Recent Accounting Pronouncements (Tables)

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The following table provides a brief description of accounting pronouncements adopted during the nine months ended September 30, 2018 and recent accounting pronouncements that could have a material effect on our financial statements:



Standard	Description	Date/Method of Adoption	Effect on financial statements or other significant matters
Adopted During the Nine Months Ended September 30, 2018
ASU 2014–09	This standard supersedes most existing revenue recognition guidance under GAAP. The new revenue recognition standard requires entities to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.	The Company adopted this standard on January 1, 2018 using the modified retrospective approach to those contracts that were not completed as of January 1, 2018. Adoption resulted in a cumulative adjustment to retained earnings as of the effective date, without restatement of prior period amounts.	The Company’s revenue from discount and interchange, transaction processing and certain fees is within the scope of Topic 606. FASB and its Transition Resource Group have issued clarifications on various aspects of ASU 2014–09. There were three primary impacts to the Company resulting from the adoption of Topic 606, which are described below. Certain amounts paid to partners in our Fleet Solutions and Travel and Corporate Solutions segments have been determined to fall under the “cost to obtain a contract” guidance. As a result, these amounts, which were previously presented as a reduction of revenues, are now reflected within sales and marketing on our unaudited condensed consolidated statements of income. This change increased both reported revenues and expenses for the three and nine months ended September 30, 2018 by approximately $13.8 million and $44.9 million, respectively. Network fees paid by all three of our segments, but primarily by our Travel and Corporate Solutions segment, are now presented as a reduction of revenues in our unaudited condensed consolidated statements of income. Prior to January 1, 2018, these amounts were included within service fees. This change reduced both reported revenues and expenses by approximately $3.4 million and $13.5 million for the three and nine months ended September 30, 2018, respectively. Certain costs to obtain a contract, such as sales commissions, are to be capitalized and amortized over the life of the customer relationship, with a practical expedient available for contracts under one year in duration. The vast majority of the Company’s commissions will continue to be expensed as incurred. This change resulted in an immaterial impact to operating income for the three and nine months ended September 30, 2018. As of January 1, 2018, we recorded $0.6 million cumulative-effect adjustment, net of the associated tax effect, related to the deferral of capitalizable costs to obtain a contract within our Health and Employee Benefit Solutions segment. These commissions are amortized to sales and marketing expense over a useful life that considers the contract term, our commission policy, renewal experience and the transfer of services to which the asset relates.

ASU 2017–07	This standard changes the presentation of net benefit pension costs by requiring the disaggregation of certain of its components. Under the guidance, companies are required to present the service cost component in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost will be presented in the income statement separately from the service cost component and outside the subtotal of operating income, if one is presented. Additionally, only the service cost component will be eligible for capitalization under the new guidance.	The Company adopted ASU 2017–07 effective January 1, 2018.	The adoption did not have a material impact on our results of operations, cash flows or consolidated financial position.



ASU 2016–18	This standard clarifies the classification and presentation of restricted cash in the statement of cash flows. Upon adoption, the statement of cash flows must explain the change during the period in the total of cash and cash equivalents and amounts described as restricted cash or cash equivalents.	The Company retrospectively adopted ASU 2016–18 effective January 1, 2018.	This retrospective adoption resulted in including restricted cash in cash, cash equivalents and restricted cash when reconciling the beginning of year and end of year amounts presented on the unaudited condensed consolidated statements of cash flows. A reconciliation of cash, cash equivalents and restricted cash as reported within our unaudited condensed consolidated balance sheets is included within our unaudited condensed consolidated statements of cash flows.

ASU 2016–01	This standard requires equity investments, except those accounted for under the equity method of accounting, or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income.	The Company adopted ASU 2016–01 effective January 1, 2018.	Changes in the fair value of investment securities are now reflected as non-operating income within our unaudited condensed consolidated statements of income. The adoption did not have a material impact on our results of operations, balance sheet or cash flows.
Not Yet Adopted as of September 30, 2018
ASU 2016–02	This standard increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required.	The Company plans to adopt ASU 2016–02 effective January 1, 2019 using the modified retrospective method provided under ASU 2018–11 Leases (Topic 842): Targeted Improvements.	The Company has established an ASU 2016–02 committee whose primary objectives include implementing a new software solution, reviewing and summarizing lease contracts, establishing completeness over the lease population, determining which practical expedients, if any, we will utilize to facilitate compliance and updating the Company’s accounting policies and procedures. The Company expects to recognize right-of-use assets and corresponding lease liabilities on the Company’s consolidated balance sheet following the adoption of ASU 2016–02, but the Company is not able to quantify the impact of adoption at this time. The Company is also evaluating the impact the standard will have on its consolidated statement of operations, consolidated statement of cash flows and related disclosures

ASU 2016–13	This standard requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses will be based on historical experience, current conditions and reasonable and supportable forecasts that impact the collectability of the reported amount.	The standard is effective January 1, 2020.	The Company is evaluating the impact the standard will have on its consolidated financial statements and related disclosures.


ASU 2018–15	This standard clarifies the accounting for capitalizing implementation costs in a cloud computing arrangement that is a service contract. The standard provides that implementation costs be treated using the same criteria used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement.	The standard is effective January 1, 2020.	The Company is evaluating the impact the standard will have on its consolidated financial statements and related disclosures.

The impact of adopting Topic 606 for the three and nine months ended September 30, 2018 was as follows:



	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018
(In thousands)	Prior to Adoption			Impact of Topic 606			As Reported			Prior to Adoption			Impact of Topic 606			As Reported
Revenues
Payment processing revenue	$	174,170		$	8,701		$	182,871		$	501,674		$	28,389		$	530,063
Account servicing revenue	78,748			—			78,748			236,168			—			236,168
Finance fee revenue	53,703			—			53,703			154,958			—			154,958
Other revenue	65,682			1,686			67,368			183,997			3,209			187,206
Total revenues	372,303			10,387			382,690			1,076,797			31,598			1,108,395
Cost of services
Processing costs	79,580			—			79,580			235,508			—			235,508
Service fees	17,234			(3,416		)	13,818			53,310			(13,463		)	39,847
Provision for credit losses	21,435			—			21,435			46,930			—			46,930
Operating interest	10,268			—			10,268			28,281			—			28,281
Depreciation and amortization	19,013			—			19,013			60,058			—			60,058
Total cost of services	147,530			(3,416		)	144,114			424,087			(13,463		)	410,624
General and administrative	51,799			—			51,799			155,720			—			155,720
Sales and marketing	40,846			13,765			54,611			123,996			44,853			168,849
Depreciation and amortization	29,054			—			29,054			88,817			—			88,817
Impairment charge	2,424			—			2,424			2,424			—			2,424
Operating income	100,650			38			100,688			281,753			208			281,961
Financing interest expense	(25,718		)	—			(25,718		)	(78,560		)	—			(78,560		)
Net foreign currency loss	(1,094		)	—			(1,094		)	(27,438		)	—			(27,438		)
Net unrealized gain on financial instruments	2,157			—			2,157			18,371			—			18,371
Income before income taxes	75,995			38			76,033			194,126			208			194,334
Income taxes	18,741			10			18,751			48,222			56			48,278
Net income	57,254			28			57,282			145,904			152			146,056
Less: Net (loss) income from non-controlling interest	(40		)	—			(40		)	803			—			803
Net income attributable to shareholders	$	57,294		$	28		$	57,322		$	145,101		$	152		$	145,253