moving

money
for
better

2011 Annual Report

W ith strong brand awareness, compliance

capabilities, and a global Agent network,
Western Union has the assets, capability and
drive to be a truly customer-centric organization
focused on the needs of the underserved.
Hikmet Ersek

2011 was a good year for Western Union

with many strong accomplishments, both in
business performance and positioning our
company for future growth.
Hikmet Ersek

and focused strategic partnerships to make life better for

consumers and better for businesses.
In order to make this vision become a reality, we have organized
our business around three key growth areas:
Global Consumer Financial Services, which includes our
consumer money transfer and bill payments businesses;
Western Union Business Solutions, our business-to-business
payments offering; and
Western Union Ventures, which includes our digital and
stored value initiatives, with a focus on developing new
products, services and partnerships.
Highlights

fellow
shareholders,
I am very pleased to report that 2011 was a good year for Western
Union with many strong accomplishments, both in business
performance and positioning our company for future growth.
The Western Union you know is a company that moves cash
around the world quickly and reliably through nearly half a million
locationsfrom global banks to local corner storesand
connects people and places that others cannot.
This businessconsumer money transferis a great business.
Its a growing and very profitable one and it will continue to be
an important business. However, the Western Union you know
is also evolving to capture additional market opportunities.

In 2011, Western Union delivered its highest revenue growth rate

since 2008, generating revenue of $5.5 billion and $1.2 billion in
cash flow from operations. We continue to emphasize shareholder
value as we returned $1 billion to shareholders through dividends
and stock repurchases.
Despite some global economic challenges, we experienced solid
growth in each of our Global Financial Services regions in 2011.
In Europe, specifically, we advanced our strategy of being
closer to the consumer and optimizing our operating model by
completing the Angelo Costa and Finint super-agent acquisitions.
Our focus is on accelerating network expansion to reach yet more
consumers by expanding our global sales force and continuing
to pursue new Agents and new Agent categories. Another
important growth area is Account Based Money Transfer and
expanding the availability of our services through ATMs, which
we are achieving through our existing and new relationships
with banks.
Continue reading letter >>

Agent Locations

Our long-term aspirationto be the premier financial service

500 new products,
provider for the underservedmeans finding
capabilities, technologies and partnerships to better serve not
only our current customers, but potentially two billion people with
400
unmet financial service needs. It also means meeting the evolving
needs of underserved businessesmostly small and medium
enterprisesto make cross-border payments,300allowing them to
grow, create jobs and better compete in the global economy.
Western Union is evolving and combining its 200existing assets
including our preeminent brand and far and wide global network
with the web, mobile infrastructure, stored 100
value capabilities

In Western Union Business Solutions, we completed the

acquisition of Travelex Global Business Payments (TGBP),
which now makes Western Union one of the leading non-bank
providers of cross-border payment services for small and
medium-sized businesses.
With the TGBP acquisition, our focus is to complete the integration and grow the business. Small business customers who
want speed, accuracy and transparency in their cross-border
payments are often underserved by providers. We believe the
Business Solutions value proposition offers superior customer
service and feature-rich capabilities, and has meaningful
growth opportunities.
In Western Union Ventures, our electronic channels business
continued to advance in 2011 with 35 percent revenue growth,
demonstrating that combining our retail network with digital send
and receive optionsweb, mobile and stored valueis helping
to meet consumer needs in the marketplace. We opened a
digital office in San Francisco and are investing in technology
and people to improve the consumer experience in our digital
offering. We believe this improved infrastructure will allow
Western Union to expand this business in the next several years.

Funds Returned
to Shareholders
($ in millions)
share repurchases
dividends

Hikmet Ersek, President, Chief Executive Officer and Director, The Western Union Company,
at the closing bell of the New York Stock Exchange.

Partner of Choice
Also in 2011, we signed a global agreement with MasterCard to
distribute prepaid cards by linking MasterCards processing
network with Western Unions distribution networka truly
powerful combination. Add to this our new or expanded partnerships with Banco Bradesco, SA in Brazil, Banca Intesa
Sanpaolo in Italy, and PayPoint in the United Kingdom and
Romania for sending and receiving money transfers and Etisalat
Group and Safaricom for mobile money transfer services and
the emerging understanding of Western Union as a partner of
choice becomes clear.
Focus on the Customer
As we move forward, Western Union is committed to continuing
to develop its core business through an unrelenting focus on
satisfying the needs of the customer. We will accomplish this
through the dedication of our Agents and our 8,000 colleagues,
who are key to the successful implementation of our plans.
With strong brand awareness, compliance capabilities, and a
global Agent network, Western Union has the assets, capability
and drive to be a truly customer-centric organization focused on
the needs of the underserved.
I look forward to continuing to advance our business in 2012 and
beyond for the mutual benefit of our customers, our communities,
our Agents and our shareholders.

Hikmet Ersek
President, Chief Executive Officer and Director

Shared Value
at Western Union

We believe access to financial services is a necessity.

Western Union moves money reliably and quickly to almost
every countryand we do it for extraordinary people
seeking a better life and businesses that generate jobs
and opportunity.
Remittances contribute to economic stability around the
world, by serving as a critical source of foreign capital in
many countries. Western Union is a leader in this $416
billion annual cross-border flow1 of resources, completing
226 million consumer-to-consumer transactions worldwide,
moving $ 81 billion of principal between consumers, and
completing 425 million business payments in 2011.
Around the world, Western Union is at the intersection of
emerging markets, unmet financial needs and rapidlyevolving technologies. For example, were partnering with
telecommunications companies to offer mobile money
transfer services in far reaches of the world where financial
services werent previously available.
When we deploy new ways to send and receive fundslike
mobile money transferswe connect people with economic
opportunity. At the same time, we expand our reach with
customers. Western Unions innovative services contribute

Educating the
Next Generation

to our financial strength and promote the financial wellbeing of the people and businesses we serve. Its shared
value in action.
Our business changes lives for the better. So does the
Western Union Foundation: since 2001, the Foundation has
granted $78 million to more than 2,000 nonprofit, nongovernmental organizations in more than 100 countries. Through
these funds and employee volunteers, we support education
that prepares people to enter the workforce; entrepreneurship
programs that create jobs through small business mentoring
and microloans; and financial literacy programs that help
people convert wages to wealth for a better future.
We also contribute vital money where and when its needed
most. For example, since the 2010 earthquake, the company
and Foundation have provided more than $7 million in
grants and in-kind support for Haitian recovery.
Western Union helps improve millions of lives around
the globe, facilitates the global economy and moves money
for better.

AITE, Cross-Border Consumer Money Transfers: An Update July 2011

Helping Small
Business Thrive

Aiding Disaster
Recovery

Strategic Focus

moving
money
for
better

Global Consumer
Financial Services

Business
Solutions

Our Service Offerings

Our Service Offerings

Consumer-to-consumer money
transfers
Consumer bill payments
Our Priorities

Transition to customer-centric
organization
Increase loyalty, add new
customers

Ventures
Our Service Offerings

Electronic money transfers

(westernunion.com, mobile)
Prepaid/stored value

Our Priorities

Integrate Travelex Global Business

Payments
E xpand sales resources,
vertical and online partners
Grow, increase market share

Accelerate network expansion

Our Priorities

Build world-class digital business

Invest in people, technology to
enhance the customer experience
Grow westernunion.com
Develop new products, services
4

Cross-border business payments

for small and medium sized
enterprises

Form 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934
For the fiscal year ended: December 31, 2011
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-32903

THE WESTERN UNION COMPANY

(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)

20-4531180
(I.R.S. Employer Identification No.)

THE WESTERN UNION COMPANY

12500 East Belford Avenue
Englewood, Colorado 80112
(Address of principal executive offices)
Registrants telephone number, including area code: (866) 405-5012
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which registered
Title of each class
Common Stock, $0.01 Par Value
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
As of June 30, 2011, the aggregate market value of the registrants common stock held by non-affiliates of the registrant was
approximately $12.6 billion based on the closing sale price of $20.03 of the common stock as reported on the New York Stock Exchange.
As of February 17, 2012, 620,333,912 shares of the registrants common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants proxy statement for the 2011 annual meeting of stockholders are incorporated into Part III of this Annual
Report on Form 10-K.

INDEX
Page
Number

PART I
Item 1.

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A.

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22

Item 1B.

Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

Item 2.

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40

Item 3.

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40

Item 4.

Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

42

Item 6.

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44

Item 7.

Managements Discussion and Analysis of Financial Condition and Results of

Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . .

80

Item 8.

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial

Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

150

Item 9A.

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

150

Item 9B.

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

150

Item 10.

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151

Item 11.

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151

Item 13.

Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . .

151

Item 14.

Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

151

Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

152

PART II
Item 5.

PART III

PART IV
Item 15.

PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and materials we have filed or will file with the Securities and Exchange
Commission (the SEC) (as well as information included in our other written or oral statements) contain or will
contain certain statements that are forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially
from those expressed in, or implied by, our forward-looking statements. Words such as expects, intends,
anticipates, believes, estimates, guides, provides guidance, provides outlook and other similar
expressions or future or conditional verbs such as will, should, would and could are intended to identify
such forward-looking statements. Readers of this Annual Report on Form 10-K of The Western Union Company
(the Company, Western Union, we, our or us) should not rely solely on the forward-looking
statements and should consider all uncertainties and risks throughout this Annual Report on Form 10-K,
including those described under Risk Factors. The statements are only as of the date they are made, and the
Company undertakes no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in
our forward-looking statements include the following:
Events Related to Our Business and Industry

deterioration in consumers and clients confidence in our business, or in money transfer and payment
service providers generally;

changes in general economic conditions and economic conditions in the regions and industries in which
we operate, including global economic downturns and financial market disruptions;

political conditions and related actions in the United States and abroad which may adversely affect our
business and economic conditions as a whole;

interruptions of United States government relations with countries in which we have or are implementing
material agent contracts;

changes in, and failure to manage effectively exposure to, foreign exchange rates, including the impact of
the regulation of foreign exchange spreads on money transfers and payment transactions;

changes in immigration laws, interruptions in immigration patterns and other factors related to migrants;

our ability to adapt technology in response to changing industry and consumer needs or trends;

our failure to develop and introduce new services and enhancements, and gain market acceptance of such
services;

mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the
realization of anticipated financial benefits from these acquisitions;

decisions to downsize, sell or close units, or to transition operating activities from one location to another
or to third parties, particularly transitions from the United States to other countries;

decisions to change our business mix;

3

failure to manage credit and fraud risks presented by our agents, clients and consumers or
non-performance by our banks, lenders, other financial services providers or insurers;

adverse movements and volatility in capital markets and other events which affect our liquidity, the
liquidity of our agents or clients, or the value of, or our ability to recover our investments or amounts
payable to us;

any material breach of security or safeguards of or interruptions in any of our systems;

our ability to attract and retain qualified key employees and to manage our workforce successfully;

our ability to maintain our agent network and business relationships under terms consistent with or more
advantageous to us than those currently in place;

adverse rating actions by credit rating agencies;

failure to compete effectively in the money transfer industry with respect to global and niche or corridor
money transfer providers, banks and other money transfer services providers, including
telecommunications providers, card associations, card-based payment providers and electronic and
Internet providers;

our ability to protect our brands and our other intellectual property rights;

our failure to manage the potential both for patent protection and patent liability in the context of a rapidly
developing legal framework for intellectual property protection;

changes in tax laws and unfavorable resolution of tax contingencies;

cessation of various services provided to us by third-party vendors;

material changes in the market value or liquidity of securities that we hold;

restrictions imposed by our debt obligations;

significantly slower growth or declines in the money transfer market and other markets in which we
operate;

changes in industry standards affecting our business;

Events Related to Our Regulatory and Litigation Environment

the failure by us, our agents or their subagents to comply with laws and regulations designed to detect and
prevent money laundering, terrorist financing, fraud and other illicit activity;

changes in United States or foreign laws, rules and regulations including the Internal Revenue Code,
governmental or judicial interpretations thereof and industry practices and standards;

liabilities resulting from a failure of our agents or subagents to comply with laws and regulations;

increased costs due to regulatory initiatives and changes in laws, regulations and industry practices and
standards affecting our agents;
4

liabilities and unanticipated developments resulting from governmental investigations and consent
agreements with, or enforcement actions by, regulators, including a failure to comply with the settlement
agreement with the State of Arizona;

the impact on our business of the Dodd-Frank Wall Street Reform, the rules promulgated there-under and
the creation of the Consumer Financial Protection Bureau;

liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs,
expenses, settlements and judgments;

failure to comply with regulations regarding consumer privacy and data use and security;

effects of unclaimed property laws;

failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of
our regulators worldwide;

changes in accounting standards, rules and interpretations;

Other Events

adverse consequences from our spin-off from First Data Corporation;

catastrophic events; and

managements ability to identify and manage these and other risks.

ITEM 1. BUSINESS
Overview
The Western Union Company (the Company, Western Union, we, our or us) is a leader in global
money movement and payment services, providing people and businesses with fast, reliable and convenient ways
to send money and make payments around the world. The Company was incorporated in Delaware as a whollyowned subsidiary of First Data Corporation (First Data) on February 17, 2006, and on September 29, 2006,
First Data distributed all of its money transfer and consumer payments businesses and its interest in a Western
Union money transfer agent, as well as its related assets, including real estate, through a tax-free distribution to
First Data shareholders (Spin-off) through this previously owned subsidiary.
The Western Union brand is globally recognized and represents speed, reliability, trust and convenience. As
people move and travel around the world, they are able to use the services of a well recognized brand to transfer
funds. Our consumer-to-consumer money transfer service enables people to send money around the world in
minutes. As of December 31, 2011, our services were available through a global network of more than 485,000
agent locations in more than 200 countries and territories, with approximately 90% of those locations outside of
the United States. Each location in our agent network is capable of providing one or more of our services, with
the majority offering a Western Union branded service. As of December 31, 2011, approximately 70% of our
locations had experienced money transfer activity in the previous 12 months.
We also provide consumers and businesses with flexible and convenient options for making one-time or
recurring bill payments, including business-to-business payment transactions, which are primarily cross-border,
cross-currency transactions, in our global business payments segment. In November 2011, we acquired the
business-to-business payment business of Travelex Holdings Limited, known as Travelex Global Business
Payments (TGBP). Although the majority of the revenue in our global business payments segment was
generated in the United States, international expansion and other key strategic initiatives, including TGBP, have
resulted in international revenue continuing to increase in this segment.
We believe that brand strength, size and reach of our global network, and convenience and reliability for our
customers have been important to the growth of our business. As we continue to meet the needs of our customers
for fast, reliable and convenient global money movement and payment services, we are also working to enhance
our services and provide our consumer and business clients with access to an expanding portfolio of payment and
other financial services.
The majority of our revenue comes from fees that consumers pay when they send money or make payments. In
certain money transfer and payment services transactions involving different send and receive currencies, we
generate revenue based on the difference between the exchange rate set by us to the consumer or business and the
rate at which we or our agents are able to acquire the currency.
Our Segments
We manage our business based on the customers we serve and the type of services we offer. Each segment
addresses a different combination of customer needs, distribution networks and services. Our segments are
consumer-to-consumer and global business payments. Our other businesses not included in these segments
primarily consist of money order and prepaid services available through a network of third-party agents.

The table below presents the components of our consolidated revenue:

2011

2010

2009

Consumer-to-consumer (a)
EMEASA (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APAC (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43%
32%
9%

44%
31%
9%

45%
32%
8%

Total consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84%
14%
2%

84%
14%
2%

85%
14%
1%

100%

100%

100%

(a) The consumer-to-consumer geographic split is determined based upon the region where the money transfer
is initiated and the region where the money transfer is paid. For transactions originated and paid in different
regions, we split the revenue between the two regions, with each region receiving 50%. For money transfers
initiated and paid in the same region, 100% of the revenue is attributed to that region.
(b) Represents the Europe, Middle East, Africa and South Asia region of our consumer-to-consumer segment,
including India.
(c) Represents the Americas region of our consumer-to-consumer segment, which includes North America,
Central America, the Caribbean and South America.
(d) Represents the Asia Pacific region of our consumer-to-consumer segment.
Financial information relating to our international and domestic revenues and long-lived assets for all of our
segments is set forth in Note 17 to our Consolidated Financial Statements in Item 8 of Part II.
For additional details regarding our consumer-to-consumer and global business payments segments, including
financial information regarding our international and United States operations, see Item 7 of Part II and our
consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on
Form 10-K.
See Risk Factors for a discussion of certain risks relating to our foreign operations.
Consumer-to-Consumer Segment
Individual money transfers from one consumer to another are the core of our business, representing 84% of our
total consolidated revenues for 2011. We offer consumers a variety of ways to send money. Although most
remittances are sent from one of our more than 485,000 agent locations worldwide, in some countries we offer
the ability to send money over the Internet or phone using a credit or debit card, or through a withdrawal directly
from a consumers bank account or mobile wallet. All agent locations accept cash to initiate a transaction, and
some also accept debit cards. We offer consumers several options to receive a money transfer. While the vast
majority of transfers are paid in cash at agent locations, in some places we offer payout directly to the receivers
bank account, to a stored-value card, to a mobile phone or through the issuance of a money order.
Operations
Our revenue is derived primarily from transaction fees charged to consumers to transfer money. In money
transfers involving different send and receive currencies, we also generate revenue based on the difference
between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire
currency.
7

In a typical money transfer transaction, a consumer goes to one of our agent locations, completes a form
specifying, among other things, the name and address of the recipient, and delivers it, along with the principal
amount of the money transfer and the fee, to the agent. Certain of these processes are streamlined for our
customers who use our loyalty card. This sending agent enters the transaction information into our money
transfer system and the funds are made available for payment, usually within minutes. The recipient enters an
agent location in the designated receiving area or country, presents identification and is paid the transferred
amount. Recipients do not pay a fee (although in limited circumstances, a tax may be imposed by the local
government on the receipt of the money transfer). We determine the fee paid by the sender, which generally is
based on the principal amount of the transaction and the send and receive locations.
We generally pay our agents a commission based on a percentage of revenue. A commission is usually paid to
both the agent that initiated the transaction, the send agent, and the agent that paid the transaction, the receive
agent. For most agents, the costs of providing the physical infrastructure and staff are typically covered by the
agents primary business (e.g., postal services, banking, check cashing, travel and retail businesses), making the
economics of being a Western Union agent attractive. Western Unions global reach and large consumer base
allow us to attract agents we believe to be of high quality.
To complement the convenience offered by our networks global physical locations, in certain countries we
have also made our services available through other channels, as described below under Services.
Over 85% of our consumer-to-consumer transactions involve at least one non-United States location. No
individual country outside the United States accounted for more than approximately 6% of our consolidated
revenue for each of the years ended December 31, 2011, 2010, and 2009. Certain of our agents facilitate a large
number of transactions; however, each individual agent accounted for less than 10% of the segments revenue
during these periods.
Services
We offer money transfer services worldwide. In 2011, the substantial majority of our consumer-to-consumer
transactions were cash money transfers involving our walk-in agent locations around the world. Although
demand for in-person, cash money transfers has historically been the strongest, we offer a number of options for
sending and receiving funds that provide consumers convenience and choice. The different ways consumers can
send or receive money include the following:
Walk-in money transfer service. The substantial majority of our remittances constitute transactions in which
cash is collected by the agent and payment (usually cash) is available for pick-up at another agent location in the
designated receive location, usually within minutes. We also offer convenience to our consumers to initiate a
transaction through the phone using a debit or credit card. To facilitate offering our services at retail locations
that do not have dedicated service staff, we provide goCASHsm in the United States and the United Kingdom, a
money transfer service that lets consumers purchase money transfers at pre-set amounts in-lane, at a cash
register, and then complete the transfer over the phone through a Western Union customer service representative
or through our website. We provide a Cash to Card service that provides consumers an option to direct funds to
a Western Union branded stored-value card in the United States, with the option to have the card delivered
overnight to a consumers home.
Our Next Day delivery option is a money transfer that is available for payment the morning after the money
transfer is sent. This option is available for certain domestic service within the United States, and in select United
States outbound and international corridors. The Next Day delivery service gives our consumers a lower-priced
option for money transfers that do not need to be received within minutes, while still offering the convenience,
reliability and ease-of-use that our consumers expect.

Online money transfer service. Our websites allow consumers to send funds online, generally using a credit or
debit card, for pay-out at most Western Union branded agent locations around the world. As of December 31,
2011, we are now providing online money transfer service in more than 20 countries, allowing consumers in
these countries to send money throughout the world.
Account based money transfer service. This service allows consumers to access Western Union services
electronically, directly from their banks Internet or automated teller machine (ATM) banking service.
Consumers can use their bank account to initiate a Western Union money transfer electronically, without having
to visit a physical Western Union agent location. In the United States, including some United States outbound
corridors, Canada and in other select international corridors, we provide a Direct to Bank service, enabling a
consumer to send a transaction from an agent location directly to a bank account. Globally, we have relationships
with over 80 banks that have agreed to offer one or more of these services, primarily through their online banking
portals.
Mobile money transfer service. Our mobile money transfer service provides consumers in certain countries
with the ability to transfer money to a mobile wallet or bank account. Consumers in selected countries can also
initiate transactions from their mobile phones and send money from mobile wallets or bank accounts. As of
December 31, 2011, there were over 150,000 Western Union agent locations enabled with the technology to
transfer money to a mobile phone.
Money transfer services through electronic channels, which include online, account based, and mobile money
transfer, combined were 3% of consolidated revenue for the year ended December 31, 2011.
Distribution and Marketing Channels
We offer our consumer-to-consumer service to millions of consumers around the world primarily through our
global network of third-party agents in almost every country and territory, with approximately 90% of our agent
locations being located outside of the United States. Our agents facilitate the global distribution and convenience
associated with our Western Union and other brands, which in-turn helps create demand for our services and
helps us to recruit and retain agents. Western Union agents include large networks such as post offices, banks and
retailers and other established organizations that provide other consumer products and services. Many of our
agents have multiple locations. Our agents know the markets they serve and work with our management to
develop business plans for their markets. Many of our agents contribute financial resources to, or otherwise
support, our efforts to market the business. Many agents operate in locations that are open outside of traditional
banking hours, for example on nights and weekends. Our top 40 agents globally have been with us an average of
approximately 16 years and in 2011, these long-standing agents were involved in transactions that generated
approximately 60% of our consumer-to-consumer revenue.
We provide our third-party agents with our multi-currency, real-time money transfer processing systems used
to originate and pay money transfers. We continue to develop our network around the world to optimize send and
receive corridors. Our systems and processes enable our agents to pay money transfers in more than 120
currencies worldwide. Certain of our agents can pay in multiple currencies at a single location. Our agents
provide the physical infrastructure and staff required to complete the transfers. Western Union provides central
operating functions such as transaction processing, settlement, marketing support and customer relationship
management to our agents.
Some of our agents outside the United States manage subagents. We refer to these agents as superagents.
Although our subagents are under contract with these superagents (and not with Western Union directly), the
subagent locations typically have access to similar technology and services as our other agent locations.
Our international agents often customize services as appropriate for their geographic markets. In some
markets, individual agents are independently offering specific services such as stored-value card payout options
9

or Direct to Bank service. We market our services to consumers in a number of ways, directly and indirectly
through our agent partners, leveraging advertising promotional activities, grassroots, digital, and loyalty
programs. Our marketing benefits from feedback from our agents and consumers.
Our marketing strategy includes our global loyalty card program, which is available in a growing number of
countries and territories. As of December 31, 2011, the loyalty card program was available in approximately 80
countries and territories and had almost 18 million active cards, an increase of 2 million cards from
December 31, 2010. The card offers customers faster service at the point-of-sale and, in certain countries and at
westernunion.com, reduced transaction fees or cash back. Loyalty card customers generally initiate more
transactions and have a higher rate of retention than non-carded customers. Over 40% of Western Union branded
consumer-to-consumer transactions are initiated using a loyalty card. The global loyalty card program is one
component of our customer relationship management strategy designed to support and enhance long-term
relationships with our customers. Customer databases supplement these efforts by providing insight on customer
preferences so that we can selectively target customer communications and marketing.
Industry Trends
Over the last several years, except for 2009, the cross-border money transfer industry has experienced growth.
Trends in the cross-border money transfer business tend to correlate to migration trends, global economic
opportunity and related employment levels worldwide. The top four inbound remittance countries in the world
are India, China, Mexico and the Philippines, and cumulatively receive an estimated $130 billion annually
according to Aite Group LLCs (Aite) July 2011 report. Due to the challenging global economy, including low
consumer confidence and high unemployment, the demand for money transfers has softened compared to
historical growth rates. Aite projects cross-border remittance growth of approximately 5% in 2012.
Another significant trend impacting the money transfer industry is the increase in regulation. Regulation in the
United States and elsewhere focuses, in part, on anti-money laundering, anti-terrorist activities and consumer
protection. Regulations require money transfer providers, banks and other financial institutions to develop
systems to prevent, detect, monitor and report certain transactions.
Competition
We face robust competition in the highly-fragmented consumer-to-consumer money transfer industry. We
compete with a variety of remittance providers, including:

Global money transfer providersGlobal money transfer providers allow consumers to send money to a
wide variety of locations, in both their home countries and abroad.

Regional money transfer providersRegional money transfer providers, or niche players, provide the
same services as global money transfer providers, but focus on a smaller group of corridors or services
within one region, such as North America to the Caribbean, Central or South America, or Western Europe
to North Africa.

Banks and postbanksBanks and postbanks of all sizes compete with us in a number of ways, including
bank wire services and card-based services.

Informal networksInformal networks enable people to transfer funds without formal mechanisms and
often without compliance with government reporting requirements. We believe that such networks
comprise a significant share of the market.

Electronic commerceOnline money transfer services allow consumers to send and receive money
electronically using the Internet.
10

Alternative channelsAlternative channels for sending and receiving money include mail and commercial
courier services, money transfers using mobile phones, and card-based options, such as ATM cards and
stored-value cards.

We believe the most significant competitive factors in consumer-to-consumer remittances relate to brand
recognition, trust and reliability, distribution network and channel options, and consumer experience and price.
Global Business Payments Segment
In our global business payments segment, we provide fast and convenient options to make one-time or
recurring payments for consumers or businesses to other businesses. We allow consumers to make payments to a
variety of organizations, including utilities, auto finance companies, mortgage servicers, financial service
providers, governmental agencies and other businesses. We also provide business-to-business payment services,
primarily for cross-border, cross-currency transactions. We can process payments using the customers credit
card, debit card, bank account or cash depending on the service selected. We believe our business customers who
receive payments through our services benefit from their relationship with Western Union as it provides them
with real-time or near real-time posting of their customer payments. In certain circumstances, our relationships
with business customers also provide them with an additional source of income, as well as reduced expenses for
cash and check handling.
Operations
Our revenue in this segment is derived primarily from transaction fees paid by the customer. The consumer
payments fees are typically less than the fees charged in our consumer-to-consumer segment. Consumers may
make a cash payment at an agent or owned location and businesses may remit a check, electronic or wire transfer
in order to initiate a transaction. In order to make an electronic payment, consumers or businesses initiate a
transaction over the phone or the Internet which we process through credit card, debit card, automated clearing
house (ACH) or wire transfer, depending on the service selected. Our Internet services are provided through
our own websites or, in certain circumstances, in partnership with other websites for which we act as the service
provider. In cross-border transactions involving different currencies, we primarily generate revenue based on the
difference between the exchange rate set by us to the business or consumer and the rate at which we are able to
acquire currency. In addition, we generate revenue from upfront enrollment fees received for our Equity
Accelerator service, and we earn investment income on funds received from services sold in advance of
settlement with payment recipients.
While we continue to pursue further international expansion of our offerings in this segment, the majority of
the segments revenue was generated in the United States during all periods presented. However, international
expansion, including the TGBP acquisition, and other key strategic initiatives have resulted in international
revenue continuing to increase in this segment.
Services
Our global business payments services are available through a variety of products which give customers
choices as to the payment channel and method of payment, and include the following:
Western Union Business Solutions (Business Solutions). Business Solutions offers business-to-business
payment solutions, primarily for cross-border, cross-currency transactions. This business also includes TGBP.
These payment transactions are conducted through various channels including the phone and Internet. Business
Solutions serves as the service provider for other partner websites and also operates its own website. Payments
are made predominately through wire transfers and ACH, but in some situations, checks are remitted. The
majority of Business Solutions business relates to exchanges of currency at the spot rate which enables
customers to make cross-currency payments. In addition, in certain countries, we write foreign currency forward
and option contracts for customers to facilitate future payments.
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Western Union Payments. The Western Union Payments service, formerly Quick Collect, allows consumers
to send funds to businesses and government agencies across the United States and Canada, using cash and, in
certain locations, a debit card. This service is offered primarily at Western Union agent locations, but may be
provided via our westernunion.com website in limited situations. This service is also offered in select
international locations under the service mark Quick PaySM. We also offer Quick Cash, a cash disbursement
service used by businesses and government agencies to send money to employees or individuals with whom they
have accounts or other business relationships. Similar to our Western Union Payments service, consumers use
our Western Union Convenience Pay (Convenience Pay) service to send payments by cash or check from a
smaller number of Convenience Pay agent locations primarily to utilities and telecommunication providers. We
are in the process of consolidating all of these services to be marketed as Western Union Payments.
Pago Fcil. In South America, we offer walk-in, cash bill payment services which allow consumers to make
payments for services such as phone, utilities and other recurring bills. In Argentina, we provide this service
under the Pago Fcil brand. We offer this service under the Western Union brand in Peru and Panama.
Speedpay. Our Speedpay service is offered principally in the United States and allows consumers to make
payments to a variety of businesses using credit cards, debit cards, ACH and in limited situations, checks.
Payments are initiated over the phone or the Internet. We also partner with some businesses to allow their
customers to access Speedpay from their websites.
Equity Accelerator. Our Equity Accelerator service enables consumers to make mortgage payments by ACH.
It is marketed as a convenient way for homeowners to schedule additional recurring principal payments on their
mortgages. Consumers who enroll in this service make mortgage payments based on an accelerated program,
which results in a more rapid reduction of their mortgage balance, as well as interest savings. We also offer a
non-recurring mortgage payment service under the brand Just in Time EFT.
Distribution and Marketing Channels
Our electronic consumer payment services are available primarily through the phone and the Internet, while
our cash-based consumer services are available through our agent networks and select Company owned
locations. Our business payment services are offered through Company locations, phone, via the Internet and
partner channels.
Businesses market our services to consumers in a number of ways, and we market our services directly to
consumers and businesses using a variety of means, including advertising materials, promotional activities, call
campaigns and attendance at trade shows and seminars. Our Internet services are marketed to consumers and
businesses on our websites as well as through co-branding arrangements with our website partners who offer our
payment solutions.
We have relationships with more than 10,000 consumer payments businesses to which our customers can
make payments. These relationships are a core component of our global business payments services. On average,
we have provided our payment services to our top 20 businesses to which our consumers can make payments for
more than 14 years. No individual customer or business accounted for greater than 10% of this segments
revenue during all periods presented.
Industry Trends
The global business payments industry has evolved with technological innovations that have created new
methods of processing payments from individuals or businesses to other businesses. The various products within
the global business payments industry are in varying stages of development outside the United States. The crossborder payments industry is expected to expand considerably in the future due to the expanding global focus of
many businesses. We believe that the United States is in the midst of a trend away from cash and paper checks
toward electronic payment methods accessible through multiple technologies.
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Competition
Western Union competes with a diverse set of service providers offering both cash and electronic-based
payment solutions and business-to-business payment services. Competition in electronic payments and
business-to-business payment services include financial institutions (which may offer consumer bill payment or
business payment services in their own name or may host payment services operated under the names of their
clients) and other non-bank competitors. Competition for electronic payments also includes businesses offering
their own or third-party services to their own customers and third-party providers of all sizes offering services
directly to consumers. In many cases, competitors specialize in a small number of industries. Competitors for
cash payments include businesses that allow consumers to pay a bill at one of their locations, or at the location of
a partner business, as well as mail and courier services. The ongoing trend away from cash-based bill payments
in the United States and competitive pressures, which result in lower cash-based bill payment volumes and a shift
to lower revenue per transaction products, continue to impact this business.
We believe the most significant competitive factors in this segment relate to brand recognition, customer
service, trust and reliability, convenience, speed, variety of payment methods, service offerings and price.
For additional details regarding our global business payments segment, see Item 7 of Part II and our historical
financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.
Other
Our remaining businesses are grouped in the Other category, which primarily includes our money orders,
which are sold primarily in the United States and Canada, and our prepaid services.
Customers use our money orders for making purchases, paying bills, and as an alternative to checks that can be
deposited directly into bank accounts or cashed at check cashiers, some banks and some retailers. We derive
investment income from interest generated on our money order settlement assets, which are primarily held in
United States tax exempt state and municipal debt securities.
Our prepaid cards are sold primarily in the United States through retail locations and on the Internet. This
service allows consumers to load money or receive a direct deposit onto the card for use at a later date. The card
can be used to withdraw money from an ATM or used where debit cards are accepted. We have agreements with
depository institutions insured by the Federal Deposit Insurance Corporation that serve as the issuers of our cards
in the United States. In the fourth quarter of 2011, we began offering certain of our prepaid cards in the United
Kingdom and began testing in certain European countries.
Intellectual Property
The Western Union brand, including trademark registrations in many countries, is material to our Company.
The international expansion of our agent network over the past decade has taken the Western Union brand nearly
everywhere consumers send and receive money. The loss of the Western Union trademark or a diminution in the
perceived quality associated with the name would harm our growth. We offer money transfer services under the
Western Union, Orlandi ValutaSM or Vigo brands in more than 200 countries and territories, and various global
business payment services under several brands like Speedpay, Equity Accelerator, Just in Time EFT, Paymap,
Western Union Payments, Quick Collect, Convenience Pay, Quick Pay, Quick Cash, Pago Fcil (registered in
Argentina), Western Union Business Solutions and other trademarks and service marks, such as MoneyWiseTM,
that are also important to our Company.
Our operating results over the past several years have allowed us to invest significantly each year to support
our brands. In 2011, we invested approximately $225 million to market, advertise and promote our brands and
services, including costs of dedicated marketing personnel. Many of our agents have also contributed significant
financial resources to assist with marketing our services.
13

We own patents and patent applications covering various aspects of our processes and services. We have been,
are and in the future may be, subject to claims and suits alleging that our technology or business methods infringe
patents owned by others, both in and out of the United States. Unfavorable resolution of these claims could
require us to change how we deliver services, result in significant financial consequences, or both, which could
adversely affect our business, financial condition and results of operations.
Risk Management
Our Company has a credit risk management department that evaluates and monitors our agent-related credit
and fraud risks. We are exposed to credit risk related to receivable balances from agents in the money transfer,
walk-in bill payment and money order settlement process. We also are exposed to credit risk directly from
consumer transactions particularly through our online services and electronic global business payment channels,
where transactions are originated through means other than cash, and may therefore be subject to chargebacks,
insufficient funds, or other collection impediments, such as fraud. Our credit risk management team performs a
credit review before each agent signing and conducts periodic analyses. As a result, our losses associated with
bad debts have been less than 1% of our annual revenue in each of the last three fiscal years.
We are exposed to credit risk in our Business Solutions business relating to: (a) derivatives written by us to our
customers and (b) receivables from certain customers for which beneficiaries are paid prior to receiving cleared
funds from the customer (known as early release). For the derivatives, the duration of these contracts is
generally nine months or less. The credit risk associated with our derivative contracts increases when foreign
currency exchange rates move against our customers, possibly impacting their ability to honor their obligations to
deliver currency to us or to maintain appropriate collateral with us. For early release customers, collection
ordinarily occurs within a few days. To mitigate risk, we perform credit reviews of the customer on an ongoing
basis, and, for our derivatives, we may require certain customers to post collateral or increase collateral based on
the fair value of the customers contract and their risk profile.
To manage our exposures to credit risk with respect to investment securities, money market fund investments
and other credit risk exposures resulting from our relationships with banks and financial institutions, we regularly
review investment concentrations, trading levels, credit spreads and credit ratings, and we attempt to diversify
our investments among global financial institutions.
A key component of the Western Union business model is our ability to manage financial risk associated with
conducting transactions worldwide. We settle accounts with the majority of our agents in United States dollars or
euros. We utilize foreign currency exchange contracts, primarily forward contracts, to mitigate the risks
associated with currency fluctuations and to provide predictability of future cash flows. Limited foreign currency
risk arises with respect to the agent settlement process because the majority of money transfer transactions are
paid within 24 hours after they are initiated and agent settlements occur within a few days in most instances.
Our financial results may fluctuate due to changes in interest rates. We review our overall exposure to floating
and fixed rates by evaluating our net asset or liability position in each, while also considering the duration of the
individual positions. We manage this mix of fixed versus floating exposure in an attempt to minimize risk,
reduce costs and improve returns. Our exposure to interest rates can be modified by changing the mix of our
interest-bearing assets, as well as adjusting the mix of fixed versus floating rate debt. The latter is accomplished
primarily through the use of interest rate swaps and the terms of any new debt issuances (i.e., fixed versus
floating). We use interest rate swaps designated as hedges to increase the percentage of floating rate debt, subject
to market conditions.
International Investment
No provision has been made for United States federal and state income taxes on certain of our outside tax basis
differences, which primarily relate to accumulated foreign earnings of approximately $3.7 billion as of
December 31, 2011, as we expect to reinvest these earnings outside the United States indefinitely. We intend to
14

invest these earnings to expand and diversify our global distribution and explore new service offerings and may
also consider international acquisition opportunities. In 2011, our foreign cash allowed us to acquire TGBP and
the remaining interests in two of our largest European-based agents, Finint S.r.l. (Finint) and Angelo Costa,
S.r.l. (Costa). However, if we are unable to utilize accumulated earnings outside of the United States and we
repatriate these earnings to the United States in the form of actual or constructive dividends, we would be subject
to United States federal income taxes (subject to an adjustment for foreign tax credits), state income taxes and
possible withholding taxes payable to various foreign countries. Such taxes could be significant.
Regulation
Our business is subject to a wide range of laws and regulations enacted by the United States federal
government, each of the states, many localities and many other countries and jurisdictions, including the
European Union. These include financial services regulations, consumer disclosure and consumer protection
laws, currency control regulations, money transfer and payment instrument licensing regulations, payment
service laws, rules, laws and regulations including those governing credit and debit cards, electronic payments,
foreign exchange hedging services and the sale of spot, forward and option currency contracts, unclaimed
property laws, competition laws and laws covering consumer privacy, data protection and information security.
Our services also are subject to an increasingly strict set of legal and regulatory requirements intended to help
detect and prevent money laundering, terrorist financing and other illicit activity. Failure to comply with any of
these requirementsby either Western Union or its agents or their subagents (who are third parties, over whom
Western Union has limited legal and practical control)could result in the suspension or revocation of a license
or registration required to provide money transfer services and/or payment services or foreign exchange products,
the limitation, suspension or termination of services, the seizure of our assets, and/or the imposition of civil and
criminal penalties, including fines and restrictions on our ability to offer services.
We have developed and continue to enhance our global compliance programs, including our anti-money
laundering program, which comprises policies, procedures, systems and internal controls to monitor and to
address various legal and regulatory requirements. In addition, we continue to adapt our business practices and
strategies to help us comply with current and evolving legal standards and industry practices. These programs
include dedicated compliance personnel, training and monitoring programs, suspicious activity reporting,
regulatory outreach and education, and support and guidance to our agent network on regulatory compliance. Our
money transfer network operates through third-party agents in most countries, and, therefore, there are
limitations on our legal and practical ability to completely control those agents compliance activities.
Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) became United States federal
law in 2010. The Act created a new Consumer Financial Protection Bureau (the CFPB) whose purpose is to
issue and enforce consumer protection initiatives governing financial products and services, including money
transfer services. The CFPB will create additional regulatory oversight for us. Recent remittance regulations
issued by the CFPB, which become effective in February 2013, will impact our business in a variety of areas.
These include a requirement to provide enhanced pre-transaction disclosures, an obligation to resolve various
errors, including certain errors that may be outside the remittance providers control, and an obligation to cancel
transactions at a consumers request. We will need to modify certain of our systems, business practices, service
offerings or procedures at agent locations. We will also become liable for the failure of our money transfer agents
to comply with the rules and will need to establish and implement additional policies, procedures, and oversight
measures designed to assure compliance by our agents. The extent of these policies, procedures, and measures
may be considered by the CFPB in any action or proceeding against us for noncompliance with the rules by our
agents. We may also be subject to examination by the CFPB. In addition, rules adopted under the Act by other
governmental agencies may subject our corporate interest rate and foreign exchange hedging transactions to
centralized clearing, centralized trading, collateral posting and other requirements. Also, our Business Solutions
business in the United States may be subjected to increased regulatory oversight and licensing requirements
relating to the foreign exchange derivative products offered to certain of its customers.
15

Money Transfer and Payment Instrument Licensing and Regulation

In the United States, most states license money transfer services providers and many exercise authority over
the operations of our money transfer services and, as part of this authority, regularly examine us. Many states
require us to invest the proceeds of money transfers in highly-rated, investment grade securities, and our use of
such investments is restricted to satisfy outstanding settlement obligations. We regularly monitor credit risk and
attempt to mitigate our exposure by investing in highly-rated securities in compliance with these regulations. The
majority of our investment securities, classified within Settlement assets in the Consolidated Balance Sheets,
are held to comply with state licensing requirements in the United States and had credit ratings of AA or
better from a major credit rating agency as of December 31, 2011.
These licensing laws also cover matters such as government approval of controlling shareholders and senior
management of our licensed entities, regulatory approval of agents and in some instances their locations,
consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to demonstrate
and maintain certain net worth levels. Many states also require money transmitters and their agents to comply
with federal and/or state anti-money laundering laws and regulations.
Our money transfer and money order services are subject to anti-money laundering laws and regulations,
including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the BSA) and
similar state laws and regulations. The BSA, among other things, requires money transfer companies and the
issuers and sellers of money orders, to develop and implement risk-based anti-money laundering programs,
report large cash transactions and suspicious activity, and in some cases, to collect and maintain information
about consumers who use their services and maintain other transaction records. Many states impose similar and,
in some cases, more stringent requirements. These requirements also apply to our agents. In addition, the United
States Department of the Treasury has interpreted the BSA to require money transfer companies to conduct due
diligence into and risk-based monitoring of their agents inside and outside the United States.
Economic and trade sanctions programs administered by the United States Department of the Treasury Office
of Foreign Assets Control (OFAC) prohibit or restrict transactions to or from (or dealings with) certain
countries, their governments, and in certain circumstances, their nationals, as well as with specifically-designated
individuals and entities such as narcotics traffickers, terrorists and terrorist organizations. We provide very
limited consumer-to-consumer services to individuals in Cuba, Syria and Sudan pursuant to and as authorized by
advisory opinions of, or licenses granted by, OFAC.
Outside of the United States, our money transfer business is subject to some form of regulation in all of the
countries and territories in which we offer those services. These laws and regulations may include limitations on
what types of entities may offer money transfer services, limitations on the amount of principal that can be sent
into or out of a country, limitations on the number of money transfers that may be sent or received by a consumer
and controls on the rates of exchange between currencies. They may also include laws and regulations intended
to help detect and prevent money laundering or terrorist financing, including reporting requirements similar to
those required under the BSA. In most countries, either we or our agents are required to obtain licenses or to
register with a government authority in order to offer money transfer services.
The Payment Services Directive (PSD), which became effective on November 1, 2009, has changed the
payments market in the European Union (EU), harmonizing the licensing and certain other requirements for
offering payment services within the EU. Previously, those requirements differed significantly among these
countries. The PSD, along with similar laws in other jurisdictions, have imposed new rules on payment service
providers like Western Union. In particular, Western Union has become responsible for the regulatory
compliance of our agents who are engaged by one of our payments institution subsidiaries. The majority of our
EU business is managed through our PSD subsidiary, which is regulated by Ireland. Thus, the risk of adverse
regulatory action against us because of the actions of our agents in those areas has increased. Under the PSD, we
are subject to investment safeguarding rules and periodic examinations similar to those we are subject to in the
16

United States. These rules have resulted in increased compliance costs and may lead to increased competition in
our areas of service. Additional countries may adopt legislation similar to these laws. The PSD, as well as
legislation in other countries such as Russia, has also allowed an increased number of non-bank entities to
become money transfer agents.
We have developed and continue to enhance global compliance programs to monitor and to address various
legal and regulatory requirements. Our money transfer network operates through third-party agents in most
countries, and our legal and practical ability to control those agents compliance activities is limited. To assist in
managing and monitoring money laundering and terrorist financing risks, we have developed and continue to
enhance our global compliance programs, including an anti-money laundering compliance program, which
comprises policies, procedures, systems and internal controls. We have employees in a number of our offices
around the world dedicated to our global compliance program efforts. In connection with an agreement and
settlement with the State of Arizona and other states entered into in February 2010, we have funded $71 million,
a portion of which was paid to a not-for-profit organization to promote safety and security along the entire United
States and Mexico border, with the rest paid to the State of Arizona for its costs associated with this matter. This
agreement and settlement also resolved all outstanding legal issues and claims with the State of Arizona. In
addition, as part of the agreement and settlement, we have made and expect to make certain investments in our
compliance programs along the United States and Mexico border and a monitor has been engaged for those
programs. The costs of the investments in our programs and for the monitor are expected to reach up to
$23 million over the period from signing to 2013. See also Item 1A, Risk FactorsWestern Union is the
subject of governmental investigations and consent agreements with or enforcement actions by regulators for
more information on this agreement and settlement, including the potential impact on our business.
Government agencies both inside and outside the United States may impose new or additional rules on money
transfers affecting us or our agents or their subagents, including regulations that:

prohibit transactions in, to or from certain countries, governments and individuals and entities;

impose additional identification, reporting or recordkeeping requirements;

limit the types of entities capable of providing money transfer services or impose additional licensing or
registration requirements;

impose minimum capital or other financial requirements on us or our agents and their subagents;

limit or restrict the revenue which may be generated from money transfers, including transaction fees and
revenue derived from foreign exchange;

require enhanced disclosures to our money transfer customers;

require the principal amount of money transfers originated in a country to be invested in that country or
held in trust until they are paid;

limit the number or principal amount of money transfers which may be sent to or from the jurisdiction,
whether by an individual, through one agent or in aggregate; or

impose taxes or fees on money transfer transactions.

Unclaimed Property Regulations

Our Company is subject to unclaimed property laws in the United States and abroad. These laws require us to
turn over to certain government authorities the property of others held by our Company that has been unclaimed
17

for a specified period of time, such as unpaid money transfers and money orders. We hold property subject to
unclaimed property laws and we have an ongoing program to comply with the laws. We are subject to audits with
regard to our escheatment practices.
Privacy and Information Security Regulations
The collection, transfer, disclosure, use and storage of personal information is required to provide our services.
These activities are subject to information security standards, data privacy, data breach and related laws and
regulations in the United States and other countries. In the United States, data privacy and data breach laws such
as the federal Gramm-Leach-Bliley Act and various state laws apply directly to a broad range of financial
institutions including money transmitters like Western Union, and indirectly to companies that provide services
to those institutions. Many state laws require us to provide notification to affected individuals, state officers and
consumer reporting agencies in the event of a security breach of computer databases or physical documents that
contain certain types of non-public personal information and present a risk for unauthorized use.
The collection, transfer, disclosure, use and storage of personal information required to provide our services is
subject to data privacy laws outside of the United States, such as laws adopted pursuant to the EUs 95/46 EC
Directive of the European Parliament (the Data Protection Directive), Canadas Personal Information
Protection and Electronic Documents Act, individual European national laws and data privacy laws of other
provinces or countries. In some cases, the laws of a country may be more restrictive than the Gramm-LeachBliley Act, and the laws developed to comply with the Data Protection Directive may impose additional duties on
companies. Each of these laws may restrict the collection, transfer, processing, storage, use and disclosure of
sensitive personal information, require notice to individuals of privacy practices and may give individuals certain
rights to prevent the use or disclosure of personal information for secondary purposes such as marketing.
These regulations, laws and industry standards also impose requirements for safeguarding personal
information through the issuance of internal data security standards, controls or guidelines.
In connection with regulatory requirements to assist in the prevention of money laundering and terrorist
financing and pursuant to legal obligations and authorizations, Western Union makes information available to
certain United States federal and state, as well as certain foreign government agencies when required by law. In
recent years, these agencies have increased their requests for such information from Western Union and other
companies (both financial service providers and others), particularly in connection with efforts to prevent
terrorist financing or identity theft. During the same period, there has also been increased public attention
regarding the corporate use and disclosure of personal information, accompanied by legislation and regulations
intended to strengthen data protection, information security and consumer privacy. These regulatory goalsthe
prevention of money laundering, terrorist financing and identity theft and the protection of the individuals right
to privacymay conflict, and the law in these areas is not consistent or settled. While we believe that Western
Union is compliant with its regulatory responsibilities, the legal, political and business environments in these
areas are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could
expose Western Union to increased program costs, liability and reputational damage.
Banking Regulation
We have subsidiaries that operate under banking licenses granted by the Austrian Financial Market Authority
and the Brazilian Central Bank which subject these subsidiaries to Austrian and Brazilian regulations. We are
also subject to regulation, examination and supervision by the New York Department of Financial Services (the
Financial Services Department), which has regulatory authority over our entity that holds all interests in these
subsidiaries, a limited liability investment company organized under Article XII of the New York Banking Law.
An Agreement of Supervision with the Financial Services Department imposes various regulatory requirements
including operational limitations, capital requirements, affiliate transaction limitations, and notice and reporting
requirements. Financial Services Department approval is required under the New York Banking Law and the
Agreement of Supervision prior to any change in control of the Article XII investment company.
18

Since these subsidiaries do not operate any banking offices in the United States and do not conduct business in
the United States except as may be incidental to their activities outside the United States, our Companys
affiliation with these subsidiaries does not cause them to be subject to the provisions of the Bank Holding
Company Act in the United States.
Other
Some of our services are subject to card association rules and regulations. For example, an independent
standards-setting organization, the Payment Card Industry (PCI) Security Standards Council (including
American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa Inc.
International) developed a set of comprehensive requirements concerning payment card account security through
the transaction process, called the Payment Card Industry Data Security Standard (PCI DSS). All merchants
and service providers that store, process and transmit payment card data are required to comply with PCI DSS as
a condition to accepting credit cards. We are subject to annual reviews to ensure compliance with PCI regulations
worldwide and are subject to fines if we are found to be non-compliant.
Stored-value services offered by Western Union prepaid services are subject to United States federal and state
laws and regulations, as well as laws and regulations outside of the United States, related to consumer protection,
licensing, escheat and money laundering. As we begin offering similar services internationally, those services
may be subject to various country laws. These laws are evolving, and the extent to which they apply to Western
Union or its consumers is sometimes unclear. While we are unable to determine the full impact that new laws and
changing interpretations may have on these services, recent history suggests that new rules may, among other
things, broaden our liability for the services and increase the scope of the information that we and our agents
must collect, maintain and report about consumers.
Employees and Labor
As of January 31, 2012, our businesses employed approximately 8,000 employees, of which approximately
6,000 employees are located outside of the United States.
Available Information
The Western Union Company is a Delaware corporation and its principal executive offices are located at
12500 East Belford Avenue, Englewood, CO, 80112, telephone (866) 405-5012. The Companys Annual Report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports
are available free of charge through the Financial Information portion of the Companys web site,
www.westernunion.com, as soon as reasonably practical after they are filed with the SEC. The SEC maintains a
web site, www.sec.gov, which contains reports, proxy and information statements, and other information filed
electronically with the SEC by the Company.

19

Executive Officers of the Registrant

As of February 24, 2012, our executives consist of the individuals listed below:
Name

Age

Hikmet Ersek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rajesh K. Agrawal . . . . . . . . . . . . . . . . . . . . . . . . . . .

51
46

John R. Dye . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52

Robin S. Heller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46

Paula S. Larson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49

Scott T. Scheirman . . . . . . . . . . . . . . . . . . . . . . . . . . .

49

Diane Scott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

Stewart A. Stockdale . . . . . . . . . . . . . . . . . . . . . . . . . .

50

Position

President, Chief Executive Officer and Director

Executive Vice President and President, Western
Union Business Solutions
Executive Vice President, General Counsel and
Secretary
Executive Vice President and Chief Integration
Officer
Executive Vice President and Chief Human
Resources Officer
Executive Vice President, Chief Financial Officer
and Global Operations
Executive Vice President and Chief Marketing
Officer and President, Western Union Ventures
Executive Vice President and President, Global
Consumer Financial Services

Hikmet Ersek is our President and Chief Executive Officer (from September 2010) and a member of the
Companys Board of Directors (from April 2010). From January 2010 to August 2010, Mr. Ersek served as the
Companys Chief Operating Officer. Prior to January 2010, Mr. Ersek served as the Companys Executive Vice
President and Managing Director, Europe, Middle East, Africa and Asia Pacific Region from December 2008.
From September 2006 to December 2008, Mr. Ersek served as the Companys Executive Vice President and
Managing Director, Europe/Middle East/Africa/South Asia. Prior to September 2006, Mr. Ersek held various
positions of increasing responsibility with Western Union. Prior to joining Western Union in September 1999,
Mr. Ersek was with GE Capital specializing in European payment systems and consumer finance.
Rajesh K. Agrawal is our Executive Vice President (from November 2011) and President, Western Union
Business Solutions (from August 2011). Prior to August 2011, Mr. Agrawal served as General Manager, Business
Solutions since November 2010, and as Senior Vice President of Finance for Business Units, from August 2010 to
November 2010. Previously, Mr. Agrawal served as Senior Vice President of Finance of the Companys Europe,
Middle East, and Africa and Asia Pacific regions from July 2008 to August 2010, and as Senior Vice President and
Treasurer from August 2006 to May 2008. Mr. Agrawal joined Western Union in 2006.
John R. Dye is our Executive Vice President, General Counsel and Secretary. Prior to taking this position in
November 2011, Mr. Dye was Senior Vice President, Interim General Counsel and Corporate Secretary of the
Federal Home Loan Mortgage Corporation (FHLMC) from July 2011. From July 2007 to July 2011, Mr. Dye
served as Senior Vice President, Principal Deputy General Counsel Corporate Affairs, of FHLMC. Prior to
joining FHLMC, Mr. Dye served as Associate General Counsel at Citigroup Inc. from August 1999 to July 2007,
and as Senior Vice President and Senior Counsel at Salomon Smith Barney from 1994 to 1999. Prior to that time,
Mr. Dye was an attorney at the law firm of Brown & Wood.
Robin S. Heller is our Executive Vice President and Chief Integration Officer. Prior to taking this position in
January 2012, she was Executive Vice President, Operations and IT since September 2006. From November
2004 to September 2006, she was Senior Vice President, Global Operations for First Data. From July 2003 to
November 2004, Ms. Heller served in a similar capacity with Western Union. Prior to that time, she was Senior
Vice President, Sales, Marketing and Operations for Western Union Commercial Services from July 2002 until
June 2003 and Senior Vice President, Operations and Client Management for Integrated Payment Systems Inc.
(IPS), a First Data subsidiary, from July 2000 until June 2002. Ms. Heller joined First Data in 1988.
20

Paula S. Larson is our Executive Vice President and Chief Human Resources Officer. Prior to taking this
position in November 2011, Ms. Larson was Chief Human Resources Officer for Invensys Plc from April 2005
to March 2011. Prior to that time, Ms. Larson held various senior human resources positions at Eaton
Corporation and subsidiaries of General Electric Company.
Scott T. Scheirman is our Executive Vice President, Chief Financial Officer and Global Operations.
Mr. Scheirman has been the Executive Vice President, Chief Financial Officer since September 2006 and
assumed the additional responsibilities of Global Operations in January 2012. In addition, from June 2011
through November 2011, Mr. Scheirman served as interim Chief Human Resources Officer for the Company.
Prior to becoming the Executive Vice President, Chief Financial Officer in September 2006, Mr. Scheirman held
a variety of positions with increasing responsibility at First Data, including Senior Vice President and Chief
Financial Officer for Western Union from 1999 to September 2006. Prior to joining First Data in 1992,
Mr. Scheirman was with Ernst & Young LLP.
Diane Scott is our Executive Vice President and Chief Marketing Officer (from April 2011) and President,
Western Union Ventures (from August 2011). Prior to April 2011, Ms. Scott was Senior Vice President,
Marketing, Americas since March 2009. From March 2008 to March 2009, Ms. Scott served as Vice President,
Marketing Services, and General Manager, Domestic Money Transfer. From March 2007 to March 2008,
Ms. Scott served as Vice President, Domestic Money Transfer and Marketing Services, and from January 2005 to
March 2007, she served as Vice President and General Manager, Domestic Money Transfer. Ms. Scott joined
Western Union in 2001.
Stewart A. Stockdale is our Executive Vice President and President, Global Consumer Financial Services.
Prior to taking this position in April 2011, Mr. Stockdale served as President, Americas and Executive Vice
President, Global Cards and Global Key Accounts, from January 2010, and as Executive Vice President and
President, Americas from November 2008 to January 2010. From June 2008 to November 2008, Mr. Stockdale
served as Executive Vice President and President, United States and Canada, with Western Union. Prior to
joining Western Union in June 2008, Mr. Stockdale served as the President of Simon Brand Ventures and as
Chief Marketing Officer of Simon Property Group since 2002.

21

ITEM 1A. RISK FACTORS

There are many factors that affect our business, financial condition and results of operations, some of which
are beyond our control. These risks include, but are not limited to, the risks described below. Such risks are
grouped according to:

Risks Relating to Our Business and Industry;

Risks Related to Our Regulatory and Litigation Environment; and
Risks Related to the Spin-Off.

You should carefully consider all of these risks.

Risks Relating to Our Business and Industry
If consumers confidence in our business or in traditional money transfer and payment service providers
generally deteriorates, our business, financial condition and results of operations could be adversely affected.
Our business is built on consumers confidence in our brands and our ability to provide fast, reliable money
transfer and payment services. Erosion in consumers confidence in our business, or in traditional money transfer
and payment service providers as a means to transfer money, could adversely impact transaction volumes which
would in turn adversely impact our business, financial condition and results of operations.
A number of factors could adversely affect consumers confidence in our business, or in traditional money
transfer and payment service providers generally, many of which are beyond our control, and could have an
adverse impact on our results of operations. These factors include:

changes or proposed changes in laws or regulations that have the effect of making it more difficult for
consumers to transfer money using traditional money transfer and payment service providers;

failure of our agents or subagents to deliver services in accordance with our requirements;

reputational concerns resulting from actual or perceived events;

actions by federal, state or foreign regulators that interfere with our ability to transfer consumers money
reliably, for example, attempts to seize money transfer funds, or limit our ability to or prohibit us from
transferring money in certain corridors;

federal, state or foreign legal requirements, including those that require us to provide consumer data to a
greater extent than is currently required;

any significant interruption in our systems, including by fire, natural disaster, power loss,
telecommunications failure, terrorism, vendor failure, unauthorized entry and computer viruses or
disruptions in our workforce; and

any breach of our security policies or legal requirements resulting in a compromise of consumer privacy or
data use and security.

Many of our money transfer consumers are migrants. Consumer advocacy groups or governmental agencies
could consider migrants to be disadvantaged and entitled to protection, enhanced consumer disclosure, or other
different treatment. If consumer advocacy groups are able to generate widespread support for positions that are
detrimental to our business, then our business, financial condition and results of operations could be adversely
affected.
22

Difficult conditions in global financial markets, global economic downturns and financial market disruptions
could adversely affect our business, financial condition and results of operations.
The global capital and credit markets have experienced in recent years, and in the future may experience,
unprecedented volatility and disruption and we face certain risks relating to such events, including:

Our agents or clients could experience reduced sales or business as a result of a deterioration in economic
conditions. As a result, our agents could reduce their numbers of locations or hours of operation, or cease
doing business altogether. Businesses using our services may make fewer cross-currency payments or may
have fewer customers making payments to them through us, particularly businesses in those industries that
may be more affected by an economic downturn.

Our exposure to receivables from our agents, consumers and businesses could impact us. For more
information on this risk, see risk factor, We face credit, liquidity and fraud risks from our agents,
consumers and businesses that could adversely affect our business, financial condition and results of
operations.

The market value of the securities in our investment portfolio may substantially decline. The impact of
that decline in value may adversely affect our results of operations and financial condition.

The counterparties to the derivative financial instruments that we use to reduce our exposure to various
market risks, including changes in interest rates and foreign exchange rates, may fail to honor their
obligations, which could expose us to risks we had sought to mitigate. That failure could have an adverse
effect on our financial condition and results of operations.

We aggregate our foreign exchange exposures in our Business Solutions business, including the exposure
generated by the derivative contracts we write to our customers as part of our cross-currency payments
business, and typically hedge the net exposure through offsetting contracts with established financial
institution counterparties. If our customers fail to honor their obligations or if the counterparties to our
offsetting positions fail to honor their obligations, our business, financial condition and results of
operations could be adversely affected.

We may be unable to refinance our existing indebtedness as it becomes due or we may have to refinance
on unfavorable terms, which could require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing funds available for working capital, capital
expenditures, acquisitions, share repurchases, dividends, and other purposes.

Our revolving credit facility with a consortium of banks is one source for funding liquidity needs and also
backs our commercial paper program. If any of the banks participating in our credit facility fails to fulfill
its lending commitment to us, our short-term liquidity and ability to support borrowings under our
commercial paper program could be adversely affected.

The third-party service providers on whom we depend may experience difficulties in their businesses,
which may impair their ability to provide services to us and have a potential impact on our own business.
The impact of a change or temporary stoppage of services may have an adverse effect on our business,
results of operations and financial condition.

Banks upon which we rely to conduct our business could fail or be unable to satisfy their obligations to us.
This could lead to our inability to access funds and/or credit losses for us and could adversely impact our
ability to conduct our business.

If market disruption and volatility occurs, we could experience difficulty in accessing capital and our
business, financial condition and results of operations could be adversely impacted.
23

Risks associated with operations outside the United States and foreign currencies could adversely affect our
business, financial condition and results of operations.
An increasing portion of our revenue is generated in currencies other than the United States dollar. As a result,
we are subject to risks associated with changes in the value of our revenues denominated in foreign currencies.
Our Business Solutions business provides currency conversion and, in certain countries, foreign exchange
hedging services to its customers, further exposing us to foreign currency exchange risk. In order to mitigate
these risks, we enter into derivative contracts. However, these contracts do not eliminate all of the risks related to
fluctuating foreign currency rates.
Our foreign exchange risk is greater, and our foreign exchange risk management is heightened, in our Business
Solutions business. The significant majority of Business Solutions revenue is from exchanges of currency at the
spot rate enabling customers to make cross-currency payments. In certain countries, this business also writes
foreign currency forward and option contracts for our customers. The duration of these derivatives contracts is
generally nine months or less. The credit risk associated with our derivative contracts increases when foreign
currency exchange rates move against our customers, possibly impacting their ability to honor their obligations to
deliver currency to us or to maintain appropriate collateral with us. Business Solutions aggregates its foreign
exchange exposures arising from customer contracts, including the derivative contracts described above, and
hedges the resulting net currency risks by entering into offsetting contracts with established financial institution
counterparties. If we are unable to obtain offsetting positions, our business, financial condition and results of
operations could be adversely affected.
A significant portion of our revenue is generated outside of the United States and much of the cash and cash
equivalents from this business are held by our foreign entities. Repatriating these funds to the United States
would, in many cases, result in significant tax obligations because most of these funds have been taxed at foreign
tax rates that are relatively low compared to our combined federal and state tax rates in the United States. If
repatriation of these funds is required or if a change in legislation requires a different tax treatment, our business,
financial condition and results of operations could be adversely impacted. For further discussion regarding the
risk that our future effective tax rates could be adversely impacted by changes in tax laws, both domestically and
internationally, see risk factor Changes in tax laws and unfavorable resolution of tax contingencies could
adversely affect our tax expense below.
Money transfers and payments to, from, within, or between countries may be limited or prohibited by law.
At times in the past, we have been required to cease operations in particular countries due to political
uncertainties or government restrictions imposed by foreign governments or the United States. Occasionally
agents have been required by their regulators to cease offering our services, see risk factor Regulatory initiatives
and changes in laws, regulations and industry practices and standards affecting our agents or subagents could
require changes in our business model and increase our costs of operations, which could adversely affect our
operations, results of operations and financial condition below. Additionally, economic or political instability
or natural disasters may make money transfers to, from, within, or between particular countries difficult or
impossible, such as when banks are closed, when currency devaluation makes exchange rates difficult to manage
or when natural disasters or civil unrest makes access to agent locations unsafe. These risks could negatively
impact our ability to offer our services, to make payments to or receive payments from international agents or our
subsidiaries or our ability to recoup funds that have been advanced to international agents or are held by our
subsidiaries and could adversely affect our business, financial condition and results of operations. In addition, the
general state of telecommunications and infrastructure in some lesser developed countries, including countries
where we have a large number of transactions, creates operational risks for us and our agents that generally are
not present in our operations in the United States and other more developed countries.
Many of our agents outside the United States are post offices, which are usually owned and operated by
national governments. These governments may decide to change the terms under which they allow post offices to
offer remittances and other financial services. For example, governments may decide to separate financial service
24

operations from postal operations, or mandate the creation or privatization of a post bank or they may require
multiple service providers in their network. These changes could have an adverse effect on our ability to
distribute, offer or price our services in countries that are material to our business.
Interruptions in migration patterns, including as a result of economic conditions, could adversely affect our
business, financial condition and results of operations.
Our consumer-to-consumer money transfer business relies in large part on migration, which brings workers to
countries with greater economic opportunities than those available in their native countries. A significant portion
of money transfers are sent by international migrants. Migration is affected by (among other factors) overall
economic conditions, the availability of job opportunities, changes in immigration laws, and political or other
events (such as war, terrorism or health emergencies) that would make it more difficult for workers to migrate or
work abroad. Changes to these factors could adversely affect our remittance volume and could have an adverse
effect on our business, financial condition and results of operations.
Many of our consumers work in industries that may be impacted by deteriorating economic conditions more
quickly or significantly than other industries. Reduced job opportunities, especially in construction,
manufacturing, hospitality, agriculture and retail, or overall weakness in the worlds economies could adversely
affect the number of money transfer transactions, the principal amounts transferred and correspondingly our
results of operations. If general market softness in the economies of countries important to migrant workers
occurs, our results of operations could be adversely impacted. Additionally, if our consumer transactions decline,
if the amount of money that consumers send per transaction declines, or if migration patterns shift due to weak or
deteriorating economic conditions, our results of operations may be adversely affected.
Our ability to adapt technology in response to changing industry and consumer needs or trends poses a
challenge to our business.
Our ability to compete in the markets we serve may be threatened by change, including changes in technology,
changes with respect to consumer needs, competition and industry standards. We actively seek solutions that
respond in a timely manner to new technology-based money transfer services such as Internet, phone-based
money transfer services and prepaid, stored-value and other card-based money transfer services. Failure to
respond well to these challenges could adversely impact our business, financial condition and results of
operations. Further, even if we respond well to these challenges, the business and financial models offered by
many of these alternative, more technology-reliant means of money transfer and electronic payment solutions
may be less advantageous to us than the model offered by our traditional cash/agent model.
Acquisitions and integration of new businesses create risks and may affect operating results.
We have acquired and may acquire businesses both inside and outside the United States. The acquisition and
integration of businesses involve a number of risks. The core risks involve valuation (negotiating a fair price for
the business based on inherently limited due diligence) and integration (managing the complex process of
integrating the acquired companys people, products and services, technology and other assets in an effort to
realize the projected value of the acquired company and the projected synergies of the acquisition). In addition,
the need in some cases to improve regulatory compliance standards is another risk associated with acquiring
companies, see Risks Related to Our Regulatory and Litigation Environment below. Acquisitions often involve
additional or increased risks including, for example:

managing geographically separated organizations, systems and facilities;

managing multi-jurisdictional operating, tax and financing structures;

integrating personnel with diverse business backgrounds and organizational cultures;

25

integrating the acquired technologies into our Company;

realization of anticipated financial benefits from these acquisitions and where necessary, improving
internal controls of these acquired businesses;

complying with regulatory requirements;

fluctuations in currency exchange rates;

enforcement of intellectual property rights in some foreign countries;

difficulty entering new markets with the services of the acquired businesses; and

general economic and political conditions, including legal and other barriers to cross-border investment in
general, or by United States companies in particular.

Integrating operations could cause an interruption of, or divert resources from, one or more of our businesses
and could result in the loss of key personnel. The diversion of managements attention and any delays or
difficulties encountered in connection with an acquisition and the integration of the acquired companys
operations could have an adverse effect on our business, financial condition and results of operations.
As of December 31, 2011, we had $3,198.9 million of goodwill comprising approximately 35% of our total
assets. An impairment review of goodwill is conducted at least once a year (including qualitative and quantitative
assessments) to determine whether it is more likely than not that the fair value of a reporting unit is less than its
carrying value. The assessment of goodwill will be performed more frequently than once a year if events or
changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. If we are
unsuccessful in integrating the businesses we have acquired or acquire in the future, or if these acquired
businesses experience declines in operating income or cash flows, adverse changes in the business climate, or if
we are unable to successfully execute our strategy for these businesses, we may be required to write down the
goodwill on our balance sheet associated with these acquisitions, which could have an impact on our financial
condition and results of operations in future periods.
We face credit, liquidity and fraud risks from our agents, consumers and businesses that could adversely
affect our business, financial condition and results of operations.
The vast majority of our global funds transfer business is conducted through third-party agents that provide our
services to consumers at their retail locations. These agents sell our services, collect funds from consumers and
are required to pay the proceeds from these transactions to us. As a result, we have credit exposure to our agents.
In some countries, our agent networks include superagents that establish subagent relationships; these agents
must collect funds from their subagents in order to pay us. We are not insured against credit losses, except in
certain circumstances related to agent theft or fraud. If an agent becomes insolvent, files for bankruptcy, commits
fraud or otherwise fails to pay money order, money transfer or payment services proceeds to us, we must
nonetheless pay the money order, complete the money transfer or payment services on behalf of the consumer.
The liquidity of our agents is necessary for our business to remain strong and to continue to provide our
services. If our agents fail to settle with us in a timely manner, our liquidity could be affected.
From time to time, we have made, and may in the future make, short-term advances and longer term loans to
our agents. These advances and loans generally are secured by settlement funds payable by us to these agents.
However, the failure of these borrowing agents to repay these advances and loans constitutes a credit risk to us.
26

In our Business Solutions business, we are also exposed to credit risk relating to foreign currency forward and
option contracts written by us to our customers. The duration of these derivative contracts is generally nine
months or less. The credit risk associated with our derivative contracts increases when foreign currency exchange
rates move against our customers, possibly impacting their ability to honor their obligations to deliver currency
to us or to maintain appropriate collateral with us. If a customer becomes insolvent, files for bankruptcy, commits
fraud or otherwise fails to pay us for the value of these contracts, we may be exposed to the value of an offsetting
position with a financial institution counterparty.
We offer consumers, primarily in the United States, the ability to transfer money utilizing their credit or debit
card via the Internet and phone. Because these are not face-to-face transactions, these transactions involve a
greater risk of fraud. We apply verification and other tools to help authenticate transactions and protect against
fraud. However, these tools are not always successful in protecting us against fraud. As the merchant of these
transactions, we may bear the financial risk of the full amount sent in some of the fraudulent transactions. Issuers
of credit and debit cards may also incur losses due to fraudulent transactions through our distribution channels
and may elect to block transactions by their cardholders in these channels with or without notice. We may be
subject to additional fees or penalties if the amount of chargebacks exceeds a certain percentage of our
transaction volume. Such fees and penalties escalate over time if we do not take effective action to reduce
chargebacks below the threshold, and if chargeback levels are not ultimately reduced to acceptable levels, our
merchant accounts could be suspended or revoked, which would adversely affect our results of operations.
Breaches of our information security policies or safeguards could adversely affect our ability to operate and
could damage our reputation, business, financial condition and results of operations.
We collect, transfer and retain consumer, business, employee and agent data as part of our business. These
activities are subject to laws and regulations in the United States and other jurisdictions, see risk factor Current
and proposed regulation addressing consumer privacy and data use and security could increase our costs of
operations, which could adversely affect our operations, results of operations and financial condition below.
The requirements imposed by these laws and regulations, which often differ materially among the many
jurisdictions, are designed to protect the privacy of personal information and to prevent that information from
being inappropriately disclosed. We have developed and maintain technical and operational safeguards designed
to comply with applicable legal requirements. However, despite those safeguards, it is possible that hackers,
employees acting contrary to our policies or others could improperly access our systems or improperly obtain or
disclose data about our consumers, business customers, agents and/or employees. Further, because some data is
collected and stored by third parties, it is possible that a third party could intentionally or negligently disclose
personal data in violation of law. Also, in some jurisdictions we transfer data related to our employees, business
customers, consumers, agents and potential employees to third-party vendors in order to perform due diligence
and for other reasons. It is possible that a vendor could intentionally or inadvertently disclose such data. Any
breach of our security policies or applicable legal requirements resulting in a compromise of consumer, business,
employee or agent data could require us to notify impacted individuals, and in some cases regulators, of a
possible or actual breach, expose us to regulatory enforcement action, including fines, limit our ability to provide
services, subject us to litigation and/or damage our reputation.
Interruptions in our systems or disruptions in our workforce may have a significant effect on our business.
Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our
computer information systems and those of our service providers. Any significant interruptions could harm our
business and reputation and result in a loss of consumers. These systems and operations could be exposed to
damage or interruption from fire, natural disaster, power loss, telecommunications failure, terrorism, vendor
failure, unauthorized entry and computer viruses or other causes, many of which may be beyond our control or
that of our service providers. Although we have taken steps to prevent systems disruptions, our measures may not
be successful and we may experience problems other than system disruptions. We also may experience software
defects, development delays, installation difficulties and other systems problems, which would harm our business
27

and reputation and expose us to potential liability which may not be fully covered by our business interruption
insurance. Our data applications may not be sufficient to address technological advances, regulatory
requirements, changing market conditions or other developments. In addition, any work stoppages or other labor
actions by employees, the significant majority of which are located outside the United States, who support our
systems or perform any of our major functions could adversely affect our business.
If we are unable to maintain our agent, subagent or global business payments networks under terms
consistent with those currently in place, or if our agents or subagents fail to comply with Western Union
business and technology standards and contract requirements our business, financial condition and results of
operations would be adversely affected.
Most of our consumer-to-consumer revenue is derived through our agent network. In addition, our
international agents may have subagent relationships in which we are not directly involved. Transaction volumes
at existing agent and subagent locations often increase over time and new agents and subagents provide us with
additional revenue. If, due to competition or other reasons, agents or subagents decide to leave our network, or if
we are unable to sign new agents or maintain our agent network under terms consistent with those currently in
place, or if our agents are unable to maintain relationships with or sign new subagents, our revenue and profit
growth rates may be adversely affected. Agent attrition might occur for a number of reasons, including a
competitor engaging an agent or an agents dissatisfaction with its relationship with us or the revenue derived
from that relationship. In addition, agents may generate fewer transactions or less revenue for various reasons,
including increased competition, political unrest or changes in the economy. Because an agent is a third party
that engages in a variety of activities in addition to providing our services, it may encounter business difficulties
unrelated to its provision of our services, which could cause the agent to reduce its number of locations, hours of
operation, or cease doing business altogether.
We rely on our agents information systems and/or processes to obtain transaction data. If an agent or subagent
loses information, if there is a significant disruption to the information systems of an agent or subagent, or if an
agent or subagent does not maintain the appropriate controls over their systems, we may experience reputational
harm which could result in losses to the Company.
We have relationships with more than 10,000 consumer payments businesses to which our customers can
make payments. These relationships are a core component of our global business payments services, and we
derive a substantial portion of our global business payments revenue through these relationships. If we are unable
to sign new relationships or maintain our current relationships under terms consistent with those currently in
place, our revenue and profit growth rates may be adversely affected.
Our business, financial condition and results of operations could be harmed by adverse rating actions by
credit rating agencies.
If our credit ratings are downgraded, or if they are placed under review or given a negative outlook, our
business, financial condition and results of operations could be adversely affected and perceptions of our
financial strength could be damaged, which could adversely affect our relationships with our agents, particularly
those agents that are financial institutions or post offices. In addition, an adverse credit rating by a rating agency,
such as a downgrade or negative outlook, could result in regulators imposing additional capital and other
requirements on us, including imposing restrictions on the ability of our regulated subsidiaries to pay dividends.
Also, a significant downgrade could increase our costs of borrowing money, adversely affecting our business,
financial condition and results of operations.

28

We face competition from global and niche or corridor money transfer providers, United States and
international banks, card associations, card-based payments providers and a number of other types of service
providers, including electronic and Internet providers. Our continued growth depends on our ability to
compete effectively in the industry.
Money transfer and global business payments are highly competitive industries which include service
providers from a variety of financial and non-financial business groups. Our competitors include banks, credit
unions, automated teller machine providers and operators, card associations, card-based payments providers such
as issuers of e-money, travel cards or stored-value cards, informal remittance systems, web-based services, phone
payment systems (including mobile phone networks), postal organizations, retailers, check cashers, mail and
courier services, currency exchanges and traditional money transfer companies. These services are differentiated
by features and functionalities such as speed, convenience, network size, hours of operations, loyalty programs,
reliability and price. Our continued growth depends on our ability to compete effectively in these industries. We
have made periodic pricing decreases in response to competition and to implement our brand investment strategy,
which includes better meeting consumer needs, maximizing market opportunities and strengthening our overall
competitive positioning. Pricing decreases generally reduce margins, but are done in anticipation that they will
result in increased transaction volumes. In addition, failure to compete on service differentiation could
significantly affect our future growth potential and results of operations.
As noted above, many of our agents outside the United States are national post offices. These entities are
usually governmental organizations that may enjoy special privileges or protections that could allow them to
simultaneously develop their own money transfer businesses. International postal organizations could agree to
establish a money transfer network among themselves. Due to the size of these organizations and the number of
locations they have, any such network could represent significant competition to us. Because these entities are
governmental organizations, they may be able toor be required tooffer their money transfer services to the
public at, near or below their cost of providing such services.
Our ability to remain competitive depends in part on our ability to protect our brands and our other
intellectual property rights and to defend ourselves against potential intellectual property infringement claims.
The Western Union brand, which is protected by trademark registrations in many countries, is material to our
Company. The loss of the Western Union trademark or a diminution in the perceived quality associated with the
name would harm our business. Similar to the Western Union trademark, the Vigo, Orlandi Valuta, Speedpay,
Paymap, Equity Accelerator, Just in Time EFT, Pago Fcil, Western Union Payments, Western Union Quick
Collect, Quick Pay, Quick Cash, Convenience Pay, Western Union Business Solutions and other trademarks and
service marks are also important to our Company and a loss of the service mark or trademarks or a diminution in
the perceived quality associated with these names could harm our business.
Our intellectual property rights are an important element in the value of our business. Our failure to take
appropriate actions against those who infringe upon our intellectual property could adversely affect our business,
financial condition and results of operations.
The laws of certain foreign countries in which we do business either do not recognize intellectual property
rights or do not protect them to the same extent as do the laws of the United States. Adverse determinations in
judicial or administrative proceedings in the United States or in foreign countries could impair our ability to sell
our services or license or protect our intellectual property, which could adversely affect our business, financial
condition and results of operations.
We have been, are and in the future may be, subject to claims alleging that our technology or business methods
infringe patents owned by others, both inside and outside the United States. Unfavorable resolution of these
claims could require us to change how we deliver a service, result in significant financial consequences, or both,
which could adversely affect our business, financial condition and results of operations.
29

Changes in tax laws and unfavorable resolution of tax contingencies could adversely affect our tax expense.
Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and
internationally. From time to time, the United States Congress and foreign, state and local governments consider
legislation that could increase our effective tax rates. If changes to applicable tax laws are enacted, our results of
operations could be negatively impacted.
Our tax returns and positions (including positions regarding jurisdictional authority of foreign governments to
impose tax) are subject to review and audit by federal, state, local and international taxing authorities. An
unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting our results of
operations. We have established contingency reserves for a variety of material, known tax exposures. As of
December 31, 2011, the total amount of unrecognized tax benefits is a liability of $144.4 million, including
accrued interest and penalties. Our reserves reflect our judgment as to the resolution of the issues involved if
subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks,
there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial
cost that does not exceed our related reserve, and such resolution could have a material effect on our effective tax
rate, financial condition, results of operations and cash flows in the current period and/or future periods. With
respect to these reserves, our income tax expense would include (i) any changes in tax reserves arising from
material changes during the period in the facts and circumstances (i.e. new information) surrounding a tax issue,
and (ii) any difference from the Companys tax position as recorded in the financial statements and the final
resolution of a tax issue during the period. Such resolution could increase or decrease income tax expense in our
consolidated financial statements in future periods and could impact our operating cash flows. For example, we
recently reached an agreement with the United States Internal Revenue Service (IRS) resolving substantially
all of the issues related to the restructuring of our international operations in 2003, which resulted in a tax benefit
of $204.7 million related to the adjustment of reserves associated with this matter and will require cash payments
to the IRS and various state tax authorities of approximately $190 million. See Item 7 of Part II, Managements
Discussion and Analysis of Financial Condition and Results of Operations; Capital Resources and Liquidity.
We receive services from third-party vendors that would be difficult to replace if those vendors ceased
providing such services which could cause temporary disruption to our business.
Some services relating to our business, such as software application support, the development, hosting and
maintenance of our operating systems, check clearing, and processing of returned checks are outsourced to thirdparty vendors, which would be difficult to replace quickly. If our third-party vendors were unwilling or unable to
provide us with these services in the future, our business and operations could be adversely affected.
Material changes in the market value or liquidity of the securities we hold may adversely affect our results of
operations and financial condition.
As of December 31, 2011, we held $1.3 billion in investment securities, substantially all of which are state and
municipal debt securities. The majority of this money represents the principal of money transfers sent by
consumers and money orders issued by us to consumers in the United States. We regularly monitor our credit
risk and attempt to mitigate our exposure by investing in highly-rated securities and by diversifying our
investments. As of December 31, 2011, the majority of our investment securities had credit ratings of AA or
better from a major credit rating agency. Despite those ratings, it is possible that the value of our portfolio may
decline in the future due to any number of factors, including general market conditions, credit issues, the viability
of the issuer of the security, failure by a fund manager to manage the investment portfolio consistently with the
fund prospectus or increases in interest rates. Any such decline in value may adversely affect our results of
operations and financial condition.

30

The trust holding the assets of our pension plan has assets totaling approximately $301.7 million as of
December 31, 2011. The fair value of these assets held in the trust are compared to the plans projected benefit
obligation to determine the pension liability of $112.7 million recorded within Other liabilities in our
Consolidated Balance Sheet as of December 31, 2011. We attempt to mitigate risk through diversification, and
we regularly monitor investment risk on our portfolio through quarterly investment portfolio reviews and
periodic asset and liability studies. Despite these measures, it is possible that the value of our portfolio may
decline in the future due to any number of factors, including general market conditions and credit issues. Such
declines could have an impact on the funded status of our pension plan and future funding requirements.
We have substantial debt obligations that could restrict our operations.
As of December 31, 2011, we had approximately $3.6 billion in consolidated indebtedness, and we may also
incur additional indebtedness in the future.
Our indebtedness could have adverse consequences, including:

limiting our ability to pay dividends to our stockholders;

increasing our vulnerability to changing economic, regulatory and industry conditions;

limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business
and the industry;

limiting our ability to borrow additional funds; and

requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt,
thereby reducing funds available for working capital, capital expenditures, acquisitions and other
purposes.

There would be adverse tax consequences associated with using certain earnings generated outside the United
States to pay the interest and principal on our indebtedness. Accordingly, this portion of our cash flow will be
unavailable under normal circumstances to service our debt obligations.
Risks Related to Our Regulatory and Litigation Environment
As described under Item 1 of Part I, our business is subject to a wide range of laws and regulations enacted by
the United States federal government, each of the states (including licensing requirements), many localities and
many other countries and jurisdictions, such as the European Union. Regulations to which we are subject include
financial services regulations, consumer disclosure and consumer protection laws, currency control regulations,
money transfer, payment instrument, and foreign exchange derivative licensing regulations, unclaimed property
laws, competition laws and laws covering consumer privacy, data protection and information security. The
failure by us, our agents or subagents to comply with any such laws or regulations could have an adverse effect
on our business, financial condition and results of operations and could seriously damage our reputation and
brands, and result in diminished revenue and profit and increased operating costs.
Our business is subject to a wide range of laws and regulations intended to help detect and prevent money
laundering, terrorist financing, fraud and other illicit activity. Failure by us, our agents or our subagents to
comply with those laws and regulations could have an adverse effect on our business, financial condition and
results of operations.
Our services are subject to an increasingly strict set of legal and regulatory requirements intended to help
detect and prevent money laundering, terrorist financing, fraud, and other illicit activity. The interpretation of
those requirements by judges, regulatory bodies and enforcement agencies is changing, often quickly and with
31

little notice. Economic and trade sanctions programs that are administered by the United States Treasury
Departments Office of Foreign Assets Control prohibit or restrict transactions to or from or dealings with
specified countries, their governments, and in certain circumstances, their nationals, and with individuals and
entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist
organizations. As United States federal and state as well as foreign legislative and regulatory scrutiny and
enforcement action in these areas increase, we expect that our costs of complying with these requirements will
increase, perhaps substantially. Failure to comply with any of these requirementsby us or by our agents or their
subagents (each of whom are third parties over which we have limited legal and practical control) could result in
the suspension or revocation of a license or registration required to provide money transfer services, the
limitation, suspension or termination of services, the seizure and/or forfeiture of our assets and/or the imposition
of civil and criminal penalties, including fines.
We are subject to regulations imposed by the Foreign Corrupt Practices Act (the FCPA) in the United States
and similar laws in other countries, such as the Bribery Act in the United Kingdom, which generally prohibit
companies and those acting on their behalf from making improper payments to foreign government officials for
the purpose of obtaining or retaining business. Some of these laws, such as the Bribery Act, also prohibit
improper payments between commercial enterprises. Because our services are offered in virtually every country
of the world, we face a higher risk associated with FCPA and United Kingdom Bribery Act compliance than
many other companies. Any determination that we have violated these laws could have an adverse effect on our
business, financial condition and results of operations.
In addition, our United States business is subject to reporting, recordkeeping and anti-money laundering
provisions of the Bank Secrecy Act (BSA), as amended by the USA PATRIOT Act of 2001, and to regulatory
oversight and enforcement by the United States Department of the Treasury Financial Crimes Enforcement
Network (FinCEN). We have subsidiaries that are subject to banking regulations, primarily those in Brazil and
Austria. These subsidiaries are also subject to regulation, examination and supervision by the New York
Department of Financial Services. Under the Payment Services Directive (PSD) in the European Union
(EU), which became effective in late 2009, and similar legislation enacted or proposed in other jurisdictions,
we have and will increasingly become directly subject to reporting, recordkeeping and anti-money laundering
regulations. These laws could also increase competition in some or all of our areas of service.
The remittance industry has come under increasing scrutiny from government regulators and others in
connection with its ability to prevent its services from being abused by people seeking to defraud others. While
we believe our fraud prevention efforts are effective and comply with applicable law and best practices, the
ingenuity of criminal fraudsters, combined with the potential susceptibility to fraud by consumers during
economically difficult times, make the prevention of consumer fraud a significant and challenging problem. Our
failure to continue to help prevent such frauds or a change in laws or their interpretation could have an adverse
effect on our business, financial condition and results of operations.
Our fees, profit margins and/or foreign exchange spreads may be reduced or limited because of regulatory
initiatives and changes in laws, regulations and industry practices and standards that are either industry wide
or specifically targeted at our Company.
The evolving regulatory environment, including increased fees or taxes, regulatory initiatives, changes in laws,
regulations and industry practices and standards imposed by state, federal or international governments and
expectations regarding our compliance efforts, are impacting the manner in which we operate our business and
may change the competitive landscape and adversely affect our financial results. New and proposed legislation
relating to financial services providers and consumer protection in various jurisdictions around the world has and
may continue to affect the manner in which we provide our services, see risk factor The Dodd-Frank Act, as
32

well as the regulations required by that Act and the creation of the Consumer Financial Protection Bureau could
adversely affect us and the scope of our activities, and could adversely affect our operations, results of
operations and financial condition. Recently proposed and enacted legislation related to financial services
providers and consumer protection in various jurisdictions around the world and at the federal and state level in
the United States may subject us to additional regulatory oversight, mandate additional consumer disclosures and
remedies, including refunds to consumers, mandate additional taxes or fees to be imposed upon consumers, or
otherwise impact the manner in which we provide our services. If governments implement new laws or
regulations that limit our right to set fees and/or foreign exchange spreads, then our business, financial condition
and results of operations could be adversely affected. In addition, changes in regulatory expectations,
interpretations or practices could increase the risk of regulatory enforcement actions, fines and penalties.
For example, our business is currently being affected by on-going changes to our compliance procedures
related to our agreement and settlement with the State of Arizona. See risk factor Western Union is the subject
of governmental investigations and consent agreements with or enforcement actions by regulators. Due to
regulatory initiatives, we will continue to evolve our business model and practices along the United States and
Mexico border, including in the southwestern region of the United States. Such changes will likely have an
adverse effect on our revenues, profits, and business operations.
In addition, one state has passed a law imposing a fee on certain money transfer transactions, and certain other
states have proposed similar legislation. At least two foreign countries have enacted rules imposing taxes or fees
on certain money transfer transactions, as well. Although money transfer services themselves are not generally
subject to sales tax on money transfer services elsewhere in the United States, the current budget shortfalls in
many jurisdictions, combined with continued federal inaction on comprehensive immigration reform, may lead
other states or localities to impose similar taxes or fees. Similar circumstances in foreign countries could invoke
similar consequences. A tax or fee exclusively on money transfer services like Western Union could put us at a
competitive disadvantage to other means of remittance which are not subject to the same taxes or fees.
Other examples of changes to our financial environment include the possibility of regulatory initiatives that
focus on lowering international remittance costs. For example, Pakistan subsidizes certain remittances into the
country from Pakistanis working abroad. We do not participate in this program, but remittance companies
accepting the subsidy are prohibited from charging fees to the sender or receiver. Such initiatives may have an
adverse impact on our business, financial condition and results of operations.
Regulators around the world increasingly look at each others approaches to the regulation of the payments
and other industries. Consequently, a development in any one country, state or region may influence regulatory
approaches in other countries, states or regions. This includes the interpretation of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the Act). Similarly, new laws and regulations in a country, state or
region involving one service may cause lawmakers there to extend the regulations to another service. As a result,
the risks created by any one new law or regulation are magnified by the potential they have to be replicated,
affecting our business in another place or involving another service. Conversely, if widely varying regulations
come into existence worldwide, we may have difficulty adjusting our services, fees and other important aspects
of our business, with the same effect. Either of these eventualities could materially and adversely affect our
business, financial condition and results of operations.
Our agents or subagents failure to comply with federal and laws and regulations as well as laws and
regulations outside the United States could have an adverse effect on our business, financial condition and
results of operations.
Any determination that our agents or subagents have violated laws and regulations could seriously damage our
reputation and brands, resulting in diminished revenue and profit and increased operating costs. In some cases,
we could be liable for the failure of our agents or subagents to comply with laws which also could have an
adverse effect on our business, financial condition and results of operations.
33

For example, under the PSD, Western Union is responsible for the compliance of its agents who are engaged
by one of our payments institution subsidiaries. The majority of our EU business is managed through our PSD
subsidiaries. Thus, the risk of adverse regulatory action against Western Union because of actions by its agents in
those areas has increased.
We may become liable for the failure of our money transfer agents to comply with the Act, the extent of which
liability will be determined by rules not yet finalized. In addition, the Consumer Financial Protection Bureau (the
CFPB) created by the Act has recently issued regulations implementing remittance provisions of the Act,
which will impose responsibility on us for any related compliance failures of our agents.
The changes associated with the PSD, the Act and similar legislation enacted or proposed in other countries
could result in increased costs to comply with the new requirements, or in the event we or our agents are unable
to comply, could have an adverse impact on our business, financial condition and results of operations.
Additional countries may adopt similar legislation.
Regulatory initiatives and changes in laws, regulations and industry practices and standards affecting our
agents or subagents could require changes in our business model and increase our costs of operations, which
could adversely affect our operations, results of operations and financial condition.
Our agents are subject to a variety of regulatory requirements, which differ from jurisdiction to jurisdiction
and are subject to change. A material change in the regulatory requirements for offering money transfer services
in a jurisdiction important to our business could mean increased costs and/or operational demands on our agents
and subagents, which could result in their attrition, a decrease in the number of locations at which money transfer
services are offered and other negative consequences. The regulatory status of our agents could affect their
ability to offer our services. For example, our agents in the United States are considered Money Service
Businesses, or MSBs, under the BSA. An increasing number of banks view MSBs, as a class, as higher risk
customers for purposes of their anti-money laundering programs. Furthermore, some of our domestic and
international agents have had difficulty establishing or maintaining banking relationships due to the banks
policies. If a significant number of agents are unable to maintain existing or establish new banking relationships,
they may not be able to continue to offer our services.
The types of enterprises that are legally authorized to act as our agents vary significantly from one country to
another. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents
(such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute
our services and the cost of providing such services, both by us and our agents. For example, a requirement that a
money transfer provider be a bank or other highly regulated financial entity could increase significantly the cost
of providing our services in many countries where that requirement does not exist today or could prevent us from
offering our services in an affected country. Further, any changes in law that would require us to provide directly
the money transfer services to consumers as opposed to through an agent network (which would effectively
change our business model) or that would prohibit or impede the use of subagents could significantly adversely
impact our ability to provide our services, and/or the cost of our services, in the relevant jurisdiction. Changes
mandated by laws which make Western Union responsible for any acts of its agents while they are providing the
Western Union money transfer service increase our risk of regulatory liability and our costs to monitor our
agents performance.
Although most of our Orlandi Valuta and Vigo branded agents are not exclusive, most of our Western Union
branded agents offer our services on an exclusive basisthat is, they have agreed by contract not to provide any
non-Western Union branded money transfer services. While we expect to continue signing agents under
exclusive arrangements and believe that these agreements are valid and enforceable, changes in laws regulating
competition or in the interpretation of those laws could undermine our ability to enforce them in the future.
Recently, several countries in Eastern Europe, the Commonwealth of Independent States, Africa and South Asia,
including India, have promulgated laws or regulations, or authorities in these countries have issued orders, which
34

effectively prohibit payment service providers, such as money transfer companies, from agreeing to exclusive
arrangements with agents in those countries. Certain institutions, non-governmental organizations (NGOs) and
others are actively advocating against exclusive arrangements in money transfer agent agreements. Advocates for
laws prohibiting or limiting exclusivity continue to push for enactment of similar laws in other jurisdictions. In
addition, certain of our agents and subagents have refused to enter into exclusive arrangements. For example, we
recently entered into a non-exclusive arrangement with our Mexican agent, Elektra del Milenio de C.V. The
inability to enter into exclusive arrangements or to enforce our exclusivity rights under our contracts could
adversely affect our operations and revenue by, for example, allowing competitors to benefit from the goodwill
associated with the Western Union brand at our agent locations.
Western Union is the subject of governmental investigations and consent agreements with or enforcement
actions by regulators.
In the second quarter of 2009, the Antitrust Division of the United States Department of Justice (DOJ)
served one of our subsidiaries with a grand jury subpoena requesting documents in connection with an
investigation into money transfers, including related foreign exchange rates, from the United States to the
Dominican Republic from 2004 through the date of subpoena. The Company is cooperating fully with the DOJ
investigation. Due to the stage of the investigation, we are unable to predict the outcome of the investigation, or
the possible loss or range of loss, if any, which could be associated with the resolution of any possible criminal
charges or civil claims that may be brought against us. Should such charges or claims be brought, we could face
significant fines, damage awards or regulatory consequences which could have a material adverse effect on our
business, financial condition and results of operations.
On February 11, 2010, we signed an agreement and settlement, which resolved all outstanding legal issues and
claims with the State of Arizona and required us to fund a multi-state not-for-profit organization promoting
safety and security along the United States and Mexico border, in which California, Texas and New Mexico are
participating with Arizona. The agreement also required us to make payments to the State of Arizona for its costs
associated with this matter. In addition, as part of the agreement and settlement, we have made and expect to
make certain investments in and changes to our compliance programs along the United States and Mexico border
and a monitor has been engaged for those programs. The costs of the investments in our programs and for the
monitor are expected to reach up to $23 million over the period from signing to 2013. The monitor has made a
number of recommendations related to our compliance programs.
We are in the process of making certain changes to our compliance program for transactions from the United
States to Mexico, including:

revisions to agent agreements to increase our ability to oversee the compliance of our agents and
subagents;
reduced thresholds at which our consumers are required to provide identification for transactions from
certain states along the United States southwest border; and
enhancement of our information systems including migrating customer information for our Western
Union, Orlandi Valuta and Vigo brands onto a common database and migrating to a standard point of sale
system.

Such changes will likely have an adverse effect on our United States to Mexico business. Any additional
changes that we elect or are required to make in the United States to Mexico corridor, or similar changes that we
may elect or be required to make in other corridors, could have a material adverse effect on our business,
financial condition or results of operations.
Over the past several years, we have entered into consent agreements with federal and state authorities,
including FinCEN, the New York Department of Financial Services, the California Department of Financial
Institutions and the Arizona Department of Financial Institutions, relating to the BSA and anti-money laundering
35

requirements and related consumer identification matters. These agreements required us to pay civil penalties and
to take certain measures to enhance our compliance with recordkeeping, reporting, training and agent oversight
requirements under applicable state and federal law. The consent agreements with the New York Department of
Financial Services and the California Department of Financial Institutions were lifted during 2008. However, the
financial services industry and businesses like ours continue to be under significant federal and state regulatory
scrutiny with respect to the BSA and anti-money laundering compliance matters. It is possible that as a result of
periodic examinations or otherwise, we could be subject to deficiency findings, fines, criminal penalties, asset
seizures or enforcement actions that could adversely affect our business, financial condition and results of
operations.
Western Union has received Civil Investigative Demands from certain state attorneys general who have
initiated an investigation into whether the Company took adequate steps to help prevent consumer fraud from
2010 to 2011. The Civil Investigative Demands seek information and documents relating to consumer fraud
complaints that the Company has received and the Companys procedures to help identify and prevent fraudulent
transfers. Due to the stage of the investigation, the Company is unable to predict the outcome of the
investigation, or the possible loss or range of loss, if any, which could be associated with any possible civil
claims that might be brought by one or more of the states. Should such claims be brought, we could face
significant fines, damage awards, or regulatory consequences, or compulsory changes in our business practices
that could have a material adverse effect on our business, financial condition, and results of operations.
The Dodd-Frank Act, as well as the regulations required by that Act and the creation of the Consumer
Financial Protection Bureau could adversely affect us and the scope of our activities, and could adversely
affect our operations, results of operations and financial condition.
The Act, which became law in the United States on July 21, 2010, calls for significant structural reforms and
new substantive regulation across the financial services industry. In addition, the Act created the CFPB, whose
purpose is to issue and enforce consumer protection initiatives governing financial products and services,
including money transfer services. The CFPB will create additional regulatory oversight for us. The Act and
actions by the CFPB could have a significant impact on us by, for example, requiring us to limit or change our
business practices, limiting our ability to pursue business opportunities, requiring us to invest valuable
management time and resources in compliance efforts, imposing additional costs on us, limiting fees we can
charge for services, requiring us to meet more stringent capital, liquidity and leverage ratio requirements,
impacting the value of our assets, delaying our ability to respond to marketplace changes, requiring us to alter our
products and services in a manner that would make our products less attractive to consumers and impair our
ability to offer them profitably, or requiring us to make other changes that could adversely affect our business.
The CFPB has recently issued regulations implementing the remittance provisions of the Act. These
regulations, which become effective in February 2013, will impact our business in a variety of areas. These
include a requirement to provide enhanced pre-transaction disclosures; an obligation to resolve various errors,
including certain errors that may be outside of a remittance providers control; and an obligation to cancel certain
transactions at a consumers request. These requirements and other potential changes under CFPB regulations
could adversely affect our operations and financial results and change the way we operate our business.
We may also be subject to examination by the CFPB, which has initiated a rulemaking process to define
larger participants of a market for other consumer financial products or services. Companies that are included
in a final rule will be subject to direct supervision by the CFPB, which may involve providing reports to the
CFPB and being examined by the CFPB. The scope, frequency, and details of these reports and examinations are
still being developed by the CFPB. In addition, the CFPB has broad authority to enforce consumer financial laws.
In July 2011, many consumer financial protection functions formerly assigned to the federal banking agency and
other agencies were transferred to the CFPB. The CFPB has a large budget and staff, and has broad authority
with respect to our money transfer service and related business. It is authorized to collect fines and provide
consumer restitution in the event of violations, engage in consumer financial education, track consumer
36

complaints, request data and promote the availability of financial services to underserved consumers and
communities. In addition, the CFPB may adopt other regulations governing consumer financial services,
including regulations defining unfair, deceptive, or abusive acts or practices, and new model disclosures. The
CFPB's authority to change regulations adopted in the past by other regulators, or to rescind or ignore past
regulatory guidance, could increase our compliance costs and litigation exposure. Our litigation exposure may
also be increased by the CFPB's authority to limit or ban pre-dispute arbitration clauses.
Furthermore, rules adopted under the Act by governmental agencies may subject our corporate interest rate
and foreign exchange hedging transactions to centralized clearing, centralized trading, collateral posting and
other requirements. Also, our Business Solutions business in the United States may be subjected to increased
regulatory oversight and licensing requirements relating to the foreign exchange derivative products offered to
certain of its customers. In addition, the Act establishes a Financial Stability Oversight Counsel that is authorized
to designate as systemically important non-bank financial companies and payment systems. Companies
designated under either standard will become subject to new regulation and regulatory supervision. If we were
designated under either standard, the additional regulatory and supervisory requirements could result in costly
new compliance burdens that could negatively impact our business.
The effect of the Act and the CFPB on our business and operations will be significant, in part because some of
the Acts implementing regulations have not been issued and the function and scope of the CFPB, the reactions
of our competitors and the responses of consumers and other marketplace participants are uncertain.
Western Union has been the subject of class-action litigation, and remains the subject of other litigation.
Western Union has been the subject of class-action litigation in the United States, alleging that its foreign
exchange rate disclosures failed to adequately inform consumers about the revenue that Western Union and its
agents derive from international remittances. These suits were all settled in or before 2004, without an admission
of liability, and we have made changes in our advertising and consumer forms. Recent changes in law will
require, and future changes in law or future litigation or regulatory action may require, that we modify our
disclosures or our practices further. These modifications could be costly to implement, restrict our ability to
advertise or promote our services, limit the amount of our foreign exchange income and/or change our
consumers behavior.
In addition, as a Company that provides global financial services primarily to consumers, we could be subject
to future class-action lawsuits, other litigation or regulatory action alleging violations of consumer protection or
other laws. We also are subject to claims asserted by consumers based on individual transactions.
The Company and one of its subsidiaries are defendants in two purported class action lawsuits: James P.
Tennille v. The Western Union Company and Robert P. Smet v. The Western Union Company, both of which are
pending in the United States District Court for the District of Colorado. The original complaints asserted claims
for violation of various consumer protection laws, unjust enrichment, conversion and declaratory relief, based on
allegations that the Company waits too long to inform consumers if their money transfers are not redeemed by
the recipients and that we use the unredeemed funds to generate income until the funds are escheated to state
governments. For more information, see Note 6 to our Consolidated Financial Statements in Item 8 of Part II.
Additional civil actions or any criminal actions could adversely affect our business, financial condition and
results of operations.
Current and proposed regulation addressing consumer privacy and data use and security could increase our
costs of operations, which could adversely affect our operations, results of operations and financial condition.
We are subject to requirements relating to privacy and data use and security under federal, state and foreign
laws. Failure to comply with existing privacy and data use and security laws and regulations to which we are
subject, including by reason of inadvertent disclosure of confidential information, could result in fines, sanctions,
37

penalties or other adverse consequences and loss of consumer confidence, which could materially adversely
affect our results of operations, overall business and reputation. While we believe that we are compliant with our
regulatory responsibilities, the legal, political and business environments in these areas are rapidly changing, and
subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program
costs, liability and reputational damage.
In addition, in connection with regulatory requirements to assist in the prevention of money laundering and
terrorist financing and pursuant to legal obligations and authorizations, we make information available to certain
United States federal, state and local, as well as certain foreign government agencies when required by law. In
recent years, these agencies have increased their requests for such information from us and other companies
(both financial service providers and others), particularly in connection with efforts to prevent terrorist financing.
During the same period, there has also been increased public attention regarding the corporate use and disclosure
of personal information, accompanied by legislation and regulations intended to strengthen data protection,
information security and consumer privacy. These regulatory goalsthe prevention of money laundering,
terrorist financing and identity theft and the protection of the individuals right to privacymay conflict, and the
law in these areas is not consistent or settled.
We are subject to unclaimed property laws, and differences between the amounts we have accrued for
unclaimed property and amounts that are claimed by a state or foreign jurisdiction could have a significant
impact on our results of operations and cash flows.
We are subject to unclaimed property laws in the United States and abroad which require us to turn over to
certain government authorities the property of others held by us that has been unclaimed for a specified period of
time, such as unpaid money transfers. We hold property subject to unclaimed property laws and we have an
ongoing program to comply with those laws. In addition, we are subject to audits with regard to our escheatment
practices. Any difference between the amounts we have accrued for unclaimed property and amounts that are
claimed by a state or foreign jurisdiction could have a significant impact on our results of operations and cash
flows. See Unclaimed Property Regulations for further discussion.
Our consolidated balance sheet may not contain sufficient amounts or types of regulatory capital to meet the
changing requirements of our various regulators worldwide, which could adversely affect our business,
financial condition and results of operations.
Our regulators expect us to possess sufficient financial soundness and strength to adequately support our
regulated subsidiaries. We have substantial indebtedness as of December 31, 2011, which could make it more
difficult to meet these requirements if such requirements are increased. In addition, although we are not a bank
holding company for purposes of United States law or the law of any other jurisdiction, as a global provider of
payments services and in light of the changing regulatory environment in various jurisdictions, we could become
subject to new capital requirements introduced or imposed by our regulators that could require us to issue
securities that would qualify as Tier 1 regulatory capital under the Basel Committee accords or retain earnings
over a period of time. Also, our regulators specify the amount and composition of settlement assets that certain of
our subsidiaries must hold in order to satisfy our outstanding settlement obligations. These regulators could
further restrict the type of instruments that qualify as settlement assets or these regulators could require our
regulated subsidiaries to maintain higher levels of settlement assets. Any change or increase in these
requirements could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to the Spin-Off
We were incorporated in Delaware as a wholly-owned subsidiary of First Data on February 17, 2006. On
September 29, 2006, First Data distributed 100% of its money transfer and consumer payments businesses and its
interest in a Western Union money transfer agent, as well as related assets, including real estate, through a
tax-free distribution to First Data shareholders (Spin-off) through this previously owned subsidiary.
38

If the Spin-off does not qualify as a tax-free transaction, First Data and its stockholders could be subject to
material amounts of taxes and, in certain circumstances, we could be required to indemnify First Data for
material taxes pursuant to indemnification obligations under the tax allocation agreement.
First Data received a private letter ruling from the IRS to the effect that, the Spin-off (including certain related
transactions) qualifies as tax-free to First Data, us and First Data stockholders for United States federal income
tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code, assuming, among
other things, the accuracy of the representations made by First Data with respect to certain matters on which the
IRS did not rule. If the factual assumptions or representations made in the private letter ruling request were
determined to be untrue or incomplete, then First Data and ourselves would not be able to rely on the ruling.
The Spin-off was conditioned upon First Datas receipt of an opinion of Sidley Austin LLP, counsel to First
Data, to the effect that, with respect to requirements on which the IRS did not rule, those requirements would be
satisfied. The opinion was based on, among other things, certain assumptions and representations as to factual
matters made by First Data and us which, if untrue or incomplete, would jeopardize the conclusions reached by
counsel in its opinion. The opinion is not binding on the IRS or the courts, and the IRS or the courts may not
agree with the opinion.
If, notwithstanding receipt of the private letter ruling and opinion of tax counsel, the Spin-off were determined
to be a taxable transaction, each holder of First Data common stock who received shares of our common stock in
connection with the Spin-off would generally be treated as receiving a taxable distribution in an amount equal to
the fair value of our common stock received. First Data would recognize taxable gain equal to the excess of the
fair value of the consideration received by First Data in the contribution over First Datas tax basis in the assets
contributed to us in the contribution. If First Data were unable to pay any taxes for which it is responsible under
the tax allocation agreement, the IRS might seek to collect such taxes from Western Union.
Even if the Spin-off otherwise qualified as a tax-free distribution under section 355 of the Internal Revenue
Code, the Spin-off may result in significant United States federal income tax liabilities to First Data if 50% or
more of First Datas stock or our stock (in each case, by vote or value) is treated as having been acquired,
directly or indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the
Spin-off. For purposes of this test, any acquisitions, or any understanding, arrangement or substantial
negotiations regarding an acquisition, within two years before or after the Spin-off are subject to special scrutiny.
With respect to taxes and other liabilities that could be imposed as a result of a final determination that is
inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private letter ruling and
relevant tax opinion) (Spin-off Related Taxes), we, one of our affiliates or any person that, after the Spin-off, is
an affiliate thereof, will be liable to First Data for any such Spin-off Related Taxes attributable solely to actions
taken by or with respect to us. In addition, we will also be liable for 50% of any Spin-off Related Taxes (i) that
would not have been imposed but for the existence of both an action by us and an action by First Data or
(ii) where we and First Data each take actions that, standing alone, would have resulted in the imposition of such
Spin-off Related Taxes. We may be similarly liable if we breach certain representations or covenants set forth in
the tax allocation agreement. If we are required to indemnify First Data for taxes incurred as a result of the
Spin-off being taxable to First Data, it likely would have an adverse effect on our business, financial condition,
results of operations and cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.

39

ITEM 2. PROPERTIES
Properties and Facilities
As of December 31, 2011, we have offices in approximately 60 countries, which includes five owned facilities
and approximately 25 United States and 400 international leased properties. Our owned facilities include our
corporate headquarters located in Englewood, Colorado.
Our owned and leased facilities are used for operational, sales and administrative purposes in support of both
our consumer-to-consumer and global business payments segments and are all currently being utilized. In certain
locations, our offices include customer service centers, where our employees answer operational questions from
agents and customers. Our office in Dublin, Ireland serves as our international headquarters.
We believe that our facilities are suitable and adequate for our current business; however, we periodically
review our facility requirements and may acquire new facilities to meet the needs of our business or consolidate
and dispose of or sublet facilities which are no longer required.
ITEM 3. LEGAL PROCEEDINGS
Western Union has received Civil Investigative Demands from certain state attorneys general who have
initiated an investigation into whether the Company took adequate steps to help prevent consumer fraud from
2010 to 2011. The Civil Investigative Demands seek information and documents relating to consumer fraud
complaints that the Company has received and the Companys procedures to help identify and prevent fraudulent
transfers. Due to the stage of the investigation, the Company is unable to predict the outcome of the
investigation, or the possible loss or range of loss, if any, which could be associated with any possible civil
claims that might be brought by one or more of the states. Should such claims be brought, we could face
significant fines, damage awards, or regulatory consequences, or compulsory changes in our business practices,
that could have a material adverse effect on our business, financial condition, and results of operations.
In October 2011, Elektra del Milenio de C.V. (Elektra), the Companys largest agent in Mexico, served a
Demand for Arbitration on two of the Company's subsidiaries, alleging that the Companys subsidiaries
intentionally breached obligations relating to exclusivity in the parties International Money Transfer Agreement.
Elektra claimed that the alleged breach caused it to lose profits that it would otherwise have earned from offering
the Companys services or other money transfer services. The Companys subsidiaries responded to the Demand
for Arbitration. In February 2012, all claims relating to this matter were resolved through a confidential
settlement in which no party admitted fault.
On July 26, 2010, U.F.C.W. Local 1776 & Participating Employers Pension Fund filed a Verified Shareholder
Double Derivative Complaint and Jury Demand in United States District Court for the District of Colorado,
alleging that the Companys Board of Directors failed to appropriately oversee the Companys compliance
program, particularly in regard to the alleged deficiencies which resulted in the Companys agreement and
settlement with the State of Arizona and other states in early 2010. In addition to naming the Companys Board
members as individual defendants, the complaint names the Company and its subsidiary Western Union
Financial Services, Inc. as nominal defendants. The complaint seeks damages from the individual defendants for
breach of fiduciary duty and waste of corporate assets and an order requiring various corrective measures. On
September 10, 2010, the United States District Court for the District of Colorado dismissed the complaint for
lack of subject matter jurisdiction. On September 23, 2010, the plaintiff re-filed the complaint in Maricopa
County Superior Court in Arizona. The complaint was removed to the United States District Court for the
District of Arizona. On September 29, 2011, the Court denied Defendants motion to dismiss on jurisdictional
grounds. On December 15, 2011, the Company and Western Union Financial Services, Inc. filed a Notice of
Settlement. The terms of the settlement are set forth in a Memorandum of Understanding attached to the Notice
of Settlement and include corporate governance changes that the Company and Western Union Financial
40

Services, Inc. have agreed to make relating to anti-money laundering monitoring. The Memorandum of
Understanding also indicates that the individual defendants deny any wrongdoing or liability with respect to the
plaintiffs claims and that the settlement does not constitute an admission of liability of wrongdoing by any party.
None of the defendants will be required to pay monetary damages. The plaintiffs counsel is seeking attorneys
fees and expenses from the Company not to exceed $850,000. Defendants have agreed not to oppose the amount
of a requested fee and expense award up to that amount. The settlement and the attorneys fee and expense award
are subject to the approval of the United States District Court for the District of Arizona.
In the second quarter of 2009, the Antitrust Division of the United States Department of Justice (DOJ)
served one of the Companys subsidiaries with a grand jury subpoena requesting documents in connection with
an investigation into money transfers, including related foreign exchange rates, from the United States to the
Dominican Republic from 2004 through the date of subpoena. The Company is cooperating fully with the DOJ
investigation. Due to the stage of the investigation, the Company is unable to predict the outcome of the
investigation, or the possible loss or range of loss, if any, which could be associated with the resolution of any
possible criminal charges or civil claims that may be brought against the Company. Should such charges or
claims be brought, the Company could face significant fines, damage awards or regulatory consequences which
could have a material adverse effect on the Companys business, financial condition and results of operations.
The Company is a party to a variety of legal proceedings that arise in the normal course of our business. While
the results of these legal proceedings cannot be predicted with certainty, management believes that the final
outcome of these proceedings will not have a material adverse effect on the Companys results of operations or
financial condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

41

PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock trades on the New York Stock Exchange under the symbol WU. There were
4,763 stockholders of record as of February 17, 2012. This figure does not include an estimate of the
indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing
agencies. The following table presents the high and low prices of the common stock on the New York Stock
Exchange as well as dividends declared per share during the calendar quarter indicated.
Common Stock
Market Price
High
Low

Dividends
Declared
per Share

2011
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 22.03
21.88
20.54
18.48

$ 18.39
19.22
15.00
14.55

$ 0.07
0.08
0.08
0.08

$ 20.26
19.57
17.86
18.97

$ 15.68
14.83
14.65
17.33

$ 0.06
0.06
0.06
0.07

2010
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The following table sets forth stock repurchases for each of the three months of the quarter ended
December 31, 2011:

Total Number of
Shares Purchased*

Average Price
Paid per Share

Total Number of Shares

Purchased as Part of
Publicly Announced
Plans or Programs**

October 1 31 . . . . . . . . . . . . . .
November 1 30 . . . . . . . . . . . .
December 1 31 . . . . . . . . . . . .

3,555

17.99

Total . . . . . . . . . . . . . . . . . . . . . .

3,555

17.99

Remaining Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (In millions)

$ 615.5
$ 615.5
$ 615.5

These amounts represent both shares authorized by the Board of Directors for repurchase under a publicly
announced plan, as described below, as well as shares withheld from employees to cover tax withholding
obligations on restricted stock awards and units that have vested.

**

On February 1, 2011, the Board of Directors authorized $1 billion of common stock repurchases through
December 31, 2012, of which $615.5 million remains available as of December 31, 2011. Management has
historically and may continue to establish prearranged written plans pursuant to Rule 10b5-1. A Rule 10b5-1
plan permits us to repurchase shares at times when we may otherwise be unable to do so, provided the plan
is adopted when we are not aware of material non-public information.

Refer to Note 16 of our Consolidated Financial Statements for information related to our equity compensation
plans.

42

Dividend Policy
During 2011, the Board of Directors declared quarterly cash dividends of $0.08 per common share payable on
December 30, 2011, October 7, 2011 and June 30, 2011, and $0.07 per common share payable on March 31,
2011. During 2010, the Board of Directors declared quarterly cash dividends of $0.07 per common share payable
on December 31, 2010, and $0.06 per common share payable on October 14, 2010, June 30, 2010 and March 31,
2010. The declaration and amount of future dividends will be determined by the Board of Directors and will
depend on our financial condition, earnings, capital requirements, regulatory constraints, industry practice and
any other factors that the Board of Directors believes are relevant. As a holding company with no material assets
other than the capital stock of our subsidiaries, our ability to pay dividends in future periods will be dependent on
our receiving dividends from our operating subsidiaries. Several of our operating subsidiaries are subject to
financial services regulations and their ability to pay dividends may be restricted.
On February 7, 2012, the Board of Directors declared a quarterly cash dividend of $0.10 per share payable on
March 30, 2012.

43

ITEM 6. SELECTED FINANCIAL DATA

The financial information in this Annual Report on Form 10-K is presented on a consolidated basis and
includes the accounts of the Company and our majority-owned subsidiaries. Our selected historical financial data
are not necessarily indicative of our future financial condition, future results of operations or future cash flows.
You should read the information set forth below in conjunction with our historical consolidated financial
statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.
(in millions, except per share data)

Year ended December 31,

2010
2009
2008

2011

2007

Statements of Income Data:

Revenues (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,491.4 $ 5,192.7 $ 5,083.6 $ 5,282.0 $ 4,900.2
Operating expenses (b) (c) (d) . . . . . . . . . . . . . . . . .
4,106.4
3,892.6
3,800.9
3,927.0
3,578.2
Operating income (a) (b) (c) (d) . . . . . . . . . . . . . . .
1,385.0
1,300.1
1,282.7
1,355.0
1,322.0
Interest income (e) . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
2.8
9.4
45.2
79.4
Interest expense (f) . . . . . . . . . . . . . . . . . . . . . . . . .
(181.9)
(169.9)
(157.9)
(171.2)
(189.0)
Other income/(expense), net, excluding interest
income and interest expense (g) . . . . . . . . . . . . .
66.3
12.2
(2.7)
9.7
10.0
Income before income taxes
(a) (b) (c) (d) (e) (f) (g) . . . . . . . . . . . . . . . . . . . .
1,274.6
1,145.2
1,131.5
1,238.7
1,222.4
Net income (a) (b) (c) (d) (e) (f) (g) (h) . . . . . . . . .
1,165.4
909.9
848.8
919.0
857.3
Depreciation and amortization . . . . . . . . . . . . . . . .
192.6
175.9
154.2
144.0
123.9
Cash Flow Data:
Net cash provided by operating activities (i) . . . . .
Capital expenditures (j) . . . . . . . . . . . . . . . . . . . . . .
Common stock repurchased (k) . . . . . . . . . . . . . . . .

1,174.9
(162.5)
(803.9)

Earnings Per Share Data:

Basic (a) (b) (c) (d) (e) (f) (g) (h) (k) . . . . . . . . . . . $
Diluted (a) (b) (c) (d) (e) (f) (g) (h) (k) . . . . . . . . . . $
Cash dividends to stockholders per common share
(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Key Indicators (unaudited):
Consumer-to-consumer transactions (m) . . . . . . . .
Global business payments transactions (n) . . . . . . .

Balance Sheet Data:

Settlement assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement obligations . . . . . . . . . . . . . . . . . . . . . . .
Total borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders equity/(deficiency) . . . . . . . . .

994.4
(113.7)
(581.4)

1,218.1
(98.9)
(400.2)

1,253.9
(153.7)
(1,314.5)

1,103.5
(192.1)
(726.8)

1.85
1.84

$
$

1.37
1.36

$
$

1.21
1.21

$
$

1.26
1.24

$
$

1.13
1.11

0.31

0.25

0.06

0.04

0.04

225.8
425.0

213.7
404.9

196.1
414.8

188.1
412.1

As of December 31,
2009

2011

2010

$ 3,091.2
9,069.9
3,091.2
3,583.2
8,175.1
894.8

$ 2,635.2
7,929.2
2,635.2
3,289.9
7,346.5
582.7

$ 2,389.1
7,353.4
2,389.1
3,048.5
6,999.9
353.5

2008

167.7
404.5
2007

$ 1,207.5 $ 1,319.2
5,578.3
5,784.2
1,207.5
1,319.2
3,143.5
3,338.0
5,586.4
5,733.5
(8.1)
50.7

(a) Revenue for the years ended December 31, 2011, 2010 and 2009 included $129.9 million, $111.0 million
and $30.8 million, respectively, of revenue related to the Custom House acquisition in September 2009,
which has subsequently been rebranded to Western Union Business Solutions. Revenue for the year ended
December 31, 2011 included $35.2 million of revenue related to Travelex Global Business Payments
(TGBP), which was acquired in November 2011.
44

(b) Our stock-based compensation expense in 2007 included a charge of $22.3 million related to the vesting of the
remaining converted unvested Western Union stock-based awards upon the completion of the acquisition of
First Data Corporation on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co.
(c) Operating expenses for the years ended December 31, 2011 and 2010 included $46.8 million and
$59.5 million of restructuring and related expenses, respectively, associated with a restructuring plan
designed to reduce overall headcount and migrate positions from various facilities, primarily within the
United States and Europe, to regional operating centers. Operating expenses for the year ended
December 31, 2008 included $82.9 million of restructuring and related expenses associated with the closure
of our facilities in Missouri and Texas and other reorganization plans. No restructuring and related expenses
were incurred during 2009 or 2007.
(d) Operating expenses for the year ended December 31, 2009 included an accrual of $71.0 million resulting
from an agreement and settlement, which resolved all outstanding legal issues and claims with the State of
Arizona and required us to fund a multi-state not-for-profit organization promoting safety and security along
the United States and Mexico border, in which California, Texas and New Mexico have participated with
Arizona. The settlement agreement was signed on February 11, 2010.
(e) Interest income consists of interest earned on cash balances not required to satisfy settlement obligations
and in connection with loans previously made to certain existing agents.
(f)

Interest expense primarily relates to our outstanding borrowings.

(g) In 2011, we recognized gains of $20.5 million and $29.4 million, in connection with the remeasurement of
our former equity interests in Finint, S.r.l. and Angelo Costa, S.r.l., respectively, to fair value. These equity
interests were remeasured in conjunction with our purchases of the remaining interests in these entities that
we previously did not hold. Additionally, in 2011, we recognized a $20.8 million net gain on foreign
currency forward contracts with maturities of less than one year entered into in order to reduce the economic
variability related to the cash amounts used to fund acquisitions of businesses with purchase prices
denominated in foreign currencies, primarily for the TGBP acquisition. In 2009, given the increased
uncertainty, at that time, surrounding the numerous third-party legal claims associated with our receivable
from the Reserve International Liquidity Fund, Ltd., we reserved $12.0 million representing the estimated
impact of a pro-rata distribution. In 2010, we recorded a recovery of this reserve of $6.3 million due to the
final settlement of this receivable.
(h) In December 2011, we reached an agreement with the United States Internal Revenue Service (IRS
Agreement) resolving substantially all of the issues related to the restructuring of our international
operations in 2003. As a result of the IRS Agreement, we recognized a tax benefit of $204.7 million related
to the adjustment of reserves associated with this matter.
(i)

Net cash provided by operating activities decreased during the year ended December 31, 2010, primarily
due to a $250 million tax deposit made relating to United States federal tax liabilities, including those
arising from our 2003 international restructuring, which were previously accrued in our consolidated
financial statements. Also impacting net cash provided by operating activities during the year ended
December 31, 2010 were cash payments of $71.0 million related to the agreement and settlement with the
State of Arizona and other states.

(j)

Capital expenditures include capitalization of contract costs, capitalization of purchased and developed
software and purchases of property and equipment.

(k) On February 1, 2011, the Board of Directors authorized $1 billion of common stock repurchases through
December 31, 2012, of which $615.5 million remains available as of December 31, 2011. During the years
ended December 31, 2011, 2010, 2009, 2008 and 2007, we repurchased 40.3 million, 35.6 million,
24.8 million, 58.1 million and 34.7 million shares, respectively.
45

(l)

During 2011, the Board of Directors declared quarterly cash dividends of $0.08 per common share in each
of the last three quarters and $0.07 per common share in the first quarter. During 2010, the Board of
Directors declared quarterly cash dividends of $0.07 per common share in the fourth quarter and $0.06 per
common share in each of the first three quarters. During the fourth quarter of 2009, the Board of Directors
declared an annual cash dividend of $0.06 per common share. During the fourth quarter of 2008 and 2007,
the Board of Directors declared an annual cash dividend of $0.04 per common share.

(m) Consumer-to-consumer transactions include Western Union, Vigo and Orlandi Valuta branded consumer-toconsumer money transfer services worldwide.
(n) Global business payments transactions include the Western Union Payments service, formerly Quick
Collect, Convenience Pay, Speedpay, Equity Accelerator, Just in Time EFT, Pago Fcil, and Western Union
Business Solutions. Amounts also include transactions for Custom House and TGBP since the acquisitions
in September 2009 and November 2011, respectively.

46

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the consolidated financial statements and the
notes to those statements included elsewhere in this Annual Report on Form 10-K. This Annual Report on
Form 10-K contains certain statements that are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Certain statements contained in the Managements Discussion and Analysis of
Financial Condition and Results of Operations are forward-looking statements that involve risks and
uncertainties. The forward-looking statements are not historical facts, but rather are based on current
expectations, estimates, assumptions and projections about our industry, business and future financial results.
Our actual results could differ materially from the results contemplated by these forward-looking statements due
to a number of factors, including those discussed in other sections of this Annual Report on Form 10-K. See
Risk Factors and Forward-looking Statements.
Overview
We are a leading provider of money movement services, operating in two business segments:

Consumer-to-consumer money transfer services between consumers, primarily through a global

network of third-party agents using our multi-currency, real-time money transfer processing systems. This
service is available for international cross-border transfers that is, the transfer of funds from one
country to anotherand, in certain countries, intra-country transfersthat is, money transfers from one
location to another in the same country.

Global business payments the processing of payments from consumers or businesses to other
businesses. Our business payments services allow consumers to make payments to a variety of
organizations including utilities, auto finance companies, mortgage servicers, financial service providers,
government agencies and other businesses. Our existing Western Union Business Solutions business
(Business Solutions) and Travelex Global Business Payments (TGBP), which was acquired in
November 2011, are also included in this segment. These businesses facilitate business-to-business
payments, primarily for cross-border, cross-currency transactions. The majority of the segments revenue
was generated in the United States during all periods presented. However, international expansion and
other key strategic initiatives, including TGBP, have resulted in international revenue continuing to
increase in this segment.

Businesses not considered part of the segments described above are categorized as Other and represented 2%
or less of consolidated revenue during the years ended December 31, 2011, 2010 and 2009.
Significant Financial and Other Highlights
Significant financial and other highlights for the year ended December 31, 2011 included:

We generated $5,491.4 million in total consolidated revenues compared to $5,192.7 million in the prior
year, representing a year-over-year increase of 6%. The acquisition of TGBP contributed $35.2 million to
revenue for 2011.

We incurred $46.8 million and $59.5 million of restructuring and related expenses as described within
Operating expenses overview in the years ended December 31, 2011 and 2010, respectively.

We generated $1,385.0 million in consolidated operating income compared to $1,300.1 million in the prior
year, representing an increase of 7%. The results include the restructuring and related expenses mentioned
above.
47

Our operating income margin was 25% during the year ended December 31, 2011, which is flat year-overyear. These results include the restructuring and related expenses mentioned above.

We completed three acquisitions in the year ended December 31, 2011:

In April 2011, we completed the acquisition of one of our largest agents, European-based Angelo
Costa, S.r.l. (Costa), for cash consideration of $135.7 million. We recognized a pre-tax gain of $29.4
million in connection with the remeasurement of our former equity interest in Costa to fair value.
In October 2011, we completed the acquisition of one of our largest agents, European-based Finint
S.r.l. (Finint), for cash consideration of $139.4 million. We recognized a pre-tax gain of $20.5
million in connection with the remeasurement of our former equity interest in Finint to fair value.
In November 2011, we completed the acquisition of the business-to-business payment business known
as TGBP from Travelex Holdings Limited for cash consideration of $967.8 million.

In December 2011, we reached an agreement with the United States Internal Revenue Service (IRS
Agreement) resolving substantially all of the issues related to the restructuring of our international
operations in 2003. As a result of the IRS Agreement, we recognized a tax benefit of $204.7 million
related to the adjustment of reserves associated with this matter.

Consolidated net income was $1,165.4 million and $909.9 million for the years ended December 31, 2011
and 2010, respectively, representing a year-over-year increase of 28%. In addition to the tax benefit
described above, the results include $32.0 million and $39.3 million in restructuring and related expense,
net of tax, respectively. Additionally, for 2011, we recognized gains of $12.7 million and $18.3 million,
net of tax, related to our acquisitions of Finint and Costa, respectively, and $13.5 million, net of tax,
related to foreign currency forward contracts entered into to reduce the economic variability related to the
cash amounts used to fund acquisitions of businesses with purchase prices denominated in foreign
currencies, primarily for the TGBP acquisition.

Our consumers transferred $81 billion and $76 billion in consumer-to-consumer principal for the years
ended December 31, 2011 and 2010, respectively, of which $73 billion and $69 billion related to crossborder principal, which represented an increase of 7% in both consumer-to-consumer principal and crossborder principal over the prior year.

Consolidated cash flows provided by operating activities were $1,174.9 million and $994.4 million for the
years ended December 31, 2011 and 2010, respectively. Cash flows provided by operating activities in
2010 were impacted by a $250 million tax deposit we made relating to United States federal tax liabilities,
including those arising from our 2003 international restructuring, which have been previously accrued for
in our consolidated financial statements.

Our strategic priorities for ensuring our long-term success include accelerating profitable growth in our retail
channels, developing new products and services for our consumers, including expanding our electronic channel
offerings to offer more choice and gain new consumers, expanding our business-to-business payments solutions,
and improving our processes and productivity to help drive growth and improve our profitability. Significant
factors affecting our financial condition and results of operations include:

Transaction volume is the primary generator of revenue in our businesses. Transaction volume in our
consumer-to-consumer segment is affected by, among other things, the size of the international migrant
population and individual needs to transfer funds in emergency situations. As noted elsewhere in this
Annual Report on Form 10-K, a reduction in the size of the migrant population, interruptions in migration
48

patterns or reduced employment opportunities including those resulting from any changes in immigration
laws, economic development patterns or political events, could adversely affect our transaction volume.
For discussion on how these factors have impacted us in recent periods, refer to the consumer-to-consumer
segment discussion below.

Revenue is also impacted by changes in the fees we charge consumers, the principal sent per transaction
and by the variance in the exchange rate set by us to the customer and the rate at which we or our agents
are able to acquire currency. We intend to continue to implement future strategic fee reductions and
actions to adjust foreign exchange spreads, where appropriate, taking into account growth opportunities
and including competitive factors. Decreases in our fees or foreign exchange spreads generally reduce
margins in the near term, but are done in anticipation that they will result in increased transaction volumes
and increased revenues over time.

A majority of our cost structure is comprised of agent commissions, which are generally variable and
fluctuate as revenues fluctuate.

Fluctuations in the exchange rate between the United States dollar and other currencies impact our
transaction fee and foreign exchange revenue. The impact to earnings per share is less than the revenue
impact due to the translation of expenses and our foreign currency hedging program.

Spin-off from First Data

We were incorporated in Delaware as a wholly-owned subsidiary of First Data on February 17, 2006. On
September 29, 2006, First Data distributed all of its money transfer and consumer payments businesses and its
interest in a Western Union money transfer agent, as well as its related assets, including real estate, through a
tax-free distribution to First Data shareholders (Spin-off) through this previously owned subsidiary.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and
include the accounts of our Company and its majority-owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated.
Components of Revenues and Expenses
The following briefly describes the components of revenues and expenses as presented in the Consolidated
Statements of Income. Descriptions of our revenue recognition policies are included in Item 8, Note 2
Summary of Significant Accounting Policies in our Consolidated Financial Statements.
Transaction feesTransaction fees are charged for sending consumer-to-consumer money transfers and for
global business payments services. Consumer-to-consumer transaction fees generally vary according to the
principal amount of the money transfer and the locations from and to which the funds are sent and received.
Transaction fees represented 77% of our total consolidated revenues for the year ended December 31, 2011.
Foreign exchange revenuesIn certain consumer-to-consumer money transfer and global business payments
transactions involving different currencies, we generate revenues based on the difference between the exchange
rate set by us to the customer and the rate at which we or our agents are able to acquire currency. In our
consumer-to-consumer business, foreign exchange revenue is primarily driven by international
consumer-to-consumer cross-currency transactions. Also, as a result of the acquisitions of Custom House, Ltd.
(Custom House) and TGBP, our foreign exchange revenues have increased. Foreign exchange revenues
represented 21% of our total consolidated revenues for the year ended December 31, 2011.
49

Other revenuesOther revenues primarily consist of commissions and fees we receive in connection with the
sale of money orders, investment income primarily derived from interest generated on consumer-to-consumer
money transfer, money order and payment services settlement assets as well as realized net gains and losses from
such assets and enrollment fees received when consumers enroll in our Equity Accelerator program (a recurring
mortgage payment service program). Other revenues represented 2% of our total consolidated revenue for the
year ended December 31, 2011. Prior to October 1, 2009, our money orders were issued by Integrated Payment
Systems Inc. (IPS), a subsidiary of First Data, from whom we received a commission. Effective October 1,
2009, we assumed the responsibility for issuing money orders and no longer receive a commission from IPS. We
now recognize fees and investment income derived from interest generated on money order settlement assets as
well as realized net gains and losses from such assets similar to our consumer-to-consumer money transfer and
payment services settlement assets.
Cost of servicesCost of services primarily consists of agent commissions, which represent approximately
70% of total cost of services, and expenses for call centers, settlement operations, and related information
technology costs. Expenses within these functions include personnel, software, equipment, telecommunications,
bank fees, depreciation and amortization and other expenses incurred in connection with providing money
transfer and other payment services.
Selling, general and administrativeSelling, general and administrative, or SG&A, primarily consists of
salaries, wages and related expenses paid to sales and administrative personnel, as well as certain advertising and
promotional costs and other selling and administrative expenses.
Interest incomeInterest income consists of interest earned on cash balances not required to satisfy settlement
obligations and in connection with loans previously made to certain existing agents.
Interest expenseInterest expense represents interest incurred in connection with outstanding borrowings,
including applicable amounts associated with interest rate swaps.
Derivative gains/(losses), netRepresents the portion of the change in fair value of foreign currency
accounting hedges that is excluded from the measurement of effectiveness, which includes (a) differences
between changes in forward rates and spot rates and (b) gains or losses on the contract and any offsetting
positions during periods in which the instrument is not designated as a hedge. We also include in this line item
changes in the fair value of derivative contracts, consisting of forward contracts with maturities of less than one
year entered into to reduce the economic variability related to the cash amounts used to fund acquisitions of
businesses with purchase prices denominated in foreign currencies. Although the majority of changes in the value
of our hedges are deferred in accumulated other comprehensive income or loss until settlement (i.e., spot rate
changes), the remaining portion of changes in value are recognized in income as they occur. Derivative gains and
losses do not include fluctuations in foreign currency forward contracts intended to mitigate exposures on
settlement activities of our consumer-to-consumer money transfer business or on certain foreign currency
denominated cash positions. Gains and losses associated with those foreign currency forward contracts are
included in Selling, general and administrative expenses. Derivative gains and losses also do not include
fluctuations in foreign currency forward and option contracts used in our business-to-business payments
operations. The impact of these contracts is classified within Foreign exchange revenues in the Consolidated
Statements of Income.
Other income, netOther income, net is comprised primarily of gains on revaluation of equity interests,
equity earnings from equity method investments and miscellaneous income and expenses.
Results of Operations
The following discussion of our consolidated results of operations and segment results refers to the year ended
December 31, 2011 compared to the same period in 2010 and the year ended December 31, 2010 compared to the
same period in 2009. The results of operations should be read in conjunction with the discussion of our segment
50

results of operations, which provide more detailed discussions concerning certain components of the
Consolidated Statements of Income. All significant intercompany accounts and transactions between our
Companys segments have been eliminated.
During the year ended December 31, 2011, we reached an agreement with the United States Internal Revenue
Service (IRS) resolving substantially all of the issues related to the restructuring of our international operations
in 2003. As a result of the IRS Agreement, we recognized a tax benefit of $204.7 million related to the
adjustment of reserves associated with this matter. For additional information, refer to Income taxes.
We incurred expenses of $46.8 million and $59.5 million for the years ended December 31, 2011 and 2010,
respectively, for restructuring and related activities, which have not been allocated to segments. No restructuring
and related expenses were recognized in the corresponding period in 2009. While these items are identifiable to
our segments, they are not included in the measurement of segment operating profit provided to the chief
operating decision maker (CODM) for purposes of assessing segment performance and decision making with
respect to resource allocation. For additional information on restructuring and related activities refer to
Operating expenses overview.
During the year ended December 31, 2009, we recorded a $71.0 million settlement accrual, which was not
allocated to the segments. While this item was identifiable to our consumer-to-consumer segment, it was not
included in the measurement of segment operating profit provided to the CODM for purposes of assessing
segment performance and decision making with respect to resource allocation. For additional information on the
settlement accrual, refer to Selling, general and administrative expenses.

51

The following table sets forth our consolidated results of operations for the years ended December 31, 2011,
2010 and 2009.
Years Ended December 31,
2011
2010
2009

(in millions, except per share amounts)

Revenues:
Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .

% Change
2011
2010
vs. 2010
vs. 2009

$ 4,220.2
1,151.2
120.0

$ 4,055.3
1,018.8
118.6

$ 4,036.2
910.3
137.1

4%
13%
1%

0%
12%
(13)%

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses:
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . .

5,491.4

5,192.7

5,083.6

6%

2%

3,102.0
1,004.4

2,978.4
914.2

2,874.9
926.0

4%
10%

4%
(1)%

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,106.4

3,892.6

3,800.9

5%

2%

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income/(expense):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative gains/(losses), net . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . .

1,385.0

1,300.1

1,282.7

7%

1%

Total other expense, net . . . . . . . . . . . . . . . . . . . . . .

5.2
(181.9)
14.0
52.3

2.8
(169.9)
(2.5)
14.7

9.4
(157.9)
(2.8)
0.1

86%
7%
*
*

(70)%
8%
*
*

(110.4)

(154.9)

(151.2)

(29)%

2%

1,131.5
282.7

11%
(54)%

1%
(17)%

Income before income taxes . . . . . . . . . . . . . . . . . . .

Provision for income taxes . . . . . . . . . . . . . . . . . . . .

1,274.6
109.2

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,165.4

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.85
1.84
630.6
634.2

1,145.2
235.3
$

909.9

848.8

28%

7%

$
$

1.37
1.36

$
$

1.21
1.21

35%
35%

13%
12%

666.5
668.9

698.9
701.0

* Calculation not meaningful

Revenues overview
The majority of transaction fees and foreign exchange revenues were contributed by our
consumer-to-consumer segment for all periods presented, which is discussed in greater detail in Segment
Discussion.
2011 compared to 2010
Consolidated revenue increased 6% during the year ended December 31, 2011 due to consumer-to-consumer
transaction growth and the weakening of the United States dollar compared to most other foreign currencies,
which positively impacted revenue, offset by slight price reductions. The weakening of the United States dollar
52

compared to most other foreign currencies positively impacted revenue growth by approximately 1% in the year
ended December 31, 2011. The acquisition of TGBP contributed $35.2 million or 1% of revenue for the year
ended December 31, 2011.
The Europe, Middle East, Africa and South Asia (EMEASA) region of our consumer-to-consumer segment,
which represented 43% of our total consolidated revenue for the year ended December 31, 2011, experienced
revenue growth primarily driven by most of the same factors described above. The United Kingdom, France,
Germany, and the Gulf States continued to experience revenue growth during the year ended December 31, 2011,
which was partially offset by softness in Southern Europe and Russia and declines resulting from the political
unrest in Libya and the Ivory Coast.
The Americas region (including North America, Central America, the Caribbean and South America) of our
consumer-to-consumer segment, which represented 32% of our total consolidated revenue for the year ended
December 31, 2011, experienced revenue growth due to transaction growth, slightly offset by pricing reductions.
Foreign exchange revenues increased for the year ended December 31, 2011 compared to the same period in
2010 primarily due to increasing foreign exchange revenues in our consumer-to-consumer segment, driven
primarily by the increased amount of cross-border principal sent. Additionally, foreign exchange revenues were
positively impacted by the acquisition of TGBP and revenue growth experienced in our existing Business
Solutions business.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States
dollar have resulted in a benefit to transaction fees and foreign exchange revenues for the year ended
December 31, 2011 of $38.0 million over the previous year, net of foreign currency hedges, that would not have
occurred had there been constant currency rates. The largest benefit was related to the EMEASA region.
2010 compared to 2009
Consolidated revenue increased 2% during the year ended December 31, 2010 due to consumer-to-consumer
transaction growth and the acquisition of Custom House, which contributed $111.0 million to revenue in 2010
and $30.8 million in 2009. Transaction growth and incremental Custom House revenue were offset by price
decreases, primarily related to pricing reductions taken in the domestic business (transactions between and within
the United States and Canada) commencing in the fourth quarter of 2009, declines in our United States bill
payments businesses, geographic and product mix, including a higher percentage of revenue earned from intracountry activity, which has a lower revenue per transaction, and the strengthening of the United States dollar
compared to most other foreign currencies, which negatively impacted revenue.
The EMEASA region of our consumer-to-consumer segment, which represented 44% of our total consolidated
revenue for the year ended December 31, 2010, experienced flat revenue despite transaction growth. Transaction
growth was offset by the strengthening of the United States dollar in the region compared to most other foreign
currencies, which negatively impacted revenue, and many of the same factors described above.
The Americas region of our consumer-to-consumer segment, which represented 31% of our total consolidated
revenue for the year ended December 31, 2010, experienced revenue increases due to strong transaction growth,
although the increase was mostly offset by the impact of pricing actions taken in our domestic business in the
fourth quarter of 2009.
The global business payments segment, which is discussed in greater detail in Segment Discussion, also
experienced revenue growth during the year ended December 31, 2010 compared to the prior year due to our
acquisition of Custom House, which was partially offset by declines in our United States cash-based bill
payments businesses.
53

Foreign exchange revenues increased for the year ended December 31, 2010 over 2009 primarily due to
foreign exchange revenues contributed from our acquisition of Custom House. In addition to the impact of
Custom House, foreign exchange revenues in the consumer-to-consumer segment also grew, driven primarily by
revenue from the international business outside of the United States.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States
dollar have resulted in a reduction of transaction fee and foreign exchange revenue for the year ended
December 31, 2010 of $36.8 million over the previous year, net of foreign currency hedges, that would not have
occurred had there been constant currency rates. The largest impact was related to the EMEASA region.
Operating expenses overview
Restructuring and related activities
On May 25, 2010 and as subsequently revised, our Board of Directors approved a restructuring plan (the
Restructuring Plan) designed to reduce our overall headcount and migrate positions from various facilities,
primarily within North America and Europe, to regional operating centers. As of September 30, 2011, we had
incurred all of the expenses related to this Restructuring Plan. Total expense incurred under the Restructuring
Plan for the period from May 25, 2010 through December 31, 2011 was $106 million, consisting of $75 million
for severance and employee related benefits, $5 million for facility closures, including lease terminations, and
$26 million for other expenses. Included in these expenses are $2 million of non-cash expenses related to fixed
asset and leasehold improvement write-offs and accelerated depreciation at impacted facilities. Total cost savings
of approximately $55 million were generated in 2011. Cost savings of approximately $70 million are expected to
be generated in 2012 and annually thereafter.
For the years ended December 31, 2011 and 2010, restructuring and related expenses of $10.6 million and
$15.0 million, respectively, are classified within Cost of services and $36.2 million and $44.5 million,
respectively, are classified within Selling, general and administrative in the Consolidated Statements of
Income.
Cost of services
Cost of services increased for the year ended December 31, 2011 compared to the same period in 2010
primarily due to agent commissions, which increase in relation to revenue increases, the weakening of the United
States dollar compared to most other foreign currencies, which resulted in a negative impact on the translation of
our expenses, and incremental operating costs associated with TGBP, partially offset by commission savings
resulting from the acquisitions of Finint and Costa, and the lowering of certain other agent commission rates.
Cost of services as a percentage of revenue was 56% and 57% for the years ended December 31, 2011 and 2010,
respectively. The decrease in cost of services as a percentage of revenue was primarily due to commission
savings resulting from the acquisitions of Finint and Costa, offset by negative currency impacts.
Cost of services increased for the year ended December 31, 2010 compared to the same period in the prior year
primarily due to incremental costs, including those related to Custom House, our money order business and
advancing our electronic channel initiatives, including our web and account based money transfer services; agent
commissions, which primarily increase in relation to revenue increases; and restructuring and related expenses of
$15.0 million, offset by operating efficiencies, primarily decreased bad debt expense. Cost of services as a
percentage of revenue was 57% for both years ended December 31, 2010 and 2009 as incremental operating
costs, including costs associated with our money order business and advancing our electronic channel initiatives,
including our web and account based money transfer services, and restructuring and related expenses were offset
by operating efficiencies, primarily decreased bad debt expense.

54

Selling, general and administrative

Selling, general and administrative expenses (SG&A) increased for the year ended December 31, 2011
compared to the same period in 2010 primarily due to increased expenses resulting from the acquisitions of
TGBP, Finint and Costa, including deal and integration costs associated with these acquisitions, investments in
strategic initiatives, and the weakening of the United States dollar compared to most other foreign currencies,
which resulted in a negative impact on the translation of our expenses, partially offset by restructuring savings.
SG&A decreased for the year ended December 31, 2010 compared to the same period in the prior year due to
the settlement accrual that was recorded in 2009, as described below, lower marketing-related expenditures and
operating efficiencies, offset by incremental costs associated with Custom House and our retail expansion in
Europe pursuant to the Payment Services Directive, restructuring and related expenses of $44.5 million and
higher employee compensation costs.
During the year ended December 31, 2009, we recorded an accrual of $71.0 million for an agreement and
settlement with the State of Arizona and other states. On February 11, 2010, we signed this agreement and
settlement, which resolved all outstanding legal issues and claims with the State of Arizona and required us to
fund a multi-state not-for-profit organization promoting safety and security along the United States and Mexico
border, in which California, Texas and New Mexico are participating with Arizona. The accrual included
amounts for reimbursement to the State of Arizona for its costs associated with this matter. In addition, as part of
the agreement and settlement, we have made and expect to make certain investments in our compliance programs
along the United States and Mexico border and a monitor has been engaged for those programs. The costs of the
investments in our programs and for the monitor are expected to reach up to $23 million over the period from
signing to 2013.
During the years ended December 31, 2011, 2010 and 2009, marketing-related expenditures, principally
classified within SG&A, were approximately 4.1%, 4.1%, and 4.7%, respectively, of revenue. Marketing-related
expenditures include advertising, events, loyalty programs and the cost of employees dedicated to marketing
activities. When making decisions with respect to marketing investments, we review opportunities for advertising
and other marketing-related expenditures together with opportunities for fee adjustments, as discussed in
Segment Discussion, for consumer-to-consumer revenues and other initiatives in order to best maximize the
return on these investments.
Total other expense, net
Total other expense, net decreased during the year ended December 31, 2011 compared to the same period in
2010 due to the gains of $20.5 million and $29.4 million in connection with the remeasurement of our former
equity interests in Finint and Costa, respectively, to fair value. Additionally, during the year ended December 31,
2011, we recognized a $20.8 million net gain on foreign currency forward contracts with maturities of less than
one year entered into in order to reduce the economic variability related to the cash amounts used to fund
acquisitions of businesses with purchase prices denominated in foreign currencies, primarily for the TGBP
acquisition. These amounts were partially offset by increased interest expense in 2011 due to our debt issuances.
Total other expense, net increased during the year ended December 31, 2010 compared to 2009 primarily due
to an increase in interest expense resulting from our $250 million note issuance and financing costs incurred in
connection with our note exchange, and a decrease in interest income due to lower short-term interest rates and
the repayment of a note receivable due from an agent. These amounts were partially offset by the recovery of
$6.3 million of the $12 million reserve recorded in the prior year against our receivable from the Reserve
International Liquidity Fund due to the final settlement.

55

Income taxes
Our effective tax rates on pre-tax income were 8.6%, 20.5% and 25.0% for the years ended December 31,
2011, 2010 and 2009, respectively. The decrease in our effective tax rate for the year ended December 31, 2011
is primarily due to an agreement with the IRS resolving substantially all of the issues related to the restructuring
of our international operations in 2003, as described below, slightly offset by higher taxes associated with the
Finint and Costa remeasurement gains. The tax rate for the year ended December 31, 2010 was impacted by a
cumulative tax planning benefit from certain foreign acquisitions and the settlement with the IRS of certain
issues relating to the 2002-2004 tax years. We continue to benefit from an increasing proportion of profits being
foreign-derived, and therefore taxed at lower rates than our combined federal and state tax rates in the United
States.
In December 2011, we reached an agreement with the IRS resolving substantially all of the issues related to
the restructuring of our international operations in 2003. As a result of the IRS Agreement, we expect to make
cash payments in 2012 of approximately $190 million, which are in addition to the $250 million tax deposit we
made with the IRS in 2010. This deposit limits the further accrual of interest charges with respect to our related
tax liabilities, to the extent of the deposit. The $250 million refundable tax deposit is recorded as a reduction to
Income taxes payable in the consolidated balance sheets as of December 31, 2011. Also as a result of the IRS
Agreement, we recognized a tax benefit of $204.7 million related to the adjustment of reserves associated with
this matter. We also expect the settlement with the IRS to result in a lower effective tax rate in future years.
We have established contingency reserves for a variety of material, known tax exposures. As of December 31,
2011, the total amount of tax contingency reserves was $135.0 million, including accrued interest and penalties,
net of related benefits. Our reserves reflect our judgment as to the resolution of the issues involved if subject to
judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can
be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that
does not exceed our related reserve. With respect to these reserves, our income tax expense would include (i) any
changes in tax reserves arising from material changes during the period in facts and circumstances (i.e. new
information) surrounding a tax issue and (ii) any difference from our tax position as recorded in the financial
statements and the final resolution of a tax issue during the period. Such resolution could materially increase or
decrease income tax expense in our consolidated financial statements in future periods and could impact our
operating cash flows.
Earnings per share
During the years ended December 31, 2011, 2010 and 2009, basic earnings per share were $1.85, $1.37 and
$1.21, respectively, and diluted earnings per share were $1.84, $1.36 and $1.21, respectively. Unvested shares of
restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential
dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted
stock have vested. As of December 31, 2011, 2010 and 2009, there were 17.1 million, 34.0 million and
37.5 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the
diluted earnings per share calculation under the treasury stock method as their effect was anti-dilutive.
Of the 30.7 million, 37.5 million and 42.8 million outstanding options to purchase shares of our common stock
as of December 31, 2011, 2010 and 2009, respectively, approximately 32%, 35% and 40%, respectively, were
held by employees of First Data.
Earnings per share increased for the year ended December 31, 2011 compared to the corresponding previous
periods, respectively, as a result of the previously described factors impacting net income, mainly from the tax
related benefit discussed above, and lower weighted-average shares outstanding. Earnings per share increased for
the year ended December 31, 2010 compared to the corresponding previous periods, respectively, as a result of
the previously described factors impacting net income and lower weighted-average shares outstanding. The lower
number of shares outstanding was due to stock repurchases exceeding stock option exercises.
56

Segment Discussion
We manage our business around the consumers and businesses we serve and the types of services we offer.
Each of our two segments addresses a different combination of consumer groups, distribution networks and
services offered. Our segments are consumer-to-consumer and global business payments. Businesses not
considered part of these segments are categorized as Other.
The business segment measurements provided to, and evaluated by, our CODM are computed in accordance
with the following principles:

The accounting policies of the reporting segments are the same as those described in the summary of
significant accounting policies.

Corporate and other overhead is allocated to the segments primarily based on a percentage of the
segments revenue compared to total revenue.

Expenses incurred in connection with mergers and acquisitions are included in Other.

We incurred expenses of $46.8 million and $59.5 million for restructuring and related activities for the
years ended December 31, 2011 and 2010, respectively, which were not allocated to segments. No
expenses were recognized for restructuring and related activities in 2009. While these items were
identifiable to our segments, they were not included in the measurement of segment operating profit
provided to the CODM for purposes of assessing segment performance and decision making with respect
to resource allocation. For additional information on restructuring and related activities, refer to
Operating expenses overview.

During 2009, we recorded an accrual of $71.0 million resulting from the multi-state agreement and settlement,
which was not allocated to the segments. While this item was identifiable to our consumer-to-consumer
segment, it was not included in the measurement of segment operating profit provided to the CODM for
purposes of assessing segment performance and decision making with respect to resource allocation. For
additional information on the settlement accrual, refer to Operating expenses overview.

All items not included in operating income are excluded from the segments.

The following table sets forth the components of segment revenues as a percentage of the consolidated totals
for the years ended December 31, 2011, 2010 and 2009.
Years Ended December 31,
2011
2010
2009

Consumer-to-consumer (a)
EMEASA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43%
32%
9%

44%
31%
9%

45%
32%
8%

Total consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84%
14%
2%

84%
14%
2%

85%
14%
1%

100%

100%

100%

(a) The consumer-to-consumer geographic split is determined based upon the region where the money transfer
is initiated and the region where the money transfer is paid. For transactions originated and paid in different
regions, we split the revenue between the two regions, with each region receiving 50%. For money transfers
initiated and paid in the same region, 100% of the revenue is attributed to that region.
57

Consumer-to-Consumer Segment
The following table sets forth our consumer-to-consumer segment results of operations for the years ended
December 31, 2011, 2010 and 2009.
% Change
(dollars and transactions in millions)

Years Ended December 31,

2011
2010

2011
vs. 2010

2009

2010
vs. 2009

Revenues:
Transaction fees . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . .

$ 3,580.2
983.1
45.1

$ 3,434.3
905.8
43.3

$ 3,373.5
877.1
50.1

4%
9%
4%

2%
3%
(14)%

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,608.4

$ 4,383.4

$ 4,300.7

5%

2%

Operating income . . . . . . . . . . . . . . . . . . . . . .
Operating income margin . . . . . . . . . . . . . . . .
Key indicator:
Consumer-to-consumer transactions . . . . . . . .

$ 1,316.0
29%

$ 1,243.3
28%

$ 1,175.5
27%

6%

6%

6%

9%

225.8

213.7

196.1

The table below sets forth transaction and revenue growth rates by region for the years ended December 31,
2011 and 2010.
Years Ended December 31,
2011
2010

Consumer-to-consumer transaction growth (a):

EMEASA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer-to-consumer revenue growth (a):
EMEASA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4%
6%
9%

5%
11%
14%

4%
5%
11%

0%
2%
13%

(a) In determining the revenue and transaction growth rates under the regional view in the above table, the
geographic split is determined based upon the region where the money transfer is initiated and the region
where the money transfer is paid. For transactions originated and paid in different regions, we split the
transaction count and revenue between the two regions, with each region receiving 50%. For money
transfers initiated and paid in the same region, 100% of the revenue and transactions are attributed to that
region.
When referring to revenue and transaction growth rates for individual countries in the following discussion, all
transactions to, from and within those countries, and 100% of the revenue associated with each transaction to,
from and within those countries are included. The countries of India and China combined represented
approximately 8%, 7% and 7% of our consolidated revenues during the years ended December 31, 2011, 2010
and 2009, respectively. No individual country, other than the United States, represented more than approximately
6% of our consolidated revenue for each of the years ended December 31, 2011, 2010 and 2009.

58

Transaction fees and foreign exchange revenues

2011 compared to 2010
For the year ended December 31, 2011 compared to the same period in 2010, consumer-to-consumer money
transfer revenue grew 5%, on transaction growth of 6%. The weakening of the United States dollar compared to
most other foreign currencies positively impacted our revenue growth by approximately 1%, which was offset by
slight price reductions for the year ended December 31, 2011.
Revenue in our EMEASA region increased 4% during the year ended December 31, 2011 compared to the
same period in 2010 due to transaction growth of 4% as well as the other factors described above. The United
Kingdom, France, Germany, and the Gulf States continued to experience revenue and transaction growth for the
year ended December 31, 2011 versus the prior year, which was partially offset by softness in Southern Europe
and Russia and declines resulting from the political unrest in Libya and the Ivory Coast. Our money transfer
business to India experienced revenue growth of 11% and transaction growth of 10% for the year ended
December 31, 2011 versus the prior year.
Americas revenue increased 5% due to transaction growth of 6% for the year ended December 31, 2011
compared to the same period in 2010. Our domestic business experienced revenue growth of 8% for the year
ended December 31, 2011 due to transaction growth of 16%. Transaction growth in our domestic business was
higher than revenue growth due to transaction growth being greater in lower principal bands, which have lower
revenue per transaction. Our United States outbound business experienced both transaction and revenue growth
in the year ended December 31, 2011. Mexico revenue increased 2% on flat transactions for the year ended
December 31, 2011. Our Mexico business is being affected by on-going changes to our compliance procedures
related to the agreement and settlement with the State of Arizona and other states. These changes are expected to
cause our Mexico business to decline in 2012.
Revenue in our Asia Pacific (APAC) region increased 11% for the year ended December 31, 2011 compared
to the same period in 2010 due to transaction growth of 9% and the weakening of the United States dollar
compared to most other foreign currencies, which positively impacted revenue. Chinas revenue increased 6% for
year ended December 31, 2011 on transaction growth of 4% for the year ended December 31, 2011.
Foreign exchange revenues for the year ended December 31, 2011 grew compared to the same period in 2010,
driven primarily by increased amounts of cross-border principal sent.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States
dollar have resulted in a benefit to transaction fees and foreign exchange revenues for the year ended
December 31, 2011 of $39.1 million over the same period in 2010, net of foreign currency hedges, that would not
have occurred had there been constant currency rates. The largest benefit was related to the EMEASA region.
We have historically implemented and will likely implement future strategic fee reductions and actions to
adjust foreign exchange spreads, where appropriate, taking into account a variety of factors. Fee and foreign
exchange reductions generally reduce revenues in the near term, but are done in anticipation that they will result
in increased transaction volumes and increased revenues over time. In certain corridors, we may also implement
fee or foreign exchange spread increases. In 2011, we adjusted our reporting of the net impact of price
reductions. We now calculate the impact of price reductions against prior year transaction volumes, rather than
current year transaction volumes. We believe utilizing prior year transaction volumes more appropriately
differentiates between the impacts of price reductions versus other items impacting revenue. Under the new
methodology, the fee decreases and foreign exchange actions were approximately 1% of total Western Union
revenue for the full year 2011 compared to approximately 3% for the full year 2010, as fee reductions were
slightly lower and there is some offset by modest increases in foreign currency spreads in some corridors. Under
the previous methodology, we reported that the impact of price reductions in 2010 was 4%.
59

The majority of transaction growth is derived from more mature agent locations; new agent locations typically
contribute only marginally to growth in the first few years of their operation. Increased productivity, measured by
transactions per location, is often experienced as locations mature. We believe that new agent locations will help
our growth by increasing the number of locations available to send and receive money. We generally refer to
locations with more than 50% of transactions being initiated (versus paid) as send locations and to the balance
of locations as receive locations. Send locations are the engine that drives consumer-to-consumer revenue.
They contribute more transactions per location than receive locations. However, a wide network of receive
locations is necessary to build each corridor and to help ensure global distribution and convenience for
consumers. The number of send and receive transactions at an agent location can vary significantly due to such
factors as customer demographics around the location, migration patterns, the locations class of trade, hours of
operation, length of time the location has been offering our services, regulatory limitations and competition. Each
of the more than 485,000 agent locations in our agent network is capable of providing one or more of our
services; however, not every location completes a transaction in a given period. For example, as of December 31,
2011, more than 85% of agent locations in the United States, Canada and Western Europe (representing at least
one of our three money transfer brands: Western Union, Orlandi Valuta(SM) and Vigo) experienced money
transfer activity in the previous 12 months. In the developing regions of Asia and other areas where there are
primarily receive locations, approximately 65% of locations experienced money transfer activity in the previous
12 months. We periodically review locations to determine whether they remain enabled to perform money
transfer transactions.
2010 compared to 2009
For the year ended December 31, 2010 compared to the prior year, consumer-to-consumer money transfer
revenue grew 2% primarily due to transaction growth of 9%. Transaction growth was offset by price decreases,
primarily related to pricing reductions taken in the domestic business commencing in the fourth quarter of 2009,
geographic and product mix, including a higher percentage of revenue earned from intra-country activity, and the
strengthening of the United States dollar compared to most other foreign currencies, which negatively impacted
revenue by approximately 1%. Our international consumer-to-consumer business experienced revenue growth of
3% on transaction growth of 8% for the year ended December 31, 2010. Our international business represents all
transactions other than transactions between and within the United States and Canada and transactions to and
from Mexico. Our international consumer-to-consumer business outside of the United States also experienced
revenue growth on transaction increases for the year ended December 31, 2010.
Revenue in our EMEASA region remained flat during the year ended December 31, 2010 compared to the
prior year despite transaction growth of 5%. Transaction growth was offset by the strengthening of the United
States dollar compared to most other foreign currencies in the region and many of the same factors described
above. Our European market experienced transaction growth during the year ended December 31, 2010
compared to the prior year. In addition, for the full year ended December 31, 2010, revenue and transactions in
the Gulf States declined moderately compared to the same period in 2009, however, both revenue and
transactions grew in the fourth quarter of 2010 compared to the comparable period in the prior year. India had
transaction growth of 4% and revenue growth of 5% for the year ended December 31, 2010 versus the same
period in 2009.
Americas revenue increased 2% on transaction growth of 11% for the year ended December 31, 2010
compared to the prior year due to the pricing actions taken in the domestic business commencing in the fourth
quarter of 2009. Our domestic business experienced revenue declines of 6% on transaction growth of 28% for the
year ended December 31, 2010 due to the same factors. However, in the fourth quarter of 2010, our domestic
business experienced revenue growth of 7% on transaction growth of 29% as we reached the anniversary of the
pricing reductions taken in the fourth quarter of 2009. Our United States outbound business experienced both
transaction and revenue growth in the year ended December 31, 2010. Our Mexico business revenue was flat
during the year ended December 31, 2010 on transaction growth of 2%.

60

APAC revenue increased 13% for the year ended December 31, 2010 compared to the prior year due to
transaction growth of 14%. Chinas revenue increased 10% on transaction growth of 7% for the year ended
December 31, 2010.
Foreign exchange revenues for the year ended December 31, 2010 grew compared to the prior year, driven
primarily by revenue from our international consumer-to-consumer business outside of the United States.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States
dollar have resulted in a reduction to transaction fees and foreign exchange revenues for the year ended
December 31, 2010 of $32.3 million over the same period in the previous year, net of foreign currency hedges,
that would not have occurred had there been constant currency rates. The largest impact was related to the
EMEASA region.
Operating income
2011 compared to 2010
Consumer-to-consumer operating income increased 6% during the year ended December 31, 2011 compared
to the same period in 2010 due to revenue growth. The change in operating income margin for the year ended
December 31, 2011 compared to the same period in 2010 was primarily due to restructuring savings and revenue
leverage, partially offset by negative currency impacts, including the effect of foreign currency hedges, and
spending on initiatives.
2010 compared to 2009
Consumer-to-consumer operating income increased 6% during the year ended December 31, 2010 compared to
the same period in 2009 due to lower marketing expenses and operating efficiencies, primarily decreased bad debt
expense, offset by higher employee compensation costs and incremental costs associated with our retail expansion
in Europe pursuant to the Payment Services Directive. The increase in operating income margin for the year ended
December 31, 2010 compared to the same period in the prior year resulted from these same factors.
Global Business Payments Segment
The following table sets forth our global business payments segment results of operations for the years ended
December 31, 2011, 2010 and 2009.
Years Ended December 31,
2011
2010
2009

(dollars and transactions in millions)

% Change
2011
2010
vs. 2010
vs. 2009

Revenues:
Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 587.8
168.1
28.8

578.0
113.0
30.7

621.9
33.2
36.6

2%
49%
(6)%

(7)%
*
(16)%

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 784.7

721.7

691.7

9%

4%

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income margin . . . . . . . . . . . . . . . . . . . . . . . .
Key indicator:
Global business payments transactions . . . . . . . . . . . . .

$ 140.4
18%

122.5
17%

171.9
25%

15%

(29)%

414.8

5%

(2)%

* Calculation not meaningful

61

425.0

404.9

Revenues
2011 compared to 2010
During the year ended December 31, 2011, global business payments segment revenue was positively
impacted by our acquisition of TGBP, which contributed $35.2 million of revenue, primarily included in foreign
exchange revenues, and revenue growth in international bill payments, Business Solutions, and United States
electronic bill payments, partially offset by a decline in United States cash-based bill payments.
Transaction growth during the year ended December 31, 2011 compared to the same period in 2010 was due to
growth in our international bill payments and United States electronic bill payments businesses.
2010 compared to 2009
During the year ended December 31, 2010, global business payments segment revenue was positively
impacted by our acquisition of Custom House, which contributed $111.0 million of revenue in 2010 versus
$30.8 million in 2009, primarily included in foreign exchange revenues, and growth in the Pago Fcil business.
These increases were offset by revenue declines in our United States cash-based bill payments businesses as
many United States consumers who would use our services continued to have difficulty paying their bills and
continue to be unable to obtain credit in any form, resulting in us handling fewer bill payments. The ongoing
trend away from cash based bill payments in the United States and competitive pressures, which resulted in lower
cash and electronic volumes and a shift to lower revenue per transaction products, also contributed to the revenue
declines.
The transaction declines during the year ended December 31, 2010 compared to the same period in 2009 were
due to declines in our United States bill payments businesses.
Operating income
2011 compared to 2010
For the year ended December 31, 2011, operating income increased compared to the prior year primarily due
to revenue increases, a decrease in integration expenses related to the acquisition of Custom House, decreased
debit card bank fees due to the recent Durbin legislation, and restructuring savings, partially offset by declines in
our United States cash-based bill payments business, which has a higher margin than other payment services in
the segment, and integration and amortization expenses related to the acquisition of TGBP.
The changes in operating income margins in the segment are due to the same factors mentioned above.
2010 compared to 2009
For the year ended December 31, 2010, operating income decreased compared to the same period in the prior
year primarily due to declines related to the United States cash-based bill payments business, and investing and
operating costs, including amortization expense, associated with the acquisition of Custom House.
The decline in operating income margin in the segment is primarily due to the increased costs associated with
the acquisition of Custom House and declines in our United States cash-based bill payments business.

62

Other
The following table sets forth other results for the years ended December 31, 2011, 2010 and 2009.
Years Ended December 31,
2011
2010
2009

(dollars in millions)

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (loss)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 98.3
$ (24.6)

$ 87.6
$ (6.2)

$ 91.2
$ 6.3

% Change
2011
2010
vs. 2010
vs. 2009

12%
*

(4)%
*

* Calculation not meaningful

Revenues
2011 compared to 2010
Revenue grew for the year ended December 31, 2011 compared to the prior year primarily due to volume
increases in our prepaid business.
2010 compared to 2009
Revenue, generated primarily from our money order services business, declined for the year ended
December 31, 2010 compared to the same period in the prior year. We experienced a decrease in the amount of
revenue earned related to our money order services business as we no longer receive a fixed return of 5.5% from
IPS on outstanding money order balances as we did for the first three quarters of 2009. We now derive
investment income from interest generated on our money order settlement assets, which are primarily held in
United States tax exempt state and municipal debt securities. These securities generally have a lower rate of
return than we were receiving under our previous agreement with IPS.
Operating (loss)/income
2011 compared to 2010
During the year ended December 31, 2011, the increase in operating loss was primarily due to deal costs
associated with the TGBP acquisition.
2010 compared to 2009
During the year ended December 31, 2010, the decrease in operating income was due to the decrease in
revenue from our money order services business, as described above, and an increase in promotional marketing
activities related to our prepaid business in the United States. In 2009, we also incurred additional costs
associated with evaluating and closing acquisitions compared to 2010.
Further financial information relating to each of our segments external revenue, operating profit measures and
total assets is set forth in Note 17 to our Consolidated Financial Statements.

63

2012 Changes in Reportable Segments

In connection with the acquisition of TGBP, recent management changes, and other key strategic initiatives,
we will implement a new segment structure to assess performance and allocate resources, beginning in the first
quarter of 2012. The changes in our segment structure primarily relate to the separation of the Global Business
Payments segment into two new reportable segments, Consumer-to-Business and Business Solutions. A
summary of how the segments will be structured follows:
Segment

Description

Consumer-to-Consumer

Money transfer services between consumers, primarily through a global network of

third-party agents.

Consumer-to-Business

Processing of payments from consumers to businesses and other organizations,

including utilities, auto finance companies, mortgage servicers, financial service
providers, government agencies and other businesses.

Business Solutions

Business-to-business payment solutions, primarily for cross-border, cross-currency

transactions, including services provided under our existing Western Union Business
Solutions business and TGBP, which was acquired in November 2011.

Other

Businesses that have not been classified into one of our other segments. These
businesses primarily include our money order and prepaid services businesses.

Capital Resources and Liquidity

Our primary source of liquidity has been cash generated from our operating activities, primarily from net
income and fluctuations in working capital. Our working capital is affected by the timing of interest payments on
our outstanding borrowings, timing of income tax payments, including our tax deposit described further in Cash
Flows from Operating Activities, and collections on receivables, among other items. The majority of our interest
payments are due in the second and fourth quarters which results in a decrease in the amount of cash provided by
operating activities in those quarters and a corresponding increase to the first and third quarters.
Our future cash flows could be impacted by a variety of factors, some of which are out of our control,
including changes in economic conditions, especially those impacting the migrant population and changes in
income tax laws or the status of income tax audits, including the resolution of outstanding tax matters.
A significant portion of our cash flows from operating activities has been generated from subsidiaries, some of
which are regulated entities. These subsidiaries may transfer all excess cash to the parent company for general
corporate use except for assets subject to legal or regulatory restrictions. Assets subject to legal or regulatory
restrictions, totaling approximately $230 million as of December 31, 2011, include assets outside of the United
States subject to restrictions from being transferred outside of the countries where they are located. We are also
required to maintain cash and investment balances in our regulated subsidiaries related to certain of our money
transfer and other payment obligations. Significant changes in the regulatory environment for money transmitters
could impact our primary source of liquidity.
We believe we have adequate liquidity to meet our business needs, including approximately $190 million of
tax payments we expect to make in 2012 as a result of the IRS Agreement, dividends and share repurchases,
through our existing cash balances and our ability to generate cash flows through operations. As of December 31,
2011, we had no outstanding borrowings under our $1.65 billion revolving credit facility (Revolving Credit
Facility) and had $297.0 million of commercial paper borrowings outstanding, which left $1,353.0 million
remaining that was available to borrow on the Revolving Credit Facility.

64

Cash and Investment Securities

As of December 31, 2011, we had cash and cash equivalents of $1.4 billion, of which $476 million was held
by our foreign entities. Our ongoing cash management strategies to fund our business needs could cause United
States and foreign cash balances to fluctuate.
Repatriating foreign funds to the United States would, in many cases, result in significant tax obligations
because most of these funds have been taxed at relatively low foreign tax rates compared to our combined federal
and state tax rate in the United States. We expect to use foreign funds to expand and fund our international
operations and to acquire businesses internationally.
In many cases, we receive funds from money transfers and certain other payment services before we settle the
payment of those transactions. These funds, referred to as Settlement assets on our Consolidated Balance
Sheets, are not used to support our operations. However, we earn income from investing these funds. We
maintain a portion of these settlement assets in highly liquid investments, classified as Cash and cash
equivalents within Settlement assets, to fund settlement obligations.
Investment securities, classified within Settlement assets, were $1.3 billion as of December 31, 2011.
Substantially all of these investments are highly-rated state and municipal debt securities. Most state regulators in
the United States require us to maintain specific highly-rated, investment grade securities and such investments
are intended to secure relevant outstanding settlement obligations in accordance with applicable regulations.
Investment securities are exposed to market risk due to changes in interest rates and credit risk. We regularly
monitor credit risk and attempt to mitigate our exposure by investing in highly-rated securities and diversifying
our investment portfolio. As of December 31, 2011, the majority of our investment securities had credit ratings of
AA or better from a major credit rating agency. Our investment securities are also actively managed with
respect to concentration. As of December 31, 2011, all investments with a single issuer and each individual
security was less than 10% of our investment securities portfolio.
Cash Flows from Operating Activities
During the years ended December 31, 2011, 2010 and 2009, cash provided by operating activities was
$1,174.9 million, $994.4 million and $1,218.1 million, respectively. In the first quarter of 2010, we made a
$250.0 million tax deposit relating to United States federal tax liabilities, including those arising from our 2003
international restructuring, which have been previously accrued in our consolidated financial statements. Making
the deposit limits the further accrual of interest charges with respect to such tax liabilities, to the extent of the
deposit.

65

Financing Resources
As of December 31, 2011, we had the following outstanding borrowings (in millions):
Due in less than one year:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Due in greater than one year (a):
Floating rate notes due 2013 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.500% notes (effective rate of 5.5%) due 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.930% notes due 2016 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.650% notes (effective rate of 4.4%) due 2018 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.253% notes due 2020 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.200% notes due 2036 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.200% notes due 2040 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

300.0
500.0
1,000.0
400.0
324.9
500.0
250.0
8.8

Total borrowings at par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value hedge accounting adjustments, net (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized discount, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,580.7
23.9
(21.4)

Total borrowings at carrying value (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

297.0

3,583.2

(a) We utilize interest rate swaps designated as fair value hedges to effectively change the interest rate
payments on a portion of our notes from fixed-rate payments to short-term LIBOR-based variable rate
payments in order to manage our overall exposure to interest rates. The changes in fair value of these
interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the
related note. These hedge accounting adjustments will be reclassified as reductions to or increases in
Interest expense over the life of the related notes and cause the effective rate of interest to differ from the
notes stated rate.
(b) On March 7, 2011, we issued $300.0 million of aggregate principal amount of unsecured floating rate notes
due March 7, 2013 (2013 Notes). Interest is payable quarterly at a per annum interest rate equal to threemonth LIBOR plus 58 basis points (1.11% as of December 31, 2011) and is reset quarterly. See below for
additional detail relating to the debt issuance.
(c) The difference between the stated interest rate and the effective interest rate is not significant.
(d) On August 22, 2011, we issued $400.0 million of aggregate principal amount of 3.650% unsecured fixed
rate notes due 2018 (2018 Notes). In anticipation of this issuance, we entered into interest rate lock
contracts to fix the interest rate of the debt issuance, and recorded a loss on the contracts of $21.6 million,
which increased the effective rate to 4.4%, in Accumulated other comprehensive loss, which will be
amortized into Interest expense over the life of the 2018 Notes. See below for additional detail relating to
the debt issuance.
(e) As of December 31, 2011, our weighted-average effective rate on total borrowings was approximately 4.8%.
Commercial Paper Program
Pursuant to our commercial paper program, we may issue unsecured commercial paper notes in an amount not
to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on our Revolving
Credit Facility. Our commercial paper borrowings may have maturities of up to 397 days from date of issuance.
66

Interest rates for borrowings are based on market rates at the time of issuance. Our commercial paper borrowings
as of December 31, 2011 had a weighted-average annual interest rate of approximately 0.6% and a weightedaverage term of 9 days. During the year ended December 31, 2011, the average commercial paper balance
outstanding was $89.7 million and the maximum balance outstanding was $784.1 million. Proceeds from our
commercial paper borrowings were used for general liquidity. We had $297.0 million of commercial paper
outstanding as of December 31, 2011.
Revolving Credit Facility
On September 23, 2011, we entered into a credit agreement which expires January 2017 providing for
unsecured financing facilities in an aggregate amount of $1.65 billion, including a $250.0 million letter of credit
sub-facility and a $150.0 million swing line sub-facility. The Revolving Credit Facility replaced our $1.5 billion
revolving credit facility that was set to expire in September 2012.
Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable
according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an
interest rate margin of 90 basis points. A facility fee of 10 basis points is also payable quarterly on the total
facility, regardless of usage. Both the interest rate margin and facility fee percentage are based on certain of our
credit ratings.
The purpose of our Revolving Credit Facility, which is diversified through a group of 17 participating
institutions, is to provide general liquidity and to support our commercial paper program, which we believe
enhances our short-term credit rating. The largest commitment from any single financial institution within the
total committed balance of $1.65 billion is approximately 12%. As of and during the year ended December 31,
2011, we had no outstanding borrowings under our $1.65 billion revolving credit facility. As of December 31,
2011, we had $297.0 million of commercial paper borrowings outstanding, which left $1,353.0 million remaining
that was available to borrow on the Revolving Credit Facility. If the amount available to borrow under the
Revolving Credit Facility decreased, or if the Revolving Credit Facility were eliminated, the cost and availability
of borrowing under the commercial paper program may be impacted.
Notes
On August 22, 2011, we issued $400.0 million of aggregate principal amount of unsecured notes due
August 22, 2018 for general corporate purposes, including repayment of debt. Interest with respect to the 2018
Notes is payable semi-annually in arrears on February 22 and August 22 each year based on the fixed per annum
interest rate of 3.650%. We may redeem the 2018 Notes at any time prior to maturity at the greater of par or a
price based on the applicable treasury rate plus 35 basis points.
On March 7, 2011, we issued $300.0 million of aggregate principal amount of unsecured floating rate notes
due March 7, 2013 for general corporate purposes. Interest with respect to the 2013 Notes is payable quarterly in
arrears on each March 7, June 7, September 7 and December 7, beginning June 7, 2011, at a per annum interest
rate equal to the three-month LIBOR plus 58 basis points (reset quarterly).
On June 21, 2010, we issued $250.0 million of aggregate principal amount of unsecured notes due June 21,
2040 (2040 Notes). Interest with respect to the 2040 Notes is payable semi-annually on June 21 and
December 21 each year based on the fixed per annum interest rate of 6.200%. We may redeem the 2040 Notes at
any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis
points.
On March 30, 2010, we exchanged $303.7 million of aggregate principal amount of unsecured notes due
November 17, 2011 (2011 Notes) for unsecured notes due April 1, 2020 (2020 Notes). Interest with respect
to the 2020 Notes is payable semi-annually on April 1 and October 1 each year based on the fixed per annum
67

interest rate of 5.253%. In connection with the exchange, note holders were given a 7% premium ($21.2 million),
which approximated market value at the exchange date, as additional principal. As this transaction was accounted
for as a debt modification, this premium was not charged to expense. Rather, the premium, along with the
offsetting hedge accounting adjustments, will be accreted into Interest expense over the life of the notes. We
may redeem the 2020 Notes at any time prior to maturity at the greater of par or a price based on the applicable
treasury rate plus 15 basis points.
On February 26, 2009, we issued $500.0 million of aggregate principal amount of unsecured notes due
February 26, 2014 (2014 Notes). Interest with respect to the 2014 Notes is payable semi-annually on
February 26 and August 26 each year based on the fixed per annum interest rate of 6.500%. We may redeem the
2014 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus
50 basis points.
On November 17, 2006, we issued $500.0 million of aggregate principal amount of unsecured notes due
November 17, 2036 (2036 Notes). Interest with respect to the 2036 Notes is payable semi-annually on May 17
and November 17 each year based on the fixed per annum interest rate of 6.200%. We may redeem the 2036
Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus
25 basis points.
On September 29, 2006, we issued $1.0 billion of aggregate principal amount of unsecured notes maturing on
October 1, 2016 (2016 Notes). Interest on the 2016 Notes is payable semi-annually on April 1 and October 1
each year based on the fixed per annum interest rate of 5.930%. We may redeem the 2016 Notes at any time prior
to maturity at the greater of par or a price based on the applicable treasury rate plus 20 basis points.
Credit Ratings and Debt Covenants
The credit ratings on our debt are an important consideration in our overall business, managing our financing
costs and facilitating access to additional capital on favorable terms. Factors that we believe are important in
assessing our credit ratings include earnings, cash flow generation, leverage, available liquidity and the overall
business.
Our Revolving Credit Facility contains an interest rate margin and facility fee which are determined based on
certain of our credit ratings. In addition, we are subject to certain provisions in our 2013 Notes, 2014 Notes, 2018
Notes and 2040 Notes and certain of our derivative contracts which could require settlement or collateral posting
in the event of a change in control combined with a downgrade below investment grade. We do not have any
other terms within our debt agreements or other contracts that are tied to changes in our credit ratings. The table
below summarizes our credit ratings as of December 31, 2011:
S&P

Moodys

Fitch

Short-term rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A-2

P-2

F2

Senior unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A3

Ratings outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stable

Negative

Stable

These ratings are not a recommendation to buy, sell or hold any of our securities. Our credit ratings may be
subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be
evaluated independently of any other rating. We cannot ensure that a rating will remain in effect for any given
period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment,
circumstances so warrant. A downgrade or a negative outlook provided by the rating agencies could result in the
following:

Our access to the commercial paper market may be limited, and if we were downgraded below investment
grade, our access to the commercial paper market would likely be eliminated;
68

We may be required to pay a higher interest rate in future financings;

Our potential pool of investors and funding sources may decrease;

Regulators may impose additional capital and other requirements on us, including imposing restrictions on
the ability of our regulated subsidiaries to pay dividends; and

Our business relationships may be adversely impacted.

Consistent with the prior facility, the Revolving Credit Facility contains certain covenants that, among other
things, limit or restrict our ability to sell or transfer assets or enter into a merger or consolidate with another
company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary
dividends, enter into sale and leaseback transactions or incur certain subsidiary level indebtedness, subject to
certain exceptions. Our notes are subject to similar covenants except that only the 2016 Notes, 2020 Notes and
the 2036 Notes contain covenants limiting or restricting subsidiary indebtedness and none of our notes are
subject to a covenant that limits our ability to impose restrictions on subsidiary dividends. Also consistent with
the prior facility, the Revolving Credit Facility requires us to maintain a consolidated adjusted EBITDA interest
coverage ratio of greater than 2:1 (ratio of consolidated adjusted EBITDA, defined as net income plus the sum of
(a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) any other
non-cash deductions, losses or changes made in determining net income for such period and (f) extraordinary
losses or charges, minus extraordinary gains, in each case determined in accordance with accounting principles
generally accepted in the United States of America for such period, to interest expense) for each period
comprising the four most recent consecutive fiscal quarters. Our consolidated interest coverage ratio was 9:1 for
the year ended December 31, 2011.
For the year ended December 31, 2011, we were in compliance with our debt covenants. A violation of our
debt covenants could impair our ability to borrow and outstanding amounts borrowed could become due, thereby
restricting our ability to use our excess cash for other purposes.
Cash Priorities
Liquidity
Our objective is to maintain strong liquidity and a capital structure consistent with our current credit ratings.
We have existing cash balances, cash flows from operating activities, access to the commercial paper markets
and our Revolving Credit Facility available to support the needs of our business.
Capital Expenditures
The total aggregate amount paid for contract costs, purchases of property and equipment and purchased and
developed software was $162.5 million, $113.7 million and $98.9 million in 2011, 2010 and 2009, respectively.
Amounts paid for new and renewed agent contracts vary depending on the terms of existing contracts as well as
the timing of new and renewed contract signings. Other capital expenditures during 2011, 2010 and 2009
included investments in our information technology infrastructure and purchased and developed software.
Acquisition of Businesses
On November 7, 2011, we acquired TGBP from Travelex Holdings Limited for cash consideration of
603 million ($967.8 million), which included acquired cash of $40.0 million and an initial working capital
adjustment. The final consideration is subject to an additional working capital adjustment.
On October 31, 2011, we acquired the remaining 70% interest in Finint, one of our largest money transfer
agents in Europe, for cash consideration of 99.6 million ($139.4 million). We previously held a 30% equity
interest in Finint.
69

On April 20, 2011, we acquired the remaining 70% interest in Costa, one of our largest money transfer agents
in Europe, for cash consideration of 95 million ($135.7 million), which included a reduction of 5 million ($7.1
million) for an initial working capital adjustment pursuant to the terms of the purchase agreement. The final
consideration is subject to an additional working capital adjustment. We previously held a 30% equity interest in
Costa.
On September 1, 2009, we acquired Canada-based Custom House, a provider of international
business-to-business payment services, for cash consideration of $371.0 million for all of the common shares of
this business and acquired cash of $2.5 million.
On February 24, 2009, we acquired the money transfer business of European-based FEXCO Group Holdings
(FEXCO Group), one of our largest agents providing services in a number of European countries, primarily the
United Kingdom, Spain, Sweden and Ireland. We surrendered our 24.65% interest in FEXCO Group and paid
123.1 million ($157.4 million) as consideration for all of the common shares of the money transfer business and
acquired cash of $11.8 million.
Share Repurchases and Dividends
During the years ended December 31, 2011, 2010 and 2009, 40.3 million, 35.6 million and 24.8 million,
respectively, of shares were repurchased for $800.0 million, $584.5 million and $400.0 million, respectively,
excluding commissions, at an average cost of $19.83, $16.44 and $16.10 per share, respectively. As of
December 31, 2011, $615.5 million remains available under share repurchase authorizations approved by our
Board of Directors through December 31, 2012.
On February 7, 2012, our Board of Directors declared a quarterly cash dividend of $0.10 per share payable on
March 30, 2012. During 2011, our Board of Directors declared quarterly cash dividends of $0.08 per common
share in each of the last three quarters and $0.07 per common share in the first quarter representing
$194.2 million in total dividends. During the year ended December 31, 2010, our Board of Directors declared
quarterly cash dividends of $0.07 per common share in the fourth quarter and $0.06 per common share in each of
the first three quarters representing $165.3 million in total dividends. During the fourth quarter of 2009, our
Board of Directors declared a cash dividend of $0.06 per common share representing $41.2 million in total
dividends. These amounts were paid to shareholders of record in the respective month the dividend was declared,
except for the September 2011 and 2010 declared dividends, which were paid in October 2011 and 2010,
respectively.
Debt Service Requirements
Our 2012 debt service requirements will include payments on existing borrowings and any future borrowings
under our commercial paper program and interest payments on all outstanding indebtedness. We have the ability
to use existing financing sources, including our Revolving Credit Facility or commercial paper program, and
cash generated from operations to meet our debt obligations as they come due.
Our ability to continue to grow the business, make acquisitions, return capital to shareholders, including share
repurchases and dividends, and service our debt will depend on our ability to continue to generate excess
operating cash through our operating subsidiaries and to continue to receive dividends from those operating
subsidiaries, our ability to obtain adequate financing and our ability to identify acquisitions that align with our
long-term strategy.
Off-Balance Sheet Arrangements
Other than facility and equipment leasing arrangements disclosed in Note 12 to our Consolidated Financial
Statements, we have no material off-balance sheet arrangements that have or are reasonably likely to have a
material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.
70

Pension Plan
Our defined benefit pension plan had recorded unfunded pension obligations of $112.7 million and $112.8
million as of December 31, 2011 and 2010, respectively. In both the years ended December 31, 2011 and 2010,
we made contributions of approximately $25 million to the Plan, including discretionary contributions of
$3 million and $10 million, respectively. Due to the closure of one of our facilities in Missouri and an agreement
with the Pension Benefit Guaranty Corporation, we funded $4.1 million during 2009. We will be required to fund
approximately $20 million to the Plan in 2012 and may make a discretionary contribution of up to approximately
$5 million.
Our most recent measurement date for our pension plan was December 31, 2011. The calculation of the funded
status and net periodic benefit income is dependent upon two primary assumptions: 1) expected long-term return
on plan assets; and 2) discount rate.
We employ a building block approach in determining the long-term rate of return for plan assets. Historical
markets are studied and long-term historical risk, return, and co-variance relationships between equities, fixed
income securities, and alternative investments are considered consistent with the widely accepted capital market
principle that assets with higher volatility generate a greater return over the long run. Current market factors such
as inflation and interest rates are evaluated before long-term capital market assumptions are determined.
Consideration is given to diversification, re-balancing and yields anticipated on fixed income securities held.
Historical returns are reviewed within the context of current economic conditions to check for reasonableness
and appropriateness. We then apply this rate against a calculated value for our plan assets. The calculated value
recognizes changes in the fair value of plan assets over a five-year period. Our expected long-term return on plan
assets was 7.00% for 2011 and 6.50% for 2010. The expected long-term return on plan assets is 7.00% for 2012.
As of December 31, 2011, pension plan target allocations were approximately 15% in equity investments, 60% in
debt securities and 25% in alternative investment strategies (e.g. hedge funds, royalty rights and private equity
funds). Hedge fund strategy types include, but are not limited to: commodities/currencies, equity long-short,
relative value, multi-strategy, event driven, and global-macro. The Plan holds derivative contracts directly which
consist of standardized obligations to buy or sell United States treasury bonds or notes at predetermined future
dates and prices which are transacted on regulated exchanges. Additionally, derivatives are held indirectly
through funds in which the Plan is invested. Derivatives are used by the Plan to help reduce the Plans exposure
to interest rate volatility and to provide an additional source of return. Cash held by the Plan is used to satisfy
margin requirements on the derivatives. Investment risk is measured and monitored on an ongoing basis through
quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies.
The discount rate assumption is set based on the rate at which the pension benefits could be settled effectively.
The discount rate is determined by matching the timing and amount of anticipated payouts under the Plan to the
rates from an AA spot rate yield curve. The curve is derived from AA bonds of varying maturities. The discount
rate assumption for our benefit obligation was 3.72% and 4.69% at December 31, 2011 and 2010, respectively. A
100 basis point change to both the discount rate and long-term rate of return on plan assets would not have a
material impact to our annual pension expense.

71

Contractual Obligations
The following table summarizes our contractual obligations to third parties as of December 31, 2011 and the
effect such obligations are expected to have on our liquidity and cash flows in future periods (in millions):
Total

Items related to amounts included on our

balance sheet:
Borrowings, including interest (a) . . . . . . . . . $
IRS Agreement (b) . . . . . . . . . . . . . . . . . . . . .
Estimated pension funding (c) . . . . . . . . . . . .
Unrecognized tax benefits (d) . . . . . . . . . . . .
Foreign currency and interest rate derivative
contracts (e) . . . . . . . . . . . . . . . . . . . . . . . .
Other (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Contractual Obligations:
Purchase obligations (g) . . . . . . . . . . . . . . . .
Operating leases . . . . . . . . . . . . . . . . . . . . . . .
Other (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$

5,388.1
190.0
84.7
144.4

Payments Due by Period

Less than 1 Year 1-3 Years
3-5 Years

474.5
190.0
20.2

1,113.6 $

43.2

After 5 Years

1,260.3 $

21.3

2,539.7

86.6
30.2

86.4
22.0

0.2
6.8

1.4

41.7
142.7
23.7

22.7
38.8
16.7

16.7
53.0
7.0

2.3
31.8

19.1

1,240.5 $

1,317.1 $

6,132.1

871.3

2,558.8

(a) We have estimated our interest payments based on (i) commercial paper borrowings outstanding as of
December 31, 2011, and the assumption that these commercial paper borrowings will be repaid upon
maturity and that no new issuances will occur in 2012, (ii) the assumption that no debt issuances or renewals
will occur upon the maturity dates of our notes, and (iii) an estimate of future interest rates on our floating
rate debt and interest rate swap agreements based on projected LIBOR rates.
(b) In December 2011, we reached an agreement with the IRS resolving substantially all of the issues related to
the restructuring of our international operations in 2003. As a result of the IRS Agreement, we expect to
make cash payments to the IRS and various state tax authorities in 2012 totaling approximately $190 million
to cover the remaining portion of the additional tax and interest.
(c) We have estimated our pension plan funding requirements, including interest, using assumptions that are
consistent with current pension funding rates. The unfunded pension liability included in Other liabilities
in the Consolidated Balance Sheets is the present value of the estimated pension plan funding requirements
disclosed above. The actual minimum required amounts each year will vary based on the actual discount
rate and asset returns when the funding requirement is calculated. In addition, we may make a discretionary
contribution of up to approximately $5 million to the plan in 2012, which has not been reflected in the table
above.
(d) Unrecognized tax benefits include associated interest and penalties. The timing of related cash payments for
substantially all of these liabilities is inherently uncertain because the ultimate amount and timing of such
liabilities is affected by factors which are variable and outside our control.
(e) Represents the liability position of our foreign currency and interest rate derivative contracts as of
December 31, 2011, which will fluctuate based on market conditions.
(f)

This line item relates to accrued and unpaid initial payments for new and renewed agent contracts as of
December 31, 2011.

(g) Many of our contracts contain clauses that allow us to terminate the contract with notice and with a
terminations penalty. Termination penalties are generally an amount less than the original obligation.
72

Obligations under certain contracts are usage-based and are, therefore, estimated in the above amounts.
Historically, we have not had any significant defaults of our contractual obligations or incurred significant
penalties for termination of our contractual obligations.
(h) This line item includes certain additional investments in our compliance programs along the United States
and Mexico border, which are expected to cost up to $19 million over the next two years pursuant to the
agreement and settlement with the State of Arizona and other states. This line item also includes the pending
acquisition of the French assets of TGBP. Due to pending regulatory matters, this acquisition for cash
consideration of 3 million (approximately $4.7 million based on currency exchange rates at December 31,
2011) has not been finalized as of December 31, 2011. This acquisition is expected to close in 2012, subject
to regulatory approval and satisfaction of closing conditions.
Other Commercial Commitments
We had approximately $120 million in outstanding letters of credit and bank guarantees as of December 31,
2011, with expiration dates through 2015, the majority of which contain a one-year renewal option. The letters of
credit and bank guarantees are primarily held in connection with lease arrangements and certain agent
agreements. We expect to renew the letters of credit and bank guarantees prior to expiration in most
circumstances.
Critical Accounting Policies and Estimates
Managements discussion and analysis of results of operations and financial condition is based on our
consolidated financial statements that have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these consolidated financial statements requires that
management make estimates and assumptions that affect the amounts reported for revenues, expenses, assets,
liabilities and other related disclosures. Actual results may or may not differ from these estimates. Our significant
accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the Notes to
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data.

73

Our critical accounting policies and estimates, described below, are very important to the portrayal of our
financial condition and our results of operations and applying them requires our management to make difficult,
subjective and complex judgments. We believe that the understanding of these key accounting policies and
estimates is essential in achieving more insight into our operating results and financial condition.
Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

With respect to earnings in certain

foreign jurisdictions, we have
provided for income taxes on such
earnings at a more favorable
income tax rate than the combined
United States federal and state
income tax rates because we
expect to reinvest these earnings
outside of the United States
indefinitely.

No provision has been made for

United States federal and state
income taxes on certain of our
outside tax basis differences,
which
primarily
relate
to
accumulated foreign earnings of
approximately $3.7 billion as of
December 31, 2011, which we
expect to reinvest outside the
United States indefinitely.

Income Taxes
Reinvestment of foreign earnings
Income taxes, as reported in our
consolidated financial statements,
represent the net amount of income
taxes we expect to pay to various
taxing jurisdictions in connection
with our operations. We provide
for income taxes based on amounts
that we believe we will ultimately
owe after applying the required
analyses and judgments.

Upon distribution of these earnings

to the United States in the form of
actual or constructive dividends,
we would be subject to United
States income taxes (subject to an
adjustment for foreign tax credits),
state income taxes and possible
withholding taxes payable to
various foreign countries which
could result in a material impact to
our financial condition, results of
operations and cash flows in the
period such distribution occurred.
Determination of the amount of
unrecognized deferred United
States tax liability is not
practicable
because
of
the
complexities associated with its
hypothetical calculation.

74

Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

Income tax contingencies

We recognize the tax benefit from
an uncertain tax position only
when it is more likely than not,
based on the technical merits of the
position, that the tax position will
be sustained upon examination,
including the resolution of any
related appeals or litigation. The
tax benefits recognized in the
consolidated financial statements
from such a position are measured
as the largest benefit that has a
greater
than
fifty
percent
likelihood of being realized upon
ultimate resolution.

We have established contingency

reserves for a variety of material,
known tax exposures. Our reserves
reflect our judgment as to the
resolution of the issues involved if
subject to judicial review. While
we believe our reserves are
adequate to cover reasonably
expected tax risks, there can be no
assurance that, in all instances, an
issue raised by a tax authority will
be resolved at a financial cost that
does not exceed our related
reserve. With respect to these
reserves, our income tax expense
would include (i) any changes in
tax reserves arising from material
changes during the period in the
facts and circumstances (i.e., new
information) surrounding a tax
issue and (ii) any difference from
our tax position as recorded in the
consolidated financial statements
and the final resolution of a tax
issue during the period.
Pursuant to the tax allocation
agreement signed in connection
with the Spin-off from First Data,
we believe we have appropriately
apportioned the taxes between
First Data and us.

75

Our tax contingency reserves for

our uncertain tax positions as of
December 31, 2011 were $135.0
million, including accrued interest
and penalties, net of related
benefits. While we believe that our
reserves are adequate to cover
reasonably expected tax risks, in
the event that the ultimate
resolution of our uncertain tax
positions differ from our estimates,
we may be exposed to material
increases in income tax expense,
which could materially impact our
financial condition, results of
operations and cash flows.
If we are required to indemnify
First Data for taxes incurred as a
result of the Spin-off being taxable
to First Data, it likely would have a
material adverse effect on our
business,
financial
condition,
results of operations and cash
flows.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

Derivative Financial Instruments

We
utilize
derivatives
to
(a) minimize our exposure related
to changes in foreign currency
exchange rates and interest rates
and (b) facilitate cross-currency
business-to-business payments by
writing derivatives to customers.
We recognize all derivatives in
Other
assets
and
Other
liabilities in our Consolidated
Balance Sheets at their fair value.
Certain
of
our
derivative
arrangements are designated as
either cash flow hedges or fair
value hedges at the time of
inception, and others are not
designated as accounting hedges.
Cash Flow hedgesCash flow
hedges consist of foreign currency
hedging of forecasted revenues, as
well as, from time to time, hedges
of the forecasted issuance of fixed
rate debt. Derivative fair value
changes that are captured in
accumulated other comprehensive
loss are reclassified to earnings in
the same period or periods the
hedged item affects earnings, to
the extent the change in the fair
value of the instrument is effective
in offsetting the change in fair
value of the hedged item. The
portions of the change in fair value
that
are
either
considered
ineffective or are excluded from
the measure of effectiveness are
recognized
immediately
in
Derivative gains/(losses), net.

The accounting guidance related to

derivative accounting is complex
and contains strict documentation
requirements.
The details of each designated
hedging relationship must be
formally documented at the
inception of the arrangement,
including the risk management
objective,
hedging
strategy,
hedged item, specific risks being
hedged, the derivative instrument,
how effectiveness is being
assessed and how ineffectiveness,
if any, will be measured. The
derivative must be highly effective
in offsetting the changes in cash
flows or fair value of the hedged
item,
and
effectiveness
is
evaluated
quarterly
on
a
retrospective and prospective
basis.
If the hedge is no longer deemed
effective, we discontinue applying
hedge
accounting
to
that
relationship prospectively.

Fair Value hedgesFair value

hedges consist of hedges of fixed
rate debt, through interest rate
swaps. The changes in fair value of
these hedges, along with offsetting
changes in fair value of the related
debt instrument are recorded in
interest expense.

76

While we expect that our

derivative
instruments
that
currently qualify for hedge
accounting will continue to meet
the
conditions
for
hedge
accounting, if hedges do not
qualify for hedge accounting, the
changes in the fair value of the
derivatives used as hedges would
be reflected in earnings which
could have a significant impact on
our reported results.
As of December 31, 2011, the
cumulative pre-tax unrealized
losses
classified
within
accumulated other comprehensive
loss from such cash flow hedges
that would be reflected in earnings
if our hedges were disqualified
from hedge accounting was $3.9
million.
As of December 31, 2011, the
cumulative debt adjustments from
our fair value hedges that would be
reflected in earnings if such hedges
were disqualified from hedge
accounting was a $23.9 million
gain.

Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

Other Intangible Assets

We capitalize certain initial
payments for new and renewed
agent contracts as well as acquired
intangible assets and software.
We evaluate such intangible assets
for impairment on an annual basis
and whenever events or changes in
circumstances indicate the carrying
value of such assets may not be
recoverable. In such reviews,
estimated undiscounted cash flows
associated with these assets may
be compared with their carrying
values to determine if a writedown to fair value (normally
measured by the present value
technique) is required.

The capitalization of initial

payments for new and renewed
agent contracts is subject to strict
accounting policy criteria and
requires management judgment as
to the appropriate time to initiate
capitalization. Our accounting
policy is to limit the amount of
capitalized costs for a given agent
contract to the lesser of the
estimated future cash flows from
the contract or the termination fees
we would receive in the event of
early termination of the contract.

Disruptions
to
contractual
relationships, significant declines
in cash flows or transaction
volumes associated with contracts,
or other issues significantly
impacting the future cash flows
associated with the contract would
cause us to evaluate the
recoverability of the asset.
If an event described above occurs
and causes us to determine that an
asset has been impaired, that could
result in an impairment charge.

The net carrying value of our other

The estimated undiscounted cash
intangible
assets
as
of
flows associated with each asset
December 31, 2011 was $847.4
requires us to make estimates and
million.
assumptions including among
other things revenue growth rates,
and operating margins based on
our budgets and business plans.

77

Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

Goodwill Impairment Testing

An impairment assessment of goodwill
is conducted annually at the reporting
unit level. This assessment of goodwill is
performed more frequently if events or
changes in circumstances indicate that
the carrying value of the goodwill may
not be recoverable.
Reporting units are driven by the level at
which management reviews segment
operating results. In some cases, that
level is the operating segment (e.g.,
consumer-to-consumer money transfer)
and in others it is one level below the
operating segment (e.g., Business
Solutions, which is included in our
global business payments segment).
Our impairment assessment begins with
a qualitative assessment to determine
whether it is more likely than not that the
fair value of a reporting unit is less than
its carrying value. The initial qualitative
assessment includes comparing the
overall financial performance of the
reporting units against the planned
results. Additionally, each reporting
units fair value is assessed under certain
events and circumstances, including
macroeconomic conditions, industry and
market considerations, cost factors, and
other relevant entity-specific events.

The determination of the reporting units

and which reporting units to include in
the qualitative assessment requires
significant judgment. Also, all of the
assumptions used in the qualitative
assessment require judgment.
For the quantitative goodwill impairment
test, we calculate the fair value of
reporting units through discounted cash
flow analyses which require us to make
estimates and assumptions including,
among other items, revenue growth
rates, operating margins, and capital
expenditures based on our budgets and
business plans which take into account
expected regulatory, marketplace, and
other economic factors.

We could be required to evaluate the

recoverability of goodwill if we
experience disruptions to the business,
unexpected significant declines in
operating results, a divestiture of a
significant component of our business,
significant
declines
in
market
capitalization or other triggering events.
In addition, as our business or the way
we manage our business changes, our
reporting units may also change.
If an event described above occurs and
causes us to recognize a goodwill
impairment charge, it would impact our
reported earnings in the periods such
charge occurs.
The carrying value of goodwill as of
December 31, 2011 was $3,198.9 million
which represented approximately 35% of
our consolidated assets. As of December
31, 2011, goodwill of $1,945.3 million
and $1,014.7 million resides in our
consumer-to-consumer and Business
Solutions reporting units, respectively.
For the consumer-to-consumer reporting
unit, the fair value of the business greatly
exceeds its carrying amount. TGBP was
recently purchased and represents a
significant majority of the goodwill
related to the Business Solutions
reporting unit. A fair value decline could
occur if actual and forecasted cash flows
do not meet expectations. Such a decline
would likely result in an impairment,
which could be significant.

If it is determined in the qualitative

assessment that it is more likely than not
that the fair value of a reporting unit is
less than its carrying value, then the
standard
two-step
quantitative
impairment test is performed. First, the
fair value of the reporting unit is
calculated
or
determined
using
discounted cash flows and is compared to
its carrying value. If the first step
indicates the carrying value exceeds the
fair value of the reporting unit, then the
second step is required. The second step
is to determine the implied fair value of a
reporting units goodwill by allocating
the determined fair value to all the
reporting units assets and liabilities,
including any unrecognized intangible
assets, as if the reporting unit had been
acquired in a business combination. The
remaining fair value of the reporting unit,
if any, is deemed to be the implied fair
value of the goodwill and an impairment
is recognized in an amount equal to the
excess of the carrying amount of
goodwill above its implied fair value.

We have not recorded any goodwill

impairments during the three years
ended December 31, 2011.

78

Description

Effect if Actual Results Differ from

Assumptions

Judgments and Uncertainties

AcquisitionsPurchase Price
Allocation
We allocate the purchase price of an
acquired business to its identifiable
assets and liabilities based on estimated
fair values. The excess of the purchase
price over the amount allocated to the
identifiable assets less liabilities and
noncontrolling interests is recorded as
goodwill.

Purchase price allocation requires

management to make assumptions and
apply judgment to estimate the fair value
of acquired assets and liabilities.
Management estimates the fair value of
assets and liabilities primarily using
discounted cash flows and replacement
cost analysis.

For most acquisitions, we engage outside

appraisal firms to assist in the fair value
determination of identifiable intangible
assets such as agent networks, customer
relationships, tradenames and any other
significant assets or liabilities. We adjust
the
preliminary
purchase
price
allocation, as necessary, after the
acquisition closing date through the end
of the measurement period of one year or
less as we finalize valuations for the
assets acquired and liabilities assumed.

During the last three years, we

completed the following acquisitions:

In November 2011, we acquired

TGBP for $967.8 million.

In October 2011, we acquired Finint

for total value of $187.2 million.

In April 2011, we acquired Costa

for total value of $181.9 million.

In September 2009, we acquired

Custom House for $371.0 million.

In February 2009, we acquired the

money transfer business of FEXCO
Group for $243.6 million.

See Note 3, Acquisitions, to the Notes to

the Consolidated Financial Statements,
included in Item 8, of this Annual Report
on Form 10-K, for more information
related to the purchase price allocations
for acquisitions completed during the
last three years.
If estimates or assumptions used to
complete the initial purchase price
allocation and estimate the fair value of
acquired
assets
and
liabilities
significantly differed from assumptions
made in the final valuation, the
allocation of purchase price between
goodwill
and
intangibles
could
significantly differ. Such a difference
would impact future earnings through
amortization
expense
of
these
intangibles. In addition, if forecasts
supporting the valuation of the
intangibles or goodwill are not achieved,
impairments could arise, as discussed
further in Goodwill Impairment
Testing and Other Intangible Assets
above. For all of our acquisitions during
the three years ended December 31,
2011, goodwill of $1,509.0 million and
intangibles of $608.9 million were
recognized.
79

Description

Judgments and Uncertainties

Effect if Actual Results Differ from

Assumptions

Restructuring and Related

Expenses
We have engaged in restructuring
actions and activities associated
with productivity improvement
initiatives and expense reduction
measures. We also evaluate
impairment issues associated with
restructuring activities.
Restructuring and related expenses
consist of direct and incremental
costs associated with restructuring
and related activities, including
severance, outplacement and other
employee related benefits; facility
closure and migration of our IT
infrastructure; and other expenses
related to the relocation of various
operations to new or existing
Company facilities and third-party
providers,
including
hiring,
training, relocation, travel, and
professional fees. Also included in
the facility closure expenses are
non-cash expenses related to fixed
asset and leasehold improvement
write-offs
and
accelerated
depreciation at impacted facilities.

These costs represent managements

best estimate, until all such amounts
are paid and settled. As such, these
costs require assumptions about the
activities that may change over time.
The decision to include a cost in
the
restructuring
disclosure
requires an assessment of whether
the cost is direct and incremental
to the productivity improvement
initiatives and expense reduction
measures. This assessment can
require judgment depending on the
nature of the cost.
The timing of recording these costs
was determined by the applicable
accounting
guidance.
This
judgment significantly impacted
the timing of the recognition of
restructuring and related expenses
on a quarterly basis and between
the years ended December 31,
2010 and 2011.

The restructuring and related

expenses
are
evaluated
periodically to determine if an
adjustment is required. Should the
actual amounts differ from our
estimates, the amount of the
restructuring and related expenses
could be materially impacted.
For the years ended December 31,
2011 and 2010, we incurred $46.8
million and $59.5 million of
restructuring and related expenses,
respectively. $13.9 million of these
expenses remained unpaid as of
December 31, 2011.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks arising from changes in market rates and prices, including changes in foreign
currency exchange rates and interest rates and credit risk related to our agents and customers. A risk management
program is in place to manage these risks.
Foreign Currency Exchange Rates
We provide consumer-to-consumer money transfer services in more than 200 countries and territories. We
manage foreign exchange risk through the structure of the business and an active risk management process. We
settle with the vast majority of our agents in United States dollars or euros. However, in certain circumstances,
we settle in other currencies. We typically require the agent to obtain local currency to pay recipients; thus, we
generally are not reliant on international currency markets to obtain and pay illiquid currencies. The foreign
currency exposure that does exist is limited by the fact that the majority of transactions are paid within 24 hours
after they are initiated. To mitigate this risk further, we enter into short-term foreign currency forward contracts,
generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations between
transaction initiation and settlement. We also utilize foreign currency forward contracts, typically with terms of
less than one year at inception, to offset foreign exchange rate fluctuations on certain foreign currency
denominated cash positions and intercompany loans. In certain consumer money transfer and global business
payments transactions involving different send and receive currencies, we generate revenue based on the
80

difference between the exchange rate set by us to the customer and the rate at which we or our agents are able to
acquire currency, helping to provide protection against currency fluctuations. We promptly buy and sell foreign
currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.
We use longer-term foreign currency forward contracts to mitigate risks associated with changes in foreign
currency exchange rates on consumer-to-consumer revenues denominated primarily in the euro, and to a lesser
degree the British pound, Canadian dollar and other currencies. We use contracts with maturities of up to
36 months at inception to mitigate some of the impact that changes in foreign currency exchange rates could have
on forecasted revenues, with a targeted weighted-average maturity of approximately one year. We believe the use
of longer-term foreign currency forward contracts provides predictability of future cash flows from our
international consumer-to-consumer operations.
We have additional foreign exchange risk and associated foreign exchange risk management due to the nature
of our Western Union Business Solutions (Business Solutions) business, which includes our Travelex Global
Business Payments business (TGBP), which was acquired in November 2011. The significant majority of this
business revenue is from exchanges of currency at the spot rate enabling customers to make cross-currency
payments. In certain countries, this business also writes foreign currency forward and option contracts for our
customers to facilitate future payments. The duration of these derivatives contracts is generally nine months or
less. Business Solutions aggregates its foreign exchange exposures arising from customer contracts, including the
derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting
contracts with established financial institution counterparties. The foreign exchange risk is actively managed.
As of December 31, 2011 and 2010, a hypothetical uniform 10% strengthening or weakening in the value of
the United States dollar relative to all other currencies in which our profits are generated would have resulted in a
decrease/increase to pre-tax annual income of approximately $33 million and $32 million, respectively, based on
our forecast of consumer-to-consumer unhedged exposure to foreign currency at those dates. There are inherent
limitations in this sensitivity analysis, primarily due to the assumption that foreign exchange rate movements are
linear and instantaneous, that the unhedged exposure is static, and that we would not hedge any additional
exposure. As a result, the analysis is unable to reflect the potential effects of more complex market changes that
could arise, which may positively or negatively affect income.
Interest Rates
We invest in several types of interest-bearing assets, with a total value as of December 31, 2011 of
$2.7 billion. Approximately $1.8 billion of these assets bear interest at floating rates and are therefore sensitive to
changes in interest rates. These assets primarily include money market funds and state and municipal variable
rate securities and are included in our Consolidated Balance Sheets within Cash and cash equivalents and
Settlement assets. To the extent these assets are held in connection with money transfers and other related
payment services awaiting redemption, they are classified as Settlement assets. Earnings on these investments
will increase and decrease with changes in the underlying short-term interest rates.
Substantially all of the remainder of our interest-bearing assets consist of highly-rated state and municipal debt
securities, the majority of which are fixed-rate instruments. These investments may include investments made
from cash received from our money transfer business and other related payment services awaiting redemption
classified within Settlement assets in the Consolidated Balance Sheets. As interest rates rise, the fair value of
these fixed-rate interest-bearing securities will decrease; conversely, a decrease to interest rates would result in
an increase to the fair values of the securities. We have classified these investments as available-for-sale within
Settlement assets in the Consolidated Balance Sheets, and accordingly, recorded these instruments at their fair
value with the net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or
deducted from our Total stockholders equity on our Consolidated Balance Sheets.

81

As of December 31, 2011, we had $300.0 million of floating notes, which had an effective interest rate of
1.11% or 58 basis points above three-month LIBOR. Additionally, $500.0 million of our total $3.6 billion of
fixed-rate borrowings at par value are effectively floating rate debt through interest rate swap agreements,
changing this fixed-rate debt to LIBOR-based floating rate debt, with weighted-average spreads of approximately
600 basis points above LIBOR. Borrowings under our commercial paper program mature in such a short period
that the financing is effectively floating rate. Commercial paper borrowings of $297.0 million were outstanding
as of the year ended December 31, 2011. Our commercial paper borrowings as of December 31, 2011 had a
weighted-average annual interest rate of approximately 0.6% and a weighted-average term of 9 days. During the
year ended December 31, 2011, the average commercial paper balance outstanding was $89.7 million and the
maximum balance outstanding was $784.1 million.
We review our overall exposure to floating and fixed rates by evaluating our net asset or liability position in
each, also considering the duration of the individual positions. We manage this mix of fixed versus floating
exposure in an attempt to minimize risk, reduce costs and improve returns. Our exposure to interest rates can be
modified by changing the mix of our interest-bearing assets as well as adjusting the mix of fixed versus floating
rate debt. The latter is accomplished primarily through the use of interest rate swaps and the decision regarding
terms of any new debt issuances (i.e., fixed versus floating). We use interest rate swaps designated as hedges to
increase the percentage of floating rate debt, subject to market conditions. As of December 31, 2011, our
weighted-average effective rate was approximately 4.8%.
A hypothetical 100 basis point increase/decrease in interest rates would result in a decrease/increase to pre-tax
income of approximately $11 million and $12 million annually based on borrowings on December 31, 2011 and
2010, respectively, that are sensitive to interest rate fluctuations. The same 100 basis point increase/decrease in
interest rates, if applied to our cash and investment balances on December 31, 2011 and 2010 that are sensitive to
interest rate fluctuations, would result in an offsetting benefit/reduction to pre-tax income of approximately $18
million and $25 million annually, respectively. There are inherent limitations in the sensitivity analysis
presented, primarily due to the assumption that interest rate changes would be instantaneous. As a result, the
analysis is unable to reflect the potential effects of more complex market changes, including changes in credit
risk regarding our investments, which may positively or negatively affect income. In addition, the current mix of
fixed versus floating rate debt and investments and the level of assets and liabilities will change over time. We
will also be further impacted by changes to future interest rates as we refinance our debt or by reinvesting
proceeds from the sale or maturity of our investments.
Credit Risk
Our interest earning assets include investment securities, substantially all of which are highly-rated state and
municipal debt securities, which are classified in Settlement assets and accounted for as available-for-sale
securities, and money market fund investments, which are classified in Cash and cash equivalents. The
majority of our investment securities had credit ratings of AA or better from a major credit rating agency.
To manage our exposures to credit risk with respect to investment securities, money market investments,
derivatives and other credit risk exposures resulting from our relationships with banks and financial institutions,
we regularly review investment concentrations, trading levels, credit spreads and credit ratings, and we attempt to
diversify our investments among global financial institutions. We also limit our investment level in any
individual money market fund to no more than $100 million.
We are also exposed to credit risk related to receivable balances from agents in the money transfer, walk-in
bill payment and money order settlement process. In addition, we are exposed to credit risk directly from
consumer transactions particularly through our Internet services and electronic channels, where transactions are
originated through means other than cash, and therefore are subject to chargebacks, insufficient funds or other
collection impediments, such as fraud. We perform a credit review before each agent signing and conduct
periodic analyses.
82

We are exposed to credit risk in our Business Solutions business relating to: (a) derivatives written by us to our
customers and (b) receivables from certain customers for which beneficiaries are paid prior to receiving cleared
funds from the customer (known as early release). For the derivatives, the duration of these contracts is
generally nine months or less. The credit risk associated with our derivative contracts increases when foreign
currency exchange rates move against our customers, possibly impacting their ability to honor their obligations to
deliver currency to us or to maintain appropriate collateral with us. For early release customers, collection
ordinarily occurs within a few days. To mitigate risk, we perform credit reviews of the customer on an ongoing
basis, and, for our derivatives, we may require certain customers to post collateral or increase collateral based on
the fair value of the customers contract and their risk profile.
Our losses associated with bad debts have been less than 1% of our revenues in all periods presented.

83

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

THE WESTERN UNION COMPANY
Index To Consolidated Financial Statements
Managements Reports on the Financial Statements and Internal Control Over Financial Reporting . . . . . . .
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for each of the three years in the period ended December 31, 2011 . . . .
Consolidated Balance Sheets as of December 31, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31,
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders Equity/(Deficiency) for each of the three years in the period
ended December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule ICondensed Financial Information of the Registrant (Parent Company Only) . . . . . . . . . . . . . . .

85
86
88
89
90
91
92
146

All other financial statement schedules for The Western Union Company have been omitted since the required
information is not present or not present in amounts sufficient to require submission of the schedule, or because
the information required is included in the respective consolidated financial statements or notes thereto.

84

Managements Report on the Financial Statements

Our management is responsible for the preparation, integrity and objectivity of the accompanying consolidated
financial statements and the related financial information. The financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of America and necessarily include
certain amounts that are based on estimates and informed judgments. Our management also prepared the related
financial information included in this Annual Report on Form 10-K and is responsible for its accuracy and
consistency with the financial statements.
As stated in their report included elsewhere in this Annual Report on Form 10-K, the consolidated financial
statements have been audited by Ernst & Young LLP, an independent registered public accounting firm who
conducted their audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States) as of December 31, 2011 and 2010, and for each of the three years in the period ended
December 31, 2011. The independent registered public accounting firms responsibility is to express an opinion
as to the fairness, in all material respects, with which such financial statements present our financial position,
results of operations and cash flows in accordance with accounting principles generally accepted in the United
States of America.
Managements Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Western Union
Companys (Western Union or the Company) internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial
statements for external purposes in accordance with generally accepted accounting principles. Western Unions
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures are
being made only in accordance with authorizations of our management and Board of Directors; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management assessed the effectiveness of Western Unions internal control over financial reporting as of
December 31, 2011, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework. The Company completed its
acquisition of Travelex Global Business Payments (TGBP) effective November 7, 2011. As permitted by the
Securities and Exchange Commission, managements assessment did not include the internal control of the
acquired operations of TGBP, which are included in the Companys consolidated financial statements as of
December 31, 2011 and for the period from November 7, 2011 through December 31, 2011. The assets of TGBP,
excluding goodwill and other intangible assets, net, constituted approximately 3% of the Companys total assets
as of December 31, 2011, and TGBP revenues constituted approximately 0.6% of our total revenues for the year
ended December 31, 2011. Based on the results of its evaluation, which excluded an assessment of the internal
control of TGBP, the Companys management concluded that as of December 31, 2011, the Companys internal
control over financial reporting is effective. Western Unions internal control over financial reporting as of
December 31, 2011 has been audited by Ernst & Young LLP, Western Unions independent registered public
accounting firm, as stated in their attestation report included in this Annual Report on Form 10-K.
85

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of The Western Union Company
We have audited The Western Union Companys internal control over financial reporting as of December 31,
2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Western Union Companys
management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Managements Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the companys internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed 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. A companys internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
As indicated in the accompanying Managements Report on Internal Control Over Financial Reporting,
managements assessment of and conclusion on the effectiveness of internal control over financial reporting did
not include the internal controls of Travelex Global Business Payments, which was acquired November 7, 2011
and is included in the consolidated financial statements of The Western Union Company as of December 31,
2011 and for the period from November 7, 2011 through December 31, 2011. The assets of Travelex Global
Business Payments, excluding goodwill and other intangible assets, net, constituted approximately 3% of The
Western Union Companys total assets as of December 31, 2011, and Travelex Global Business Payments
revenues constituted approximately 0.6% of The Western Union Companys total revenues for the year then
ended. Our audit of internal control over financial reporting of The Western Union Company also did not include
an evaluation of the internal control over financial reporting of Travelex Global Business Payments.
In our opinion, The Western Union Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2011, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of The Western Union Company as of December 31, 2011 and
2010, and the related consolidated statements of income, cash flows, and stockholders equity/(deficiency) for
each of the three years in the period ended December 31, 2011 and our report dated February 24, 2012 expressed
an unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
February 24, 2012
86

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of The Western Union Company
We have audited the accompanying consolidated balance sheets of The Western Union Company as of
December 31, 2011 and 2010, and the related consolidated statements of income, cash flows, and stockholders
equity/(deficiency) for each of the three years in the period ended December 31, 2011. Our audits also included
the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of The Western Union Company at December 31, 2011 and 2010, and the consolidated results
of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), The Western Union Companys internal control over financial reporting as of December 31,
2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2012 expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
February 24, 2012

87

THE WESTERN UNION COMPANY

Consolidated Statements of Income
(in millions, except per share amounts)
Year Ended December 31,
2011

2010

2009

Revenues:
Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,220.2
1,151.2
120.0

$ 4,055.3
1,018.8
118.6

$ 4,036.2
910.3
137.1

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,491.4

5,192.7

5,083.6

Expenses:
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,102.0
1,004.4

2,978.4
914.2

2,874.9
926.0

Total expenses* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,106.4

3,892.6

3,800.9

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,385.0

1,300.1

1,282.7

Other income/(expense):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative gains/(losses), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.2
(181.9)
14.0
52.3

2.8
(169.9)
(2.5)
14.7

9.4
(157.9)
(2.8)
0.1

Total other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(110.4)

(154.9)

(151.2)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,274.6

1,145.2

1,131.5

Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109.2

235.3

282.7

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,165.4

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.85
1.84
630.6
634.2

909.9

848.8

$
$

1.37
1.36

$
$

1.21
1.21

666.5
668.9

698.9
701.0

* As further described in Note 5, total expenses include amounts for related parties of $190.7 million,
$236.4 million, and $257.4 million for the years ended December 31, 2011, 2010 and 2009, respectively.

See Notes to Consolidated Financial Statements.

88

THE WESTERN UNION COMPANY

Consolidated Balance Sheets
(in millions, except per share amounts)
December 31,
2011
2010

Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,370.9 $ 2,157.4
Settlement assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,091.2
2,635.2
Property and equipment, net of accumulated depreciation of $429.7 and $383.6,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
198.1
196.5
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,198.9
2,151.7
Other intangible assets, net of accumulated amortization of $462.5 and $441.2,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
847.4
438.0
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
363.4
350.4
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,069.9

$ 7,929.2

Liabilities and Stockholders Equity

Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 535.0 $ 520.4
Settlement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,091.2
2,635.2
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302.4
356.6
Deferred tax liability, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
389.7
289.9
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,583.2
3,289.9
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
273.6
254.5
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,175.1

7,346.5

Commitments and contingencies (Note 6)

Stockholders equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued . . . . . . . . . .
Common stock, $0.01 par value; 2,000 shares authorized; 619.4 shares and 654.0
shares issued and outstanding as of December 31, 2011 and 2010,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.2
247.1
760.0
(118.5)

6.5
117.4
591.6
(132.8)

Total stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

894.8

582.7

Total liabilities and stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,069.9

$ 7,929.2

See Notes to Consolidated Financial Statements.

89

THE WESTERN UNION COMPANY

Consolidated Statements of Cash Flows
(in millions)
Year Ended December 31,
2011
2010
2009

Cash flows from operating activities

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax provision/(benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on revaluation of equity interests (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash items, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from
changes in:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Capitalization of contract costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalization of purchased and developed software . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of businesses, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from settlement of foreign currency forward contracts related to
acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from receivable for securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of notes receivable issued to agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,165.4

909.9

848.8

61.0
131.6
21.2
31.2
(49.9)
(1.4)

61.5
114.4
28.6
35.9

2.0

55.9
98.3
(20.8)
31.9

44.1

(27.7)
(43.0)
(62.3)
(51.2)

28.1
10.5
(159.2)
(37.3)

(31.4)
75.5
138.3
(22.5)

1,174.9

994.4

(96.7)
(13.0)
(52.8)
(1,218.6)

(35.0)
(25.4)
(53.3)
(4.7)

(27.3)
(11.9)
(59.7)
(515.9)

36.9
16.9

255.5
35.2

20.8

1,218.1

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,360.3)

(64.6)

(324.1)

Cash flows from financing activities

Proceeds from exercise of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from/(repayments of) commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from issuance of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payments on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100.0
(194.2)
(803.9)
297.0
696.3
(696.3)

42.1
(165.3)
(581.4)

247.0

23.2
(41.2)
(400.2)
(82.8)
496.6
(500.0)

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(601.1)

(457.6)

(504.4)

Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(786.5)
2,157.4

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental cash flow information:

Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income taxes paid (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-cash exchange of 5.400% notes due 2011 for 5.253% notes due 2020 (Note 15) . . . $
See Notes to Consolidated Financial Statements.
90

1,370.9

472.2
1,685.2

389.6
1,295.6

$ 2,157.4

$ 1,685.2

191.3 $ 175.5 $ 150.0

144.9 $ 365.4 $ 162.8
$ 303.7 $

THE WESTERN UNION COMPANY

Consolidated Statements of Stockholders Equity/(Deficiency)
(in millions)
Accumulated
Total
Capital
Other
Stockholders
Common Stock
Surplus/
Retained Comprehensive
Equity/
Comprehensive
Shares Amount (Deficiency) Earnings
Loss
(Deficiency) Income/(Loss)

Balance, December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . 709.6 $ 7.1 $

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . .

Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . .

Repurchase and retirement of common shares . . . . . . . . (24.9)

(0.2)
Shares issued under stock-based compensation plans . . . 1.8

Tax adjustments from employee stock option plans . . . .

Unrealized gains on investment securities, net of tax . . .

Unrealized losses on hedging activities, net of tax . . . . .

Foreign currency translation adjustment, net of tax . . . .

Pension liability adjustment, net of tax . . . . . . . . . . . . . .

(14.4) $
29.2

848.8
31.9

(41.2)

(403.6)
23.9

(0.7)

$ (30.0)

5.5
(62.5)
(29.0)
(11.3)

(8.1)
848.8
31.9
(41.2)
(403.8)
23.9
(0.7)
5.5
(62.5)
(29.0)
(11.3)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . 686.5
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock-based compensation and other . . . . . . . . . . . . . . .

Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . .

Repurchase and retirement of common shares . . . . . . . . (35.7)

Shares issued under stock-based compensation plans . . . 3.2
Tax adjustments from employee stock option plans . . . .

Unrealized losses on investment securities, net of tax . .

Unrealized losses on hedging activities, net of tax . . . . .

Foreign currency translation adjustment, net of tax . . . .

Pension liability adjustment, net of tax . . . . . . . . . . . . . .

6.9

(0.4)

40.7

34.6

44.1
(2.0)

433.2
909.9

(165.3)
(586.2)

(127.3)

(3.3)
(4.9)
6.6
(3.9)

353.5
909.9
34.6
(165.3)
(586.6)
44.1
(2.0)
(3.3)
(4.9)
6.6
(3.9)

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . 654.0
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . .

Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . .

Repurchase and retirement of common shares . . . . . . . . (40.5)

Shares issued under stock-based compensation plans . . . 5.9
Tax adjustments from employee stock option plans . . . .

Unrealized gains on investment securities, net of tax . . .

Unrealized gains on hedging activities, net of tax . . . . . .

Foreign currency translation adjustment, net of tax . . . .

Pension liability adjustment, net of tax . . . . . . . . . . . . . .

6.5

(0.4)
0.1

117.4

31.2

98.7
(0.2)

591.6
1,165.4

(194.2)
(802.8)

(132.8)

1.8
27.0
(2.0)
(12.5)

582.7
1,165.4
31.2
(194.2)
(803.2)
98.8
(0.2)
1.8
27.0
(2.0)
(12.5)

848.8

5.5
(62.5)
(29.0)
(11.3)
$

751.5

909.9

(3.3)
(4.9)
6.6
(3.9)
$

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . 619.4 $

904.4

$ 1,165.4

1.8
27.0
(2.0)
(12.5)
$ 1,179.7

6.2

247.1 $

760.0

See Notes to Consolidated Financial Statements.

91

$ (118.5)

894.8

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Formation of the Entity and Basis of Presentation
The Western Union Company (Western Union or the Company) is a leader in global money movement
and payment services, providing people and businesses with fast, reliable and convenient ways to send money
and make payments around the world. The Western Union brand is globally recognized. The Companys
services are available through a network of agent locations in more than 200 countries and territories. Each
location in the Companys agent network is capable of providing one or more of the Companys services.
The Western Union business consists of the following segments:

Consumer-to-consumer money transfer services between consumers, primarily through a global

network of third-party agents using the Companys multi-currency, real-time money transfer processing
systems. This service is available for international cross-border transfers that is, the transfer of funds
from one country to anotherand, in certain countries, intra-country transfers that is, money transfers
from one location to another in the same country.

Global business payments the processing of payments from consumers or businesses to other
businesses. The Companys business payments services allow consumers to make payments to a variety of
organizations including utilities, auto finance companies, mortgage servicers, financial service providers,
government agencies and other businesses. The Companys existing Western Union Business Solutions
business (Business Solutions) and Travelex Global Business Payments (TGBP), which was acquired
in November 2011 (see Note 3), are also included in this segment. These businesses facilitate
business-to-business payments, primarily for cross-border, cross-currency transactions. The majority of
the segments revenue was generated in the United States during all periods presented. However,
international expansion and other key strategic initiatives, including TGBP, have resulted in international
revenue continuing to increase in this segment.

All businesses that have not been classified into the consumer-to-consumer or global business payments
segments are reported as Other and primarily include the Companys money order and prepaid services
business. Prior to October 1, 2009, the Companys money orders were issued by Integrated Payment Systems
Inc. (IPS), a subsidiary of First Data Corporation (First Data), to consumers at retail locations primarily in
the United States and Canada. Effective October 1, 2009, the Company assumed the responsibility for issuing
money orders.
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries
where these assets are located, or which constitute undistributed earnings of affiliates of the Company accounted
for under the equity method of accounting. However, there are generally no limitations on the use of these assets
within those countries. Additionally, the Company must meet minimum capital requirements in some countries in
order to maintain operating licenses. As of December 31, 2011, the amount of net assets subject to these
limitations totaled approximately $230 million.
Various aspects of the Companys services and businesses are subject to United States federal, state and local
regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services
regulations.
Spin-off from First Data
On January 26, 2006, the First Data Board of Directors announced its intention to pursue the distribution of all
of its money transfer and consumer payments businesses and its interest in a Western Union money transfer
agent, as well as its related assets, including real estate, through a tax-free distribution to First Data shareholders
92

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(the Spin-off). Effective on September 29, 2006, First Data completed the separation and the distribution of
these businesses by distributing The Western Union Company common stock to First Data shareholders (the
Distribution). Prior to the Distribution, the Company had been a segment of First Data.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and
include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated.
Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the
short-term nature of the Companys settlement obligations contrasted with the Companys ability to invest cash
awaiting settlement in long-term investment securities.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (GAAP) requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual results could differ from these
estimates.
Principles of Consolidation
The Company consolidates financial results when it has both the power to direct the activities of an entity that
most significantly impact the entitys economic performance and the ability to absorb losses or the right to
receive benefits of the entity that could potentially be significant to the entity. The Company utilizes the equity
method of accounting when it is able to exercise significant influence over the entitys operations, which
generally occurs when the Company has an ownership interest of between 20% and 50% in an entity.
Earnings Per Share
The calculation of basic earnings per share is computed by dividing net income available to common
stockholders by the weighted-average number of shares of common stock outstanding for the period. Unvested
shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the
potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of
restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from
the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options
and restricted stock are available to acquire shares at an average market price throughout the year, and therefore,
reduce the dilutive effect.
As of December 31, 2011, 2010 and 2009, there were 17.1 million, 34.0 million and 37.5 million, respectively,
of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share
calculation, as their effect was anti-dilutive.

93

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table provides the calculation of diluted weighted-average shares outstanding (in millions):
For the Year Ended December 31,
2011
2010
2009

Basic weighted-average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

630.6
3.6

666.5
2.4

698.9
2.1

Diluted weighted-average shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . .

634.2

668.9

701.0

Fair Value Measurements

The Company determines the fair values of its assets and liabilities that are recognized or disclosed at fair
value in accordance with the hierarchy described below. The fair values of the assets and liabilities held in the
Companys defined benefit plan trust (Trust) are recognized or disclosed utilizing the same hierarchy. The
following three levels of inputs may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities. For most of these assets,
the Company utilizes pricing services that use multiple prices as inputs to determine daily market values.
In addition, the Trust has other investments that fall within Level 2 that are valued at net asset value which
is not quoted on an active market; however, the unit price is based on underlying investments which are
traded on an active market.

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 items where the
determination of fair value requires significant management judgment or estimation. The Company has
Level 3 assets that are recognized and disclosed at fair value on a non-recurring basis related to the
Companys business combinations, where the values of the intangible assets and goodwill acquired in a
purchase are derived utilizing one of the three recognized approaches: the market approach, the income
approach or the cost approach.

Carrying amounts for many of the Companys financial instruments, including cash and cash equivalents,
settlement cash and cash equivalents, settlement receivables, settlement obligations, borrowings under the
commercial paper program and other short-term notes payable, approximate fair value due to their short
maturities. Investment securities, included in settlement assets, and derivative financial instruments are carried at
fair value and included in Note 8. Fixed rate notes are carried at their original issuance values as adjusted over
time to accrete that value to par, except for portions of notes hedged by interest rate swap agreements as
disclosed in Note 14. The fair values of fixed rate notes are also disclosed in Note 15 and are based on market
quotations. For more information on the fair value of financial instruments, see Note 8.
The fair values of non-financial assets and liabilities related to the Companys business combinations are
disclosed in Note 3. The fair values of financial assets and liabilities related to the Trust are disclosed in Note 11.

94

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Business Combinations
The Company accounts for all business combinations where control over another entity is obtained using the
acquisition method of accounting, which requires that most assets (both tangible and intangible), liabilities
(including contingent consideration), and remaining noncontrolling interests be recognized at fair value at the
date of acquisition. The excess of the purchase price over the fair value of assets less liabilities and
noncontrolling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets,
liabilities, or noncontrolling interests made subsequent to the acquisition date, but within the measurement
period, which is one year or less, are recorded as adjustments to goodwill. Any adjustments subsequent to the
measurement period are recorded in income. Any cost or equity method interest that the Company holds in the
acquired company prior to the acquisition is remeasured to fair value at acquisition with a resulting gain or loss
recognized in income for the difference between fair value and existing book value. Results of operations of the
acquired company are included in the Companys results from the date of the acquisition forward and include
amortization expense arising from acquired intangible assets. The Company expenses all costs as incurred related
to or involved with an acquisition in Selling, general and administrative expenses.
Cash and Cash Equivalents
Highly liquid investments (other than those included in settlement assets) with maturities of three months or
less at the date of purchase (that are readily convertible to cash) are considered to be cash equivalents and are
stated at cost, which approximates market value.
The Company maintains cash and cash equivalent balances with various financial institutions, including a
substantial portion in money market funds. The Company limits the concentration of its cash and cash
equivalents with any one institution. The Company regularly reviews investment concentrations and credit
worthiness of these institutions, and has relationships with a globally diversified list of banks and financial
institutions.
Allowance for Doubtful Accounts
The Company records an allowance for doubtful accounts when it is probable that the related receivable
balance will not be collected based on its history of collection experience, known collection issues, such as agent
suspensions and bankruptcies, and other matters the Company identifies in its routine collection monitoring. The
allowance for doubtful accounts was $28.5 million and $21.1 million as of December 31, 2011 and 2010,
respectively, and is recorded in the same Consolidated Balance Sheet caption as the related receivable. During
the years ended December 31, 2011, 2010 and 2009, the provision for doubtful accounts (bad debt expense)
reflected in the Consolidated Statements of Income was $24.3 million, $19.1 million and $36.2 million,
respectively.
Settlement Assets and Obligations
Settlement assets represent funds received or to be received from agents for unsettled money transfers, money
orders and consumer payments. The Company records corresponding settlement obligations relating to amounts
payable under money transfers, money orders and consumer payment service arrangements. Settlement assets
and obligations also include amounts receivable from and payable to businesses for the value of customer crosscurrency payment transactions related to the global business payments segment.
95

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Settlement assets consist of cash and cash equivalents, receivables from selling agents and
business-to-business customers, and investment securities. Cash received by Western Union agents generally
becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of
short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents
represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse
agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company
performs ongoing credit evaluations of its agents financial condition and credit worthiness. See Note 7 for
information concerning the Companys investment securities.
Receivables from business-to-business customers arise from cross-currency payment transactions in the global
business payments segment. Receivables occur when funds have been paid out to a beneficiary but not yet
received from the customer. The credit risk associated with the receivables from these spot foreign currency
exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from
customers before releasing the associated cross-currency payment.
Settlement obligations consist of money transfer, money order and payment service payables and payables to
agents. Money transfer payables represent amounts to be paid to transferees when they request their funds.
Money order payables represent amounts not yet presented for payment. Most agents typically settle with
transferees first and then obtain reimbursement from the Company. Payment service payables represent amounts
to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers,
government agencies and others. Due to the agent funding and settlement process, payables to agents represent
amounts due to agents for money transfers that have been settled with transferees.
Settlement assets and obligations consisted of the following (in millions):
December 31,
2011
2010

Settlement assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

712.5

133.8

Receivables from selling agents and business-to-business customers . . . . . . . . . .

1,046.7

1,132.3

Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,332.0

1,369.1

3,091.2

2,635.2

2,242.3

2,170.0

Settlement obligations:
Money transfer, money order and payment service payables . . . . . . . . . . . . . . . . .
Payables to agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

848.9
$

3,091.2

465.2
$

2,635.2

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the
lesser of the estimated life of the related assets (generally three to 10 years for equipment, furniture and fixtures,
and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the
respective assets, are charged to expense as incurred.
96

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Property and equipment consisted of the following (in millions):
December 31,
2011
2010

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

434.8

401.5

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80.1

77.5

Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61.1

51.9

Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33.1

30.3

Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16.9

16.9

Projects in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.8

2.0

627.8

580.1

(429.7)

(383.6)

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

198.1

196.5

Amounts charged to expense for depreciation of property and equipment were $61.0 million, $61.5 million and
$55.9 million during the years ended December 31, 2011, 2010 and 2009, respectively.
Deferred Customer Set Up Costs
The Company capitalizes direct incremental costs not to exceed related deferred revenues associated with the
enrollment of customers in the Equity Accelerator program, a service that allows consumers to make mortgage
payments based on a customized payment program. Deferred customer set up costs, included in Other assets in
the Consolidated Balance Sheets, are amortized to Cost of services in the Consolidated Statements of Income
over the length of the customers expected participation in the program, generally five to seven years. Actual
customer attrition data is assessed at least annually and the amortization period is adjusted prospectively.
Goodwill
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets
acquired, less liabilities assumed arising from business combinations. The Companys annual impairment
assessment did not identify any goodwill impairment during the years ended December 31, 2011, 2010 and 2009.
Other Intangible Assets
Other intangible assets primarily consist of acquired contracts, contract costs (primarily amounts paid to agents
in connection with establishing and renewing long-term contracts) and software. Other intangible assets are
amortized on a straight-line basis over the length of the contract or benefit periods. Included in the Consolidated
Statements of Income is amortization expense of approximately $131.6 million, $114.4 million and $98.3 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
Acquired contracts include customer and contractual relationships and networks of subagents that are
recognized in connection with the Companys acquisitions.
97

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable
through future operations or penalties in the case of early termination. The Companys accounting policy is to
limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the
contract or the termination fees the Company would receive in the event of early termination of the contract.
The Company develops software that is used in providing services. Software development costs are capitalized
once technological feasibility of the software has been established. Costs incurred prior to establishing
technological feasibility are expensed as incurred. Technological feasibility is established when the Company has
completed all planning and designing activities that are necessary to determine that a product can be produced to
meet its design specifications, including functions, features and technical performance requirements.
Capitalization of costs ceases when the product is available for general use. Software development costs and
purchased software are generally amortized over a term of three to five years.
The following table provides the components of other intangible assets (in millions):
December 31, 2011
WeightedAverage
Amortization
Period
(in years)

Acquired contracts (a) . . . . . . . . . . . . . . . . . . .

10.5

Capitalized contract costs . . . . . . . . . . . . . . . .

Initial
Cost

December 31, 2010

Net of
Accumulated
Amortization

Initial
Cost

629.5

$ 526.5

6.7

399.1

213.8

350.3

164.6

Purchased or acquired software (a) . . . . . . . . .

3.5

132.2

57.9

113.9

30.7

Developed software . . . . . . . . . . . . . . . . . . . . .

3.3

65.2

3.1

86.1

13.7

Acquired trademarks . . . . . . . . . . . . . . . . . . . .

24.5

41.5

31.0

42.3

33.4

Projects in process . . . . . . . . . . . . . . . . . . . . . .

3.0

0.8

0.8

6.1

6.1

Other intangibles (a) . . . . . . . . . . . . . . . . . . . .

3.8

41.6

14.3

24.0

2.7

Total other intangible assets . . . . . . . . . . . . . .

8.5

1,309.9

$ 847.4

256.5

Net of
Accumulated
Amortization

879.2

186.8

438.0

(a) Total other intangible assets includes $299.7 million of identifiable intangible assets related to the
preliminary allocation of purchase price for the TGBP acquisition (see Note 3).
The estimated future aggregate amortization expense for existing other intangible assets as of December 31,
2011 is expected to be $160.6 million in 2012, $131.0 million in 2013, $107.3 million in 2014, $89.1 million in
2015, $70.7 million in 2016 and $288.7 million thereafter.
Other intangible assets are reviewed for impairment on an annual basis and whenever events indicate that their
carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with
these assets or operations are compared with their carrying values to determine if a write-down to fair value
(normally measured by the present value technique) is required. The Company did not record any impairment
related to other intangible assets during the years ended December 31, 2011 and 2009, and recorded impairments
of approximately $9 million for the year ended December 31, 2010.

98

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Revenue Recognition
The Companys revenues are primarily derived from consumer money transfer transaction fees that are based
on the principal amount of the money transfer and the locations from and to which funds are transferred. The
Company also offers several global business payments services, including payments from consumers or
businesses to other businesses. Transaction fees are set by the Company and recorded as revenue at the time of
sale.
In certain consumer money transfer and global business payments transactions involving different currencies,
the Company generates revenue based on the difference between the exchange rate set by the Company to the
customer and the rate at which the Company or its agents are able to acquire currency. This foreign exchange
revenue is recorded at the time the related consumer money transfer transaction fee revenue is recognized or at
the time a customer initiates a transaction through the Companys business-to-business payment service
operations.
The Companys Equity Accelerator service generally requires a consumer to pay an upfront enrollment fee to
participate in this mortgage payment service. These enrollment fees are deferred and recognized into income over
the length of the customers expected participation in the program, generally five to seven years. Actual customer
attrition data is assessed at least annually and the period over which revenue is recognized is adjusted
prospectively. Many factors impact the duration of the expected customer relationship, including interest rates,
refinance activity and trends in consumer behavior.
Cost of Services
Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations
and related information technology costs. Expenses within these functions include personnel, software,
equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection
with providing money transfer and other payment services.
Advertising Costs
Advertising costs are charged to operating expenses as incurred or at the time the advertising first takes place.
Advertising costs for the years ended December 31, 2011, 2010, and 2009 were $174.8 million, $163.9 million
and $201.4 million, respectively.
Income Taxes
The Company accounts for income taxes under the liability method, which requires that deferred tax assets and
liabilities be determined based on the expected future income tax consequences of events that have been
recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on
temporary differences between the 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.
The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not,
based on the technical merits of the position, the tax position will be sustained upon examination, including the
resolution of any related appeals or litigation. The tax benefits recognized in the consolidated financial
statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood
of being realized upon ultimate resolution.
99

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Foreign Currency Translation
The United States dollar is the functional currency for substantially all of the Companys businesses. Revenues
and expenses are translated at average exchange rates prevailing during the period. Foreign currency
denominated assets and liabilities for those entities for which the local currency is the functional currency are
translated into United States dollars based on exchange rates at the end of the period. The effects of foreign
exchange gains and losses arising from the translation of assets and liabilities of these entities are included as a
component of Accumulated other comprehensive loss. Foreign currency denominated monetary assets and
liabilities of operations in which the United States dollar is the functional currency are remeasured based on
exchange rates at the end of the period and are recognized in operations. Non-monetary assets and liabilities of
these operations are remeasured at historical rates in effect when the asset was recognized or the liability was
incurred.
Derivatives
The Company utilizes derivatives to (a) minimize its exposures related to changes in foreign currency
exchange rates and interest rates and (b) facilitate cross-currency business-to-business payments by writing
derivatives to customers. The Company recognizes all derivatives in the Other assets and Other liabilities
captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with
derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows,
except for cash flows associated with foreign currency forward contracts entered into in order to reduce the
economic variability related to the cash amounts used to fund acquisitions of businesses with purchase prices
denominated in foreign currencies, which are recorded in investing activities.

Cash Flow hedgesChanges in the fair value of derivatives that are designated and qualify as cash flow
hedges are recorded in Accumulated other comprehensive loss. Cash flow hedges consist of foreign
currency hedging of forecasted revenues, as well as hedges of the forecasted issuance of fixed rate debt.
Derivative fair value changes that are captured in Accumulated other comprehensive loss are
reclassified to earnings in the same period or periods the hedged item affects earnings. The portions of the
change in fair value that are excluded from the measure of effectiveness are recognized immediately in
Derivative gains/(losses), net.

Fair Value hedgesChanges in the fair value of derivatives that are designated as fair value hedges of
fixed rate debt are recorded in Interest expense. The offsetting change in value of the related debt
instrument attributable to changes in the benchmark interest rate is also recorded in Interest expense.

UndesignatedDerivative contracts entered into to reduce the variability related to (a) money transfer
settlement assets and obligations, generally with maturities of a few days up to one month, and (b) certain
money transfer related foreign currency denominated cash positions and intercompany loans, generally
with maturities of less than one year, are not designated as hedges for accounting purposes and changes in
their fair value are included in Selling, general and administrative. In addition, changes in fair value of
derivative contracts, consisting of forward contracts with maturities of less than one year entered into to
reduce the economic variability related to the cash amounts used to fund acquisitions of businesses with
purchase prices denominated in foreign currencies, are recorded in Derivative gains/(losses), net. The
Company is also exposed to risk from derivative contracts written to its customers arising from its crosscurrency business-to-business payments operations. These contracts have durations generally of nine
months or less. The Company aggregates its foreign exchange exposures in its cross-currency
business-to-business payments operations, including the exposure generated by the derivative contracts it
100

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
writes to its customers, and typically hedges the net exposure through offsetting contracts with established
financial institution counterparties (economic hedge contract) as part of a broader foreign currency
portfolio, including significant spot exchanges of currency in addition to forwards and options. The
changes in fair value related to these contracts are recorded in Foreign exchange revenues.
The fair value of the Companys derivatives is derived from standardized models that use market based inputs
(e.g., forward prices for foreign currency).
The details of each designated hedging relationship are formally documented at the inception of the
arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being
hedged, the derivative instrument, how effectiveness is being assessed and how ineffectiveness, if any, will be
measured. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the
hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis.
Stock-Based Compensation
The Company currently has a stock-based compensation plan that provides for grants of Western Union stock
options, restricted stock awards and restricted stock units to employees who perform services for the Company.
In addition, the Company has a stock-based compensation plan that provides for grants of Western Union stock
options and stock unit awards to non-employee directors of the Company. Prior to the Spin-off, employees of
Western Union participated in First Datas stock-based compensation plans.
All stock-based compensation to employees is required to be measured at fair value and expensed over the
requisite service period and also requires an estimate of forfeitures when calculating compensation expense. The
Company recognizes compensation expense on awards on a straight-line basis over the requisite service period
for the entire award. Refer to Note 16 for additional discussion regarding details of the Companys stock-based
compensation plans.
Restructuring and Related Expenses
The Company records severance-related expenses once they are both probable and estimable in accordance
with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit
arrangement. One-time, involuntary benefit arrangements and other exit costs are generally recognized when the
liability is incurred. Expenses arising under the Companys defined benefit pension plans from curtailing future
service of employees participating in the plans and providing enhanced benefits are recognized in earnings when
it is probable and reasonably estimable. The Company also evaluates impairment issues associated with
restructuring activities when the carrying amount of the assets may not be fully recoverable, in accordance with
the appropriate accounting guidance. Restructuring and related expenses consist of direct and incremental
expenses associated with restructuring and related activities, including severance, outplacement and other
employee related benefits; facility closure and migration of the Companys IT infrastructure; and other expenses
related to the relocation of various operations to new or existing Company facilities and third-party providers,
including hiring, training, relocation, travel and professional fees. Also included in the facility closure expenses
are non-cash expenses related to fixed asset and leasehold improvement write-offs and accelerated depreciation
at impacted facilities. For more information on the Companys restructuring and related expenses, see Note 4.

101

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
3. Acquisitions
2011 Acquisitions
On November 7, 2011, the Company acquired the business-to-business payment business known as Travelex
Global Business Payments (TGBP) from Travelex Holdings Limited for cash consideration of 603 million
($967.8 million), plus an initial working capital adjustment. The acquisition of the French assets of TGBP for
cash consideration of 3 million (approximately $4.7 million based on currency exchange rates at December 31,
2011) has not been finalized as of December 31, 2011. This acquisition is expected to close in 2012, subject to
regulatory approval and satisfaction of closing conditions. The final consideration and the final purchase price
allocation are subject to an additional working capital adjustment, further analysis of tax balances, final valuation
of identifiable intangible assets, and other items. For the year ended December 31, 2011, the Company incurred
$20.7 million of costs associated with the closing of this acquisition. With the acquisition of TGBP and the
Companys existing Business Solutions business, the Company has the ability to leverage TGBPs
business-to-business payments market expertise, distribution, product and capabilities with Western Unions
brand, existing Business Solutions operations, global infrastructure and relationships, and financial strength. The
results of operations for TGBP have been included in the Companys consolidated financial statements from the
date of acquisition.
On October 31, 2011 and April 20, 2011, the Company acquired the remaining 70% interests in Europeanbased Finint S.r.l. (Finint) and Angelo Costa S.r.l. (Costa), respectively, two of the Companys largest agents
providing services in a number of European countries. The Company previously held a 30% equity interest in
each of these agents. The Company expects these acquisitions will help accelerate the introduction of additional
Western Union products and services and will leverage its existing European infrastructure to build new
opportunities across the European Union. The acquisitions do not impact the Companys money transfer revenue,
because the Company was already recording all of the revenue arising from money transfers originating at
Finints and Costas subagents. As of the acquisition dates, the Company no longer incurs commission costs for
transactions related to Finint and Costa; rather the Company now pays commissions to Finint and Costa
subagents, resulting in lower overall commission expense. The Companys operating expenses include costs
attributable to Finints and Costas operations subsequent to the acquisition dates.
The Company acquired the remaining 70% interest in Finint for cash consideration of 99.6 million
($139.4 million). The final purchase price allocation is subject to further analysis of tax balances and other items.
The Company revalued its previous 30% equity interest to fair value of approximately $47.8 million on the
acquisition date, resulting in total value of $187.2 million. In conjunction with the revaluation, the Company
recognized a gain of $20.5 million, recorded in Other income, net in the Companys Consolidated Statements
of Income, for the amount by which the fair value of the 30% equity interest exceeded its previous carrying
value.
The Company acquired the remaining 70% interest in Costa for cash consideration of 95 million
($135.7 million), which included a reduction of 5 million ($7.1 million) for an initial working capital
adjustment pursuant to the terms of the purchase agreement. The final consideration and the final purchase price
allocation are subject to an additional working capital adjustment. The Company revalued its previous 30%
equity interest to fair value of approximately $46.2 million on the acquisition date, resulting in total value of
$181.9 million. In conjunction with the revaluation, the Company recognized a gain of $29.4 million, recorded in
Other income, net in the Companys Consolidated Statements of Income, for the amount by which the fair
value of the 30% equity interest exceeded its previous carrying value.
102

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
All assets and liabilities have been recorded at fair value, excluding deferred tax liabilities. The following table
summarizes the preliminary allocations of purchase price (in millions):
Travelex Global
Business
Payments

Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40.0

Finint S.r.l

Angelo Costa
S.r.l

Settlement assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

169.1

52.2

48.0

Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.9

0.5

3.0

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

728.7

153.1

172.3

Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299.7

64.8

51.4

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30.0

2.4

1.7

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,272.4

273.0

276.4

6.0

10.8

Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . .

43.2

Settlement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

169.1

57.5

55.7

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1

3.1

10.3

Deferred tax liability, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69.4

15.8

15.5

Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.8

3.4

2.2

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

304.6

85.8

94.5

Total purchase price (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 967.8

187.2

181.9

(a) Total purchase price includes cash consideration transferred and the revaluation of the Companys previous
equity interest, if any, to fair value on the acquisition date.
The preliminary valuation of assets acquired were derived using primarily unobservable Level 3 inputs, which
require significant management judgment and estimation, and resulted in identifiable intangible assets as follows
(in millions):
Travelex Global
Business
Payments

Customer and other contractual relationships . . . . . . . . . . . . . . . . . . . . .

276.6

Finint S.r.l

Angelo Costa
S.r.l

Network of subagents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

53.9

44.6

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23.1

10.9

6.8

Total identifiable intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299.7

64.8

51.4

Customer and other contractual relationships and network of subagents identifiable intangible assets were
valued using an income approach and are being amortized over 10 to 11 years, subject to valuation completion.
Other intangibles were valued using both income and cost approaches and are being amortized over one to five
103

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
years. For the remaining assets and liabilities excluding goodwill and deferred tax liabilities, fair value
approximated carrying value.
The goodwill recognized for TGBP of $728.7 million is attributable to expected synergies, the projected longterm business growth in current and new markets and an assembled workforce and relates entirely to the global
business payments segment. The goodwill recognized for Finint and Costa of $153.1 million and $172.3 million,
respectively, is attributable to growth opportunities that will arise from the Company directly managing its agent
relationships, expected synergies, projected long-term business growth and an assembled workforce and relates
entirely to the consumer-to-consumer segment. Based on the preliminary allocation of purchase price, goodwill
expected to be deductible for income tax purposes for TGBP, Finint and Costa is approximately $470.6 million,
$97.0 million and $104.9 million, respectively.
Other acquisitions
On September 1, 2009, the Company acquired Canada-based Custom House, a provider of international
business-to-business payment services, for $371.0 million. The acquisition of Custom House allowed the
Company to enter the international business-to-business payments market. Custom House facilitates crossborder, cross-currency payment transactions. These payment transactions are conducted through various channels
including the phone and Internet. The significant majority of Custom Houses revenue is from exchanges of
currency at the spot rate enabling customers to make cross-currency payments. In addition, this business writes
foreign currency forward and option contracts for its customers to facilitate future payments. The duration of
these derivatives contracts is generally nine months or less. The results of operations for Custom House have
been included in the Companys consolidated financial statements from the date of acquisition.
The Company recorded the assets and liabilities of Custom House at fair value, excluding the deferred tax
liability. The valuation of assets acquired resulted in $118.1 million of identifiable intangible assets,
$99.8 million of which were attributable to customer and other contractual relationships and were valued using
an income approach and $18.3 million of other intangibles, which were valued using both income and cost
approaches. For the remaining assets and liabilities, excluding goodwill, fair value approximated carrying value.
The intangible assets related to customer and other contractual relationships are being amortized over 10 to
12 years. The remaining intangibles are being amortized over three to five years. The goodwill recognized of
$264.3 million is attributable to the projected long-term business growth in current and new markets and an
assembled workforce. All goodwill relates entirely to the global business payments segment. Goodwill expected
to be deductible for United States income tax purposes is approximately $231.3 million.
On February 24, 2009, the Company acquired the money transfer business of European-based FEXCO, one of the
Companys largest agents providing services in a number of European countries, primarily the United Kingdom,
Spain, Sweden and Ireland. The acquisition of FEXCOs money transfer business has assisted the Company in the
implementation of the Payment Services Directive (PSD) in the European Union by providing an initial operating
infrastructure. The PSD has allowed the Company to operate under a single license in 27 European countries and, in
those European Union countries where the Company has been limited to working with banks, post-banks and
foreign exchange houses, to expand its network to additional types of businesses. The acquisition does not impact
the Companys revenue, because the Company was already recording all of the revenue arising from money
transfers originating at FEXCOs locations. As of the acquisition date, the Company no longer incurs commission
costs for transactions related to FEXCO; rather, the Company now pays commissions directly to former FEXCO
subagents, resulting in lower overall commission expense. The Companys operating expenses include costs
attributable to FEXCOs operations subsequent to the acquisition date.
104

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Prior to the acquisition, the Company held a 24.65% interest in FEXCO Group Holdings (FEXCO Group),
which was a holding company for both the money transfer business as well as various unrelated businesses. The
Company surrendered its 24.65% interest in FEXCO Group as non-cash consideration, which had an estimated
fair value of $86.2 million on the acquisition date, and paid 123.1 million ($157.4 million) as additional
consideration for all of the common shares of the money transfer business, resulting in a total purchase price of
$243.6 million. The Company recognized no gain or loss in connection with the disposition of its equity interest
in the FEXCO Group, because its estimated fair value approximated its carrying value. The Company recorded
the assets and liabilities of FEXCO at fair value, excluding the deferred tax liability. The valuation of assets
acquired resulted in $74.9 million of identifiable intangible assets, $64.8 million of which were attributable to the
network of subagents, with $10.1 million relating to other intangibles. The subagent network intangible assets are
being amortized over 10 to 15 years, and the remaining intangibles are being amortized over two to three years.
Goodwill of $190.6 million was recognized, of which $91.1 million is expected to be deductible for United States
income tax purposes.
The following table presents changes to goodwill for the years ended December 31, 2011 and 2010 (in millions):
Consumer-toConsumer

January 1, 2010 balance . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,619.9

Global Business
Payments

$ 509.2

Other

14.3

Total

$ 2,143.4

Purchase price adjustments . . . . . . . . . . . . . . . . . . . . . . . . . .

(7.9)

(7.9)

Currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16.3

(0.1)

16.2

1,619.9

$ 517.6

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

325.4

728.7

Currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2010 balance . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2011 balance . . . . . . . . . . . . . . . . . . . . . . . . .

1,945.3

(6.7)
$1,239.6

14.2

$ 2,151.7

1,054.1

(0.2)
$

14.0

(6.9)
$ 3,198.9

4. Restructuring and Related Expenses

On May 25, 2010 and as subsequently revised, the Companys Board of Directors approved a restructuring
plan (the Restructuring Plan) designed to reduce the Companys overall headcount and migrate positions from
various facilities, primarily within North America and Europe, to regional operating centers. Details of the
expenses incurred are included in the tables below. Included in these expenses are approximately $2 million of
non-cash expenses related to fixed asset and leasehold improvement write-offs and accelerated depreciation at
impacted facilities. As of December 31, 2011, the Company has incurred all of the expenses related to the
Restructuring Plan.

105

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table summarizes the activity for the restructuring and related expenses discussed above and the
related restructuring accruals as of and for the years ended December 31, 2011 and December 31, 2010 (in millions):
Severance,
Outplacement
And Related
Benefits

Balance, January 1, 2010 . . . . . . . . . . . . . . . . .

Fixed Asset
Write-Offs and
Accelerated
Depreciation

Lease
Terminations

Other (b)

Total

Expenses (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .

48.7

0.9

9.9

59.5

Cash payments . . . . . . . . . . . . . . . . . . . . . . . . .

(13.7)

(8.8)

(22.5)

Non-cash charges (a) . . . . . . . . . . . . . . . . . . . .

(0.7)

(0.9)

(1.6)

Balance, December 31, 2010 . . . . . . . . . . . . . .

34.3

1.1

35.4

Expenses (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.1

1.3

3.5

15.9

46.8

Cash payments . . . . . . . . . . . . . . . . . . . . . . . . .

(48.1)

(3.5)

(16.8)

(68.4)

Non-cash charges (a) . . . . . . . . . . . . . . . . . . . .

1.4

(1.3)

0.1

Balance, December 31, 2011 . . . . . . . . . . . . . .

13.7

0.2

13.9

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . .

74.8

2.2

3.5

25.8

106.3

(a) Expenses include non-cash write-offs and accelerated depreciation of fixed assets and leasehold
improvements. However, these amounts were recognized outside of the restructuring accrual.
(b) Other expenses related to the relocation of various operations to new and existing Company facilities
including expenses for hiring, training, relocation, travel and professional fees. All such expenses will be
recorded when incurred.
Restructuring and related expenses are reflected in the Consolidated Statements of Income as follows (in
millions):
Year Ended
December 31, 2011

Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.6

Year Ended
December 31, 2010

36.2

15.0
44.5

Total restructuring and related expenses, pre-tax . . . . . . . . . . . . . . . . . . .

46.8

59.5

Total restructuring and related expenses, net of tax . . . . . . . . . . . . . . . . .

32.0

39.3

106

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table summarizes the restructuring and related expenses by reportable segment (in millions).
These expenses have not been allocated to the Companys segments disclosed in Note 17. While these items are
identifiable to the Companys segments, these expenses have been excluded from the measurement of segment
operating profit provided to the chief operating decision maker (CODM) for purposes of assessing segment
performance and decision making with respect to resource allocation.
Consumer-toConsumer

2010 expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2011 expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44.7

Global
Business
Payments

33.7
$

78.4

12.8

Other

11.2
$

24.0

2.0

Total

1.9
$

3.9

59.5
46.8

106.3

The Company did not incur any material restructuring and related expenses in the year ended December 31,
2009.
5. Related Party Transactions
The Company has ownership interests in certain of its agents accounted for under the equity method of
accounting. The Company pays these agents, as it does its other agents, commissions for money transfer and
other services provided on the Companys behalf. Commission expense recognized for these agents for the years
ended December 31, 2011, 2010 and 2009 totaled $131.9 million, $183.5 million and $203.2 million,
respectively. Commission expense recognized for Finint prior to October 31, 2011, Costa prior to April 20, 2011,
and FEXCO prior to February 24, 2009, the date of the acquisitions (see Note 3), was considered a related party
transaction.
In July 2009, the Company appointed a director who is also a director for a company holding significant
investments in two of the Companys existing agents. These agents had been agents of the Company prior to the
director being appointed to the board. The Company recognized commission expense of $58.8 million,
$52.9 million and $54.2 million for the years ended December 31, 2011, 2010 and 2009, respectively, related to
these agents.
6. Commitments and Contingencies
Letters of Credit and Bank Guarantees
The Company had approximately $120 million in outstanding letters of credit and bank guarantees as of
December 31, 2011 with expiration dates through 2015, the majority of which contain a one-year renewal option.
The letters of credit and bank guarantees are primarily held in connection with lease arrangements and certain
agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to expiration in
most circumstances.
Litigation and Related Contingencies
In the second quarter of 2009, the Antitrust Division of the United States Department of Justice (DOJ)
served one of the Companys subsidiaries with a grand jury subpoena requesting documents in connection with
107

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
an investigation into money transfers, including related foreign exchange rates, from the United States to the
Dominican Republic from 2004 through the date of subpoena. The Company is cooperating fully with the DOJ
investigation. Due to the stage of the investigation, the Company is unable to predict the outcome of the
investigation, or the possible loss or range of loss, if any, which could be associated with the resolution of any
possible criminal charges or civil claims that may be brought against the Company. Should such charges or
claims be brought, the Company could face significant fines, damage awards or regulatory consequences which
could have a material adverse effect on the Companys business, financial condition and results of operations.
The Company and one of its subsidiaries are defendants in two purported class action lawsuits: James P.
Tennille v. The Western Union Company and Robert P. Smet v. The Western Union Company, both of which are
pending in the United States District Court for the District of Colorado. The original complaints asserted claims
for violation of various consumer protection laws, unjust enrichment, conversion and declaratory relief, based on
allegations that the Company waits too long to inform consumers if their money transfers are not redeemed by
the recipients and that the Company uses the unredeemed funds to generate income until the funds are escheated
to state governments. The Tennille complaint was served on the Company on April 27, 2009. The Smet
complaint was served on the Company on April 6, 2010. On September 21, 2009, the Court granted the
Companys motion to dismiss the Tennille complaint and gave the plaintiff leave to file an amended complaint.
On October 21, 2009, Tennille filed an amended complaint. The Company moved to dismiss the Tennille
amended complaint and the Smet complaint. On November 8, 2010, the Court denied the motion to dismiss as to
the plaintiffs unjust enrichment and conversion claims. On February 4, 2011, the Court dismissed plaintiffs
consumer protection claims. On March 11, 2011, the plaintiffs filed an amended complaint that adds a claim for
breach of fiduciary duty, various elements to its declaratory relief claim and Western Union Financial Services,
Inc. as a defendant. On April 25, 2011, the Company and Western Union Financial Services, Inc. filed a motion
to dismiss the breach of fiduciary duty and declaratory relief claims. Western Union Financial Services, Inc. also
moved to compel arbitration of the plaintiffs claims and to stay the action pending arbitration. On November 21,
2011, the Court denied the motion to compel arbitration and the stay request. Both companies appealed the
decision. On January 24, 2012, the United States Court of Appeals for the Tenth Circuit granted the companies
request to stay the District Court proceedings pending their appeal. The plaintiffs have not sought and the Court
has not granted class certification. The Company and Western Union Financial Services, Inc. intend to
vigorously defend themselves against both lawsuits. However, due to the preliminary stages of these lawsuits, the
fact the plaintiffs have not quantified their damage demands, and the uncertainty as to whether they will ever be
certified as class actions, the potential outcome cannot be determined.
During 2009, the Company recorded an accrual of $71.0 million for an agreement and settlement with the
State of Arizona and other states, which was paid in 2010. On February 11, 2010, the Company signed this
agreement and settlement, which resolved all outstanding legal issues and claims with the State of Arizona and
required the Company to fund a multi-state not-for-profit organization promoting safety and security along the
United States and Mexico border, in which California, Texas and New Mexico are participating with Arizona.
The accrual included amounts for reimbursement to the State of Arizona for its costs associated with this matter.
In addition, as part of the agreement and settlement, the Company has made and expects to make certain
investments in its compliance programs along the United States and Mexico border and a monitor has been
engaged for those programs. The costs of the investments in the Companys programs and for the monitor are
expected to reach up to $23 million over the period from signing to 2013.
In the normal course of business, the Company is subject to claims and litigation. Management of the
Company believes such matters involving a reasonably possible chance of loss will not, individually or in the
aggregate, result in a material adverse effect on the Companys financial condition, results of operations and cash
flows. The Company accrues for loss contingencies as they become probable and estimable.
108

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Pursuant to the separation and distribution agreement with First Data in connection with the Spin-off, First
Data and the Company are each liable for, and agreed to perform, all liabilities with respect to their respective
businesses. In addition, the separation and distribution agreement also provides for cross-indemnities principally
designed to place financial responsibility for the obligations and liabilities of the Companys business with the
Company and financial responsibility for the obligations and liabilities of First Datas retained businesses with
First Data. The Company also entered into a tax allocation agreement that sets forth the rights and obligations of
First Data and the Company with respect to taxes imposed on their respective businesses both prior to and after
the Spin-off as well as potential tax obligations for which the Company may be liable in conjunction with the
Spin-off (see Note 10).
7. Investment Securities
Investment securities, classified within Settlement assets in the Consolidated Balance Sheets, consist
primarily of highly-rated state and municipal debt securities, including variable rate demand notes. Variable rate
demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the
same day to one week, but that have varying maturities through 2050. Generally, these securities are used by the
Company for short-term liquidity needs and are held for short periods of time, typically less than 30 days. The
Company is required to hold specific highly-rated, investment grade securities and such investments are
restricted to satisfy outstanding settlement obligations in accordance with applicable state and foreign country
requirements. The substantial majority of the Companys investment securities are classified as available-for-sale
and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and
credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in
highly-rated securities and through investment diversification. As of December 31, 2011, the majority of the
Companys investment securities had credit ratings of AA or better from a major credit rating agency.
On October 1, 2009 (the Transition Date), the Company assumed IPSs role as issuer of money orders and
terminated the existing agreement whereby IPS paid the Company a fixed return of 5.5% on the outstanding
money order balances. Following the Transition Date, the Company invested the cash received from IPS in
highly-rated, investment grade securities, primarily tax exempt United States state and municipal debt securities,
in accordance with applicable regulations.
Subsequent to the Transition Date, all revenue generated from the investment portfolio is being retained by the
Company. IPS continues to provide the Company with clearing services necessary for payment of the money
orders in exchange for the payment by the Company to IPS of a per-item processing fee. The Company no longer
provides to IPS the services required under the original money order agreement or receives from IPS the fee for
such services.
Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a
component of accumulated other comprehensive income or loss, net of related deferred taxes. Proceeds from the
sale and maturity of available-for-sale securities during the years ended December 31, 2011, 2010 and 2009 were
$14.2 billion, $14.7 billion and $8.4 billion, respectively. The transition of the money order business from IPS in
October 2009, as described above, increased the frequency of purchases and proceeds received by the Company
in 2010 and 2011.
Gains and losses on investments are calculated using the specific-identification method and are recognized
during the period in which the investment is sold or when an investment experiences an other-than-temporary
decline in value. Factors that could indicate an impairment exists include, but are not limited to: earnings
performance, changes in credit rating or adverse changes in the regulatory or economic environment of the asset.
109

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
If potential impairment exists, the Company assesses whether it has the intent to sell the debt security, more
likely than not will be required to sell the debt security before its anticipated recovery or expects that some of the
contractual cash flows will not be received. The Company had no material other-than-temporary impairments
during the periods presented.
The components of investment securities are as follows (in millions):
Amortized
Cost

December 31, 2011

Fair
Value

Gross
Gross
Net
Unrealized Unrealized Unrealized
Gains
Losses Gains/(Losses)

State and municipal debt securities (a) . . . . . . . . . . . . . . . $

858.5 $

866.5 $10.4

State and municipal variable rate demand notes . . . . . . . .

376.9

376.9

Corporate debt and other . . . . . . . . . . . . . . . . . . . . . . . . . .

88.7

88.6

0.6

(0.7)

(0.1)

1,332.0 $11.0

$ (3.1)

1,324.1 $

Amortized
Cost

December 31, 2010

Fair
Value

$ (2.4)

8.0

7.9

Gross
Gross
Net
Unrealized Unrealized Unrealized
Gains
Losses Gains/(Losses)

State and municipal debt securities (a) . . . . . . . . . . . . . . . $

844.1 $

849.1 $ 7.0

State and municipal variable rate demand notes . . . . . . . .

490.0

490.0

Agency mortgage-backed securities and other . . . . . . . . .

29.9

30.0

0.1

0.1

1,364.0 $

$ (2.0)

1,369.1 $ 7.1

$ (2.0)

5.0

5.1

(a) The majority of these securities are fixed rate instruments.

There were no investments with a single issuer or individual securities representing greater than 10% of total
investment securities as of December 31, 2011 and 2010.
The following summarizes contractual maturities of investment securities as of December 31, 2011 (in
millions):
Amortized
Cost

Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

180.0

Fair
Value

180.5

Due after 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

705.6

713.3

Due after 5 years through 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115.8

114.6

Due after 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

322.7

323.6

1,324.1

1,332.0

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay
the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with
variable rate demand notes. Variable rate demand notes, having a fair value of $12.4 million, $65.4 million,
110

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
$6.0 million and $293.1 million are included in the Due within 1 year, Due after 1 year through 5 years,
Due after 5 years through 10 years and Due after 10 years categories, respectively, in the table above.
8. Fair Value Measurements
Fair value, as defined by the relevant accounting standards, represents the exchange price that would be
received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants on the measurement date. For
additional information on how the Company measures fair value, refer to Note 2.
The following table reflects assets and liabilities that were measured and carried at fair value on a recurring
basis (in millions):
December 31, 2011

Assets:
State and municipal debt securities . . . . .
State and municipal variable rate
demand notes . . . . . . . . . . . . . . . . . . . .
Corporate debt and other . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . .

Level 1

Fair Value Measurement Using

Level 2
Level 3

0.1

866.5

376.9
88.5
124.8

Assets/Liabilities
at Fair Value

866.5
376.9
88.6
124.8

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . .

0.1

1,456.7

1,456.8

Liabilities:
Derivatives . . . . . . . . . . . . . . . . . . . . . . .

86.6

86.6

Total liabilities . . . . . . . . . . . . . . . . . . . . . . .

86.6

86.6

December 31, 2010

Assets:
State and municipal debt securities . . . . .
State and municipal variable rate
demand notes . . . . . . . . . . . . . . . . . . . .
Agency mortgage-backed securities and
other . . . . . . . . . . . . . . . . . . . . . . . . . . .

Level 1

Fair Value Measurement Using

Level 2
Level 3

Derivatives . . . . . . . . . . . . . . . . . . . . . . .

849.1

Assets/Liabilities
at Fair Value

849.1

490.0

490.0

0.1

29.9

30.0

69.8

69.8

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . .

0.1

1,438.8

1,438.9

Liabilities:
Derivatives . . . . . . . . . . . . . . . . . . . . . . .

80.9

80.9

Total liabilities . . . . . . . . . . . . . . . . . . . . . . .

80.9

80.9

111

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
No non-recurring fair value adjustments were recorded during the years ended December 31, 2011 and 2010,
except those associated with acquisitions, as disclosed in Note 3.
Other Fair Value Measurements
The carrying amounts for the Companys financial instruments, including cash and cash equivalents,
settlement cash and cash equivalents, settlement receivables and settlement obligations approximate fair value
due to their short maturities. The Companys borrowings had a carrying value and fair value of $3,583.2 million
and $3,563.5 million, respectively, as of December 31, 2011 and had a carrying value and fair value of
$3,289.9 million and $3,473.6 million, respectively, as of December 31, 2010 (see Note 15).
The fair value of the assets in the Trust, which holds the assets for the Companys defined benefit plan, is
disclosed in Note 11.
9. Other Assets and Other Liabilities
The following table summarizes the components of other assets and other liabilities (in millions):
December 31,
2011
2010

Other assets:
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124.8 $
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54.5
Equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41.3
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37.6
Amounts advanced to agents, net of discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34.1
Deferred customer set up costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.0
Debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.8
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.8
Receivables from First Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18.9

69.8
50.1
85.7
26.2
25.3
20.4
12.8
13.8
24.1
22.2

Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 363.4

$ 350.4

Other liabilities:
Pension obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 112.7
86.6
33.6
40.7

$ 112.8
80.9
37.3
23.5

Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 273.6

$ 254.5

112

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Receivable for securities sold
On September 15, 2008, Western Union requested redemption of its shares from the Reserve International
Liquidity Fund, Ltd. (the Fund), a money market fund, totaling $298.1 million. Western Union included the
value of the receivable in Other assets in the Consolidated Balance Sheets. At the time the redemption request
was made, the Company was informed by the Reserve Management Company, the Funds investment advisor,
that the Companys redemption trades would be honored at a $1.00 per share net asset value despite losses the
Fund had incurred on certain holdings resulting in the Fund subsequently reducing its net asset value. In 2009,
the Company received partial distributions totaling $255.5 million from the Fund and recorded a reserve of
$12 million, representing the estimated impact of a pro-rata distribution of the Fund. On December 31, 2010, the
Company received a final distribution from the Fund totaling $36.9 million. As a result of the final distribution,
the Company recovered $6.3 million of the related reserve, the impact of which is included in Other income in
the Consolidated Statements of Income.
10. Income Taxes
The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows
(in millions):
Year Ended December 31,
2011
2010
2009

Components of pre-tax income:

Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 423.9 $ 151.4 $ 249.7
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
850.7
993.8
881.8
$1,274.6

$1,145.2

$1,131.5

For the year ended December 31, 2011, the increase in domestic pre-tax income and decrease in foreign
pre-tax income are primarily due to the current year pre-tax impact of the Companys agreement with the United
States Internal Revenue Service (IRS Agreement) resolving substantially all of the issues related to the
Companys restructuring of its international operations in 2003.
The provision for income taxes was as follows (in millions):
Year Ended December 31,
2011
2010
2009

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78.1 $ 132.2 $ 217.3

4.5
39.8
28.0
26.6
63.3
37.4

$ 109.2

$ 235.3

$ 282.7

Domestic taxes have been incurred on certain pre-tax income amounts that were generated by the Companys
foreign operations. Accordingly, the percentage obtained by dividing the total federal, state and local tax
provision by the domestic pre-tax income, all as shown in the preceding tables, may be higher than the statutory
tax rates in the United States.
113

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Companys effective tax rates differed from statutory rates as follows:
Year Ended December 31,
2011
2010
2009

Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

State income taxes, net of federal income tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IRS Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35.0%
2.0%
(13.9)%
(16.1)%
1.6%

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.6%

35.0% 35.0%
1.9%
1.5%
(15.3)% (12.5)%

(1.1)% 1.0%
20.5%

25.0%

The decrease in the Companys effective tax rate for the year ended December 31, 2011 is primarily due to an
agreement with the United States Internal Revenue Service (IRS) resolving substantially all of the issues
related to the Companys restructuring of its international operations in 2003, as described below, slightly offset
by higher taxes associated with the Finint and Costa remeasurement gains. The tax rate for the year ended
December 31, 2010 was impacted by a cumulative tax planning benefit from certain foreign acquisitions and the
settlement with the IRS of certain issues relating to the 2002-2004 tax years. The Company continues to benefit
from an increasing proportion of profits being foreign-derived, and therefore taxed at lower rates than its
combined federal and state tax rates in the United States.
The Companys provision for income taxes consisted of the following components (in millions):
Year Ended December 31,
2011
2010
2009

Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36.2 $ 103.6 $ 235.8

0.6
30.1
26.0
51.2
73.0
41.8

Total current taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

88.0

Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.9
3.9
(24.6)

28.6
9.7
(9.7)

(18.5)
2.0
(4.4)

Total deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.2

28.6

(20.9)

$ 109.2

$ 235.3

114

206.7

303.6

$ 282.7

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences
between the book and tax bases of the Companys assets and liabilities. The following table outlines the principal
components of deferred tax items (in millions):
December 31,
2011
2010

Deferred tax assets related to:

Reserves, accrued expenses and employee-related items . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax attribute carryovers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40.6
40.0
11.9
20.6

61.6
38.7
7.4
16.7

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

113.1

124.4

Deferred tax liabilities related to:

Intangibles, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

502.8

411.8
2.5

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

502.8

414.3

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 389.7

$ 289.9

Uncertain Tax Positions

The Company has established contingency reserves for a variety of material, known tax exposures. As of
December 31, 2011, the total amount of tax contingency reserves was $135.0 million, including accrued interest
and penalties, net of related benefits. The Companys tax reserves reflect managements judgment as to the
resolution of the issues involved if subject to judicial review. While the Company believes its reserves are
adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised
by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to
these reserves, the Companys income tax expense would include (i) any changes in tax reserves arising from
material changes during the period in the facts and circumstances (i.e., new information) surrounding a tax issue,
and (ii) any difference from the Companys tax position as recorded in the financial statements and the final
resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax
expense in the Companys consolidated financial statements in future periods and could impact operating cash
flows.

115

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and
the amounts otherwise recognized in the Companys financial statements, and are reflected in Income taxes
payable in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of
unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):
2011

2010

Balance as of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increasespositions taken in current period (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increasespositions taken in prior periods (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increasesacquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreasespositions taken in prior periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreasessettlements with taxing authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreaseslapse of applicable statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 618.7 $ 477.2
143.1
134.1
34.1
33.4
9.7

(27.9)
(21.8)
(650.9)
(0.8)
(3.1)
(3.4)

Balance as of December 31, (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 123.7

$ 618.7

(a) Includes recurring accruals for issues which initially arose in previous periods.
(b) Changes to positions taken in prior periods relate to changes in estimates used to calculate prior period
unrecognized tax benefits.
(c) Balance at December 31, 2011, includes amounts related to a variety of U.S. federal and state and foreign
tax matters.
In December 2011, the Company reached an agreement with the IRS resolving substantially all of the issues
related to the Companys restructuring of its international operations in 2003. As a result of the IRS Agreement,
the Company expects to make cash payments to the IRS and various state tax authorities in 2012 of
approximately $190 million, which are in addition to the $250 million tax deposit (see below) the Company
made with the IRS in 2010. This deposit limits the further accrual of interest charges with respect to the
Companys related tax liabilities, to the extent of the deposit. Also as a result of the IRS Agreement, the
Company recorded a tax benefit of $204.7 million related to the adjustment of reserves associated with this
matter.
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was
$115.6 million and $555.5 million as of December 31, 2011 and 2010, respectively, excluding interest and
penalties.
The Company recognizes interest and penalties with respect to unrecognized tax benefits in Provision for
income taxes in its Consolidated Statements of Income, and records the associated liability in Income taxes
payable in its Consolidated Balance Sheets. The Company recognized ($4.0) million, $6.9 million and
$11.0 million in interest and penalties during the years ended December 31, 2011, 2010 and 2009, respectively.
The Company has accrued $20.7 million and $52.4 million for the payment of interest and penalties as of
December 31, 2011 and 2010, respectively.
The Company has identified no uncertain tax positions for which it is reasonably possible that the total amount
of unrecognized tax benefits will significantly increase or decrease within 12 months. The change in
116

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
unrecognized tax benefits during the year ended December 31, 2011 is substantially attributable to the settlement
with the IRS discussed above. The unrecognized tax benefits accrual as of December 31, 2011, consists of
federal, state and foreign tax matters.
The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and
for various non-United States jurisdictions, and the Company has identified the United States and Ireland as its
two major tax jurisdictions. The United States federal income tax returns of First Data, which include the
Company, are eligible to be examined for the years 2003 through 2006. The Companys United States federal
income tax returns since the Spin-off are also eligible to be examined. The IRS completed its examination of the
United States federal consolidated income tax returns of First Data for 2003 and 2004, which included the
Company, and issued a Notice of Deficiency in December 2008. The Notice of Deficiency alleged significant
additional taxes, interest and penalties owed with respect to a variety of adjustments involving the Company and
its subsidiaries, and the Company generally has responsibility for taxes associated with these potential Companyrelated adjustments under the tax allocation agreement with First Data executed at the time of the Spin-off. A
substantial part of the alleged amounts due related to the Companys international restructuring, which took
effect in the fourth quarter of 2003. In December 2011, the Company reached an agreement with the IRS
resolving substantially all of the issues related to the Companys restructuring of its international operations in
2003, as noted above. An examination of the United States federal consolidated income tax returns of First Data
that cover the Companys 2005 and pre-Spin-off 2006 taxable periods is ongoing, as is an examination of the
Companys United States federal consolidated income tax returns for the 2006 post-Spin-off period through
2009. The Irish income tax returns of certain subsidiaries for the years 2007 and forward are eligible to be
examined by the Irish tax authorities, although no examinations have commenced.
In the first quarter of 2010, the Company made a $250 million tax deposit relating to United States federal tax
liabilities, including those arising from the Companys 2003 international restructuring, which have been
previously accrued in the Companys consolidated financial statements. The deposit was recorded as a reduction
to Income taxes payable in the Consolidated Balance Sheets and a decrease in cash flows from operating
activities in the Consolidated Statement of Cash Flows. Making the deposit limits the further accrual of interest
charges with respect to such tax liabilities, to the extent of the deposit.
As of December 31, 2011, no provision had been made for United States federal and state income taxes on
certain of the Companys outside tax basis differences, which primarily relate to accumulated foreign earnings of
approximately $3.7 billion, which are expected to be reinvested outside the United States indefinitely. Upon
distribution of those earnings to the United States in the form of actual or constructive dividends, the Company
would be subject to United States income taxes (subject to an adjustment for foreign tax credits), state income
taxes and possible withholding taxes payable to various foreign countries. Such taxes could be significant.
Determination of this amount of unrecognized deferred United States tax liability is not practicable because of
the complexities associated with its hypothetical calculation.
Tax Allocation Agreement with First Data
The Company and First Data each are liable for taxes imposed on their respective businesses both prior to and
after the Spin-off. If such taxes have not been appropriately apportioned between First Data and the Company,
subsequent adjustments may occur that may impact the Companys financial condition or results of operations.
Also under the tax allocation agreement, with respect to taxes and other liabilities that result from a final
determination that is inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private
letter ruling and relevant tax opinion) (Spin-off Related Taxes), the Company will be liable to First Data for
117

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
any such Spin-off Related Taxes attributable solely to actions taken by or with respect to the Company. In
addition, the Company will also be liable for half of any Spin-off Related Taxes (i) that would not have been
imposed but for the existence of both an action by the Company and an action by First Data or (ii) where the
Company and First Data each take actions that, standing alone, would have resulted in the imposition of such
Spin-off Related Taxes. The Company may be similarly liable if it breaches certain representations or covenants
set forth in the tax allocation agreement. If the Company is required to indemnify First Data for taxes incurred as
a result of the Spin-off being taxable to First Data, it likely would have a material adverse effect on the
Companys business, financial condition and results of operations. First Data generally will be liable for all
Spin-off Related Taxes, other than those described above.
11. Employee Benefit Plans
Defined Contribution Plans
The Western Union Company Incentive Savings Plan (401(k)) covers eligible employees on the United
States payroll of the Company. Employees who make voluntary contributions to this plan receive up to a 4%
Company matching contribution. All matching contributions are immediately vested.
The Company administers more than 25 defined contribution plans in various countries globally on behalf of
approximately 1,300 employee participants as of December 31, 2011. Such plans have vesting and employer
contribution provisions that vary by country.
In addition, the Company sponsors a non-qualified deferred compensation plan for a select group of highly
compensated employees. The plan provides tax-deferred contributions, matching and the restoration of Company
matching contributions otherwise limited under the 401(k).
The aggregate amount charged to expense in connection with all of the above plans was $12.8 million,
$12.0 million and $11.2 million during the years ended December 31, 2011, 2010 and 2009, respectively.
Defined Benefit Plan
On December 31, 2010, the Company merged its two frozen defined benefit pension plans into one plan
(Plan). The Plan assets were held in a master trust and were identical in terms of their benefit entitlements and
other provisions (except for participant eligibility requirements) and consequently, the financial effect of the
merger was not significant.
The Plan had recorded unfunded pension obligations of $112.7 million and $112.8 million as of December 31,
2011 and 2010, respectively, included in Other liabilities in the Consolidated Balance Sheets. In both the years
ended December 31, 2011 and 2010, the Company made contributions of approximately $25 million to the Plan,
including discretionary contributions of $3 million and $10 million, respectively. Due to the closure of one of its
facilities in Missouri and an agreement with the Pension Benefit Guaranty Corporation, the Company funded
$4.1 million during 2009. The Company will be required to fund approximately $20 million to the Plan in 2012
and may make a discretionary contribution of up to approximately $5 million.
The Company recognizes the funded status of the Plan in its Consolidated Balance Sheets with a
corresponding adjustment to Accumulated other comprehensive loss, net of tax.
118

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table provides a reconciliation of the changes in the Plans projected benefit obligation, fair
value of assets and the funded status (in millions):
2011

Change in projected benefit obligation

Projected benefit obligation as of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projected benefit obligation as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in plan assets
Fair value of plan assets as of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

402.9 $
17.9
35.3
(41.7)

400.1
20.1
25.3
(42.6)

414.4

402.9

290.1 $
28.3
(41.7)
25.0

275.9
31.9
(42.6)
24.9

301.7

290.1

Fair value of plan assets as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Funded status of the plan as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (112.7) $ (112.8)

Accumulated benefit obligation as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

414.4

402.9

Differences in expected returns on plan assets estimated at the beginning of the year versus actual returns, and
assumptions used to estimate the beginning of year projected benefit obligation versus the end of year obligation
(principally discount rate and mortality assumptions) are, on a combined basis, considered actuarial gains and
losses. Such actuarial gains and losses are recognized as a component of Comprehensive income and amortized
to income over the average remaining life expectancy of the plan participants. Included in Accumulated other
comprehensive loss as of December 31, 2011 is $10.5 million ($6.5 million, net of tax) of actuarial losses that
are expected to be recognized in net periodic pension cost during the year ended December 31, 2012.
The following table provides the amounts recognized in the Consolidated Balance Sheets (in millions):
December 31,
2011
2010

Accrued benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated other comprehensive loss (pre-tax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (112.7) $ (112.8)
196.8
176.5

Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

119

84.1

63.7

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table provides the components of net periodic benefit cost for the Plan (in millions):
Year Ended December 31,
2011
2010
2009

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17.9 $ 20.1 $ 23.6

Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21.3)
(20.4)
(24.7)
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1
6.2
3.6
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.7

5.9

2.5

The accrued loss related to the pension liability included in Accumulated other comprehensive loss, net of
tax, increased $12.5 million, $3.9 million and $11.3 million in 2011, 2010 and 2009, respectively.
The rate assumptions used in the measurement of the Companys benefit obligation were as follows:
2011

2010

3.72%

4.69%

2011

2010

2009

4.69%
7.00%

5.30%
6.50%

6.26%
7.50%

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The rate assumptions used in the measurement of the Companys net cost were as follows:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected long-term return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Company measures the Plans obligations and annual expense using assumptions that reflect best
estimates and are consistent to the extent that each assumption reflects expectations of future economic
conditions. As the bulk of the pension benefits will not be paid for many years, the computation of pension
expenses and benefits is based on assumptions about future interest rates and expected rates of return on plan
assets. In general, pension obligations are most sensitive to the discount rate assumption, and it is set based on
the rate at which the pension benefits could be settled effectively. The discount rate is determined by matching
the timing and amount of anticipated payouts under the Plan to the rates from an AA spot rate yield curve. The
curve is derived from AA bonds of varying maturities.
The Company employs a building block approach in determining the long-term rate of return for plan assets.
Historical markets are studied and long-term historical risk, return, and co-variance relationships between
equities, fixed-income securities, and alternative investments are considered consistent with the widely accepted
capital market principle that assets with higher volatility generate a greater return over the long run. Current
market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are
determined. Consideration is given to diversification, re-balancing and yields anticipated on fixed income
securities held. Historical returns are reviewed within the context of current economic conditions to check for
reasonableness and appropriateness. The Company then applies this rate against a calculated value for its plan
assets. The calculated value recognizes changes in the fair value of plan assets over a five-year period.

120

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Pension plan asset allocation as of December 31, 2011 and 2010, and target allocations based on investment
policies, were as follows:
Percentage of Plan Assets
as of Measurement Date
2011
2010

Asset Class

Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17%
61%
22%

31%
69%
0%

100%

100%

Target Allocation

Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15%
60%
25%

The assets of the Companys Plan are managed in a third-party Trust. The investment policy and allocation of
the assets in the Trust are overseen by the Companys Investment Council. The Company employs a total return
investment approach whereby a mix of equity, fixed income, and alternative investments are used in an effort to
maximize the long-term return of plan assets. Risk tolerance is established through careful consideration of plan
liabilities and plan funded status. The investment portfolio contains a diversified blend of equity, fixed-income,
and alternative investments (e.g. hedge funds, royalty rights and private equity funds). Furthermore, equity
investments are diversified across United States and non-United States stocks, as well as securities deemed to be
growth, value, and small and large capitalizations. Alternative investments, the significant majority of which are
hedge funds, are used in an effort to enhance long-term returns while improving portfolio diversification. Hedge
fund strategy types include, but are not limited to: commodities/currencies, equity long-short, relative value,
multi-strategy, event driven, and global-macro. The Plan holds derivative contracts directly which consist of
standardized obligations to buy or sell United States treasury bonds or notes at predetermined future dates and
prices which are transacted on regulated exchanges. Additionally, derivatives are held indirectly through funds in
which the Plan is invested. Derivatives are used by the Plan to help reduce the Plans exposure to interest rate
volatility and to provide an additional source of return. Cash held by the Plan is used to satisfy margin
requirements on the derivatives. Investment risk is measured and monitored on an ongoing basis through
quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies.

121

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following tables reflect investments of the Trust that were measured and carried at fair value (in millions).
For information on how the Company measures fair value, refer to Note 2.
December 31, 2011
Asset Class

Fair Value Measurement Using

Level 1
Level 2
Level 3

Equity investments
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Corporate debt (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. treasury bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative investments
Hedge funds (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty rights and private equity (c) . . . . . . . . . . . . . . . . . . . . .

$ 28.1

22.4

Total Assets
at Fair Value

$ 28.1
22.4

39.8

134.1

4.7
3.0

134.1
39.8
4.7
3.0

52.8

13.6

52.8
13.6

Total investments of the Trust at fair value . . . . . . . . . . . . . . . . . . . .

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 67.9

$ 217.0

$ 13.6

$ 298.5
3.2

Total investments of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 67.9

$ 217.0

$ 13.6

$ 301.7

December 31, 2010

Asset Class

Fair Value Measurement Using

Level 1
Level 2
Level 3

Equity investments
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Private equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
Corporate debt (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. treasury bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. government agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total Assets
at Fair Value

3.1

$ 40.9
45.2

1.3

$ 44.0
45.2
1.3

57.9

117.3

6.8
6.0
9.0

117.3
57.9
6.8
6.0
9.0

Total investments of the Trust at fair value . . . . . . . . . . . . . . . . . . . . . .

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 61.0

$ 225.2

$ 1.3

$ 287.5
2.6

Total investments of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 61.0

$ 225.2

$ 1.3

$ 290.1

(a) Substantially all corporate debt securities are investment grade securities.
(b) Hedge funds generally hold liquid and readily priceable securities, such as public equities, exchange-traded
derivatives, and corporate bonds. Hedge funds themselves do not have readily available market quotations,
122

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
and therefore are valued using the NAV per share provided by the investment sponsor or third party
administrator. Funds investing in diverse hedge fund strategies (primarily commingled funds) with the
following composition of underlying hedge fund investments within the pension plans at
December 31, 2011: commodities/currencies (34%), equity long/short (20%), relative value (17%), multistrategy (11%), event driven (10%), and global-macro (8%). There are no redemption restrictions, and
redemptions can generally be done monthly or quarterly with required notice ranging from one to 45 days.
(c) Diversified investments in royalty rights related to the sale of pharmaceutical and biotechnology products by
third parties. Also included are private equity funds with a focus on venture capital and mezzanine financing
strategies.
The maturities of debt securities as of December 31, 2011 range from less than one year to approximately
38 years with a weighted-average maturity of 15 years.
The following tables provide summaries of changes in the fair value of the Trusts Level 3 financial assets (in
millions):
Royalty
Rights

Balance, January 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Actual return on plan assets:
Relating to assets still held as of the reporting date . . . . . . . . . . . . . . . . . . . . . .
Relating to assets sold during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net purchases and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Actual return on plan assets:
Relating to assets still held as of the reporting date . . . . . . . . . . . . . . . . . . . . . .
Relating to assets sold during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net purchases and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11.4

Private
Equity

2.0

Total

(0.4)
0.2
(0.5)
$

11.4

1.3

(0.4)
0.2
(0.5)
$

(0.8)
0.9
0.8
$

2.2

2.0

1.3
(0.8)
0.9
12.2

13.6

The estimated undiscounted future benefit payments are expected to be $40.4 million in 2012, $39.0 million in
2013, $37.5 million in 2014, $36.0 million in 2015, $34.5 million in 2016 and $147.2 million in 2017 through
2021.
12. Operating Lease Commitments
The Company leases certain real properties for use as customer service centers and administrative and sales
offices. The Company also leases data communications terminals, computers and office equipment. Certain of
these leases contain renewal options and escalation provisions. Total rent expense under operating leases, net of
sublease income, was $44.2 million, $34.7 million and $34.0 million during the years ended December 31, 2011,
2010 and 2009, respectively.
123

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
As of December 31, 2011, the minimum aggregate rental commitments under all noncancelable operating
leases, net of sublease income commitments aggregating $2.0 million through 2016, were as follows (in
millions):
Year Ending December 31,

2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38.8
29.9
23.1
18.8
13.0
19.1

Total future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

142.7

13. Stockholders Equity

Accumulated other comprehensive loss
Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be
recognized in income, except those resulting from transactions with shareholders. The major components include
unrealized gains and losses on investment securities, gains or losses from cash flow hedging activities, foreign
currency translation adjustments and pension liability adjustments.
Unrealized gains and losses on investment securities that are available for sale, primarily state and municipal
debt securities, are included in Accumulated other comprehensive loss until the investment is either sold or
deemed other-than-temporarily impaired. See Note 7 for further discussion.
The effective portion of the change in fair value of derivatives that qualify as cash flow hedges are recorded in
Accumulated other comprehensive loss. Generally, amounts are recognized in income when the related
forecasted transaction affects earnings. See Note 14 for further discussion.
The assets and liabilities of foreign subsidiaries whose functional currency is not the United States dollar are
translated using the appropriate exchange rate as of the end of the year. Foreign currency translation adjustments
represent unrealized gains and losses on assets and liabilities arising from the difference in the foreign country
currency compared to the United States dollar. These gains and losses are accumulated in comprehensive income.
When a foreign subsidiary is substantially liquidated, the cumulative translation gain or loss is removed from
Accumulated other comprehensive loss and is recognized as a component of the gain or loss on the sale of the
subsidiary.
A pension liability adjustment associated with the defined benefit pension plan is recognized for the difference
between estimated assumptions (e.g., asset returns, discount rates, mortality) and actual results. The amount in
Accumulated other comprehensive loss is amortized to income over the remaining life expectancy of the plan
participants. Details of the pension plans assets and obligations are explained further in Note 11.

124

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The income tax effects allocated to and the cumulative balance of each component of accumulated other
comprehensive loss were as follows (in millions):
2011

Beginning balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized gains/(losses) on investment securities:
Unrealized gains/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax (expense)/benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of gains into earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

$ (132.8) $ (127.3) $

2009

(30.0)

9.7
(3.6)
(6.9)
2.6

(0.5)
0.1
(4.7)
1.8

11.5
(4.3)
(2.7)
1.0

1.8

(3.3)

5.5

(5.2)
5.6
33.0
(6.4)

15.8
0.7
(23.0)
1.6

(43.6)
8.9
(32.9)
5.1

Net unrealized gains/(losses) on hedging activities . . . . . . . . . . . . . .

Foreign currency translation adjustments:
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . .
Tax (expense)/benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of gains into earnings (a) . . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27.0

(4.9)

(62.5)

(3.7)
1.7

8.4
(1.8)

(21.6)
7.6
(23.1)
8.1

Net foreign currency translation adjustments . . . . . . . . . . . . . . . . . .

Pension liability adjustments:
Unrealized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of losses into earnings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2.0)

6.6

(29.0)

(28.4)
10.9
8.1
(3.1)

(13.7)
5.9
6.2
(2.3)

(22.2)
8.7
3.6
(1.4)

Net pension liability adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12.5)

(3.9)

(11.3)

14.3

(5.5)

(97.3)

Net unrealized gains/(losses) on investment securities . . . . . . . . . . .

Unrealized gains/(losses) on hedging activities:
Unrealized gains/(losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax (expense)/benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of (gains)/losses into earnings . . . . . . . . . . . . . . . . . . . . .
Tax expense/(benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ending balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (118.5) $ (132.8) $ (127.3)

(a) The year ended December 31, 2009 includes the impact to the foreign currency translation account of the
surrender of the Companys interest in FEXCO Group. See Note 3.

125

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
As of December 31, the components of accumulated other comprehensive loss, net of tax, were as follows (in
millions):
2011

Unrealized gains on investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized gains/(losses) on hedging activities . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension liability adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

2009

4.9 $
3.1 $
6.4
5.1
(21.9)
(17.0)
(6.3)
(4.3)
(10.9)
(122.2)
(109.7)
(105.8)

$ (118.5) $ (132.8) $ (127.3)

Cash Dividends Paid
During 2011, the Companys Board of Directors declared quarterly cash dividends of $0.08 per common share
in the second through fourth quarters of 2011 and $0.07 per share in the first quarter representing $194.2 million
in total dividends. Of this amount, $49.6 million was paid on both December 30, 2011 and October 7, 2011,
$50.3 million was paid on June 30, 2011 and $44.7 million was paid on March 31, 2011. During 2010, the
Companys Board of Directors declared quarterly cash dividends of $0.07 per common share in the fourth quarter
and $0.06 per common share in each of the first three quarters representing $165.3 million in total dividends. Of
this amount, $45.8 million was paid on December 31, 2010, $39.4 million was paid on October 14, 2010,
$39.6 million was paid on June 30, 2010 and $40.5 million was paid on March 31, 2010. During the fourth
quarter of 2009, the Companys Board of Directors declared an annual cash dividend of $0.06 per common share
representing $41.2 million in total dividends, paid on December 30, 2009.
On February 7, 2012, the Companys Board of Directors declared a quarterly cash dividend of $0.10 per share
payable on March 30, 2012.
Share Repurchases
During the years ended December 31, 2011, 2010 and 2009, 40.3 million, 35.6 million and 24.8 million shares,
respectively, have been repurchased for $800.0 million, $584.5 million and $400.0 million, respectively,
excluding commissions, at an average cost of $19.83, $16.44 and $16.10 per share, respectively. As of
December 31, 2011, $615.5 million remains available under share repurchase authorizations approved by the
Board of Directors through December 31, 2012.
14. Derivatives
The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates,
primarily the euro, and to a lesser degree the British pound, Canadian dollar and other currencies, related to
forecasted money transfer revenues and on money transfer settlement assets and obligations. The Company is
also exposed to risk from derivative contracts written to its customers arising from its cross-currency
business-to-business payments operations. Additionally, the Company is exposed to interest rate risk related to
changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to
(a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and
(b) facilitate cross-currency business-to-business payments by writing derivatives to customers.
126

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The Company executes derivatives with established financial institutions, with the substantial majority of these
financial institutions having credit ratings of A or better from a major credit rating agency. The Company also
executes global business payments derivatives mostly with small and medium size enterprises. The primary
credit risk inherent in derivative agreements represents the possibility that a loss may occur from the
nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these
counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the
concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties
will be able to fully satisfy their obligations under the agreements, but takes action (including termination of
contracts) when doubt arises about the counterparties ability to perform. The Companys hedged foreign
currency exposures are in liquid currencies; consequently, there is minimal risk that appropriate derivatives to
maintain the hedging program would not be available in the future.
Foreign CurrencyConsumer-to-Consumer
The Companys policy is to use longer-term foreign currency forward contracts, with maturities of up to
36 months at inception and a targeted weighted-average maturity of approximately one year, to mitigate some of
the risk that changes in foreign currency exchange rates compared to the United States dollar could have on
forecasted revenues denominated in other currencies related to its business. As of December 31, 2011, the
Companys longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a
weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of
forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies
during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective
or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in
Derivative gains/(losses), net within the Companys Consolidated Statements of Income.
The Company also uses short duration foreign currency forward contracts, generally with maturities from a
few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations
between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year,
are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash positions.
None of these contracts are designated as accounting hedges.
The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of
December 31, 2011 were as follows (in millions):
Contracts not designated as hedges:
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 159.9
British pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48.4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
142.6
Contracts designated as hedges:
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500.1
Canadian dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116.8
British pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106.4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117.0

127

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Foreign CurrencyGlobal Business Payments
The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly
with small and medium size enterprises and derives a currency spread from this activity as part of its global
business payments operations. The Company aggregates its global business payments foreign currency exposures
arising from customer contracts, including the derivative contracts described above, and hedges the resulting net
currency risks by entering into offsetting contracts with established financial institution counterparties (economic
hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising
from its cross-currency business-to-business payments operations, which primarily include spot exchanges of
currency in addition to forwards and options. Foreign exchange revenues from the total portfolio of positions
were $154.6 million, $105.0 million, and $28.8 million for the years ended December 31, 2011, 2010 and 2009,
respectively. None of the derivative contracts used in global business payments operations are designated as
accounting hedges. The duration of these derivative contracts is generally nine months or less.
The aggregate equivalent United States dollar notional amounts of foreign currency derivative customer
contracts held by the Company in its global business payments operations as of December 31, 2011 were
approximately $3.3 billion. The significant majority of customer contracts are written in major currencies such as
the euro, Canadian dollar, British pound, and Australian dollar.
The Company has forward contracts to offset foreign exchange rate fluctuations on a Canadian dollar denominated
intercompany loan. These contracts, which are not designated as accounting hedges, had a notional amount of
approximately 240 million and 245 million Canadian dollars as of December 31, 2011 and 2010, respectively.
Interest Rate HedgingCorporate
The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its
notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall
exposure to interest rates. The Company designates these derivatives as fair value hedges utilizing the short-cut
method, which permits an assumption of no ineffectiveness if certain criteria are met. The change in fair value of
the interest rate swaps is offset by a change in the carrying value of the debt being hedged within the Companys
Borrowings in the Consolidated Balance Sheets and Interest expense in the Consolidated Statements of
Income has been adjusted to include the effects of interest accrued on the swaps.
The Company, at times, utilizes derivatives to hedge the forecasted issuance of fixed rate debt. These
derivatives are designated as cash flow hedges of the variability in the fixed rate coupon of the debt expected to
be issued. The effective portion of the change in fair value of the derivatives is recorded in Accumulated other
comprehensive loss.
As of December 31, 2011 and 2010, the Company held interest rate swaps in an aggregate notional amount of
$500.0 million and $1,195.0 million, respectively. The aggregate notional amount held at December 31, 2011
related to notes due in 2014.

128

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Balance Sheet
The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of
December 31, 2011 and 2010 (in millions):
Derivative Assets
Fair Value
Balance Sheet
Location
2011
2010

Derivativeshedges:
Interest rate fair value hedges
Corporate . . . . . . . . . . . . . . . . . . . . . . . Other assets $
Foreign currency cash flow hedges
Consumer-to-consumer . . . . . . . . . . . . Other assets

4.4 $

Derivative Liabilities
Fair Value
Balance Sheet
Location
2011
2010

8.0 Other liabilities $

37.0

14.7 Other liabilities

41.4 $

22.7

Derivativesundesignated:
Foreign currencyGlobal business
payments . . . . . . . . . . . . . . . . . . . . . . . Other assets $
Foreign currency
Consumer-to-consumer . . . . . . . . . . . . Other assets

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total derivatives . . . . . . . . . . . . . . . . . . . . . . .

1.6

6.6

31.1

6.6 $

32.7

79.8 $

46.9 Other liabilities $

67.6 $

36.2

3.6

0.2 Other liabilities

12.4

12.0

83.4 $

47.1

80.0 $

48.2

$ 124.8 $

69.8

86.6 $

80.9

The following table summarizes the net fair value of derivatives held as of December 31, 2011 and their
expected maturities (in millions):
Total

Foreign currency undesignated hedges

Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest rate fair value hedgesCorporate . . . . . . . . . . . . . . .
Foreign currency undesignated hedgesGlobal business
payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency cash flow hedges
Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

129

2012

2013

2014

Thereafter

(8.8) $
4.4

(4.8) $

(4.0) $

4.4

12.2

12.3

(0.1)

30.4

15.4

15.0

38.2

22.9

10.9

4.4

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Income Statement
The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated
Statements of Income segregated by designated, qualifying hedging instruments and those that are not, for the
years ended December 31, 2011, 2010 and 2009 (in millions):
Fair Value Hedges
The following table presents the location and amount of gains/(losses) from fair value hedges for the years
ended December 31, 2011, 2010 and 2009 (in millions):
Gain/(Loss) Recognized in Income on
Derivatives
Amount
Income Statement
Location
2011
2010
2009

Derivatives

Gain/(Loss) Recognized in Income on

Related Hedged Item (a)
Amount
Income Statement
Location
Hedged Items
2011
2010
2009

Interest rate contracts . . . Interest expense

11.8 $

13.3 $

12.9 Fixed-rate debt Interest expense

12.6 $

10.5 $

11.1

Total gain . . . . . . . . . . . .

11.8 $

13.3 $

12.9

12.6 $

10.5 $

11.1

Cash Flow Hedges

The following table presents the location and amount of gains/(losses) from cash flow hedges for the years
ended December 31, 2011, 2010 and 2009 (in millions):

Derivatives

Amount of Gain/
(Loss)
Reclassified from Accumulated
Recognized in OCI on Gain/(Loss)
OCI into Income (Effective Portion)
Derivatives
(Effective Portion)
Amount
Income Statement
2011 2010
2009
Location
2011
2010 2009

Foreign currency
contracts . . . . . . $ 16.4 $ 20.0 $ (43.6) Revenue
Interest rate
contracts (c) . . . (21.6) (4.2)
Interest expense
Total
gain/(loss) . . . . . $ (5.2) $ 15.8 $ (43.6)

$ (30.3) $ 24.5 $ 34.6

(2.7)

(1.5)

(1.7)

Gain/(Loss) Recognized in Income on

Derivatives (Ineffective Portion and
Amount Excluded from Effectiveness
Testing) (b)
Amount
Income Statement
Location
2011 2010 2009
Derivative gains/
(losses), net
Interest expense

$ (33.0) $ 23.0 $ 32.9

$ (10.2) $ (1.5) $ (1.2)

(0.1)

$ (10.2) $ (1.6) $ (1.2)

Undesignated Hedges
The following table presents the location and amount of net gains/(losses) from undesignated hedges for the
years ended December 31, 2011, 2010 and 2009 (in millions):

Derivatives

Gain/(Loss) Recognized in Income on Derivatives (d)

Income Statement Location
Amount
2011
2010

Foreign currency contracts (e) . . . . . . . . . . .

Foreign currency contracts (f) . . . . . . . . . . . .

Selling, general and administrative

Derivative gains/(losses), net

Total gain/(loss) . . . . . . . . . . . . . . . . . . . . . .
130

5.9 $ (1.0) $
21.9
0.6

27.8

2009

(7.4)
(2.8)

$ (0.4) $ (10.2)

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(a) The 2011 gain of $12.6 million is comprised of a loss in value on the debt of $11.8 million and amortization
of hedge accounting adjustments of $24.4 million. The 2010 gain of $10.5 million is comprised of a loss in
value on the debt of $13.3 million and amortization of hedge accounting adjustments of $23.8 million. The
2009 gain of $11.1 million is comprised of a loss in value on the debt of $12.9 million and amortization of
hedge accounting adjustments of $24.0 million.
(b) The portion of the change in fair value of a derivative excluded from the effectiveness assessment for
foreign currency forward contracts designated as cash flow hedges represents the difference between
changes in forward rates and spot rates.
(c) The Company uses derivatives to hedge the forecasted issuance of fixed rate debt and records the effective
portion of the derivatives fair value in Accumulated other comprehensive loss in the Consolidated
Balance Sheets. These amounts are reclassified to Interest expense over the life of the related notes.
(d) The Company uses foreign currency forward and option contracts as part of its business-to-business
payments operations. These derivative contracts are excluded from this table as they are managed as part of
a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these
derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed
above.
(e) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on
settlement assets and obligations as well as certain foreign currency denominated positions. Foreign
exchange gain/(loss) on settlement assets and obligations and cash balances were ($20.5) million,
($2.5) million and $2.8 million in 2011, 2010 and 2009, respectively.
(f)

The derivative contracts used in the Companys revenue hedging program are not designated as hedges in
the final month of the contract. Additionally, in the year ended December 31, 2011, the Company entered
into derivative contracts, consisting of foreign currency forward contracts with maturities of less than one
year, to reduce the economic variability related to the cash amounts used to fund acquisitions of businesses
with purchase prices denominated in foreign currencies, primarily for the TGBP acquisition, and recorded a
net gain of $20.8 million in Derivative gains/(losses), net.

An accumulated other comprehensive pre-tax gain of $15.4 million related to the foreign currency forward
contracts is expected to be reclassified into revenue within the next 12 months as of December 31, 2011.
Approximately $3.6 million of net losses on the forecasted debt issuance hedges are expected to be recognized in
Interest expense within the next 12 months as of December 31, 2011. No amounts have been reclassified into
earnings as a result of the underlying transaction being considered probable of not occurring within the specified
time period.

131

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
15. Borrowings
The Companys outstanding borrowings consisted of the following (in millions):
December 31, 2011

Due in less than one year:

Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.400% notes (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due in greater than one year (b):
Floating rate notes due 2013 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.500% notes (effective rate of 5.5%) due 2014 . . . . . . . . . . . . . . . .
5.930% notes due 2016 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.650% notes (effective rate of 4.4%) due 2018 (e) . . . . . . . . . . . . .
5.253% notes due 2020 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.200% notes due 2036 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.200% notes due 2040 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total borrowings at par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value hedge accounting adjustments, net (b) . . . . . . . . . . . . . . .
Unamortized discount, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total borrowings at carrying value (f) . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2010

297.0

696.3

300.0
500.0
1,000.0
400.0
324.9
500.0
250.0
8.8

500.0
1,000.0

324.9
500.0
250.0
5.9

3,580.7
23.9
(21.4)

3,277.1
36.6
(23.8)

$ 3,583.2

3,289.9

(a) The 5.400% notes due in November 2011 (2011 Notes) were repaid using the Companys cash, including cash
generated from operations and proceeds from the Companys 2011 borrowings and commercial paper issuances.
(b) The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest
rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate
payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest
rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related
note. These hedge accounting adjustments will be reclassified as reductions to or increases in Interest
expense over the life of the related notes, and cause the effective rate of interest to differ from the notes
stated rate.
(c) On March 7, 2011, the Company issued $300.0 million of aggregate principal amount of unsecured floating
rate notes due March 7, 2013 (2013 Notes). Interest is payable quarterly at a per annum interest rate equal
to three-month LIBOR plus 58 basis points (1.11% as of December 31, 2011) and is reset quarterly. See
below for additional detail relating to the debt issuance.
(d) The difference between the stated interest rate and the effective interest rate is not significant.
(e) On August 22, 2011, the Company issued $400.0 million of aggregate principal amount of 3.650%
unsecured fixed rate notes due 2018 (2018 Notes). In anticipation of this issuance, the Company entered
into interest rate lock contracts to fix the interest rate of the debt issuance, and recorded a loss on the
132

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
contracts of $21.6 million, which increased the effective rate to 4.4%, in Accumulated other
comprehensive loss, which will be amortized into Interest expense over the life of the 2018 Notes. See
below for additional detail relating to the debt issuance.
(f)

As of December 31, 2011, the Companys weighted-average effective rate on total borrowings was
approximately 4.8%.

The aggregate fair value of the Companys borrowings, based on quotes from multiple banks, excluding the
impact of related interest rate swaps, was $3,563.5 million and $3,473.6 million as of December 31, 2011 and
2010, respectively.
The Companys maturities of borrowings at par value as of December 31, 2011 are $300.0 million in 2012,
$300.0 million in 2013, $500.0 million in 2014, $1.0 billion in 2016 and approximately $1.5 billion thereafter.
The Companys obligations with respect to its outstanding borrowings, as described below, rank equally.
Commercial Paper Program
Pursuant to the Companys commercial paper program, the Company may issue unsecured commercial paper
notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings
outstanding on the Companys Revolving Credit Facility. The Commercial Paper Notes may have maturities of
up to 397 days from date of issuance. The Companys commercial paper borrowings as of December 31, 2011
had a weighted-average annual interest rate of approximately 0.6% and a weighted-average term of 9 days.
During the year ended December 31, 2011, the average commercial paper balance outstanding was $89.7 million
and the maximum balance outstanding was $784.1 million. Proceeds from the Companys commercial paper
borrowings were used for general liquidity. The Company had $297.0 million of commercial paper outstanding
as of December 31, 2011 and no commercial paper borrowings outstanding as of December 31, 2010.
Revolving Credit Facility
On September 23, 2011, the Company entered into a credit agreement which expires January 2017 providing
for unsecured financing facilities in an aggregate amount of $1.65 billion, including a $250.0 million letter of
credit sub-facility and a $150.0 million swing line sub-facility (Revolving Credit Facility). The Revolving
Credit Facility replaced the Companys $1.5 billion revolving credit facility that was set to expire in September
2012. Consistent with the prior facility, the Revolving Credit Facility contains certain covenants that, among
other things, limit or restrict the Companys ability to sell or transfer assets or merge or consolidate with another
company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary
dividends, enter into sale and leaseback transactions, or incur certain subsidiary level indebtedness, subject to
certain exceptions. Also consistent with the prior facility, the Company is required to maintain compliance with a
consolidated interest coverage ratio covenant. The Revolving Credit Facility supports borrowings under the
Companys $1.5 billion commercial paper program.
Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable
according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an
interest rate margin of 90 basis points. A facility fee of 10 basis points is also payable quarterly on the total
facility, regardless of usage. Both the interest rate margin and facility fee percentage are based on certain of the
Companys credit ratings.
133

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
As of and during the year ended December 31, 2011, the Company had no outstanding borrowings under the
Revolving Credit Facility. As of December 31, 2011, the Company had $297.0 million of commercial paper
borrowings outstanding, which left $1,353.0 million remaining that was available to borrow on the Revolving
Credit Facility.
Notes
On August 22, 2011, the Company issued $400.0 million of aggregate principal amount of unsecured notes
due August 22, 2018. Interest with respect to the 2018 Notes is payable semi-annually in arrears on February 22
and August 22 of each year, based on the fixed per annum interest rate of 3.650%. The 2018 Notes are subject to
covenants that, among other things, limit or restrict the ability of the Company to sell or transfer assets or merge
or consolidate with another company, and limit or restrict the Companys and certain of its subsidiaries ability to
incur certain types of security interests, or enter into certain sale and leaseback transactions. If a change of
control triggering event occurs, holders of the 2018 Notes may require the Company to repurchase some or all of
their notes at a price equal to 101% of the principal amount of their notes, plus any accrued and unpaid interest.
The Company may redeem the 2018 Notes at any time prior to maturity at the greater of par or a price based on
the applicable treasury rate plus 35 basis points.
On March 7, 2011, the Company issued $300.0 million of aggregate principal amount of unsecured floating
rate notes due March 7, 2013. Interest with respect to the 2013 Notes is payable quarterly in arrears on each
March 7, June 7, September 7 and December 7, beginning June 7, 2011, at a per annum interest rate equal to the
three-month LIBOR plus 58 basis points (reset quarterly). The 2013 Notes are subject to covenants that, among
other things, limit or restrict the ability of the Company to sell or transfer assets or merge or consolidate with
another company, and limit or restrict the Companys and certain of its subsidiaries ability to incur certain types
of security interests, or enter into sale and leaseback transactions. If a change of control triggering event occurs,
holders of the 2013 Notes may require the Company to repurchase some or all of their notes at a price equal to
101% of the principal amount of their notes, plus any accrued and unpaid interest.
On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of unsecured notes due
June 21, 2040 (2040 Notes). Interest with respect to the 2040 Notes is payable semi-annually on June 21 and
December 21 each year based on the fixed per annum interest rate of 6.200%. The 2040 Notes are subject to
covenants that, among other things, limit or restrict the Companys and certain of its subsidiaries ability to grant
certain types of security interests or enter into sale and leaseback transactions. The Company may redeem the
2040 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus
30 basis points.
On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of the 2011 Notes
for unsecured notes due April 1, 2020 (2020 Notes). Interest with respect to the 2020 Notes is payable semiannually on April 1 and October 1 each year based on the fixed per annum interest rate of 5.253%. In connection
with the exchange, note holders were given a 7% premium ($21.2 million), which approximated market value at
the exchange date, as additional principal. As this transaction was accounted for as a debt modification, this
premium was not charged to expense. Rather, the premium, along with the offsetting hedge accounting
adjustments, will be accreted into Interest expense over the life of the notes. The 2020 Notes are subject to
covenants that, among other things, limit or restrict the Companys and certain of its subsidiaries ability to grant
certain types of security interests, incur debt (in the case of significant subsidiaries), or enter into sale and
leaseback transactions. The Company may redeem the 2020 Notes at any time prior to maturity at the greater of
par or a price based on the applicable treasury rate plus 15 basis points.
134

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The 2020 Notes were originally issued in reliance on exemptions from the registration requirements of the
Securities Act of 1933, as amended (the Securities Act). On October 8, 2010, the Company exchanged the 2020
Notes for notes registered under the Securities Act, pursuant to the terms of the Registration Rights Agreement.
On February 26, 2009, the Company issued $500.0 million of aggregate principal amount of unsecured notes
due February 26, 2014 (2014 Notes). Interest with respect to the 2014 Notes is payable semi-annually on
February 26 and August 26 each year based on the fixed per annum interest rate of 6.500%. The 2014 Notes are
subject to covenants that, among other things, limit or restrict the Companys and certain of its subsidiaries
ability to grant certain types of security interests or enter into sale and leaseback transactions. The Company may
redeem the 2014 Notes at any time prior to maturity at the greater of par or a price based on the applicable
treasury rate plus 50 basis points.
On November 17, 2006, the Company issued $1.0 billion aggregate principal amount of 5.400% Notes due
2011 (2011 Notes) and $500.0 million aggregate principal amount of 6.200% Notes due 2036 (2036 Notes).
The 2011 Notes were redeemed upon maturity in November 2011.
Interest with respect to the 2036 Notes is payable semi-annually on May 17 and November 17 each year based
on the fixed per annum interest rate of 6.200%. The 2036 Notes are subject to covenants that, among other
things, limit or restrict the Companys and certain of its subsidiaries ability to grant certain types of security
interests, incur debt (in the case of significant subsidiaries), or enter into sale and leaseback transactions. The
Company may redeem the 2036 Notes at any time prior to maturity at the greater of par or a price based on the
applicable treasury rate plus 25 basis points.
On September 29, 2006, the Company issued $1.0 billion of aggregate principal amount of unsecured notes
maturing on October 1, 2016 (2016 Notes). Interest on the 2016 Notes is payable semi-annually on April 1 and
October 1 each year based on a fixed per annum interest rate of 5.930%. The 2016 Notes are subject to covenants
that, among other things, limit or restrict the Companys and certain of its subsidiaries ability to grant certain
types of security interests, incur debt (in the case of significant subsidiaries) or enter into sale and leaseback
transactions. The Company may redeem the 2016 Notes at any time prior to maturity at the greater of par or a
price based on the applicable treasury rate plus 20 basis points.
16. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company 2006 Long-Term Incentive Plan
The Western Union Company 2006 Long-Term Incentive Plan (2006 LTIP) provides for the granting of
stock options, restricted stock awards and units, unrestricted stock awards and other equity-based awards to
employees who perform services for the Company. A maximum of 120.0 million shares of common stock may
be awarded under the 2006 LTIP, of which 36.1 million shares are available as of December 31, 2011.
Options granted under the 2006 LTIP are issued with exercise prices equal to the fair market value of Western
Union common stock on the grant date, have 10-year terms, and typically vest over four equal annual increments
beginning 12 months after the date of grant, with the exception of options granted to retirement eligible
employees, which will vest on a prorated basis. Compensation expense related to stock options is recognized
over the requisite service period.
135

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Restricted stock awards and units granted under the 2006 LTIP typically become 100% vested on the three
year anniversary of the grant date, with the exception of restricted stock units granted to retirement eligible
employees, which will vest on a prorated basis. The fair value of the awards granted is measured based on the
fair value of the shares on the date of grant. Certain share unit grants do not provide for the payment of dividend
equivalents. For those grants, the value of the grants is reduced by the net present value of the foregone dividend
equivalent payments. The related compensation expense is recognized over the requisite service period which is
the same as the vesting period.
In 2011, the compensation committee of the Companys Board of Directors granted the Companys executives
and other key employees, long-term incentive awards under the 2006 LTIP which consisted of two-thirds
performance based restricted stock unit awards and one-third stock option awards. The performance based
restricted stock units are restricted stock awards. The grant date fair value is fixed and the amount of restricted
stock units depends upon certain financial and strategic performance objectives being met over a two-year period
plus an additional one-year vesting period after the two-year performance period. The actual number of
performance based restricted stock units that the recipients receive ranges from 0% to 300% of the target number
of stock units granted under the LTIP based on the achievement of the performance objectives. Additionally, in
2011, non-executive employees of the Company participating in the 2006 LTIP received annual equity grants of
two-thirds restricted stock units and one-third stock option awards, or all restricted stock units depending on their
employment grade level.
The Western Union Company 2006 Non-Employee Director Equity Compensation Plan
The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (2006 Director
Plan) provides for the granting of equity-based awards to non-employee directors of the Company. Options
granted under the 2006 Director Plan are issued with exercise prices equal to the fair market value of Western
Union common stock at the grant date, have 10-year terms, and vest immediately. Since options and deferred
stock units under this plan vest immediately, compensation expense is recognized on the date of grant based on
the fair value of the awards when granted. Awards under the plan may be settled immediately unless the
participant elects to defer the receipt of the common shares under applicable plan rules. A maximum of
1.5 million shares of common stock may be awarded under the 2006 Director Plan. As of December 31, 2011, the
Company has awarded 1.0 million options and 0.3 million unrestricted stock units to non-employee directors of
the Company.
Impact of Spin-Off to Stock-Based Awards Granted Under First Data Plans
At the time of the Spin-off, First Data converted stock options, restricted stock awards and restricted stock
units (collectively, Stock-Based Awards) of First Data stock held by Western Union and First Data employees.
For Western Union employees, each outstanding First Data Stock-Based Award was converted to new Western
Union Stock-Based Awards. For First Data employees, each outstanding First Data Stock-Based Award held
prior to the Spin-off was converted into one replacement First Data Stock-Based Award and one Western Union
Stock-Based Award. The new Western Union and First Data Stock-Based Awards maintained their
pre-conversion aggregate intrinsic values, and, in the case of stock options, their ratio of the exercise price per
share to their fair value per share.
All converted Stock-Based Awards, which had not vested prior to September 24, 2007, were subject to the terms
and conditions applicable to the original First Data Stock-Based Awards, including change of control provisions
which required full vesting upon a change of control of First Data. Accordingly, upon the completion of the
acquisition of First Data on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co.s, all of these
136

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
remaining converted unvested Western Union Stock-Based Awards vested. As a result of this accelerated vesting,
there is no remaining unamortized compensation expense associated with such converted Stock-Based Awards.
After the Spin-off, the Company receives all cash proceeds related to the exercise of all Western Union stock
options, recognizes all stock compensation expense and retains the resulting tax benefits relating to Western
Union awards held by Western Union employees. First Data recognizes all stock-based compensation expense
and retains all associated tax benefits for Western Union Stock-Based Awards held by First Data employees.
Stock Option Activity
A summary of Western Union stock option activity for the year ended December 31, 2011 was as follows
(options and aggregate intrinsic value in millions):

Options

Year Ended December 31, 2011

Weighted-Average
Remaining
Weighted-Average Contractual Term
Exercise Price
(Years)

Aggregate
Intrinsic
Value

Outstanding as of January 1, . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cancelled/forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37.5
1.8
(5.8)
(2.8)

$ 18.76
20.85
17.10
20.40

Outstanding at December 31, . . . . . . . . . . . . . . . . . . . .

30.7

$ 19.05

4.3

$ 26.4

Options exercisable as of December 31, . . . . . . . . . . . .

25.4

$ 19.43

3.5

$ 15.1

As of December 31, 2011, approximately 32% of outstanding options to purchase shares of common stock of
the Company were held by employees of First Data.
The Company received $98.8 million, $44.1 million and $23.9 million in cash proceeds related to the exercise
of stock options during the years ended December 31, 2011, 2010 and 2009, respectively. Upon the exercise of
stock options, shares of common stock are issued from authorized common shares.
The Companys calculated pool of excess tax benefits available to absorb write-offs of deferred tax assets in
subsequent periods was approximately $6.1 million as of December 31, 2011. The Company realized total tax
benefits during the years ended December 31, 2011, 2010 and 2009 from stock option exercises of $4.8 million,
$1.4 million and $0.8 million, respectively.
The total intrinsic value of stock options exercised during the years ended December 31, 2011, 2010 and 2009
was $20.6 million, $8.2 million and $8.6 million, respectively.

137

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Restricted Stock Activity
A summary of Western Union activity for restricted stock units, performance based restricted stock units, and
restricted stock awards for the year ended December 31, 2011 is listed below (awards/units in millions):
Year Ended
December 31, 2011
Number
Weighted-Average
Outstanding Grant-Date Fair Value

Non-vested as of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.7
2.1
(0.4)
(0.5)

$ 15.34
19.59
20.92
16.94

Non-vested as of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.9

$ 16.85

Stock-Based Compensation
The following table sets forth the total impact on earnings for stock-based compensation expense recognized
in the Consolidated Statements of Income resulting from stock options, restricted stock awards, restricted stock
units, performance based restricted stock units and deferred stock units for the years ended December 31, 2011,
2010 and 2009 (in millions, except per share data).
Year Ended December 31,
2011
2010
2009

Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax benefit from stock-based compensation expense . . . . . . . . . . . . . . . . . .

$ (31.2) $ (35.9) $ (31.9)

9.8
11.6
9.9

Net income impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (21.4) $ (24.3) $ (22.0)

Earnings per share:

Basic and Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (0.03) $ (0.04) $ (0.03)

As of December 31, 2011, there was $17.4 million of total unrecognized compensation cost, net of assumed
forfeitures, related to non-vested stock options which is expected to be recognized over a weighted-average
period of 2.3 years, and there was $34.7 million of total unrecognized compensation cost, net of assumed
forfeitures, related to non-vested restricted stock units and performance based restricted stock units which is
expected to be recognized over a weighted-average period of 2.1 years.

138

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Fair Value Assumptions
The Company used the following assumptions for the Black-Scholes option pricing model to determine the
value of Western Union options granted.
Year Ended December 31,
2011
2010
2009

Stock options granted:

Weighted-average risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5%
Weighted-average dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4%
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31.0%
Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.8
Weighted-average grant date fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.99

2.7%
1.3%
33.9%
5.8
$ 5.12

2.0%
0.2%
46.3%
5.6
$ 5.41

Expected volatilityFor the Companys executives and non-employee directors, the expected volatility for the
2011, 2010 and 2009 grants was 29.7%, 32.8% and 46.9%, respectively. The expected volatility for the
Companys non-executive employees was 31.9%, 34.5% and 46.0% for the 2011, 2010 and 2009 grants,
respectively. The Company used a blend of implied and historical volatility. The Companys implied volatility
was calculated using the market price of traded options on Western Unions common stock and the historical
volatility represented a blend of Western Union and First Data (prior to the Spin-off) stock data.
Expected dividend yieldThe Companys expected annual dividend yield is the calculation of the annualized
Western Union dividend divided by an average Western Union stock price on each respective grant date. The
2011 grants made prior to May 19, 2011 do not reflect the increase in dividend approved by the Board of
Directors on this date. The 2010 and 2009 grants do not reflect the increase in dividends approved by the Board
of Directors on December 8, 2010 and December 9, 2009, respectively, as all 2010 and 2009 grants were issued
prior to that date.
Expected termFor 2011, 2010 and 2009, Western Unions expected term was approximately 5 years for
non-executive employees and approximately 7 years for executives and non-employee directors. The Companys
expected term of options was based upon, among other things, historical exercises (including the exercise history
of First Datas awards), the vesting term of the Companys options and the options contractual term of ten years.
Risk-free interest rateThe risk-free rate for stock options granted during the period is determined by using a
United States Treasury rate for the period that coincided with the expected terms listed above.
The assumptions used to calculate the fair value of options granted will be evaluated and revised, as necessary,
to reflect market conditions and the Companys historical experience and future expectations. The calculated fair
value is recognized as compensation cost in the Companys consolidated financial statements over the requisite
service period of the entire award. Compensation cost is recognized only for those options expected to vest, with
forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Companys
historical experience and future expectations. Any change in the forfeiture assumption will be accounted for as a
change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the
consolidated financial statements of the period in which the change is made. In the future, as more historical data
is available to calculate the volatility of Western Union stock and the actual terms Western Union employees
139

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
hold options, expected volatility and expected term may change which could change the grant-date fair value of
future stock option awards and, ultimately, the recorded compensation expense.
17. Segments
As previously described in Note 1, the Company classifies its businesses into two reportable operating
segments: consumer-to-consumer and global business payments. Operating segments are defined as components
of an enterprise that engage in business activities, about which separate financial information is available that is
evaluated regularly by the Companys CODM in deciding where to allocate resources and in assessing
performance.
The consumer-to-consumer reporting segment is viewed as one global network where a money transfer can be
sent from one location to another, around the world, including related transactions that can be initiated from our
websites. The segment consists of three regions, which primarily coordinate agent network management and
marketing activities. The CODM makes decisions regarding resource allocation and monitors performance based
on specific corridors within and across these regions, but also reviews total revenue and operating profit of each
region. These regions frequently interact on transactions with consumers and share processes, systems and
licenses, thereby constituting one global consumer-to-consumer money transfer network. The regions and
corridors generally offer the same services distributed by the same agent network, have the same types of
customers, are subject to similar regulatory requirements, are processed on the same system and have similar
economic characteristics, allowing the geographic regions to be aggregated into one reporting segment.
The global business payments segment processes payments from consumers or businesses to other businesses.
The results of the Companys existing consumer-to-business operations, as well as the Companys existing
Western Union Business Solutions business and recently acquired TGBP business, have been combined in this
segment as these businesses are focused on facilitating payments. For further information on these global
business payments segment acquisitions, see Note 3.
All businesses that have not been classified into consumer-to-consumer or global business payments are reported
as Other. These businesses primarily include the Companys money order and prepaid services businesses.
The Companys reportable segments are reviewed separately below because each reportable segment
represents a strategic business unit that offers different products and serves different markets. The business
segment measurements provided to, and evaluated by, the Companys CODM are computed in accordance with
the following principles:

The accounting policies of the reportable segments are the same as those described in the summary of
significant accounting policies.

Corporate and other overhead is allocated to the segments primarily based on a percentage of the
segments revenue compared to total revenue.

Expenses incurred in connection with mergers and acquisitions are included in Other.

Restructuring and related expenses of $46.8 million and $59.5 million for the years ended December 31,
2011 and 2010, respectively, were not allocated to the segments. The Company did not incur any material
restructuring and related expenses in the year ended December 31, 2009. While these items were identifiable
to the Companys segments, they were not included in the measurement of segment operating profit provided
140

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
to the CODM for purposes of assessing segment performance and decision making with respect to resource
allocation. For additional information on restructuring and related activities, refer to Note 4.

During the year ended December 31, 2009, the Company recorded an accrual of $71.0 million for an
agreement and settlement with the State of Arizona and other states. The agreement and settlement
includes resolution of all outstanding legal issues and claims with the State and a multi-state agreement to
fund a not-for-profit organization promoting safety and security along the United States and Mexico
border. While this item was identifiable to the Companys consumer-to-consumer segment, it was not
included in the measurement of segment operating profit provided to the CODM for purposes of assessing
segment performance and decision making with respect to resource allocation. For additional information
on the settlement, refer to Note 6.

All items not included in operating income are excluded from the segments.

141

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
The following table presents the Companys reportable segment results for the years ended December 31,
2011, 2010 and 2009, respectively (in millions):
Years Ended December 31,
2011
2010
2009

Revenues:
Consumer-to-consumer:
Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,580.2
983.1
45.1
4,608.4

$ 3,434.3
905.8
43.3
4,383.4

$ 3,373.5
877.1
50.1
4,300.7

587.8
168.1
28.8
784.7

578.0
113.0
30.7
721.7

621.9
33.2
36.6
691.7

52.2
46.1

43.0
44.6

40.8
50.4

98.3

87.6

91.2

Total consolidated revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,491.4

$ 5,192.7

$ 5,083.6

Operating income/(loss):
Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total segment operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agreement and settlement (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring and related expenses (Note 4) . . . . . . . . . . . . . . . . . . . . .

$ 1,316.0 $ 1,243.3 $ 1,175.5

140.4
122.5
171.9
(24.6)
(6.2)
6.3
$ 1,431.8 $ 1,359.6 $ 1,353.7

(71.0)
(46.8)
(59.5)

Total consolidated operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,385.0

$ 1,300.1

$ 1,282.7

Assets:
Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,644.6
2,866.3
1,559.0

$ 5,014.3
1,452.7
1,462.2

$ 4,602.5
1,419.0
1,331.9

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,069.9

$ 7,929.2

$ 7,353.4

Depreciation and amortization:

Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

141.0
45.6
4.7

130.5
36.0
8.5

124.2
24.3
5.7

Total segment depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . .

Restructuring and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

191.3
1.3

175.0
0.9

154.2

Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

192.6

175.9

154.2

Capital expenditures:
Consumer-to-consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global business payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

138.4
20.1
4.0

85.3
21.5
6.9

71.6
16.7
10.6

Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

162.5

113.7

98.9

Global business payments:

Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other:
Transaction fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

142

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Information concerning principal geographic areas was as follows (in millions):
Years Ended December 31,
2011
2010
2009

Revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,568.6
3,922.8

$ 1,516.0
3,676.7

$ 1,584.9
3,498.7

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,491.4

$ 5,192.7

$ 5,083.6

Long-lived assets:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

152.1
46.0

159.4
37.1

161.1
43.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

198.1

196.5

204.3

The consumer-to-consumer geographic split is determined based upon the region where the money transfer is
initiated and the region where the money transfer is paid. For transactions originated and paid in different
regions, the Company splits the revenue between the two regions, with each region receiving 50%. For money
transfers initiated and paid in the same region, 100% of the revenue is attributed to that region. The geographic
split of revenue above for global business payments is based upon the country where the transaction is initiated
with 100% of the revenue allocated to that country. Long-lived assets, consisting of Property and equipment,
net, are presented based upon the location of the assets.
A significant majority of the Companys consumer-to-consumer transactions involve at least one non-United
States location. Based on the method used to attribute revenue between countries described in the paragraph
above, each individual country outside the United States accounted for less than 10% of revenue for the years
ended December 31, 2011, 2010 and 2009. In addition, each individual agent or global business payments
customer accounted for less than 10% of revenue during these periods.

143

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
2012 Changes in Reportable Segments
In connection with the acquisition of TGBP, recent management changes, and other key strategic initiatives,
the Company will implement a new segment structure to assess performance and allocate resources, beginning in
the first quarter of 2012. The changes in the Companys segment structure primarily relate to the separation of
the Global Business Payments segment into two new reportable segments, Consumer-to-Business and Business
Solutions. A summary of how the segments will be structured follows:
Segment

Description

Consumer-to-Consumer

Money transfer services between consumers, primarily through a global network

of third-party agents.
Processing of payments from consumers to businesses and other organizations,
including utilities, auto finance companies, mortgage servicers, financial service
providers, government agencies and other businesses.
Business-to-business payment solutions, primarily for cross-border, crosscurrency transactions, including services provided under the Companys existing
Western Union Business Solutions business and TGBP, which was acquired in
November 2011.
Businesses that have not been classified into one of the Companys other
segments. These businesses primarily include the Companys money order and
prepaid services businesses.

Consumer-to-Business

Business Solutions

Other

18. Quarterly Financial Information (Unaudited)

Summarized quarterly results for the years ended December 31, 2011 and 2010 were as follows (in millions,
except per share data):

2011 by Quarter:

Q1

Q2

Q3

Q4

Year Ended
December 31,
2011

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,283.0 $ 1,366.3 $ 1,410.8 $ 1,431.3 $

Expenses (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
970.1
1,015.6
1,047.8
1,072.9

5,491.4
4,106.4

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense, net (b) . . . . . . . . . . . . . . . . . . . . . .

312.9
38.2

350.7
17.3

363.0
49.1

358.4
5.8

1,385.0
110.4

Income before income taxes . . . . . . . . . . . . . . . . .

Provision for/(benefit from) income taxes (c) . . . .

274.7
64.5

333.4
70.2

313.9
74.2

352.6
(99.7)

1,274.6
109.2

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

210.2 $

263.2 $

239.7 $

452.3 $

1,165.4

0.32 $
0.32 $

0.42 $
0.41 $

0.38 $
0.38 $

0.73 $
0.73 $

1.85
1.84

Earnings per share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

646.9
652.1

631.1
635.8

624.9
627.1

619.4
621.7

630.6
634.2

(a) Includes $24.0 million in the first quarter, $8.9 million in the second quarter and $13.9 million in the third
quarter of restructuring and related expenses. For more information, see Note 4.
144

THE WESTERN UNION COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(b) The second quarter includes a gain of $29.4 million, recognized in connection with the remeasurement of
the Companys former equity interest in Costa to fair value. The fourth quarter includes a net gain of $20.8
million recorded on derivative contracts, consisting of foreign currency forward contracts with maturities of
less than one year, entered into to reduce the economic variability related to the cash amounts used to fund
acquisitions of businesses with purchase prices denominated in foreign currencies, primarily for the TGBP
acquisition. The fourth quarter also includes a gain of $20.5 million, recognized in connection with the
remeasurement of the Companys former equity interest in Finint to fair value.
(c) In December 2011, the Company reached an agreement with the IRS resolving substantially all of the issues
related to the Companys restructuring of its international operations in 2003. As a result of the IRS
Agreement, the Company recognized a tax benefit of $204.7 million in the fourth quarter related to the
adjustment of reserves associated with this matter.

2010 by Quarter:

Year Ended
December 31,
2010

Q1

Q2

Q3

Q4

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses (d) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,232.7
916.9

$ 1,273.4
962.4

$ 1,329.6
978.4

$ 1,357.0
1,034.9

Operating income . . . . . . . . . . . . . . . . . . . . . .
Other expense, net . . . . . . . . . . . . . . . . . . . . .

315.8
39.8

311.0
38.7

351.2
42.6

322.1
33.8

1,300.1
154.9

Income before income taxes . . . . . . . . . . . . .

Provision for income taxes . . . . . . . . . . . . . .

276.0
68.1

272.3
51.3

308.6
70.2

288.3
45.7

1,145.2
235.3

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . .

5,192.7
3,892.6

207.9

221.0

238.4

242.6

909.9

$
$

0.30
0.30

$
$

0.33
0.33

$
$

0.36
0.36

$
$

0.37
0.37

$
$

1.37
1.36

681.9
684.2

669.3
671.6

659.1
661.3

655.4
658.4

666.5
668.9

(d) Includes $34.5 million in the second quarter, $14.0 million in the third quarter and $11.0 million in the
fourth quarter of restructuring and related expenses. For more information, see Note 4.

145

THE WESTERN UNION COMPANY

SCHEDULE I CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
The following lists the condensed financial information for the parent company as of December 31, 2011 and
2010 and statements of operations and cash flows for each of the three years in the period ended December 31,
2011.
THE WESTERN UNION COMPANY
CONDENSED BALANCE SHEETS
(PARENT COMPANY ONLY)
(in millions, except per share amounts)
December 31,
2011
2010

Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $12.3 and $10.6,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1

89.2

32.6
250.0
55.9
4,708.8

30.9
250.0
60.2
3,805.3

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,048.4

$ 4,235.6

Liabilities and Stockholders Equity

Liabilities:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payable to subsidiaries, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72.0
99.7
406.1
3,574.4
1.4

80.9
285.1

3,283.9
3.0

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued . . . . . .
Common stock, $0.01 par value; 2,000 shares authorized; 619.4 shares and
654.0 shares issued and outstanding at December 31, 2011 and 2010,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,153.6

3,652.9

6.2
247.1
760.0
(118.5)

6.5
117.4
591.6
(132.8)

Total stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

894.8

582.7

Total liabilities and stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,048.4

$ 4,235.6

See Notes to Condensed Financial Statements.

146

THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF OPERATIONS
(PARENT COMPANY ONLY)
(in millions)
For the Years Ended December 31,
2011
2010
2009

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.1
(181.0)
(0.1)

0.2
(168.7)
(3.3)

1.8
(157.3)

Loss before equity in earnings of affiliates and income taxes . . . . . . . .

Equity in earnings of affiliates, net of tax . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(181.0)
1,276.7
69.7

(171.8)
1,012.5
69.2

(155.5)
941.7
62.6

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,165.4

See Notes to Condensed Financial Statements.

147

$ 909.9

$ 848.8

THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF CASH FLOWS
(PARENT COMPANY ONLY)
(in millions)
For the Years Ended December 31,
2011
2010
2009

Cash flows from operating activities

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital contributed to subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

698.1

631.6

505.0

(4.2)

(29.0)

(4.2)

(29.0)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash flows from financing activities
Advances to subsidiaries, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from issuance of borrowings . . . . . . . . . . . . . . . . . . . . . .
Principal payments on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from/(repayments of) commercial paper . . . . . . . . . . . . .
Proceeds from exercise of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(180.9)
696.3
(696.3)
297.0
100.0
(194.2)
(803.9)

(112.7)
247.0

42.1
(165.3)
(581.4)

(224.7)
496.6
(500.0)
(82.8)
23.2
(41.2)
(400.2)

Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

(782.0)

(570.3)

(729.1)

Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .

Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . .

(88.1)
89.2

61.3
27.9

(253.1)
281.0

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . .

See Notes to Condensed Financial Statements.

148

1.1

89.2

27.9

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The Western Union Company (the Parent) is a holding company that conducts substantially all of its
business operations through its subsidiaries. Under a parent company only presentation, the Parents investments
in its consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial
statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. These
financial statements should be read in conjunction with The Western Union Companys consolidated financial
statements.
2. Restricted Net Assets
Certain assets of the Parents subsidiaries totaling approximately $230 million constitute restricted net assets,
as there are legal or regulatory limitations on transferring such assets outside of the countries where the
respective assets are located, or because they constitute undistributed earnings of affiliates of the Parent
accounted for under the equity method of accounting. As of December 31, 2011, the Parent is in a stockholders
equity position of $894.8 million, and as such, the restricted net assets of the Parents subsidiaries currently
exceeds 25% of the consolidated net assets of the Parent and its subsidiaries, thus requiring this Schedule I,
Condensed Financial Information of the Registrant.
3. Related Party Transactions
Excess cash generated from operations of the Parents subsidiaries that is not required to meet certain
regulatory requirements is paid periodically to the Parent and is reflected as Payable to subsidiaries, net in the
Condensed Balance Sheets as of December 31, 2011 and 2010. The Parents subsidiaries periodically distribute
excess cash balances to the Parent in the form of a dividend, although the amounts of such dividends may vary
from year to year.
The Parent files a consolidated United States federal income tax return, and also a number of consolidated
state income tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for
remitting income tax payments on behalf of the consolidated group. The Parents provision for income taxes has
been computed as if it were a separate tax-paying entity.
4. Commitments and Contingencies
The Parent had $13.3 million in outstanding letters of credit and bank guarantees, including parental
guarantees for subsidiaries, as of December 31, 2011 with expiration dates through 2012. The letters of credit and
bank guarantees are primarily held in connection with credit-related dealings, which include, but are not limited
to, derivatives and foreign exchange transactions. The Company expects to renew the letters of credit and bank
guarantees prior to expiration in most circumstances.

149

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of the Principal Executive Officer and
Principal Financial Officer, have evaluated the effectiveness of our controls and procedures related to our
reporting and disclosure obligations as of December 31, 2011, which is the end of the period covered by this
Annual Report on Form 10-K. Based on that evaluation, the Principal Executive Officer and Principal Financial
Officer have concluded that, as of December 31, 2011, the disclosure controls and procedures were effective to
ensure that information required to be disclosed by us, including our consolidated subsidiaries, in the reports we
file or submit under the Exchange Act, is recorded, processed, summarized and reported, as applicable, within the
time periods specified in the rules and forms of the Securities and Exchange Commission, and are designed to
ensure that information required to be disclosed by us in the reports that we file or submit are accumulated and
communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to
allow timely decisions regarding required disclosure.
Managements Annual Report on Internal Control Over Financial Reporting
Managements report on Western Unions internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934), and the related Report of Independent
Registered Public Accounting Firm, are set forth under Item 8 of this Annual Report on Form 10-K.
Managements annual report on internal control over financial reporting did not include an assessment of and
conclusion on the effectiveness of internal control over financial reporting of Travelex Global Business Payments
(TGBP), which was acquired on November 7, 2011 and is included in our consolidated financial statements as
of December 31, 2011 and for the period from November 7, 2011 through December 31, 2011. The assets of
TGBP, excluding goodwill and other intangible assets, net, constituted approximately 3% of our total assets as of
December 31, 2011, and TGBP revenues constituted approximately 0.6% of our total revenues for the year ended
December 31, 2011. Under guidelines established by the Securities and Exchange Commission, companies are
allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first
year following the acquisition while integrating the acquired company.
Changes in Internal Control over Financial Reporting
There has not been any change in our internal control over financial reporting during our most recently
completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
ITEM 9B. OTHER INFORMATION
None.

150

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Except for the information required by this item with respect to our executive officers included in Item 1 of
Part I of this Annual Report on Form 10-K and our Code of Ethics, the information required by this Item 10 is
incorporated herein by reference to the discussion in Proposals Submitted for Shareholder VoteProposal 1
Election of Directors, Board of Directors Information, Section 16(a) Beneficial Ownership Reporting
Compliance, and Corporate GovernanceCommittees of the Board of Directors of our definitive proxy
statement for the 2012 annual meeting of stockholders.
Code of Ethics
The Companys Directors Code of Conduct, Code of Ethics for Senior Financial Officers, Procedure for
Accounting and Auditing Concerns, Professional Conduct Policy for Attorneys, and the Code of Conduct are
available without charge through the Corporate Governance portion of the Companys website,
www.westernunion.com, or by writing to the attention of: Investor Relations, The Western Union Company,
12500 East Belford Avenue, Englewood, Colorado 80112. In the event of an amendment to, or a waiver from, the
Companys Code of Ethics for Senior Financial Officers, the Company intends to post such information on its
website, www.westernunion.com.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated herein by reference to the discussion in
Compensation Discussion and Analysis, Executive Compensation, Compensation of Directors, and
Compensation and Benefits Committee Report of our definitive proxy statement for the 2012 annual meeting
of stockholders, provided that the Compensation and Benefits Committee Report shall not be deemed filed in this
Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by this Item 12 is incorporated herein by reference to the discussion in Stock
Beneficially Owned by Directors, Executive Officers and Our Largest Stockholders, and Equity Compensation
Plan Information of our definitive proxy statement for the 2012 annual meeting of stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item 13 is incorporated herein by reference to the discussion of Corporate
GovernanceIndependence of Directors of our definitive proxy statement for the 2012 annual meeting of
stockholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 is incorporated herein by reference to the discussion in Proposal 3
Ratification of Selection of Auditors of our definitive proxy statement for the 2012 annual meeting of
stockholders.

151

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this report:
1. Financial Statements (See Index to Consolidated Financial Statements on page 84 of this Annual Report on
Form 10-K);
2. Financial Statement Schedule (See Index to Consolidated Financial Statements on page 84 of this Annual
Report on Form 10-K);
3. The exhibits listed in the Exhibit Index attached to this Annual Report on Form 10-K.

152

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE WESTERN UNION COMPANY (Registrant)
February 24, 2012

By: /s/ HIKMET ERSEK

Hikmet Ersek, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature

Title

Date

/s/ Hikmet Ersek

Hikmet Ersek

President, Chief Executive Officer and Director

(Principal Executive Officer)

February 24, 2012

/s/ Scott T. Scheirman

Scott T. Scheirman

Executive Vice President and Chief Financial

Officer (Principal Financial Officer)

February 24, 2012

/s/ Amintore T.X. Schenkel

Amintore T.X. Schenkel

Senior Vice President, Chief Accounting

Officer and Controller (Principal Accounting
Officer)

February 24, 2012

/s/ Jack M. Greenberg

Jack M. Greenberg

Non-Executive Chairman of the Board of

Directors

February 24, 2012

/s/ Dinyar S. Devitre

Dinyar S. Devitre

Director

February 24, 2012

/s/ Richard A. Goodman

Richard A. Goodman

Director

February 24, 2012

/s/ Betsy D. Holden

Betsy D. Holden

Director

February 24, 2012

/s/ Linda Fayne Levinson

Linda Fayne Levinson

Director

February 24, 2012

/s/ Roberto G. Mendoza

Director

February 24, 2012

/s/ Michael A. Miles, Jr.

Michael A. Miles, Jr.

Director

February 24, 2012

/s/ Dennis Stevenson

Dennis Stevenson

Director

February 24, 2012

/s/ Wulf von Schimmelmann

Wulf von Schimmelmann

Director

February 24, 2012

Roberto G. Mendoza

153

EXHIBIT INDEX
Exhibit
Number

Description

2.1

Separation and Distribution Agreement, dated as of September 29, 2006, between First Data
Corporation and The Western Union Company (filed as Exhibit 2.1 to the Companys Current Report
on Form 8-K filed on October 3, 2006 and incorporated herein by reference thereto).

3.1

Amended and Restated Certificate of Incorporation of The Western Union Company (filed as
Exhibit 4.1 to the Companys Registration Statement on Form S-8 (registration no. 333-137665) and
incorporated herein by reference thereto).

3.2

The Western Union Company By-laws, as amended on December 11, 2008 (filed as Exhibit 3.1(ii) to
the Companys Current Report on Form 8-K filed on December 17, 2008 and incorporated herein by
reference thereto).

4.1

Indenture, dated as of September 29, 2006, between The Western Union Company and Wells Fargo
Bank, National Association, as trustee (filed as Exhibit 4.1 to the Companys Current Report on
Form 8-K filed on October 2, 2006 and incorporated herein by reference thereto).

4.2

Form of 5.930% Note due 2016 (filed as Exhibit 4.2 to the Companys Current Report on Form 8-K
filed on October 2, 2006 and incorporated herein by reference thereto).

4.3

Form of 5.930% Note due 2016 (filed as Exhibit 4.11 to the Companys Registration Statement on
Form S-4 filed on December 22, 2006 and incorporated herein by reference thereto).

4.4

Supplemental Indenture, dated as of September 29, 2006, among The Western Union Company, First
Financial Management Corporation and Wells Fargo Bank, National Association, as trustee (filed as
Exhibit 4.3 to the Companys Current Report on Form 8-K filed on October 2, 2006 and incorporated
herein by reference thereto).

4.5

Second Supplemental Indenture, dated as of November 17, 2006, among The Western Union
Company, First Financial Management Corporation and Wells Fargo Bank, National Association, as
trustee (filed as Exhibit 4.6 to the Companys Current Report on Form 8-K filed on November 20,
2006 and incorporated herein by reference thereto).

4.6

Third Supplemental Indenture, dated as of September 6, 2007, among The Western Union Company
and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.6 to the Companys
Annual Report on Form 10-K filed on February 26, 2008 and incorporated herein by reference
thereto).

4.7

Indenture, dated as of November 17, 2006, between The Western Union Company and Wells Fargo
Bank, National Association, as trustee (filed as Exhibit 4.1 to the Companys Current Report on
Form 8-K filed on November 20, 2006 and incorporated herein by reference thereto).

4.8

Form of 6.200% Note due 2036 (filed as Exhibit 4.14 to the Companys Registration Statement on
Form S-4 filed on December 22, 2006 and incorporated herein by reference thereto).

4.9

Form of 6.50% Note due 2014 (filed as Exhibit 4.1 to the Companys Current Report on Form 8-K
filed on February 26, 2009 and incorporated herein by reference thereto).

4.10

Form of 6.200% Note due 2040 (filed as Exhibit 4.1 to the Companys Current Report on Form 8-K
filed on June 21, 2010 and incorporated herein by reference thereto).

4.11

Form of 5.253% 144A Note due 2020 (filed as Exhibit 4.1 to the Companys Current Report on
Form 8-K filed on April 2, 2010 and incorporated herein by reference thereto).

4.12

Form of 5.253% Note due 2020 (filed as Exhibit 4.3 to the Companys Registration Statement on
Form S-4 filed on August 5, 2010 and incorporated herein by reference thereto).
154

4.13

Supplemental Indenture, dated as of September 6, 2007, among The Western Union Company and
Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.13 to the Companys Annual
Report on Form 10-K filed on February 26, 2008 and incorporated herein by reference thereto).

4.14

Form of Floating Rate Note due 2013 (filed as Exhibit 4.1 to the Companys Current Report on Form
8-K filed on March 7, 2011 and incorporated herein by reference thereto).

4.15

Form of 3.650% Note due 2018 (filed as Exhibit 4.1 to the Companys Current Report on Form 8-K
filed on August 22, 2011 and incorporated herein by reference thereto).

10.1

Tax Allocation Agreement, dated as of September 29, 2006, between First Data Corporation and The
Western Union Company (filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed
on October 3, 2006 and incorporated herein by reference thereto).

10.2

Employee Matters Agreement, dated as of September 29, 2006, between First Data Corporation and
The Western Union Company (filed as Exhibit 10.2 to the Companys Current Report on Form 8-K
filed on October 3, 2006 and incorporated herein by reference thereto).

10.3

Transition Services Agreement, dated as of September 29, 2006, between First Data Corporation and
The Western Union Company (filed as Exhibit 10.3 to the Companys Current Report on Form 8-K
filed on October 3, 2006 and incorporated herein by reference thereto).

10.4

Patent Ownership Agreement and Covenant Not to Sue, dated as of September 29, 2006, between First
Data Corporation and The Western Union Company (filed as Exhibit 10.4 to the Companys Current
Report on Form 8-K filed on October 3, 2006 and incorporated herein by reference thereto).

10.5

Settlement Agreement, dated as of February 11, 2010, by and between Western Union Financial
Services, Inc. and the State of Arizona (filed as Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on February 16, 2010 and incorporated herein by reference thereto).

10.6

Form of Director Indemnification Agreement (filed as Exhibit 10.11 to the Companys Registration
Statement on Form 10 (file no. 001-32903) and incorporated herein by reference thereto).*

10.7

The Western Union Company 2006 Long-Term Incentive Plan, as Amended and Restated Effective
October 24, 2011.*

10.8

The Western Union Company 2006 Non-Employee Director Equity Compensation Plan, as Amended
and Restated Effective December 31, 2008 (filed as Exhibit 10.2 to the Companys Quarterly Report
on Form 10-Q filed on November 3, 2008 and incorporated herein by reference thereto).*

10.9

The Western Union Company Non-Employee Director Deferred Compensation Plan, as Amended and
Restated Effective December 31, 2008 (filed as Exhibit 10.12 to the Companys Annual Report on
Form 10-K filed on February 19, 2009 and incorporated herein by reference thereto).*

10.10

The Western Union Company Severance/Change in Control Policy (Executive Committee Level), as
Amended and Restated Effective September 15, 2011.*

10.11

The Western Union Company Senior Executive Annual Incentive Plan (filed as Exhibit 10.2 to the
Companys Quarterly Report on Form 10-Q filed on August 7, 2007 and incorporated herein by
reference thereto).*

10.12

The Western Union Company Supplemental Incentive Savings Plan, as Amended and Restated
Effective January 1, 2010 (filed as Exhibit 10.13 to the Companys Annual Report on Form 10-K filed
on February 26, 2010 and incorporated herein by reference thereto).*

10.13

The Western Union Company Grandfathered Supplemental Incentive Savings Plan, as Amended and
Restated Effective January 1, 2010 (filed as Exhibit 10.14 to the Companys Annual Report on
Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*

155

10.14

Form of Unrestricted Stock Unit Award Agreement Under The Western Union Company 2006 NonEmployee Director Equity Compensation Plan, as Amended and Restated Effective February 17, 2009
(filed as Exhibit 10.15 to the Companys Annual Report on Form 10-K filed on February 26, 2010 and
incorporated herein by reference thereto).*

10.15

Form of Nonqualified Stock Option Award Agreement Under The Western Union Company 2006
Non-Employee Director Equity Compensation Plan, as Amended and Restated Effective February 17,
2009 (filed as Exhibit 10.16 to the Companys Annual Report on Form 10-K filed on February 26,
2010 and incorporated herein by reference thereto).*

10.16

Form of Unrestricted Stock Unit Award Agreement for Non-Employee Directors Residing Outside the
United States Under The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q filed on
May 6, 2010 and incorporated herein by reference thereto).*

10.17

Form of Nonqualified Stock Option Award Agreement for Non-Employee Directors Residing Outside
the United States Under The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q filed on
May 6, 2010 and incorporated herein by reference thereto).*

10.18

Form of Unrestricted Stock Unit Award Agreement for Non-Employee Directors Residing in the
United States Under The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q filed on
May 6, 2010 and incorporated herein by reference thereto).*

10.19

Form of Nonqualified Stock Option Award Agreement for Non-Employee Directors Residing in the
United States Under The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q filed on
May 6, 2010 and incorporated herein by reference thereto).*

10.20

Form of Restricted Stock Award Agreement for Executive Committee Members Residing in the
United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed as
Exhibit 10.20 to the Companys Quarterly Report on Form 10-Q filed on November 8, 2006 and
incorporated herein by reference thereto).*

10.21

Form of Restricted Stock Unit Award Agreement for Executive Committee Members Residing
Outside the United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed
as Exhibit 10.21 to the Companys Quarterly Report on Form 10-Q filed on November 8, 2006 and
incorporated herein by reference thereto).*

10.22

Form of Nonqualified Stock Option Award Agreement for Executive Committee Members Under The
Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.22 to the Companys
Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference
thereto).*

10.23

Amendment to Form of Nonqualified Stock Option Award Agreement for Executive Committee
Members Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.1
to the Companys Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by
reference thereto).*

10.24

Amendment to Form of Nonqualified Stock Option Award Agreement for Executive Committee
Members under the 2002 First Data Corporation Long-Term Incentive Plan (filed as Exhibit 10.2 to
the Companys Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by
reference thereto).*
156

10.25

Amendment to Form of Nonqualified Stock Option Award Agreement for Executive Committee
Members under the First Data Corporation 1992 Long-Term Incentive Plan (filed as Exhibit 10.3 to
the Companys Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by
reference thereto).*

10.26

Form of Nonqualified Stock Option Award Agreement for Scott T. Scheirman Under The Western
Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.23 to the Companys Quarterly
Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*

10.27

Form of Restricted Stock Award Agreement for Scott T. Scheirman Under The Western Union
Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.24 to the Companys Quarterly Report
on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*

10.28

Form of Nonqualified Stock Option Award Agreement for Section 16 Officers (U.S.) Under The
Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.29 to the Companys
Annual Report on Form 10-K filed on February 25, 2011 and incorporated herein by reference
thereto).*

10.29

Form of Nonqualified Stock Option Award Agreement for Section 16 Officers (Non - U.S.) Under The
Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.30 to the Companys
Annual Report on Form 10-K filed on February 25, 2011 and incorporated herein by reference
thereto).*

10.30

Form of Restricted Stock Unit Award Agreement for Executive Committee Members Residing in the
United States Under The Western Union Company 2006 Long-Term Incentive Plan, as Amended and
Restated Effective December 8, 2009 (filed as Exhibit 10.27 to the Companys Annual Report on
Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*

10.31

Form of Restricted Stock Unit Award Agreement for Executive Committee Member Residing in
Austria Under The Western Union Company 2006 Long-Term Incentive Plan, as Amended and
Restated Effective December 8, 2009 (filed as Exhibit 10.28 to the Companys Annual Report on
Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*

10.32

Form of Restricted Stock Unit Award Agreement (Career Shares) for Executive Committee Members
Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan, as
Amended and Restated Effective December 8, 2009 (filed as Exhibit 10.29 to the Companys Annual
Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*

10.33

Form of Restricted Stock Unit Award Agreement (Career Shares) for Executive Committee Member
Residing in Austria Under The Western Union Company 2006 Long-Term Incentive Plan, as
Amended and Restated Effective December 8, 2009 (filed as Exhibit 10.30 to the Companys Annual
Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*

10.34

Form of Restricted Stock Unit Award Agreement (Career Shares) for Stewart A. Stockdale Under The
Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.31 to the Companys
Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference
thereto).*

10.35

Form of Cash Performance Grant Award Agreement for Executive Committee Members (filed as
Exhibit 10.33 to the Companys Annual Report on Form 10-K filed on February 19, 2009 and
incorporated herein by reference thereto).*

10.36

Form of 2010 Cash Performance Grant Award Agreement for Executive Committee Members (filed as
Exhibit 10.33 to the Companys Annual Report on Form 10-K filed on February 26, 2010 and
incorporated herein by reference thereto).*

157

10.37

Form of Award Agreement under The Western Union Company Senior Executive Annual Incentive
Plan for 2010 (filed as Exhibit 10.34 to the Companys Annual Report on Form 10-K filed on
February 26, 2010 and incorporated herein by reference thereto).*

10.38

Form of Performance-Based Restricted Stock Unit Award Notice for Executive Committee Members
Under The Western Union Company 2006 Long-Term Incentive Plan.*

10.39

Employment Contract, dated as of November 9, 2009, between Western Union Financial Services
GmbH and Hikmet Ersek (filed as Exhibit 10.35 to the Companys Annual Report on Form 10-K filed
on February 26, 2010 and incorporated herein by reference thereto).*

10.40

Expatriate Letter Agreement, dated as of November 9, 2009, between Western Union Financial
Services GmbH, The Western Union Company and Hikmet Ersek (filed as Exhibit 10.36 to the
Companys Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by
reference thereto).*

10.41

First Amendment to Employment Contract and Expatriate Letter Agreement, dated as of October 7,
2010, between Western Union Financial Services GmbH, The Western Union Company and Hikmet
Ersek (filed as Exhibit 10 to the Companys Quarterly Report on Form 10-Q filed on November 5,
2010 and incorporated herein by reference thereto).*

10.42

Expatriate Letter Agreement, dated as of January 4, 2012, between Western Union, LLC and Rajesh
K. Agrawal.*

10.43

Expatriate Letter Agreement, dated as of December 12, 2011, between Western Union, LLC and
Robin S. Heller.*

10.44

Letter Agreement, dated May 22, 2008, between The Western Union Company and Stewart A.
Stockdale (filed as Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q filed on August 5,
2008 and incorporated herein by reference thereto).*

10.45

Letter Agreement, dated May 6, 2010, between The Western Union Company, Western Union LLC
and Christina Gold (filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed on
May 6, 2010 and incorporated herein by reference thereto).*

10.46

Letter Agreement, dated December 22, 2010, between The Western Union Company and Rajesh K.
Agrawal, as terminated by the Letter Agreement, dated January 9, 2012, between The Western Union
Company and Rajesh K. Agrawal.*

10.47

Credit Agreement, dated as of September 23, 2011, among The Western Union Company, the banks
named therein, as lenders, Wells Fargo Bank, National Association, in its capacity as the swing line
bank, Wells Fargo Bank, National Association, Citibank, N.A. and JPMorgan Chase Bank, N.A., in
their respective capacities as issuing lenders, Citibank, N.A. and JPMorgan Chase Bank, N.A., as
syndication agents, Bank of America, N.A., Barclays Bank PLC and U.S. Bank National Association,
as documentation agents, and Wells Fargo Bank, National Association, as administrative agent (filed
as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on September 29, 2011 and
incorporated herein by reference thereto).

10.48

Mutual Separation Agreement and Release, dated as of August 25, 2011, between Western Union,
LLC and David Yates (filed as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q filed on
November 3, 2011 and incorporated herein by reference thereto) (certain portions of this exhibit were
granted confidential treatment by the Securities and Exchange Commission on February 8, 2012).*

12

Computation of Ratio of Earnings to Fixed Charges

14

The Western Union Company Code of Ethics for Senior Financial Officers, as Amended and Restated
Effective December 9, 2009 (filed as Exhibit 14 to the Companys Annual Report on Form 10-K filed
on February 26, 2010 and incorporated herein by reference thereto).
158

21

Subsidiaries of The Western Union Company

23

Consent of Independent Registered Public Accounting Firm

31.1

Certification of Chief Executive Officer of The Western Union Company Pursuant to Rule 13a14(a) under the Securities Exchange Act of 1934

31.2

Certification of Chief Financial Officer of The Western Union Company Pursuant to Rule 13a14(a) under the Securities Exchange Act of 1934

32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to
Item 15(b) of this report.

159

Board of Directors
Jack M. Greenberg
Non-Executive Chairman of our
Board of Directors,
Former Chairman and
Chief Executive Officer,
McDonalds Corporation

Betsy D. Holden
Director, Chair of the Corporate
Governance and Public Policy
Committee and member of the
Compensation and Benefits Committee,
Senior Advisor to McKinsey & Company

Michael A. Miles, Jr.

Director, Member of the Corporate
Governance and Public Policy
Committee and the Audit Committee,
President and Chief Operating Officer,
Staples, Inc.

Dinyar S. Devitre
Director, Chair of the Audit Committee,
Special Advisor to General Atlantic LLC

Linda Fayne Levinson

Director, Chair of the Compensation
and Benefits Committee and
Member of the Audit Committee,
Advisor to Professionally Funded,
Privately Held Ventures

Dennis Stevenson
Director, Member of the Corporate
Governance and Public Policy
Committee and the Compensation
and Benefits Committee,
Former Chairman, HBOS plc

Roberto G. Mendoza
Director, Member of the Audit
Committee and the Compensation
and Benefits Committee,
Senior Managing Director,
Atlas Advisors LLC

Wulf von Schimmelmann

Director, Member of the Corporate
Governance and Public Policy
Committee and the Compensation
and Benefits Committee,
Former Chief Executive Officer,
Deutsche Postbank AG

Hikmet Ersek
President, Chief Executive Officer
and Director

Robin S. Heller
Executive Vice President and
Chief Integration Officer

Diane M. Scott
Executive Vice President and
Chief Marketing Officer and President,
Western Union Ventures

Rajesh K. Agrawal
Executive Vice President and President,
Western Union Business Solutions

Paula S. Larson
Executive Vice President and
Chief Human Resources Officer

John R. Dye
Executive Vice President,
General Counsel and Secretary

Scott T. Scheirman
Executive Vice President,
Chief Financial Officer and
Global Operations

Hikmet Ersek
President, Chief Executive Officer
and Director,
The Western Union Company
Richard A. Goodman
Director, Member of the Audit Committee,
Former Executive Vice President,
Global Operations of Pepsico, Inc.

Leadership Team

Stewart A. Stockdale
Executive Vice President and President,
Global Consumer Financial Services

Corporate Information
Corporate Headquarters
12500 East Belford Avenue, Englewood, CO 80112
+1-720-332-1000
+1-866-405-5012
Transfer Agent and Registrar
Stockholders with questions concerning their stock holdings
or dividends, or with address changes should contact:
Wells Fargo Bank, National Association
161 North Concord Exchange South
St. Paul, MN 55075
+1-651-450-4064
+1-800-468-9716
Independent Registered Public Accounting Firm
Ernst & Young LLP
370 17th Street, Suite 3300, Denver, CO 80202
Financial Information and Reports
The company routinely sends out annual stockholder reports
and press releases. To receive this information, please write
the company at 12500 East Belford Avenue, Englewood, CO
80112, call +1-866-405-5012 or visit the Investor Relations
section of our website at www.westernunion.com. A copy of
The Western Union Company 2011 Form 10-K report to the
Securities and Exchange Commission will be furnished to
stockholders without charge (except charges for providing
exhibits) upon written request to the company. Analysts and
investors seeking additional information about the company can
contact the Investor Relations Department at +1-866-405-5012.
For more information about The Western Union Company, please
visit the company on the Internet at www.westernunion.com.
Stockholders of Record
The number of stockholders of record was 4,763 as of
February 17, 2012.
Dividends
During 2011, the Board of Directors declared quarterly cash
dividends of $0.08 per common share payable on December 30,
2011, October 7, 2011 and June 30, 2011, and $ 0.07 per
common share payable on March 31, 2011. During 2010, the
Board of Directors declared quarterly cash dividends of $0.07
per common share payable on December 31, 2010, and $0.06
per common share payable on October 14, 2010, June 30, 2010
and March 31, 2010.

Trademarks, Service Marks and Trade Names

The Western Union name, logo and related trademarks and service
marks, owned by Western Union Holdings, Inc., are registered
and/or used in the U.S. and many foreign countries. All other
trademarks, service marks, logos and trade names referenced
in this material are the property of their respective owners.
Stock Prices
The Western Union Company common stock is traded on the
New York Stock Exchange under the symbol WU. The high
and low closing prices for our common stock during 2011 and
2010, were as follows:
2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

$22.03
$21.88
$20.54
$18.48

$18.39
$19.22
$15.00
$14.55

$20.26
$19.57
$17.86
$18.97

$15.68
$14.83
$14.65
$17.33

2010
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Performance Graph
The following graph shows the five-year comparison of cumulative total shareholder return, calculated on a dividend reinvested
basis, for our common stock, (i) the S&P 500 Index, and
(ii) 195 companies in Standard Industry Classification (SIC)
Code 7389. Pursuant to rules of the Securities and Exchange
Commission, the comparison assumes $100 was invested on
December 29, 2006 (the last trading day prior to our fiscal year
end of December 31, 2006) in our common stock and in each
of the indices. Data points on the graph are annual. Historic
stock price performance is not necessarily indicative of future
stock price performance.
140
130
120
110
100
90
80

Western Union Co.

7389 Service-Business Services, NEC
S&P 500 IndexTotal Returns

70
60

Annual Meeting
The annual meeting of stockholders of The Western Union
Company will be held at 505 Fifth Avenue, 7th Floor,
New York, NY, 10017 on Wednesday, May 23, 2012
at 8:00 a.m. local time.

Common Stock
Market Price
High
Low

2006

2007

2008

2009

2010

2011

Corporate Governance
To review the companys corporate governance guidelines, board
committee charters and codes of business conduct and ethics,
please visit the Corporate Governance section on the Investor
Relations page of our website at www.westernunion.com.

westernunion.com