(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip code) |
Title of Each Class: | Trading Symbol | Name of Each Exchange on Which Registered: |
PAGE | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 1B. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
ITEM 5. | ||
ITEM 6. | ||
ITEM 7. | ||
ITEM 7A. | ||
ITEM 8. | ||
ITEM 9. | ||
ITEM 9A. | ||
ITEM 9B. | ||
ITEM 10. | ||
ITEM 11. | ||
ITEM 12. | ||
ITEM 13. | ||
ITEM 14. | ||
ITEM 15. |
• | the success of Broadridge Financial Solutions, Inc. (“Broadridge” or the “Company”) in retaining and selling additional services to its existing clients and in obtaining new clients; |
• | Broadridge’s reliance on a relatively small number of clients, the continued financial health of those clients, and the continued use by such clients of Broadridge’s services with favorable pricing terms; |
• | a material security breach or cybersecurity attack affecting the information of Broadridge’s clients; |
• | changes in laws and regulations affecting Broadridge’s clients or the services provided by Broadridge; |
• | declines in participation and activity in the securities markets; |
• | the failure of our key service providers to provide the anticipated levels of service; |
• | a disaster or other significant slowdown or failure of Broadridge’s systems or error in the performance of Broadridge’s services; |
• | overall market and economic conditions and their impact on the securities markets; |
• | Broadridge’s failure to keep pace with changes in technology and the demands of its clients; |
• | the ability to attract and retain key personnel; |
• | the impact of new acquisitions and divestitures; and |
• | competitive conditions. |
ITEM 1. | Business |
• | Governance. We provide a strong network through our governance platform that links broker-dealers, public companies, mutual funds, shareholders, and regulators. We continue to grow our governance solutions by continuing to transform content and delivery and improve product capabilities to drive higher investor engagement. We aim to be an integral partner to asset managers and retirement service providers by offering data-driven solutions that help them grow revenue, reduce costs and maintain compliance. We are also expanding our capabilities to better serve the needs of issuers and we are driving the next generation of digital communications while optimizing print and mail services through advanced technology. |
• | Capital Markets. Global institutions have a strong need to simplify their complex technology environment, and our SaaS-based global, multi-asset class technology platform addresses this need. We are driving global post-trade management to create transformation opportunities to simplify our clients’ operations, improve performance, evolve to global operating models, adopt new technologies, and enable our clients to better manage their data. |
• | Wealth Management. Wealth management clients which include capital markets and financial services firms, financial advisors, wealth managers and insurance agents are undergoing unprecedented change and need partners to help them navigate the new technologies that are essential to their business. Market dynamics are driving the need for integrated, data-centric digital wealth solutions and we see the need of investment managers to modernize their technology infrastructure. To address this need, we are integrating a “One Wealth” platform that optimizes advisor productivity, client experience and enterprise operations. |
• | In May 2019, we acquired Rockall Technologies Limited (“Rockall”), a leading provider of securities-based lending (“SBL”) and collateral management solutions for wealth management firms and commercial banks. The acquisition expands our core front- to back-office wealth capabilities, providing innovative SBL and collateral management technology solutions to help firms manage risk and optimize clients’ securities lending and financing needs; and |
• | In June 2019, we acquired RPM Technologies (“RPM”), a leading Canadian provider of enterprise wealth management software solutions and services. The acquisition brings important new capabilities and next-generation technology to our clients. RPM's state-of-the-art technology platforms build on our strong Canadian wealth management business, providing a solution set for the retail banking sector with enhanced mutual fund and deposit manufacturing capabilities. |
• | ShareLink® - complete project management for the entire annual meeting process including distribution of proxy materials and vote processing. |
• | Virtual Shareholder Meeting™ - electronic annual meetings on the Internet, either on a stand-alone basis, or in conjunction with physical annual meetings including shareholder validation and voting services. |
• | Proxy Materials Document Composition and Management - proxy and annual report design and digitization, SEC filing, printing and web hosting services. |
• | Shareholder Data Services - integrate (1) an analytics engine for obtaining a comprehensive view of a company’s full shareholder base, including both registered and beneficial shareholders; (2) custom targeted communications for reaching discrete shareholder segments based on specific criteria; and (3) response reporting for evaluating results of targeted reminder mailings to shareholders. Companies can monitor progress of their proxy voting and capture valuable aggregated voting behavior data as a basis for on-going investor communications initiatives. |
• | Enhanced Packaging of annual meeting materials - our Enhanced Packaging service offers windowed envelope options enabling issuers to engage their shareholders before they even open the envelope through call-to-action messaging, product highlights or simply showcasing the annual report; thereby improving proxy voting participation as well as increasing brand loyalty. |
• | processed approximately 80% of the outstanding shares in the U.S. in the performance of our proxy services; |
• | processed over 6 billion investor and customer communications through print and digital channels; |
• | processed on average over $7 trillion in equity and fixed income trades per day of U.S. and Canadian securities; and |
• | provided fixed income trade processing services to 19 of the 24 primary dealers of fixed income securities in the U.S. |
ITEM 1A. | Risk Factors |
• | computer viruses or undetected errors in internal software programs or computer systems; |
• | direct or indirect hacking or denial of service cybersecurity attacks; |
• | inability to rapidly monitor all system activity; |
• | inability to effectively resolve any errors in internal software programs or computer systems once they are detected; |
• | heavy stress placed on systems during peak times; or |
• | power or telecommunications failure, fire, flood or any other disaster. |
• | economic, political and market conditions; |
• | legislative and regulatory changes; |
• | the availability of short-term and long-term funding and capital; |
• | the level and volatility of interest rates; |
• | currency values and inflation; and |
• | national, state, and local taxation levels affecting securities transactions. |
• | valuation: finding suitable businesses to acquire at affordable valuations or on other acceptable terms; competition for acquisitions from other potential acquirors, and negotiating a fair price for the business based on inherently limited due diligence reviews; |
• | integration: managing the complex process of integrating the acquired company’s people, products, technology, and other assets, and converting their financial, information security, privacy and other systems and controls to meet our standards, so as to realize the projected value of the acquired company and the synergies projected to be realized in connection with the acquisition; and |
• | legacy issues: protecting against actions, claims, regulatory investigations, losses, and other liabilities related to the predecessor business. |
• | finding suitable businesses to acquire at affordable valuations or on other acceptable terms; |
• | competition for acquisitions from other potential acquirors; |
• | incurring unforeseen obligations or liabilities in connection with such acquisitions; |
• | devoting unanticipated financial and management resources to an acquired business; |
• | borrowing money from lenders or selling equity or debt securities to the public to finance future acquisitions on terms that may be adverse to us; |
• | loss of clients of the acquired business; |
• | entering markets where we have minimal prior experience; and |
• | experiencing decreases in earnings as a result of non-cash impairment charges. |
• | geographically separated organizations, systems, and facilities; |
• | integrating personnel with diverse business backgrounds and organizational cultures; |
• | complying with non-U.S. regulatory requirements; |
• | enforcing intellectual property rights in some non-U.S. countries; and |
• | general economic and political conditions. |
ITEM 1B. | Unresolved Staff Comments |
ITEM 3. | Legal Proceedings |
ITEM 4. | Mine Safety Disclosures |
ITEM 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
June 30, 2014 | June 30, 2015 | June 30, 2016 | June 30, 2017 | June 30, 2018 | June 30, 2019 | |||||||||||||||||||
Broadridge Financial Solutions. Inc. Common Stock | $ | 100.00 | $ | 122.88 | $ | 163.67 | $ | 193.32 | $ | 299.01 | $ | 337.34 | ||||||||||||
S&P 500 Index | $ | 100.00 | $ | 107.42 | $ | 111.69 | $ | 131.67 | $ | 150.59 | $ | 166.26 | ||||||||||||
S&P 500 Information Technology Index | $ | 100.00 | $ | 111.10 | $ | 116.42 | $ | 155.87 | $ | 204.66 | $ | 234.00 | ||||||||||||
S&P 400 MidCap Index | $ | 100.00 | $ | 106.38 | $ | 107.79 | $ | 127.79 | $ | 145.03 | $ | 146.97 | ||||||||||||
S&P 400 Information Technology Index | $ | 100.00 | $ | 111.12 | $ | 107.70 | $ | 141.99 | $ | 167.25 | $ | 190.55 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||||
April 1, 2019 – April 30, 2019 | 211,960 | $ | 105.00 | — | 6,651,256 | ||||||||
May 1, 2019 – May 31, 2019 | 1,780,784 | 120.46 | 1,779,049 | 4,872,207 | |||||||||
June 1, 2019 – June 30, 2019 | 320,774 | 127.16 | 320,685 | 4,551,522 | |||||||||
Total | 2,313,518 | $ | 119.97 | 2,099,734 |
(1) | Includes 213,784 shares purchased from employees to pay taxes related to the vesting of restricted stock units. |
(2) | During the fiscal quarter ended June 30, 2019, the Company repurchased 2,099,734 shares of common stock at an average price per share of $121.46 under its share repurchase program. At June 30, 2019, there were 4,551,522 shares remaining available for repurchase under its share repurchase program. |
ITEM 6. | Selected Financial Data |
Years Ended June 30, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
(in millions, except for per share amounts) | ||||||||||||||||||||
Statements of Earnings Data | ||||||||||||||||||||
Revenues (a) | $ | 4,362.2 | $ | 4,329.9 | $ | 4,142.6 | $ | 2,897.0 | $ | 2,694.2 | ||||||||||
Operating income (a) (b) | 652.7 | 598.1 | 534.0 | 502.3 | 467.6 | |||||||||||||||
Earnings before income taxes (a) | 607.3 | 561.0 | 488.1 | 468.9 | 438.9 | |||||||||||||||
Net earnings (a) | 482.1 | 427.9 | 326.8 | 307.5 | 287.1 | |||||||||||||||
Basic earnings per share (a) | $ | 4.16 | $ | 3.66 | $ | 2.77 | $ | 2.60 | $ | 2.39 | ||||||||||
Diluted earnings per share (a) | $ | 4.06 | $ | 3.56 | $ | 2.70 | $ | 2.53 | $ | 2.32 | ||||||||||
Basic Weighted-average shares outstanding | 115.9 | 116.8 | 118.0 | 118.3 | 119.9 | |||||||||||||||
Diluted Weighted-average shares outstanding | 118.8 | 120.4 | 120.8 | 121.6 | 124.0 | |||||||||||||||
Cash dividends declared per common share | $ | 1.94 | $ | 1.46 | $ | 1.32 | $ | 1.20 | $ | 1.08 |
June 30, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Cash and cash equivalents | $ | 273.2 | $ | 263.9 | $ | 271.1 | $ | 727.7 | $ | 324.1 | ||||||||||
Total current assets (a) | 1,042.3 | 991.1 | 989.6 | 1,289.1 | 861.4 | |||||||||||||||
Property, plant and equipment, net | 189.0 | 204.1 | 198.1 | 112.2 | 97.3 | |||||||||||||||
Total assets (a) | 3,880.7 | 3,304.7 | 3,149.8 | 2,872.7 | 2,364.8 | |||||||||||||||
Total current liabilities (a) | 802.6 | 777.3 | 744.9 | 692.9 | 508.9 | |||||||||||||||
Long-term debt, excluding current portion | 1,470.4 | 1,053.4 | 1,102.1 | 890.7 | 686.0 | |||||||||||||||
Total liabilities (a) | 2,753.2 | 2,210.4 | 2,146.0 | 1,827.3 | 1,437.0 | |||||||||||||||
Total stockholders’ equity (a) | 1,127.5 | 1,094.3 | 1,003.8 | 1,045.5 | 927.8 |
(a) | The Company adopted ASU No. 2014-09 on July 1, 2018, using the modified retrospective transition method with the cumulative effect of initially applying ASU No. 2014-09 recognized at the date of initial application. Accordingly, financial statement periods prior to July 1, 2018 have not been restated for the effects of ASU No. 2014-09. See Note 2, “Summary of Significant Accounting Policies”, and Note 3, “Revenue Recognition” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for details of the Company’s adoption of ASU No. 2014-09. |
(b) | Effective in the first quarter of fiscal year 2019, the Company adopted Financial Accounting Standards Board ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU No. 2017-07”) whereby the Company revised its presentation in the Consolidated Statements of Earnings to reflect the non-service cost components of net benefit cost as part of Other non-operating income (expenses), net, which were previously recorded as part of Total operating expenses. The Company has applied this guidance on a retrospective basis and accordingly, the Consolidated Statements of Earnings as of June 30, 2018, 2017, 2016 and 2015, respectively, have been updated to reflect this new classification. |
ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Rockall | RPM | TD Ameritrade | Total | |||||||||||||
(in millions) | ||||||||||||||||
Cash payments, net of cash acquired | $ | 34.9 | $ | 258.3 | $ | 61.5 | $ | 354.7 | ||||||||
Deferred payments, net | (0.1 | ) | 43.8 | — | 43.7 | |||||||||||
Contingent consideration liability (acquisition date fair value) | 7.1 | 0.8 | — | 7.9 | ||||||||||||
Aggregate purchase price | $ | 41.9 | $ | 302.9 | $ | 61.5 | $ | 406.4 |
Summit | ActivePath | FundAssist | Total | |||||||||||||
(in millions) | ||||||||||||||||
Cash payments, net of cash acquired | $ | 26.4 | $ | 21.8 | $ | 41.3 | $ | 89.5 | ||||||||
Deferred payments, net | 1.4 | 2.4 | — | 3.8 | ||||||||||||
Contingent consideration liability (acquisition date fair value) | 2.7 | — | 6.4 | 9.2 | ||||||||||||
Aggregate purchase price | $ | 30.6 | $ | 24.2 | $ | 47.7 | $ | 102.5 |
• | Mutual Fund Proxy: The proxy and related services we provide to mutual funds when certain events occur requiring a shareholder vote including changes in directors, sub-advisors, fee structures, investment restrictions, and mergers of funds. |
• | Mutual Fund Communications: Mutual fund communications services consist primarily of the distribution on behalf of mutual funds of supplemental information required to be provided to the annual mutual fund prospectus as a result of certain triggering events such as a change in portfolio managers. In addition, mutual fund communications consist of notices and marketing materials such as newsletters. |
• | Proxy Contests and Specials, Corporate Actions, and Other: The proxy services we provide in connection with shareholder meetings driven by special events such as proxy contests, mergers and acquisitions, and tender/exchange offers. |
Years Ended June 30, | |||||||||||||||
2019 | 2018 | Change | |||||||||||||
($) | (%) | ||||||||||||||
(in millions, except for per share amounts) | |||||||||||||||
Revenues | $ | 4,362.2 | $ | 4,329.9 | $ | 32.3 | 1 | ||||||||
Cost of revenues | 3,131.9 | 3,167.4 | (35.4 | ) | (1 | ) | |||||||||
Selling, general and administrative expenses | 577.5 | 564.5 | 13.1 | 2 | |||||||||||
Total operating expenses | 3,709.5 | 3,731.8 | (22.3 | ) | (1 | ) | |||||||||
Operating income | 652.7 | 598.1 | 54.6 | 9 | |||||||||||
Margin | 15.0 | % | 13.8 | % | 1.2 | pts | |||||||||
Interest expense, net | (41.8 | ) | (38.6 | ) | (3.2 | ) | 8 | ||||||||
Other non-operating income (expenses), net | (3.7 | ) | 1.5 | (5.2 | ) | (347 | ) | ||||||||
Earnings before income taxes | 607.3 | 561.0 | 46.2 | 8 | |||||||||||
Provision for income taxes | 125.2 | 133.1 | (7.9 | ) | (6 | ) | |||||||||
Effective tax rate | 20.6 | % | 23.7 | % | (3.1 | ) | pts | ||||||||
Net earnings | $ | 482.1 | $ | 427.9 | $ | 54.1 | 13 | ||||||||
Basic earnings per share | $ | 4.16 | $ | 3.66 | $ | 0.50 | 14 | ||||||||
Diluted earnings per share | $ | 4.06 | $ | 3.56 | $ | 0.50 | 14 |
Years Ended June 30, | ||||||||||||||
2019 | 2018 | Change | ||||||||||||
$ | % | |||||||||||||
($ in millions) | ||||||||||||||
Recurring fee revenues | $ | 2,759.3 | $ | 2,610.4 | $ | 148.9 | 6 | |||||||
Event-driven fee revenues | 244.5 | 283.9 | (39.4 | ) | (14 | ) | ||||||||
Distribution revenues | 1,460.8 | 1,512.9 | (52.1 | ) | (3 | ) | ||||||||
Foreign currency exchange | (102.4 | ) | (77.3 | ) | (25.1 | ) | 32 | |||||||
Total | $ | 4,362.2 | $ | 4,329.9 | $ | 32.3 | 1 | |||||||
Points of Growth | ||||||||||||||
Net New Business | Internal Growth | Acquisitions | Total | |||||||||||
Recurring fee revenue Growth Drivers | 3pts | 1pt | 1pt | 6 | % |
• | The impact of the ASC 606 revenue accounting change on recurring fee revenue was negligible. |
• | The lower event-driven fee revenues were primarily the result of lower equity proxy contest and mutual fund proxy activity compared to fiscal year 2018. |
• | Distribution revenues decreased $52.1 million, or 3%, to $1,460.8 million from lower transactional print volumes and the decrease in Event-driven fee revenues. |
• | The strengthening of the U.S. dollar against other currencies negatively impacted revenues by $25.1 million. |
• | Cost of revenues - The decrease of $35.4 million in cost of revenues primarily reflects: lower distribution cost of revenues driven by the decrease in distribution revenues, partially offset by higher operating costs from acquisitions and higher proxy fulfillment expenses. Fluctuations in foreign currency exchange rates decreased cost of revenues by $21.9 million. |
• | Selling, general and administrative expenses - The increase of $13.1 million in selling, general, and administrative expenses primarily reflects: higher labor expenses, including higher performance-based compensation expense, partially offset by lower spending on growth initiatives. |
• | Effective tax rate for the fiscal year ended June 30, 2019 - 20.6%. |
• | Effective tax rate for the fiscal year ended June 30, 2018 - 23.7%. |
• | Recurring fee revenues would have been $0.4 million higher, |
• | Event-driven fee revenues would have been $2.2 million lower, and |
• | Distribution revenues would have been $9.6 million higher. |
Years Ended June 30, | |||||||||||||
2019 | 2018 | Change | |||||||||||
$ | % | ||||||||||||
($ in millions) | |||||||||||||
Investor Communication Solutions | $ | 3,511.1 | $ | 3,495.6 | $ | 15.4 | — | ||||||
Global Technology and Operations | 953.5 | 911.6 | 42.0 | 5 | |||||||||
Foreign currency exchange | (102.4 | ) | (77.3 | ) | (25.1 | ) | 32 | ||||||
Total | $ | 4,362.2 | $ | 4,329.9 | $ | 32.3 | 1 |
Years Ended June 30, | ||||||||||||||
2019 | 2018 | Change | ||||||||||||
$ | % | |||||||||||||
($ in millions) | ||||||||||||||
Investor Communication Solutions | $ | 508.4 | $ | 494.6 | $ | 13.8 | 3 | |||||||
Global Technology and Operations | 210.3 | 199.3 | 11.1 | 6 | ||||||||||
Other | (130.9 | ) | (151.4 | ) | 20.5 | (14 | ) | |||||||
Foreign currency exchange | 19.4 | 18.6 | 0.9 | 4 | ||||||||||
Total | $ | 607.3 | $ | 561.0 | $ | 46.2 | 8 |
Years Ended June 30, | ||||||||||||||
2019 | 2018 | Change | ||||||||||||
$ | % | |||||||||||||
($ in millions) | ||||||||||||||
Revenues | ||||||||||||||
Recurring fee revenues | $ | 1,805.8 | $ | 1,698.9 | $ | 106.9 | 6 | |||||||
Event-driven fee revenues | 244.5 | 283.9 | (39.4 | ) | (14 | ) | ||||||||
Distribution revenues | 1,460.8 | 1,512.9 | (52.1 | ) | (3 | ) | ||||||||
Total | $ | 3,511.1 | $ | 3,495.6 | $ | 15.4 | — | |||||||
Earnings before Income Taxes | ||||||||||||||
Earnings before income taxes | $ | 508.4 | $ | 494.6 | $ | 13.8 | 3 | |||||||
Pre-tax Margin | 14.5 | % | 14.1 | % | ||||||||||
Points of Growth | ||||||||||||||
Net New Business | Internal Growth | Acquisitions | Total | |||||||||||
Recurring fee revenue Growth Drivers | 4pts | 1pt | 1pt | 6 | % |
• | The impact of the ASC 606 revenue accounting change on recurring fee revenue was negligible. |
• | With respect to recurring fees, position growth compared to the same period in the prior year, which is a component of internal growth, was 6% for annual equity proxy communications and 9% for mutual fund and ETF interims. |
• | Lower event-driven fee revenues were primarily the result of lower equity proxy contest and mutual fund proxy activity compared to fiscal year 2018. |
• | Lower distribution revenues resulted from lower transactional print volumes and the decrease in Event-driven fee revenues. |
• | The earnings increase of $13.8 million was primarily due to higher recurring fee revenues more than offsetting lower event-driven fee revenues. |
• | Pre-tax margins increased by 0.4 percentage points to 14.5% from 14.1%. Considering the impact of the revenue accounting change, pre-tax margins for the year ended June 30, 2018 would have been 14.4%. |
Years Ended June 30, | ||||||||||||||
2019 | 2018 | Change | ||||||||||||
$ | % | |||||||||||||
($ in millions) | ||||||||||||||
Revenues | ||||||||||||||
Recurring fee revenues | $ | 953.5 | $ | 911.6 | $ | 42.0 | 5 | |||||||
Earnings before Income Taxes | ||||||||||||||
Earnings before income taxes | $ | 210.3 | $ | 199.3 | $ | 11.1 | 6 | |||||||
Pre-tax Margin | 22.1 | % | 21.9 | % | ||||||||||
Points of Growth | ||||||||||||||
Net New Business | Internal Growth | Acquisitions | Total | |||||||||||
Recurring fee revenue Growth Drivers | 3pts | 1pt | 1pt | 5 | % |
• | The impact of the ASC 606 revenue accounting change on recurring fee revenue was negligible. |
• | The earnings increase was primarily due to higher organic revenues, partially offset by the impact of incremental expenditures to win, implement and support new business as well as ongoing new product development. |
• | Pre-tax margins increased by 0.2 percentage points to 22.1% from 21.9%. |
• | The decreased loss was primarily due to lower spending on growth initiatives and other corporate expenses, partially offset by a decrease in investment gains and higher interest expense compared to the prior year period. |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Operating income (GAAP) | $ | 652.7 | $ | 598.1 | ||||
Adjustments: | ||||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 87.4 | 81.4 | ||||||
Acquisition and Integration Costs | 6.4 | 8.8 | ||||||
Adjusted Operating income (Non-GAAP) | $ | 746.5 | $ | 688.2 | ||||
Operating income margin (GAAP) | 15.0 | % | 13.8 | % | ||||
Adjusted Operating income margin (Non-GAAP) | 17.1 | % | 15.9 | % |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Net earnings (GAAP) | $ | 482.1 | $ | 427.9 | ||||
Adjustments: | ||||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 87.4 | 81.4 | ||||||
Acquisition and Integration Costs | 6.4 | 8.8 | ||||||
Gain on Sale of Securities | — | (5.5 | ) | |||||
Taxable adjustments | 93.8 | 84.7 | ||||||
Tax act items | — | 15.4 | ||||||
Tax impact of adjustments (a) | (22.3 | ) | (23.9 | ) | ||||
Adjusted Net earnings (Non-GAAP) | $ | 553.6 | $ | 504.1 |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
Diluted earnings per share (GAAP) | $ | 4.06 | $ | 3.56 | ||||
Adjustments: | ||||||||
Amortization of Acquired Intangibles and Purchased Intellectual Property | 0.74 | 0.68 | ||||||
Acquisition and Integration Costs | 0.05 | 0.07 | ||||||
Gain on Sale of Securities | — | (0.05 | ) | |||||
Taxable adjustments | 0.79 | 0.70 | ||||||
Tax Act Items | — | 0.13 | ||||||
Tax impact of adjustments (a) | (0.19 | ) | (0.20 | ) | ||||
Adjusted earnings per share (Non-GAAP) | $ | 4.66 | $ | 4.19 |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Net cash flows provided by operating activities (GAAP) | $ | 617.0 | $ | 693.6 | ||||
Capital expenditures and Software purchases and capitalized internal use software | (72.6 | ) | (97.9 | ) | ||||
Free cash flow (Non-GAAP) | $ | 544.4 | $ | 595.7 |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Cash and cash equivalents: | ||||||||
Domestic cash | $ | 95.5 | $ | 98.2 | ||||
Cash held by foreign subsidiaries | 99.8 | 103.6 | ||||||
Cash held by regulated entities | 77.9 | 62.0 | ||||||
Total cash and cash equivalents | $ | 273.2 | $ | 263.9 |
Expiration Date | Principal amount outstanding at June 30, 2019 | Carrying value at June 30, 2019 | Carrying value at June 30, 2018 | Unused Available Capacity | Fair Value at June 30, 2019 | ||||||||||||||||
(in millions) | |||||||||||||||||||||
Long-term debt | |||||||||||||||||||||
Fiscal 2019 Revolving Credit Facility: | |||||||||||||||||||||
U.S. dollar tranche | March 2024 | $ | 360.0 | $ | 360.0 | $ | 160.0 | $ | 740.0 | $ | 360.0 | ||||||||||
Multicurrency tranche | March 2024 | 215.7 | 215.7 | — | 184.3 | 215.7 | |||||||||||||||
Total Revolving Credit Facility | $ | 575.7 | $ | 575.7 | $ | 160.0 | $ | 924.3 | $ | 575.7 | |||||||||||
Fiscal 2014 Senior Notes | September 2020 | 400.0 | 399.2 | 398.5 | — | 405.4 | |||||||||||||||
Fiscal 2016 Senior Notes | June 2026 | 500.0 | 495.5 | 494.8 | — | 509.8 | |||||||||||||||
Total debt | $ | 1,475.7 | $ | 1,470.4 | $ | 1,053.4 | $ | 924.3 | $ | 1,490.9 |
Years ending June 30, | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | |||||||||||||||||||||
(in millions) | $ | — | $ | 400.0 | $ | — | $ | — | $ | 575.7 | $ | 500.0 | $ | 1,475.7 |
Years Ended June 30, | |||||||||||
2019 | 2018 | $ Change | |||||||||
(in millions) | |||||||||||
Net cash flows provided by operating activities | $ | 617.0 | $ | 693.6 | $ | (76.6 | ) | ||||
Net cash flows used in investing activities | $ | (433.5 | ) | $ | (249.3 | ) | $ | (184.3 | ) | ||
Net cash flows used in financing activities | $ | (173.1 | ) | $ | (449.9 | ) | $ | 276.8 |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
SORP | $ | 45.5 | $ | 38.3 | ||||
SERP | 5.4 | 4.5 | ||||||
Total | $ | 50.8 | $ | 42.8 |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Executive Retiree Health Insurance Plan | $ | 5.2 | $ | 5.3 |
Years ended June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
The Gratuity Plan | $ | 5.8 | $ | 5.0 |
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 4-5 Years | After 5 Years | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Debt(1) | $ | 1,475.7 | $ | — | $ | 400.0 | $ | 575.7 | $ | 500.0 | ||||||||||
Interest and facility fee on debt(2) | 234.4 | 53.2 | 77.5 | 69.7 | 34.0 | |||||||||||||||
Facility and equipment operating leases(3) | 406.5 | 46.8 | 84.7 | 70.6 | 204.4 | |||||||||||||||
Software licensing(4) | 5.9 | 4.3 | 1.6 | — | — | |||||||||||||||
Purchase obligations(5) | 311.1 | 66.5 | 127.3 | 117.3 | — | |||||||||||||||
Capital commitment to fund investment(6) | 1.5 | 1.5 | — | — | — | |||||||||||||||
Acquisition deferred payments(7) | 39.6 | 39.6 | — | — | — | |||||||||||||||
Uncertain tax positions(8) | — | — | — | — | — | |||||||||||||||
Total(9) | $ | 2,474.8 | $ | 212.0 | $ | 691.1 | $ | 833.3 | $ | 738.4 |
(1) | These amounts represent the principal repayments of Long-term debt and are included on our Consolidated Balance Sheets. See Note 12, “Borrowings” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for additional information about our Borrowings and related matters. |
(2) | Includes estimated future interest payments on our long-term debt and interest and facility fee on the revolving credit facility. |
(3) | We enter into operating leases in the normal course of business relating to facilities and equipment. The majority of our lease agreements have fixed payment terms based on the passage of time. Certain facility and equipment leases require payment of maintenance and real estate taxes and contain escalation provisions based on future adjustments in price indices. Our future operating lease obligations could change if we exit certain contracts and if we enter into additional operating lease agreements. |
(4) | We enter into various software licenses agreements in the normal course of business. |
(5) | Purchase obligations relate to payments to IBM related to the IT Services Agreement entered into in March 2010 that expires in June 2024, the EU IT Services Agreement entered into in March 2014 that expires in October 2023, and purchase and maintenance agreements on our software, equipment and other assets. |
(6) | Represents the Company’s funding commitment to an equity method investee. In addition, the Company also has a future commitment to fund $4.3 million to an investee. |
(7) | Deferred payment obligation associated with the Company’s acquisition of RPM. |
(8) | Due to the uncertainty related to the timing of the reversal of uncertain tax positions, only uncertain tax benefits related to certain settlements have been provided in the table above. The Company is unable to make reasonably reliable estimates related to the timing of the remaining gross unrecognized tax benefit liability of $43.8 million (inclusive of interest). See Note 15, “Income Taxes” to our Consolidated Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K for further detail. |
(9) | Certain post-employment benefit obligations reported in our Consolidated Balance Sheets in the amount of $61.9 million as of June 30, 2019 were not included in the table above due to the uncertainty of the timing of these future payments. |
IT Services Agreement | EU IT Services Agreement | Total | ||||||||||
(in millions) | ||||||||||||
Capitalized costs, beginning balance | $ | 62.3 | $ | 5.2 | $ | 67.5 | ||||||
Capitalized costs incurred | — | — | — | |||||||||
Impact of foreign currency exchange | — | (0.2 | ) | (0.2 | ) | |||||||
Total capitalized costs, ending balance | 62.3 | 5.0 | 67.3 | |||||||||
Total accumulated amortization | (35.8 | ) | (2.5 | ) | (38.3 | ) | ||||||
Net Deferred IBM Costs | $ | 26.5 | $ | 2.5 | $ | 29.0 |
ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk |
ITEM 8. | Financial Statements and Supplementary Data |
Consolidated Financial Statements | |
Financial Statement Schedule | |
Goodwill - Refer to Notes 2 and 9 to the financial statements |
Critical Audit Matter Description The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the income approach, which considers a discounted future cash flow analysis using various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the particular reporting unit’s weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate and the discount rate assumptions. The goodwill balance was $1,500 million as of June 30, 2019, which is allocated among various reporting units. During fiscal year 2019, the Company performed the required impairment tests of Goodwill and determined that there was no impairment. The Company also performed a sensitivity analysis under Step 1 of the goodwill impairment test assuming hypothetical reductions in the fair values of the reporting units. We identified goodwill as a critical audit matter because of the significant estimates and assumptions management makes to estimate the fair value of certain reporting units and the sensitivity of these reporting units’ operations to changes in demand. Auditing the fair value of certain of the reporting units involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, as it relates to evaluating whether management’s judgments in determining whether the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of terminal value growth rate and discount rate were appropriate. |
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate and discount rate for certain of the reporting units included the following, among others: • We tested the effectiveness of controls over goodwill, including those over the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate and discount rate. • We evaluated the reasonableness of management’s projected future operating cash flows based on forecasted EBIT margins, including future revenues by comparing to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases, analyst and industry reports of the Company and companies in its peer group.• We considered the impact of changes in the regulatory environment on management’s forecasts.• With the assistance of our fair value specialists, we evaluated the selection of the terminal value growth rate and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the rates selected by management. |
Years ended June 30, | |||||||||||||
2019 | 2018 | 2017 | |||||||||||
Revenues | (Note 3) | $ | $ | $ | |||||||||
Operating expenses: | |||||||||||||
Cost of revenues | |||||||||||||
Selling, general and administrative expenses | |||||||||||||
Total operating expenses | |||||||||||||
Operating income | |||||||||||||
Interest expense, net | (Note 5) | ( | ) | ( | ) | ( | ) | ||||||
Other non-operating income (expenses), net | ( | ) | ( | ) | |||||||||
Earnings before income taxes | |||||||||||||
Provision for income taxes | (Note 15) | ||||||||||||
Net earnings | $ | $ | $ | ||||||||||
Basic earnings per share | $ | $ | $ | ||||||||||
Diluted earnings per share | $ | $ | $ | ||||||||||
Weighted-average shares outstanding: | |||||||||||||
Basic | (Note 4) | ||||||||||||
Diluted | (Note 4) |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net earnings | $ | $ | $ | |||||||||
Other comprehensive income (loss), net: | ||||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
Net gains (losses) on securities, net of taxes of $0.0, $1.2 and ($0.6) for the years ended June 30, 2019, 2018 and 2017, respectively | ( | ) | ||||||||||
Pension and post-retirement liability adjustment, net of taxes of $0.9, ($0.4) and $1.0 for the years ended June 30, 2019, 2018 and 2017, respectively | ( | ) | ( | ) | ||||||||
Total other comprehensive income (loss), net | ( | ) | ( | ) | ||||||||
Comprehensive income | $ | $ | $ |
June 30, 2019 | June 30, 2018 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | $ | |||||||
Accounts receivable, net of allowance for doubtful accounts of $2.6 and $2.7, respectively | |||||||||
Other current assets | |||||||||
Total current assets | |||||||||
Property, plant and equipment, net | (Note 8) | ||||||||
Goodwill | (Note 9) | ||||||||
Intangible assets, net | (Note 9) | ||||||||
Other non-current assets | (Note 10) | ||||||||
Total assets | $ | $ | |||||||
Liabilities and Stockholders’ Equity | |||||||||
Current liabilities: | |||||||||
Payables and accrued expenses | (Note 11) | $ | $ | ||||||
Contract Liabilities | |||||||||
Total current liabilities | |||||||||
Long-term debt | (Note 12) | ||||||||
Deferred taxes | (Note 15) | ||||||||
Contract Liabilities | |||||||||
Other non-current liabilities | |||||||||
Total liabilities | |||||||||
Commitments and contingencies | (Note 16) | ||||||||
Stockholders’ equity: | |||||||||
Preferred stock: Authorized, 25.0 shares; issued and outstanding, none | |||||||||
Common stock, $0.01 par value: Authorized, 650.0 shares; issued, 154.5 and 154.5 shares, respectively; outstanding, 114.3 and 116.3 shares, respectively | |||||||||
Additional paid-in capital | |||||||||
Retained earnings | |||||||||
Treasury stock, at cost: 40.2 and 38.1 shares, respectively | ( | ) | ( | ) | |||||
Accumulated other comprehensive loss | (Note 17) | ( | ) | ( | ) | ||||
Total stockholders’ equity | |||||||||
Total liabilities and stockholders’ equity | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Cash Flows From Operating Activities | ||||||||||||
Net earnings | $ | $ | $ | |||||||||
Adjustments to reconcile Net earnings to Net cash flows provided by operating activities: | ||||||||||||
Depreciation and amortization | ||||||||||||
Amortization of acquired intangibles and purchased intellectual property | ||||||||||||
Amortization of other assets | ||||||||||||
Stock-based compensation expense | ||||||||||||
Deferred income taxes | ( | ) | ( | ) | ( | ) | ||||||
Excess tax benefits from stock-based compensation awards | ( | ) | ||||||||||
Other | ( | ) | ( | ) | ( | ) | ||||||
Changes in operating assets and liabilities, net of assets and liabilities acquired: | ||||||||||||
Current assets and liabilities: | ||||||||||||
Increase in Accounts receivable, net | ( | ) | ( | ) | ( | ) | ||||||
(Increase) decrease in Other current assets | ( | ) | ( | ) | ||||||||
Increase (decrease) in Payables and accrued expenses | ( | ) | ||||||||||
Increase (decrease) in Contract liabilities | ( | ) | ||||||||||
Non-current assets and liabilities: | ||||||||||||
Increase in Other non-current assets | ( | ) | ( | ) | ( | ) | ||||||
Increase in Other non-current liabilities | ||||||||||||
Net cash flows provided by operating activities | ||||||||||||
Cash Flows From Investing Activities | ||||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | ||||||
Software purchases and capitalized internal use software | ( | ) | ( | ) | ( | ) | ||||||
Acquisitions, net of cash acquired | ( | ) | ( | ) | ( | ) | ||||||
Purchase of intellectual property | ( | ) | ( | ) | ||||||||
Other investing activities | ( | ) | ( | ) | ( | ) | ||||||
Net cash flows used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
Cash Flows From Financing Activities | ||||||||||||
Debt proceeds | ||||||||||||
Debt repayments | ( | ) | ( | ) | ( | ) | ||||||
Excess tax benefits from stock-based compensation awards | ||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ||||||
Purchases of Treasury stock | ( | ) | ( | ) | ( | ) | ||||||
Proceeds from exercise of stock options | ||||||||||||
Other financing activities | ( | ) | ( | ) | ( | ) | ||||||
Net cash flows used in financing activities | ( | ) | ( | ) | ( | ) | ||||||
Effect of exchange rate changes on Cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
Net change in Cash and cash equivalents | ( | ) | ( | ) | ||||||||
Cash and cash equivalents, beginning of fiscal year | ||||||||||||
Cash and cash equivalents, end of fiscal year | $ | $ | $ | |||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash payments made for interest | $ | $ | $ | |||||||||
Cash payments made for income taxes, net of refunds | $ | $ | $ | |||||||||
Non-cash investing and financing activities: | ||||||||||||
Accrual of unpaid property, plant, equipment and software | $ | $ | $ |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | ||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||
Balances, July 1, 2016 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||
Comprehensive income (loss) | — | — | — | — | ( | ) | |||||||||||||||||||||
Stock option exercises and excess tax benefits | — | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||
Treasury stock acquired (4.9 shares) | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Treasury stock reissued (3.1 shares) | — | — | ( | ) | — | — | |||||||||||||||||||||
Common stock dividends ($1.32 per share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Balances, June 30, 2017 | ( | ) | ( | ) | |||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | |||||||||||||||||||||||
Stock option exercises | — | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||
Treasury stock acquired (2.4 shares) | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Treasury stock reissued (2.3 shares) | — | — | ( | ) | — | — | |||||||||||||||||||||
Common stock dividends ($1.46 per share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Balances, June 30, 2018 | ( | ) | ( | ) | |||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | — | ( | ) | |||||||||||||||||||||
Cumulative effect of changes in accounting principle (a) | — | — | — | — | ( | ) | |||||||||||||||||||||
Stock option exercises | — | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||
Treasury stock acquired (3.5 shares) | — | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||
Treasury stock reissued (1.4 shares) | — | — | ( | ) | — | — | |||||||||||||||||||||
Common stock dividends ($1.94 per share) | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||
Balances, June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
(a) | Reflects the adoption of accounting standards as described in Note 2, “Summary of Significant Accounting Policies.” |
NOTE 1. | BASIS OF PRESENTATION |
NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | Investor Communication Solutions—Revenues are generated primarily from processing and distributing investor communications and other related services as well as vote processing. The Company typically enters into agreements with clients to provide services on a fee for service basis. Fees received for processing and distributing investor communications are generally variably priced and recognized as revenue over time as the Company provides the services to clients based on the number of units processed, which coincides with the pattern of value transfer to the client. Broadridge works directly with corporate issuers (“Issuers”) and mutual funds to ensure that the account holders of the Company’s bank and broker clients, who are also the shareholders of Issuers and mutual funds, receive the appropriate investor communications materials and that the services are fulfilled in accordance with each Issuer’s and mutual fund’s requirements. Broadridge works directly with the Issuers and mutual funds to resolve any issues that may arise. As such, Issuers and mutual funds are viewed as the customer of the Company’s services. As a result, revenues for distribution services as well as proxy materials fulfillment services are recorded in Revenue on a gross basis with corresponding costs including amounts remitted to the broker-dealers and banks (referred to as “Nominees”) recorded in Cost of revenues. Fees for the Company’s investor communications services arrangements are typically billed and paid on a monthly basis following the delivery of the services. The Company also offers certain hosted service arrangements that can be priced on a fixed and/or variable basis for which revenue is recognized over time as the Company satisfies its performance obligation by delivering services to the client on a monthly basis based on the number of transactions processed or units delivered, in the case of variable priced arrangements, or a fixed monthly fee in the case of fixed price arrangements, in each case which coincides with the pattern of value transfer to the client. These services may be billed in a variety of payment frequencies depending on the specific arrangement. |
• | Global Technology and Operations—Revenues are generated primarily from fees for trade processing and related services. Revenue is recognized over time as the Company satisfies its performance obligation by delivering services to the client. The Company’s arrangements for processing and related services typically consist of an obligation to provide specific services to its clients on a when and if needed basis (a stand ready obligation) with revenue recognized from the satisfaction of the performance obligations on a monthly basis generally in the amount billable to the client. These services are generally provided under variable priced arrangements based on volume of service and can include minimum monthly usage fees. Client service agreements often include up-front consideration in addition to the recurring fee for trade processing. Up-front implementation fees, as well as certain enhancements to existing technology platforms, are deferred and recognized on a straight-line basis over the service term of the contract which corresponds to the timing of transfer of value to the client that commences after client acceptance when the processing term begins. In addition, revenue is also generated from the fulfillment of professional services engagements which are generally priced on a time and materials or fixed price basis, and are recognized as the services are provided to the client which corresponds to the timing of transfer of value to the client. |
Equipment | 3 to 5 years | |
Buildings and Building Improvements | 5 to 20 years | |
Furniture and fixtures | 4 to 7 years |
Fiscal Year Ended June 30, 2019 | |||
(in millions) | |||
Investor Communication Solutions | |||
Equity proxy | $ | ||
Mutual fund and exchange traded funds (“ETF”) interims | |||
Customer communications and fulfillment | |||
Other ICS | |||
Total ICS Recurring fee revenues | |||
Equity and other | |||
Mutual funds | |||
Total ICS Event-driven fee revenues | |||
Distribution revenues | |||
Total ICS Revenues | $ | ||
Global Technology and Operations | |||
Equities and other | $ | ||
Fixed income | |||
Total GTO Recurring fee revenues | |||
Foreign currency exchange | ( | ) | |
Total Revenues | $ | ||
Revenues by Type | |||
Recurring fee revenues | $ | ||
Event-driven fee revenues | |||
Distribution revenues | |||
Foreign currency exchange | ( | ) | |
Total Revenues | $ |
June 30, 2019 | July 1, 2018 | ||||||
(in millions) | |||||||
Contract assets | $ | $ | |||||
Contract liabilities | $ | $ |
• | Sales Commissions - The Company previously recognized sales commissions related to contracts with clients as selling expenses when incurred. Under ASU No. 2014-09, the Company capitalizes incremental sales commissions as costs of obtaining a contract and, if expected to be recovered, amortizes such costs using a portfolio approach consistent with the pattern of transfer of the good or service to which the asset relates. |
• | Deferred Client Conversion and Start-Up Costs - The Company previously capitalized direct and incremental client conversion or start-up costs to set up or convert a client’s systems to function with the Company’s technology that are expected to be recovered. Under ASU No. 2014-09, the Company capitalizes certain additional client conversion or start-up costs that are directly related to the client conversion but that are not considered incremental costs to the Company. |
• | Proxy Revenues - The Company previously recognized proxy revenues following the client’s shareholder meeting, which is typically 30 days after the proxy materials distribution. Under ASU No. 2014-09, the Company recognizes proxy revenues primarily at the time of proxy materials distribution to the client’s shareholders. |
• | Software Term License Revenues - The Company previously recognized revenue from software term licenses that are not hosted by the Company ratably over the contract term. Under ASU No. 2014-09, for software license arrangements that are distinct, the Company recognizes software license revenue upon delivery assuming a contract is deemed to exist. For arrangements with clients that include significant customization, modification or production of software such that the software is not distinct from the associated implementation services, revenue is typically recognized over time based upon efforts expended to measure progress towards completion or in certain cases upon completion of the installation. Software term license revenue is not a significant portion of the Company’s revenues. |
• | Termination Fees - The Company previously recognized client contract termination fees at a point in time upon deconversion or receipt of a non-refundable cash payment. Under ASU No. 2014-09, a contract termination is considered a contract modification and therefore, the Company recognizes contract termination fees over the remaining modified contract term. |
Fiscal Year Ended June 30, 2019 | |||||||||||
As reported | Effects of ASU 2014-09 | Without Effects of ASU No. 2014-09 | |||||||||
(in millions) | |||||||||||
Consolidated Statement of Earnings | |||||||||||
Revenues (1) | $ | $ | $ | ||||||||
Cost of revenues | |||||||||||
Selling, general and administrative expenses | |||||||||||
Operating income | |||||||||||
Earnings before income taxes | |||||||||||
Provision for income taxes | |||||||||||
Net earnings | $ | $ | $ | ||||||||
Basic earnings per share | $ | $ | $ | ||||||||
Diluted earnings per share | $ | $ | $ |
As reported | Effects of ASU 2014-09 | Without Effects of ASU No. 2014-09 | |||||||||
(in millions) | |||||||||||
Consolidated Balance Sheet | |||||||||||
Assets: | |||||||||||
Current assets | $ | $ | $ | ||||||||
Total assets | $ | $ | ( | ) | $ | ||||||
Liabilities: | |||||||||||
Current liabilities | $ | $ | ( | ) | $ | ||||||
Total liabilities | $ | $ | ( | ) | $ | ||||||
Stockholders’ equity: | |||||||||||
Total stockholders’ equity | $ | $ | ( | ) | $ |
NOTE 4. | EARNINGS PER SHARE |
Years ended June 30, | |||||||||
2019 | 2018 | 2017 | |||||||
(in millions) | |||||||||
Weighted-average shares outstanding: | |||||||||
Basic | |||||||||
Common stock equivalents | |||||||||
Diluted |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions, except per share amounts) | ||||||||||||
Net earnings | $ | $ | $ | |||||||||
Basic Weighted-average shares outstanding | ||||||||||||
Basic EPS | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions, except per share amounts) | ||||||||||||
Net earnings | $ | $ | $ | |||||||||
Diluted Weighted-average shares outstanding | ||||||||||||
Diluted EPS | $ | $ | $ |
NOTE 5. | INTEREST EXPENSE, NET |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Interest expense on borrowings | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Interest income | ||||||||||||
Interest expense, net | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Rockall | RPM | TD Ameritrade | Total | |||||||||||||
(in millions) | ||||||||||||||||
Cash payments, net of cash acquired | $ | $ | $ | $ | ||||||||||||
Deferred payments, net | ( | ) | ||||||||||||||
Contingent consideration liability | ||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ | ||||||||||||
Net tangible assets acquired / (liabilities assumed) | $ | ( | ) | $ | $ | $ | ||||||||||
Goodwill | ||||||||||||||||
Intangible assets | ||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ |
• | The contingent consideration liability is payable over the next two years upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $ |
• | Goodwill is not tax deductible. |
• | Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a four-year life and six-year life, respectively. |
• | The contingent consideration liability is payable over the next two years upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $ |
• | Goodwill is partially tax deductible. |
• | Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and seven-year life, respectively. |
Summit | ActivePath | FundAssist | Total | |||||||||||||
(in millions) | ||||||||||||||||
Cash payments, net of cash acquired | $ | $ | $ | $ | ||||||||||||
Deferred payments, net | ||||||||||||||||
Contingent consideration liability (acquisition date fair value) | ||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ | ||||||||||||
Net tangible assets acquired / (liabilities assumed) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Goodwill | ||||||||||||||||
Intangible assets | ||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ |
• | The contingent consideration liability is payable over the next three years upon the achievement by the acquired business of certain revenue and earnings targets, and has a maximum potential pay-out of $ |
• | The fair value of the contingent consideration liability at June 30, 2019 is $ |
• | Goodwill is primarily tax deductible. |
• | Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and seven-year life, respectively. |
• | Goodwill is not tax deductible. |
• | Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and two-year life, respectively. |
• | The contingent consideration liability contains a revenue component which will be settled in fiscal year 2021, based on the achievement of a defined revenue target by the acquired business. |
• | The fair value of the contingent consideration liability at June 30, 2019 is $ |
• | Goodwill is not tax deductible. |
• | Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a six-year life and five-year life, respectively. |
NACC | M&O | MAL | Total | |||||||||||||
(in millions) | ||||||||||||||||
Cash payments, net of cash acquired | $ | $ | $ | $ | ||||||||||||
Note payable to sellers | ||||||||||||||||
Contingent consideration liability (acquisition date fair value) | ||||||||||||||||
Other closing adjustments | ||||||||||||||||
Aggregate purchase price | $ | $ | $ | $ | ||||||||||||
Net tangible assets acquired / (liabilities assumed) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
Goodwill | ||||||||||||||||
Intangible assets | ||||||||||||||||
Other closing adjustments | ||||||||||||||||
Fair value of the Company’s pre-existing investment in MAL | ( | ) | ( | ) | ||||||||||||
Aggregate purchase price, net of other closing adjustments | $ | $ | $ | $ |
• | The aggregate purchase price was $ |
• | Goodwill is primarily tax deductible. |
• | Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a ten-year life and seven-year life, respectively. |
NACC | |||
Accounts receivable, net | $ | ||
Other current assets | |||
Property, plant and equipment | |||
Intangible assets | |||
Goodwill | |||
Other non-current assets | |||
Accounts payable | ( | ) | |
Accrued expenses and other current liabilities | ( | ) | |
Deferred taxes | ( | ) | |
Deferred revenue | ( | ) | |
Other long term liabilities | ( | ) | |
Consideration paid, net of cash acquired | $ |
Years ended June 30, | |||||||
2017 | 2016 | ||||||
(in millions, except per share amounts) | |||||||
Revenues | $ | $ | |||||
Net earnings | $ | $ | |||||
Basic earnings per share | $ | $ | |||||
Diluted earnings per share | $ | $ |
• | Goodwill is not tax deductible. |
• | Intangible assets acquired consist primarily of customer relationships and acquired software technology, which are being amortized over a seven-year life and six-year life, respectively. |
• | The contingent consideration liability is payable over the next |
• | The contingent consideration liability has a maximum potential pay-out of $ |
• | The fair value of the Company’s |
• | Goodwill is not tax deductible. |
• | Intangible assets acquired consist primarily of customer relationships and acquired software technology, which are being amortized over a seven-year life and five-year life, respectively. |
Level 1 | Quoted market prices in active markets for identical assets and liabilities. | |
Level 2 | Observable market-based inputs other than quoted prices in active markets for identical assets and liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds (1) | $ | $ | $ | $ | ||||||||||||
Other current assets: | ||||||||||||||||
Securities | ||||||||||||||||
Other non-current assets: | ||||||||||||||||
Securities | ||||||||||||||||
Total assets as of June 30, 2019 | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration obligations | $ | $ | $ | $ | ||||||||||||
Total liabilities as of June 30, 2019 | $ | $ | $ | $ |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents: | ||||||||||||||||
Money market funds (1) | $ | $ | $ | $ | ||||||||||||
Other current assets: | ||||||||||||||||
Securities | ||||||||||||||||
Other non-current assets: | ||||||||||||||||
Securities | ||||||||||||||||
Total assets as of June 30, 2018 | $ | $ | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration obligations | $ | $ | $ | $ | ||||||||||||
Total liabilities as of June 30, 2018 | $ | $ | $ | $ |
(1) | Money market funds include money market deposit account balances of $ |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Beginning balance | $ | $ | ||||||
Additional contingent consideration incurred | ||||||||
Net increase (decrease) in contingent consideration liability | ( | ) | ||||||
Foreign currency impact on contingent consideration liability | ( | ) | ||||||
Payments | ( | ) | ( | ) | ||||
Ending balance | $ | $ |
NOTE 8. | PROPERTY, PLANT AND EQUIPMENT, NET |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Property, plant and equipment: | ||||||||
Land and buildings | $ | $ | ||||||
Equipment | ||||||||
Furniture, leaseholds and other | ||||||||
Less: Accumulated depreciation | ( | ) | ( | ) | ||||
Property, plant and equipment, net | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Depreciation expense for Property, plant and equipment | $ | $ | $ |
NOTE 9. | GOODWILL AND INTANGIBLE ASSETS, NET |
Investor Communication Solutions | Global Technology and Operations | Total | ||||||||||
(in millions) | ||||||||||||
Goodwill, gross, at July 1, 2017 | $ | $ | $ | |||||||||
Transfers (a) | ( | ) | ||||||||||
Additions | ||||||||||||
Fair value adjustments (b) | ||||||||||||
Foreign currency translation and other | ( | ) | ||||||||||
Accumulated impairment losses | ||||||||||||
Goodwill, net, at June 30, 2018 | $ | $ | $ | |||||||||
Goodwill, gross, at June 30, 2018 | $ | $ | $ | |||||||||
Additions | ||||||||||||
Fair value adjustments (b) | ||||||||||||
Foreign currency translation and other | ( | ) | ( | ) | ( | ) | ||||||
Accumulated impairment losses | ||||||||||||
Goodwill, net, at June 30, 2019 | $ | $ | $ |
June 30, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Original Cost | Accumulated Amortization | Intangible Assets, net | Original Cost | Accumulated Amortization | Intangible Assets, net | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Software licenses | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Acquired software technology | ( | ) | ( | ) | ||||||||||||||||||||
Customer contracts and lists | ( | ) | ( | ) | ||||||||||||||||||||
Acquired intellectual property | ( | ) | ( | ) | ||||||||||||||||||||
Other intangibles | ( | ) | ( | ) | ||||||||||||||||||||
$ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
Weighted-Average Remaining Useful Life (Years) | ||
Acquired software technology | ||
Software licenses | ||
Customer contracts and lists | ||
Acquired intellectual property | ||
Other intangibles | ||
Total weighted-average remaining useful life |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Amortization expense for intangible assets | $ | $ | $ |
Years Ending June 30, | (in millions) | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter |
NOTE 10. | OTHER NON-CURRENT ASSETS |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Deferred client conversion and start-up costs | $ | $ | ||||||
Deferred sales commissions costs | ||||||||
Contract assets (a) | ||||||||
Deferred data center costs (b) | ||||||||
Long-term investments | ||||||||
Long-term broker fees | ||||||||
Other | ||||||||
Total | $ | $ |
NOTE 11. | PAYABLES AND |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Accounts payable | $ | $ | ||||||
Employee compensation and benefits | ||||||||
Accrued broker fees | ||||||||
Accrued taxes | ||||||||
Accrued dividend payable | ||||||||
Managed services administration fees | ||||||||
Customer deposits | ||||||||
Other | ||||||||
Total | $ | $ |
NOTE 12. | BORROWINGS |
Expiration Date | Principal amount outstanding at June 30, 2019 | Carrying value at June 30, 2019 | Carrying value at June 30, 2018 | Unused Available Capacity | Fair Value at June 30, 2019 | ||||||||||||||||
(in millions) | |||||||||||||||||||||
Long-term debt | |||||||||||||||||||||
Fiscal 2019 Revolving Credit Facility: | |||||||||||||||||||||
U.S. dollar tranche | March 2024 | $ | $ | $ | $ | $ | |||||||||||||||
Multicurrency tranche | March 2024 | ||||||||||||||||||||
Total Revolving Credit Facility | $ | $ | $ | $ | $ | ||||||||||||||||
Fiscal 2014 Senior Notes | September 2020 | — | |||||||||||||||||||
Fiscal 2016 Senior Notes | June 2026 | — | |||||||||||||||||||
Total debt | $ | $ | $ | $ | $ |
Years ending June 30, | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | |||||||||||||||||||||
(in millions) | $ | $ | $ | $ | $ | $ | $ |
NOTE 13. | STOCK-BASED COMPENSATION |
Stock Options | Time-based RSUs | Performance-based RSUs | |||||||||||||||||||
Number of Options | Weighted Average Exercise Price | Number of Shares | Weighted Average Grant-Date Fair Value | Number of Shares | Weighted Average Grant-Date Fair Value | ||||||||||||||||
Balances at July 1, 2016 | $ | $ | $ | ||||||||||||||||||
Granted | |||||||||||||||||||||
Exercised (a) | ( | ) | — | — | — | — | |||||||||||||||
Vesting of RSUs (b) | — | — | ( | ) | ( | ) | |||||||||||||||
Expired/forfeited | ( | ) | ( | ) | ( | ) | |||||||||||||||
Balances at June 30, 2017 | $ | $ | $ | ||||||||||||||||||
Granted | |||||||||||||||||||||
Exercised (a) | ( | ) | — | — | — | — | |||||||||||||||
Vesting of RSUs (b) | — | — | ( | ) | ( | ) | |||||||||||||||
Expired/forfeited | ( | ) | ( | ) | ( | ) | |||||||||||||||
Balances at June 30, 2018 | $ | $ | $ | ||||||||||||||||||
Granted | |||||||||||||||||||||
Exercised (a) | ( | ) | — | — | — | — | |||||||||||||||
Vesting of RSUs (b) | — | — | ( | ) | ( | ) | |||||||||||||||
Expired/forfeited | ( | ) | ( | ) | ( | ) | |||||||||||||||
Balances at June 30, 2019 (c) | $ | $ | $ |
(a) | Stock options exercised during the fiscal years ended June 30, 2019, 2018 and 2017 had intrinsic values of $ |
(b) | Time-based RSUs that vested during the fiscal years ended June 30, 2019, 2018 and 2017 had a total fair value of $ |
(c) |
Outstanding Options | |||||||||||||
Options Outstanding | Weighted Average Remaining Contractual Term (in years) | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value (in millions) (a) | ||||||||||
Range of Exercise Prices | |||||||||||||
$0.01 to $35.00 | $ | ||||||||||||
$35.01 to $50.00 | $ | ||||||||||||
$50.01 to $65.00 | $ | ||||||||||||
$65.01 to $80.00 | $ | ||||||||||||
$80.01 to $95.00 | $ | ||||||||||||
$95.01 to $110.00 | $ | ||||||||||||
$ | $ |
Exercisable Options | |||||||||||||
Range of Exercise Prices | Options Exercisable | Weighted Average Remaining Contractual Term (in years) | Weighted Average Exercise Price Per Share | Aggregate Intrinsic Value (in millions) (a) | |||||||||
$0.01 to $35.00 | $ | ||||||||||||
$35.01 to $50.00 | $ | ||||||||||||
$50.01 to $65.00 | $ | ||||||||||||
$65.01 to $80.00 | $ | ||||||||||||
$80.01 to $95.00 | $ | ||||||||||||
$95.01 to $110.00 | $ | ||||||||||||
$ | $ |
Fiscal Year Ended June 30, 2019 | Fiscal Year Ended June 30, 2018 | Fiscal Year Ended June 30, 2017 | ||||||||||
Graded Vesting | ||||||||||||
Risk-free interest rate | % | % | % | |||||||||
Dividend yield | % | % | % | |||||||||
Weighted-average volatility factor | % | % | % | |||||||||
Weighted-average expected life (in years) | ||||||||||||
Weighted-average fair value (in dollars) | $ | $ | $ |
Fiscal Year Ended June 30, 2018 | ||||
Cliff Vesting | ||||
Risk-free interest rate | % | |||
Dividend yield | % | |||
Weighted-average volatility factor | % | |||
Weighted-average expected life (in years) | ||||
Weighted-average fair value (in dollars) | $ |
NOTE 14. | EMPLOYEE BENEFIT PLANS |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
401(k) savings plan | $ | $ | $ | |||||||||
ERSP | ||||||||||||
Total | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
SORP | $ | $ | $ | |||||||||
SERP | ||||||||||||
Total | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
SORP | $ | $ | $ | |||||||||
SERP | ||||||||||||
Total | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Executive Retiree Health Insurance Plan | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Executive Retiree Health Insurance Plan | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
The Gratuity Plan | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
The Gratuity Plan | $ | $ | $ |
NOTE 15. | INCOME TAXES |
Years Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Earnings before income taxes: | ||||||||||||
U.S. | $ | $ | $ | |||||||||
Foreign | ||||||||||||
Total | $ | $ | $ |
Years Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Current: | ||||||||||||
U.S. Domestic | $ | $ | $ | |||||||||
Foreign | ||||||||||||
State | ||||||||||||
Total current | ||||||||||||
Deferred: | ||||||||||||
U.S. Domestic | ( | ) | ( | ) | ||||||||
Foreign | ( | ) | ( | ) | ||||||||
State | ( | ) | ( | ) | ( | ) | ||||||
Total deferred | ( | ) | ( | ) | ( | ) | ||||||
Total Provision for income taxes | $ | $ | $ |
Years Ended June 30, | |||||||||||||||||||||
2019 | % | 2018 | % | 2017 | % | ||||||||||||||||
(in millions) | |||||||||||||||||||||
Provision for income taxes at U.S. statutory rate | $ | $ | $ | ||||||||||||||||||
Increase (decrease) in Provision for income taxes from: | |||||||||||||||||||||
State taxes, net of federal tax | |||||||||||||||||||||
Foreign tax differential | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Valuation allowances | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Non-taxable investment gain | ( | ) | ( | ) | |||||||||||||||||
Stock-based compensation - ETB | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Tax Act Items | ( | ) | ( | ) | |||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Total Provision for income taxes | $ | $ | $ |
June 30, | ||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Classification: | ||||||||
Long-term deferred tax assets (included in Other non-current assets) | ||||||||
Long-term deferred tax liabilities | ( | ) | ( | ) | ||||
Net deferred tax liabilities | $ | ( | ) | $ | ( | ) | ||
Components: | ||||||||
Deferred tax assets: | ||||||||
Accrued expenses not currently deductible | $ | $ | ||||||
Depreciation | ||||||||
Compensation and benefits not currently deductible | ||||||||
Net operating and capital losses | ||||||||
Tax credits | ||||||||
Other | ||||||||
Total deferred tax assets | ||||||||
Less: Valuation allowances | ( | ) | ( | ) | ||||
Deferred tax assets, net | ||||||||
Deferred tax liabilities: | ||||||||
Goodwill and identifiable intangibles | ||||||||
Depreciation | ||||||||
Net deferred expenses | ||||||||
Unremitted earnings | ||||||||
Other | ||||||||
Deferred tax liabilities | ||||||||
Net deferred tax liabilities | $ | ( | ) | $ | ( | ) |
Fiscal Year Ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Beginning balance | $ | $ | $ | |||||||||
Gross increase related to prior period tax positions | ||||||||||||
Gross increase related to current period tax positions | ||||||||||||
Gross decrease related to prior period tax positions | ( | ) | ( | ) | ( | ) | ||||||
Ending balance | $ | $ | $ |
NOTE 16. | CONTRACTUAL COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ARRANGEMENTS |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
IT Services Agreement | $ | $ | $ | |||||||||
EU IT Services Agreement | ||||||||||||
Total expenses | $ | $ | $ |
IT Services Agreement | EU IT Services Agreement | Total | ||||||||||
(in millions) | ||||||||||||
Capitalized costs, beginning balance | $ | $ | $ | |||||||||
Capitalized costs incurred | ||||||||||||
Impact of foreign currency exchange | ( | ) | ( | ) | ||||||||
Total capitalized costs, ending balance | ||||||||||||
Total accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
Net Deferred IBM Costs | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
IT Services Agreement | $ | $ | $ | |||||||||
EU IT Services Agreement | ||||||||||||
Total expenses | $ | $ | $ |
Years ended June 30, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Data center expenses | $ | $ | $ | |||||||||
Facilities and equipment leases | ||||||||||||
Software license agreements | ||||||||||||
Software/hardware maintenance agreements | ||||||||||||
Total expenses | $ | $ | $ |
Years Ending June 30, | (in millions) | |||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total | $ |
Foreign Currency Translation | Securities | Pension and Post- Retirement Liabilities | Total | |||||||||||||
(in millions) | ||||||||||||||||
Balances at July 1, 2016 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
Other comprehensive income/(loss) before reclassifications | ( | ) | ( | ) | ( | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) | ||||||||||||||||
Balances at June 30, 2017 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
Other comprehensive income/(loss) before reclassifications | ( | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) | ( | ) | ( | ) | ||||||||||||
Balances at June 30, 2018 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Cumulative effect of changes in accounting principle (a) | ( | ) | ( | ) | ||||||||||||
Other comprehensive income/(loss) before reclassifications | ( | ) | ( | ) | ( | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) | ||||||||||||||||
Balances at June 30, 2019 | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) |
(a) |
NOTE 18. | FINANCIAL DATA BY SEGMENT |
Investor Communication Solutions | Global Technology and Operations | Other | Foreign Currency Exchange | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Year ended June 30, 2019 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Earnings (loss) before income taxes | ( | ) | ||||||||||||||||||
Assets | ||||||||||||||||||||
Capital expenditures | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Amortization of acquired intangibles | ||||||||||||||||||||
Amortization of other assets | ||||||||||||||||||||
Year ended June 30, 2018 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Earnings (loss) before income taxes | ( | ) | ||||||||||||||||||
Assets | ||||||||||||||||||||
Capital expenditures | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Amortization of acquired intangibles | ||||||||||||||||||||
Amortization of other assets | ||||||||||||||||||||
Year ended June 30, 2017 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
Earnings (loss) before income taxes | ( | ) | ||||||||||||||||||
Assets | ||||||||||||||||||||
Capital expenditures | ||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||
Amortization of acquired intangibles | ||||||||||||||||||||
Amortization of other assets |
United States | Canada | United Kingdom | Other | Total | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Year ended June 30, 2019 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | |||||||||||||||
Assets | $ | $ | $ | $ | $ | |||||||||||||||
Year ended June 30, 2018 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | |||||||||||||||
Assets | $ | $ | $ | $ | $ | |||||||||||||||
Year ended June 30, 2017 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | |||||||||||||||
Assets | $ | $ | $ | $ | $ |
NOTE 19. | QUARTERLY FINANCIAL RESULTS (UNAUDITED) |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Fiscal Year Total | ||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||
Year ended June 30, 2019 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | |||||||||||||||
Gross profit | ||||||||||||||||||||
Operating income | ||||||||||||||||||||
Earnings before income taxes | ||||||||||||||||||||
Net earnings | ||||||||||||||||||||
Basic EPS | $ | $ | $ | $ | $ | |||||||||||||||
Diluted EPS | $ | $ | $ | $ | $ | |||||||||||||||
Year ended June 30, 2018 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | |||||||||||||||
Gross profit | ||||||||||||||||||||
Operating income | ||||||||||||||||||||
Earnings before income taxes | ||||||||||||||||||||
Net earnings | ||||||||||||||||||||
Basic EPS | $ | $ | $ | $ | $ | |||||||||||||||
Diluted EPS | $ | $ | $ | $ | $ |
Column A | Column B | Column C | Column D | Column E | ||||||||||||
Balance at beginning of period | Additions charged to costs and expenses | Deductions | Balance at end of period | |||||||||||||
Fiscal year ended June 30, 2019: | ||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | ( | ) | $ | ||||||||||
Deferred tax valuation allowance | $ | $ | $ | ( | ) | $ | ||||||||||
Fiscal year ended June 30, 2018: | ||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | ( | ) | $ | ||||||||||
Deferred tax valuation allowance | $ | $ | $ | ( | ) | $ | ||||||||||
Fiscal year ended June 30, 2017: | ||||||||||||||||
Allowance for doubtful accounts | $ | $ | $ | ( | ) | $ | ||||||||||
Deferred tax valuation allowance | $ | $ | $ | ( | ) | $ |
ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
ITEM 9A. | Controls and Procedures |
/s/ TIMOTHY C. GOKEY | ||
Timothy C. Gokey | ||
President and Chief Executive Officer | ||
/s/ JAMES M. YOUNG | ||
James M. Young | ||
Vice President, Chief Financial Officer |
ITEM 9B. | Other Information |
ITEM 10. | Directors, Executive Officers and Corporate Governance |
ITEM 11. | Executive Compensation |
ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
ITEM 13. | Certain Relationships and Related Transactions, and Director Independence |
ITEM 14. | Principal Accounting Fees and Services |
ITEM 15. | Exhibits, Financial Statement Schedules |
(a) | The following documents are filed as part of this Annual Report on Form 10-K: |
1. | Financial Statements |
2. | Financial Statement Schedule. |
3. | Exhibits. |
BROADRIDGE FINANCIAL SOLUTIONS, INC. | |||
By: | /s/ TIMOTHY C. GOKEY | ||
Name: | Timothy C. Gokey | ||
Title: | President and Chief Executive Officer |
Signature | Title | Date | |
/s/ TIMOTHY C. GOKEY | President, Chief Executive Officer and Director (Principal Executive Officer) | August 6, 2019 | |
Timothy C. Gokey | |||
/s/ JAMES M. YOUNG | Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) | August 6, 2019 | |
James M. Young | |||
/s/ RICHARD J. DALY | Executive Chairman of the Board of Directors | August 6, 2019 | |
Richard J. Daly | |||
/S/ LESLIE A. BRUN | Lead Independent Director | August 6, 2019 | |
Leslie A. Brun | |||
/S/ PAMELA L. CARTER | Director | August 6, 2019 | |
Pamela L. Carter | |||
/S/ ROBERT N. DUELKS | Director | August 6, 2019 | |
Robert N. Duelks | |||
/S/ BRETT A. KELLER | Director | August 6, 2019 | |
Brett A. Keller | |||
/S/ STUART R. LEVINE | Director | August 6, 2019 | |
Stuart R. Levine | |||
/S/ MAURA A. MARKUS | Director | August 6, 2019 | |
Maura A. Markus | |||
/S/ THOMAS J. PERNA | Director | August 6, 2019 | |
Thomas J. Perna | |||
/S/ ALAN J. WEBER | Director | August 6, 2019 | |
Alan J. Weber | |||
/S/ AMIT ZAVERY | Director | August 6, 2019 | |
Amit Zavery | |||
Exhibit Number | Description of Exhibit (1) | |
Certificate of Incorporation of Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 2, 2007). | ||
Indenture, dated as of May 29, 2007, by and between Broadridge Financial Solutions, Inc. and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Form 8-K filed on May 30, 2007). | ||
Second Supplemental Indenture dated as of August 21, 2013, by and between Broadridge Financial Solutions, Inc. and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Form 8-K filed on August 21, 2013). | ||
Form of Broadridge Financial Solutions, Inc. 3.950% Senior Note due 2020 (included in Exhibit 4.2 to Form 8-K filed on August 21, 2013 and incorporated by reference). | ||
Third Supplemental Indenture dated June 27, 2016 by and among Broadridge Financial Solutions, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to Form 8-K filed on June 27, 2016). | ||
Form of Broadridge Financial Solutions, Inc. 3.400% Senior Note due 2026 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on June 27, 2016). | ||
Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers (incorporated by reference to Exhibit 10.6 to Form 8-K filed on April 2, 2007). | ||
Amendment No. 1 to the Broadridge Financial Solutions, Inc. Change in Control Severance Plan for Corporate Officers (incorporated by reference to Exhibit 10.26 to Form 10-K/A filed on October 27, 2010). | ||
Change in Control Enhancement Agreement for Richard J. Daly (incorporated by reference to Exhibit 10.8 to Form 8-K filed on April 2, 2007). | ||
Amendment No. 1 to Change in Control Enhancement Agreement for Richard J. Daly (incorporated by reference to Exhibit 10.28 to Form 10-K/A filed on October 27, 2010). | ||
Amendment No. 2, dated September 19, 2013, to the Change in Control Enhancement Agreement, dated as of March 29, 2007 and amended effective December 31, 2008, between Broadridge Financial Solutions, Inc. and Richard J. Daly (incorporated by reference to Exhibit 10.1 to Form 8-K filed on September 20, 2013). | ||
Officer Severance Plan dated September 16, 2011 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on September 20, 2011). | ||
Amended and Restated Supplemental Officers Retirement Plan (“SORP”) (incorporated by reference to Exhibit 10.27 to Form 10-K/A filed on October 27, 2010). | ||
Amendment to the Broadridge Financial Solutions, Inc. SORP, effective February 2, 2017 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed on May 10, 2017). | ||
Broadridge Financial Solutions, Inc. Director Deferred Compensation Plan (Amended and Restated Effective January 1, 2019) (incorporated by reference to Exhibit 10.2 to Form 8-K filed on November 14, 2018). | ||
Information Technology Services Agreement, dated as of March 31, 2010, by and between International Business Machines Corporation and Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on May 10, 2010). (2) | ||
Exhibit Number | Description of Exhibit (1) | |
Amendment No. 1 to the Information Technology Services Agreement, dated as of June 25, 2010, by and between International Business Machines Corporation and Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 10.24 to Form 10-K filed on August 12, 2010). (2) | ||
Amendment No. 3 to the Information Technology Services Agreement, dated as of April 15, 2011, by and between International Business Machines Corporation and Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 10.33 to Form 10-K filed on August 12, 2011). | ||
Amendment No. 5 to the Information Technology Services Agreement, dated as of June 11, 2011, by and between International Business Machines Corporation and Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 10.34 to Form 10-K filed on August 12, 2011). (2) | ||
Amendment No. 7 to the Information Technology Services Agreement, dated October 10, 2011, by and between International Business Machines Corporation and Broadridge Financial Solutions, Inc. (incorporated by reference to Exhibit 10.1 to Form 10-Q filed February 7, 2012). (2) | ||
Amendment No. 12 to the Information Technology Services Agreement, dated as of March 31, 2015, by and between International Business Machines Corporation and Broadridge Financial Solutions Inc. (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 8, 2015). | ||
Broadridge Financial Solutions, Inc. Executive Deferred Compensation Plan (“EDCP”) (Amended and Restated effective June 15, 2011) (incorporated by reference to Exhibit 10.32 to Form 10-K filed on August 12, 2011). | ||
Amendment to the Broadridge EDCP, adopted August 1, 2014, effective December 31, 2014 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on November 6, 2014). | ||
Broadridge Financial Solutions, Inc. Supplemental Executive Retirement Plan (“SERP”) (incorporated by reference to Exhibit 10.31 to Form 10-K/A filed on October 27, 2010). | ||
Amendment to the Broadridge Financial Solutions, Inc. SERP, effective February 2, 2017 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on May 10, 2017). | ||
Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan, Amended and Restated effective November 14, 2013 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on November 15, 2013). | ||
Amendment to the Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan (Amended and Restated effective November 14, 2013), effective February 6, 2018 (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 8, 2018). | ||
Broadridge Financial Solutions, Inc. 2018 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 13, 2018). | ||
Executive Officer Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 14, 2018). | ||
Amended and Restated Credit Agreement, dated as of March 18, 2019, among Broadridge Financial Solutions, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 18, 2019). | ||
Code of Ethics for the Company’s Principal Executive Officer and Senior Financial Officers (incorporated by reference to Exhibit 99.1 to Form 8-K filed on August 8, 2007). | ||
Exhibit Number | Description of Exhibit (1) | |
101 | The following financial statements from the Broadridge Financial Solutions, Inc. Annual Report on Form 10-K for the fiscal year ended June 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated statements of earnings for the fiscal years ended June 30, 2019, 2018 and 2017, (ii) consolidated statements of comprehensive income for the fiscal years ended June 30, 2019, 2018 and 2017, (iii) consolidated balance sheets as of June 30, 2019 and 2018, (iv) consolidated statements of cash flows for the fiscal years ended June 30, 2019, 2018 and 2017, (v) consolidated statements of stockholders’ equity for the fiscal years ended June 30, 2019, 2018 and 2017, and (vi) the notes to the Consolidated Financial Statements. |
(1) | The SEC File No. for the Company’s Form 8-K Reports referenced is 001-33220. |
(2) | Certain confidential information contained in this Exhibit was omitted by means of redacting a portion of the text and replacing it with an asterisk. This Exhibit has been filed separately with the Secretary of the Securities and Exchange Commission without the redaction pursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. |
• | acquisition of the Company by means of a tender offer, |
• | acquisition of the Company by means of a proxy contest or otherwise, or |
• | removal of the Company’s incumbent officers and directors. |
• | 3.950% Senior Notes due 2020 (the “2020 Notes”), issued pursuant to the registration statement on Form S-3 filed with the SEC on August 8, 2013 (Filed No. 333-190470); and |
• | 3.400% Senior Notes due 2026 (the “2026 Notes” and together with the 2020 Notes, the “Notes”), issued pursuant to the Current Registration Statement. |
• | liens existing on the date of the creation of the debt securities of such series; |
• | liens on assets or property of a person at the time it becomes a subsidiary securing only indebtedness of such person; provided such indebtedness was not incurred in connection |
• | liens existing on assets created at the time of, or within 18 months after, the acquisition, purchase, lease, improvement or development of such assets to secure all or a portion of the purchase price or lease for, or the costs of improvement or development of, such assets; |
• | liens to secure any extension, renewal, refinancing or refunding (or successive extensions, renewals, refinancings or refundings), in whole or in part, of any indebtedness secured by liens referred to above or liens created in connection with any amendment, consent or waiver relating to such indebtedness, so long as such lien is limited to all or part of substantially the same property which secured the lien extended, renewed or replaced, the amount of indebtedness secured is not increased (other than by the amount equal to any costs and expenses (including any premiums, fees or penalties) incurred in connection with any extension, renewal, refinancing or refunding) and the indebtedness so secured does not exceed the fair market value (as determined by the Board) of the assets subject to such liens at the time of such extension, renewal, refinancing or refunding, or such amendment, consent or waiver, as the case may be; |
• | liens on property incurred in permitted sale and leaseback transactions (except in the case of the Notes); |
• | liens in favor of only Broadridge or one or more subsidiaries granted by Broadridge or a subsidiary to secure any obligations owed to Broadridge or a subsidiary of Broadridge; |
• | liens on assets of any subsidiary of Broadridge registered as a “broker” or a “dealer” as such terms are defined in Sections 3(a)(4) and (5) of the Exchange Act of 1934 (the “Exchange Act”) created or otherwise arising in the ordinary course of such subsidiary’s business; |
• | liens on securities deemed to exist under repurchase agreements and reverse repurchase agreements entered into by Broadridge or any Significant Subsidiary in the ordinary course of business; |
• | liens in favor of the trustee granted in accordance with the indenture; and |
• | liens otherwise prohibited by this covenant, securing indebtedness which, together with the value of attributable debt incurred in sale and leaseback transactions permitted under “—Limitation on Sale and Leaseback Transactions” below, do not exceed the greater of (i) 15% of Consolidated Net Tangible Assets measured at the date of incurrence of the lien and (ii) $50 million (or in the case of the Notes, $100 million). |
• | temporary leases for a term, including renewals at the option of the lessee, of not more than three years; |
• | leases between only Broadridge and a subsidiary of Broadridge or only between subsidiaries of Broadridge; |
• | leases where the proceeds are at least equal to the fair market value (as determined by the Board) of the property and Broadridge applies within 180 days after the sale of an amount equal to the greater of the net proceeds of the sale or the attributable debt associated with the property to the retirement of long-term secured indebtedness; and |
• | leases of property executed by the time of, or within 12 months after the latest of, the acquisition, the completion of construction or improvement, or the commencement of commercial operation of the property. |
• | (1) Broadridge is the surviving or continuing corporation or (2) the successor entity, if other than Broadridge, is a U.S. corporation, partnership, limited liability company or trust and expressly assumes by supplemental indenture all of Broadridge’s obligations under the debt securities of all series and the indenture; |
• | immediately after giving effect to the transaction, no event of default (as defined below), and no event that, after notice or lapse of time or both, would become an event of default, has occurred and is continuing; and |
• | if, as a result of any consolidation, merger, sale or lease, conveyance or transfer described in this covenant, properties or assets of Broadridge would become subject to any lien which would not be permitted by the asset lien restriction described above without |
(1) | a failure to pay principal of or premium, if any, on the debt securities of such series when due at its stated maturity date, upon optional redemption or otherwise; |
(2) | in the case of the Notes, a failure by Broadridge to repurchase the applicable Notes tendered for repurchase following the occurrence of a change of control repurchase event in conformity with the covenant set forth below under “The Notes—Purchase of Notes Upon a Change of Control Repurchase Event”; |
(3) | a default in the payment of interest on the debt securities of such series when due, continued for 30 days; |
(4) | certain events of bankruptcy, insolvency or reorganization involving Broadridge; |
(5) | a default in the performance, or breach, of Broadridge's obligations under the “—Limitation on Consolidation, Merger and Sale of Assets” covenant described above; |
(6) | a default in the performance, or breach, of any other covenant, warranty or agreement in the indenture (other than a default or breach pursuant to clause (5) immediately above or any other covenant or warranty a default in which is elsewhere dealt with in the indenture) for 60 days after a Notice of Default (as defined below) is given to Broadridge; and |
(7) | (a) a failure to make any payment at maturity, including any applicable grace period, on any indebtedness of Broadridge (other than indebtedness of Broadridge owing to any of its subsidiaries) outstanding in an amount in excess of $75 million or its foreign currency equivalent at the time and continuance of this failure to pay or (b) a default on any indebtedness of Broadridge (other than indebtedness owing to any of its subsidiaries), |
(a) | such holder has previously given to the trustee written notice of a continuing event of default, |
(b) | the registered holders of at least 25% in aggregate principal amount of the debt securities of such series then outstanding have made written request and offered reasonable indemnity to the trustee to institute such proceeding as trustee, and |
(c) | the trustee shall not have received from the registered holders of a majority in aggregate principal amount of the debt securities of such series then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. |
• | to evidence the succession of another person to Broadridge and the assumption by any such successor of the covenants of Broadridge under the indenture and the debt securities; |
• | to add to the covenants of Broadridge for the benefit of holders of the debt securities or to surrender any right or power conferred upon Broadridge; |
• | to add any additional events of default for the benefit of holders of the debt securities; |
• | to add to or change any of the provisions of the indenture as necessary to permit or facilitate the issuance of debt securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of debt securities in uncertificated form; |
• | to secure the debt securities; |
• | to add or appoint a successor or separate trustee; |
• | to cure any ambiguity, defect or inconsistency; |
• | to supplement any of the provisions of the indenture as necessary to permit or facilitate the defeasance and discharge of any series of debt securities, provided that the interests of the holders of such debt securities are not adversely affected in any material respect; |
• | to make any other change that would not adversely affect the holders of the debt securities of such series; |
• | to make any change necessary to comply with any requirement of the SEC in connection with the qualification of the Base Indenture or any supplemental indenture under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”); |
• | to conform the Base Indenture to the Description of Debt Securities included in the applicable registration statement filed by the Company with the SEC; and |
• | to reflect the issuance of additional debt securities of a particular series as permitted by the indenture. |
• | make any change to the percentage of principal amount of debt securities the holders of which must consent to an amendment, modification, supplement or waiver; |
• | reduce the rate of or extend the time of payment for interest on any debt securities; |
• | reduce the principal amount or extend the stated maturity of any debt securities; |
• | reduce the redemption or repurchase price of any series of debt securities, change the date on which any series of debt securities is subject to redemption or repurchase or add redemption provisions to the debt securities; |
• | make any debt securities payable in money other than that stated in the indenture or the debt securities; |
• | impair the right to institute suit for the enforcement of any payment on or with respect to the debt securities; or |
• | make any change in the ranking or priority of any debt securities that would adversely affect the holder of such debt securities. |
(a) | Broadridge irrevocably deposits in trust with the trustee money or U.S. government securities or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms, will provide money in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay principal and interest when due on all the debt securities being defeased to maturity; |
(b) | no default or event of default with respect to the debt securities of such series has occurred and is continuing on the date of such deposit, or, with respect to an event of default involving bankruptcy, at any time in the period ending on the 91st day after the date of deposit; |
(c) | in the case of the legal defeasance option, Broadridge delivers to the trustee an opinion of counsel stating that: |
(1) | Broadridge has received from the Internal Revenue Service a ruling, or |
(2) | since the date of the indenture there has been a change in the applicable U.S. federal income tax law, to the effect, in either case, that and based thereon such opinion of counsel shall confirm that the holders of the debt securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance has not occurred; |
(d) | in the case of the covenant defeasance option, Broadridge delivers to the trustee an opinion of counsel to the effect that the holders of the debt securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and |
(e) | Broadridge delivers to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent to the defeasance and discharge of the debt securities of any series have been complied with as required by the indenture. |
• | the Notes are senior unsecured obligations of Broadridge and rank equally in right of payment with all other existing and future unsecured and unsubordinated debt obligations of Broadridge; |
• | the Notes are obligations exclusively of Broadridge and are not guaranteed by any of its subsidiaries; |
• | the 2020 Notes are initially limited to $400.0 million aggregate principal amount and the 2026 Notes are initially limited to $500.0 million aggregate principal amount (each series is subject to the rights of Broadridge to issue additional Notes as described under “—Further Issuances” below); |
• | the 2020 Notes accrue interest at a rate of 3.950% per year and the 2026 Notes accrue interest at a rate of 3.400% per year; |
• | interest accrues on the 2020 Notes from the most recent interest payment date to or for which interest has been paid or duly provided for (or if no interest has been paid or duly provided for, from the issue date of the 2020 Notes), payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2014; |
• | interest accrues on the 2026 Notes from the most recent interest payment date to or for which interest has been paid or duly provided for (or if no interest has been paid or duly provided for, from the issue date of the 2026 Notes), payable semiannually in arrears on June 27 and December 27 of each year, beginning on December 27, 2016; |
• | the 2020 Notes will mature on September 1, 2020 and 2026 Notes will mature on June 27, 2026, unless, in each case, redeemed or repurchased prior to the applicable maturity date; |
• | Broadridge may redeem the Notes, in whole or in part, at any time at its option as described under “—Optional Redemption” below; |
• | Broadridge may be required to repurchase the Notes in whole or in part at the option of the applicable holders in connection with the occurrence of a “change of control repurchase event” as described under “—Purchase of Notes Upon a Change of Control Repurchase Event” below; |
• | the Notes are issued in registered form in denominations of $2,000 and integral multiples of $1,000 in excess thereof; |
• | the Notes are represented by one or more global notes registered in the name of a nominee of DTC (as defined below), but in certain circumstances may be represented by Notes in definitive form (see “—Book-entry; Delivery and Form; Global Notes” below); and |
• | the Notes are exchangeable and transferable at the office or agency of Broadridge maintained for such purposes (which initially will be the corporate trust office of the trustee). |
• | 100% of the aggregate principal amount of the applicable Notes to be redeemed on the redemption date; or |
• | the sum of the present values of the Remaining Scheduled Payments. |
• | the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published |
• | if that release, or any successor release, is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. |
(1) | accept for payment all the applicable Notes or portions of applicable Notes properly tendered pursuant to its offer; |
(2) | deposit with the paying agent an amount equal to the aggregate purchase price in respect of all the applicable Notes or portions of applicable Notes properly tendered; and |
(3) | deliver or cause to be delivered to the trustee Notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of Notes being purchased by Broadridge. |
(a) | Broadridge irrevocably deposits in trust with the trustee money or U.S. government securities or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms, will provide money in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay principal and interest when due on all the debt securities being defeased to maturity, |
(b) | no default or event of default with respect to applicable Notes has occurred and is continuing on the date of such deposit, or, with respect to an event of default involving bankruptcy, at any time in the period ending on the 91st day after the date of deposit, |
(c) | in the case of the Notes legal defeasance option, Broadridge delivers to the trustee an opinion of counsel stating that: |
(1) | Broadridge has received from the Internal Revenue Service a ruling, or |
(2) | since the date of the indenture there has been a change in the applicable U.S. federal income tax law, to the effect, in either case, that and based thereon such opinion of counsel shall confirm that the holders of the debt securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance has not occurred, |
(d) | in the case of the Notes covenant defeasance option, Broadridge delivers to the trustee an opinion of counsel to the effect that the holders of the applicable Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred, and |
(e) | Broadridge delivers to the trustee an officer’s certificate and an opinion of counsel, each stating that all conditions precedent to the defeasance and discharge of the applicable Notes have been complied with as required by the applicable Notes Indenture. |
Eligible Compensation | $300,000 | ||
Annual Deferral Amount | $50,000 | ||
Compensation under 401(k) Plan | $250,000 | ||
Limitation under Section 401(a)(17) | $280,000 | ||
Matching Employer Contribution Percentage | 70 | % |
Eligible Compensation | $300,000 | ||
Annual Deferral Amount | $50,000 | ||
Compensation under 401(k) Plan | $250,000 | ||
Limitation under Section 401(a)(17) | $280,000 | ||
Employer Non-Elective Contribution Percentage | 2.50 | % |
Name: | State or other Jurisdiction of Incorporation: | |
Access Data Corp. | Delaware | |
ActivePath Solutions Ltd. | Israel | |
Bonaire Software Solutions, LLC | Massachusetts | |
Broadridge Analytics Solutions Limited | United Kingdom | |
Broadridge Asia Pacific Limited | Hong Kong | |
Broadridge (Australia) Pty. Ltd. | Australia | |
Broadridge Business Process Outsourcing, LLC | Delaware | |
Broadridge Business Process Outsourcing (Canada), Inc. | Canada | |
Broadridge City Networks (UK) Limited | United Kingdom | |
Broadridge Corporate Issuer Solutions, Inc. | Pennsylvania | |
Broadridge Customer Communications Canada, ULC | British Columbia | |
Broadridge Czech Republic s.r.o. | Czech Republic | |
Broadridge (Deutschland) GmbH | Germany | |
Broadridge Financial Solutions International, Ltd. | United Kingdom | |
Broadridge Financial Solutions (India) Private Limited | India | |
Broadridge Financial Solutions Ltd. | United Kingdom | |
Broadridge Financial Solutions (Canada) Corp. | Canada | |
Broadridge Fixed Income Liquidity Solutions, LLC (1) | Delaware | |
Broadridge Fluent Solutions, LLC | Delaware | |
Broadridge France SAS | France | |
Broadridge FX and Liquidity Solutions, LLC | Delaware | |
Broadridge Holdings, LLC | Delaware | |
Broadridge Investor Communications Corporation | Canada | |
Broadridge Investor Communication Solutions, Inc. | Delaware | |
Broadridge (Japan) Ltd. | Japan | |
Broadridge Mail, LLC | Delaware | |
Broadridge Managed Solutions, Inc. | Delaware | |
Broadridge Nederland I B.V. | Netherlands | |
Broadridge Nederland II B.V. | Netherlands | |
Broadridge Nederland III B.V. | Netherlands | |
Broadridge Output Solutions, Inc. | Delaware | |
Broadridge Poland sp. z o.o. | Poland | |
Broadridge Rus LLC | Russia | |
Broadridge Securities Processing Solutions, LLC | Delaware | |
Broadridge (Singapore) Private Limited | Singapore | |
Broadridge Software Limited | Canada | |
Broadridge SPS, LLC | Delaware | |
Broadridge (Suisse) S.A. | Switzerland | |
Broadridge Trading Trf. Corp. | Delaware | |
BR REC, LLC | New York | |
BR NYC Solutions, Inc. | Delaware | |
BR ICS (Canada) ULC | Nova Scotia |
Name: | State or other Jurisdiction of Incorporation: | |
BR (Canada) Holdings Inc. | Ontario | |
FundAssist Limited | Ireland | |
Fund Buyer Focus Limited | United Kingdom | |
Fund Radar Limited | United Kingdom | |
ICJ Inc. (1) | Japan | |
Investigo Corporation | Minnesota | |
Inlet LLC (1) | Delaware | |
Message Automation Ltd | England, Wales | |
Matrix Trust Company | Colorado | |
Matrix Settlement & Clearance Services, LLC | New York | |
Matrix Financial Solutions, Inc. | Delaware | |
MWB Ventures Limited | United Kingdom | |
Paladyne Asia Limited | Hong Kong | |
Paladyne Systems Cayman | Cayman | |
Paladyne Systems Europe Ltd. | United Kingdom | |
QED Financial Systems, Inc. | New Jersey | |
Rockall Technologies Limited | Ireland | |
4sight Financial Software Limited | Scotland, UK | |
4Sight Financial Software (Australia) Pty. Ltd. | Australia | |
4sight IT Services Limited | Scotland and Wales | |
(1) | Less than 100% owned |
1. | I have reviewed this Annual Report on Form 10-K of Broadridge Financial Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ TIMOTHY C. GOKEY | |
Timothy C. Gokey | |
President and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Broadridge Financial Solutions, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ JAMES M. YOUNG | |
James M. Young | |
Vice President, Chief Financial Officer |
(a) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(b) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
/s/ TIMOTHY C. GOKEY | |
Timothy C. Gokey | |
President and Chief Executive Officer |
(a) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(b) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. |
/s/ JAMES M. YOUNG | |
James M. Young | |
Vice President, Chief Financial Officer |
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Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | |||
Revenues | $ 4,362.2 | $ 4,329.9 | $ 4,142.6 |
Cost of revenues | 3,131.9 | 3,167.4 | 3,107.9 |
Selling, general and administrative expenses | 577.5 | 564.5 | 500.7 |
Total operating expenses | 3,709.5 | 3,731.8 | 3,608.6 |
Operating income | 598.1 | 534.0 | |
Interest expense, net | (41.8) | (38.6) | (42.7) |
Other non-operating income (expenses), net | (3.7) | 1.5 | (3.2) |
Earnings before income taxes | 607.3 | 561.0 | 488.1 |
Provision for income taxes | 125.2 | 133.1 | 161.4 |
Net earnings | $ 482.1 | $ 427.9 | $ 326.8 |
Basic earnings per share (in dollars per share) | $ 4.16 | $ 3.66 | $ 2.77 |
Diluted earnings per share (in dollars per share) | $ 4.06 | $ 3.56 | $ 2.70 |
Weighted-average shares outstanding: | |||
Basic (in shares) | 115.9 | 116.8 | 118.0 |
Diluted (in shares) | 118.8 | 120.4 | 120.8 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 482.1 | $ 427.9 | $ 326.8 |
Other comprehensive income (loss), net: | |||
Foreign currency translation adjustments | (15.0) | 5.7 | (17.0) |
Net gains (losses) on securities, net of taxes of $0.0, $1.2 and ($0.6) for the years ended June 30, 2019, 2018 and 2017, respectively | 0.0 | (2.6) | 1.0 |
Pension and post-retirement liability adjustment, net of taxes of $0.9, ($0.4) and $1.0 for the years ended June 30, 2019, 2018 and 2017, respectively | (2.7) | 0.9 | (1.6) |
Total other comprehensive income (loss), net | (17.7) | 3.9 | (17.6) |
Comprehensive income | $ 464.3 | $ 431.9 | $ 309.2 |
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | |||
Unrealized gains (losses) on available-for-sale securities, taxes | $ 0.0 | $ 1.2 | $ (0.6) |
Pension and post-retirement liability adjustment, taxes | $ 0.9 | $ (0.4) | $ 1.0 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 2.6 | $ 2.7 |
Preferred stock, shares authorized (in shares) | 25,000,000.0 | 25,000,000.0 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 650,000,000 | 650,000,000 |
Common stock, shares issued (in shares) | 154,500,000 | 154,500,000 |
Common stock, shares outstanding (in shares) | 114,300,000 | 116,300,000 |
Treasury stock, shares (in shares) | 40,200,000 | 38,100,000 |
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | |||
Treasury stock acquired (in shares) | 3.5 | 2.4 | 4.9 |
Treasury stock reissued (in shares) | 1.4 | 2.3 | 3.1 |
Dividends declared (in dollars per share) | $ 1.94 | $ 1.46 | $ 1.32 |
Basis of Presentation |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION A. Description of Business. Broadridge Financial Solutions, Inc. (“Broadridge” or the “Company”), a Delaware corporation and a part of the S&P 500® Index, is a global financial technology leader providing investor communications and technology-driven solutions to banks, broker-dealers, asset and wealth managers and corporate issuers. Broadridge’s services include investor communications, securities processing, data and analytics, and customer communications solutions. Broadridge serves a large and diverse client base across four client groups: banks/broker-dealers, asset management firms/mutual funds, corporate issuers, and wealth management firms. For capital markets firms, Broadridge helps clients lower costs and improve the effectiveness of their trade and account processing operations with support for their front-, middle- and back-office operations, and their administration, finance, risk and compliance requirements. Broadridge serves asset management firms by meeting their critical needs for shareholder communications and by providing investment operations technology to support their investment decisions. For wealth management clients, Broadridge provides an integrated platform with tools that create a better investor experience, while also delivering a more streamlined, efficient, and effective advisory servicing process. For Broadridge’s corporate issuer clients, Broadridge helps manage every aspect of their shareholder communications, including registered and beneficial proxy processing, annual meeting support, transfer agency services and financial disclosure document creation, management and United States of America (“U.S.”) Securities and Exchange Commission (the “SEC”) filing services. The Company operates in two reportable segments: Investor Communication Solutions (“ICS”) and Global Technology and Operations (“GTO”). Investor Communication Solutions - Broadridge provides governance and communications solutions through its Investor Communication Solutions business segment to the following financial services clients: banks/broker-dealers, asset management firms/mutual funds, corporate issuers and wealth management firms. In addition to financial services firms, Broadridge’s Customer Communications business also serves companies in the healthcare, insurance, consumer finance, telecommunications, utilities, and other service industries. A large portion of Broadridge’s Investor Communication Solutions business involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing. ProxyEdge® (“ProxyEdge”) is Broadridge’s innovative electronic proxy delivery and voting solution for institutional investors and financial advisors that helps ensure the voting participation of the largest stockholders of many companies. Broadridge also provides the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help its clients meet their regulatory compliance needs. Broadridge also provides asset managers and retirement service providers with data-driven solutions that help clients grow revenue, operate efficiently, and maintain compliance. Broadridge offers an end-to-end platform for content management, composition, and multi-channel distribution of regulatory, marketing, and transactional information. Broadridge’s data and analytics solutions provide investment product distribution data, analytical tools, insights, and research to enable asset managers to optimize product distribution across retail and institutional channels globally. Broadridge also provides mutual fund trade processing services for retirement providers, third-party administrators, financial advisors, banks and wealth management professionals through Matrix Financial Solutions, Inc. (“Matrix”). In addition, Broadridge provides public corporations with a full suite of solutions to help corporations manage their annual meeting process, including registered proxy distribution and processing services, proxy and annual report document management solutions, and solutions to gain insight into their shareholder base through Broadridge’s shareholder data services. Broadridge also provides financial reporting document composition and management, SEC disclosure and filing services, and registrar, stock transfer and record-keeping services through Broadridge Corporate Issuer Solutions. Broadridge’s wealth management solutions enable firms, financial advisors, wealth managers, and insurance agents to better engage with customers through digital marketing and customer communications tools. Broadridge integrates data, content and technology to drive new customer acquisition and cross-sell opportunities through the creation of sales and educational content, including seminars as well as customizable advisor websites, search engine marketing and electronic and print newsletters. Broadridge’s advisor solutions also help advisors optimize their practice management through customer and account data aggregation and reporting. Broadridge also provides customer communications solutions which include print and digital solutions, content management, postal optimization, and fulfillment services. The Broadridge Communications CloudSM (the “Communications Cloud”) provides multi-channel communications delivery, communications management, information management and control and administration capabilities that enable and enhance its clients’ communications with their customers. In addition, Broadridge provides its clients with capabilities to enhance the consumer experience associated with essential communications such as consumer statements, bills and regulatory communications. In June 2019, Broadridge acquired the retirement plan custody and trust assets from TD Ameritrade Trust Company (“TD Ameritrade”), a subsidiary of TD Ameritrade Holding Company. The acquisition expands Broadridge's suite of solutions for the growing qualified and non-qualified retirement plan services market and the support provided for third-party administrators, financial advisors, record-keepers, banks, and brokers. Global Technology and Operations - Broadridge is a leading global provider of securities processing solutions for capital markets, wealth management, and asset management firms. Broadridge offers advanced solutions that automate the securities transaction lifecycle, from desktop productivity tools, data aggregation, performance reporting, and portfolio management to order capture and execution, trade confirmation, margin, cash management, clearance and settlement, asset servicing, reference data management, reconciliations, securities financing and collateral optimization, compliance and regulatory reporting, and accounting. Broadridge’s services help financial institutions efficiently and cost-effectively consolidate their books and records, gather and service assets under management and manage risk, thereby enabling them to focus on their core business activities. Broadridge’s multi-asset, multi-market, multi-entity and multi-currency solutions support real-time global trade processing of equity, fixed income, mutual fund, foreign exchange, and exchange traded derivatives. In addition, Broadridge provides a comprehensive wealth management platform that offers capabilities across the entire wealth management lifecycle and streamlines all aspects of wealth management services, including account management, fee management and client on-boarding. Through Broadridge’s Managed Services, it provides business process outsourcing services that support the operations of its buy- and sell-side clients’ businesses and combine its technology with its operations expertise to support the entire trade lifecycle and provide front-, middle- and back-office solutions. Broadridge also provides buy-side technology solutions for the global investment management industry through its asset management solutions, including front-, middle- and back-office solutions for hedge funds, family offices, investment managers and the providers that service this space. In May 2019, Broadridge acquired Rockall Technologies Limited (“Rockall”), a leading provider of securities-based lending (“SBL”) and collateral management solutions for wealth management firms and commercial banks. The acquisition expands Broadridge's core front-to back-office wealth capabilities, providing innovative SBL and collateral management technology solutions to help firms manage risk and optimize clients' securities lending and financing needs. In June 2019, Broadridge acquired RPM Technologies (“RPM”), a leading Canadian provider of enterprise wealth management software solutions and services. The acquisition brings important new capabilities and next-generation technology to Broadridge. RPM's state-of-the-art technology platforms build on Broadridge's strong Canadian wealth management business, providing a solution set for the retail banking sector with enhanced mutual fund and deposit manufacturing capabilities. B. Consolidation and Basis of Presentation. The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and in accordance with the U.S. SEC requirements for Annual Reports on Form 10-K. These financial statements present the consolidated position of the Company and include the entities in which the Company directly or indirectly has a controlling financial interest as well as various entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non-marketable securities. Intercompany balances and transactions have been eliminated. Amounts presented may not sum due to rounding. Certain prior period amounts have been reclassified to conform to the current year presentation, except as it relates to (i) Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers” and its related amendments (collectively “ASU No. 2014-09”), (ii) ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU No. 2016-01”), (iii) ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU No. 2018-02”), and (iv) ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (“ASU No. 2016-09”), as described further below. Effective July 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective transition approach applied to all contracts. Under this transition approach, the Company has not restated the prior period Consolidated Financial Statements presented to the current period presentation. However, the Company has provided additional disclosures related to the amount by which each relevant fiscal 2019 financial statement line item was affected by the adoption of ASU No. 2014-09 along with explanations for significant changes. Additional information about the Company’s revenue recognition policies and the related impact of the adoption of ASU No. 2014-09 is included in Note 2, “Summary of Significant Accounting Policies” and Note 3, “Revenue Recognition”. Effective July 1, 2018, the Company adopted ASU No. 2016-01, which requires changes in the fair value of publicly traded equity securities for which the Company does not have significant influence to be recorded as part of Net earnings rather than as Other comprehensive income (loss), net. In addition, equity investments that do not have a readily determinable fair value will be recorded at cost less impairment as further adjusted for observable price changes in orderly transactions for identical or similar investments of the issuer. The Company adopted ASU No. 2016-01 using the modified-retrospective transition approach by recording the cumulative effect of previously unrecognized gains or losses on publicly traded equity securities to retained earnings as of July 1, 2018. The provisions of ASU No. 2016-01 relative to equity investments that do not have a readily determinable fair value have been applied prospectively. The Consolidated Financial Statements have not been revised for periods prior to July 1, 2018. The impact of adopting ASU No. 2016-01 resulted in a reclassification of less than $0.1 million in unrealized gains, net from accumulated other comprehensive loss to retained earnings as of July 1, 2018. Effective July 1, 2018, the Company adopted ASU No. 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects associated with the change in the U.S. federal corporate tax rate resulting from the U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017. The adoption of ASU No. 2018-02 resulted in an increase to retained earnings of $1.5 million. Effective July 1, 2018, the Company adopted ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU No. 2017-07”) whereby the Company revised its presentation in the Consolidated Statements of Earnings to reflect the non-service cost components of net benefit cost as part of Other non-operating income (expenses), net, which were previously recorded as part of Total operating expenses. All prior period information has been conformed to the current period presentation. Effective July 1, 2017, the Company adopted ASU No. 2016-09, which identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including presenting the excess tax benefits (“ETB”) or deficits from the exercise or vesting of share-based payments in the income statement, classifying the ETB or deficits as an operating activity in the Consolidated Statements of Cash Flows rather than as a financing activity, a revision to the criteria for classifying an award as equity or liability and an option to recognize gross stock-based compensation expense with actual forfeitures recognized as they occur. In addition, ASU No. 2016-09 eliminates the ETB from the assumed proceeds calculation under the treasury stock method for purposes of calculating diluted shares. As a result of this adoption, the Company recorded ETB related to stock-based compensation awards of $19.3 million and $40.9 million during the fiscal years ended June 30, 2019 and 2018 in the income tax provision on a prospective basis, whereas such benefits would previously have been recognized in equity. The Company also excluded the ETB from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share for the fiscal years ended June 30, 2019 and 2018. The Company has not adjusted prior periods presented for the change in accounting for ETB in the Consolidated Financial Statements. The Company also elected to apply the change in presentation of ETB in the Consolidated Statement of Cash Flows prospectively, and as a result, ETB are classified as operating activities when realized through reductions to subsequent tax payments. This adoption resulted in an increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities of $19.3 million and $40.9 million for the fiscal years ended June 30, 2019 and 2018. The Company has not adjusted prior periods presented for the change in classification of ETB on the Consolidated Statement of Cash Flows. The Company also elected to continue its current practice of estimating expected forfeitures as permitted by ASU No. 2016-09.
|
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 | ||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Use of Estimates. The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes thereto. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions and judgment that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. The use of estimates in specific accounting policies is described further in the notes to the Consolidated Financial Statements, as appropriate. B. Revenue Recognition. ASU No. 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. The core principle is that an entity recognizes revenue to reflect 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. The Company’s revenues from clients are primarily generated from fees for providing investor communications and technology-enabled services and solutions. Revenues are recognized for the two reportable segments as follows:
The Company uses the following methods, inputs, and assumptions in determining amounts of revenue to recognize: Identification of Performance Obligations For revenue arrangements containing multiple goods or services, the Company accounts for the individual goods or services as a separate performance obligation if they are distinct, the good or service is separately identifiable from other items in the arrangement, and if a client can benefit from it on its own or with other resources that are readily available to the client. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Transaction Price Once separate performance obligations are determined, the transaction price is allocated to the individual performance obligations. If the contracted prices reflect the relative standalone selling prices for the individual performance obligations, no allocations are made. Otherwise, the Company uses the relative selling price method to allocate the transaction price, obtained from sources such as the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar clients. If such evidence is unavailable, the Company uses the best estimate of the selling price, which includes various internal factors such as pricing strategy and market factors. A significant portion of the Company’s performance obligations are generated from transactions with volume based fees and includes services that are delivered at the same time. The Company recognizes revenue related to these arrangements over time as the services are provided to the client. While many of the Company’s contracts contain some component of variable consideration, the Company only recognizes variable consideration that is not expected to reverse. The Company allocates variable payments to distinct services in an overall contract when the variable payment relates specifically to that particular service and for which the variable payment reflects what the Company expects to receive in exchange for that particular service. As a result, the Company generally allocates and recognizes variable consideration in the period it has the contractual right to invoice the client. As described above, our most significant performance obligations involve variable consideration which constitutes the majority of our revenue streams. The Company’s variable consideration components meet the criteria in ASU No. 2014-09 for exclusion from disclosure of the remaining transaction price allocated to unsatisfied performance obligations as does any contracts with clients with an original duration of one year or less. The Company has contracts with clients that vary in length depending on the nature of the services and contractual terms negotiated with the client, and they generally extend over a multi-year period. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a client, are excluded from revenue. Distribution revenues associated with shipping and handling activities are accounted for as a fulfillment activity and recognized as the related services or products are transferred to the client. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between client payment and the transfer of goods or services is expected to be one year or less. C. Cash and Cash Equivalents. Investment securities with an original maturity of 90 days or less are considered cash equivalents. The fair value of the Company’s Cash and cash equivalents approximates carrying value due to their short term nature. D. Financial Instruments. Substantially all of the financial instruments of the Company other than Long-term debt are carried at fair values, or at carrying amounts that approximate fair values because of the short maturity of the instruments. The carrying value of the Company’s long-term fixed-rate senior notes represent the face value of the long-term fixed-rate senior notes net of the unamortized discount and net of the associated unamortized debt issuance cost. The fair value of the Company’s long-term fixed-rate senior notes is based on quoted market prices. Refer to Note 12, “Borrowings,” for a further description of the Company’s long-term fixed-rate senior notes. E. Property, Plant and Equipment. Property, plant and equipment is initially recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements. The estimated useful lives of assets are as follows:
Refer to Note 8, “Property, Plant and Equipment, Net”, for a further description of the Company’s Property, plant and equipment, net. F. Securities. Securities are non-derivatives that are reflected in Other non-current assets in the Consolidated Balance Sheets, unless management intends to dispose of the investment within twelve months of the end of the reporting period, in which case they are reflected in Other current assets in the Consolidated Balance Sheets. These investments are in entities over which the Company does not have control, joint control, or significant influence. Securities that have a readily determinable fair value are carried at fair value. Securities without a readily determinable fair value are initially recognized at cost and subsequently carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in transactions for an identical or similar investment of the same issuer, such as subsequent capital raising transactions. Changes in the value of securities with or without a readily determinable fair value are recorded in the Consolidated Statements of Earnings. In determining whether a security without a readily determinable fair value is impaired, management considers qualitative factors to identify an impairment including the financial condition and near-term prospects of the issuer. G. Inventories. Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market. Inventory balances of $21.1 million and $18.5 million, consisting of forms and envelopes used in the mailing of proxy and other materials to our customers, are reflected in Other current assets in the Consolidated Balance Sheets at June 30, 2019 and 2018, respectively. H. Deferred Client Conversion and Start-Up Costs. Direct costs incurred to set up or convert a client’s systems to function with the Company’s technology, that are expected to be recovered, are generally deferred and recognized on a straight- line basis over the service term of the arrangement to which the costs relate, which commences after client acceptance when the processing term begins. The Company evaluates the carrying value of deferred client conversion and start-up costs for impairment on the basis of whether these costs are fully recoverable from the expected future undiscounted net operating cash flows of the client to which the deferred costs relate. These deferred costs are reflected in Other non-current assets in the Consolidated Balance Sheets at June 30, 2019 and June 30, 2018, respectively. Refer to Note 10, “Other Non-Current Assets” for a further description of the Company’s Deferred client conversion and start-up costs. I. Deferred Sales Commission Costs. The Company defers incremental costs to obtain a client contract that it expects to recover, which consists of sales commissions incurred, only if the contract is executed. Deferred sales commission costs are amortized on a straight-line basis using a portfolio approach consistent with the pattern of transfer of the goods or services to which the asset relates, which also considers expected customer lives. As a practical expedient, the Company recognizes the sales commissions as an expense when incurred if the amortization period of the sales commission asset that the entity otherwise would have recognized is one year or less. The Company evaluates the carrying value of deferred sales commission costs for impairment on the basis of whether these costs are fully recoverable from the expected future undiscounted net operating cash flows of the portfolio of clients to which the deferred sales commission costs relate. Refer to Note 10, “Other Non-Current Assets” for a further description of the Company’s Deferred sales commission costs. J. Deferred Data Center Costs. Data center costs relate to conversion costs associated with our principal data center systems and applications. Costs directly related to the activities necessary to make the data center usable for its intended purpose are deferred and amortized over the life of the contract on a straight-line basis commencing on the date the data center has achieved full functionality. These deferred costs are reflected in Other non-current assets in the Consolidated Balance Sheets at June 30, 2019 and 2018, respectively. Refer to Note 10, “Other Non-Current Assets” for a further description of the Company’s Deferred data center costs. K. Goodwill. The Company does not amortize goodwill but instead tests goodwill for impairment at the reporting unit level at least annually or more frequently if circumstances indicate possible impairment. The Company tests for goodwill impairment annually in the fourth quarter of the fiscal year, using the March 31 financial statement balances. The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the income approach, which considers a discounted future cash flow analysis using various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the particular reporting unit’s weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted earnings before interest and taxes, and the selection of the terminal value growth rate and discount rate assumptions. The weighted-average cost of capital takes into account the relative weight of each component of our consolidated capital structure (equity and long-term debt). The estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of the Company’s routine, long-range planning process. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined. Refer to Note 9, “Goodwill and Intangible Assets, Net” for a further description on the Company’s accounting for goodwill. L. Impairment of Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the estimated undiscounted future cash flows expected to be generated by the asset (or asset group). If the carrying amount of an asset (or asset group) exceeds its expected estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset (or asset group) exceeds its fair value. Intangible assets with finite lives are amortized primarily on a straight-line basis over their estimated useful lives and are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Refer to Note 8, “Property, Plant and Equipment, Net” for a further description of the Company’s Property, plant and equipment, net. Refer to Note 6, “Acquisitions” and Note 9, “Goodwill and Intangible Assets, Net” for a further description of the Company’s Intangible assets, net. M. Equity Method Investments. The Company’s investments resulting in a 20% to 50% ownership interest are accounted for using the equity method of accounting when the ability to exercise significant influence is maintained by the Company. The Company’s share of net income or losses of equity method investments is included in Other non-operating income (expenses), net. Equity method investments are included in Other non-current assets. Equity method investments are reviewed for impairment by assessing if a decline in market value of the investment below the carrying value is other than temporary, which considers the intent and ability to retain the investment, the length of time and extent that the market value has been less than cost, and the financial condition of the investee. N. Foreign Currency Translation and Transactions. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars based on exchange rates in effect at the end of each period. Revenues and expenses are translated at average exchange rates during the periods. Currency transaction gains or losses are included in Non-operating income (expenses), net. Gains or losses from balance sheet translation are included in Accumulated other comprehensive income (loss). O. Distribution Cost of Revenues. Distribution cost of revenues consists primarily of postage related expenses incurred in connection with the Company’s Investor Communication Solutions segment, as well as Matrix Financial Solutions, Inc. administrative services expenses. These costs are reflected in Cost of revenues in the Consolidated Statements of Earnings. P. Stock-Based Compensation. The Company accounts for stock-based compensation by recognizing the measurement of stock-based compensation expense in the Consolidated Statements of Earnings based on the fair value of the award on the date of grant. For stock options issued, the fair value of each stock option was estimated on the date of grant using a binomial option-pricing model. The binomial model considers a range of assumptions related to volatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial model are based on a combination of implied market volatilities, historical volatility of the Company’s stock price, and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock option grants is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding. For restricted stock units, the fair value of the award is based on the current fair value of the Company’s stock on the date of grant less the present value of future expected dividends discounted at the risk-free-rate derived from the U.S. Treasury yield curve in effect at the time of grant. Refer to Note 13, “Stock-Based Compensation” for a further description of the Company’s stock-based compensation. Q. Internal Use Software. Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized generally over a three- to five-year period on a straight-line basis. For software developed or obtained for internal use, the Company’s accounting policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to direct time spent on such projects. Costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred. The Company also expenses internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities. Refer to Note 9, “Goodwill and Intangible assets, Net” for a further description of the Company’s capitalized software. R. Income Taxes. The Company accounts for income taxes under the asset and liability method, which establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements or tax returns. Deferred tax assets and liabilities are recognized based on temporary differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. Judgment is required in addressing the future tax consequences of events that have been recognized in our Consolidated Financial Statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws or interpretations thereof). Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings. The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss, projected future taxable income, carryforward periods, scheduled reversals of deferred tax liabilities and tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The assumptions used to project future taxable income requires significant judgment and are consistent with the plans and estimates used to manage the underlying businesses. Refer to Note 15, “Income Taxes” for a further description of the Company’s income taxes. S. Advertising Costs. Advertising costs are expensed at the time the advertising takes place. Total advertising costs were $4.1 million, $6.3 million and $4.2 million for the fiscal years ended June 30, 2019, 2018 and 2017, respectively. T. Concentration of Risk. The majority of our clients operate in the financial services industry. In the fiscal years ended June 30, 2019, 2018 and 2017, we derived approximately 22%, 21% and 20% of our consolidated revenues from our five largest clients in that particular fiscal year, respectively. Our largest single client in each of our fiscal years 2019, 2018 and 2017 accounted for approximately 6% of our consolidated revenues. U. New Accounting Pronouncements. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Accounting for Goodwill Impairment” (“ASU No. 2017-04”). ASU No. 2017-04 removes Step 2 of the current goodwill impairment test, which currently requires a hypothetical purchase price allocation if the fair value of a reporting unit were to be less than its book value, for purposes of determining the amount of goodwill impaired. Under ASU No. 2017-04, the Company would now recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds the fair value of the reporting unit; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 will be effective for the Company beginning in the first quarter of fiscal 2021, to be applied on a prospective basis. The pending adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, ASU No. 2017-01, “Clarifying the Definition of a Business” (“ASU No. 2017-01”). ASU No. 2017-01 narrows the definition of a business, in part by concluding that an integrated set of assets and activities (referred to as a “set”) is not a business when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets. ASU No. 2017-01 became effective for the Company beginning in the first quarter of fiscal year 2019, and was applied on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”), as subsequently amended by ASU No. 2018-10 “Codification Improvements to Topic 842, Leases”, ASU No. 2018-11 “Leases (Topic 842): Targeted Improvements”, and ASU No. 2018-20 “Leases (Topic 842): Narrow Scope Improvements for Lessors” (collectively referred to herein as “ASU No. 2016-02, as amended”). Under ASU No. 2016-02, as amended, all lease arrangements, with certain limited exceptions, exceeding a twelve-month term must now be recognized as assets and liabilities on the balance sheet of the lessee by recording a right-of-use asset and corresponding lease obligation generally equal to the present value of the future lease payments over the lease term. Further, the income statement will reflect lease expense for leases classified as operating and amortization/interest expense for leases classified as financing, determined using classification criteria substantially similar to the current lease guidance for distinguishing between an operating and capital lease. ASU No. 2016-02, as amended, also contains certain additional qualitative and quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities, including significant judgments and changes in judgments. ASU No. 2016-02, as amended, is effective for the Company in the first quarter of fiscal year 2020 and can be adopted using either a modified retrospective basis which requires adjustment to all comparative periods presented in the consolidated financial statements, or by recognizing a cumulative-effect adjustment to the opening balance of retained earnings at the date of initial application. The Company has elected to adopt ASU No. 2016-02, as amended, by recognizing a cumulative-effect adjustment to the opening balance of retained earnings at the date of initial application. The Company has identified and implemented appropriate changes for adopting this new lease standard on its consolidated financial statements, including changes to related disclosures, accounting policies, and necessary control, process and system changes. The adoption of the new lease standard is expected to result in the recognition of lease liabilities of $253 million and right-of-use assets of $236 million, which include the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheet as of July 1, 2019 for real and personal property operating leases. The adoption of ASU 2016-02, as amended, will not have a material impact on the Company’s Consolidated Statements of Earnings or Consolidated Statements of Cash Flows. Effective July 1, 2018, the Company adopted ASU No. 2014-09. ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry specific requirements. It also includes guidance on accounting for the incremental costs of obtaining and costs incurred to fulfill a contract with a customer. The core principle of the revenue model is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As a result, it is possible more judgment and estimates may be required within the revenue recognition process including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 also requires certain enhanced disclosures, including disclosures on the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The Company identified certain impacts of ASU No. 2014-09 on its Consolidated Financial Statements. Specifically, under ASU No. 2014-09, the Company now capitalizes certain sales commissions, and it capitalizes certain additional costs that are part of setting up or converting a client’s systems to function with the Company’s technology, both of which were previously expensed. Additionally, the Company now recognizes proxy revenue primarily at the time of proxy materials distribution to the client’s shareholders rather than on the date of the client’s shareholder meeting, which is typically 30 days after the proxy materials distribution. Other changes to the timing of revenue recognition include deferral of revenue from certain transaction processing platform enhancements as well as acceleration of revenue from certain multi-year software license arrangements that was previously recognized over the term of the software subscription. The Company adopted ASU No. 2014-09 using the modified retrospective transition method applied to all contracts, which resulted in a cumulative-effect increase in the opening balance of retained earnings of $101.3 million, most notably related to the deferral of incremental sales commissions incurred in obtaining contracts in prior periods. Under this transition approach, the Company has not restated the prior period Consolidated Financial Statements presented. However, the Company has provided additional disclosures related to the amount by which each relevant fiscal 2019 financial statement line item was affected by the adoption of ASU No. 2014-09 and explanations for significant changes. See Note 3, “Revenue Recognition” for additional information about the Company’s revenue recognition policies and the related impact of the Company’s adoption of ASU No. 2014-09. V. Subsequent Events. In preparing the accompanying Consolidated Financial Statements, the Company has reviewed events that have occurred after June 30, 2019 through the date of issuance of the Consolidated Financial Statements. Refer to Note 20, “Subsequent Events” for a description of the Company’s subsequent events.
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Revenue Recognition | REVENUE RECOGNITION Disaggregation of Revenue The Company has presented below its revenue disaggregated by product line and by revenue type within each of its Investor Communication Solutions and Global Technology and Operations reportable segments. Fee revenues in the Investor Communication Solutions segment are derived from both recurring and event-driven activity. In addition, the level of recurring and event-driven activity the Company processes directly impacts distribution revenues. While event-driven activity is highly repeatable, it may not recur on an annual basis. Event-driven fee revenues are based on the number of special events and corporate transactions the Company processes. Event-driven activity is impacted by financial market conditions and changes in regulatory compliance requirements, resulting in fluctuations in the timing and levels of event-driven fee revenues. Distribution revenues primarily include revenues related to the physical mailing of proxy materials, interim communications, transaction reporting, customer communications and fulfillment services, as well as Matrix administrative services.
Contract Balances The following table provides information about contract assets and liabilities:
Contract assets result from revenue already recognized but not yet invoiced, including certain future amounts to be collected under software term licenses and certain other client contracts. Contract liabilities represent consideration received or receivable from clients before the transfer of control occurs (deferred revenue). Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period. During the fiscal year ended June 30, 2019, contract liabilities increased primarily due to the impact of client contract terminations. The Company recognized $96.4 million of revenue during the fiscal year ended June 30, 2019 that was included in the contract liability balance as of July 1, 2018. Changes in Accounting Policy Except for the changes below, the Company has consistently applied its revenue and cost accounting policies to all periods presented in its Consolidated Financial Statements. The details of the significant changes are disclosed below.
Quantitative Impact on Financial Statements The following tables summarize the impact of ASU No. 2014-09 adoption on the Company’s Consolidated Statement of Earnings for the fiscal year ended June 30, 2019.
(1) The effects of ASU No. 2014-09 on revenues includes contract modifications. The following table summarizes the impact of ASU No. 2014-09 adoption on the Company’s Consolidated Balance Sheet as of June 30, 2019.
The adoption of ASU No. 2014-09 did not change the net cash provided by or used in operating activities, investing activities or financing activities on the Consolidated Statements of Cash Flows, nor the amount of Other comprehensive income (loss) on the Consolidated Statements of Comprehensive Income.
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share (“EPS”) is calculated by dividing the Company’s Net earnings by the basic Weighted-average shares outstanding for the periods presented. The Company calculates diluted EPS using the treasury stock method, which reflects the potential dilution that could occur if outstanding stock options at the presented date are exercised and restricted stock unit awards have vested. As of June 30, 2019, 2018 and 2017, the computation of diluted EPS did not include 0.4 million, 1.1 million and 0.5 million options to purchase Broadridge common stock, respectively, as the effect of their inclusion would have been anti-dilutive. The following table sets forth the denominators of the basic and diluted EPS computations:
The following table sets forth the computation of basic EPS utilizing Net earnings for the following fiscal years and the Company’s basic Weighted-average shares outstanding:
The following table sets forth the computation of diluted EPS utilizing Net earnings for the following fiscal years and the Company’s diluted Weighted-average shares outstanding:
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Interest Expense, Net |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense, Net | INTEREST EXPENSE, NET Interest expense, net consisted of the following:
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Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | ACQUISITIONS Assets acquired and liabilities assumed in business combinations are recorded on the Company’s Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date. The results of operations of the businesses acquired by the Company are included in the Company’s Consolidated Statements of Earnings beginning on the respective dates of acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill. The Company is providing pro forma supplemental information for the acquisition of net assets of the North America Customer Communications (“NACC”) business of DST Systems, Inc., as the Company deemed this acquisition to be material to the Company’s operating results. Pro forma supplemental financial information for all acquisitions, excluding NACC, is not provided as the impact of these acquisitions on the Company’s operating results was not material for any acquisition individually or in the aggregate. Fiscal Year 2019 Acquisitions: BUSINESS COMBINATIONS Financial information on each transaction is as follows:
Rockall In May 2019, the Company completed the acquisition of Rockall, a market leading provider of securities-based lending (“SBL”) and collateral management solutions for wealth management firms and commercial banks. The acquisition expands Broadridge's core front-to-back office wealth capabilities, providing innovative SBL and collateral management technology solutions to help firms manage risk and optimize clients' securities lending and financing needs.
The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, and is still subject to a working capital adjustment. RPM In June 2019, Broadridge acquired RPM, a leading Canadian provider of enterprise wealth management software solutions and services. The acquisition brings important new capabilities and next-generation technology to clients of both RPM and Broadridge.
The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, and is still subject to a working capital adjustment. TD Ameritrade In June 2019, Broadridge acquired the retirement plan custody and trust assets from TD Ameritrade Trust Company, a subsidiary of TD Ameritrade Holding Company. The acquisition expands Broadridge's suite of solutions for the growing qualified and non-qualified retirement plan services market and the support it provides for third-party administrators, financial advisors, record-keepers, banks, and brokers. •Goodwill is tax deductible. •Intangible assets acquired consist of customer relationships, which are being amortized over a seven-year life. The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, and is still subject to a working capital adjustment. Fiscal Year 2018 Acquisitions: BUSINESS COMBINATIONS Financial information on each transaction is as follows:
Summit In October 2017, the Company acquired Summit, a full service financial document management solutions provider, including document composition and regulatory filing services.
ActivePath In March 2018, the Company acquired ActivePath, a digital technology company with technology that enhances the consumer experience associated with consumer statements, bills and regulatory communications.
FundAssist In May 2018, the Company acquired FundAssist, a regulatory, marketing and sales solutions service provider to the global investments industry.
ASSET ACQUISITION Purchase of Intellectual Property In February 2018, the Company paid $40.0 million to an affiliate of Inveshare, Inc. (“Inveshare”) for the delivery of blockchain technology applications, as contemplated as part of the Company’s acquisition of intellectual property assets from Inveshare. Fiscal Year 2017 Acquisitions: BUSINESS COMBINATIONS Financial information on each transaction is as follows:
NACC In July 2016, the Company’s Investor Communication Solutions segment acquired the net assets of the NACC business of DST Systems, Inc., a leading provider of customer communication services including print and digital communication solutions, content management, postal optimization, and fulfillment.
The following summarizes the allocation of purchase price for the NACC acquisition (in millions):
Unaudited Pro Forma Financial Information The unaudited pro forma condensed consolidated results of operations in the table below are provided for illustrative purposes only and summarize the combined results of operations of Broadridge and NACC. For purposes of this pro forma presentation, the acquisition of NACC is assumed to have occurred on July 1, 2015. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets, interest expense from a recent bond offering, the proceeds of which were used to fund the acquisition, and certain integration related expenses. This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on July 1, 2015, nor of the results of operations that may be obtained in the future.
M&O In November 2016, the Company’s Global Technology and Operations segment acquired M&O Systems, Inc. (“M&O”). M&O is a provider of SaaS-based compensation management and related solutions for broker-dealers and registered investment advisors, and is now known as Broadridge Advisor Compensation Solutions.
MAL In March 2017, the Company’s Global Technology and Operations segment acquired Message Automation Limited (“MAL”), which is a specialist provider of post-trade control solutions for sell-side and buy-side firms. The Company previously owned 25% of MAL through its acquisition of City Networks Ltd in fiscal year 2010, and purchased the remaining 75% of the company.
The fair value of the remaining contingent consideration liability at June 30, 2019 is $1.8 million. ASSET ACQUISITION Purchase of Intellectual Property In September 2016, the Company’s Investor Communication Solutions segment acquired intellectual property assets from Inveshare and concurrently entered into a development agreement with an affiliate of Inveshare to use these assets to develop blockchain technology applications for Broadridge’s proxy business. The purchase price was $95.0 million, which consisted of a $90.0 million cash payment upon closing of the acquisition and a $5.0 million obligation payable which the Company paid in September 2017.
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Fair Value of Financial Instruments |
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Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments, as applicable, based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. The fair value of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the table below. The following tables set forth the Company’s financial assets and liabilities at June 30, 2019 and 2018, respectively, which are measured at fair value on a recurring basis during the period, segregated by level within the fair value hierarchy:
In addition, the Company has non-marketable securities with a carrying amount of $12.9 million as of June 30, 2019 and $7.3 million as of June 30, 2018 that are classified as Level 2 financial assets and included as part of Other non-current assets. The following table sets forth an analysis of changes during fiscal years 2019 and 2018 in Level 3 financial liabilities of the Company: The Company did not incur any Level 3 fair value asset impairments during fiscal year 2019. The Company incurred a Level 3 fair value asset impairment of $1.1 million in fiscal year 2018. Changes in economic conditions or model based valuation techniques may require the transfer of financial instruments between levels. The Company’s policy is to record transfers between levels if any, as of the beginning of the fiscal year.
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Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment at cost and Accumulated depreciation at June 30, 2019 and 2018 are as follows:
In fiscal years 2019 and 2018, Property, plant and equipment and Accumulated depreciation were each reduced by $32.8 million and $40.3 million, respectively, for asset retirements related to fully depreciated property, plant and equipment no longer in use. Depreciation expense for Property, plant and equipment for the years ended June 30, 2019, 2018 and 2017 was as follows:
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Goodwill and Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | GOODWILL AND INTANGIBLE ASSETS, NET Changes in Goodwill for the fiscal years ended June 30, 2019 and 2018 are as follows:
(a) In connection with an organizational change made in the second quarter of fiscal year 2018, in order to further align and enhance our portfolio of services, certain discrete services that were previously reported in our Investor Communication Solutions reportable segment are now reported within the Global Technology and Operations reportable segment. As a result, $38.7 million of goodwill was reclassified from the ICS segment to the GTO segment based on a relative fair value analysis. (b) Fair value adjustments includes adjustments to goodwill as part of the finalization of purchase price allocation related to the ActivePath acquisition. Additions for the fiscal year ended June 30, 2019 include $28.9 million, $191.5 million and $27.3 million for the acquisitions of Rockall, RPM and TD Ameritrade, respectively. Additions for the fiscal year ended June 30, 2018 include $18.5 million, $28.7 million and $29.2 million for the acquisitions of Summit, ActivePath and FundAssist, respectively. During fiscal years 2019, 2018 and 2017, the Company performed the required impairment tests of Goodwill and determined that there was no impairment. The Company also performs a sensitivity analysis under Step 1 of the goodwill impairment test assuming hypothetical reductions in the fair values of the reporting units. A 10% change in our estimates of projected future operating cash flows, discount rates, or terminal value growth rates, which are the most significant estimates used in our calculations of the fair values of the reporting units, would not result in an impairment of our goodwill. Intangible assets at cost and accumulated amortization at June 30, 2019 and 2018 are as follows:
In fiscal years 2019 and 2018, intangible assets and accumulated amortization were reduced by $0.2 million and $36.7 million, respectively, for asset retirements related to fully amortized intangibles. Other intangibles consist of capitalized internal use software and the following intangible assets acquired in business acquisitions: intellectual property, covenants, patents, and trademarks. All of the intangible assets have finite lives and as such, are subject to amortization. The weighted-average remaining useful life of the intangible assets is as follows:
Amortization of intangibles for the years ended June 30, 2019, 2018 and 2017 was as follows:
Estimated remaining amortization expenses of the Company’s existing intangible assets for the next five fiscal years and thereafter are as follows:
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Other Non-Current Assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Non-Current Assets | OTHER NON-CURRENT ASSETS Other non-current assets consisted of the following:
(a) Contract assets result from revenue already recognized but not yet invoiced, including certain future amounts to be collected under software term licenses and certain other client contracts. (b) Represents deferred data center costs associated with the Company’s information technology services agreements with International Business Machines Corporation (“IBM”). Please refer to Note 16, “Contractual Commitments, Contingencies and Off-Balance Sheet Arrangements” for a further discussion. The total amount of deferred client conversion and start-up costs and deferred sales commission costs amortized in Operating expenses for the fiscal year ended June 30, 2019 was $65.7 million.
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Payables and Accrued Expenses |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accrued Expenses | ACCRUED EXPENSES Payables and accrued expenses consisted of the following:
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Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | BORROWINGS Outstanding borrowings and available capacity under the Company’s borrowing arrangements were as follows:
Future principal payments on the Company’s outstanding debt are as follows:
Fiscal 2019 Revolving Credit Facility: On March 18, 2019, the Company entered into an amended and restated $1.5 billion five-year revolving credit facility (the “Fiscal 2019 Revolving Credit Facility”), which replaced the $1.0 billion five-year revolving credit facility entered into during February 2017 (the “Fiscal 2017 Revolving Credit Facility”) (together the “Revolving Credit Facilities”). The Fiscal 2019 Revolving Credit Facility is comprised of a $1.1 billion U.S. dollar tranche and a $400.0 million multicurrency tranche. At June 30, 2019, the Company had $575.7 million in total outstanding borrowings and had total unused available capacity of $924.3 million under the Fiscal 2019 Revolving Credit Facility. The weighted-average interest rate on the Revolving Credit Facilities was 3.26%, 2.44% and 1.79% for the fiscal years ended June 30, 2019, 2018 and 2017, respectively. The fair value of the variable-rate Fiscal 2019 Revolving Credit Facility borrowings at June 30, 2019 approximates carrying value and has been classified as a Level 2 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”). Borrowings under the Fiscal 2019 Revolving Credit Facility can be made in tranches up to 360 days and bear interest at LIBOR plus 101.5 basis points. The Fiscal 2017 Revolving Credit Facility bore interest at LIBOR plus 100 basis points. In addition, the Fiscal 2019 Revolving Credit Facility has an annual facility fee equal to 11.0 basis points on the entire facility, compared to 12.5 basis points on the Fiscal 2017 Revolving Credit Facility. The Company incurred an incremental $2.3 million in costs to establish the Fiscal 2019 Revolving Credit Facility. As of June 30, 2019, $3.6 million of the aggregate costs related to the Company’s Revolving Credit Facility remain to be amortized. Such costs are capitalized in Other non-current assets in the Consolidated Balance Sheets and are being amortized to Interest expense, net on a straight-line basis, which approximates the effective interest method, over the term of the Fiscal 2019 Revolving Credit Facility. The Company may voluntarily prepay, in whole or in part and without premium or penalty, borrowings under the Fiscal 2019 Revolving Credit Facility in accordance with individual drawn loan maturities. The Fiscal 2019 Revolving Credit Facility is subject to certain covenants, including a leverage ratio. At June 30, 2019, the Company is in compliance with all covenants of the Fiscal 2019 Revolving Credit Facility. Fiscal 2014 Senior Notes: In August 2013, the Company completed an offering of $400.0 million in aggregate principal amount of senior notes (the “Fiscal 2014 Senior Notes”). The Fiscal 2014 Senior Notes will mature on September 1, 2020 and bear interest at a rate of 3.95% per annum. Interest on the Fiscal 2014 Senior Notes is payable semi-annually in arrears on March 1st and September 1st of each year. The Fiscal 2014 Senior Notes were issued at a price of 99.871% (effective yield to maturity of 3.971%). The indenture governing the Fiscal 2014 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money and to enter into certain sale-leaseback transactions. At June 30, 2019, the Company is in compliance with the covenants of the indenture governing the Fiscal 2014 Senior Notes. The indenture also contains covenants regarding the purchase of the Fiscal 2014 Senior Notes upon a change of control triggering event. The Company may redeem the Fiscal 2014 Senior Notes in whole or in part at any time before their maturity. The Company incurred $4.3 million in debt issuance costs to establish the Fiscal 2014 Senior Notes. These costs have been capitalized and are being amortized to Interest expense, net on a straight-line basis, which approximates the effective interest method over the seven-year term. As of June 30, 2019 and June 30, 2018, $0.7 million and $1.3 million, respectively, of debt issuance costs remain to be amortized and have been presented as a direct deduction from the carrying value of the Fiscal 2014 Senior Notes. The fair value of the fixed-rate Fiscal 2014 Senior Notes at June 30, 2019 and 2018 was $405.4 million and $405.8 million, respectively, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”). Fiscal 2016 Senior Notes: In June 2016, the Company completed an offering of $500.0 million in aggregate principal amount of senior notes (the “Fiscal 2016 Senior Notes”). The Fiscal 2016 Senior Notes will mature on June 27, 2026 and bear interest at a rate of 3.40% per annum. Interest on the Fiscal 2016 Senior Notes is payable semi-annually in arrears on June 27 and December 27 of each year. The Fiscal 2016 Senior Notes were issued at a price of 99.589% (effective yield to maturity of 3.449%). The indenture governing the Fiscal 2016 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets. At June 30, 2019, the Company is in compliance with the covenants of the indenture governing the Fiscal 2016 Senior Notes. The indenture also contains covenants regarding the purchase of the Fiscal 2016 Senior Notes upon a change of control triggering event. The Company may redeem the Fiscal 2016 Senior Notes in whole or in part at any time before their maturity. The Company incurred $4.5 million in debt issuance costs to establish the Fiscal 2016 Senior Notes. These costs have been capitalized and are being amortized to Interest expense, net on a straight-line basis, which approximates the effective interest method, over the ten-year term. As of June 30, 2019 and June 30, 2018, $3.0 million and $3.5 million, respectively, of debt issuance costs remain to be amortized and have been presented as a direct deduction from the carrying value of the Fiscal 2016 Senior Notes. The fair value of the fixed-rate Fiscal 2016 Senior Notes at June 30, 2019 and June 30, 2018 was $509.8 million and $474.4 million, respectively, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”). The Fiscal 2019 Revolving Credit Facility, Fiscal 2014 Senior Notes, and Fiscal 2016 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment. In addition, certain of the Company’s subsidiaries established unsecured, uncommitted lines of credit with banks. As of June 30, 2019 and 2018, respectively, there were no outstanding borrowings under these lines of credit.
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | STOCK-BASED COMPENSATION Incentive Equity Awards. The Broadridge Financial Solutions, Inc. 2007 Omnibus Award Plan (the “2007 Plan”) and 2018 Omnibus Award Plan (the “2018 Plan”) provide for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock awards, stock bonuses and performance compensation awards to employees, non-employee directors, and other key individuals who perform services for the Company. The 2018 Plan was approved by shareholders in November 2018 and replaced the 2007 Plan. The accounting for stock-based compensation requires the measurement of stock-based compensation expense to be recognized in the Consolidated Statements of Earnings based on the fair value of the award on the date of grant. In accordance with the 2007 Plan and 2018 Plan, the Company’s stock-based compensation consists of the following: Stock Options: Stock options are granted to employees at exercise prices equal to the fair market value of the Company’s common stock on the dates of grant. Stock options are generally issued under a graded vesting schedule, meaning that they vest ratably over four years, and have a term of 10 years. A portion of the stock options granted in fiscal year 2018 have a cliff vesting schedule meaning that they fully vest in four years from the grant date and have a term of 10 years. Compensation expense for stock options under a graded vesting schedule is recognized over the requisite service period for each separately vesting portion of the stock option award. Compensation expense for stock options under a cliff vesting schedule is recognized equally over the vesting period of four years with 25 percent of the cost recognized over each 12 months period net of estimated forfeitures. Time-based Restricted Stock Units: The Company has a time-based restricted stock unit (“RSU”) program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. Time-based RSUs typically vest two and one-half years from the date of grant. The Company records stock compensation expense for time-based RSUs net of estimated forfeitures on a straight-line basis over the vesting period. Performance-based Restricted Stock Units: The Company has a performance-based RSU program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted. RSUs vest upon the achievement by the Company of specific performance metrics. The Company records stock compensation expense for performance-based RSUs net of estimated forfeitures on a straight-line basis over the performance period, plus a subsequent vesting period, which typically totals approximately two and one-half years from the date of grant. The activity related to the Company’s incentive equity awards for the fiscal years ended June 30, 2019, 2018 and 2017 consisted of the following:
The tables below summarize information regarding the Company’s outstanding and exercisable stock options as of June 30, 2019:
(a) Calculated using the closing stock price on the last trading day of fiscal year 2019 of $127.68, less the option exercise price, multiplied by the number of instruments. Stock-based compensation expense of $58.4 million, $55.1 million, and $46.1 million was recognized in the Consolidated Statements of Earnings for the fiscal years ended June 30, 2019, 2018 and 2017, respectively, as well as related tax benefits of $13.5 million, $15.7 million, and $15.9 million, respectively. As of June 30, 2019, the total remaining unrecognized compensation cost related to non-vested stock options and RSU awards amounted to $17.1 million and $48.9 million, respectively, which will be amortized over the weighted-average remaining requisite service periods of 2.8 years and 1.6 years, respectively. In April 2013, the Company began reissuing treasury stock to satisfy stock option exercises and issuances under the Company’s RSU awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase programs. The Company repurchased 3.2 million shares in fiscal year 2019 under our share repurchase program as compared to 2.2 million shares repurchased in fiscal year 2018, which excludes shares withheld by the Company to cover payroll taxes on the vesting of RSU awards, which are also accounted for as treasury stock. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions. The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30, 2019, 2018 and 2017:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS A. Defined Contribution Savings Plans. The Company sponsors a 401(k) savings plan covering eligible U.S. employees of the Company. This plan provides a base contribution plus Company matching contributions on a portion of employee contributions. An Executive Retirement and Savings Plan (the “ERSP”) was adopted effective January 1, 2015 for those executives who are not participants in the Broadridge SORP or Broadridge SERP (defined below). The ERSP is a defined contribution plan that allows eligible full-time U.S. employees to defer compensation until a later date and the Company will match a portion of the deferred compensation above the qualified defined contribution compensation and deferral limitations. The costs recorded by the Company for these plans were:
B. Defined Benefit Pension Plans. The Company sponsors a Supplemental Officer Retirement Plan (the “Broadridge SORP”). The Broadridge SORP is a defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key officers upon retirement based upon the officers’ years of service and compensation. The Broadridge SORP is currently unfunded. The Broadridge SORP was closed to new participants beginning in fiscal year 2015. The Company also sponsors a Supplemental Executive Retirement Plan (the “Broadridge SERP”). The Broadridge SERP is a defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key executives upon retirement based upon the executives’ years of service and compensation. The Broadridge SERP is currently unfunded. The Broadridge SERP was closed to new participants beginning in fiscal year 2015. The amounts charged to expense by the Company for these plans were:
The benefit obligation to the Company under these plans at June 30, 2019, 2018 and 2017 was:
C. Other Post-retirement Benefit Plan. The Company sponsors an Executive Retiree Health Insurance Plan. It is a post-retirement benefit plan pursuant to which the Company helps defray the health care costs of certain eligible key executive retirees and qualifying dependents, based upon the retirees’ age and years of service, until they reach the age of 65. The plan is currently unfunded. The amounts charged to expense by the Company for this plan were:
The benefit obligation to the Company under this plan at June 30, 2019, 2018 and 2017 was:
D. Other Post-employment Benefit Obligations. The Company sponsors a post-employment plan (the “Gratuity Plan”) covering all employees in India who are eligible under the terms of their employment. The Gratuity Plan is required by local law and provides a lump sum payment to vested employees upon retirement, death, incapacitation, or termination of employment based on the respective employee’s salary and the tenure of employment. The Gratuity Plan is currently unfunded. The amounts charged to expense by the Company for this plan were:
The benefit obligation to the Company under this plan at June 30, 2019, 2018 and 2017 was:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES Earnings before income taxes shown below are based on the geographic location to which such earnings are attributable.
The Provision for income taxes consists of the following components:
The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2019 were $125.2 million and 20.6%, compared to $133.1 million and 23.7%, for the fiscal year ended June 30, 2018, respectively. The decrease in the effective tax rate for the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018 is primarily due to a reduced statutory U.S. federal tax rate as well as a prior period net tax charge relating to the enactment of the Tax Act, partially offset by the recognition of lower ETB attributable to stock-based compensation compared to the ETB recognized in fiscal year ended June 30, 2018. In the fiscal year ending June 30, 2019, the Company’s federal corporate statutory income tax rate was 21.0% compared to a blended tax rate of 28.1% for the prior fiscal year. In addition, notwithstanding the reduction in the federal corporate statutory income tax rate for the fiscal year ended June 30, 2018, the Tax Act required the Company to accrue a transition tax on earnings of certain foreign subsidiaries at December 31, 2017, and which in turn led to the accrual of applicable foreign withholding taxes to repatriate such earnings subject to the transition tax. At June 30, 2018 the Company estimated the transition tax and applicable foreign withholding taxes to be approximately $30.8 million, partially offset by a benefit of approximately $15.3 million relating to the remeasurement of the Company’s net deferred tax liabilities. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provided the Company with up to one year to finalize accounting for the impacts of the Tax Act. Under SAB 118, the Company finalized the prior year estimate of the transition tax and applicable withholding taxes and recognized a tax benefit of approximately $0.5 million in the fiscal year ended June 30, 2019. In addition to the lower corporate tax rate, the Tax Act introduced two new federal tax provisions relating to foreign source earnings, (i) a minimum tax on global intangible low-tax income (“GILTI”) and (ii) a deduction for foreign-derived intangible income (“FDII”). Both provisions were effective beginning with the fiscal year ended June 30, 2019, and on a net basis generated a tax benefit of approximately $1.8 million. The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2018 were $133.1 million and 23.7%, compared to $161.4 million and 33.1%, for the fiscal year ended June 30, 2017, respectively. The effective tax for the fiscal year ended June 30, 2018 was impacted by the recognition of a $40.9 million of ETB attributable to stock-based compensation as well as a reduced U.S. federal tax rate, partially offset by $15.4 million of net tax charges relating to the December 22, 2017 enactment of the Tax Act. As of June 30, 2019, the Company had approximately $496.8 million of accumulated earnings and profits attributable to foreign subsidiaries. The Company considers $221.7 million of accumulated earnings attributable to foreign subsidiaries to be permanently reinvested outside the U.S. and has not determined the cost to repatriate such earnings since it is not practicable to calculate the amount of income taxes payable in the event all such foreign earnings are repatriated. The Company does not consider the remaining $275.1 million of accumulated earnings to be permanently reinvested outside the U.S. Under SAB 118, the Company has provisionally accrued approximately $11.6 million of foreign withholding taxes and $0.6 million of state income taxes attributable to such earnings. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2019 and 2018 were as follows:
The Company has estimated foreign net operating loss carryforwards of approximately $9.5 million as of June 30, 2019 of which $1.5 million expires in 2020 through 2028 and of which $8.0 million has an indefinite utilization period. In addition, the Company has estimated U.S. federal net operating loss carryforwards of approximately $18.6 million, which expire in 2019 through 2030. Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings. The Company has recorded valuation allowances of $3.3 million and $3.8 million at June 30, 2019 and 2018, respectively. The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss, projected future taxable income, carryforward periods, scheduled reversals of deferred tax liabilities and tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The assumptions used to project future taxable income require significant judgment and are consistent with the plans and estimates used to manage the underlying businesses. In the next twelve months, the Company does not expect a material change to its net reserve balance for unrecognized tax benefits. The following table summarizes the activity related to the Company’s gross unrecognized tax positions:
As of June 30, 2019, 2018 and 2017, the net reserve for unrecognized tax positions recorded by the Company that is included in the preceding table of gross unrecognized tax positions was $33.4 million, $19.4 million, and $13.4 million respectively, and if reversed in full, would favorably affect the effective tax rate by these amounts, respectively. The $2.6 million, $2.4 million and $2.8 million gross decreases in fiscal years 2019, 2018 and 2017, respectively, for prior period tax positions related to certain tax audit settlements and certain state, federal and foreign statute of limitation expirations. During the fiscal year ended June 30, 2019, the Company adjusted accrued interest by approximately $(0.1) million and recognized a total liability for interest on unrecognized tax positions of $3.6 million; in the fiscal year ended June 30, 2018, the Company adjusted accrued interest by approximately $0.5 million and recognized a total liability of $3.7 million for interest on unrecognized tax positions; in the fiscal year ended June 30, 2017 the Company adjusted accrued interest by approximately $(0.2) million and recognized a total liability of $3.2 million for interest on unrecognized tax positions. The Company is regularly subject to examination of its income tax returns by U.S. Federal, state and foreign income tax authorities. The tax years that are currently open and could be subject to income tax audits for U.S. federal and most state and local jurisdictions are fiscal years ending June 30, 2013 through June 30, 2019, and for Canadian operations that could be subject to audit in Canada, fiscal years ending June 30, 2014 through June 30, 2019. A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements.
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Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements | CONTRACTUAL COMMITMENTS, CONTINGENCIES, AND OFF-BALANCE SHEET ARRANGEMENTS Data Center Agreements In March 2010, the Company and International Business Machines Corporation (“IBM”) entered into an Information Technology Services Agreement (the “IT Services Agreement”), under which IBM provides certain aspects of the Company’s information technology infrastructure. Under the IT Services Agreement, IBM provides a broad range of technology services to the Company including supporting its mainframe, midrange, open systems, network and data center operations, as well as providing disaster recovery services. The Company has the option of incorporating additional services into the agreement over time. The migration of the data center processing to IBM was completed in August 2012. The IT Services Agreement would have expired on June 30, 2022. In March 2015, the Company signed a two-year extension to the IT Services Agreement which expires on June 30, 2024. The Company has the right to renew the term of the IT Services Agreement for up to one additional 12-month term. Commitments remaining under this agreement at June 30, 2019 are $290.8 million through fiscal year 2024, the final year of the contract. In March 2014, the Company and IBM United Kingdom Limited (“IBM UK”) entered into an Information Technology Services Agreement (the “EU IT Services Agreement”), under which IBM UK provides data center services supporting the Company’s technology outsourcing services for certain clients in Europe and Asia. The EU IT Services Agreement expires in October 2023. The Company has the right to renew the initial term of the EU IT Services Agreement for up to one additional 12-month term or one additional 24-month term. Commitments remaining under this agreement at June 30, 2019 are $20.4 million through fiscal year 2024, the final year of the contract. The following table summarizes the respective total annual expenses related to these agreements:
The following table summarizes the capitalized costs related to these agreements as of June 30, 2019:
The following table summarizes the respective total annual amortization expense of capitalized costs related to these agreements:
Investments The Company contributed $3.5 million and $5.3 million to an equity method investment during the fiscal years ended June 30, 2019 and 2018, respectively, and has a remaining commitment of $1.5 million to fund this investment at June 30, 2019. At June 30, 2019, the Company also has a future commitment to fund $4.3 million to one of the Company’s investees. Contractual Obligations The Company has obligations under the IT Services Agreement, the EU IT Services Agreement, and related software maintenance agreements, various facilities and equipment leases, software license agreements, and software/hardware maintenance agreements. The following table summarizes the total expenses related to these agreements:
The minimum commitments under these obligations at June 30, 2019 are as follows, which includes the aforementioned IT Services Agreement and EU IT Services Agreement:
In addition to fixed rentals, certain leases require payment of maintenance and real estate taxes and contain escalation provisions based on future adjustments in price indices. Other In the normal course of business, the Company is subject to various claims and litigation. While the outcome of any claim or litigation is inherently unpredictable, the Company believes that the ultimate resolution of these matters will not, individually or in the aggregate, result in a material impact on its financial condition, results of operations or cash flows. It is not the Company’s business practice to enter into off-balance sheet arrangements. However, the Company is exposed to market risk from changes in foreign currency exchange rates that could impact its financial position, results of operations, and cash flows. The Company manages its exposure to these market risks through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company may use derivative financial instruments as risk management tools and not for trading purposes. The Company was not a party to any derivative financial instruments as of June 30, 2019 and 2018. In the normal course of business, the Company also enters into contracts in which it makes representations and warranties that relate to the performance of the Company’s products and services. The Company does not expect any material losses related to such representations and warranties, or collateral arrangements. The Company’s business process outsourcing and mutual fund processing services are performed by Broadridge Business Process Outsourcing, LLC (“BBPO”), an indirect wholly-owned subsidiary, which is a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Although BBPO’s FINRA membership agreement allows it to engage in clearing and the retailing of corporate securities in addition to mutual fund retailing on a wire order basis, BBPO does not clear customer transactions, process any retail business or carry customer accounts. As a registered broker-dealer and member of FINRA, BBPO is subject to the Uniform Net Capital Rule 15c3-1 of the Securities Exchange Act of 1934, as amended, which requires BBPO to maintain a minimum net capital amount. At June 30, 2019, BBPO was in compliance with this capital requirement. BBPO, as a “Managing Clearing Member” of the Options Clearing Corporation (the “OCC”), is also subject to OCC Rule 309(b) with respect to the business process outsourcing services that it provides to other OCC “Managed Clearing Member” broker-dealers. OCC Rule 309(b) requires BBPO to maintain a minimum net capital amount. At June 30, 2019, BBPO was in compliance with this capital requirement. In addition, Matrix Trust Company, a subsidiary of the Company, is a Colorado State non-depository trust company and National Securities Clearing Corporation trust member, whose primary business is to provide cash agent, custodial and directed trustee services to institutional customers, and investment management services to collective trust funds. As a result, Matrix Trust Company is subject to various regulatory capital requirements administered by the Colorado Division of Banking and the Arizona Department of Financial Institutions, as well as the National Securities Clearing Corporation. Specific capital requirements that involve quantitative measures of assets, liabilities, and certain off-balance sheet items, when applicable, must be met. At June 30, 2019, Matrix Trust Company was in compliance with its capital requirements.
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Changes in Accumulated Other Comprehensive Income/(Loss) by Component |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income/(Loss) by Component | CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) BY COMPONENT The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income/(loss):
___________ (a) Reflects the adoption of accounting standards as described in Note 2, “Summary of Significant Accounting Policies.”
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Financial Data by Segment |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Data by Segment | FINANCIAL DATA BY SEGMENT The Company operates in two reportable segments: Investor Communication Solutions and Global Technology and Operations. See Note 1, “Basis of Presentation” for a further description of the Company’s reportable segments. The primary components of “Other” are certain gains, losses, corporate overhead expenses and non-operating expenses that have not been allocated to the reportable segments, such as interest expense. Foreign currency exchange is a reconciling item between the actual foreign currency exchange rates and the constant foreign currency exchange rates used for internal management reporting. Certain corporate expenses, as well as certain centrally managed expenses, are allocated based upon budgeted amounts in a reasonable manner. Because the Company compensates the management of its various businesses on, among other factors, segment profit, the Company may elect to record certain segment-related operating and non-operating expense items in Other rather than reflect such items in segment profit. In connection with an organizational change made in the second quarter of fiscal year 2018, in order to further align and enhance our portfolio of services, certain discrete services that were previously reported in our Investor Communication Solutions reportable segment are now reported within the Global Technology and Operations reportable segment. As a result, our prior period segment results have been revised to reflect this change in reporting segments.
Revenues and assets by geographic area are as follows:
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Quarterly Financial Results (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Results (Unaudited) | QUARTERLY FINANCIAL RESULTS (UNAUDITED) Summarized quarterly results of operations for the fiscal years ended June 30, 2019 and 2018 are as follows:
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Subsequent Event (Notes) |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On July 31, 2019, the Company’s Board of Directors increased the Company’s quarterly cash dividend by $0.055 per share to $0.540 per share, an increase in the expected annual dividend amount from $1.94 to $2.16 per share. The declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the Company’s Board of Directors, and will depend upon many factors, including the Company’s financial condition, earnings, capital requirements of its businesses, legal requirements, regulatory constraints, industry practice, and other factors that the Board of Directors deems relevant. |
Schedule II-Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II-Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts ($ in millions)
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Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||
Consolidation and Basis of Presentation | Consolidation and Basis of Presentation. The Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and in accordance with the U.S. SEC requirements for Annual Reports on Form 10-K. These financial statements present the consolidated position of the Company and include the entities in which the Company directly or indirectly has a controlling financial interest as well as various entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non-marketable securities. Intercompany balances and transactions have been eliminated. Amounts presented may not sum due to rounding. Certain prior period amounts have been reclassified to conform to the current year presentation, except as it relates to (i) Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers” and its related amendments (collectively “ASU No. 2014-09”), (ii) ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU No. 2016-01”), (iii) ASU No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU No. 2018-02”), and (iv) ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting” (“ASU No. 2016-09”), as described further below. Effective July 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective transition approach applied to all contracts. Under this transition approach, the Company has not restated the prior period Consolidated Financial Statements presented to the current period presentation. However, the Company has provided additional disclosures related to the amount by which each relevant fiscal 2019 financial statement line item was affected by the adoption of ASU No. 2014-09 along with explanations for significant changes. Additional information about the Company’s revenue recognition policies and the related impact of the adoption of ASU No. 2014-09 is included in Note 2, “Summary of Significant Accounting Policies” and Note 3, “Revenue Recognition”. Effective July 1, 2018, the Company adopted ASU No. 2016-01, which requires changes in the fair value of publicly traded equity securities for which the Company does not have significant influence to be recorded as part of Net earnings rather than as Other comprehensive income (loss), net. In addition, equity investments that do not have a readily determinable fair value will be recorded at cost less impairment as further adjusted for observable price changes in orderly transactions for identical or similar investments of the issuer. The Company adopted ASU No. 2016-01 using the modified-retrospective transition approach by recording the cumulative effect of previously unrecognized gains or losses on publicly traded equity securities to retained earnings as of July 1, 2018. The provisions of ASU No. 2016-01 relative to equity investments that do not have a readily determinable fair value have been applied prospectively. The Consolidated Financial Statements have not been revised for periods prior to July 1, 2018. The impact of adopting ASU No. 2016-01 resulted in a reclassification of less than $0.1 million in unrealized gains, net from accumulated other comprehensive loss to retained earnings as of July 1, 2018. Effective July 1, 2018, the Company adopted ASU No. 2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects associated with the change in the U.S. federal corporate tax rate resulting from the U.S. Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017. The adoption of ASU No. 2018-02 resulted in an increase to retained earnings of $1.5 million. Effective July 1, 2018, the Company adopted ASU No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU No. 2017-07”) whereby the Company revised its presentation in the Consolidated Statements of Earnings to reflect the non-service cost components of net benefit cost as part of Other non-operating income (expenses), net, which were previously recorded as part of Total operating expenses. All prior period information has been conformed to the current period presentation. Effective July 1, 2017, the Company adopted ASU No. 2016-09, which identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including presenting the excess tax benefits (“ETB”) or deficits from the exercise or vesting of share-based payments in the income statement, classifying the ETB or deficits as an operating activity in the Consolidated Statements of Cash Flows rather than as a financing activity, a revision to the criteria for classifying an award as equity or liability and an option to recognize gross stock-based compensation expense with actual forfeitures recognized as they occur. In addition, ASU No. 2016-09 eliminates the ETB from the assumed proceeds calculation under the treasury stock method for purposes of calculating diluted shares. As a result of this adoption, the Company recorded ETB related to stock-based compensation awards of $19.3 million and $40.9 million during the fiscal years ended June 30, 2019 and 2018 in the income tax provision on a prospective basis, whereas such benefits would previously have been recognized in equity. The Company also excluded the ETB from the assumed proceeds available to repurchase shares in the computation of diluted earnings per share for the fiscal years ended June 30, 2019 and 2018. The Company has not adjusted prior periods presented for the change in accounting for ETB in the Consolidated Financial Statements. The Company also elected to apply the change in presentation of ETB in the Consolidated Statement of Cash Flows prospectively, and as a result, ETB are classified as operating activities when realized through reductions to subsequent tax payments. This adoption resulted in an increase to net cash provided by operating activities and a corresponding decrease to net cash provided by financing activities of $19.3 million and $40.9 million for the fiscal years ended June 30, 2019 and 2018. The Company has not adjusted prior periods presented for the change in classification of ETB on the Consolidated Statement of Cash Flows. The Company also elected to continue its current practice of estimating expected forfeitures as permitted by ASU No. 2016-09.
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Use of Estimates | Use of Estimates. The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes thereto. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions and judgment that are believed to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. The use of estimates in specific accounting policies is described further in the notes to the Consolidated Financial Statements, as appropriate. | |||||||||||||||
Revenue Recognition | Revenue Recognition. ASU No. 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. The core principle is that an entity recognizes revenue to reflect 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. The Company’s revenues from clients are primarily generated from fees for providing investor communications and technology-enabled services and solutions. Revenues are recognized for the two reportable segments as follows:
The Company uses the following methods, inputs, and assumptions in determining amounts of revenue to recognize: Identification of Performance Obligations For revenue arrangements containing multiple goods or services, the Company accounts for the individual goods or services as a separate performance obligation if they are distinct, the good or service is separately identifiable from other items in the arrangement, and if a client can benefit from it on its own or with other resources that are readily available to the client. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Transaction Price Once separate performance obligations are determined, the transaction price is allocated to the individual performance obligations. If the contracted prices reflect the relative standalone selling prices for the individual performance obligations, no allocations are made. Otherwise, the Company uses the relative selling price method to allocate the transaction price, obtained from sources such as the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar clients. If such evidence is unavailable, the Company uses the best estimate of the selling price, which includes various internal factors such as pricing strategy and market factors. A significant portion of the Company’s performance obligations are generated from transactions with volume based fees and includes services that are delivered at the same time. The Company recognizes revenue related to these arrangements over time as the services are provided to the client. While many of the Company’s contracts contain some component of variable consideration, the Company only recognizes variable consideration that is not expected to reverse. The Company allocates variable payments to distinct services in an overall contract when the variable payment relates specifically to that particular service and for which the variable payment reflects what the Company expects to receive in exchange for that particular service. As a result, the Company generally allocates and recognizes variable consideration in the period it has the contractual right to invoice the client. As described above, our most significant performance obligations involve variable consideration which constitutes the majority of our revenue streams. The Company’s variable consideration components meet the criteria in ASU No. 2014-09 for exclusion from disclosure of the remaining transaction price allocated to unsatisfied performance obligations as does any contracts with clients with an original duration of one year or less. The Company has contracts with clients that vary in length depending on the nature of the services and contractual terms negotiated with the client, and they generally extend over a multi-year period. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a client, are excluded from revenue. Distribution revenues associated with shipping and handling activities are accounted for as a fulfillment activity and recognized as the related services or products are transferred to the client. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between client payment and the transfer of goods or services is expected to be one year or less.
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Cash and Cash Equivalents | Cash and Cash Equivalents. Investment securities with an original maturity of 90 days or less are considered cash equivalents. The fair value of the Company’s Cash and cash equivalents approximates carrying value due to their short term nature. | |||||||||||||||
Financial Instruments | Financial Instruments. Substantially all of the financial instruments of the Company other than Long-term debt are carried at fair values, or at carrying amounts that approximate fair values because of the short maturity of the instruments. The carrying value of the Company’s long-term fixed-rate senior notes represent the face value of the long-term fixed-rate senior notes net of the unamortized discount and net of the associated unamortized debt issuance cost. The fair value of the Company’s long-term fixed-rate senior notes is based on quoted market prices. | |||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment. Property, plant and equipment is initially recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful lives of the improvements. The estimated useful lives of assets are as follows:
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Available-For-Sale Equity Securities | Securities. Securities are non-derivatives that are reflected in Other non-current assets in the Consolidated Balance Sheets, unless management intends to dispose of the investment within twelve months of the end of the reporting period, in which case they are reflected in Other current assets in the Consolidated Balance Sheets. These investments are in entities over which the Company does not have control, joint control, or significant influence. Securities that have a readily determinable fair value are carried at fair value. Securities without a readily determinable fair value are initially recognized at cost and subsequently carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in transactions for an identical or similar investment of the same issuer, such as subsequent capital raising transactions. Changes in the value of securities with or without a readily determinable fair value are recorded in the Consolidated Statements of Earnings. In determining whether a security without a readily determinable fair value is impaired, management considers qualitative factors to identify an impairment including the financial condition and near-term prospects of the issuer. | |||||||||||||||
Inventories | Inventories. Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market. | |||||||||||||||
Deferred Client Conversion and Start-Up Costs | Deferred Client Conversion and Start-Up Costs. Direct costs incurred to set up or convert a client’s systems to function with the Company’s technology, that are expected to be recovered, are generally deferred and recognized on a straight-line basis over the service term of the arrangement to which the costs relate, which commences after client acceptance when the processing term begins. The Company evaluates the carrying value of deferred client conversion and start-up costs for impairment on the basis of whether these costs are fully recoverable from the expected future undiscounted net operating cash flows of the client to which the deferred costs relate. | |||||||||||||||
Deferred Data Center Costs | Deferred Data Center Costs. Data center costs relate to conversion costs associated with our principal data center systems and applications. Costs directly related to the activities necessary to make the data center usable for its intended purpose are deferred and amortized over the life of the contract on a straight-line basis commencing on the date the data center has achieved full functionality. | |||||||||||||||
Goodwill | Goodwill. The Company does not amortize goodwill but instead tests goodwill for impairment at the reporting unit level at least annually or more frequently if circumstances indicate possible impairment. The Company tests for goodwill impairment annually in the fourth quarter of the fiscal year, using the March 31 financial statement balances. The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the income approach, which considers a discounted future cash flow analysis using various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the particular reporting unit’s weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted earnings before interest and taxes, and the selection of the terminal value growth rate and discount rate assumptions. The weighted-average cost of capital takes into account the relative weight of each component of our consolidated capital structure (equity and long-term debt). The estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of the Company’s routine, long-range planning process. If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined. | |||||||||||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the estimated undiscounted future cash flows expected to be generated by the asset (or asset group). If the carrying amount of an asset (or asset group) exceeds its expected estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset (or asset group) exceeds its fair value. Intangible assets with finite lives are amortized primarily on a straight-line basis over their estimated useful lives and are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. | |||||||||||||||
Equity Method Investments | Equity Method Investments. The Company’s investments resulting in a 20% to 50% ownership interest are accounted for using the equity method of accounting when the ability to exercise significant influence is maintained by the Company. The Company’s share of net income or losses of equity method investments is included in Other non-operating income (expenses), net. Equity method investments are included in Other non-current assets. Equity method investments are reviewed for impairment by assessing if a decline in market value of the investment below the carrying value is other than temporary, which considers the intent and ability to retain the investment, the length of time and extent that the market value has been less than cost, and the financial condition of the investee. | |||||||||||||||
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars based on exchange rates in effect at the end of each period. Revenues and expenses are translated at average exchange rates during the periods. Currency transaction gains or losses are included in Non-operating income (expenses), net. Gains or losses from balance sheet translation are included in Accumulated other comprehensive income (loss). | |||||||||||||||
Distribution Cost of Revenues | Distribution Cost of Revenues. Distribution cost of revenues consists primarily of postage related expenses incurred in connection with the Company’s Investor Communication Solutions segment, as well as Matrix Financial Solutions, Inc. administrative services expenses. These costs are reflected in Cost of revenues in the Consolidated Statements of Earnings. | |||||||||||||||
Stock-Based Compensation | Stock-Based Compensation. The Company accounts for stock-based compensation by recognizing the measurement of stock-based compensation expense in the Consolidated Statements of Earnings based on the fair value of the award on the date of grant. For stock options issued, the fair value of each stock option was estimated on the date of grant using a binomial option-pricing model. The binomial model considers a range of assumptions related to volatility, dividend yield, risk-free interest rate, and employee exercise behavior. Expected volatilities utilized in the binomial model are based on a combination of implied market volatilities, historical volatility of the Company’s stock price, and other factors. Similarly, the dividend yield is based on historical experience and expected future changes. The risk-free rate is derived from the U.S. Treasury yield curve in effect at the time of grant. The binomial model also incorporates exercise and forfeiture assumptions based on an analysis of historical data. The expected life of the stock option grants is derived from the output of the binomial model and represents the period of time that options granted are expected to be outstanding. For restricted stock units, the fair value of the award is based on the current fair value of the Company’s stock on the date of grant less the present value of future expected dividends discounted at the risk-free-rate derived from the U.S. Treasury yield curve in effect at the time of grant. | |||||||||||||||
Internal Use Software | Internal Use Software. Expenditures for major software purchases and software developed or obtained for internal use are capitalized and amortized generally over a three- to five-year period on a straight-line basis. For software developed or obtained for internal use, the Company’s accounting policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, the Company also capitalizes payroll and payroll-related costs for employees who are directly associated with internal use computer software projects. The amount of capitalizable payroll costs with respect to these employees is limited to direct time spent on such projects. Costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred. The Company also expenses internal costs related to minor upgrades and enhancements, as it is impractical to separate these costs from normal maintenance activities. | |||||||||||||||
Income Taxes | Income Taxes. The Company accounts for income taxes under the asset and liability method, which establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements or tax returns. Deferred tax assets and liabilities are recognized based on temporary differences between the consolidated financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse. Judgment is required in addressing the future tax consequences of events that have been recognized in our Consolidated Financial Statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws or interpretations thereof). Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings. The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss, projected future taxable income, carryforward periods, scheduled reversals of deferred tax liabilities and tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The assumptions used to project future taxable income requires significant judgment and are consistent with the plans and estimates used to manage the underlying businesses. | |||||||||||||||
Advertising Costs | Advertising Costs. Advertising costs are expensed at the time the advertising takes place. | |||||||||||||||
New Accounting Pronouncements | New Accounting Pronouncements. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Accounting for Goodwill Impairment” (“ASU No. 2017-04”). ASU No. 2017-04 removes Step 2 of the current goodwill impairment test, which currently requires a hypothetical purchase price allocation if the fair value of a reporting unit were to be less than its book value, for purposes of determining the amount of goodwill impaired. Under ASU No. 2017-04, the Company would now recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds the fair value of the reporting unit; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 will be effective for the Company beginning in the first quarter of fiscal 2021, to be applied on a prospective basis. The pending adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017-01, ASU No. 2017-01, “Clarifying the Definition of a Business” (“ASU No. 2017-01”). ASU No. 2017-01 narrows the definition of a business, in part by concluding that an integrated set of assets and activities (referred to as a “set”) is not a business when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets. ASU No. 2017-01 became effective for the Company beginning in the first quarter of fiscal year 2019, and was applied on a prospective basis. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”), as subsequently amended by ASU No. 2018-10 “Codification Improvements to Topic 842, Leases”, ASU No. 2018-11 “Leases (Topic 842): Targeted Improvements”, and ASU No. 2018-20 “Leases (Topic 842): Narrow Scope Improvements for Lessors” (collectively referred to herein as “ASU No. 2016-02, as amended”). Under ASU No. 2016-02, as amended, all lease arrangements, with certain limited exceptions, exceeding a twelve-month term must now be recognized as assets and liabilities on the balance sheet of the lessee by recording a right-of-use asset and corresponding lease obligation generally equal to the present value of the future lease payments over the lease term. Further, the income statement will reflect lease expense for leases classified as operating and amortization/interest expense for leases classified as financing, determined using classification criteria substantially similar to the current lease guidance for distinguishing between an operating and capital lease. ASU No. 2016-02, as amended, also contains certain additional qualitative and quantitative disclosures to supplement the amounts recorded in the financial statements so that users can understand more about the nature of an entity’s leasing activities, including significant judgments and changes in judgments. ASU No. 2016-02, as amended, is effective for the Company in the first quarter of fiscal year 2020 and can be adopted using either a modified retrospective basis which requires adjustment to all comparative periods presented in the consolidated financial statements, or by recognizing a cumulative-effect adjustment to the opening balance of retained earnings at the date of initial application. The Company has elected to adopt ASU No. 2016-02, as amended, by recognizing a cumulative-effect adjustment to the opening balance of retained earnings at the date of initial application. The Company has identified and implemented appropriate changes for adopting this new lease standard on its consolidated financial statements, including changes to related disclosures, accounting policies, and necessary control, process and system changes. The adoption of the new lease standard is expected to result in the recognition of lease liabilities of $253 million and right-of-use assets of $236 million, which include the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheet as of July 1, 2019 for real and personal property operating leases. The adoption of ASU 2016-02, as amended, will not have a material impact on the Company’s Consolidated Statements of Earnings or Consolidated Statements of Cash Flows. Effective July 1, 2018, the Company adopted ASU No. 2014-09. ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry specific requirements. It also includes guidance on accounting for the incremental costs of obtaining and costs incurred to fulfill a contract with a customer. The core principle of the revenue model is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As a result, it is possible more judgment and estimates may be required within the revenue recognition process including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 also requires certain enhanced disclosures, including disclosures on the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The Company identified certain impacts of ASU No. 2014-09 on its Consolidated Financial Statements. Specifically, under ASU No. 2014-09, the Company now capitalizes certain sales commissions, and it capitalizes certain additional costs that are part of setting up or converting a client’s systems to function with the Company’s technology, both of which were previously expensed. Additionally, the Company now recognizes proxy revenue primarily at the time of proxy materials distribution to the client’s shareholders rather than on the date of the client’s shareholder meeting, which is typically 30 days after the proxy materials distribution. Other changes to the timing of revenue recognition include deferral of revenue from certain transaction processing platform enhancements as well as acceleration of revenue from certain multi-year software license arrangements that was previously recognized over the term of the software subscription. The Company adopted ASU No. 2014-09 using the modified retrospective transition method applied to all contracts, which resulted in a cumulative-effect increase in the opening balance of retained earnings of $101.3 million, most notably related to the deferral of incremental sales commissions incurred in obtaining contracts in prior periods. Under this transition approach, the Company has not restated the prior period Consolidated Financial Statements presented. However, the Company has provided additional disclosures related to the amount by which each relevant fiscal 2019 financial statement line item was affected by the adoption of ASU No. 2014-09 and explanations for significant changes. See Note 3, “Revenue Recognition” for additional information about the Company’s revenue recognition policies and the related impact of the Company’s adoption of ASU No. 2014-09.
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Subsequent Events | Subsequent Events. In preparing the accompanying Consolidated Financial Statements, the Company has reviewed events that have occurred after June 30, 2019 through the date of issuance of the Consolidated Financial Statements. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | |||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||
Summary of Estimated Useful Lives of Assets | The estimated useful lives of assets are as follows:
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Revenue Recognition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue |
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Contract Assets and Liabilities | The following table provides information about contract assets and liabilities:
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Summary of the Impact of ASU No. 2014-09 on Financial Statements | The following tables summarize the impact of ASU No. 2014-09 adoption on the Company’s Consolidated Statement of Earnings for the fiscal year ended June 30, 2019.
(1) The effects of ASU No. 2014-09 on revenues includes contract modifications. The following table summarizes the impact of ASU No. 2014-09 adoption on the Company’s Consolidated Balance Sheet as of June 30, 2019.
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Denominators of Basic and Diluted EPS Computations | The following table sets forth the denominators of the basic and diluted EPS computations:
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Computation of Basic EPS | The following table sets forth the computation of basic EPS utilizing Net earnings for the following fiscal years and the Company’s basic Weighted-average shares outstanding:
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Computation of Diluted EPS | The following table sets forth the computation of diluted EPS utilizing Net earnings for the following fiscal years and the Company’s diluted Weighted-average shares outstanding:
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Interest Expense, Net (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Interest Expense, Net | Interest expense, net consisted of the following:
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination, Financial Information on Transaction | Financial information on each transaction is as follows:
Financial information on each transaction is as follows:
Financial information on each transaction is as follows:
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Allocation of Purchase Price | The following summarizes the allocation of purchase price for the NACC acquisition (in millions):
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Pro Forma Information | This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on July 1, 2015, nor of the results of operations that may be obtained in the future.
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Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables set forth the Company’s financial assets and liabilities at June 30, 2019 and 2018, respectively, which are measured at fair value on a recurring basis during the period, segregated by level within the fair value hierarchy:
(1) Money market funds include money market deposit account balances of $30.1 million and $28.4 million as of June 30, 2019 and 2018, respectively.
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Schedule of Changes in Level 3 Financial Liabilities | The following table sets forth an analysis of changes during fiscal years 2019 and 2018 in Level 3 financial liabilities of the Company:
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Property, Plant and Equipment, Net (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property, Plant and Equipment at Cost and Accumulated Depreciation and Depreciation Expense | Depreciation expense for Property, plant and equipment for the years ended June 30, 2019, 2018 and 2017 was as follows:
Property, plant and equipment at cost and Accumulated depreciation at June 30, 2019 and 2018 are as follows:
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Goodwill and Intangible Assets, Net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Goodwill | Changes in Goodwill for the fiscal years ended June 30, 2019 and 2018 are as follows:
(a) In connection with an organizational change made in the second quarter of fiscal year 2018, in order to further align and enhance our portfolio of services, certain discrete services that were previously reported in our Investor Communication Solutions reportable segment are now reported within the Global Technology and Operations reportable segment. As a result, $38.7 million of goodwill was reclassified from the ICS segment to the GTO segment based on a relative fair value analysis. (b) Fair value adjustments includes adjustments to goodwill as part of the finalization of purchase price allocation related to the ActivePath acquisition.
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Schedule of Intangible Assets at Cost and Accumulated Amortization | Intangible assets at cost and accumulated amortization at June 30, 2019 and 2018 are as follows:
The weighted-average remaining useful life of the intangible assets is as follows:
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Finite-lived Intangible Assets Amortization Expense | Amortization of intangibles for the years ended June 30, 2019, 2018 and 2017 was as follows:
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Estimated Amortization Expenses of Intangible Assets | Estimated remaining amortization expenses of the Company’s existing intangible assets for the next five fiscal years and thereafter are as follows:
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Other Non-Current Assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Non-Current Assets | Other non-current assets consisted of the following:
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Payables and Accrued Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Payables and Accrued Expenses | consisted of the following:
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Borrowings (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Borrowings | Outstanding borrowings and available capacity under the Company’s borrowing arrangements were as follows:
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Schedule Of Future Principal Payments On Outstanding Debt | Future principal payments on the Company’s outstanding debt are as follows:
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Incentive Equity Awards | The activity related to the Company’s incentive equity awards for the fiscal years ended June 30, 2019, 2018 and 2017 consisted of the following:
(c) As of June 30, 2019, the Company’s outstanding stock options using the fiscal year-end share price of $127.68 had an aggregate intrinsic value of $268.2 million. As of June 30, 2019, the Company’s outstanding “in the money” vested stock options using the fiscal year-end share price of $127.68 had an aggregate intrinsic value of $195.8 million. As of June 30, 2019, time-based RSUs and performance-based RSUs expected to vest using the fiscal year-end share price of $127.68 (approximately 0.8 million and 0.3 million shares, respectively) had an aggregate intrinsic value of $100.1 million and $39.8 million, respectively.
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Summary of Outstanding and Exercisable Stock Options | The tables below summarize information regarding the Company’s outstanding and exercisable stock options as of June 30, 2019:
(a) Calculated using the closing stock price on the last trading day of fiscal year 2019 of $127.68, less the option exercise price, multiplied by the number of instruments.
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Assumptions Used to Determine Fair Values of Stock Option Grants | The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30, 2019, 2018 and 2017:
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Employee Benefit Plans (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Costs Recored for Defined Contribution Savings Plans | The costs recorded by the Company for these plans were:
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Summary of Amounts Charged to Expense | The amounts charged to expense by the Company for this plan were:
The amounts charged to expense by the Company for these plans were:
The amounts charged to expense by the Company for this plan were:
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Summary of Benefit Obligation under Plan | The benefit obligation to the Company under this plan at June 30, 2019, 2018 and 2017 was:
The benefit obligation to the Company under these plans at June 30, 2019, 2018 and 2017 was:
The benefit obligation to the Company under this plan at June 30, 2019, 2018 and 2017 was:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings from Continuing Operations before Income Taxes | Earnings before income taxes shown below are based on the geographic location to which such earnings are attributable.
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Components of Provision for Income Taxes | The Provision for income taxes consists of the following components:
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Effective Income Tax Rate Reconciliation |
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Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities at June 30, 2019 and 2018 were as follows:
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Summary of Activity Related to Unrecognized Tax Benefits | The following table summarizes the activity related to the Company’s gross unrecognized tax positions:
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Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Expenses Related to Data Center Agreements | The following table summarizes the respective total annual expenses related to these agreements:
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Capitalized Contract Costs | The following table summarizes the capitalized costs related to these agreements as of June 30, 2019:
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Summary of Total Amortization Expense of Capitalized Costs Related to Data Center Agreements | The following table summarizes the respective total annual amortization expense of capitalized costs related to these agreements:
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Summary of Lease Expenses Related to IT Services Agreement, the EU IT Services Agreement, and related software maintenance agreements, various facilities and equipment leases, software license agreements, and software/hardware maintenance agreements | The following table summarizes the total expenses related to these agreements:
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Schedule of Minimum Commitments Related to Technology Service Agreement | The minimum commitments under these obligations at June 30, 2019 are as follows, which includes the aforementioned IT Services Agreement and EU IT Services Agreement:
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Changes in Accumulated Other Comprehensive Income/(Loss) by Component (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income/(loss):
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Reclassification out of Accumulated Other Comprehensive Income |
Financial Data by Segment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Data Segment Reporting Information |
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Schedule of Revenues and Assets by Geographic Area | Revenues and assets by geographic area are as follows:
|
Quarterly Financial Results (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Quarterly Results of Operations | Summarized quarterly results of operations for the fiscal years ended June 30, 2019 and 2018 are as follows:
|
Summary of Significant Accounting Policies - Summary of Estimated Useful Lives of Assets (Details) |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 3 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 5 years |
Building and Building Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 5 years |
Building and Building Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 20 years |
Furniture and Fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 4 years |
Furniture and Fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of assets | 7 years |
Revenue Recognition - Additional Information (Details) - 12 months ended Jun. 30, 2019 $ in Millions |
segment |
Segment |
USD ($) |
---|---|---|---|
Revenue from Contract with Customer [Abstract] | |||
Number of reportable segments | 2 | 2 | |
Amount of revenue recognized | $ 96.4 |
Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jul. 01, 2018 |
Jun. 30, 2018 |
---|---|---|---|
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 47.5 | $ 35.5 | $ 16.5 |
Contract liabilities | $ 251.6 | $ 162.8 |
Revenue Recognition - Quantitative Impact on Financial Statements (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Revenues | $ 1,211.2 | $ 1,224.8 | $ 953.4 | $ 972.8 | $ 1,320.4 | $ 1,071.9 | $ 1,012.8 | $ 924.8 | $ 4,362.2 | $ 4,329.9 | $ 4,142.6 | |
Cost of revenues | 3,131.9 | 3,167.4 | 3,107.9 | |||||||||
Selling, general and administrative expenses | 577.5 | 564.5 | 500.7 | |||||||||
Operating income | 240.8 | 233.6 | 78.2 | 100.1 | 266.2 | 130.8 | 115.9 | 85.2 | 652.7 | 598.1 | ||
Earnings (loss) before income taxes | 230.0 | 223.6 | 64.3 | 89.3 | 258.0 | 125.2 | 103.5 | 74.3 | 607.3 | 561.0 | 488.1 | |
Provision for income taxes | 125.2 | 133.1 | 161.4 | |||||||||
Net earnings | $ 183.2 | $ 172.2 | $ 49.9 | $ 76.7 | $ 206.9 | $ 109.1 | $ 62.1 | $ 49.9 | $ 482.1 | $ 427.9 | $ 326.8 | |
Basic earnings per share (in dollars per share) | $ 1.59 | $ 1.49 | $ 0.43 | $ 0.66 | $ 1.76 | $ 0.93 | $ 0.53 | $ 0.43 | $ 4.16 | $ 3.66 | $ 2.77 | |
Diluted earnings per share (in dollars per share) | $ 1.55 | $ 1.45 | $ 0.42 | $ 0.64 | $ 1.72 | $ 0.90 | $ 0.52 | $ 0.42 | $ 4.06 | $ 3.56 | $ 2.70 | |
Current assets | $ 1,042.3 | $ 991.1 | $ 1,042.3 | $ 991.1 | ||||||||
Assets | 3,880.7 | 3,304.7 | 3,880.7 | 3,304.7 | $ 3,149.8 | |||||||
Current liabilities | 802.6 | 777.3 | 802.6 | 777.3 | ||||||||
Total liabilities | 2,753.2 | 2,210.4 | 2,753.2 | 2,210.4 | ||||||||
Total stockholders’ equity | 1,127.5 | $ 1,094.3 | 1,127.5 | $ 1,094.3 | $ 1,003.8 | $ 1,045.5 | ||||||
Without Effects of ASU No. 2014-09 | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Revenues | 4,463.3 | |||||||||||
Cost of revenues | 3,147.8 | |||||||||||
Selling, general and administrative expenses | 585.5 | |||||||||||
Operating income | 730.0 | |||||||||||
Earnings (loss) before income taxes | 684.6 | |||||||||||
Provision for income taxes | 144.3 | |||||||||||
Net earnings | $ 540.3 | |||||||||||
Basic earnings per share (in dollars per share) | $ 4.66 | |||||||||||
Diluted earnings per share (in dollars per share) | $ 4.55 | |||||||||||
Current assets | 1,043.5 | $ 1,043.5 | ||||||||||
Assets | 3,752.9 | 3,752.9 | ||||||||||
Current liabilities | 799.2 | 799.2 | ||||||||||
Total liabilities | 2,670.6 | 2,670.6 | ||||||||||
Total stockholders’ equity | 1,082.3 | 1,082.3 | ||||||||||
Effects of ASU 2014-09 | Restatement Adjustment | ||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||||
Revenues | 101.1 | |||||||||||
Cost of revenues | 15.8 | |||||||||||
Selling, general and administrative expenses | 8.0 | |||||||||||
Operating income | 77.4 | |||||||||||
Earnings (loss) before income taxes | 77.4 | |||||||||||
Provision for income taxes | 19.1 | |||||||||||
Net earnings | $ 58.2 | |||||||||||
Basic earnings per share (in dollars per share) | $ 0.50 | |||||||||||
Diluted earnings per share (in dollars per share) | $ 0.49 | |||||||||||
Current assets | 1.2 | $ 1.2 | ||||||||||
Assets | (127.8) | (127.8) | ||||||||||
Current liabilities | (3.4) | (3.4) | ||||||||||
Total liabilities | (82.6) | (82.6) | ||||||||||
Total stockholders’ equity | $ (45.2) | $ (45.2) |
Earnings Per Share - Additional Information (Details) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | |||
Anti-diluted options related to the purchase of common stock | 0.4 | 1.1 | 0.5 |
Earnings Per Share - Denominators of Basic and Diluted EPS Computations (Details) - shares shares in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Weighted-average shares outstanding: | |||
Basic (in shares) | 115.9 | 116.8 | 118.0 |
Common stock equivalents (in shares) | 2.9 | 3.5 | 2.8 |
Diluted (in shares) | 118.8 | 120.4 | 120.8 |
Earnings Per Share - Computation of Basic EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | |||||||||||
Net earnings | $ 183.2 | $ 172.2 | $ 49.9 | $ 76.7 | $ 206.9 | $ 109.1 | $ 62.1 | $ 49.9 | $ 482.1 | $ 427.9 | $ 326.8 |
Basic Weighted-average shares outstanding (in shares) | 115.9 | 116.8 | 118.0 | ||||||||
Basic EPS (in dollars per share) | $ 1.59 | $ 1.49 | $ 0.43 | $ 0.66 | $ 1.76 | $ 0.93 | $ 0.53 | $ 0.43 | $ 4.16 | $ 3.66 | $ 2.77 |
Earnings Per Share - Computation of Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | |||||||||||
Net earnings | $ 183.2 | $ 172.2 | $ 49.9 | $ 76.7 | $ 206.9 | $ 109.1 | $ 62.1 | $ 49.9 | $ 482.1 | $ 427.9 | $ 326.8 |
Diluted Weighted-average shares outstanding (in shares) | 118.8 | 120.4 | 120.8 | ||||||||
Diluted EPS (in dollars per share) | $ 1.55 | $ 1.45 | $ 0.42 | $ 0.64 | $ 1.72 | $ 0.90 | $ 0.52 | $ 0.42 | $ 4.06 | $ 3.56 | $ 2.70 |
Interest Expense, Net - Components of Interest Expense, Net (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Other Income and Expenses [Abstract] | |||
Interest expense on borrowings | $ (45.9) | $ (42.4) | $ (44.7) |
Interest income | (4.2) | (3.8) | (2.0) |
Interest expense, net | $ (41.8) | $ (38.6) | $ (42.7) |
Acquisitions - Allocation of Purchase Price (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jul. 31, 2016 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 1,500.0 | $ 1,254.9 | ||
NACC | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable, net | $ 89.1 | |||
Other current assets | 19.5 | |||
Property, plant and equipment | 45.0 | |||
Intangible assets | $ 218.3 | 218.3 | ||
Goodwill | $ 135.7 | 135.7 | ||
Other non-current assets | 1.6 | |||
Accounts payable | (14.3) | |||
Accrued expenses and other current liabilities | (62.9) | |||
Deferred taxes | (21.9) | |||
Deferred revenue | (1.1) | |||
Other long term liabilities | (2.9) | |||
Consideration paid, net of cash acquired | $ 406.2 |
Acquisitions - Pro Forma Information (Details) - NACC - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Business Acquisition [Line Items] | ||
Revenues | $ 4,142.6 | $ 4,059.3 |
Net earnings | $ 335.6 | $ 312.4 |
Basic earnings per share (in dollars per share) | $ 2.84 | $ 2.64 |
Diluted earnings per share (in dollars per share) | $ 2.78 | $ 2.57 |
Fair Value of Financial Instruments - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis - Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | ||
MMDA account balances (less than in 2017) | $ 68.1 | $ 86.8 |
MMDA Account | ||
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | ||
MMDA account balances (less than in 2017) | $ 30.1 | $ 28.4 |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying amount of non-marketable securities | $ 12.9 | $ 7.3 |
Fair Value of Financial Instruments - Schedule of Changes in Level 3 Financial Liabilities (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 18.6 | $ 6.7 |
Additional contingent consideration incurred | 7.9 | 13.5 |
Net increase (decrease) in contingent consideration liability | 3.6 | (1.1) |
Foreign currency impact on contingent consideration liability | (0.6) | 0.2 |
Payments | (1.0) | (0.7) |
Ending balance | 28.4 | $ 18.6 |
Estimate of Fair Value Measurement | Level 3 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value asset impairment | $ 1.1 |
Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment at Cost and Accumulated Depreciation (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 612.9 | $ 596.3 |
Less: Accumulated depreciation | (423.9) | (392.2) |
Property, plant and equipment, net | 189.0 | 204.1 |
Land and buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2.6 | 2.6 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 435.6 | 432.1 |
Furniture, leaseholds and other | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 174.6 | $ 161.5 |
Property, Plant and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Property, Plant and Equipment [Abstract] | |||
Reduction in accumulated depreciation | $ (32.8) | $ (40.3) | |
Depreciation expense for Property, plant and equipment | $ 65.8 | $ 63.4 | $ 53.5 |
Goodwill and Intangible Assets, Net - Schedule of Changes in Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill [Roll Forward] | ||||
Goodwill, gross | $ 1,254.9 | $ 1,159.3 | ||
Transfers | $ 0.0 | 0.0 | ||
Transfers (a) | 247.7 | 88.2 | ||
Fair value adjustments (b) | 7.4 | 0.0 | ||
Fair value adjustments (b) | (10.0) | 7.4 | ||
Foreign currency translation and other | 0.0 | 0.0 | ||
Goodwill | 1,500.0 | 1,254.9 | ||
Investor Communication Solutions | ||||
Goodwill [Roll Forward] | ||||
Goodwill, gross | 884.4 | 821.0 | ||
Transfers | $ (38.7) | 0.0 | (38.7) | |
Transfers (a) | 27.3 | 88.2 | ||
Fair value adjustments (b) | 7.4 | 0.0 | ||
Fair value adjustments (b) | (3.2) | 13.9 | ||
Foreign currency translation and other | 0.0 | 0.0 | ||
Goodwill | 915.9 | 884.4 | ||
Global Technology and Operations | ||||
Goodwill [Roll Forward] | ||||
Goodwill, gross | 370.5 | $ 338.4 | ||
Transfers | 0.0 | 38.7 | ||
Transfers (a) | 220.4 | 0.0 | ||
Fair value adjustments (b) | 0.0 | 0.0 | ||
Fair value adjustments (b) | (6.8) | (6.5) | ||
Foreign currency translation and other | 0.0 | 0.0 | ||
Goodwill | $ 584.2 | $ 370.5 |
Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill [Line Items] | |||
Goodwill additions | $ 247,700,000 | $ 88,200,000 | |
Reduction in goodwill | (7,400,000) | 0 | |
Goodwill impairment | $ 0 | 0 | $ 0 |
Change in estimates of projected future variables that has no impact on reported value of goodwill, percentage | 10.00% | ||
Reduction in accumulated amortization | $ 200,000 | 36,700,000 | |
Reduction in intangible assets | 200,000 | 36,700,000 | |
Summit | |||
Goodwill [Line Items] | |||
Goodwill additions | 28,900,000 | ||
ActivePath | |||
Goodwill [Line Items] | |||
Goodwill additions | 191,500,000 | ||
FundAssist | |||
Goodwill [Line Items] | |||
Goodwill additions | $ 27,300,000 | ||
NACC | |||
Goodwill [Line Items] | |||
Goodwill additions | 18,500,000 | ||
M&O | |||
Goodwill [Line Items] | |||
Goodwill additions | 28,700,000 | ||
MAL | |||
Goodwill [Line Items] | |||
Goodwill additions | $ 29,200,000 |
Goodwill and Intangible Assets, Net - Useful Lives (Details) |
12 Months Ended |
---|---|
Jun. 30, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 5 years 2 months 12 days |
Acquired software technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 4 years |
Software licenses | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 2 years 4 months 24 days |
Customer contracts and lists | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 6 years 3 months 18 days |
Acquired intellectual property | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 2 years 9 months 18 days |
Other intangibles | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Weighted-Average Remaining Useful Life (Years) | 4 years 3 months 18 days |
Goodwill and Intangible Assets, Net - Amortization of Intangibles (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense for intangible assets | $ 106.8 | $ 100.2 | $ 87.7 |
Goodwill and Intangible Assets, Net - Estimated Amortization Expenses of Intangible Assets (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 128.2 |
2021 | 118.5 |
2022 | 95.1 |
2023 | 76.0 |
2024 | 61.2 |
Thereafter | $ 77.2 |
Other Non-Current Assets - Schedule of Other Non-Current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jul. 01, 2018 |
Jun. 30, 2018 |
---|---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Deferred client conversion and start-up costs | $ 254.7 | $ 169.5 | |
Deferred sales commissions costs | 95.5 | 0.0 | |
Contract assets | 47.5 | $ 35.5 | 16.5 |
Deferred data center costs | 29.0 | 35.0 | |
Long-term investments | 100.4 | 80.3 | |
Long-term broker fees | 35.3 | 28.7 | |
Other | 30.6 | 30.5 | |
Total | $ 593.1 | $ 360.5 |
Other Non-Current Assets - Additional Information (Details) $ in Millions |
12 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Amortization of deferred costs | $ 65.7 |
Payables and Accrued Expenses - Components of Payables and Accrued Expenses (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accounts payable | $ 133.7 | $ 156.2 |
Employee compensation and benefits | 232.2 | 233.2 |
Accrued broker fees | 87.0 | 85.2 |
Accrued taxes | 68.9 | 20.3 |
Accrued dividend payable | 55.4 | 42.5 |
Managed services administration fees | 53.1 | 55.3 |
Customer deposits | 34.8 | 39.2 |
Other | 46.6 | 39.1 |
Total | $ 711.7 | $ 671.0 |
Borrowings - Future Principal Payments on Outstanding Debt (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2020 | $ 0.0 |
2021 | 400.0 |
2022 | 0.0 |
2023 | 0.0 |
2024 | 575.7 |
Thereafter | 500.0 |
Total | $ 1,475.7 |
Stock-Based Compensation - Assumptions Used to Determine Fair Values of Stock Option Grants (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Graded Vesting | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.50% | 2.70% | 2.10% |
Dividend yield | 2.00% | 1.60% | 2.00% |
Weighted-average volatility factor | 26.00% | 23.80% | 23.10% |
Weighted-average expected life (in years) | 5 years 10 months 24 days | 6 years 6 months | 6 years 6 months |
Weighted-average fair value (in dollars) | $ 22.12 | $ 22.16 | $ 13.74 |
Cliff Vesting | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.70% | ||
Dividend yield | 1.60% | ||
Weighted-average volatility factor | 23.80% | ||
Weighted-average expected life (in years) | 6 years | ||
Weighted-average fair value (in dollars) | $ 21.65 |
Employee Benefit Plans - Defined Contribution Savings Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Contribution Saving Plan costs recorded | $ 37.8 | $ 36.3 | $ 37.0 |
Domestic Plan | 401(k) savings plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Contribution Saving Plan costs recorded | 35.5 | 34.4 | 35.2 |
Domestic Plan | ERSP | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Defined Contribution Saving Plan costs recorded | $ 2.3 | $ 1.9 | $ 1.8 |
Employee Benefit Plans - Defined Benefit Pension Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Benefit expense | $ 4.4 | $ 4.9 | $ 4.3 |
Benefit obligation | 50.8 | 42.8 | 39.7 |
SORP | Supplemental Employee Retirement Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Benefit expense | 3.9 | 4.3 | 3.6 |
Benefit obligation | 45.5 | 38.3 | 35.4 |
SERP | Supplemental Employee Retirement Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Benefit expense | 0.5 | 0.6 | 0.7 |
Benefit obligation | $ 5.4 | $ 4.5 | $ 4.3 |
Employee Benefit Plans - Other Post-retirement Benefit Plan (Details) - Executive Retiree Health Insurance Plan - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Defined benefit plan, maximum age eligibility | 65 years | ||
Benefit expense | $ 0.5 | $ 0.4 | $ 0.3 |
Benefit obligation | $ 5.2 | $ 5.3 | $ 4.9 |
Employee Benefit Plans - Other Post-employment Benefit Obligations (Details) - The Gratuity Plan - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Benefit expense | $ 1.3 | $ 1.0 | $ 1.3 |
Benefit obligation | $ 5.8 | $ 5.0 | $ 4.1 |
Income Taxes - Earnings from Continuing Operations before Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings before income taxes: | |||||||||||
U.S. | $ 526.4 | $ 450.0 | $ 398.6 | ||||||||
Foreign | 80.8 | 111.1 | 89.5 | ||||||||
Earnings before income taxes | $ 230.0 | $ 223.6 | $ 64.3 | $ 89.3 | $ 258.0 | $ 125.2 | $ 103.5 | $ 74.3 | $ 607.3 | $ 561.0 | $ 488.1 |
Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Current: | |||
U.S. Domestic | $ 88.8 | $ 89.4 | $ 138.2 |
Foreign | 24.7 | 43.4 | 24.8 |
State | 15.1 | 9.6 | 13.0 |
Total current | 128.7 | 142.4 | 176.0 |
Deferred: | |||
U.S. Domestic | 2.2 | (13.6) | (7.9) |
Foreign | (2.8) | 4.9 | (4.2) |
State | (2.9) | (0.6) | (2.5) |
Total deferred | (3.5) | (9.3) | (14.7) |
Total Provision for income taxes | $ 125.2 | $ 133.1 | $ 161.4 |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2019 |
Jun. 30, 2018 |
---|---|---|
Classification: | ||
Long-term deferred tax assets (included in Other non-current assets) | $ 5.5 | $ 9.2 |
Long-term deferred tax liabilities | (86.7) | (57.9) |
Deferred tax assets: | ||
Accrued expenses not currently deductible | 3.2 | 3.5 |
Depreciation | 0.0 | 2.2 |
Compensation and benefits not currently deductible | 57.6 | 51.7 |
Net operating and capital losses | 11.1 | 12.1 |
Tax credits | 7.5 | 5.2 |
Other | 6.1 | 6.6 |
Total deferred tax assets | 85.6 | 81.3 |
Less: Valuation allowances | (3.3) | (3.8) |
Deferred tax assets, net | 82.2 | 77.6 |
Deferred tax liabilities: | ||
Goodwill and identifiable intangibles | 100.9 | 93.4 |
Depreciation | 10.1 | 0.0 |
Net deferred expenses | 33.6 | 15.5 |
Unremitted earnings | 12.2 | 11.1 |
Other | 6.8 | 6.2 |
Deferred tax liabilities | 163.5 | 126.3 |
Net deferred tax liabilities | $ (81.3) | $ (48.8) |
Income Taxes - Summary of Activity Related to Unrecognized Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 22.8 | $ 18.7 | $ 18.2 |
Gross increase related to prior period tax positions | 17.3 | 3.5 | 0.6 |
Gross increase related to current period tax positions | 2.8 | 3.0 | 2.7 |
Gross decrease related to prior period tax positions | (2.6) | (2.4) | (2.8) |
Ending balance | $ 40.2 | $ 22.8 | $ 18.7 |
Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements - Data Center Agreements - Total Expenses (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Loss Contingencies [Line Items] | |||
Total expenses | $ 106.1 | $ 107.5 | $ 104.8 |
IT Services Agreement | |||
Loss Contingencies [Line Items] | |||
Total expenses | 100.0 | 101.2 | 99.3 |
EU IT Services Agreement | |||
Loss Contingencies [Line Items] | |||
Total expenses | $ 6.1 | $ 6.3 | $ 5.5 |
Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements - Data Center Agreements - Amortization Expense of Capitalized Costs (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Loss Contingencies [Line Items] | |||
Amortization of capitalized costs | $ 5.8 | $ 5.8 | $ 5.0 |
IT Services Agreement | |||
Loss Contingencies [Line Items] | |||
Amortization of capitalized costs | 5.3 | 5.3 | 4.6 |
EU IT Services Agreement | |||
Loss Contingencies [Line Items] | |||
Amortization of capitalized costs | $ 0.5 | $ 0.5 | $ 0.4 |
Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements - Contractual Obligations (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Data center expenses | $ 106.1 | $ 107.5 | $ 104.8 |
Facilities and equipment leases | 49.0 | 50.4 | 50.3 |
Software license agreements | 37.3 | 33.7 | 32.0 |
Software/hardware maintenance agreements | 65.0 | 63.5 | 63.2 |
Total expenses | $ 257.4 | $ 255.0 | $ 250.3 |
Contractual Commitments, Contingencies, and Off-Balance Sheet Arrangements - Schedule of Minimum Commitments Related to Technology Service Agreement (Details) $ in Millions |
Jun. 30, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 117.6 |
2021 | 111.1 |
2023 | 102.5 |
2023 | 96.4 |
2024 | 91.4 |
Thereafter | 204.4 |
Total | $ 723.5 |
Financial Data by Segment - Schedule of Revenues and Assets by Geographic Area (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 1,211.2 | $ 1,224.8 | $ 953.4 | $ 972.8 | $ 1,320.4 | $ 1,071.9 | $ 1,012.8 | $ 924.8 | $ 4,362.2 | $ 4,329.9 | $ 4,142.6 |
Assets | 3,880.7 | 3,304.7 | 3,880.7 | 3,304.7 | 3,149.8 | ||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 3,913.8 | 3,907.2 | 3,771.9 | ||||||||
Assets | 2,870.2 | 2,661.9 | 2,870.2 | 2,661.9 | 2,579.1 | ||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 279.5 | 273.6 | 251.4 | ||||||||
Assets | 504.8 | 216.7 | 504.8 | 216.7 | 237.9 | ||||||
United Kingdom | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 127.5 | 118.7 | 92.1 | ||||||||
Assets | 277.0 | 257.8 | 277.0 | 257.8 | 238.1 | ||||||
Other | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 41.4 | 30.4 | 27.3 | ||||||||
Assets | $ 228.7 | $ 168.3 | $ 228.7 | $ 168.3 | $ 94.7 |
Quarterly Financial Results (Unaudited) - Summary of Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 1,211.2 | $ 1,224.8 | $ 953.4 | $ 972.8 | $ 1,320.4 | $ 1,071.9 | $ 1,012.8 | $ 924.8 | $ 4,362.2 | $ 4,329.9 | $ 4,142.6 |
Gross profit | 399.6 | 377.5 | 219.4 | 233.8 | 450.9 | 269.3 | 243.5 | 198.8 | 1,230.2 | 1,162.5 | |
Operating income | 240.8 | 233.6 | 78.2 | 100.1 | 266.2 | 130.8 | 115.9 | 85.2 | 652.7 | 598.1 | |
Earnings before income taxes | 230.0 | 223.6 | 64.3 | 89.3 | 258.0 | 125.2 | 103.5 | 74.3 | 607.3 | 561.0 | 488.1 |
Net earnings | $ 183.2 | $ 172.2 | $ 49.9 | $ 76.7 | $ 206.9 | $ 109.1 | $ 62.1 | $ 49.9 | $ 482.1 | $ 427.9 | $ 326.8 |
Basic EPS (in dollars per share) | $ 1.59 | $ 1.49 | $ 0.43 | $ 0.66 | $ 1.76 | $ 0.93 | $ 0.53 | $ 0.43 | $ 4.16 | $ 3.66 | $ 2.77 |
Diluted EPS (in dollars per share) | $ 1.55 | $ 1.45 | $ 0.42 | $ 0.64 | $ 1.72 | $ 0.90 | $ 0.52 | $ 0.42 | $ 4.06 | $ 3.56 | $ 2.70 |
Subsequent Event (Details) - Subsequent Event - $ / shares |
Jul. 31, 2019 |
Jul. 30, 2019 |
---|---|---|
Quarterly Dividend Declared | ||
Subsequent Event [Line Items] | ||
Increase in dividends payable (per share) | $ 0.055 | |
Dividends payable (per share) | 0.540 | |
Annual Dividend Declared | ||
Subsequent Event [Line Items] | ||
Dividends payable (per share) | $ 2.16 | $ 1.94 |
Schedule II-Valuation and Qualifying Accounts [Schedule] (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | $ 2.7 | $ 3.7 | $ 2.3 |
Additions charged to costs and expenses | 1.1 | 1.4 | 2.3 |
Deductions | (1.2) | (2.4) | (0.9) |
Balance at end of period | 2.6 | 2.7 | 3.7 |
Deferred tax valuation allowance | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at beginning of period | 3.8 | 9.3 | 9.8 |
Additions charged to costs and expenses | 0.0 | 0.0 | 0.0 |
Deductions | (0.4) | (5.5) | (0.5) |
Balance at end of period | $ 3.3 | $ 3.8 | $ 9.3 |
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