0001101215-20-000093 | 10-Q | XBRL Viewer | Alliance Data Systems Corp

Three Months Ended

March 31,

(in millions)

Net charge-offs of securitized principal

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2020	Apr. 23, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	001-15749
Entity Registrant Name	ALLIANCE DATA SYSTEMS CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	31-1429215
Entity Address, Address Line One	3075 Loyalty Circle
Entity Address, City or Town	Columbus
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43219
City Area Code	614
Local Phone Number	729-4000
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	ADS
Security Exchange Name	NYSE
Entity 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		47,627,962
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001101215
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 4,456.8	$ 3,874.4
Accounts receivable, net, less allowance for doubtful accounts ($3.4 at each of March 31, 2020 and December 31, 2019, respectively)	359.4	451.1
Credit card and loan receivables:
Credit card receivables - restricted for securitization investors	12,033.4	13,504.2
Other credit card and loan receivables	5,698.5	5,958.9
Total credit card and loan receivables	17,731.9	19,463.1
Allowance for loan loss	(2,150.8)	(1,171.1)
Credit card and loan receivables, net	15,581.1	18,292.0
Credit card receivables held for sale	88.8	408.0
Inventories, net	189.1	218.0
Other current assets	461.1	268.4
Redemption settlement assets, restricted	568.0	600.8
Total current assets	21,704.3	24,112.7
Property and equipment, net	263.0	282.3
Right of use assets - operating	256.8	264.3
Deferred tax asset, net	282.9	45.2
Intangible assets, net	129.9	153.3
Goodwill	929.1	954.9
Other non-current assets	668.9	682.1
Total assets	24,234.9	26,494.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	203.0	300.8
Accrued expenses	407.4	327.8
Current operating lease liabilities	22.3	22.6
Current portion of deposits	6,521.5	6,942.4
Current portion of non-recourse borrowings of consolidated securitization entities	2,520.4	3,030.8
Current portion of long-term and other debt	101.4	101.4
Other current liabilities	228.1	338.3
Deferred revenue	748.3	807.9
Total current liabilities	10,752.4	11,872.0
Deferred revenue	103.6	114.1
Deferred tax liability, net		80.0
Long-term operating lease liabilities	282.6	291.7
Deposits	4,864.2	5,209.3
Non-recourse borrowings of consolidated securitization entities	3,840.3	4,253.2
Long-term and other debt	2,974.7	2,748.5
Other liabilities	329.4	337.7
Total liabilities	23,147.2	24,906.5
Commitments and contingencies (Note 15)
Stockholders' equity:
Common stock, $0.01 par value; authorized, 200.0 shares; issued, 115.0 shares at each of March 31, 2020 and December 31, 2019, respectively	1.2	1.1
Additional paid-in capital	3,259.7	3,257.7
Treasury stock, at cost, 67.4 shares at each of March 31, 2020 and December 31, 2019, respectively	(6,733.9)	(6,733.9)
Retained earnings	4,678.8	5,163.3
Accumulated other comprehensive loss	(118.1)	(99.9)
Total stockholders' equity	1,087.7	1,588.3
Total liabilities and stockholders' equity	$ 24,234.9	$ 26,494.8

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Mar. 31, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, net, allowance for doubtful accounts (in dollars)	$ 3.4	$ 3.4
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	115.0
Treasury stock, shares	67.4	67.4

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues
Services	$ 46.6	$ 73.3
Redemption, net	120.9	111.9
Finance charges, net	1,214.3	1,149.0
Total revenue	1,381.8	1,334.2
Operating expenses
Cost of operations (exclusive of depreciation and amortization disclosed separately below)	499.2	640.5
Provision for loan loss	655.9	252.1
General and administrative	23.9	38.3
Depreciation and other amortization	17.4	20.6
Amortization of purchased intangibles	21.4	25.8
Total operating expenses	1,217.8	977.3
Operating income	164.0	356.9
Interest expense
Securitization funding costs	49.9	57.3
Interest expense on deposits	60.3	48.7
Interest expense on long-term and other debt, net	28.4	37.9
Total interest expense, net	138.6	143.9
Income from continuing operations before income taxes	25.4	213.0
(Benefit) provision for income taxes	(4.6)	34.8
Income from continuing operations	30.0	178.2
Loss from discontinued operations, net of taxes		(29.1)
Net income	$ 30.0	$ 149.1
Basic income (loss) per share (Note 3):
Income from continuing operations (in dollars per share)	$ 0.63	$ 3.36
Loss from discontinued operations (in dollars per share)		(0.55)
Net income per share (in dollars per share)	0.63	2.81
Diluted income (loss) per share (Note 3):
Income from continuing operations (in dollars per share)	0.63	3.35
Loss from discontinued operations (in dollars per share)		(0.55)
Net income per share (in dollars per share)	$ 0.63	$ 2.80
Weighted average shares (Note 3):
Basic (in shares)	47.6	53.0
Diluted (in shares)	47.7	53.2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 30.0	$ 149.1
Other comprehensive income:
Unrealized gain on securities available-for-sale	2.7	10.0
Tax expense	(1.1)	(1.0)
Unrealized gain on securities available-for-sale, net of tax	1.6	9.0
Unrealized gain (loss) on cash flow hedges	0.4	(0.1)
Tax expense	(0.1)
Unrealized gain (loss) on cash flow hedges, net of tax	0.3	(0.1)
Unrealized gain on net investment hedge		16.1
Tax expense		(3.9)
Unrealized gain on net investment hedge, net of tax		12.2
Foreign currency translation adjustments (inclusive of deconsolidation of $3.8 million related to sale of business for the three months ended March 31, 2020)	(20.1)	(10.9)
Other comprehensive income (loss), net of tax	(18.2)	10.2
Total comprehensive income, net of tax	$ 11.8	$ 159.3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Deconsolidation related to sale of business	$ 3.8

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Loss	Total
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				149.1		149.1
Other comprehensive income (loss)					10.2	10.2
Stock-based compensation		20.1				20.1
Repurchases of common stock			(222.8)			(222.8)
Dividends and dividend equivalent rights declared				(33.7)		(33.7)
Other		(15.5)				(15.5)
Other (in shares)	0.2
Balance at Mar. 31, 2019	$ 1.1	3,177.0	(5,938.5)	5,127.8	(127.9)	2,239.5
Balance (in shares) at Mar. 31, 2019	113.2
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
Increase (Decrease) in Stockholders' Equity
Net income				30.0		30.0
Cumulative effect adjustment to retained earnings in accordance with ASU 2016-13				(485.0)		(485.0)
Other comprehensive income (loss)					(18.2)	(18.2)
Stock-based compensation		4.7				4.7
Dividends and dividend equivalent rights declared				(29.5)		(29.5)
Other	$ 0.1	(2.7)				(2.6)
Balance at Mar. 31, 2020	$ 1.2	$ 3,259.7	$ (6,733.9)	$ 4,678.8	$ (118.1)	$ 1,087.7
Balance (in shares) at Mar. 31, 2020	115.0

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares			3 Months Ended
	Apr. 23, 2020	Jan. 30, 2020	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21	$ 0.63	$ 0.63	$ 0.63

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 30.0	$ 149.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	38.8	118.9
Deferred income taxes	(158.7)	(35.0)
Provision for loan loss	655.9	252.1
Non-cash stock compensation	4.7	21.1
Amortization of deferred financing costs	9.5	11.0
Change in other operating assets and liabilities, net of sale of business	8.6	8.7
Other	(16.3)	84.9
Net cash provided by operating activities	572.5	610.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in redemption settlement assets	1.0	(0.1)
Change in credit card and loan receivables	1,446.7	758.2
Proceeds from sale of business	25.4
Proceeds from sale of credit card portfolios	289.5
Payments for acquired businesses, net of cash		(6.7)
Capital expenditures	(15.7)	(38.7)
Purchases of other investments	(14.0)	(5.0)
Maturities/sales of other investments	13.2	6.4
Other	0.2	3.4
Net cash provided by investing activities	1,746.3	717.5
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under debt agreements	500.0	1,045.1
Repayments of borrowings	(275.4)	(870.9)
Non-recourse borrowings of consolidated securitization entities	350.0	1,122.2
Repayments/maturities of non-recourse borrowings of consolidated securitization entities	(1,275.0)	(1,997.5)
Net decrease in deposits	(769.4)	(502.6)
Payment of deferred financing costs	(0.6)	(5.4)
Dividends paid	(30.3)	(33.9)
Purchase of treasury shares		(222.8)
Other	(2.7)	(17.2)
Net cash used in financing activities	(1,503.4)	(1,483.0)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7.6)	3.0
Change in cash, cash equivalents and restricted cash	807.8	(151.7)
Cash, cash equivalents and restricted cash at beginning of period	3,958.1	3,967.7
Cash, cash equivalents and restricted cash at end of period	4,765.9	3,816.0
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	138.3	206.7
Income taxes paid, net	$ 44.6	$ 20.4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared by Alliance Data Systems Corporation (“ADSC” or, including its consolidated subsidiaries and variable interest entities (“VIEs”), the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020.

The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets; (2) liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP. Effective March 31, 2019, the Company’s divested Epsilon segment met the criteria set forth in Accounting Standards Codification (“ASC”) 205-20, “Presentation of Financial Statements — Discontinued Operations,” and was subsequently sold on July 1, 2019. The Company’s products and services are reported under two segments—LoyaltyOne^® and Card Services.

Recently Issued Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities. The Company is evaluating the impact that adoption of ASU 2020-04 will have on its consolidated financial statements.

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or ASC 326. This standard, referred to as Current Expected Credit Loss (“CECL”), required entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the CECL model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio.

The Company adopted CECL on January 1, 2020 and recorded an increase in its allowance for loan loss at adoption of $644.0 million, which was recorded through a cumulative-effect adjustment to retained earnings, net of taxes. CECL also expanded the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating its allowance for loan loss. See Note 6, “Credit Card and Loan Receivables,” for the Company’s CECL disclosures.

In addition, CECL modified the impairment model for available-for-sale debt securities and provided for a simplified accounting model for purchased financial assets with credit deterioration since their origination. CECL impacts the Company’s valuation of its accounts receivable and available-for-sale debt securities, with respect to 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 Company’s adoption of this standard on January 1, 2020 did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. 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 adopted ASU 2018-15 on January 1, 2020 on a prospective basis and the adoption did not have a material impact on its consolidated financial statements.

REVENUE

3 Months Ended

Mar. 31, 2020

REVENUE

REVENUE

2. REVENUE

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:


					Corporate/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	71.3	$	—	$	—	$	71.3
Short-term loyalty programs		120.3		—		—		120.3
Servicing fees, net		—		(30.7)		—		(30.7)
Other		3.3		—		0.1		3.4
Revenue from contracts with customers	$	194.9	$	(30.7)	$	0.1	$	164.3

Finance charges, net		—		1,214.3		—		1,214.3
Investment income		3.2		—		—		3.2
Total	$	198.1	$	1,183.6	$	0.1	$	1,381.8


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

Coalition loyalty program	$	71.4	$	—	$	—	$	71.4
Short-term loyalty programs		109.6		—		—		109.6
Servicing fees, net		—		(18.6)		—		(18.6)
Other		19.8		—		—		19.8
Revenue from contracts with customers	$	200.8	$	(18.6)	$	—	$	182.2

Finance charges, net		—		1,149.0		—		1,149.0
Investment income		3.0		—		—		3.0
Total	$	203.8	$	1,130.4	$	—	$	1,334.2

The following tables present revenue disaggregated by geographic region based on the location of the subsidiary that generally correlates with the location of the customer:


					Corporate/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	2.1	$	1,183.6	$	0.1	$	1,185.8
Canada		79.1		—		—		79.1
Europe, Middle East and Africa		68.6		—		—		68.6
Asia Pacific		37.0		—		—		37.0
Other		11.3		—		—		11.3
Total	$	198.1	$	1,183.6	$	0.1	$	1,381.8


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

United States	$	6.4	$	1,130.4	$	—	$	1,136.8
Canada		89.0		—		—		89.0
Europe, Middle East and Africa		81.4		—		—		81.4
Asia Pacific		17.5		—		—		17.5
Other		9.5		—		—		9.5
Total	$	203.8	$	1,130.4	$	—	$	1,334.2

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, 2020	$	258.6	$	663.4	$	922.0
Cash proceeds		44.8		73.4		118.2
Revenue recognized ⁽¹⁾		(48.6)		(69.2)		(117.8)
Effects of foreign currency translation		(19.6)		(50.9)		(70.5)
Balance at March 31, 2020	$	235.2	$	616.7	$	851.9
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$	131.6	$	616.7	$	748.3
Deferred revenue (non-current)	$	103.6	$	—	$	103.6

(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 $106.8 million in 2020, $83.3 million in 2021, $40.8 million in 2022, and $4.3 million in 2023.

Additionally, contract liabilities for the Company’s short-term loyalty programs are recognized in other current liabilities in the Company’s unaudited condensed consolidated balance sheets. The beginning balance as of January 1, 2020 was $122.8 million and the closing balance as of March 31, 2020 was $79.0 million, with the change due to revenue recognized of approximately $89.6 million during the three months ended March 31, 2020, offset in part by cash payments received in advance of program performance.

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

EARNINGS PER SHARE

3. EARNINGS PER SHARE

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


	Three Months Ended March 31,
	2020		2019
	(in millions, except per share amounts)
Numerator:
Income from continuing operations	$	30.0	$	178.2
Loss from discontinued operations		—		(29.1)
Net income	$	30.0	$	149.1

Denominator:
Weighted average shares, basic		47.6		53.0
Weighted average effect of dilutive securities:
Net effect of dilutive stock options and unvested restricted stock		0.1		0.2
Denominator for diluted calculation		47.7		53.2

Basic income per share:
Income from continuing operations	$	0.63	$	3.36
Loss from discontinued operations	$	—	$	(0.55)
Net income per share	$	0.63	$	2.81

Diluted income per share:
Income from continuing operations	$	0.63	$	3.35
Loss from discontinued operations	$	—	$	(0.55)
Net income per share	$	0.63	$	2.80

For each of the three months ended March 31, 2020 and 2019, 0.3 million of restricted stock units, respectively, were excluded from the calculation of weighted average dilutive common shares as the effect would have been anti-dilutive.

DISPOSITION

3 Months Ended

Mar. 31, 2020

DISPOSITION

DISPOSITION

4. DISPOSITION

On January 10, 2020, the Company sold Precima^®, a provider of retail strategy and customer data applications and analytics, to Nielsen Holdings plc for total consideration of $43.8 million. The purchase and sale agreement provides for $10.0 million in contingent consideration based upon the occurrence of specified events and performance of the business, with two earnout determination dates in September 2020 and September 2021, respectively. The Company estimated the fair value of the contingent purchase price at approximately $6.5 million, which is included in the total consideration below. Precima was included in the Company’s LoyaltyOne segment. The pre-tax gain was recorded in cost of operations in the Company’s unaudited condensed consolidated statements of income.


	January 10,
	2020
	(in millions)
Total consideration ⁽¹⁾	$	43.8
Net carrying value of assets and liabilities (including other comprehensive income)		26.8
Allocation of goodwill		3.2
Strategic transaction costs		5.8
Pre-tax gain on sale of business, net of strategic transaction costs	$	8.0

(1)	Consideration as defined included cash associated with the sold Precima entities, which was $10.8 million.

DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2020

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

5. DISCONTINUED OPERATIONS

Effective March 31, 2019, the Company’s divested Epsilon segment met the criteria set forth in ASC 205-20, “Presentation of Financial Statements — Discontinued Operations,” and was subsequently sold on July 1, 2019.

The following table summarizes the results of discontinued operations for the three months ended March 31, 2019:


	Three Months Ended
	March 31, 2019
	(in millions)
Revenue	$	507.8
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		443.4
Depreciation and other amortization		29.0
Amortization of purchased intangibles		43.5
Interest expense ⁽¹⁾		32.1
Loss before benefit from income taxes		(40.2)
Benefit from income taxes ⁽¹⁾		(11.1)
Loss from discontinued operations, net of taxes ⁽²⁾	$	(29.1)

(1)

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.

(2)	Reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment and the allocation of interest expense on corporate debt.

Depreciation and amortization and capital expenditures from discontinued operations for the three months ended March 31, 2019 are as follows:


	Three Months Ended
	March 31, 2019
	(in millions)
Depreciation and amortization	$	72.5
Capital expenditures	$	6.8

CREDIT CARD AND LOAN RECEIVABLES

3 Months Ended

Mar. 31, 2020

CREDIT CARD AND LOAN RECEIVABLES

CREDIT CARD AND LOAN RECEIVABLES

6. 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:


	March 31,		December 31,
	2020		2019
	(in millions)
Principal receivables	$	16,725.4	$	18,413.1
Billed and accrued finance charges		933.5		977.3
Other		73.0		72.7
Total credit card and loan receivables		17,731.9		19,463.1
Less: Credit card receivables – restricted for securitization investors		12,033.4		13,504.2
Other credit card and loan receivables	$	5,698.5	$	5,958.9

Allowance for Loan Loss

Effective January 1, 2020, the Company adopted ASC 326 on a modified retrospective approach and applied a CECL model to determine its allowance for loan loss. The allowance for loan loss is an estimate of expected credit losses, measured over the estimated life of its credit card and loan receivables that considers forecasts of future economic conditions in addition to information about past events and current conditions. The estimate under the CECL model is significantly influenced by the composition, characteristics and quality of the Company’s portfolio of credit card and loan receivables, as well as the prevailing economic conditions and forecasts utilized. The estimate of the allowance for loan loss includes an estimate for uncollectible principal as well as unpaid interest and fees. Charge-offs of principal amounts, net of recoveries are deducted from the allowance. The allowance is maintained through an adjustment to the provision for loan loss and is evaluated for appropriateness. Prior to January 1, 2020, the Company’s allowance for loan loss was determined utilizing an incurred loss model under ASC 450, “Contingencies.”

ASC 326 requires entities to use a “pooled” approach to estimate expected credit losses for financial assets with similar risk characteristics. As part of its CECL implementation, the Company evaluated multiple risk characteristics of its credit card and loan receivables portfolio, and determined delinquency status and credit quality to be the most significant characteristics for estimating expected credit losses. To estimate its allowance for loan loss, the Company segregates its credit card and loan receivables into four groups with similar risk characteristics, on the basis of delinquency status and credit quality risk score. These risk characteristics are evaluated at least on an annual basis, or more frequently as facts and circumstances warrant. The Company’s credit card and loan receivables do not have stated maturities and therefore prepayments are not factored into the determination of the estimated life of the credit card and loan receivables. In determining the estimated life of a credit card and loan receivable, payments were applied to the measurement date balance with no payments allocated to future purchase activity. The Company uses a combination of First In First Out (“FIFO”) and the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (“CARD Act”) methodology to model balance paydown.

The Company’s groups of pooled financial assets with similar risk characteristics and their estimated life is as follows:


	Estimated Life
	(in months)
Group A (Current, risk score - high)		14
Group B (Current, risk score - low)		19
Group C (Delinquent, risk score - high)		17
Group D (Delinquent, risk score - low)		26

In estimating its allowance for loan loss, for each identified group, management utilizes various models and estimation techniques based on historical loss experience, current conditions, reasonable and supportable forecasts and other relevant factors. The Company’s quantitative estimate of expected credit losses under CECL is impacted by certain forecasted economic factors. Management utilizes a third party service to analyze a number of scenarios, but uses one scenario to determine the macroeconomic variables over the forecast period. The Company considers the forecast used to be reasonable and supportable over the estimated life of the credit card and loan receivables, with no reversion period. In addition to the quantitative estimate of expected credit losses, the Company also incorporates qualitative adjustments for certain factors such as Company-specific risks, changes in current economic conditions that may not be captured in the quantitatively derived results, or other relevant factors to ensure the allowance for loan loss reflects the Company’s best estimate of current expected credit losses. As permitted by ASC 326, the Company excludes unbilled finance charges from its amortized cost basis of credit card and loan receivables. At March 31, 2020, unbilled finance charges were $262.9 million and included in other credit card and loan receivables in the Company’s unaudited condensed consolidated balance sheet.

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


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,171.1	$	1,038.3
Adoption of ASC 326 ⁽¹⁾		644.0		—
Provision for loan loss		655.9		252.1
Recoveries		67.9		59.8
Principal charge-offs		(388.1)		(329.1)
Balance at end of period	$	2,150.8	$	1,021.1

(1)

Recorded January 1, 2020 through a cumulative-effect adjustment to retained earnings, net of taxes.

For the three months ended March 31, 2020, the increase in the allowance for loan loss, in addition to the impact of the $644.0 million attributable to the adoption of ASC 326, was due to an increase in delinquent amounts and deterioration of the macroeconomic outlook due to COVID-19.

Net Charge-offs

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.

Charge-offs for unpaid interest and fees were $231.9 million and $218.8 million for the three months ended March 31, 2020 and 2019, 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, 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 amortized cost basis of the aging analysis of the Company’s credit card and loan receivables portfolio:


	Aging Analysis of Delinquent Amortized Cost Credit Card and Loan Receivables
	31 to 60 days delinquent		61 to 90 days delinquent		91 or more days delinquent		Total delinquent		Current		Total
	(in millions)
As of March 31, 2020	$	347.6	$	273.8	$	667.1	$	1,288.5	$	16,072.5	$	17,361.0

As of December 31, 2019	$	399.1	$	293.9	$	698.4	$	1,391.4	$	17,656.4	$	19,047.8

Modified Credit Card Receivables

Forbearance Programs

In response to the COVID-19 pandemic, in March 2020 the Company began to offer forbearance programs to affected cardholders, which provide for short-term modifications in the form of payment deferrals and late fee waivers to borrowers who were current as of their most recent billing cycle prior to April 2020. These programs are intended to provide temporary relief to affected cardholders and are not considered troubled debt restructurings. At March 31, 2020, the amount of credit card and loan receivables in forbearance programs was not material.

Troubled Debt Restructurings

The Company holds certain credit card receivables for which the terms have been modified. The Company’s modified credit card receivables include credit card receivables for which temporary hardship concessions have been granted and credit card receivables in permanent workout programs. These modified credit card receivables include concessions consisting primarily of a reduced minimum payment and an interest rate reduction. The temporary programs’ concessions remain in place for a period no longer than twelve months, while the permanent programs remain in place through the payoff of the credit card receivables if the credit cardholder complies with the terms of the program. 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.

The Company had $332.6 million and $308.7 million, respectively, as a recorded investment in impaired credit card receivables as of March 31, 2020 and December 31, 2019, respectively, which represented less than 2% of the Company’s

total credit card receivables. The average recorded investment in impaired credit card receivables was $314.7 million and $297.7 million for the three months ended March 31, 2020 and 2019, respectively.

Interest income on these modified credit card receivables is accounted for in the same manner as other accruing credit card receivables. Cash collections on these modified credit card receivables are allocated according to the same payment hierarchy methodology applied to credit card receivables that are not in such programs. The Company recognized $5.5 million and $5.7 million for the three months ended March 31, 2020 and 2019, respectively, in interest income associated with modified credit card receivables during the period that such credit card receivables were impaired.

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

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Pre-modification

Post-modification

Pre-modification

Post-modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card receivables

75,065

112.8

112.7

70,294

104.3

104.1

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


	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance
	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted – credit card receivables	31,670	$	44.0	50,456	$	65.4

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. 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. The following table reflects the composition of the Company’s credit card and loan receivables on an amortized cost basis by obligor credit quality as of March 31, 2020 and December 31, 2019:


	Amortized Cost Revolving Credit Card and Loan Receivables
	March 31, 2020				December 31, 2019
			Percentage of				Percentage of
			Amortized				Amortized
Probability of an Account Becoming 91 or More Days Past	Amortized		Cost Basis		Amortized		Cost Basis
Due or Becoming Charged-off (within the next 12 months)	Cost Basis		Outstanding		Cost Basis		Outstanding
	(in millions, except percentages)
No Score	$	217.5	1.3	%	$	298.4	1.6	%
27.1% and higher		1,580.7	9.1			1,648.8	8.7
17.1% - 27.0%		1,053.7	6.1			1,108.5	5.8
12.6% - 17.0%		1,123.5	6.5			1,171.7	6.2
3.7% - 12.5%		7,828.1	45.1			8,292.1	43.5
1.9% - 3.6%		2,944.8	17.0			3,375.3	17.7
Lower than 1.9%		2,612.7	14.9			3,153.0	16.5
Total	$	17,361.0	100.0	%	$	19,047.8	100.0	%

Note: The Company’s credit card and loan receivables are revolving receivables as they do not have stated maturities and are exempted from certain vintage disclosures required under ASC 326.

The proprietary scoring models are based on historical data and require various assumptions about future performance, which the Company updates periodically. Obligor credit quality is monitored at least monthly during the life of an account. The effect of the COVID-19 pandemic resulted in an increase in the probability of an account becoming 91 of more days past due or becoming charged-off.

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 $88.8 million and $408.0 million as of March 31, 2020 and December 31, 2019, respectively.

During the three months ended March 31, 2020, the Company sold a credit card portfolio for preliminary cash consideration of approximately $289.5 million, subject to customary sale price adjustments, and recognized a gain of approximately $20.4 million on the transaction, which was recorded in cost of operations in the Company’s unaudited condensed consolidated statements of income.

The Company recorded portfolio valuation adjustments, which are reflected in cost of operations in the Company’s unaudited condensed consolidated statements of income, of $4.2 million and $59.9 million for the three months ended March 31, 2020 and 2019, respectively.

Securitized Credit Card Receivables

The Company regularly securitizes its credit card receivables through its credit card securitization trusts, consisting of World Financial Network Credit Card Master Trust, World Financial Network Credit Card Master Note Trust (“Master Trust I”) and World Financial Network Credit Card Master Trust III (“Master Trust III”) (collectively, the “WFN Trusts”), and World Financial Capital Credit Card Master Note Trust (the “WFC Trust”). The Company continues to own and service the accounts that generate credit card receivables held by the WFN Trusts and the WFC Trust. In its capacity as a servicer, each of the respective banks earns a fee from the WFN Trusts and the WFC Trust to service and administer the credit card receivables, collect payments and charge-off uncollectible receivables. These fees are eliminated and therefore not reflected in the Company’s unaudited condensed consolidated statements of income for the three months ended March 31, 2020 and 2019.

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.

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


	March 31,		December 31,
	2020		2019
	(in millions)
Total credit card receivables – restricted for securitization investors	$	12,033.4	$	13,504.2
Principal amount of credit card receivables – restricted for securitization investors, 91 days or more past due	$	302.5	$	321.8

INVENTORIES, NET

3 Months Ended

Mar. 31, 2020

INVENTORIES, NET

INVENTORIES, NET

7. INVENTORIES, NET

Inventories, net of $189.1 million and $218.0 million at March 31, 2020 and December 31, 2019, respectively, primarily consist of finished goods to be utilized as rewards in the Company’s loyalty programs. 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.

OTHER INVESTMENTS

3 Months Ended

Mar. 31, 2020

OTHER INVESTMENTS

OTHER INVESTMENTS

8. 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 unaudited condensed 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:


	March 31, 2020								December 31, 2019
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Marketable securities	$	257.9	$	7.3	$	(0.1)	$	265.1	$	257.2	$	3.0	$	(0.4)	$	259.8
Total	$	257.9	$	7.3	$	(0.1)	$	265.1	$	257.2	$	3.0	$	(0.4)	$	259.8

The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of March 31, 2020 and December 31, 2019, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:


	March 31, 2020
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	3.7	$	(0.1)	$	—	$	—	$	3.7	$	(0.1)
Total	$	3.7	$	(0.1)	$	—	$	—	$	3.7	$	(0.1)


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

The amortized cost and estimated fair value of the marketable securities and U.S. Treasury bonds at March 31, 2020 by contractual maturity are as follows:


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	40.2	$	40.2
Due after one year through five years		1.4		1.4
Due after five years through ten years		—		—
Due after ten years		216.3		223.5
Total	$	257.9	$	265.1

Market values were determined for each individual security in the investment portfolio. Effective January 1, 2020, the Company adopted ASC 326, which replaced the other-than-temporary impairment model for available-for-sale debt securities. For available-for-sale debt securities in which fair value is less than cost, ASC 326 requires that credit-related impairment, if any, be recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The Company typically invests in highly-rated securities with low probabilities of default and has the intent and ability to hold the investments until maturity, and the Company performs an assessment each period for credit-related impairment. As of March 31, 2020, the Company does not consider its investments to be impaired.

There were no realized gains or losses from the sale of investment securities for the three months ended March 31, 2020 and 2019.

REDEMPTION SETTLEMENT ASSETS

3 Months Ended

Mar. 31, 2020

REDEMPTION SETTLEMENT ASSETS

REDEMPTION SETTLEMENT ASSETS

9. 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:


	March 31, 2020								December 31, 2019
		Amortized	Unrealized		Unrealized					Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Restricted cash	$	55.9	$	—	$	—	$	55.9	$	39.3	$	—	$	—	$	39.3
Mutual funds		22.9		—		—		22.9		25.1		—		—		25.1
Corporate bonds		490.7		3.0		(4.5)		489.2		536.0		2.4		(2.0)		536.4
Total	$	569.5	$	3.0	$	(4.5)	$	568.0	$	600.4	$	2.4	$	(2.0)	$	600.8


	March 31, 2020
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	171.8	$	(3.6)	$	116.8	$	(0.9)	$	288.6	$	(4.5)
Total	$	171.8	$	(3.6)	$	116.8	$	(0.9)	$	288.6	$	(4.5)


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

The amortized cost and estimated fair value of the securities at March 31, 2020 by contractual maturity are as follows:


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	121.9	$	121.6
Due after one year through five years		384.4		383.3
Due after five year through ten years		7.3		7.2
Total	$	513.6	$	512.1

There were no realized gains or losses from the sale of investment securities for the three months ended March 31, 2020. Realized losses from the sale of investment securities for the three months ended March 31, 2019 were de minimis.

LEASES

3 Months Ended

Mar. 31, 2020

LEASES

LEASES

10. LEASES

The Company has operating leases for general office properties, warehouses, data centers, call centers, automobiles and certain equipment. As of March 31, 2020, the Company’s leases have remaining lease terms of less than 1 year to 18 years, some of which may include renewal options. 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:


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
	(in millions)
Operating lease cost	$	10.2	$	10.3
Short-term lease cost		0.3		0.6
Variable lease cost		0.2		1.9
Total	$	10.7	$	12.8

Other information related to leases was as follows:


	March 31,
	2020
Weighted-average remaining lease term (in years):
Operating leases		11.3
Weighted-average discount rate:
Operating leases		5.2%

Supplemental cash flow information related to leases was as follows:


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14.4	$	15.3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2.6	$	8.6

Maturities of the lease liabilities as of March 31, 2020 were as follows:


	Operating
Year	Leases
	(in millions)
2020 (excluding the three months ended March 31, 2020)	$	27.5
2021		39.5
2022		38.6
2023		36.7
2024		35.3
Thereafter		234.6
Total undiscounted lease liabilities		412.2
Less: Amount representing interest		(107.3)
Total present value of minimum lease payments	$	304.9

Amounts recognized in the March 31, 2020 consolidated balance sheet:
Current operating lease liabilities	$	22.3
Long-term operating lease liabilities		282.6
Total	$	304.9

INTANGIBLE ASSETS AND GOODWILL

3 Months Ended

Mar. 31, 2020

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL

11. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets consist of the following:


	March 31, 2020
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	319.9	$	(285.6)	$	34.3	7 years—straight line
Premium on purchased credit card portfolios		176.4		(87.8)		88.6	1-13 years—straight line
Collector database		49.8		(49.0)		0.8	5 years—straight line
Tradenames		31.3		(26.3)		5.0	8-15 years—straight line
	$	577.4	$	(448.7)	$	128.7
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	578.6	$	(448.7)	$	129.9


	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

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 (excluding the three months ended March 31, 2020)	$	59.7
2021		22.2
2022		17.5
2023		12.8
2024		10.7
Thereafter		5.8

Goodwill

The changes in the carrying amount of goodwill are as follows:



	LoyaltyOne		Card Services		Total
	(in millions)
Balance at January 1, 2020	$	690.9	$	264.0	$	954.9
Goodwill related to sale of Precima		(3.2)		—		(3.2)
Effects of foreign currency translation		(22.6)		—		(22.6)
Balance at March 31, 2020	$	665.1	$	264.0	$	929.1

Approximately $3.2 million of LoyaltyOne goodwill was allocated to Precima upon sale in January 2020, based on a relative fair value allocation of the businesses.

The Company tests goodwill for impairment annually, as of July 31, or when events and circumstances change that would indicate the carrying value may not be recoverable. As of March 31, 2020, the Company does not believe it is more likely than not that the fair value of its reporting units is less than its carrying amount. In light of the COVID-19 pandemic and current macroeconomic environment, should future deterioration result in a material adverse impact to our business, our goodwill may be impaired.

RESTRUCTURING AND OTHER CHARGES

3 Months Ended

Mar. 31, 2020

RESTRUCTURING AND OTHER CHARGES

RESTRUCTURING AND OTHER CHARGES

12. RESTRUCTURING AND OTHER CHARGES

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

The following tables summarize the restructuring and other charges incurred by reportable segment for all restructuring activities for the periods presented.


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2020	Benefits ⁽¹⁾		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	(0.1)	$	—	$	—	$	—	$	(0.1)
LoyaltyOne		0.1		—		—		—		0.1
Card Services		(6.5)		—		—		—		(6.5)
Total	$	(6.5)	$	—	$	—	$	—	$	(6.5)

(1)	For the three months ended March 31, 2020, restructuring and other charges consisted of adjustments to our liability.


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	—	$	—	$	—	$	—	$	—
LoyaltyOne		1.2		4.6		—		2.1		7.9
Card Services		—		—		—		—		—
Total	$	1.2	$	4.6	$	—	$	2.1	$	7.9

The Company’s liability for restructuring and other charges is recognized in accrued expenses and other liabilities in its unaudited condensed consolidated balance sheets. The following table summarizes the activities related to the restructuring and other charges, as discussed above, for the three months ended March 31, 2020:


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2020	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Liability as of January 1, 2020	$	34.7	$	—	$	—	$	0.1	$	34.8
Adjustments for non-cash charges		(6.5)		—		—		—		(6.5)
Cash payments		(13.2)		—		—		(0.1)		(13.3)
Liability as of March 31, 2020	$	15.0	$	—	$	—	$	—	$	15.0

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.

DEBT

3 Months Ended

Mar. 31, 2020

DEBT

DEBT

13. DEBT

Debt consists of the following:


	March 31,		December 31,
Description	2020		2019		Maturity	Interest Rate
	(Dollars in millions)
Long-term and other debt:
2017 revolving line of credit	$	250.0	$	—	December 2022	⁽¹⁾
2017 term loans		2,003.4		2,028.8	December 2022	⁽²⁾
BrandLoyalty credit agreement		—		—	June 2020	⁽³⁾
Senior notes due 2024		850.0		850.0	December 2024	4.750%
Total long-term and other debt		3,103.4		2,878.8
Less: Unamortized debt issuance costs		27.3		28.9
Less: Current portion		101.4		101.4
Long-term portion	$	2,974.7	$	2,748.5

Deposits:
Certificates of deposit	$	7,806.8	$	8,585.2	Various – Apr 2020 to Mar 2025	1.33% to 4.00%
Money market deposits		3,598.8		3,589.8	Non-maturity	⁽⁴⁾
Total deposits		11,405.6		12,175.0
Less: Unamortized debt issuance costs		19.9		23.3
Less: Current portion		6,521.5		6,942.4
Long-term portion	$	4,864.2	$	5,209.3

Non-recourse borrowings of consolidated securitization entities:
Fixed rate asset-backed term note securities	$	4,891.0	$	4,891.0	Various – May 2020 to Sep 2022	2.03% to 3.95%
Conduit asset-backed securities		1,480.0		2,405.0	Various – Sep 2020 to Apr 2021	⁽⁵⁾
Total non-recourse borrowings of consolidated securitization entities		6,371.0		7,296.0
Less: Unamortized debt issuance costs		10.3		12.0
Less: Current portion		2,520.4		3,030.8
Long-term portion	$	3,840.3	$	4,253.2

(1)

The interest rate is based upon LIBOR plus an applicable margin. At March 31, 2020, the weighted average interest rate for the revolving line of credit was 2.64%.

(2)

The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 2.74% and 3.30% at March 31, 2020 and December 31, 2019, respectively.

(3)

The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin.

(4)

The interest rates are based on the Federal Funds rate plus an applicable margin. At March 31, 2020, the interest rates ranged from 0.34% to 3.50%. At December 31, 2019, the interest rates ranged from 1.84% to 3.50%.

(5)

The interest rate is based upon LIBOR or the asset-backed commercial paper costs of each individual conduit provider plus an applicable margin. At March 31, 2020, the interest rates ranged from 2.10% to 2.49%. At December 31, 2019, the interest rates ranged from 2.79% to 2.96%.

At March 31, 2020, the Company was in compliance with its financial covenants.

Long-term and Other Debt

The Company’s credit agreement, as amended, provided for $2,028.8 million in term loans subject to certain principal repayments and a $750.0 million revolving line of credit. As of March 31, 2020, the Company had $2,003.4 million in term loans outstanding with $500.0 million total availability under the revolving line of credit.

BrandLoyalty Credit Agreement

As of March 31, 2020, there were no amounts outstanding under the BrandLoyalty credit agreement.

On April 3, 2020, BrandLoyalty and certain of its subsidiaries, as borrowers and guarantors, terminated its existing facility and entered into a new credit agreement (the “2020 BrandLoyalty Credit Agreement”) that provides for a committed revolving line of credit of €30.0 million ($32.4 million as of April 3, 2020), an uncommitted revolving line of credit of €30.0 million ($32.4 million as of April 3, 2020), and an accordion feature permitting BrandLoyalty to request an increase in either the committed or uncommitted line of credit up to €80.0 million ($86.5 million as of April 3, 2020) in aggregate. Each of the committed and uncommitted revolving line of credit are schedule to mature on April 3, 2023, subject to BrandLoyalty’s request to extend for two additional one-year terms at the absolute discretion of the lenders at the time of such requests.

All advances under the 2020 BrandLoyalty Credit Agreement are denominated in Euros. The interest rate fluctuates and is equal to EURIBOR, as defined in the 2020 BrandLoyalty Credit Agreement, plus an applicable margin based on BrandLoyalty’s senior net leverage ratio. The 2020 BrandLoyalty Credit Agreement contains financial covenants, including a senior net leverage ratio, as well as usual and customary negative covenants, representations, general and information undertakings and events of default.

Non-Recourse Borrowings of Consolidated Securitization Entities

Asset-Backed Term Notes

As of March 31, 2020, the Company collected $225.3 million of principal payments made by its credit cardholders during the accumulation period for the repayment of the Series 2017-A notes, which mature in May 2020. The cash is restricted to the securitization investors and is reflected in other current assets in the Company’s unaudited condensed consolidated balance sheet as of March 31, 2020.

Conduit Facilities

The Company has access to committed undrawn capacity through three conduit facilities to support the funding of its credit card receivables through Master Trust I, Master Trust III and the WFC Trust.

As of March 31, 2020, total capacity under the conduit facilities was $4.7 billion, of which $1.5 billion had been drawn and was included in non-recourse borrowings of consolidated securitization entities in the unaudited condensed consolidated balance sheets.

In April 2020, Master Trust I amended its 2009-VFN conduit facility, decreasing the capacity from $1.18 billion to $1.0 billion and extending the maturity to July 2021. In April 2020, Master Trust III amended its 2009-VFC conduit facility, decreasing the capacity from $1.3 billion to $1.0 billion and extending the maturity to July 2021.

DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2020

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

14. 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 March 31, 2020, 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 March 31, 2020, the maximum term over which the Company is hedging its exposure to the variability of future cash flows associated with certain inventory transactions is 11 months.

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 unaudited condensed consolidated statements of income as they occur. Gains and losses on derivatives not designated as hedging instruments are included in other operating activities in the unaudited condensed consolidated statements of cash flows for all periods presented.

The following tables present the fair values of the derivative instruments included within the Company’s unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019:


	March 31, 2020
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	19.6	$	1.1	Other current assets	April 2020 to December 2020
Foreign currency exchange hedges	$	9.5	$	0.3	Other current liabilities	April 2020 to February 2021


	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

Derivatives Designated as Hedging Instruments

Gains of $0.3 million, net of tax, and losses of $0.1 million, net of tax, were recognized in other comprehensive income for the three months ended March 31, 2020 and 2019, respectively, related to foreign currency exchange hedges designated as effective.

Changes in the fair value of these hedges are recorded in other comprehensive income until the hedged transactions affect net income. Reclassifications from accumulated other comprehensive loss into net income (cost of operations) for each of the periods presented were not material. At March 31, 2020, $0.2 million is expected to be reclassified from accumulated other comprehensive income into net income in the coming 12 months.

Derivatives Not Designated as Hedging Instruments

As of March 31, 2020, the Company did not hold any derivatives not designated as hedging instruments, and there were no gains or losses related to derivatives not designated as hedging instruments for the three months ended March 31, 2020.

For the three months ended March 31, 2019, losses of $1.2 million related to foreign currency exchange forward contracts not designated as hedging instruments were recognized in general and administrative expense in the Company’s unaudited condensed consolidated statements of income.

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES.

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

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.

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. As of March 31, 2020, there was no change to the Company’s estimate of loss contingency.

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2020

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

16. STOCKHOLDERS’ EQUITY

Stock Repurchase Program

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. As of December 31, 2019, the Company had $347.8 million remaining under its authorized stock repurchase program. On April 23, 2020, the Company announced that it has suspended its stock repurchase program.

For the three months ended March 31, 2020, the Company did not repurchase any shares of its outstanding common stock, and the Company had $347.8 million remaining under its authorized stock repurchase program.

Stock Compensation Expense

During the three months ended March 31, 2020, the Company awarded 124,344 service-based restricted stock units with a weighted average grant date fair value per share of $100.14 as determined on the date of grant. Service-based restricted stock units typically vest ratably over three years provided that the participant is employed by the Company on each such vesting date.

During the three months ended March 31, 2020, the Company awarded 219,186 performance-based restricted stock units with a weighted average grant date fair value per share of $100.50 as determined on the date of grant with pre-defined vesting criteria that permit a range from 0% to 150% to be earned. If the performance targets are met, the restrictions will lapse with respect to 33% of the award on February 18, 2021, an additional 33% of the award on February 18, 2022 and the final 34% of the award on February 18, 2023, provided that the participant is employed by the Company on each such vesting date.

During the three months ended March 31, 2020, the Company also awarded 20,770 restricted stock units with a market-based condition subject to pre-defined vesting criteria that permit a range from 0% to 175% to be earned. The fair market value of these awards is $78.92 and was estimated utilizing Monte Carlo simulations of the Company’s stock price correlation, expected volatility and risk-free rate 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 18, 2022, provided that the participant is employed by the Company on such vesting date.

Stock-based compensation expense recognized in the Company’s unaudited condensed consolidated statements of income for the three months ended March 31, 2020 and 2019 is as follows:


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Cost of operations	$	2.7	$	6.7
General and administrative		2.0		4.6
Total	$	4.7	$	11.3

For the three months ended March 31, 2019, an additional $9.8 million of stock-based compensation expense related to associates from the Company’s divested Epsilon segment was recorded to discontinued operations.

Dividends

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 to stockholders of record at the close of business on February 14, 2020, resulting in a dividend payment of $30.0 million on March 19, 2020. Additionally, the Company paid $0.3 million in cash related to dividend equivalent rights for the three months ended March 31, 2020.

On April 23, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share on the Company’s common stock to stockholders of record at the close of business on May 14, 2020 and payable on June 18, 2020.

ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2020

ACCUMULATED OTHER COMPREHENSIVE LOSS.

ACCUMULATED OTHER COMPREHENSIVE LOSS

17. ACCUMULATED OTHER COMPREHENSIVE LOSS

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


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2020	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance at December 31, 2019	$	2.5	$	(0.1)	$	(7.5)	$	(94.8)	$	(99.9)
Changes in other comprehensive income (loss)		1.6		0.3		—		(23.9)		(22.0)
Recognition resulting from the sale of Precima's foreign subsidiaries		—		—		—		3.8		3.8
Balance at March 31, 2020	$	4.1	$	0.2	$	(7.5)	$	(114.9)	$	(118.1)


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2019	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance at December 31, 2018	$	(10.7)	$	(0.2)	$	(12.4)	$	(114.8)	$	(138.1)
Changes in other comprehensive income (loss)		9.0		(0.1)		12.2		(10.9)		10.2
Balance at March 31, 2019	$	(1.7)	$	(0.3)	$	(0.2)	$	(125.7)	$	(127.9)

(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 Precima on January 10, 2020, $3.8 million of accumulated foreign currency translation adjustments attributable to Precima’s foreign subsidiaries sold were reclassified from accumulated other comprehensive loss and included in the calculation of the gain on sale of Precima.

Other reclassifications from accumulated other comprehensive loss into net income for each of the periods presented were not material.

FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2020

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

18. 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:


	March 31, 2020				December 31, 2019
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in millions)
Financial assets
Credit card and loan receivables, net	$	15,581.1	$	16,432.6	$	18,292.0	$	19,126.0
Credit card receivables held for sale		88.8		91.5		408.0		436.2
Redemption settlement assets, restricted		568.0		568.0		600.8		600.8
Other investments		265.1		265.1		259.8		259.8
Derivative instruments		1.1		1.1		0.2		0.2
Financial liabilities
Derivative instruments		0.3		0.3		0.3		0.3
Deposits		11,385.7		11,575.1		12,151.7		12,303.6
Non-recourse borrowings of consolidated securitization entities		6,360.7		6,365.0		7,284.0		7,333.6
Long-term and other debt		3,076.1		2,903.3		2,849.9		2,878.8

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

Credit card and loan receivables, net — 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 unaudited condensed 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.

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 March 31, 2020 and December 31, 2019:


			Fair Value Measurements at
			March 31, 2020 Using
	Balance at
	March 31,
	2020		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	22.9	$	22.9	$	—	$	—
Corporate bonds ⁽¹⁾		489.2		—		489.2		—
Marketable securities ⁽²⁾		265.1		34.2		230.9		—
Derivative instruments ⁽³⁾		1.1		—		1.1		—
Total assets measured at fair value	$	778.3	$	57.1	$	721.2	$	—

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


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

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

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

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

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

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 March 31, 2020 and December 31, 2019:


	Fair Value Measurements at
	March 31, 2020
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	16,432.6	$	—	$	—	$	16,432.6
Credit card receivables held for sale		91.5		—		—		91.5
Total	$	16,524.1	$	—	$	—	$	16,524.1

Financial liabilities:
Deposits	$	11,575.1	$	—	$	11,575.1	$	—
Non-recourse borrowings of consolidated securitization entities		6,365.0		—		6,365.0		—
Long-term and other debt		2,903.3		—		2,903.3		—
Total	$	20,843.4	$	—	$	20,843.4	$	—


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

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

- 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

3 Months Ended

Mar. 31, 2020

INCOME TAXES

INCOME TAXES

19. INCOME TAXES

For the three months ended March 31, 2020 and 2019, the Company utilized an effective tax rate of (18.1)% and 16.3%, respectively, to calculate its provision for income taxes. The negative effective tax rate for the first quarter of 2020 was the result of a discrete tax benefit and reduction of tax reserves following a favorable settlement with a state tax authority.

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION

SEGMENT INFORMATION

20. 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.

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/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	198.1	$	1,183.6	$	0.1	$	1,381.8

Income (loss) before income taxes	$	46.7	$	32.1	$	(53.4)	$	25.4
Interest expense, net		(0.3)		110.2		28.7		138.6
Operating income (loss)		46.4		142.3		(24.7)		164.0
Depreciation and amortization		18.2		19.7		0.9		38.8
Stock compensation expense		1.0		1.7		2.0		4.7
Gain on sale of business, net of strategic transaction costs		(8.0)		—		—		(8.0)
Strategic transaction costs		0.1		—		0.6		0.7
Restructuring and other charges		0.1		(6.5)		(0.1)		(6.5)
Adjusted EBITDA ⁽¹⁾		57.8		157.2		(21.3)		193.7
Less: Securitization funding costs		—		49.9		—		49.9
Less: Interest expense on deposits		—		60.3		—		60.3
Adjusted EBITDA, net ⁽¹⁾	$	57.8	$	47.0	$	(21.3)	$	83.5


					Corporate/
Three Months Ended March 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	203.8	$	1,130.4	$	—	$	1,334.2

Income (loss) before income taxes	$	23.0	$	266.9	$	(76.9)	$	213.0
Interest expense, net		1.1		106.0		36.8		143.9
Operating income (loss)		24.1		372.9		(40.1)		356.9
Depreciation and amortization		20.1		24.3		2.0		46.4
Stock compensation expense		3.0		3.7		4.6		11.3
Restructuring charges		7.9		—		—		7.9
Adjusted EBITDA ⁽¹⁾		55.1		400.9		(33.5)		422.5
Less: Securitization funding costs		—		57.3		—		57.3
Less: Interest expense on deposits		—		48.7		—		48.7
Adjusted EBITDA, net ⁽¹⁾	$	55.1	$	294.9	$	(33.5)	$	316.5

(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, (benefit) provision for income taxes, interest expense, net, depreciation and other amortization and amortization of purchased intangibles. Adjusted EBITDA also excludes the gain on the sale of Precima, strategic transaction costs, which represent costs for professional services associated with strategic initiatives, and restructuring and other charges.

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.

SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Mar. 31, 2020

SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

21. SUPPLEMENTAL CASH FLOW INFORMATION

The unaudited condensed 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 unaudited condensed consolidated statements of cash flows:


	March 31,		March 31,
	2020		2019
	(in millions)
Cash and cash equivalents	$	4,456.8	$	3,725.1
Restricted cash included within other current assets ⁽¹⁾		253.2		47.6
Restricted cash included within redemption settlement assets, restricted⁽²⁾		55.9		43.3
Total cash, cash equivalents and restricted cash	$	4,765.9	$	3,816.0

(1)

Includes cash restricted for principal and interest repayments of non-recourse borrowings of consolidated securitized debt and other restricted cash within other current assets. At March 31, 2020, restricted cash included $225.3 million in principal accumulation for the repayment of non-recourse borrowings of consolidated securitized debt that matures in May 2020.

(2)

See Note 9, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Mar. 31, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements included herein have been prepared by Alliance Data Systems Corporation (“ADSC” or, including its consolidated subsidiaries and variable interest entities (“VIEs”), the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets; (2) liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP. Effective March 31, 2019, the Company’s divested Epsilon segment met the criteria set forth in Accounting Standards Codification (“ASC”) 205-20, “Presentation of Financial Statements — Discontinued Operations,” and was subsequently sold on July 1, 2019. The Company’s products and services are reported under two segments—LoyaltyOne^® and Card Services.
Recently Issued and Adopted Accounting Standards	Recently Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company does not expect the adoption of ASU 2019-12 to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and is effective upon issuance for all entities. The Company is evaluating the impact that adoption of ASU 2020-04 will have on its consolidated financial statements. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” or ASC 326. This standard, referred to as Current Expected Credit Loss (“CECL”), required entities to utilize a financial instrument impairment model to establish an allowance based on expected losses over the life of the exposure rather than a model based on an incurred loss approach. Estimates of expected credit losses under the CECL model are based on relevant information about past events, current conditions, and reasonable and supportable forward-looking forecasts regarding the collectability of the loan portfolio. The Company adopted CECL on January 1, 2020 and recorded an increase in its allowance for loan loss at adoption of $644.0 million, which was recorded through a cumulative-effect adjustment to retained earnings, net of taxes. CECL also expanded the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating its allowance for loan loss. See Note 6, “Credit Card and Loan Receivables,” for the Company’s CECL disclosures. In addition, CECL modified the impairment model for available-for-sale debt securities and provided for a simplified accounting model for purchased financial assets with credit deterioration since their origination. CECL impacts the Company’s valuation of its accounts receivable and available-for-sale debt securities, with respect to 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 Company’s adoption of this standard on January 1, 2020 did not have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” ASU 2018-15 requires customers in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40, “Intangibles—Goodwill and Other—Internal-Use Software,” to determine which implementation costs may be capitalized. 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 adopted ASU 2018-15 on January 1, 2020 on a prospective basis and the adoption did not have a material impact on its consolidated financial statements.

REVENUE (Tables)

3 Months Ended

Mar. 31, 2020

REVENUE

Schedule of disaggregation of revenue by major source and geographic region


					Corporate/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Major Source:

Coalition loyalty program	$	71.3	$	—	$	—	$	71.3
Short-term loyalty programs		120.3		—		—		120.3
Servicing fees, net		—		(30.7)		—		(30.7)
Other		3.3		—		0.1		3.4
Revenue from contracts with customers	$	194.9	$	(30.7)	$	0.1	$	164.3

Finance charges, net		—		1,214.3		—		1,214.3
Investment income		3.2		—		—		3.2
Total	$	198.1	$	1,183.6	$	0.1	$	1,381.8


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

Coalition loyalty program	$	71.4	$	—	$	—	$	71.4
Short-term loyalty programs		109.6		—		—		109.6
Servicing fees, net		—		(18.6)		—		(18.6)
Other		19.8		—		—		19.8
Revenue from contracts with customers	$	200.8	$	(18.6)	$	—	$	182.2

Finance charges, net		—		1,149.0		—		1,149.0
Investment income		3.0		—		—		3.0
Total	$	203.8	$	1,130.4	$	—	$	1,334.2


					Corporate/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Disaggregation of Revenue by Geographic Region:

United States	$	2.1	$	1,183.6	$	0.1	$	1,185.8
Canada		79.1		—		—		79.1
Europe, Middle East and Africa		68.6		—		—		68.6
Asia Pacific		37.0		—		—		37.0
Other		11.3		—		—		11.3
Total	$	198.1	$	1,183.6	$	0.1	$	1,381.8


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

United States	$	6.4	$	1,130.4	$	—	$	1,136.8
Canada		89.0		—		—		89.0
Europe, Middle East and Africa		81.4		—		—		81.4
Asia Pacific		17.5		—		—		17.5
Other		9.5		—		—		9.5
Total	$	203.8	$	1,130.4	$	—	$	1,334.2

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


	Deferred Revenue
	Service		Redemption		Total
	(in millions)
Balance at January 1, 2020	$	258.6	$	663.4	$	922.0
Cash proceeds		44.8		73.4		118.2
Revenue recognized ⁽¹⁾		(48.6)		(69.2)		(117.8)
Effects of foreign currency translation		(19.6)		(50.9)		(70.5)
Balance at March 31, 2020	$	235.2	$	616.7	$	851.9
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$	131.6	$	616.7	$	748.3
Deferred revenue (non-current)	$	103.6	$	—	$	103.6

(1)

Reported on a gross basis herein.

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

EARNINGS PER SHARE

Schedule of computation of basic and diluted net income per share


	Three Months Ended March 31,
	2020		2019
	(in millions, except per share amounts)
Numerator:
Income from continuing operations	$	30.0	$	178.2
Loss from discontinued operations		—		(29.1)
Net income	$	30.0	$	149.1

Denominator:
Weighted average shares, basic		47.6		53.0
Weighted average effect of dilutive securities:
Net effect of dilutive stock options and unvested restricted stock		0.1		0.2
Denominator for diluted calculation		47.7		53.2

Basic income per share:
Income from continuing operations	$	0.63	$	3.36
Loss from discontinued operations	$	—	$	(0.55)
Net income per share	$	0.63	$	2.81

Diluted income per share:
Income from continuing operations	$	0.63	$	3.35
Loss from discontinued operations	$	—	$	(0.55)
Net income per share	$	0.63	$	2.80

DISPOSITION (Tables)

3 Months Ended

Mar. 31, 2020

DISPOSITION

Schedule of information related to disposition of business


	January 10,
	2020
	(in millions)
Total consideration ⁽¹⁾	$	43.8
Net carrying value of assets and liabilities (including other comprehensive income)		26.8
Allocation of goodwill		3.2
Strategic transaction costs		5.8
Pre-tax gain on sale of business, net of strategic transaction costs	$	8.0

(1)	Consideration as defined included cash associated with the sold Precima entities, which was $10.8 million.

DISCONTINUED OPERATIONS (Tables)

3 Months Ended

Mar. 31, 2020

DISCONTINUED OPERATIONS

Schedule of financial statement information for discontinued operations


	Three Months Ended
	March 31, 2019
	(in millions)
Revenue	$	507.8
Cost of operations (exclusive of depreciation and amortization disclosed separately below)		443.4
Depreciation and other amortization		29.0
Amortization of purchased intangibles		43.5
Interest expense ⁽¹⁾		32.1
Loss before benefit from income taxes		(40.2)
Benefit from income taxes ⁽¹⁾		(11.1)
Loss from discontinued operations, net of taxes ⁽²⁾	$	(29.1)

(1)

(2)	Reflects the results of operations of the Company’s former Epsilon segment, direct costs identifiable to the Epsilon segment and the allocation of interest expense on corporate debt.


	Three Months Ended
	March 31, 2019
	(in millions)
Depreciation and amortization	$	72.5
Capital expenditures	$	6.8

- 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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Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

CREDIT CARD AND LOAN RECEIVABLES (Tables)

3 Months Ended

Mar. 31, 2020

CREDIT CARD AND LOAN RECEIVABLES

Schedule of components of total credit card and loan receivables


	March 31,		December 31,
	2020		2019
	(in millions)
Principal receivables	$	16,725.4	$	18,413.1
Billed and accrued finance charges		933.5		977.3
Other		73.0		72.7
Total credit card and loan receivables		17,731.9		19,463.1
Less: Credit card receivables – restricted for securitization investors		12,033.4		13,504.2
Other credit card and loan receivables	$	5,698.5	$	5,958.9

Schedule of Company's group similar risk characteristics and estimated life


	Estimated Life
	(in months)
Group A (Current, risk score - high)		14
Group B (Current, risk score - low)		19
Group C (Delinquent, risk score - high)		17
Group D (Delinquent, risk score - low)		26

Schedule of aging analysis of total credit card and loan receivables at amortized cost basis


	Aging Analysis of Delinquent Amortized Cost Credit Card and Loan Receivables
	31 to 60 days delinquent		61 to 90 days delinquent		91 or more days delinquent		Total delinquent		Current		Total
	(in millions)
As of March 31, 2020	$	347.6	$	273.8	$	667.1	$	1,288.5	$	16,072.5	$	17,361.0

As of December 31, 2019	$	399.1	$	293.9	$	698.4	$	1,391.4	$	17,656.4	$	19,047.8

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

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Pre-modification

Post-modification

Pre-modification

Post-modification

Number of

Outstanding

Number of

Outstanding

Restructurings

Balance

Restructurings

Balance

(Dollars in millions)

Troubled debt restructurings – credit card receivables

75,065

112.8

112.7

70,294

104.3

104.1

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


	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
	Number of	Outstanding		Number of	Outstanding
	Restructurings	Balance		Restructurings	Balance
	(Dollars in millions)
Troubled debt restructurings that subsequently defaulted – credit card receivables	31,670	$	44.0	50,456	$	65.4

Schedule of Company's allowance for loan loss


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Balance at beginning of period	$	1,171.1	$	1,038.3
Adoption of ASC 326 ⁽¹⁾		644.0		—
Provision for loan loss		655.9		252.1
Recoveries		67.9		59.8
Principal charge-offs		(388.1)		(329.1)
Balance at end of period	$	2,150.8	$	1,021.1

(1)

Recorded January 1, 2020 through a cumulative-effect adjustment to retained earnings, net of taxes.

Schedule of composition of obligor credit quality


	Amortized Cost Revolving Credit Card and Loan Receivables
	March 31, 2020				December 31, 2019
			Percentage of				Percentage of
			Amortized				Amortized
Probability of an Account Becoming 91 or More Days Past	Amortized		Cost Basis		Amortized		Cost Basis
Due or Becoming Charged-off (within the next 12 months)	Cost Basis		Outstanding		Cost Basis		Outstanding
	(in millions, except percentages)
No Score	$	217.5	1.3	%	$	298.4	1.6	%
27.1% and higher		1,580.7	9.1			1,648.8	8.7
17.1% - 27.0%		1,053.7	6.1			1,108.5	5.8
12.6% - 17.0%		1,123.5	6.5			1,171.7	6.2
3.7% - 12.5%		7,828.1	45.1			8,292.1	43.5
1.9% - 3.6%		2,944.8	17.0			3,375.3	17.7
Lower than 1.9%		2,612.7	14.9			3,153.0	16.5
Total	$	17,361.0	100.0	%	$	19,047.8	100.0	%

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


	March 31,		December 31,
	2020		2019
	(in millions)
Total credit card receivables – restricted for securitization investors	$	12,033.4	$	13,504.2
Principal amount of credit card receivables – restricted for securitization investors, 91 days or more past due	$	302.5	$	321.8

OTHER INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2020

OTHER INVESTMENTS

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


	March 31, 2020								December 31, 2019
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Marketable securities	$	257.9	$	7.3	$	(0.1)	$	265.1	$	257.2	$	3.0	$	(0.4)	$	259.8
Total	$	257.9	$	7.3	$	(0.1)	$	265.1	$	257.2	$	3.0	$	(0.4)	$	259.8

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


	March 31, 2020
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Marketable securities	$	3.7	$	(0.1)	$	—	$	—	$	3.7	$	(0.1)
Total	$	3.7	$	(0.1)	$	—	$	—	$	3.7	$	(0.1)


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

Schedule of securities by contractual maturity date


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	40.2	$	40.2
Due after one year through five years		1.4		1.4
Due after five years through ten years		—		—
Due after ten years		216.3		223.5
Total	$	257.9	$	265.1

REDEMPTION SETTLEMENT ASSETS (Tables)

3 Months Ended

Mar. 31, 2020

REDEMPTION SETTLEMENT ASSETS

Schedule of redemption settlement assets


	March 31, 2020								December 31, 2019
		Amortized	Unrealized		Unrealized					Amortized	Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
	(in millions)
Restricted cash	$	55.9	$	—	$	—	$	55.9	$	39.3	$	—	$	—	$	39.3
Mutual funds		22.9		—		—		22.9		25.1		—		—		25.1
Corporate bonds		490.7		3.0		(4.5)		489.2		536.0		2.4		(2.0)		536.4
Total	$	569.5	$	3.0	$	(4.5)	$	568.0	$	600.4	$	2.4	$	(2.0)	$	600.8


	March 31, 2020
	Less than 12 months				12 Months or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
	(in millions)
Corporate bonds	$	171.8	$	(3.6)	$	116.8	$	(0.9)	$	288.6	$	(4.5)
Total	$	171.8	$	(3.6)	$	116.8	$	(0.9)	$	288.6	$	(4.5)


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

Schedule of redemption settlement assets by contractual maturity date


	Amortized		Estimated
	Cost		Fair Value
	(in millions)
Due in one year or less	$	121.9	$	121.6
Due after one year through five years		384.4		383.3
Due after five year through ten years		7.3		7.2
Total	$	513.6	$	512.1

LEASES (Tables)

3 Months Ended

Mar. 31, 2020

LEASES

Schedule of lease cost


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
	(in millions)
Operating lease cost	$	10.2	$	10.3
Short-term lease cost		0.3		0.6
Variable lease cost		0.2		1.9
Total	$	10.7	$	12.8

Other information related to leases was as follows:


	March 31,
	2020
Weighted-average remaining lease term (in years):
Operating leases		11.3
Weighted-average discount rate:
Operating leases		5.2%

Supplemental cash flow information related to leases was as follows:


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14.4	$	15.3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2.6	$	8.6

Schedule of maturities of lease liabilities


	Operating
Year	Leases
	(in millions)
2020 (excluding the three months ended March 31, 2020)	$	27.5
2021		39.5
2022		38.6
2023		36.7
2024		35.3
Thereafter		234.6
Total undiscounted lease liabilities		412.2
Less: Amount representing interest		(107.3)
Total present value of minimum lease payments	$	304.9

Amounts recognized in the March 31, 2020 consolidated balance sheet:
Current operating lease liabilities	$	22.3
Long-term operating lease liabilities		282.6
Total	$	304.9

INTANGIBLE ASSETS AND GOODWILL (Tables)

3 Months Ended

Mar. 31, 2020

INTANGIBLE ASSETS AND GOODWILL

Schedule of intangible assets


	March 31, 2020
	Gross		Accumulated
	Assets		Amortization		Net		Amortization Life and Method
	(in millions)
Finite Lived Assets
Customer contracts and lists	$	319.9	$	(285.6)	$	34.3	7 years—straight line
Premium on purchased credit card portfolios		176.4		(87.8)		88.6	1-13 years—straight line
Collector database		49.8		(49.0)		0.8	5 years—straight line
Tradenames		31.3		(26.3)		5.0	8-15 years—straight line
	$	577.4	$	(448.7)	$	128.7
Indefinite Lived Assets
Tradename		1.2		—		1.2	Indefinite life
Total intangible assets	$	578.6	$	(448.7)	$	129.9


	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

Schedule of estimated amortization expense related to intangible assets


	For the Years Ending
	December 31,
	(in millions)
2020 (excluding the three months ended March 31, 2020)	$	59.7
2021		22.2
2022		17.5
2023		12.8
2024		10.7
Thereafter		5.8

Schedule of changes in carrying amount of goodwill



	LoyaltyOne		Card Services		Total
	(in millions)
Balance at January 1, 2020	$	690.9	$	264.0	$	954.9
Goodwill related to sale of Precima		(3.2)		—		(3.2)
Effects of foreign currency translation		(22.6)		—		(22.6)
Balance at March 31, 2020	$	665.1	$	264.0	$	929.1

RESTRUCTURING AND OTHER CHARGES (Tables)

3 Months Ended

Mar. 31, 2020

RESTRUCTURING AND OTHER CHARGES

Schedule of restructuring and other charges incurred by reportable segment


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2020	Benefits ⁽¹⁾		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	(0.1)	$	—	$	—	$	—	$	(0.1)
LoyaltyOne		0.1		—		—		—		0.1
Card Services		(6.5)		—		—		—		(6.5)
Total	$	(6.5)	$	—	$	—	$	—	$	(6.5)

(1)	For the three months ended March 31, 2020, restructuring and other charges consisted of adjustments to our liability.


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2019	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Corporate/Other	$	—	$	—	$	—	$	—	$	—
LoyaltyOne		1.2		4.6		—		2.1		7.9
Card Services		—		—		—		—		—
Total	$	1.2	$	4.6	$	—	$	2.1	$	7.9

Schedule of liability and activities related to restructuring and other charges


	Termination		Asset		Lease		Other
Three Months Ended March 31, 2020	Benefits		Impairments		Termination Costs		Exit Costs		Total
	(in millions)
Liability as of January 1, 2020	$	34.7	$	—	$	—	$	0.1	$	34.8
Adjustments for non-cash charges		(6.5)		—		—		—		(6.5)
Cash payments		(13.2)		—		—		(0.1)		(13.3)
Liability as of March 31, 2020	$	15.0	$	—	$	—	$	—	$	15.0

DEBT (Tables)

3 Months Ended

Mar. 31, 2020

DEBT

Schedule of debt


	March 31,		December 31,
Description	2020		2019		Maturity	Interest Rate
	(Dollars in millions)
Long-term and other debt:
2017 revolving line of credit	$	250.0	$	—	December 2022	⁽¹⁾
2017 term loans		2,003.4		2,028.8	December 2022	⁽²⁾
BrandLoyalty credit agreement		—		—	June 2020	⁽³⁾
Senior notes due 2024		850.0		850.0	December 2024	4.750%
Total long-term and other debt		3,103.4		2,878.8
Less: Unamortized debt issuance costs		27.3		28.9
Less: Current portion		101.4		101.4
Long-term portion	$	2,974.7	$	2,748.5

Deposits:
Certificates of deposit	$	7,806.8	$	8,585.2	Various – Apr 2020 to Mar 2025	1.33% to 4.00%
Money market deposits		3,598.8		3,589.8	Non-maturity	⁽⁴⁾
Total deposits		11,405.6		12,175.0
Less: Unamortized debt issuance costs		19.9		23.3
Less: Current portion		6,521.5		6,942.4
Long-term portion	$	4,864.2	$	5,209.3

Non-recourse borrowings of consolidated securitization entities:
Fixed rate asset-backed term note securities	$	4,891.0	$	4,891.0	Various – May 2020 to Sep 2022	2.03% to 3.95%
Conduit asset-backed securities		1,480.0		2,405.0	Various – Sep 2020 to Apr 2021	⁽⁵⁾
Total non-recourse borrowings of consolidated securitization entities		6,371.0		7,296.0
Less: Unamortized debt issuance costs		10.3		12.0
Less: Current portion		2,520.4		3,030.8
Long-term portion	$	3,840.3	$	4,253.2

(1)

The interest rate is based upon LIBOR plus an applicable margin. At March 31, 2020, the weighted average interest rate for the revolving line of credit was 2.64%.

(2)

The interest rate is based upon LIBOR plus an applicable margin. The weighted average interest rate for the term loans was 2.74% and 3.30% at March 31, 2020 and December 31, 2019, respectively.

(3)

The interest rate is based upon the Euro Interbank Offered Rate plus an applicable margin.

(4)

(5)

DERIVATIVE INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

DERIVATIVE INSTRUMENTS

Schedule of fair value of derivative instruments


	March 31, 2020
	Notional
	Amount		Fair Value		Balance Sheet Location	Maturity
	(in millions)
Designated as hedging instruments:
Foreign currency exchange hedges	$	19.6	$	1.1	Other current assets	April 2020 to December 2020
Foreign currency exchange hedges	$	9.5	$	0.3	Other current liabilities	April 2020 to February 2021


	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

STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2020

STOCKHOLDERS' EQUITY

Schedule of stock-based compensation expense


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Cost of operations	$	2.7	$	6.7
General and administrative		2.0		4.6
Total	$	4.7	$	11.3

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Mar. 31, 2020

ACCUMULATED OTHER COMPREHENSIVE LOSS.

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


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2020	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance at December 31, 2019	$	2.5	$	(0.1)	$	(7.5)	$	(94.8)	$	(99.9)
Changes in other comprehensive income (loss)		1.6		0.3		—		(23.9)		(22.0)
Recognition resulting from the sale of Precima's foreign subsidiaries		—		—		—		3.8		3.8
Balance at March 31, 2020	$	4.1	$	0.2	$	(7.5)	$	(114.9)	$	(118.1)


	Net		Net Unrealized		Net Unrealized		Foreign		Accumulated
	Unrealized		Gains (Losses)		Gains (Losses)		Currency		Other
	Gains (Losses)		on Cash		on Net		Translation		Comprehensive
Three Months Ended March 31, 2019	on Securities		Flow Hedges		Investment Hedge		Adjustments ⁽¹⁾		Loss
	(in millions)
Balance at December 31, 2018	$	(10.7)	$	(0.2)	$	(12.4)	$	(114.8)	$	(138.1)
Changes in other comprehensive income (loss)		9.0		(0.1)		12.2		(10.9)		10.2
Balance at March 31, 2019	$	(1.7)	$	(0.3)	$	(0.2)	$	(125.7)	$	(127.9)

(1)

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

FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2020

FINANCIAL INSTRUMENTS

Schedule of estimated fair value of Company's financial instruments


	March 31, 2020				December 31, 2019
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in millions)
Financial assets
Credit card and loan receivables, net	$	15,581.1	$	16,432.6	$	18,292.0	$	19,126.0
Credit card receivables held for sale		88.8		91.5		408.0		436.2
Redemption settlement assets, restricted		568.0		568.0		600.8		600.8
Other investments		265.1		265.1		259.8		259.8
Derivative instruments		1.1		1.1		0.2		0.2
Financial liabilities
Derivative instruments		0.3		0.3		0.3		0.3
Deposits		11,385.7		11,575.1		12,151.7		12,303.6
Non-recourse borrowings of consolidated securitization entities		6,360.7		6,365.0		7,284.0		7,333.6
Long-term and other debt		3,076.1		2,903.3		2,849.9		2,878.8

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


			Fair Value Measurements at
			March 31, 2020 Using
	Balance at
	March 31,
	2020		Level 1		Level 2		Level 3
	(in millions)
Mutual funds ⁽¹⁾	$	22.9	$	22.9	$	—	$	—
Corporate bonds ⁽¹⁾		489.2		—		489.2		—
Marketable securities ⁽²⁾		265.1		34.2		230.9		—
Derivative instruments ⁽³⁾		1.1		—		1.1		—
Total assets measured at fair value	$	778.3	$	57.1	$	721.2	$	—

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


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

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

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

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

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

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


	Fair Value Measurements at
	March 31, 2020
	Total		Level 1		Level 2		Level 3
	(in millions)
Financial assets:
Credit card and loan receivables, net	$	16,432.6	$	—	$	—	$	16,432.6
Credit card receivables held for sale		91.5		—		—		91.5
Total	$	16,524.1	$	—	$	—	$	16,524.1

Financial liabilities:
Deposits	$	11,575.1	$	—	$	11,575.1	$	—
Non-recourse borrowings of consolidated securitization entities		6,365.0		—		6,365.0		—
Long-term and other debt		2,903.3		—		2,903.3		—
Total	$	20,843.4	$	—	$	20,843.4	$	—


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

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

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION

Schedule of segment information


					Corporate/
Three Months Ended March 31, 2020	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	198.1	$	1,183.6	$	0.1	$	1,381.8

Income (loss) before income taxes	$	46.7	$	32.1	$	(53.4)	$	25.4
Interest expense, net		(0.3)		110.2		28.7		138.6
Operating income (loss)		46.4		142.3		(24.7)		164.0
Depreciation and amortization		18.2		19.7		0.9		38.8
Stock compensation expense		1.0		1.7		2.0		4.7
Gain on sale of business, net of strategic transaction costs		(8.0)		—		—		(8.0)
Strategic transaction costs		0.1		—		0.6		0.7
Restructuring and other charges		0.1		(6.5)		(0.1)		(6.5)
Adjusted EBITDA ⁽¹⁾		57.8		157.2		(21.3)		193.7
Less: Securitization funding costs		—		49.9		—		49.9
Less: Interest expense on deposits		—		60.3		—		60.3
Adjusted EBITDA, net ⁽¹⁾	$	57.8	$	47.0	$	(21.3)	$	83.5


					Corporate/
Three Months Ended March 31, 2019	LoyaltyOne		Card Services		Other		Total
	(in millions)
Revenues	$	203.8	$	1,130.4	$	—	$	1,334.2

Income (loss) before income taxes	$	23.0	$	266.9	$	(76.9)	$	213.0
Interest expense, net		1.1		106.0		36.8		143.9
Operating income (loss)		24.1		372.9		(40.1)		356.9
Depreciation and amortization		20.1		24.3		2.0		46.4
Stock compensation expense		3.0		3.7		4.6		11.3
Restructuring charges		7.9		—		—		7.9
Adjusted EBITDA ⁽¹⁾		55.1		400.9		(33.5)		422.5
Less: Securitization funding costs		—		57.3		—		57.3
Less: Interest expense on deposits		—		48.7		—		48.7
Adjusted EBITDA, net ⁽¹⁾	$	55.1	$	294.9	$	(33.5)	$	316.5

(1)

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

SUPPLEMENTAL CASH FLOW INFORMATION

Schedule of reconciliation of cash and cash equivalents


	March 31,		March 31,
	2020		2019
	(in millions)
Cash and cash equivalents	$	4,456.8	$	3,725.1
Restricted cash included within other current assets ⁽¹⁾		253.2		47.6
Restricted cash included within redemption settlement assets, restricted⁽²⁾		55.9		43.3
Total cash, cash equivalents and restricted cash	$	4,765.9	$	3,816.0

(1)

(2)

See Note 9, “Redemption Settlement Assets,” for additional information regarding the nature of restrictions on redemption settlement assets.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - 3 months ended Mar. 31, 2020	item	segment
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of Reportable Segments	2	2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Adopted Accounting Standards (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for loan loss	$ 2,150.8	$ 1,171.1	$ 1,021.1	$ 1,038.3
ASU 2016-13 \| Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for loan loss		$ 644.0

REVENUE (Details) $ in Millions	3 Months Ended
REVENUE (Details) $ in Millions	Mar. 31, 2020 USD ($)	Mar. 31, 2020 item	Mar. 31, 2020 segment	Mar. 31, 2019 USD ($)
Disaggregation of revenue
Number of segments		2	2
Revenue from contracts with customers	$ 164.3			$ 182.2
Finance charges, net	1,214.3			1,149.0
Investment income	3.2			3.0
Total revenue	1,381.8			1,334.2
Coalition loyalty program
Disaggregation of revenue
Revenue from contracts with customers	71.3			71.4
Short-term loyalty programs
Disaggregation of revenue
Revenue from contracts with customers	120.3			109.6
Servicing fees, net
Disaggregation of revenue
Revenue from contracts with customers	(30.7)			(18.6)
Other
Disaggregation of revenue
Revenue from contracts with customers	3.4			19.8
United States
Disaggregation of revenue
Total revenue	1,185.8			1,136.8
Canada
Disaggregation of revenue
Total revenue	79.1			89.0
Europe, Middle East and Africa
Disaggregation of revenue
Total revenue	68.6			81.4
Asia Pacific
Disaggregation of revenue
Total revenue	37.0			17.5
Other
Disaggregation of revenue
Total revenue	11.3			9.5
Operating segment \| LoyaltyOne
Disaggregation of revenue
Revenue from contracts with customers	194.9			200.8
Investment income	3.2			3.0
Total revenue	198.1			203.8
Operating segment \| LoyaltyOne \| Coalition loyalty program
Disaggregation of revenue
Revenue from contracts with customers	71.3			71.4
Operating segment \| LoyaltyOne \| Short-term loyalty programs
Disaggregation of revenue
Revenue from contracts with customers	120.3			109.6
Operating segment \| LoyaltyOne \| Other
Disaggregation of revenue
Revenue from contracts with customers	3.3			19.8
Operating segment \| LoyaltyOne \| United States
Disaggregation of revenue
Total revenue	2.1			6.4
Operating segment \| LoyaltyOne \| Canada
Disaggregation of revenue
Total revenue	79.1			89.0
Operating segment \| LoyaltyOne \| Europe, Middle East and Africa
Disaggregation of revenue
Total revenue	68.6			81.4
Operating segment \| LoyaltyOne \| Asia Pacific
Disaggregation of revenue
Total revenue	37.0			17.5
Operating segment \| LoyaltyOne \| Other
Disaggregation of revenue
Total revenue	11.3			9.5
Operating segment \| Card Services
Disaggregation of revenue
Revenue from contracts with customers	(30.7)			(18.6)
Finance charges, net	1,214.3			1,149.0
Total revenue	1,183.6			1,130.4
Operating segment \| Card Services \| Servicing fees, net
Disaggregation of revenue
Revenue from contracts with customers	(30.7)			(18.6)
Operating segment \| Card Services \| United States
Disaggregation of revenue
Total revenue	1,183.6			$ 1,130.4
Corporate/Other
Disaggregation of revenue
Revenue from contracts with customers	0.1
Total revenue	0.1
Corporate/Other \| Other
Disaggregation of revenue
Revenue from contracts with customers	0.1
Corporate/Other \| United States
Disaggregation of revenue
Total revenue	$ 0.1

REVENUE - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019
Change in Contract with Customer, Liability
Deferred revenue	$ 851.9		$ 922.0
Cash proceeds	118.2
Revenue recognized	(117.8)
Effects of foreign currency translation	(70.5)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	748.3		807.9
Deferred revenue (non-current)	$ 103.6		114.1
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
LoyaltyOne \| Other current liabilities
Change in Contract with Customer, Liability
Deferred revenue	$ 79.0	$ 122.8
Revenue recognized	(89.6)
Service
Change in Contract with Customer, Liability
Deferred revenue	235.2		258.6
Cash proceeds	44.8
Revenue recognized	(48.6)
Effects of foreign currency translation	(19.6)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	131.6
Deferred revenue (non-current)	103.6
Redemption
Change in Contract with Customer, Liability
Deferred revenue	616.7		$ 663.4
Cash proceeds	73.4
Revenue recognized	(69.2)
Effects of foreign currency translation	(50.9)
Amounts recognized in the consolidated balance sheets:
Deferred revenue (current)	$ 616.7

REVENUE - Performance Obligation (Details) - LoyaltyOne $ in Millions	Mar. 31, 2020 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
REVENUE
Revenue, remaining performance obligation	$ 106.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
REVENUE
Revenue, remaining performance obligation	$ 83.3
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	$ 40.8
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	$ 4.3
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Revenue, expected timing of satisfaction of remaining performance	12 months

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Income from continuing operations	$ 30.0	$ 178.2
Loss from discontinued operations		(29.1)
Net income	$ 30.0	$ 149.1
Denominator:
Weighted average shares, basic	47.6	53.0
Weighted average effect of dilutive securities:
Net effect of dilutive stock options and unvested restricted stock (in shares)	0.1	0.2
Denominator for diluted calculations (in shares)	47.7	53.2
Basic income per share:
Income from continuing operations (in dollars per share)	$ 0.63	$ 3.36
Loss from discontinued operations (in dollars per share)		(0.55)
Net income per share (in dollars per share)	0.63	2.81
Diluted income per share:
Income from continuing operations (in dollars per share)	0.63	3.35
Loss from discontinued operations (in dollars per share)		(0.55)
Net income per share (in dollars per share)	$ 0.63	$ 2.80
Restricted stock units
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract]
Anti-dilutive shares excluded from the calculation of net income per share (in shares)	0.3	0.3

DISPOSITION (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Precima $ in Millions	Jan. 10, 2020 USD ($) item
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total consideration	$ 43.8
Contingent consideration	$ 10.0
Number of earnout determination dates \| item	2
Fair value of contingent purchase price	$ 6.5
Net carrying value of assets and liabilities (including other comprehensive income)	26.8
Allocation of goodwill	3.2
Strategic transaction costs	5.8
Pre-tax gain on sale of business, net of strategic transaction costs	8.0
Cash associated with Precima, included in total consideration	$ 10.8

DISCONTINUED OPERATIONS (Details) - Epsilon - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Interest expense	$ 5.6
Benefit from income taxes	1.7
Disposal Group, Including Discontinued Operation, Additional Disclosures
Mandatory payment per credit agreement		$ 500.0
Discontinued Operations, Held-for-sale
Disposal Group, Including Discontinued Operation, Income Statement Disclosures
Revenue	507.8
Cost of operations (exclusive of depreciation and amortization)	443.4
Depreciation and other amortization	29.0
Amortization of purchased intangibles	43.5
Interest expense	32.1
Income (loss) before benefit from income taxes	(40.2)
Benefit from income taxes	(11.1)
Loss from discontinued operations, net of taxes	(29.1)
Disposal Group, Including Discontinued Operation, Additional Disclosures
Depreciation and amortization	72.5
Capital expenditures	$ 6.8

CREDIT CARD AND LOAN RECEIVABLES - Allowance for Loan Loss and Delinquencies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Billed and accrued finance charges	$ 933.5		$ 977.3
Total credit card and loan receivables	17,731.9		19,463.1
Less: Credit card receivables - restricted for securitization investors	12,033.4		13,504.2
Other credit card and loan receivables	5,698.5		5,958.9
Unbilled finance charges	262.9
Allowance for Loan Loss
Balance at beginning of period	1,171.1	$ 1,038.3
Provision for loan loss	655.9	252.1
Recoveries	67.9	59.8
Principal charge-offs	(388.1)	(329.1)
Balance at end of period	$ 2,150.8	1,021.1
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	$ 231.9	218.8
Period for which interest and fee income accrue until balance, interest and fees paid or charged off	180 days
Period an account becomes past due before a proprietary collection scoring algorithm automatically scores the risk of an account becoming further delinquent	30 days
Amortized cost of receivables balances contractually delinquent:
Total delinquent	$ 1,288.5		1,391.4
Modified Credit Card Receivables
Maximum period of time temporary programs' concessions remain in place	12 months
Impaired credit card and loan receivables	$ 332.6		$ 308.7
Maximum percentage of credit card receivables to total portfolio	2.00%		2.00%
Average recorded investment in impaired credit card receivables	$ 314.7	297.7
Interest income on modified credit card receivables	5.5	$ 5.7
Adjustment \| ASU 2016-13
Allowance for Loan Loss
Balance at beginning of period	$ 644.0
Group A (Current, risk score - high)
Allowance for Loan Loss
Estimated Life (in months)	14 months
Group B (Current, risk score - low)
Allowance for Loan Loss
Estimated Life (in months)	19 months
Group C (Delinquent, risk score - high)
Allowance for Loan Loss
Estimated Life (in months)	17 months
Group D (Delinquent, risk score - low)
Allowance for Loan Loss
Estimated Life (in months)	26 months
Credit Card and Loan Receivables
Principal receivables	$ 16,725.4		$ 18,413.1
Other
Principal receivables	$ 73.0		$ 72.7

CREDIT CARD AND LOAN RECEIVABLES - Amortized Cost Basis Credit Card and Loan Receivables (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Total delinquent	$ 1,288.5	$ 1,391.4
Current	16,072.5	17,656.4
Amortized cost of credit card and loan receivables	17,361.0	19,047.8
31 to 60 days delinquent
Financing Receivable, Past Due [Line Items]
Total delinquent	347.6	399.1
61 to 90 days delinquent
Financing Receivable, Past Due [Line Items]
Total delinquent	273.8	293.9
91 or more days delinquent
Financing Receivable, Past Due [Line Items]
Total delinquent	$ 667.1	$ 698.4

CREDIT CARD AND LOAN RECEIVABLES - Troubled Debt Restructurings (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($) item	Mar. 31, 2019 USD ($) item
Credit Card Receivables
Modifications related to troubled debt restructurings within credit card and loan receivables
Number of Restructurings \| item	75,065	70,294
Pre-modification Outstanding Balance	$ 112.8	$ 104.3
Post-modification Outstanding Balance	$ 112.7	$ 104.1
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	31,670	50,456
Post-modification Outstanding Balance	$ 44.0	$ 65.4

CREDIT CARD AND LOAN RECEIVABLES - Credit Quality on Amortized Cost Basis (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 17,361.0	$ 19,047.8
Percentage of Amortized Cost Basis of 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)
Amortized Cost Basis of Receivables Outstanding	$ 217.5	$ 298.4
Percentage of Amortized Cost Basis of Receivables Outstanding	1.30%	1.60%
27.1% and higher
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 1,580.7	$ 1,648.8
Percentage of Amortized Cost Basis of Receivables Outstanding	9.10%	8.70%
17.1% - 27.0%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 1,053.7	$ 1,108.5
Percentage of Amortized Cost Basis of Receivables Outstanding	6.10%	5.80%
12.6% - 17.0%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 1,123.5	$ 1,171.7
Percentage of Amortized Cost Basis of Receivables Outstanding	6.50%	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)
Amortized Cost Basis of Receivables Outstanding	$ 7,828.1	$ 8,292.1
Percentage of Amortized Cost Basis of Receivables Outstanding	45.10%	43.50%
1.9% - 3.6%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 2,944.8	$ 3,375.3
Percentage of Amortized Cost Basis of Receivables Outstanding	17.00%	17.70%
Lower than 1.9%
Probability of an Account Becoming 91 or More Days Past Due or Becoming Charged-off (within the next 12 months)
Amortized Cost Basis of Receivables Outstanding	$ 2,612.7	$ 3,153.0
Percentage of Amortized Cost Basis of Receivables Outstanding	14.90%	16.50%

CREDIT CARD AND LOAN RECEIVABLES - Securitized Credit Card Receivables (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Portfolio Held For Sale
Carrying value of the credit card portfolios held for sale	$ 88.8		$ 408.0
Valuation adjustment on credit card and loan portfolios held for sale	4.2	$ 59.9
Proceeds from sale of credit card portfolios	289.5
Gain (loss) on sales of credit card portfolio	20.4
Securitized Credit Card Receivables
Total credit card receivables - restricted for securitization investors	12,033.4		13,504.2
Principal amount of credit card receivables - restricted for securitization investors, 91 days or more past due	302.5		$ 321.8
Net charge-offs of securitized principal	$ 239.5	$ 239.5

INVENTORIES, NET (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
INVENTORIES, NET
Inventories, net	$ 189.1	$ 218.0

OTHER INVESTMENTS (Details) - USD ($) $ in Millions	3 Months Ended
OTHER INVESTMENTS (Details) - USD ($) $ in Millions	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Marketable securities
Amortized Cost	$ 257.9		$ 257.2
Unrealized Gains	7.3		3.0
Unrealized Losses	(0.1)		(0.4)
Fair Value	265.1		259.8
Other Investments, Total
Amortized Cost	257.9		257.2
Unrealized Gains	7.3		3.0
Unrealized Losses	(0.1)		(0.4)
Fair Value	265.1		259.8
Fair Value, Marketable securities
Less than 12 months	3.7		18.8
12 Months or Greater			13.1
Total	3.7		31.9
Unrealized Losses, Marketable securities
Less than 12 months	(0.1)		(0.2)
12 Months or Greater			(0.2)
Total	(0.1)		(0.4)
Fair Value, Total
Less than 12 months	3.7		18.8
12 Months or Greater			13.1
Total	3.7		31.9
Unrealized Losses, Total
Less than 12 months	(0.1)		(0.2)
12 Months or Greater			(0.2)
Total	(0.1)		$ (0.4)
Amortized Cost
Due in one year or less	40.2
Due after one year through five years	1.4
Due after ten years	216.3
Total	257.9
Fair Value
Due in one year or less	40.2
Due after one year through five years	1.4
Due after ten years	223.5
Fair Value	265.1
Realized gains or losses
Realized gains or losses from the sale of investment securities	$ 0.0	$ 0.0

REDEMPTION SETTLEMENT ASSETS (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	$ 569.5	$ 600.4
Unrealized Gains	3.0	2.4
Unrealized Losses	(4.5)	(2.0)
Fair Value	568.0	600.8
Fair Value
Less than 12 months	171.8	166.6
12 Months or Greater	116.8	155.1
Total	288.6	321.7
Unrealized Losses
Less than 12 months	(3.6)	(1.3)
12 Months or Greater	(0.9)	(0.7)
Total	(4.5)	(2.0)
Amortized cost of the redemption settlement assets by contractual maturity
Due in one year or less	121.9
Due after one year through five years	384.4
Due after five year through ten years	7.3
Total	513.6
Estimated fair value of the redemption settlement assets by contractual maturity
Due in one year or less	121.6
Due after one year through five years	383.3
Due after five year through ten years	7.2
Total	512.1
Realized gains or losses from the sale of investment securities	0.0
Restricted cash
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	55.9	39.3
Fair Value	55.9	39.3
Mutual funds
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	22.9	25.1
Fair Value	22.9	25.1
Corporate bonds
REDEMPTION SETTLEMENT ASSETS
Amortized Cost	490.7	536.0
Unrealized Gains	3.0	2.4
Unrealized Losses	(4.5)	(2.0)
Fair Value	489.2	536.4
Fair Value
Less than 12 months	171.8	166.6
12 Months or Greater	116.8	155.1
Total	288.6	321.7
Unrealized Losses
Less than 12 months	(3.6)	(1.3)
12 Months or Greater	(0.9)	(0.7)
Total	$ (4.5)	$ (2.0)

LEASES (Details)	3 Months Ended
LEASES (Details)	Mar. 31, 2020
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	18 years

LEASES - Lease expense (Details) - USD ($) $ in Millions	3 Months Ended
LEASES - Lease expense (Details) - USD ($) $ in Millions	Mar. 31, 2020	Mar. 31, 2019
Lease expense
Operating lease cost	$ 10.2	$ 10.3
Short-term lease cost	0.3	0.6
Variable lease cost	0.2	1.9
Total	$ 10.7	12.8
Remaining lease term - operating leases	11 years 3 months 18 days
Discount rate - operating leases	5.20%
Supplemental cash flow information related to leases was as follows:
Operating cash flows from operating leases	$ 14.4	15.3
Operating leases - Right-of-use assets obtained in exchange for lease obligations	$ 2.6	$ 8.6

LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Lease liabilites
2020 (excluding the three months ended March 31, 2020)	$ 27.5
2021	39.5
2022	38.6
2023	36.7
2024	35.3
Thereafter	234.6
Total undiscounted lease liabilities	412.2
Less: Amount representing interest	(107.3)
Total present value of minimum lease payments	304.9
Amounts recognized in the December 31, 2019 consolidated balance sheet:
Current operating lease liabilities	22.3	$ 22.6
Long-term operating lease liabilities	282.6	$ 291.7
Total present value of minimum lease payments	$ 304.9

INTANGIBLE ASSETS AND GOODWILL - Finite Lived Assets and Indefinite Lived Assets (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	$ 577.4	$ 603.4
Accumulated Amortization	(448.7)	(451.3)
Finite lived assets, net	128.7	152.1
Total Intangible Assets
Gross Assets	578.6	604.6
Accumulated Amortization	(448.7)	(451.3)
Net	129.9	153.3
Tradenames
Indefinite Lived Assets
Indefinite lived assets	1.2	1.2
Customer contracts and lists
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	319.9	325.1
Accumulated Amortization	(285.6)	(278.7)
Finite lived assets, net	$ 34.3	$ 46.4
Amortization Life and Method
Useful life	7 years	7 years
Total Intangible Assets
Accumulated Amortization	$ (285.6)	$ (278.7)
Premium on purchased credit card portfolios
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	176.4	192.6
Accumulated Amortization	(87.8)	(93.2)
Finite lived assets, net	88.6	99.4
Total Intangible Assets
Accumulated Amortization	$ (87.8)	$ (93.2)
Premium on purchased credit card portfolios \| Minimum
Amortization Life and Method
Useful life	1 year	1 year
Premium on purchased credit card portfolios \| Maximum
Amortization Life and Method
Useful life	13 years	13 years
Collector database
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	$ 49.8	$ 53.9
Accumulated Amortization	(49.0)	(52.9)
Finite lived assets, net	$ 0.8	$ 1.0
Amortization Life and Method
Useful life	5 years	5 years
Total Intangible Assets
Accumulated Amortization	$ (49.0)	$ (52.9)
Tradenames
Schedule of Finite and Indefinite-lived Intangible Assets
Finite lived assets, gross	31.3	31.8
Accumulated Amortization	(26.3)	(26.5)
Finite lived assets, net	5.0	5.3
Total Intangible Assets
Accumulated Amortization	$ (26.3)	$ (26.5)
Tradenames \| Minimum
Amortization Life and Method
Useful life	8 years	8 years
Tradenames \| Maximum
Amortization Life and Method
Useful life	15 years	15 years

INTANGIBLE ASSETS AND GOODWILL - Maturity Schedule (Details) $ in Millions	Mar. 31, 2020 USD ($)
Estimated amortization expense related to intangible assets for the next five years and thereafter
2020 (excluding the three months ended March 31, 2020)	$ 59.7
2021	22.2
2022	17.5
2023	12.8
2024	10.7
Thereafter	$ 5.8

INTANGIBLE ASSETS AND GOODWILL - Goodwill Information (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Jan. 31, 2020	Mar. 31, 2020
Goodwill
Beginning Balance	$ 954.9	$ 954.9
Goodwill related to sale of Precima		(3.2)
Effects of foreign currency translation		(22.6)
Ending Balance		929.1
Operating segment \| LoyaltyOne
Goodwill
Beginning Balance	690.9	690.9
Goodwill related to sale of Precima	(3.2)	(3.2)
Effects of foreign currency translation		(22.6)
Ending Balance		665.1
Operating segment \| Card Services
Goodwill
Beginning Balance	$ 264.0	264.0
Ending Balance		$ 264.0

RESTRUCTURING AND OTHER CHARGES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Restructuring costs and reserve
Restructuring charges		$ 7.9
Restructuring, adjustment	$ (6.5)
Termination Benefits
Restructuring costs and reserve
Restructuring charges		1.2
Restructuring, adjustment	(6.5)
Asset Impairments
Restructuring costs and reserve
Restructuring charges		4.6
Other Exit Costs
Restructuring costs and reserve
Restructuring charges		2.1
Corporate/Other
Restructuring costs and reserve
Restructuring charges	(0.1)
Restructuring, adjustment	(0.1)
Corporate/Other \| Termination Benefits
Restructuring costs and reserve
Restructuring, adjustment	(0.1)
LoyaltyOne
Restructuring costs and reserve
Restructuring charges		7.9
Restructuring, adjustment	0.1
LoyaltyOne \| Termination Benefits
Restructuring costs and reserve
Restructuring charges		1.2
Restructuring, adjustment	0.1
LoyaltyOne \| Asset Impairments
Restructuring costs and reserve
Restructuring charges		4.6
LoyaltyOne \| Other Exit Costs
Restructuring costs and reserve
Restructuring charges		$ 2.1
Card Services
Restructuring costs and reserve
Restructuring, adjustment	(6.5)
Card Services \| Termination Benefits
Restructuring costs and reserve
Restructuring, adjustment	$ (6.5)

RESTRUCTURING AND OTHER CHARGES - Liability (Details) $ in Millions	3 Months Ended
	Mar. 31, 2020 USD ($)
Restructuring Reserve
Restructuring Reserve, Beginning Balance	$ 34.8
Adjustments for non-cash charges	(6.5)
Cash payments	(13.3)
Restructuring Reserve, Ending Balance	15.0
LoyaltyOne
Restructuring Reserve
Adjustments for non-cash charges	0.1
Card Services
Restructuring Reserve
Adjustments for non-cash charges	(6.5)
Termination Benefits
Restructuring Reserve
Restructuring Reserve, Beginning Balance	34.7
Adjustments for non-cash charges	(6.5)
Cash payments	(13.2)
Restructuring Reserve, Ending Balance	15.0
Termination Benefits \| LoyaltyOne
Restructuring Reserve
Adjustments for non-cash charges	0.1
Termination Benefits \| Card Services
Restructuring Reserve
Adjustments for non-cash charges	(6.5)
Other Exit Costs
Restructuring Reserve
Restructuring Reserve, Beginning Balance	0.1
Cash payments	$ (0.1)

DEBT (Details) € in Millions, $ in Millions		3 Months Ended
DEBT (Details) € in Millions, $ in Millions	Apr. 03, 2020 USD ($) item	Mar. 31, 2020 USD ($) item	Apr. 30, 2020 USD ($)	Apr. 03, 2020 EUR (€) item	Dec. 31, 2019 USD ($)
Debt
Less: Current portion		$ 6,521.5			$ 6,942.4
Long-term portion		4,864.2			5,209.3
Less: Current portion		2,520.4			3,030.8
Long-term portion		$ 3,840.3			4,253.2
Number of conduit facilities \| item		3
Series 2017-A asset backed term notes
Debt
Principal payments collected during accumulation period		$ 225.3
Total deposits
Debt
Deposits		11,405.6			12,175.0
Less: Unamortized debt issuance costs		19.9			23.3
Less: Current portion		6,521.5			6,942.4
Long-term portion		4,864.2			5,209.3
Certificates of deposit
Debt
Deposits		7,806.8			8,585.2
Money market deposits
Debt
Money market deposits		3,598.8			3,589.8
Non-recourse borrowings of consolidated securitization entities
Debt
Less: Unamortized debt issuance costs		10.3			12.0
Total non-recourse borrowings of consolidated securitization entities		6,371.0			7,296.0
Less: Current portion		2,520.4			3,030.8
Long-term portion		3,840.3			4,253.2
Fixed rate asset-backed term note securities
Debt
Total non-recourse borrowings of consolidated securitization entities		4,891.0			4,891.0
Conduit asset-backed securities
Debt
Maximum borrowing capacity		4,700.0
Total non-recourse borrowings of consolidated securitization entities		1,480.0			2,405.0
Line of credit amount outstanding		1,500.0
Conduit facility under Master Trust I
Debt
Maximum borrowing capacity		1,180.0	$ 1,000.0
Conduit facility under Master Trust III
Debt
Maximum borrowing capacity		1,300.0	$ 1,000.0
Long-term and other debt
Debt
Total long-term and other debt		3,103.4			2,878.8
Less: Unamortized discount and debt issuance costs		27.3			28.9
Less: Current portion		101.4			101.4
Long-term and other debt		2,974.7			2,748.5
Senior Notes Due 2024
Debt
Total long-term and other debt		$ 850.0			$ 850.0
Interest Rate (as a percent)		4.75%			4.75%
2017 Credit Agreement
Debt
Total availability under Credit Facility		$ 500.0
2017 revolving line of credit
Debt
Maximum borrowing capacity		750.0
Total long-term and other debt		$ 250.0
Weighted average interest rate (as a percent)		2.64%
2017 Term Loans
Debt
Principal amount of debt		$ 2,028.8
Total long-term and other debt		$ 2,003.4			$ 2,028.8
Weighted average interest rate (as a percent)		2.74%			3.30%
BrandLoyalty credit agreement
Debt
Total long-term and other debt		$ 0.0
Number of requests for one-year extensions \| item	2			2
Term of individual extensions	1 year
BrandLoyalty revolving line of credit
Debt
Maximum borrowing capacity	$ 32.4			€ 30.0
BrandLoyalty uncommitted line of credit
Debt
Maximum borrowing capacity	32.4			30.0
BrandLoyalty uncommitted line of credit \| Credit Facility, Accordion Feature
Debt
Maximum borrowing capacity	$ 86.5			€ 80.0
Minimum \| Certificates of deposit
Debt
Interest Rate (as a percent)		1.33%
Minimum \| Money market deposits
Debt
Interest Rate (as a percent)		0.34%			1.84%
Minimum \| Fixed rate asset-backed term note securities
Debt
Interest Rate (as a percent)		2.03%
Minimum \| Conduit asset-backed securities
Debt
Interest Rate (as a percent)		2.10%			2.79%
Maximum \| Certificates of deposit
Debt
Interest Rate (as a percent)		4.00%
Maximum \| Money market deposits
Debt
Interest Rate (as a percent)		3.50%			3.50%
Maximum \| Fixed rate asset-backed term note securities
Debt
Interest Rate (as a percent)		3.95%
Maximum \| Conduit asset-backed securities
Debt
Interest Rate (as a percent)		2.49%			2.96%

DERIVATIVE INSTRUMENTS - Designated and Not Designated Instruments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Notional amount, fair value and classification of the company's outstanding derivative contracts
Maximum length of time, foreign currency cash flow hedge	12 months
Maximum length of time hedged in cash flow hedge	11 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	$ 19.6	$ 5.5
Fair Value	1.1	0.2
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	9.5	7.8
Fair Value	$ 0.3	$ 0.3

DERIVATIVE INSTRUMENTS - Activity and Location of Outstanding Derivatives (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Activity related to company's outstanding derivative contracts and location
Unrealized gain (loss) on cash flow hedges, net of tax	$ 0.3	$ (0.1)
Gains on net investment hedge		12.2
Amount expected to be reclassified in the coming 12 months	0.2
Not designated as hedging instrument.
Activity related to company's outstanding derivative contracts and location
Gains (losses) on derivative instruments	0.0
Foreign currency exchange forward contracts \| Not designated as hedging instrument. \| General and administrative
Activity related to company's outstanding derivative contracts and location
Gains (losses) on derivative instruments		(1.2)
Foreign currency exchange hedges \| Designated as hedging instrument
Activity related to company's outstanding derivative contracts and location
Unrealized gain (loss) on cash flow hedges, net of tax	$ 0.3	$ (0.1)

COMMITMENTS AND CONTINGENCIES - Litigation and Regulatory Matters (Details) $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)
Epsilon \| Discontinued Operations, Disposed of by Sale \| Indemnification Agreement
Contingencies
Loss contingency	$ 32.9

STOCKHOLDERS' EQUITY - Stock Repurchase Programs (Details) - 2019 Stock Repurchase Program - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	Jul. 31, 2019
Stock Repurchase Programs
Amount of company's outstanding common stock authorized to be repurchased			$ 1,100.0
Available balance under stock repurchase program	$ 347.8	$ 347.8

STOCKHOLDERS' EQUITY - Restricted Stock Unit Awards and Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
	Apr. 23, 2020	Mar. 19, 2020	Jan. 30, 2020	Mar. 31, 2020	Mar. 31, 2019
Stock Compensation Plans
Common Stock dividends and dividend equivalent rights declared (in dollars per share)	$ 0.21		$ 0.63	$ 0.63	$ 0.63
Dividends paid		$ 30.0		$ 30.3	$ 33.9
Payments related to dividend equivalent rights				$ 0.3
Performance-based restricted stock unit awards
Stock Compensation Plans
Shares granted (in shares)				219,186
Weighted average grant-date fair value (in dollars per share)				$ 100.50
Percentage of stock units on which restrictions will lapse in February 2021				33.00%
Percentage of stock units on which restrictions will lapse in February 2022				33.00%
Percentage of stock units on which restrictions will lapse in February 2023				34.00%
Performance-based restricted stock unit awards \| Minimum
Stock Compensation Plans
Percentage of stock units to vest				0.00%
Performance-based restricted stock unit awards \| Maximum
Stock Compensation Plans
Percentage of stock units to vest				150.00%
Service-based restricted stock unit awards
Stock Compensation Plans
Shares granted (in shares)				124,344
Weighted average grant-date fair value (in dollars per share)				$ 100.14
Award vesting period				3 years
Market-based restricted stock unit awards
Stock Compensation Plans
Shares granted (in shares)				20,770
Weighted average grant-date fair value (in dollars per share)				$ 78.92
Percentage of stock units on which restrictions will lapse in February 2022				100.00%
Award vesting period				2 years
Market-based restricted stock unit awards \| Minimum
Stock Compensation Plans
Percentage of stock units to vest				0.00%
Market-based restricted stock unit awards \| Maximum
Stock Compensation Plans
Percentage of stock units to vest				175.00%

STOCKHOLDERS' EQUITY Stock - Compensation Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 4.7	$ 11.3
Cost of operations.
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	2.7	6.7
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 2.0	4.6
Discontinued Operations, Held-for-sale \| Epsilon
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense		$ 9.8

ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accumulated Other Comprehensive Income
Balance	$ 1,588.3	$ 2,332.1
Changes in other comprehensive income	(18.2)	10.2
Recognition resulting from the sale of Precima's foreign subsidiaries	3.8
Balance	1,087.7	2,239.5
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income
Balance	(99.9)	(138.1)
Changes in other comprehensive income	(18.2)	10.2
Balance	(118.1)	(127.9)
Net Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income
Balance	2.5	(10.7)
Changes in other comprehensive income (loss)	1.6
Changes in other comprehensive income		9.0
Balance	4.1	(1.7)
Unrealized Gains (Losses) on Cash Flow Hedges
Accumulated Other Comprehensive Income
Balance	(0.1)	(0.2)
Changes in other comprehensive income (loss)	0.3
Changes in other comprehensive income		(0.1)
Balance	0.2	(0.3)
Unrealized Gains (Losses) on Net Investment Hedge.
Accumulated Other Comprehensive Income
Balance	(7.5)	(12.4)
Changes in other comprehensive income		12.2
Balance	(7.5)	(0.2)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income
Balance	(94.8)	(114.8)
Changes in other comprehensive income (loss)	(23.9)
Changes in other comprehensive income		(10.9)
Recognition resulting from the sale of Precima's foreign subsidiaries	3.8
Balance	(114.9)	(125.7)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income
Balance	(99.9)	(138.1)
Changes in other comprehensive income (loss)	(22.0)
Changes in other comprehensive income		10.2
Recognition resulting from the sale of Precima's foreign subsidiaries	3.8
Balance	$ (118.1)	$ (127.9)

FINANCIAL INSTRUMENTS - Fair Value of Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Financial assets
Credit card and loan receivables, net	$ 15,581.1	$ 18,292.0
Credit card receivables held for sale	88.8	408.0
Redemption settlement assets, restricted	568.0	600.8
Other investments	265.1	259.8
Financial liabilities
Deposits	11,575.1	12,303.6
Non-recourse borrowings of consolidated securitization entities	6,365.0	7,333.6
Long-term and other debt	2,903.3	2,878.8
Carrying Amount
Financial assets
Credit card and loan receivables, net	15,581.1	18,292.0
Credit card receivables held for sale	88.8	408.0
Redemption settlement assets, restricted	568.0	600.8
Other investments	265.1	259.8
Derivative instruments	1.1	0.2
Financial liabilities
Derivative instruments	0.3	0.3
Deposits	11,385.7	12,151.7
Non-recourse borrowings of consolidated securitization entities	6,360.7	7,284.0
Long-term and other debt	3,076.1	2,849.9
Fair Value.
Financial assets
Credit card and loan receivables, net	16,432.6	19,126.0
Credit card receivables held for sale	91.5	436.2
Redemption settlement assets, restricted	568.0	600.8
Other investments	265.1	259.8
Derivative instruments	1.1	0.2
Financial liabilities
Derivative instruments	0.3	0.3
Deposits	11,575.1	12,303.6
Non-recourse borrowings of consolidated securitization entities	6,365.0	7,333.6
Long-term and other debt	$ 2,903.3	$ 2,878.8

FINANCIAL INSTRUMENTS - Fair Value Level Disclosure (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Assets disclosed at fair value
Marketable securities	$ 265.1	$ 259.8
Total assets measured at fair value	16,524.1	19,562.2
Liabilities disclosed at fair value
Total liabilities measured at fair value	20,843.4	22,516.0
Level 2
Liabilities disclosed at fair value
Total liabilities measured at fair value	20,843.4	22,516.0
Level 3
Assets disclosed at fair value
Total assets measured at fair value	16,524.1	19,562.2
Recurring
Assets disclosed at fair value
Mutual funds	22.9	25.1
Corporate bonds	489.2	536.4
Marketable securities	265.1	259.8
Derivative instruments	1.1	0.2
Total assets measured at fair value	778.3	821.5
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	22.9	25.1
Marketable securities	34.2	26.2
Total assets measured at fair value	57.1	51.3
Recurring \| Level 2
Assets disclosed at fair value
Corporate bonds	489.2	536.4
Marketable securities	230.9	233.6
Derivative instruments	1.1	0.2
Total assets measured at fair value	721.2	770.2
Liabilities disclosed at fair value
Derivative instruments	0.3	0.3
Total liabilities measured at fair value	$ 0.3	$ 0.3

FINANCIAL INSTRUMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Financial assets
Credit card and loan receivables, net	$ 16,432.6	$ 19,126.0
Credit card and loan receivables held for sale	91.5	436.2
Total assets measured at fair value	16,524.1	19,562.2
Financial liabilities
Deposits	11,575.1	12,303.6
Non-recourse borrowings of consolidated securitization entities	6,365.0	7,333.6
Long-term and other debt	2,903.3	2,878.8
Total liabilities measured at fair value	20,843.4	22,516.0
Level 2
Financial liabilities
Deposits	11,575.1	12,303.6
Non-recourse borrowings of consolidated securitization entities	6,365.0	7,333.6
Long-term and other debt	2,903.3	2,878.8
Total liabilities measured at fair value	20,843.4	22,516.0
Level 3
Financial assets
Credit card and loan receivables, net	16,432.6	19,126.0
Credit card and loan receivables held for sale	91.5	436.2
Total assets measured at fair value	$ 16,524.1	$ 19,562.2

INCOME TAXES (Details)	3 Months Ended
INCOME TAXES (Details)	Mar. 31, 2020	Mar. 31, 2019
INCOME TAXES
Effective tax rate utilized (as a percent)	(18.10%)	16.30%

SEGMENT INFORMATION (Details) - USD ($) $ in Millions	3 Months Ended
SEGMENT INFORMATION (Details) - USD ($) $ in Millions	Mar. 31, 2020	Mar. 31, 2019
Segment information
Revenues	$ 1,381.8	$ 1,334.2
Income (loss) before income taxes	25.4	213.0
Interest expense, net	138.6	143.9
Operating income (loss)	164.0	356.9
Depreciation and amortization	38.8	118.9
Stock compensation expense	4.7	21.1
Restructuring and other charges		7.9
Less: Securitization funding costs	49.9	57.3
Less: Interest expense on deposits	60.3	48.7
Continuing Operations
Segment information
Revenues	1,381.8	1,334.2
Income (loss) before income taxes	25.4	213.0
Interest expense, net	138.6	143.9
Operating income (loss)	164.0	356.9
Depreciation and amortization	38.8	46.4
Stock compensation expense	4.7	11.3
Gain on sale of business, net of strategic transaction costs	(8.0)
Strategic transaction costs	0.7
Restructuring and other charges	(6.5)	7.9
Adjusted EBITDA	193.7	422.5
Less: Securitization funding costs	49.9	57.3
Less: Interest expense on deposits	60.3	48.7
Adjusted EBITDA, net	83.5	316.5
LoyaltyOne
Segment information
Restructuring and other charges		7.9
Operating segment \| LoyaltyOne
Segment information
Revenues	198.1	203.8
Income (loss) before income taxes	46.7	23.0
Interest expense, net	(0.3)	1.1
Operating income (loss)	46.4	24.1
Gain on sale of business, net of strategic transaction costs	(8.0)
Strategic transaction costs	0.1
Restructuring and other charges	0.1	7.9
Adjusted EBITDA	57.8	55.1
Adjusted EBITDA, net	57.8	55.1
Operating segment \| LoyaltyOne \| Continuing Operations
Segment information
Depreciation and amortization	18.2	20.1
Stock compensation expense	1.0	3.0
Operating segment \| Card Services
Segment information
Revenues	1,183.6	1,130.4
Income (loss) before income taxes	32.1	266.9
Interest expense, net	110.2	106.0
Operating income (loss)	142.3	372.9
Restructuring and other charges	(6.5)
Adjusted EBITDA	157.2	400.9
Less: Securitization funding costs	49.9	57.3
Less: Interest expense on deposits	60.3	48.7
Adjusted EBITDA, net	47.0	294.9
Operating segment \| Card Services \| Continuing Operations
Segment information
Depreciation and amortization	19.7	24.3
Stock compensation expense	1.7	3.7
Corporate/Other
Segment information
Revenues	0.1
Income (loss) before income taxes	(53.4)	(76.9)
Interest expense, net	28.7	36.8
Operating income (loss)	(24.7)	(40.1)
Strategic transaction costs	0.6
Restructuring and other charges	(0.1)
Adjusted EBITDA	(21.3)	(33.5)
Adjusted EBITDA, net	(21.3)	(33.5)
Corporate/Other \| Continuing Operations
Segment information
Depreciation and amortization	0.9	2.0
Stock compensation expense	$ 2.0	$ 4.6

SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
SUPPLEMENTAL CASH FLOW INFORMATION
Cash and cash equivalents	$ 4,456.8		$ 3,725.1
Restricted cash included within other current assets (1)	253.2		47.6
Restricted cash included within redemption settlement assets, restricted	55.9		43.3
Total cash, cash equivalents and restricted cash	4,765.9	$ 3,958.1	$ 3,816.0	$ 3,967.7
Restricted cash in principal accumulation for repayment	$ 225.3