FDC 2017 Annual Report

FI R S T D A T A C O R P O R A TI O N N O T E S T O T H E C O N S O LI D A T E D FI N A N CI A L S T A T E M E N T S ( C o nti n u e d) 7 6 if t h e v al u e, v esti n g c o n diti o ns or cl assifi c ati o n of a n a w ar d c h a n g es. T his n e w g ui d a n c e will b e eff e cti v e f or fis c al y e ars b egi n ni n g aft er D e c e m b er 1 5, 2 0 1 7 f or all e ntiti es, i n cl u di n g i nt eri m p eri o ds wit hi n t h os e fis c al y e ars wit h e arl y a d o pti o n p er mitt e d. T h e g ui d a n c e is a d o pt e d pr os p e cti v el y t o a w ar ds m o difi e d o n or aft er t h e a d o pti o n d at e. T h e C o m p a n y will a d o pt t h e n e w g ui d a n c e o n J a n u ar y 1, 2 0 1 8. T h e i m p a ct of a d o pti o n o n t h e C o m p a n y's c o ns oli d at e d fi n a n ci al st at e m e nts is d e p e n d e nt o n f ut ur e c h a n g es t o s h ar e- b as e d c o m p e ns ati o n a w ar ds. Cr e dit L oss es I n J u n e 2 0 1 6, t h e F A S B iss u e d g ui d a n c e t h at will c h a n g e t h e a c c o u nti n g f or cr e dit i m p air m e nt. U n d er t h e n e w g ui d a n c e, c o m p a ni es ar e r e q uir e d t o m e as ur e all e x p e ct e d cr e dit l oss es f or fi n a n ci al i nstr u m e nts h el d at t h e r e p orti n g d at e b as e d o n hist ori c al e x p eri e n c e, c urr e nt c o n diti o ns a n d r e as o n a bl e s u p p ort a bl e f or e c asts. T his r e pl a c es t h e e xisti n g i n c urr e d l oss m o d el a n d is a p pli c a bl e t o t h e m e as ur e m e nt of cr e dit l oss es o n fi n a n ci al ass ets m e as ur e d at a m orti z e d c ost a n d a p pli es t o s o m e off- b al a n c e s h e et cr e dit e x p os u r es. T his n e w g ui d a n c e will b e eff e cti v e f or p u bli c c o m p a ni es f or fis c al y e ars b e gi n ni n g aft er D e c e m b er 1 5, 2 0 1 9, i n cl u di n g i nt eri m p eri o ds wit hi n t h os e fis c al y e ars. E arl y a d o pti o n is p er mitt e d f or fis c al y e ars b e gi n ni n g aft er D e c e m b er 1 5, 2 0 1 8. T h e C o m p a n y is c urr e ntl y e v al u ati n g t h e i m p a ct of t h e n e w g ui d a n c e o n its c o ns oli d at e d fi n a n ci al st at e m e nts. St at e m e nt of C as h Fl o ws I n N o v e m b er 2 0 1 6, t h e F A S B iss u e d g ui d a n c e t h at will c h a n g e t h e pr es e nt ati o n of r estri ct e d c as h a n d r estri ct e d c as h e q ui v al e nts o n t h e st at e m e nt of c as h fl o ws. U n d er t h e n e w g ui d a n c e, c o m p a ni es will b e r e q uir e d t o i n cl u d e r estri ct e d c as h a n d r estri ct e d c a s h e q ui v al e nts wit h t h e c as h a n d c as h e q ui v al e nts li n e it e m w h e n r e c o n cili n g b e gi n ni n g- of- p eri o d a n d e n d- of- p eri o d t ot al a m o u nts s h o w n o n t h e st at e m e nt of c as h fl o ws. Gi v e n t his c h a n g e, tr a nsf ers b et w e e n c as h, c as h e q ui v al e nts, a n d r estri ct e d c as h a n d c as h e q ui v al e nts will n ot b e r e p ort e d as c as h fl o w a cti viti es o n t h e st at e m e nt of c as h fl o ws. I n a d diti o n, t h e g ui d a n c e r e q uir es e nt iti es t o dis cl os e i nf or m ati o n a b o ut t h e n at ur e of r estri cti o ns o n its c as h a n d c as h e q ui v al e nts, i n cl u di n g r estri ct e d c as h a n d c as h e q ui v al e nts. T his n e w g ui d a n c e will b e eff e cti v e f or p u bli c c o m p a ni es f or fis c al y e ars b e gi n ni n g aft er D e c e m b er 1 5, 2 0 1 7, i n cl u di n g i nt eri m p eri o ds wit hi n t h os e fis c al y e ars wit h e arl y a d o pti o n p er mitt e d, i n cl u di n g a d o pti o n i n a n i nt eri m p eri o d. T h e g ui d a n c e s h o ul d b e a p pli e d usi n g a r etr os p e cti v e tr a nsiti o n m et h o d t o e a c h p eri o d pr es e nt e d. T h e C o m p a n y a d o pt e d t h e n e w g ui d a n c e o n J a n u ar y 1, 2 0 1 8. T h e C o m p a n y d o es n ot e x p e ct t h e a d o pti o n of t his g ui d a n c e t o h a v e a m at eri al i m p a ct o n its c o ns oli d at e d fi n a n c i al st at e m e nts. G o o d will I n J a n u ar y 2 0 1 7, t h e F A S B iss u e d g ui d a n c e si m plif yi n g t h e t est f or g o o d will i m p air m e nt. T his st a n d ar d eli mi n at es St e p 2 fr o m t h e g o o d will i m p air m e nt t est, i nst e a d r e q uiri n g a n e ntit y t o r e c o g ni z e a g o o d will i m p air m e nt c h ar g e f or t h e a m o u nt b y w hi c h t h e g o o d will c arr yi n g a m o u nt e x c e e ds t h e r e p orti n g u nit’s f air v al u e. T his g ui d a n c e is eff e cti v e f or i nt eri m a n d a n n u al g o o d will i m p air m e nt t ests i n fis c al y e ars b e gi n ni n g aft er D e c e m b er 1 5, 2 0 1 9, a n d e arl y a d o pti o n is p er mitt e d. T his g ui d a n c e m ust b e a p pli e d o n a pr os p e cti v e b asis. T h e C o m p a n y a d o pt e d t h e n e w g ui d a n c e d uri n g t h e f o urt h q u art er of 2 0 1 7 wit h n o i m p a ct t o its c o ns oli d at e d fi n a n ci al st at e m e nts. P e nsi o n C osts I n M ar c h 2 0 1 7, t h e F A S B iss u e d g ui d a n c e t h at r e q uir es e m pl o y ers t h at s p o ns or d efi n e d b e n efit pl a ns f or p e nsi o ns a n d/ or ot h er p ost-r etir e m e nt b e n efits t o pr es e nt t h e s er vi c e c ost c o m p o n e nt of n et p eri o di c b e n efit c ost i n t h e s a m e i n c o m e st at e m e nt li n e i t e m as ot h er e m pl o y e e c o m p e ns ati o n c osts arisi n g fr o m s er vi c es r e n d er e d d uri n g t h e p eri o d. O nl y t h e s er vi c e c ost c o m p o n e nt will b e eli gi bl e f or c a pit ali z ati o n i n ass ets. E m pl o y ers will pr es e nt t h e ot h er c o m p o n e nts of t h e n et p eri o di c b e n efit c ost s e p ar at el y fr o m t h e li n e it e m t h at i n cl u d es t h e s er vi c e c ost a n d o utsi d e of a n y s u bt ot al of o p er ati n g i n c o m e, if o n e is pr es e nt e d. T h es e c o m p o ne nts will n ot b e eli gi bl e f or c a pit ali z ati o n i n ass ets. T his n e w g ui d a n c e will b e eff e cti v e f or p u bli c c o m p a ni es f or fis c al y e ars b e gi n ni n g aft er D e c e m b er 1 5, 2 0 1 7, i n cl u di n g i nt eri m p eri o ds wit hi n t h os e fis c al y e ars wit h e arl y a d o pti o n p er mitt e d, i n cl u di n g a d o pti o n i n a n i nt eri m p eri o d. T h e C o m p a n y pl a ns t o a d o pt t h e g ui d a n c e o n J a n u ar y 1, 2 0 1 8. U p o n a d o pti o n, t h e g ui d a n c e r e q uir es c h a n g es t o t h e pr es e nt ati o n of t h e i n c o m e st at e m e nt t o b e a p pli e d r etr os p e cti v el y. H a d t h e C o m p a n y a d o pt e d o n J a n u ar y 1, 2 0 1 7, t h e i m p act o n o ur fi n a n ci al st at e m e nts at D e c e m b er 3 1, 2 0 1 7 w o ul d h a v e i n cr e as e d o p er ati n g e x p e ns e a n d d e cr e as e d n o n- o p er ati n g e x p e ns e b y l ess t h a n $ 1 0 milli o n. D eri v ati v es a n d H e d gi n g I n A u g ust 2 0 1 7, t h e F A S B iss u e d g ui d a n c e t o si m plif y t h e c urr e nt a p pli c ati o n of h e d g e a c c o u nti n g. T his st a n d ar d is i nt e n d e d t o b ett er ali g n a c o m p a n y’s ris k m a n a g e m e nt str at e gi es a n d fi n a n ci al r e p orti n g f or h e d gi n g r el ati o ns hi ps t hr o u g h c h a n g es t o b ot h d esi g n ati o n a n d m e as ur e m e nt f or q u alif yi n g h e d gi n g r el ati o ns hi ps a n d m or e a c c ur at el y pr es e nti n g t h e e c o n o mi c eff e cts i n t h e fi n a n ci al st at e m e nts. I n a d diti o n, t h e n e w g ui d a n c e est a blis h es fl e xi bilit y i n t h e r e q uir e m e nts t o q u alif y a n d m ai nt ai n h e d g e