2015. The 2015 ESPP reserved an additional 1,000,000 shares of the Company’s common stock for issuance under the 2015 Plan, bringing the maximum number of shares reserved for issuance under the 2015 ESPP to 1,441,327 shares, subject to adjustment as provided in the 2015 ESPP.

On June 5, 2015, the Company registered 1,441,327 shares of its common stock for issuance in accordance with the 2015 ESPP pursuant to a Registration Statement on Form S-8, File No. 333-204759.

During the year ended December 31, 2019, the Company issued 107,167 shares of common stock under the 2015 ESPP at a weighted-average issue price of $113.17. Since its adoption on July 1, 2015, 448,682 shares of common stock have been issued, with 992,645 shares available for issuance under the 2015 ESPP.

2015 Omnibus Incentive Plan

The 2015 Omnibus Incentive Plan authorizes the compensation committee to grant cash-based and other equity-based or equity-related awards, including deferred stock units. The maximum cash amount that may be awarded to any single participant in any one calendar year may not exceed $7.5 million. See Note 19, “Stockholders’ Equity,” for more information about the 2015 Plan.

401(k) Retirement Savings Plan

The Alliance Data Systems 401(k) and Retirement Savings Plan is a defined contribution plan that is qualified under Section 401(k) of the Internal Revenue Code of 1986. The Company amended its 401(k) and Retirement Savings Plan effective January 1, 2019. The 401(k) and Retirement Savings Plan is an IRS-approved safe harbor plan design that eliminates the need for most discrimination testing. Eligible employees can participate in the 401(k) and Retirement Savings Plan immediately upon joining the Company and after 180 days of employment begin receiving company matching contributions. In addition, “seasonal” or “on-call” employees must complete a year of eligibility service before they may participate in the 401(k) and Retirement Savings Plan. The 401(k) and Retirement Savings Plan permits eligible employees to make Roth elective deferrals, which are included in the employee’s taxable income at the time of contribution, but not when distributed. Regular, or Non-Roth, elective deferrals made by employees, together with contributions by the Company to the 401(k) and Retirement Savings Plan, and income earned on these contributions, are not taxable to employees until withdrawn from the 401(k) and Retirement Savings Plan. The 401(k) and Retirement Savings Plan covers U.S. employees, who are at least 18 years old, of ADS Alliance Data Systems, Inc., one of the

Company’s wholly-owned subsidiaries, and any other subsidiary or affiliated organization that adopts this 401(k) and Retirement Savings Plan. Employees of the Company, and all of its U.S. subsidiaries, are currently covered under the 401(k) and Retirement Savings Plan.

The Company matches an employee’s contribution dollar-for-dollar up to five percent of the employee’s eligible compensation. All company matching contributions are immediately vested. Company matching contributions for the years ended December 31, 2019, 2018 and 2017 were $35.3 million, $44.8 million and $41.6 million, respectively.

The participants in the plan can direct their contributions and the Company’s matching contribution to numerous investment options, including the Company’s common stock. On July 20, 2001, the Company registered 1,500,000 shares of its common stock for issuance in accordance with its 401(k) and Retirement Savings Plan pursuant to a Registration Statement on Form S-8, File No. 333-65556. As of December 31, 2019, 462,101 of such shares remain available for issuance.

Group Retirement Savings Plan and Deferred Profit Sharing Plan (LoyaltyOne)

The Company provides for its Canadian employees the Group Retirement Savings Plan of the Loyalty Group (“GRSP”), which is a group retirement savings plan registered with the Canada Revenue Agency. Contributions made by Canadian employees on their behalf or on behalf of their spouse to the GRSP, and income earned on these contributions, are not taxable to employees until withdrawn from the GRSP. Employee contributions eligible for company match may not exceed the overall maximum allowed by the Income Tax Act (Canada); the maximum tax-deductible GRSP contribution is set by the Canada Revenue Agency each year. The Deferred Profit Sharing Plan (“DPSP”) is a legal trust registered with the Canada Revenue Agency. Eligible full-time employees can participate in the GRSP after three months of employment and eligible part-time employees after six months of employment. Employees become eligible to receive company matching contributions into the DPSP on the first day of the calendar quarter following twelve months of employment. Based on the eligibility guidelines, the Company matches an employee’s contribution dollar-for-dollar up to five percent of the employee’s eligible compensation. Contributions made to the DPSP reduce an employee’s maximum contribution amounts to the GRSP under the Income Tax Act (Canada) for the following year. All company matching contributions into the DPSP vest after receipt of one continuous year of DPSP contributions. LoyaltyOne matching and discretionary contributions were $1.8 million, $1.7 million and $1.9 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Executive Deferred Compensation Plan and the Canadian Supplemental Executive Retirement Plan

The Company also maintains an Executive Deferred Compensation Plan (“EDCP”). The EDCP permits a defined group of management and highly compensated employees to defer on a pre-tax basis a portion of their base salary and incentive compensation (as defined in the EDCP) payable for services rendered. Deferrals under the EDCP are unfunded and subject to the claims of the Company’s creditors. Each participant in the EDCP is 100% vested in their account, and account balances accrue interest at a rate established and adjusted periodically by the committee that administers the EDCP.

The Company provides a Canadian Supplemental Executive Retirement Plan for a defined group of management and highly compensated employees of LoyaltyOne, Co., one of the Company’s wholly-owned subsidiaries. Similar to the EDCP, participants may defer on a pre-tax basis a portion of their compensation and bonuses payable for services rendered and to receive certain employer contributions.

As of December 31, 2019 and 2018, the Company’s outstanding liability related to these plans and included in accrued expenses in the Company’s consolidated balance sheets was $33.3 million and $63.2 million, respectively.

INCOME TAXES - Operating Loss Carryforward (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Operating Loss, Carryforwards
Foreign net operating loss carryforwards	$ 216.3
Increase (decrease) in valuation allowance	(27.7)	$ 40.1	$ 31.7
Reconciliation of unrecognized tax benefits
Balance at the beginning of the period	296.3	208.3	192.0
Increases related to prior years' tax positions	2.7	41.3	9.3
Decreases related to prior years' tax positions	(76.6)	(9.6)	(15.7)
Increases related to current year tax positions	58.3	61.5	33.0
Settlements during the period	(0.6)	(1.0)	(6.7)
Lapses of applicable statutes of limitation	(5.8)	(4.2)	(3.6)
Balance at the end of the period	274.3	296.3	208.3
Cumulative interest and penalties with respect to unrecognized tax benefits	67.0	66.7	41.6
Potential interest and penalties with respect to unrecognized tax benefits	(0.8)	24.5	5.7
Unrecognized tax benefits, if recognized, would impact effective tax rate	255.1	247.7	170.0
Senior Notes Due 2022 and 2023
Operating Loss, Carryforwards
Income tax expenses (benefit) related to foreign rate changes	1.6	$ 9.5	$ (26.2)
Capital losses
Operating Loss, Carryforwards
Foreign net operating loss carryforwards	5.6
Federal
Operating Loss, Carryforwards
Net operating loss carryovers	20.1
Foreign
Operating Loss, Carryforwards
Tax credits	33.8
State
Operating Loss, Carryforwards
Net operating loss carryovers	175.4
Tax credits	$ 5.9

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2019

ACCUMULATED OTHER COMPREHENSIVE LOSS.

Schedule of changes in each component of accumulated comprehensive income (loss), net of tax effects


									Accumulated
	Net Unrealized		Net Unrealized		Net Unrealized		Foreign Currency		Other
	Gains (Losses) on		Gains (Losses) on		Gains (Losses) on		Translation		Comprehensive
	Securities		Cash Flow Hedges		Net Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance as of January 1, 2017	$	(1.6)	$	0.4	$	4.1	$	(153.6)	$	(150.7)
Changes in other comprehensive income (loss)		(7.1)		(0.5)		(46.1)		64.2		10.5
Balance at December 31, 2017	$	(8.7)	$	(0.1)	$	(42.0)	$	(89.4)	$	(140.2)
Changes in other comprehensive income (loss)		(2.0)		(0.1)		29.6		(25.4)		2.1
Balance at December 31, 2018	$	(10.7)	$	(0.2)	$	(12.4)	$	(114.8)	$	(138.1)
Changes in other comprehensive income (loss)		13.2		0.1		4.9		(6.8)		11.4
Recognition resulting from the sale of Epsilon's foreign subsidiaries		—		—		—		26.8		26.8
Balance at December 31, 2019	$	2.5	$	(0.1)	$	(7.5)	$	(94.8)	$	(99.9)

(1)

Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

18. COMMITMENTS AND CONTINGENCIES

AIR MILES Reward Program

The Company has entered into contractual arrangements with certain AIR MILES Reward Program sponsors that result in fees being billed to those sponsors upon the redemption of AIR MILES reward miles issued by those sponsors. The Company has obtained letters of credit and other assurances from those sponsors for the Company’s benefit that expire at various dates. These letters of credit and other assurances totaled $141.7 million at December 31, 2019, which exceeds the amount of the Company’s estimate of its obligation to provide travel and other rewards upon the redemption of the AIR MILES reward miles issued by those sponsors.

The Company currently has an obligation to provide AIR MILES Reward Program collectors with travel and other rewards upon the redemption of AIR MILES reward miles. The Company believes that the redemption settlement assets, including the letters of credit and other assurances mentioned above, are sufficient to meet that obligation.

The Company has entered into certain long-term arrangements with airlines and other suppliers in connection with reward redemptions under the AIR MILES Reward Program. These long-term arrangements allow the Company to retain preferred pricing subject to meeting agreed upon annual volume commitments for rewards purchased.

Regulatory Matters

Comenity Bank is regulated, supervised and examined by the State of Delaware and the Federal Deposit Insurance Corporation (“FDIC”). Comenity Bank remains subject to regulation by the Board of the Governors of the Federal Reserve System. The Company’s industrial bank, Comenity Capital Bank, is regulated, supervised and examined by the State of Utah and the FDIC. Both Comenity Bank and Comenity Capital Bank are under the supervision of the Consumer Financial Protection Bureau (“CFPB”), a federal consumer protection regulator with authority to make further changes to the federal consumer protection laws and regulations, and the CFPB may, from time to time, conduct reviews of their practices.

Quantitative measures established by regulations to ensure capital adequacy require Comenity Bank and Comenity Capital Bank (collectively, the “Banks”) to maintain minimum amounts and ratios of Common Equity Tier 1, Tier 1 and total capital to risk weighted assets and of Tier 1 capital to average assets. Based on these guidelines, the Banks are considered well capitalized.

The actual capital ratios and minimum ratios as of December 31, 2019 are as follows:


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets	12.9	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.6		4.5		6.5
Tier 1 capital to risk-weighted assets	14.6		6.0		8.0
Total capital to risk-weighted assets	15.9		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets	11.9	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.4		4.5		6.5
Tier 1 capital to risk-weighted assets	14.4		6.0		8.0
Total capital to risk-weighted assets	15.7		8.0		10.0

The actual capital ratios and minimum ratios as of December 31, 2018 are as follows:


					Minimum Ratio to be
			Minimum Ratio for		Well Capitalized under
	Actual		Capital Adequacy		Prompt Corrective
	Ratio		Purposes		Action Provisions
Comenity Bank
Tier 1 capital to average assets	13.1	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.6		4.5		6.5
Tier 1 capital to risk-weighted assets	14.6		6.0		8.0
Total capital to risk-weighted assets	15.9		8.0		10.0

Comenity Capital Bank
Tier 1 capital to average assets	12.1	%	4.0	%	5.0	%
Common Equity Tier 1 capital to risk-weighted assets	14.4		4.5		6.5
Tier 1 capital to risk-weighted assets	14.4		6.0		8.0
Total capital to risk-weighted assets	15.7		8.0		10.0

On September 10, 2019, Comenity Capital Bank submitted a bank merger application to the Federal Deposit Insurance Corporation (“FDIC”) seeking the FDIC’s approval to merge Comenity Bank with and into Comenity Capital Bank as the surviving bank entity. On the same date, Comenity Capital Bank and Comenity Bank each submitted counterpart bank merger applications to the Utah Department of Financial Institutions and the Delaware Office of the State Bank Commissioner, respectively, in connection with the proposed merger. The merger application remains subject to regulatory review and approval and no guarantee can be provided as to the outcome or timing of such review.

Cardholders

The Company’s Card Services segment is active in originating private label and co-brand credit cards in the United States. The Company reviews each potential customer’s credit application and evaluates the applicant’s financial history and ability and perceived willingness to repay. Credit card loans are made primarily on an unsecured basis. Cardholders reside throughout the United States and are not significantly concentrated in any one area.

Holders of credit cards issued by the Company have available lines of credit, which vary by cardholder. These lines of credit represent elements of risk in excess of the amount recognized in the financial statements. The lines of credit are subject to change or cancellation by the Company. At December 31, 2019, the Company had 61.0 million total accounts, including both active and inactive, having unused lines of credit averaging $2,307 per account.

Indemnification

On July 1, 2019, the Company completed the sale of its Epsilon segment to Publicis Groupe S.A. (“Publicis”). Under the terms of the agreement governing that transaction, the Company agreed to indemnify Publicis and its affiliates from and against any losses arising out of or related to a Department of Justice (“DOJ”) investigation. The DOJ investigation relates to third-party marketers who sent, or allegedly sent, deceptive mailings and the provision of data and services to those marketers by Epsilon’s data practice. Epsilon has actively cooperated with the DOJ in connection with its ongoing investigation. The Company records a loss contingency when a loss is probable and an amount can be reasonably estimated. For the year ended December 31, 2019, the Company recorded a loss contingency of $32.9 million, net of tax, which was included in loss from discontinued operations. As these estimates are initially developed substantially earlier than when the ultimate loss is known, no assurance can be given that the investigation will be resolved on these, or other, terms. Therefore, this loss contingency may be refined each period as additional information becomes available. For the year ended December 31, 2019, the Company incurred $3.2 million in legal fees associated with this matter, which was included in cost of operations in the Company’s consolidated statements of income.

Legal Proceedings

From time to time the Company is involved in various claims and lawsuits arising in the ordinary course of business that it believes will not have a material effect on its business, financial condition or cash flows, including claims and lawsuits alleging breaches of the Company’s contractual obligations.

COMMITMENTS AND CONTINGENCIES - Cardholders (Details) $ in Millions	Dec. 31, 2019 USD ($)
AIR MILES Reward Program
Letters of credit and other assurances	$ 141.7

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Deconsolidation related to sale of business	$ 26.8

REVENUE (Tables)

12 Months Ended

Dec. 31, 2019

REVENUE

Schedule of disaggregation of revenue by major source and geographic region


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	290.1	$	—	$	—	$	290.1
Short-term loyalty programs		635.5		—		—		635.5
Servicing fees, net		—		(180.7)		—		(180.7)
Other		94.9		—		0.4		95.3
Revenue from contracts with customers	$	1,020.5	$	(180.7)	$	0.4	$	840.2

Finance charges, net		—		4,728.5		—		4,728.5
Investment income		12.6		—		—		12.6
Total	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	352.3	$	—	$	—	$	352.3
Short-term loyalty programs		613.8		—		—		613.8
Servicing fees, net		—		(97.3)		—		(97.3)
Other		90.7		—		0.6		91.3
Revenue from contracts with customers	$	1,056.8	$	(97.3)	$	0.6	$	960.1

Finance charges, net		—		4,694.9		—		4,694.9
Investment income		11.6		—		—		11.6
Total	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	40.1	$	4,547.8	$	0.4	$	4,588.3
Canada		352.2		—		—		352.2
Europe, Middle East and Africa		449.1		—		—		449.1
Asia Pacific		121.7		—		—		121.7
Other		70.0		—		—		70.0
Total	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	23.1	$	4,597.6	$	0.6	$	4,621.3
Canada		411.3		—		—		411.3
Europe, Middle East and Africa		463.2		—		—		463.2
Asia Pacific		122.0		—		—		122.0
Other		48.8		—		—		48.8
Total	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6

Schedule of reconciliation of contract liabilities for the AIR MILES Reward Program


	Deferred Revenue
	Service		Redemption		Total
	(in millions)
Balance at January 1, 2018	$	283.8	$	683.1	$	966.9
Cash proceeds		194.7		324.8		519.5
Revenue recognized ⁽¹⁾		(209.2)		(328.4)		(537.6)
Other		—		0.7		0.7
Effects of foreign currency translation		(21.3)		(52.9)		(74.2)
Balance at December 31, 2018		248.0		627.3		875.3
Cash proceeds		192.0		313.3		505.3
Revenue recognized ⁽¹⁾		(193.7)		(309.2)		(502.9)
Other		—		0.6		0.6
Effects of foreign currency translation		12.3		31.4		43.7
Balance at December 31, 2019	$	258.6	$	663.4	$	922.0
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$	144.5	$	663.4	$	807.9
Deferred revenue (non-current)	$	114.1	$	—	$	114.1

(1)

Reported on a gross basis herein.

FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Financial assets
Credit card and loan receivables, net	$ 19,126.0	$ 17,472.7
Credit card and loan receivables held for sale	436.2	1,995.5
Total assets measured at fair value	19,562.2	19,468.2
Financial liabilities
Deposits	12,303.6	11,768.7
Non-recourse borrowings of consolidated securitization entities	7,333.6	7,626.9
Long-term and other debt	2,878.8	5,755.3
Total liabilities measured at fair value	22,516.0	25,150.9
Level 2
Financial liabilities
Deposits	12,303.6	11,768.7
Non-recourse borrowings of consolidated securitization entities	7,333.6	7,626.9
Long-term and other debt	2,878.8	5,755.3
Total liabilities measured at fair value	22,516.0	25,150.9
Level 3
Financial assets
Credit card and loan receivables, net	19,126.0	17,472.7
Credit card and loan receivables held for sale	436.2	1,995.5
Total assets measured at fair value	$ 19,562.2	$ 19,468.2

FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

23. FINANCIAL INSTRUMENTS

In accordance with ASC 825, “Financial Instruments,” the Company is required to disclose the fair value of financial instruments for which it is practical to estimate fair value. To obtain fair values, observable market prices are used if available. In some instances, observable market prices are not readily available and fair value is determined using present value or other techniques appropriate for a particular financial instrument. These techniques involve judgment and as a result are not necessarily indicative of the amounts the Company would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts.

Fair Value of Financial Instruments—The estimated fair values of the Company’s financial instruments are as follows:


	December 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in millions)
Financial assets
Credit card and loan receivables, net	$	18,292.0	$	19,126.0	$	16,816.7	$	17,472.7
Credit card receivables held for sale		408.0		436.2		1,951.6		1,995.5
Redemption settlement assets, restricted		600.8		600.8		558.6		558.6
Other investments		259.8		259.8		291.3		291.3
Derivative instruments		0.2		0.2		3.8		3.8
Financial liabilities
Derivative instruments		0.3		0.3		0.3		0.3
Deposits		12,151.7		12,303.6		11,793.7		11,768.7
Non-recourse borrowings of consolidated securitization entities		7,284.0		7,333.6		7,651.7		7,626.9
Long-term and other debt		2,849.9		2,878.8		5,725.4		5,755.3

The following techniques and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein:

Credit card and loan receivables, net — The Company utilizes a discounted cash flow model using unobservable inputs, including estimated yields (interest and fee income), loss rates, payment rates and discount rates to estimate the fair value measurement of the credit card and loan receivables.

Credit card receivables held for sale — The Company utilizes a discounted cash flow model using unobservable inputs, including forecasted yields and net charge-off estimates to estimate the fair value measurement of the credit card portfolios held for sale, as well as market data as applicable.

Redemption settlement assets, restricted — Redemption settlement assets, restricted are recorded at fair value based on quoted market prices for the same or similar securities.

Other investments — Other investments consist of marketable securities and U.S. Treasury bonds and are included in other current assets and other non-current assets in the consolidated balance sheets. Other investments are recorded at fair value based on quoted market prices for the same or similar securities.

Deposits — For money market deposits, carrying value approximates fair value due to the liquid nature of these deposits. For certificates of deposit, the fair value is estimated based on the current observable market rates available to the Company for similar deposits with similar remaining maturities.

Non-recourse borrowings of consolidated securitization entities — The fair value is estimated based on the current observable market rates available to the Company for similar debt instruments with similar remaining maturities or quoted market prices for the same transaction.

Long-term and other debt — The fair value is estimated based on the current observable market rates available to the Company for similar debt instruments with similar remaining maturities or quoted market prices for the same transaction.

Derivative instruments — The Company’s foreign currency cash flow hedges are recorded at fair value based on a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs. The fair value of the foreign currency forward contracts is estimated based on published quotations of spot foreign currency rates and forward points which are converted into implied foreign currency rates.

Financial Assets and Financial Liabilities Fair Value Hierarchy

ASC 820, “Fair Value Measurements and Disclosures,” establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

●

Level 1, defined as observable inputs such as quoted prices in active markets;

●

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

●

Level 3, defined as unobservable inputs where little or no market data exists, therefore requiring an entity to develop its own assumptions.

Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. The use of different techniques to determine fair value of these financial instruments could result in different estimates of fair value at the reporting date.

The following tables provide information for the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2019 and 2018:


			Fair Value Measurements at
			December 31, 2019 Using
	Balance at
	December 31,
	2019		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	25.1	$	25.1	$	—	$	—
Corporate bonds ⁽¹⁾		536.4		—		536.4		—
Marketable securities ⁽²⁾		259.8		26.2		233.6		—
Derivative instruments ⁽³⁾		0.2		—		0.2		—
Total assets measured at fair value	$	821.5	$	51.3	$	770.2	$	—

Derivative instruments ⁽³⁾	$	0.3	$	—	$	0.3	$	—
Total liabilities measured at fair value	$	0.3	$	—	$	0.3	$	—


			Fair Value Measurements at
			December 31, 2018 Using
	Balance at
	December 31,
	2018		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	23.2	$	23.2	$	—	$	—
Corporate bonds ⁽¹⁾		491.5		—		491.5		—
Marketable securities ⁽²⁾		266.4		25.0		241.4		—
U.S. Treasury bonds ⁽²⁾		24.9		24.9		—		—
Derivative instruments ⁽³⁾		3.8		—		3.8		—
Total assets measured at fair value	$	809.8	$	73.1	$	736.7	$	—

Derivative instruments ⁽³⁾	$	0.3	$	—	$	0.3	$	—
Total liabilities measured at fair value	$	0.3	$	—	$	0.3	$	—

(1)	Amounts are included in redemption settlement assets in the consolidated balance sheets.

(2)	Amounts are included in other current assets and other non-current assets in the consolidated balance sheets.

(3)	Amounts are included in other current assets and other current liabilities in the consolidated balance sheets.

There were no transfers between Levels 1 and 2 within the fair value hierarchy for the years ended December 31, 2019 and 2018.

Financial Instruments Disclosed but Not Carried at Fair Value

The following tables provide assets and liabilities disclosed but not carried at fair value as of December 31, 2019 and 2018:


	Fair Value Measurements at
	December 31, 2019
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	19,126.0	$	—	$	—	$	19,126.0
Credit card receivables held for sale		436.2		—		—		436.2
Total	$	19,562.2	$	—	$	—	$	19,562.2

Financial liabilities:
Deposits	$	12,303.6	$	—	$	12,303.6	$	—
Non-recourse borrowings of consolidated securitization entities		7,333.6		—		7,333.6		—
Long-term and other debt		2,878.8		—		2,878.8		—
Total	$	22,516.0	$	—	$	22,516.0	$	—


	Fair Value Measurements at
	December 31, 2018
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	17,472.7	$	—	$	—	$	17,472.7
Credit card receivables held for sale		1,995.5		—		—		1,995.5
Total	$	19,468.2	$	—	$	—	$	19,468.2

Financial liabilities:
Deposits	$	11,768.7	$	—	$	11,768.7	$	—
Non-recourse borrowings of consolidated securitization entities		7,626.9		—		7,626.9		—
Long-term and other debt		5,755.3		—		5,755.3		—
Total	$	25,150.9	$	—	$	25,150.9	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

INCOME TAXES - Components of Income Tax and Reconciliation and Deferred Taxes (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Components of income before income taxes:
Domestic									$ 591.9	$ 1,052.7	$ 883.8
Foreign									146.5	162.3	178.7
Income from continuing operations before income taxes	$ 167.4	$ 164.2	$ 193.8	$ 213.0	$ 363.8	$ 343.0	$ 263.1	$ 245.1	738.4	1,215.0	1,062.5
Deferred
Total deferred									(186.1)	16.3	(113.8)
Total provision for income taxes	37.0	42.6	51.4	34.8	110.7	54.3	39.3	65.2	165.8	$ 269.5	$ 293.3
Federal statutory rate (as a percent)										21.00%	35.00%
Reconciliation of recorded federal provision for income taxes to the expected amount computed by applying the federal statutory rate
Expected expense at statutory rate									155.1	$ 255.1	$ 371.9
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit									33.6	57.4	14.5
Foreign rate differential									(2.3)	11.6	(26.0)
Foreign restructuring										(48.0)
Impact of 2017 Tax Reform									(30.2)	(29.7)	(64.9)
Global intangible low-taxed income									8.7	15.5
Non-deductible expenses (non-taxable income)									9.1	3.7	(4.6)
Other									(8.2)	3.9	2.4
Total provision for income taxes	37.0	$ 42.6	$ 51.4	$ 34.8	110.7	$ 54.3	$ 39.3	$ 65.2	165.8	269.5	293.3
Deferred tax assets
Deferred revenue	9.5				10.6				9.5	10.6
Allowance for doubtful accounts	267.6				267.0				267.6	267.0
Net operating loss carryforwards and other carryforwards	69.0				57.8				69.0	57.8
Stock-based compensation and other employee benefits	13.7				24.4				13.7	24.4
Lease liabilities	74.4								74.4
Accrued expenses and other	40.3				66.2				40.3	66.2
Intangibles	23.2								23.2
Total deferred tax assets	497.7				426.0				497.7	426.0
Valuation allowance	(64.0)				(36.3)				(64.0)	(36.3)
Deferred tax assets, net of valuation allowance	433.7				389.7				433.7	389.7
Deferred tax liabilities
Deferred income	365.6				409.8				365.6	409.8
Depreciation	41.8				79.0				41.8	79.0
Right of use assets	61.1								61.1
Intangible assets					113.4					113.4
Total deferred tax liabilities	468.5				602.2				468.5	602.2
Total - Net deferred tax liability	(34.8)				(212.5)				(34.8)	(212.5)
Amounts recognized in the consolidated balance sheets:
Non-current assets	45.2				44.0				45.2	44.0
Non-current liabilities	(80.0)				(256.5)				(80.0)	(256.5)
Total - Net deferred tax liability	$ (34.8)				$ (212.5)				(34.8)	(212.5)
Continuing Operations
Components of income before income taxes:
Income from continuing operations before income taxes									738.4	1,215.0	1,062.5
Current
Federal									126.0	152.2	295.0
State									35.8	58.0	17.5
Foreign									11.5	52.8	56.7
Total current									173.3	263.0	369.2
Deferred
Federal									(11.8)	48.0	(65.3)
State									6.7	14.7	6.2
Foreign									(2.4)	(56.2)	(16.8)
Total deferred									(7.5)	6.5	(75.9)
Total provision for income taxes									165.8	269.5	293.3
Increase (decrease) in income taxes resulting from:
Total provision for income taxes									$ 165.8	$ 269.5	$ 293.3

LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2019	Dec. 31, 2018
Lease liabilites
2020	$ 38.4
2021	39.6
2022	38.6
2023	36.8
2024	35.6
Thereafter	237.4
Total undiscounted lease liabilities	426.4
Less: Amount representing interest	(112.1)
Total present value of minimum lease payments	314.3
Amounts recognized in the December 31, 2019 consolidated balance sheet:
Current operating lease liabilities	22.6
Long-term operating lease liabilities	291.7
Total present value of minimum lease payments	$ 314.3
Operating Leases - Future Minimum Payments
2019		$ 42.0
2020		39.9
2021		37.7
2022		36.8
2023		35.6
Thereafter		256.4
Total		$ 448.4

ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2019

Signet

Acquisition

Summary of the fair values of the assets acquired and liabilities assumed


	As of October 20, 2017
	(in millions)
Credit card receivables	$	906.3
Intangible assets		52.3
Total assets acquired		958.6

Other liabilities		0.2
Deferred tax liability		4.9
Total liabilities assumed		5.1

Net assets acquired	$	953.5
Total consideration paid		945.6
Gain on business combination	$	7.9

CREDIT CARD AND LOAN RECEIVABLES - Securitized Credit Card Receivables (Details) $ in Millions	1 Months Ended						12 Months Ended
	Feb. 29, 2020 item	Dec. 31, 2019 USD ($) item	Sep. 30, 2019 USD ($) item	Aug. 31, 2019 USD ($) item	Jun. 30, 2019 USD ($) item	Apr. 30, 2019 USD ($) item	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Portfolio Held For Sale
Carrying value of the credit card portfolios held for sale		$ 408.0					$ 408.0	$ 1,951.6
Carrying value of the credit card portfolios held for sale, subsequently sold		$ 313.9					$ 313.9
Number of credit card portfolios transferred to held for sale \| item							1	11
Carrying value of the loan and credit card portfolios transferred to held for sale							$ 510.3	$ 2,300.0
Valuation adjustment on credit card and loan portfolios held for sale							$ 189.8	$ 101.6
Number of credit card portfolios sold \| item	1	7	1	1	3	1	13	6
Proceeds from sale of credit card portfolios		$ 1,082.4	$ 334.7	$ 70.4	$ 217.7	$ 356.6	$ 2,061.8	$ 1,153.5	$ 797.7
Gain (loss) on sales of credit card portfolio		24.5	$ 15.2	$ 1.7	$ 2.9	$ (0.4)	$ 43.9	29.2
Portfolio Acquisitions
Number of credit card portfolios acquired \| item							4
Purchase price of credit card portfolio							$ 924.8
Purchase price of credit card receivables portfolio		843.5					843.5		906.3
Purchase price of credit card receivables portfolio, intangible assets		35.7					35.7
Purchase price of credit card receivables portfolio, other non-current assets		45.6					45.6
Securitized Credit Card Receivables
Cash collateral, restricted deposits which are required to be used to cover losses on securitized credit card receivable		0.0					0.0	0.0	0.0
Total credit card receivables - restricted for securitization investors		13,504.2					13,504.2	13,418.3
Principal amount of credit card receivables - restricted for securitization investors, 90 days or more past due		$ 321.8					321.8	301.6
Net charge-offs of securitized principal							$ 907.7	$ 927.0	$ 741.1
Minimum
Securitized Credit Card Receivables
Minimum interests requirement (as a percent)							4.00%
Maximum
Securitized Credit Card Receivables
Minimum interests requirement (as a percent)							10.00%

DERIVATIVE INSTRUMENTS - Activity and Location of Outstanding Derivatives (Details) € in Millions, $ in Millions		12 Months Ended
	Jul. 01, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2019 EUR (€)	Jul. 31, 2019
Activity related to company's outstanding derivative contracts and location
Gains (losses) related to foreign exchange hedges designated as effective		$ 0.1	$ (0.1)	$ (0.5)
Ineffectiveness recorded				(0.1)
Gains on net investment hedge		4.9	29.6	(46.1)
Amount expected to be reclassified in the coming 12 months		0.1
Senior Notes Due 2023
Activity related to company's outstanding derivative contracts and location
Principal amount of debt \| €					€ 300.0
Interest Rate (as a percent)					5.25%	5.25%
Senior Notes Due March 2022
Activity related to company's outstanding derivative contracts and location
Principal amount of debt \| €					€ 400.0
Interest Rate (as a percent)					4.50%	4.50%
Cost of operations
Activity related to company's outstanding derivative contracts and location
Reclassifications out of accumulated other comprehensive income (loss) into net income		(0.1)	0.2	0.2
Net investment hedge
Activity related to company's outstanding derivative contracts and location
Ineffectiveness recorded		0.0	0.0	0.0
Gains on net investment hedge		4.9	29.6	46.1
Unamortized amount of nest investment hedge	$ (7.5)
Net investment hedge \| Senior Notes Due March 2022
Activity related to company's outstanding derivative contracts and location
Hedged amount \| €					€ 340.0
Foreign currency exchange forward contracts \| General and administrative
Activity related to company's outstanding derivative contracts and location
Gains (losses) on derivative instruments		$ (1.4)	$ 10.6	$ 12.5

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details)	12 Months Ended
	Dec. 31, 2019 segment
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Number of Reportable Segments	2

COMMITMENTS AND CONTINGENCIES - Litigation and Regulatory Matters (Details) item in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018
Cardholders
Approximate number of cardholders \| item	61.0
Average unused lines of credit per account	$ 2,307
Indemnification Agreement
Contingencies
Legal fees	$ 3,200,000
Comenity Bank
Tier 1 capital to average assets
Tier 1 capital to average assets, Actual Ratio (as a prcent)	12.90%	13.10%
Tier 1 capital to average assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	4.00%	4.00%
Tier 1 capital to average assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions	5.00%	5.00%
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)	14.60%	14.60%
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	4.50%	4.50%
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)	6.50%	6.50%
Risk Based Ratios [Abstract]
Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)	14.60%	14.60%
Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	6.00%	6.00%
Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)	8.00%	8.00%
Total capital to risk-weighted assets, Actual Ratio (as a percent)	15.90%	15.90%
Total capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	8.00%	8.00%
Total capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent)	10.00%	10.00%
Comenity Capital Bank
Tier 1 capital to average assets
Tier 1 capital to average assets, Actual Ratio (as a prcent)	11.90%	12.10%
Tier 1 capital to average assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	4.00%	4.00%
Tier 1 capital to average assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions	5.00%	5.00%
Common Equity Tier 1 capital to risk-weighted assets
Common Equity Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)	14.40%	14.40%
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	4.50%	4.50%
Common Equity Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)	6.50%	6.50%
Risk Based Ratios [Abstract]
Tier 1 capital to risk-weighted assets, Actual Ratio (as a percent)	14.40%	14.40%
Tier 1 capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	6.00%	6.00%
Tier 1 capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under Prompt Corrective Action Provisions (as a percent)	8.00%	8.00%
Total capital to risk-weighted assets, Actual Ratio (as a percent)	15.70%	15.70%
Total capital to risk-weighted assets, Minimum Ratio for Capital Adequacy Purposes (as a percent)	8.00%	8.00%
Total capital to risk-weighted assets, Minimum Ratio to be Well Capitalized under prompt Corrective Action Provisions (as a percent)	10.00%	10.00%
Epsilon \| Discontinued Operations, Disposed of by Sale \| Indemnification Agreement
Contingencies
Loss contingency	$ 32,900,000

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

12 Months Ended

Dec. 31, 2019

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

27. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Unaudited quarterly results of operations for the years ended December 31, 2019 and 2018 are presented below.


	Quarter Ended
	March 31,		June 30,		September 30,		December 31,
	2019 ⁽¹⁾		2019		2019		2019
	(in millions, except per share amounts)
Revenues	$	1,334.2	$	1,348.5	$	1,437.6	$	1,461.0
Operating expenses		977.3		1,011.2		1,133.4		1,152.0
Operating income		356.9		337.3		304.2		309.0
Interest expense, net		143.9		143.5		140.0		141.6
Income from continuing operations before income taxes		213.0		193.8		164.2		167.4
Provision for income taxes		34.8		51.4		42.6		37.0
Income from continuing operations		178.2		142.4		121.6		130.4
Loss from discontinued operations, net of taxes		(29.1)		(3.4)		(229.2)		(32.9)
Net income (loss)	$	149.1	$	139.0	$	(107.6)	$	97.5

Basic income (loss) per share:
Income from continuing operations	$	3.36	$	2.72	$	2.47	$	2.73
Loss from discontinued operations	$	(0.55)	$	(0.07)	$	(4.69)	$	(0.70)
Net income (loss) per share	$	2.81	$	2.65	$	(2.22)	$	2.03

Diluted income (loss) per share:
Income from continuing operations	$	3.35	$	2.71	$	2.41	$	2.74
Loss from discontinued operations	$	(0.55)	$	(0.07)	$	(4.54)	$	(0.69)
Net income (loss) per share	$	2.80	$	2.64	$	(2.13)	$	2.05

(1)

In the first quarter of 2019, Epsilon was presented as a discontinued operation in accordance with ASC 205 in our Quarterly Report on Form 10-Q. Included in our presentation was the allocation of interest expense associated with $1.9 billion in senior notes for the three months ended March 31, 2019 and 2018, respectively. On April 30, 2019, the Company amended its credit agreement, which among other items, provided that upon consummation of the sale of Epsilon, a mandatory payment of $500.0 million of the revolving credit facility was required and all of the Company’s outstanding senior notes were required to be redeemed. The table above includes the allocation of interest expense associated with the $500.0 million mandatory repayment of the revolving credit facility, as well as the related income tax effect, which was not reflected in our historical results in our Quarterly Report on Form 10-Q for the period ended March 31, 2019. The impact was $5.6 million of interest expense and an income tax benefit of $1.7 million.


	Quarter Ended
	March 31,		June 30,		September 30,		December 31,
	2018		2018		2018		2018
	(in millions, except per share amounts)
Revenues	$	1,381.7	$	1,397.2	$	1,423.2	$	1,464.5
Operating expenses		1,009.4		1,000.5		943.4		956.0
Operating income		372.3		396.7		479.8		508.5
Interest expense, net		127.2		133.6		136.8		144.7
Income from continuing operations before income taxes		245.1		263.1		343.0		363.8
Provision for income taxes		65.2		39.3		54.3		110.7
Income from continuing operations		179.9		223.8		288.7		253.1
(Loss) income from discontinued operations, net of taxes		(16.0)		(6.0)		7.8		31.8
Net income	$	163.9	$	217.8	$	296.5	$	284.9

Basic income (loss) per share:
Income from continuing operations	$	3.25	$	4.05	$	5.27	$	4.69
(Loss) income from discontinued operations	$	(0.29)	$	(0.11)	$	0.14	$	0.59
Net income per share	$	2.96	$	3.94	$	5.41	$	5.28

Diluted income (loss) per share:
Income from continuing operations	$	3.23	$	4.04	$	5.25	$	4.67
(Loss) income from discontinued operations	$	(0.28)	$	(0.11)	$	0.14	$	0.58
Net income per share	$	2.95	$	3.93	$	5.39	$	5.25

RESTRUCTURING AND OTHER CHARGES (Tables)

12 Months Ended

Dec. 31, 2019

RESTRUCTURING AND OTHER CHARGES

Schedule of restructuring and other charges incurred by reportable segment


	Termination		Asset		Lease		Other
Year Ended December 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	18.6	$	11.1	$	7.0	$	1.2	$	37.9
LoyaltyOne		7.6		40.7		0.2		2.3		50.8
Card Services		27.3		0.2		1.9		—		29.4
Total	$	53.5	$	52.0	$	9.1	$	3.5	$	118.1

Schedule of liability and activities related to restructuring and other charges


	Termination		Asset		Lease		Other
Year Ended December 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Liability as of December 31, 2018	$	—	$	—	$	—	$	—	$	—
Charged to expense		53.5		52.0		9.1		3.5		118.1
Adjustments for non-cash charges ⁽¹⁾		—		(52.0)		0.7		(0.1)		(51.4)
Cash payments		(18.8)		—		(9.8)		(3.3)		(31.9)
Liability as of December 31, 2019	$	34.7	$	—	$	—	$	0.1	$	34.8

(1)

SEGMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2019

SEGMENT INFORMATION

Schedule of segment information


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3

Income (loss) before income taxes	$	103.1	$	991.7	$	(356.4)	$	738.4
Interest expense, net		2.3		439.0		127.7		569.0
Operating income (loss)		105.4		1,430.7		(228.7)		1,307.4
Depreciation and amortization		80.1		89.3		6.7		176.1
Stock compensation expense		7.2		9.3		8.6		25.1
Strategic transaction costs		1.0		—		10.7		11.7
Restructuring and other charges		50.8		29.4		37.9		118.1
Loss on extinguishment of debt		—		—		71.9		71.9
Adjusted EBITDA ⁽¹⁾		244.5		1,558.7		(92.9)		1,710.3
Less: Securitization funding costs		—		213.4		—		213.4
Less: Interest expense on deposits		—		225.6		—		225.6
Adjusted EBITDA, net ⁽¹⁾	$	244.5	$	1,119.7	$	(92.9)	$	1,271.3

Capital expenditures	$	41.5	$	44.2	$	0.8	$	86.5


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6

Income (loss) before income taxes	$	153.8	$	1,381.6	$	(320.4)	$	1,215.0
Interest expense, net		5.6		385.9		150.8		542.3
Operating income (loss)		159.4		1,767.5		(169.6)		1,757.3
Depreciation and amortization		84.8		101.1		7.7		193.6
Stock compensation expense		10.0		13.3		21.1		44.4
Adjusted EBITDA ⁽¹⁾		254.2		1,881.9		(140.8)		1,995.3
Less: Securitization funding costs		—		220.2		—		220.2
Less: Interest expense on deposits		—		165.7		—		165.7
Adjusted EBITDA, net ⁽¹⁾	$	254.2	$	1,496.0	$	(140.8)	$	1,609.4

Capital expenditures	$	34.0	$	53.8	$	5.5	$	93.3



					Corporate/
Year Ended December 31, 2017	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	1,303.5	$	4,170.6	$	0.6	$	5,474.7

Income (loss) before income taxes	$	161.6	$	1,235.7	$	(334.8)	$	1,062.5
Interest expense, net		5.4		281.7		168.3		455.4
Operating income (loss)		167.0		1,517.4		(166.5)		1,517.9
Depreciation and amortization		81.7		98.4		7.8		187.9
Stock compensation expense		8.0		10.8		22.5		41.3
Adjusted EBITDA ⁽¹⁾		256.7		1,626.6		(136.2)		1,747.1
Less: Securitization funding costs		—		156.6		—		156.6
Less: Interest expense on deposits		—		125.1		—		125.1
Adjusted EBITDA, net ⁽¹⁾	$	256.7	$	1,344.9	$	(136.2)	$	1,465.4

Capital expenditures	$	55.2	$	54.2	$	8.8	$	118.2

(1)

The table below reconciles the reportable segments’ total assets to consolidated total assets:


		LoyaltyOne		Card Services		Corporate/ Other		Discontinued Operations		Total
		(in millions)
Total Assets
December 31, 2019	$	2,338.0	$	23,931.1	$	225.7	$	—	$	26,494.8
December 31, 2018	$	2,200.2	$	23,904.2	$	125.9	$	4,157.4	$	30,387.7

Schedule of information concerning principal geographic areas


					Europe,
	United				Middle East
	States		Canada		and Africa		Asia Pacific		Other		Total
	(in millions)
Revenues
Year Ended December 31, 2019	$	4,588.3	$	352.2	$	449.1	$	121.7	$	70.0	$	5,581.3
Year Ended December 31, 2018	$	4,621.3	$	411.3	$	463.2	$	122.0	$	48.8	$	5,666.6
Year Ended December 31, 2017	$	4,192.5	$	726.6	$	411.4	$	129.2	$	15.0	$	5,474.7

Long Lived Assets
December 31, 2019	$	1,361.1	$	311.1	$	696.2	$	12.8	$	0.9	$	2,382.1
December 31, 2018	$	4,693.1	$	261.0	$	698.6	$	22.5	$	0.8	$	5,676.0

PARENT-ONLY FINANCIAL STATEMENTS (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Assets:
Cash and cash equivalents	$ 3,874.4				$ 3,817.4				$ 3,874.4	$ 3,817.4
Total assets	26,494.8				30,387.7				26,494.8	30,387.7
Liabilities:
Total liabilities	24,906.5				28,055.6				24,906.5	28,055.6
Stockholders' equity	1,588.3				2,332.1				1,588.3	2,332.1	$ 1,855.3	$ 1,658.2
Total liabilities and equity	26,494.8				30,387.7				26,494.8	30,387.7
Statements of Income
Total revenue	1,461.0	$ 1,437.6	$ 1,348.5	$ 1,334.2	1,464.5	$ 1,423.2	$ 1,397.2	$ 1,381.7	5,581.3	5,666.6	5,474.7
Loss on extinguishment of debt									71.9
Interest expense, net	141.6	140.0	143.5	143.9	144.7	136.8	133.6	127.2	569.0	542.3	455.4
Income (loss) before income taxes and equity in undistributed net income of subsidiaries	167.4	164.2	193.8	213.0	363.8	343.0	263.1	245.1	738.4	1,215.0	1,062.5
Benefit for income taxes	(37.0)	(42.6)	(51.4)	(34.8)	(110.7)	(54.3)	(39.3)	(65.2)	(165.8)	(269.5)	(293.3)
Net income									278.0	963.1	788.7
(Loss) income from discontinued operations, net of tax	(32.9)	$ (229.2)	$ (3.4)	(29.1)	31.8	$ 7.8	$ (6.0)	(16.0)	(294.6)	17.6	19.5
Other comprehensive income:
Net income									278.0	963.1	788.7
Other comprehensive income									38.2	2.1	10.5
Statements of Cash Flows
Net cash (used in) provided by operating activities									1,217.7	2,754.9	2,599.1
Investing activities:
Proceeds from sale of business									4,409.7
Net cash provided by (used in) investing activities									2,860.8	(1,872.0)	(4,268.1)
Financing activities:
Payment of debt extinguishment costs									(46.1)
Payment of deferred financing costs									(45.4)	(25.8)	(65.7)
Purchase of treasury shares									(976.1)	(443.2)	(553.7)
Dividends paid									(127.4)	(125.2)	(115.5)
Proceeds from issuance of common stock									12.4	17.6	18.4
Other									(27.0)	(31.3)	(29.3)
Net cash (used in) provided by financing activities									(4,091.7)	(1,217.9)	4,004.9
Change in cash, cash equivalents and restricted cash									(9.6)	(347.0)	2,346.2
Cash, cash equivalents and restricted cash at beginning of year				3,967.7				4,314.7	3,967.7	4,314.7	1,968.5
Cash, cash equivalents and restricted cash at end of year	3,958.1				3,967.7				3,958.1	3,967.7	4,314.7
Parent company
Assets:
Cash and cash equivalents	0.2				0.1				0.2	0.1
Investment in subsidiaries	5,326.2				8,606.0				5,326.2	8,606.0
Other assets	3.4				20.1				3.4	20.1
Total assets	5,329.8				8,626.2				5,329.8	8,626.2
Liabilities:
Current portion of long-term and other debt	101.4				114.4				101.4	114.4
Long-term debt	2,748.5				5,427.7				2,748.5	5,427.7
Intercompany liabilities	806.7				395.9				806.7	395.9
Other liabilities	84.9				356.1				84.9	356.1
Total liabilities	3,741.5				6,294.1				3,741.5	6,294.1
Stockholders' equity	1,588.3				2,332.1				1,588.3	2,332.1
Total liabilities and equity	5,329.8				8,626.2				5,329.8	8,626.2
Statements of Income
Interest from loans to subsidiaries									19.2	17.9	13.8
Dividends from subsidiaries									922.6	810.1	360.6
Total revenue									941.8	828.0	374.4
Loss on extinguishment of debt									71.9
Interest expense, net									130.0	281.2	278.9
Other expenses, net									(0.7)	(0.4)	12.9
Total expenses									201.2	280.8	291.8
Income (loss) before income taxes and equity in undistributed net income of subsidiaries									740.6	547.2	82.6
Benefit for income taxes									42.1	7.0	322.7
Income before equity in undistributed net income of subsidiaries									782.7	554.2	405.3
Equity in undistributed net income of subsidiaries									(504.7)	408.9	383.4
Net income									278.0	963.1	788.7
(Loss) income from discontinued operations, net of tax									(252.1)
Other comprehensive income:
Net income									278.0	963.1	788.7
Other comprehensive income									4.9	29.6	(46.1)
Total comprehensive income, net of tax									282.9	992.7	742.6
Statements of Cash Flows
Net cash (used in) provided by operating activities									(1,029.1)	82.3	72.3
Investing activities:
Investment in subsidiaries									(135.0)		(164.0)
Proceeds from sale of business									4,118.3
Dividends received									922.6	810.1	360.6
Net cash provided by (used in) investing activities									4,905.9	810.1	196.6
Financing activities:
Borrowings under debt agreements									3,083.0	4,527.0	7,673.6
Repayments of borrowings									(5,778.2)	(4,838.3)	(7,232.4)
Payment of debt extinguishment costs									(46.1)
Payment of deferred financing costs									(20.7)	(4.6)	(33.7)
Purchase of treasury shares									(976.1)	(443.2)	(553.7)
Dividends paid									(127.4)	(125.2)	(115.5)
Proceeds from issuance of common stock									12.4	17.6	18.4
Other									(23.6)	(25.7)	(25.6)
Net cash (used in) provided by financing activities									(3,876.7)	(892.4)	(268.9)
Change in cash, cash equivalents and restricted cash									0.1
Cash, cash equivalents and restricted cash at beginning of year				$ 0.1				$ 0.1	0.1	0.1	0.1
Cash, cash equivalents and restricted cash at end of year	$ 0.2				$ 0.1				0.2	$ 0.1	$ 0.1
Non-cash investing items
Non-cash dividend									$ 3,000.0

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

12 Months Ended

Dec. 31, 2019

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of the Business—Alliance Data Systems Corporation (“ADSC” or, including its consolidated subsidiaries and variable interest entities, the “Company”) is a leading global provider of data-driven marketing and loyalty solutions serving large, consumer-based businesses. The Company captures and analyzes data created during each customer interaction, leveraging the insight derived from that data to enable clients to identify and acquire new customers and enhance customer loyalty. The Company operates in two reportable segments: LoyaltyOne^® and Card Services. LoyaltyOne provides coalition and short-term loyalty programs through the Canadian AIR MILES^® Reward Program and BrandLoyalty Group B.V. (“BrandLoyalty”). Card Services encompasses credit card processing, billing and payment processing, customer care and collections services for private label retailers as well as private label and co-brand retail credit card and loan receivables financing, including securitization and other funding of certain credit card and loan receivables that it underwrites from its private label and co-brand retail credit card programs.

Basis of Presentation—For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements have been presented with its former Epsilon^® segment as a discontinued operation. See Note 6, “Discontinued Operations,” for more information.

SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2019

SUBSEQUENT EVENT.

SUBSEQUENT EVENT

28. SUBSEQUENT EVENTS

In January 2020, the Company entered into a securities purchase agreement and effectuated the sale of Precima, a provider of retail strategy and customer data applications and analytics, for total consideration of approximately $40.0 million, of which $10.0 million is contingent upon the occurrence of specified events and performance of the business. Precima was included in the Company’s LoyaltyOne segment.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued and Adopted Accounting Standards (Details) - USD ($) $ in Millions		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Liabilities			$ 314.3
Operating Lease, Right-of-Use Asset			264.3
Liabilities			24,906.5	$ 28,055.6
Accrued expenses			327.8	322.2
Other liabilities			$ 337.7	$ 392.4
ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Liabilities	$ 324.5
Operating Lease, Right-of-Use Asset	269.9
Cumulative effect on retained earnings	0.0
Discontinued Operations, Held-for-sale \| Epsilon \| ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Liabilities	208.7
Operating Lease, Right-of-Use Asset	181.1
Capital lease assets	13.0
Capital lease liabilities	12.6
Forecast \| ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for loan and lease losses, adjustments, net		$ 644.0
Adjustment \| ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Right-of-Use Asset	54.6
Liabilities	(54.6)
Adjustment \| Discontinued Operations, Held-for-sale \| Epsilon \| ASC 842
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Right-of-Use Asset	2.9
Liabilities	$ 30.5

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2019

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Summary of unaudited quarterly results of operations


	Quarter Ended
	March 31,		June 30,		September 30,		December 31,
	2019 ⁽¹⁾		2019		2019		2019
	(in millions, except per share amounts)
Revenues	$	1,334.2	$	1,348.5	$	1,437.6	$	1,461.0
Operating expenses		977.3		1,011.2		1,133.4		1,152.0
Operating income		356.9		337.3		304.2		309.0
Interest expense, net		143.9		143.5		140.0		141.6
Income from continuing operations before income taxes		213.0		193.8		164.2		167.4
Provision for income taxes		34.8		51.4		42.6		37.0
Income from continuing operations		178.2		142.4		121.6		130.4
Loss from discontinued operations, net of taxes		(29.1)		(3.4)		(229.2)		(32.9)
Net income (loss)	$	149.1	$	139.0	$	(107.6)	$	97.5

Basic income (loss) per share:
Income from continuing operations	$	3.36	$	2.72	$	2.47	$	2.73
Loss from discontinued operations	$	(0.55)	$	(0.07)	$	(4.69)	$	(0.70)
Net income (loss) per share	$	2.81	$	2.65	$	(2.22)	$	2.03

Diluted income (loss) per share:
Income from continuing operations	$	3.35	$	2.71	$	2.41	$	2.74
Loss from discontinued operations	$	(0.55)	$	(0.07)	$	(4.54)	$	(0.69)
Net income (loss) per share	$	2.80	$	2.64	$	(2.13)	$	2.05

(1)


	Quarter Ended
	March 31,		June 30,		September 30,		December 31,
	2018		2018		2018		2018
	(in millions, except per share amounts)
Revenues	$	1,381.7	$	1,397.2	$	1,423.2	$	1,464.5
Operating expenses		1,009.4		1,000.5		943.4		956.0
Operating income		372.3		396.7		479.8		508.5
Interest expense, net		127.2		133.6		136.8		144.7
Income from continuing operations before income taxes		245.1		263.1		343.0		363.8
Provision for income taxes		65.2		39.3		54.3		110.7
Income from continuing operations		179.9		223.8		288.7		253.1
(Loss) income from discontinued operations, net of taxes		(16.0)		(6.0)		7.8		31.8
Net income	$	163.9	$	217.8	$	296.5	$	284.9

Basic income (loss) per share:
Income from continuing operations	$	3.25	$	4.05	$	5.27	$	4.69
(Loss) income from discontinued operations	$	(0.29)	$	(0.11)	$	0.14	$	0.59
Net income per share	$	2.96	$	3.94	$	5.41	$	5.28

Diluted income (loss) per share:
Income from continuing operations	$	3.23	$	4.04	$	5.25	$	4.67
(Loss) income from discontinued operations	$	(0.28)	$	(0.11)	$	0.14	$	0.58
Net income per share	$	2.95	$	3.93	$	5.39	$	5.25

ACCUMULATED OTHER COMPREHENSIVE LOSS

12 Months Ended

Dec. 31, 2019

ACCUMULATED OTHER COMPREHENSIVE LOSS.

ACCUMULATED OTHER COMPREHENSIVE LOSS

21. ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in each component of accumulated other comprehensive loss, net of tax effects, are as follows:


									Accumulated
	Net Unrealized		Net Unrealized		Net Unrealized		Foreign Currency		Other
	Gains (Losses) on		Gains (Losses) on		Gains (Losses) on		Translation		Comprehensive
	Securities		Cash Flow Hedges		Net Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance as of January 1, 2017	$	(1.6)	$	0.4	$	4.1	$	(153.6)	$	(150.7)
Changes in other comprehensive income (loss)		(7.1)		(0.5)		(46.1)		64.2		10.5
Balance at December 31, 2017	$	(8.7)	$	(0.1)	$	(42.0)	$	(89.4)	$	(140.2)
Changes in other comprehensive income (loss)		(2.0)		(0.1)		29.6		(25.4)		2.1
Balance at December 31, 2018	$	(10.7)	$	(0.2)	$	(12.4)	$	(114.8)	$	(138.1)
Changes in other comprehensive income (loss)		13.2		0.1		4.9		(6.8)		11.4
Recognition resulting from the sale of Epsilon's foreign subsidiaries		—		—		—		26.8		26.8
Balance at December 31, 2019	$	2.5	$	(0.1)	$	(7.5)	$	(94.8)	$	(99.9)

(1)

Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates.

In accordance with ASC 830, “Foreign Currency Matters,” upon the sale of Epsilon on July 1, 2019, $26.8 million of accumulated foreign currency translation adjustments attributable to Epsilon’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the gain/loss on sale of Epsilon segment. Additionally, as of January 1, 2018, a cumulative-effect adjustment of $1.5 million, net of tax, was reclassified from accumulated other comprehensive loss to retained earnings related to the adoption of ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” For more information, see Note 2, “Summary of Significant Accounting Policies.” Other reclassifications from accumulated other comprehensive loss into net income for each of the periods presented were not material.

SEGMENT INFORMATION - Financial Information (Details) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Segment information
Revenues	$ 1,461.0	$ 1,437.6	$ 1,348.5	$ 1,334.2	$ 1,464.5	$ 1,423.2	$ 1,397.2	$ 1,381.7	$ 5,581.3	$ 5,666.6	$ 5,474.7
Income (loss) before income taxes	167.4	164.2	193.8	213.0	363.8	343.0	263.1	245.1	738.4	1,215.0	1,062.5
Interest expense, net	141.6	140.0	143.5	143.9	144.7	136.8	133.6	127.2	569.0	542.3	455.4
Operating income (loss)	309.0	$ 304.2	$ 337.3	$ 356.9	508.5	$ 479.8	$ 396.7	$ 372.3	1,307.4	1,757.3	1,517.9
Depreciation and amortization									249.3	487.3	497.6
Stock compensation expense									54.8	80.8	75.1
Restructuring and other charges									118.1
Loss on extinguishment of debt									71.9
Less: Securitization funding costs									213.4	220.2	156.6
Less: Interest expense on deposits									225.6	165.7	125.1
Capital expenditures									142.3	199.8	225.4
Total assets	26,494.8				30,387.7				26,494.8	30,387.7
Epsilon
Segment information
Total assets					4,157.4					4,157.4
Continuing Operations
Segment information
Revenues									5,581.3	5,666.6	5,474.7
Income (loss) before income taxes									738.4	1,215.0	1,062.5
Interest expense, net									569.0	542.3	455.4
Operating income (loss)									1,307.4	1,757.3	1,517.9
Depreciation and amortization									176.1	193.6	187.9
Stock compensation expense									25.1	44.4	41.3
Strategic transaction costs									11.7
Restructuring and other charges									118.1
Loss on extinguishment of debt									71.9
Adjusted EBITDA									1,710.3	1,995.3	1,747.1
Less: Securitization funding costs									213.4	220.2	156.6
Less: Interest expense on deposits									225.6	165.7	125.1
Adjusted EBITDA, net									1,271.3	1,609.4	1,465.4
Capital expenditures									86.5	93.3	118.2
LoyaltyOne
Segment information
Restructuring and other charges									50.8
Card Services
Segment information
Restructuring and other charges									29.4
Operating segment \| LoyaltyOne
Segment information
Revenues									1,033.1	1,068.4	1,303.5
Income (loss) before income taxes									103.1	153.8	161.6
Interest expense, net									2.3	5.6	5.4
Operating income (loss)									105.4	159.4	167.0
Strategic transaction costs									1.0
Restructuring and other charges									50.8
Adjusted EBITDA									244.5	254.2	256.7
Adjusted EBITDA, net									244.5	254.2	256.7
Total assets	2,338.0				2,200.2				2,338.0	2,200.2
Operating segment \| LoyaltyOne \| Continuing Operations
Segment information
Depreciation and amortization									80.1	84.8	81.7
Stock compensation expense									7.2	10.0	8.0
Capital expenditures									41.5	34.0	55.2
Operating segment \| Card Services
Segment information
Revenues									4,547.8	4,597.6	4,170.6
Income (loss) before income taxes									991.7	1,381.6	1,235.7
Interest expense, net									439.0	385.9	281.7
Operating income (loss)									1,430.7	1,767.5	1,517.4
Restructuring and other charges									29.4
Adjusted EBITDA									1,558.7	1,881.9	1,626.6
Less: Securitization funding costs									213.4	220.2	156.6
Less: Interest expense on deposits									225.6	165.7	125.1
Adjusted EBITDA, net									1,119.7	1,496.0	1,344.9
Total assets	23,931.1				23,904.2				23,931.1	23,904.2
Operating segment \| Card Services \| Continuing Operations
Segment information
Depreciation and amortization									89.3	101.1	98.4
Stock compensation expense									9.3	13.3	10.8
Capital expenditures									44.2	53.8	54.2
Corporate/Other
Segment information
Revenues									0.4	0.6	0.6
Income (loss) before income taxes									(356.4)	(320.4)	(334.8)
Interest expense, net									127.7	150.8	168.3
Operating income (loss)									(228.7)	(169.6)	(166.5)
Strategic transaction costs									10.7
Restructuring and other charges									37.9
Loss on extinguishment of debt									71.9
Adjusted EBITDA									(92.9)	(140.8)	(136.2)
Adjusted EBITDA, net									(92.9)	(140.8)	(136.2)
Total assets	$ 225.7				$ 125.9				225.7	125.9
Corporate/Other \| Continuing Operations
Segment information
Depreciation and amortization									6.7	7.7	7.8
Stock compensation expense									8.6	21.1	22.5
Capital expenditures									$ 0.8	$ 5.5	$ 8.8

REVENUE

12 Months Ended

Dec. 31, 2019

REVENUE

REVENUE

3. REVENUE

Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s contracts with its customers state the terms of sale, including the description, quantity, and price of the product or service purchased. Payment terms can vary by contract, but the period between invoicing and when payment is due is not significant. Taxes assessed on revenue-producing transactions are excluded from revenues.

The Company’s products and services are reported under two segments—LoyaltyOne and Card Services, as shown below. The following tables present revenue disaggregated by major source, as well as geographic region based on the location of the subsidiary that generally correlates with the location of the customer:


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	290.1	$	—	$	—	$	290.1
Short-term loyalty programs		635.5		—		—		635.5
Servicing fees, net		—		(180.7)		—		(180.7)
Other		94.9		—		0.4		95.3
Revenue from contracts with customers	$	1,020.5	$	(180.7)	$	0.4	$	840.2

Finance charges, net		—		4,728.5		—		4,728.5
Investment income		12.6		—		—		12.6
Total	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	352.3	$	—	$	—	$	352.3
Short-term loyalty programs		613.8		—		—		613.8
Servicing fees, net		—		(97.3)		—		(97.3)
Other		90.7		—		0.6		91.3
Revenue from contracts with customers	$	1,056.8	$	(97.3)	$	0.6	$	960.1

Finance charges, net		—		4,694.9		—		4,694.9
Investment income		11.6		—		—		11.6
Total	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6


					Corporate/
Year Ended December 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	40.1	$	4,547.8	$	0.4	$	4,588.3
Canada		352.2		—		—		352.2
Europe, Middle East and Africa		449.1		—		—		449.1
Asia Pacific		121.7		—		—		121.7
Other		70.0		—		—		70.0
Total	$	1,033.1	$	4,547.8	$	0.4	$	5,581.3


					Corporate/
Year Ended December 31, 2018	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	23.1	$	4,597.6	$	0.6	$	4,621.3
Canada		411.3		—		—		411.3
Europe, Middle East and Africa		463.2		—		—		463.2
Asia Pacific		122.0		—		—		122.0
Other		48.8		—		—		48.8
Total	$	1,068.4	$	4,597.6	$	0.6	$	5,666.6

LoyaltyOne

LoyaltyOne provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty. The AIR MILES Reward Program is a coalition loyalty program for sponsors, who pay LoyaltyOne a fee per AIR MILES reward mile issued, in return for which LoyaltyOne provides all marketing, customer service, rewards and redemption management. BrandLoyalty designs, implements, conducts and evaluates innovative and tailor-made short-term loyalty programs for grocers worldwide.

Total consideration from the issuance of AIR MILES reward miles is allocated to three performance obligations: redemption, service, and brand, based on a relative standalone selling price basis. Because the standalone selling price is not directly observable for the three performance obligations, the Company estimates the standalone selling price for the redemption and the service performance obligations based on cost plus a reasonable margin. The Company estimates the standalone selling price of the brand performance obligation using a relief from royalty approach. Accordingly, management determines the estimated standalone selling price by considering multiple inputs and methods, including discounted cash flows and available market data in consideration of applicable margins and royalty rates to utilize. The number of AIR MILES reward miles issued and redeemed are factored into the estimates, as management estimates the standalone selling prices and volumes over the term of the respective agreements in order to determine the allocation of consideration to each performance obligation delivered. The redemption performance obligation incorporates the expected number of AIR MILES reward miles to be redeemed, and therefore, the amount of redemption revenue recognized is subject to management’s estimate of breakage, or those AIR MILES reward miles estimated to be unredeemed by the collector base.

Redemption revenue is recognized at a point in time, as the AIR MILES reward miles are redeemed. For the fulfillment of certain rewards where the AIR MILES Reward Program does not control the goods or services before they are transferred to the collector, revenue is recorded on a net basis. Service revenue is recognized over time using a time-elapsed output method, the estimated life of an AIR MILES reward mile. Revenue from the brand is recognized over time, using an output method, when an AIR MILES reward mile is issued. Revenue associated with both the service and brand is included in service revenue in the Company’s consolidated statements of income.

The amount of revenue recognized in a period is subject to the estimate of breakage and the estimated life of an AIR MILES reward mile. Breakage and the life of an AIR MILES reward mile are based on management’s estimate after viewing and analyzing various historical trends including vintage analysis, current run rates and other pertinent factors, such as the impact of macroeconomic factors and changes in the program structure. Throughout 2017, 2018 and 2019, the Company’s breakage rate was 20%. During 2017, the Company changed its estimated life of an AIR MILES reward mile from 42 months to 38 months. Throughout 2018 and 2019, the Company’s estimated life of a mile was 38 months.

The short-term loyalty programs typically last between 12 and 20 weeks, depending on the nature of the program, with contract terms usually less than one year in length. These programs are tailored for the specific retailer client and are designed to reward key customer segments based on their spending levels during defined campaign periods. Revenue is recognized at the point in time control passes from BrandLoyalty to the retailer.

Contract Liabilities. The Company records a contract liability when cash payments are received in advance of its performance, which applies to the service and redemption of an AIR MILES reward mile and the reward products for its short-term loyalty programs.

A reconciliation of contract liabilities for the AIR MILES Reward Program is as follows:


	Deferred Revenue
	Service		Redemption		Total
	(in millions)
Balance at January 1, 2018	$	283.8	$	683.1	$	966.9
Cash proceeds		194.7		324.8		519.5
Revenue recognized ⁽¹⁾		(209.2)		(328.4)		(537.6)
Other		—		0.7		0.7
Effects of foreign currency translation		(21.3)		(52.9)		(74.2)
Balance at December 31, 2018		248.0		627.3		875.3
Cash proceeds		192.0		313.3		505.3
Revenue recognized ⁽¹⁾		(193.7)		(309.2)		(502.9)
Other		—		0.6		0.6
Effects of foreign currency translation		12.3		31.4		43.7
Balance at December 31, 2019	$	258.6	$	663.4	$	922.0
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$	144.5	$	663.4	$	807.9
Deferred revenue (non-current)	$	114.1	$	—	$	114.1

(1)

Reported on a gross basis herein.

The deferred redemption obligation associated with the AIR MILES Reward Program is effectively due on demand from the collector base, thus the timing of revenue recognition is based on the redemption by the collector. Service revenue is amortized over the expected life of a mile, with the deferred revenue balance expected to be recognized into revenue in the amount of $144.5 million in 2020, $79.5 million in 2021, $33.5 million in 2022, and $1.1 million in 2023.

Additionally, contract liabilities for the Company’s short-term loyalty programs are recognized in other current liabilities in the Company’s consolidated balance sheets. In 2019, the beginning balance as of January 1, 2019 was $110.2 million and the closing balance as of December 31, 2019 was $122.8 million, with the change due to cash payments received in advance of program performance, offset in part by revenue recognized of approximately $526.6 million during the year ended December 31, 2019. In 2018, the beginning balance as of January 1, 2018 was $87.5 million and the closing balance as of December 31, 2018 was $110.2 million, with the change due to cash payments received in advance of program performance revenue, offset in part by revenue recognized of approximately $506.5 million during the year ended December 31, 2018.

Card Services

Card Services is a provider of branded credit card programs, both private label and co-brand, that drive sales for its brand partners. For these private label and co-brand programs, Card Services provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services.

Finance charges, net. Finance charges, net represents revenue earned on customer accounts owned by the Company, and is recognized in the period in which it is earned. The Company recognizes earned finance charges, interest income and fees on credit card and loan receivables in accordance with the contractual provisions of the credit arrangements, which are within the scope of ASC 310, “Receivables.” Interest and fees continue to accrue on all credit card accounts beyond 90 days, except in limited circumstances, until the credit card account balance and all related interest and other fees are paid or charged-off, in the month during which an account becomes 180 days delinquent. Charge-offs for unpaid interest and fees as well as any adjustments to the allowance associated with unpaid interest and fees are recorded as a reduction to finance charges, net. Pursuant to ASC 310-20, “Receivables - Nonrefundable Fees and Other Costs,” direct

loan origination costs on credit card and loan receivables are deferred and amortized on a straight-line basis over a one-year period and recorded as a reduction to finance charges, net. As of December 31, 2019 and 2018, the remaining unamortized deferred costs related to loan origination were $47.1 million and $40.6 million, respectively.

Servicing fees, net. Servicing fees, net represents revenue earned from retailers and cardholders from processing and servicing accounts, and is recognized as such services are performed.

Revenue earned from retailers primarily consists of merchant and interchange fees, which are transaction fees charged to the merchant for the processing of credit card transactions. Merchant and interchange fees are recognized at a point in time upon the cardholder purchase.

Our credit card program agreements may also provide for payments to the retailer based on purchased volume or if certain contractual incentives are met, such as if the economic performance of the program exceeds a contractually defined threshold. These amounts are recorded as a reduction of revenue.

Revenue earned from cardholders primarily consists of monthly fees from the purchase of certain payment protection products purchased by our cardholders. The fees are based on the average cardholder account balance, and these products can be cancelled at any time by the cardholder. Revenue is recognized over time using a time-elapsed output method.

Contract Costs. The Company recognizes an asset for the incremental costs of obtaining or fulfilling a contract with the retailer for a credit card program agreement to the extent it expects to recover those costs, in accordance with ASC 340-40. Contract costs are deferred and amortized on a straight-line basis over the respective term of the agreement, which represents the period of service. Depending on the nature of the contract costs, the amortization is recorded as a reduction to revenue, or costs of operations, in the Company’s consolidated statements of income. As of December 31, 2019 and 2018, the remaining unamortized contract costs were $406.8 million and $372.5 million, respectively, and are included in other current assets and other non-current assets in the Company’s consolidated balance sheets.

For the year ended December 31, 2019, amortization of contract costs recorded as a reduction to revenue totaled $71.8 million and amortization of contract costs recorded to cost of operations expense totaled $11.9 million. For the year ended December 31, 2018, amortization of contract costs recorded as a reduction to revenue totaled $68.7 million and amortization of contract costs recorded to cost of operations expense totaled $9.8 million. No impairment was recognized during the periods presented.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which the Company has the right to invoice for services performed.

The Company has elected the practical expedient from ASC 340-40 with respect to contract costs, and expenses the incremental costs as incurred for those costs that would otherwise be recognized with an amortization period of one year or less. These costs are recorded to cost of operations expense in the Company’s consolidated statements of income.

DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2019

DISCONTINUED OPERATIONS

Schedule of financial statement information for discontinued operations


	July 1,
	2019
	(in millions)
Consideration received ⁽¹⁾	$	4,451.9
Net carrying value of assets and liabilities (including other comprehensive income)		3,939.7
Pre-tax gain on deconsolidation	$	512.2

(1)	Consideration as defined included cash associated with the sold Epsilon entities, which was $42.2 million.



	Years Ended December 31,
	2019		2018		2017
	(in millions)
Revenue	$	999.6	$	2,175.1	$	2,272.1
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		993.9		1,744.4		1,834.8
Depreciation and other amortization		29.7		115.4		109.4
Amortization of purchased intangibles		43.5		178.3		200.3
Interest expense ⁽¹⁾		64.1		128.3		109.0
Gain on sale of Epsilon		(512.2)		—		—
Income before provision (benefit) from income taxes		380.6		8.7		18.6
Provision (benefit) for income taxes		675.2		(8.9)		(0.9)
(Loss) income from discontinued operations, net of taxes ⁽²⁾	$	(294.6)	$	17.6	$	19.5

(1)

(2)


	December 31,
	2018
	(in millions)
Assets:
Cash and cash equivalents	$	45.7
Accounts receivable, net		519.9
Other current assets		56.6
Property and equipment, net		306.9
Intangible assets, net		322.3
Goodwill		2,886.2
Other assets		19.8
Total assets of discontinued operations	$	4,157.4

Liabilities:
Accounts payable	$	72.2
Accrued expenses		98.8
Other current liabilities		52.5
Other liabilities		36.9
Total liabilities of discontinued operations	$	260.4


	Years Ended December 31,
	2019		2018		2017
	(in millions)
Depreciation and amortization	$	73.2	$	293.7	$	309.7
Capital expenditures	$	55.8	$	106.5	$	107.2

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

RESTRUCTURING AND OTHER CHARGES - Liability (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2019
Restructuring Reserve
Charged to expense			$ 118.1
Adjustments for non-cash charges			(51.4)
Cash payments			(31.9)
Restructuring Reserve, Ending Balance	$ 34.8		34.8
LoyaltyOne
Restructuring Reserve
Charged to expense			50.8
Card Services
Restructuring Reserve
Charged to expense			29.4
Termination Benefits
Restructuring Reserve
Charged to expense			53.5
Cash payments			(18.8)
Restructuring Reserve, Ending Balance	34.7		34.7
Termination Benefits \| LoyaltyOne
Restructuring Reserve
Charged to expense		$ 8.1	7.6
Termination Benefits \| Card Services
Restructuring Reserve
Charged to expense	27.3		27.3
Asset Impairments
Restructuring Reserve
Charged to expense			52.0
Adjustments for non-cash charges			(52.0)
Asset Impairments \| LoyaltyOne
Restructuring Reserve
Charged to expense	2.6	33.5	40.7
Asset Impairments \| Card Services
Restructuring Reserve
Charged to expense		0.2	0.2
Lease Termination Costs
Restructuring Reserve
Charged to expense			9.1
Adjustments for non-cash charges			0.7
Cash payments			(9.8)
Lease Termination Costs \| LoyaltyOne
Restructuring Reserve
Charged to expense		$ 0.2	0.2
Lease Termination Costs \| Card Services
Restructuring Reserve
Charged to expense			1.9
Other Exit Costs
Restructuring Reserve
Charged to expense			3.5
Adjustments for non-cash charges			(0.1)
Cash payments			(3.3)
Restructuring Reserve, Ending Balance	$ 0.1		0.1
Other Exit Costs \| LoyaltyOne
Restructuring Reserve
Charged to expense			$ 2.3

DISCONTINUED OPERATIONS (Details) - USD ($) $ in Millions		12 Months Ended
DISCONTINUED OPERATIONS (Details) - USD ($) $ in Millions	Jul. 01, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Apr. 30, 2019	Apr. 12, 2019	Mar. 31, 2019
Disposal Group, Including Discontinued Operation, Additional Disclosures
Long-term Debt		$ 2,849.9
Mandatory payment per credit agreement					$ 500.0
Depreciation and amortization		73.2	$ 293.7	$ 309.7
Capital expenditures		55.8	106.5	107.2
Epsilon
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration, cash associated with disposal group	$ 42.2
Transaction costs		79.0
After tax loss on sale		252.1
Disposal Group, Including Discontinued Operation, Additional Disclosures
Mandatory payment per credit agreement		500.0			$ 500.0		$ 500.0
Epsilon \| Senior Notes
Disposal Group, Including Discontinued Operation, Additional Disclosures
Long-term Debt		1,900.0					$ 1,900.0
Epsilon \| Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration						$ 4,400.0
Pre-tax gain on deconsolidation		512.2
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Revenue		999.6	2,175.1	2,272.1
Cost of operations (exclusive of depreciation and amortization)		993.9	1,744.4	1,834.8
Depreciation and other amortization		29.7	115.4	109.4
Amortization of purchased intangibles		43.5	178.3	200.3
Interest expense		64.1	128.3	109.0
Gain on sale of Epsilon		(512.2)
Income (loss) before benefit from income taxes		380.6	8.7	18.6
Provision (benefit) from income taxes		675.2	(8.9)	(0.9)
(Loss) income from discontinued operations, net of taxes		$ (294.6)	17.6	$ 19.5
Assets :
Cash and cash equivalents			45.7
Accounts receivable, net			519.9
Other current assets			56.6
Property and equipment, net			306.9
Intangible assets, net			322.3
Goodwill			2,886.2
Other assets			19.8
Total assets of discontinued operations			4,157.4
Liabilities:
Accounts payable			72.2
Accrued expenses			98.8
Other current liabilities			52.5
Other liabilities			36.9
Total liabilities of discontinued operations			$ 260.4
Epsilon \| Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration	4,451.9
Net carrying value of assets and liabilities (including other comprehensive income)	3,939.7
Pre-tax gain on deconsolidation	512.2
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Gain on sale of Epsilon	$ (512.2)

INTANGIBLE ASSETS AND GOODWILL - Maturity Schedule (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Oct. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Intangible assets
Acquired intangible assets		$ 35.7
Amortization expense		96.2	$ 112.9	$ 114.2
Estimated amortization expense related to intangible assets for the next five years and thereafter
2020		82.7
2021		22.4
2022		17.6
2023		12.9
2024		10.7
Thereafter		5.8
Customer relationships
Intangible assets
Acquired intangible assets		$ 21.8
Weighted average life		2 years 8 months 12 days
Marketing relationships
Intangible assets
Acquired intangible assets		$ 13.9
Weighted average life		5 years 10 months 24 days
Signet
Intangible assets
Acquired intangible assets	$ 52.3
Signet \| Customer relationships
Intangible assets
Acquired intangible assets	$ 35.9
Weighted average life	3 years
Signet \| Marketing relationships
Intangible assets
Acquired intangible assets	$ 16.4
Weighted average life	7 years

SCHEDULE II CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for Doubtful Accounts -Trade receivables - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Movement in valuation and qualifying accounts
Balance at Beginning of Year	$ 0.4	$ 0.1	$ 0.3
Charged to Costs and Expenses	3.5	0.4	0.1
Charged to Other Accounts			(0.1)
Write-Offs Net of Recoveries	(0.5)	(0.1)	(0.2)
Balance at End of Year	$ 3.4	$ 0.4	$ 0.1

REVENUE - Performance Obligation (Details) $ in Millions	12 Months Ended
REVENUE - Performance Obligation (Details) $ in Millions	Dec. 31, 2019 USD ($)
REVENUE
Initial application and transition, completed contract, same reporting period	true
Incremental Cost of Obtaining Contract	true
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
REVENUE
Revenue, remaining performance obligation	$ 144.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
REVENUE
Revenue, remaining performance obligation	$ 79.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
REVENUE
Revenue, remaining performance obligation	$ 33.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
REVENUE
Revenue, remaining performance obligation	$ 1.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	12 months