7 unchanged sentences
However, in certain circumstances, we settle in other currencies.
−Removed: The foreign currency exposure that does exist is limited by the fact that the majority of transactions are paid by the next day after they are
−Removed: initiated, and agent settlements occur within a few days in most instances.
+Added: The foreign currency exposure that does exist is limited by the fact that the majority of transactions are paid by the next day after they are initiated, and agent settlements occur within a few days in most instances.
To mitigate this risk further, we enter into short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations between transaction initiation and settlement.
2 unchanged sentences
We attempt to promptly buy and sell foreign currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.
−Removed: We use longer-term foreign currency forward contracts to help mitigate risks associated with changes in foreign currency exchange rates on revenues denominated primarily in the euro, and to a lesser degree the Canadian dollar, British pound, Australian dollar, and other currencies.
+Added: We use longer-term foreign currency forward contracts to help mitigate risks associated with changes in foreign currency exchange rates on revenues denominated primarily in the euro, and to a lesser degree the British pound, the Canadian dollar, and other currencies.
We use contracts with maturities of up to 36 months at inception to mitigate some of the impact that changes in foreign currency exchange rates could have on forecasted revenues, with a targeted weighted-average maturity of approximately one year.
We believe the use of longer-term foreign currency forward contracts provides predictability of future cash flows from our international operations.
−Removed: We have bill payment, money transfer, and other operations in Argentina, which together represented less than 5% of our total consolidated revenues for the years ended December 31, 2019 and 2018.
+Added: We have bill payment, money transfer, and other operations in Argentina, which together represented less than 3% of our total consolidated revenues for the year ended December 31, 2020.
The strengthening of the United States dollar against the Argentine peso has had adverse impacts on our historical results of operations and cash flows, as our Argentine peso-denominated revenue and operating income have been reduced when translated into United States dollars for inclusion in our financial statements.
−Removed: Additionally, beginning in the third quarter of 2018, we reflected the impact of all changes in the value of the Argentine peso on our monetary assets and liabilities in net income, given Argentina’s status as a highly inflationary economy.
−Removed: Prior to the third quarter of 2018, changes in the Argentine peso exchange rate were reflected in net income for our money transfer operations, whereas these effects were reflected in other comprehensive income for our bill payment operations.
During the third quarter of 2019, the Argentine government imposed restrictions that limit the transfer of cash outside of the country.
4 unchanged sentences
In certain countries, this business also writes foreign currency forward and option contracts for our customers to facilitate future payments.
−Removed: The duration of these derivative contracts at inception is generally less than one year.
+Added: The significant majority of these derivative contracts have a duration at inception of less than one year.
Business Solutions aggregates its foreign exchange exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties.
−Removed: As of December 31, 2019, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to pre-tax annual income of approximately $45 million, based on our forecast of unhedged exposure to foreign currency at that date.
+Added: As of December 31, 2020, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to
+Added: pre-tax annual income of approximately $65 million, based on our forecast of unhedged exposure to foreign currency at that date.
There are inherent limitations in this sensitivity analysis, primarily due to the following assumptions:
3 unchanged sentences
We invest in several types of interest-bearing assets, with a total value as of December 31, 2020 of approximately $3.3 billion.
−Removed: Approximately $1.4 billion of these assets bear interest at floating rates and are therefore sensitive to changes in interest rates.
+Added: Approximately $2.0 billion of these assets bear interest at floating rates.
These assets primarily include cash in banks, money market instruments, and state and municipal variable-rate securities and are included in our Consolidated Balance Sheets within Cash and cash equivalents and Settlement assets.
2 unchanged sentences
The remainder of our interest-bearing assets primarily consists of highly-rated state and municipal debt securities, which are fixed-rate term notes.
−Removed: These investments may include investments made from cash received from our money order services, money transfer business, and other related payment services that is awaiting redemption and is classified within Settlement assets in the Consolidated Balance Sheets.
+Added: These investments may include investments made from cash received from our money order services, money transfer business, and other related payment services awaiting redemption and are classified within Settlement assets in the Consolidated Balance Sheets.
As interest rates rise, the fair value of these fixed-rate interest-bearing securities will decrease;
conversely, a decrease to interest rates would result in an increase to the fair values of the securities.
−Removed: We have classified these investments as available-for-sale within Settlement assets in the Consolidated Balance Sheets, and accordingly, recorded these instruments at their fair value with the net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from our Total stockholders’ deficit on our Consolidated Balance Sheets.
−Removed: As of December 31, 2019, we had a total of approximately $1.2 billion of borrowings that are subject to floating interest rates.
+Added: We have classified these investments as available-for-sale within Settlement assets in the Consolidated Balance Sheets, and accordingly, recorded these instruments at their fair value with the net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from our Total stockholders’ equity/(deficit) in our Consolidated Balance Sheets.
+Added: As of December 31, 2020, we had a total of approximately $1.0 billion of borrowings subject to floating interest rates.
Interest on $950.0 million borrowed under our Term Loan Facility is calculated using a selected LIBOR rate plus an interest rate margin of 125 basis points.
6 unchanged sentences
As of December 31, 2020, our weighted-average effective rate on total borrowings was approximately 3.5%.
−Removed: For further detail on our floating-rate borrowings, see risk factor “ We have substantial debt and other obligations that could restrict our operations ” in Part I, Item 1A, Risk Factors .
+Added: For further detail on our variable rate borrowings, see risk factor “ We have substantial debt and other obligations that could restrict our operations ” in Part I, Item 1A, Risk Factors .
A hypothetical 100 basis point increase/decrease in interest rates would result in a decrease/increase to annual pre-tax income of approximately $10 million based on borrowings that are sensitive to interest rate fluctuations, net of the impact of hedges, on December 31, 2020.
−Removed: The same 100 basis point increase/decrease in interest rates, if applied to our cash and investment balances on December 31, 2019 that are sensitive to interest rate fluctuations, would result in an offsetting increase/decrease to annual pre-tax income of approximately $14 million.
+Added: The same 100 basis point increase/decrease in interest rates, if applied to our cash and investment balances on December 31, 2020 that bear interest at floating rates, would result in an offsetting increase/decrease to annual pre-tax income of approximately $20 million.
There are inherent limitations in the sensitivity analysis presented, primarily due to the assumptions that interest rate changes would be instantaneous and consistent across all geographies in which our interest-bearing assets are held and our liabilities are payable.
4 unchanged sentences
We perform a credit review before each agent signing and conduct periodic analyses of agents and certain other parties we transact with directly.
−Removed: In addition, we are exposed to credit risk directly from consumer transactions, particularly through our electronic channels, where transactions are originated through means other than cash and are therefore subject to “chargebacks,” insufficient funds or other collection impediments, such as fraud, which are anticipated to increase as electronic channels become a greater proportion of our money transfer business.
+Added: While we have experienced some delays in our collections from agents in connection with COVID-19 agent location closures and other impacts, we believe we are taking appropriate measures to attempt to address liquidity-related considerations by evaluating, monitoring, and assessing the creditworthiness and credit risk ratings of our agents.
+Added: These delays have been largely temporary as certain agents were not able to remit settlement funds to us during lockdowns or other stay-at-home orders.
+Added: In addition, we are exposed to losses directly from consumer transactions, particularly through our digital channels, where transactions are originated through means other than cash and are therefore subject to “chargebacks,” insufficient funds or other collection impediments, such as fraud, which are anticipated to increase as digital channels become a greater proportion of our money transfer business.
We are exposed to credit risk in our Business Solutions business relating to:
4 unchanged sentences
To mitigate the risk associated with potential customer defaults, we perform credit reviews of the customer on an ongoing basis, and, for our derivatives, we may require certain customers to post or increase collateral.
−Removed: Our losses associated with bad debts have been approximately 1% of our consolidated revenues in all periods presented.
+Added: Our losses have been approximately 2% or less of our consolidated revenues in all periods presented.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.