Price Graph
Price
Yield
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended: December 31, 2012
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¨
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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DELAWARE
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20-4531180
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 Par Value
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The New York Stock Exchange
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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PAGE
NUMBER
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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deterioration in consumers' and clients' confidence in our business, or in money transfer and payment service providers generally;
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•
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changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic and trade downturns and financial market disruptions;
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•
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political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole;
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•
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failure to compete effectively in the money transfer and payment service industry with respect to global and niche or corridor money transfer providers, banks and other money transfer and payment service providers, including telecommunications providers, card associations, card-based payment providers and electronic and Internet providers;
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•
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the pricing of our services and any pricing reductions, and their impact on our consumers and our financial results;
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our ability to adapt technology in response to changing industry and consumer needs or trends;
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•
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our failure to develop and introduce new services and enhancements, and gain market acceptance of such services;
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•
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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;
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interruptions of United States government relations with countries in which we have or are implementing significant business relationships with agents or clients;
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•
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changes in immigration laws, interruptions in immigration patterns and other factors related to migrants;
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mergers, acquisitions and integration of acquired businesses and technologies into our Company, including Travelex Global Business Payments, and the realization of anticipated financial benefits from these acquisitions, and events requiring us to write down our goodwill;
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•
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decisions to change our business mix;
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•
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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;
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•
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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;
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•
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any material breach of security or safeguards of or interruptions in any of our systems;
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our ability to attract and retain qualified key employees and to manage our workforce successfully;
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•
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our ability to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place;
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•
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adverse rating actions by credit rating agencies;
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•
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our ability to realize the anticipated benefits from productivity and cost-savings and other related initiatives, which may include decisions to downsize or to transition operating activities from one location to another, and to minimize any disruptions in our workforce that may result from those initiatives;
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•
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our ability to protect our brands and our other intellectual property rights;
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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;
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changes in tax laws and unfavorable resolution of tax contingencies;
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cessation of or defects in various services provided to us by third-party vendors;
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material changes in the market value or liquidity of securities that we hold;
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restrictions imposed by our debt obligations;
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significantly slower growth or declines in the money transfer, payment service, and other markets in which we operate;
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changes in industry standards affecting our business;
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•
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the failure by us, our agents or their subagents to comply with laws and regulations, including regulatory or judicial interpretations thereof, designed to detect and prevent money laundering, terrorist financing, fraud and other illicit activity, and increased costs or loss of business associated with compliance with those laws and regulations;
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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, including the impact of the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act;
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liabilities resulting from a failure of our agents or their subagents to comply with laws and regulations;
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increased costs or loss of business due to regulatory initiatives and changes in laws, regulations and industry practices and standards affecting us, our agents, or their subagents;
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liabilities and unanticipated developments resulting from governmental investigations and consent agreements with, or enforcement actions by, regulators, including those associated with compliance with, failure to comply with, or extension of, the settlement agreement with the State of Arizona;
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the impact on our business from the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules promulgated there-under, and the actions of the Consumer Financial Protection Bureau;
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liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments;
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failure to comply with regulations regarding consumer privacy and data use and security;
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effects of unclaimed property laws;
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failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our regulators worldwide;
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changes in accounting standards, rules and interpretations;
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adverse tax consequences from our spin-off from First Data Corporation;
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catastrophic events; and
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management's ability to identify and manage these and other risks.
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Year Ended December 31,
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2012
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2011
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2010
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Consumer-to-Consumer
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81
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%
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84
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%
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84
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%
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Consumer-to-Business
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11
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%
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11
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%
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12
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%
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Business Solutions
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6
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%
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3
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%
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2
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%
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Other
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2
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%
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2
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%
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2
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%
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100
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%
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100
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%
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100
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%
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•
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Global money transfer providers
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Global money transfer providers allow consumers to send money to a wide variety of locations, in both their home countries and abroad.
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•
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Regional money transfer providers
- Regional money transfer providers, or “niche” providers, 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.
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•
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Banks and postbanks
- Banks and postbanks of all sizes compete with us in a number of ways, including bank wire services and card-based services.
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Informal networks
- Informal 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.
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Electronic commerce
- Online money transfer services allow consumers to send and receive money electronically using the Internet or mobile phones.
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•
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Alternative channels
- Alternative channels for sending and receiving money include mail and commercial courier services, and card-based options, such as ATM cards and stored-value cards.
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•
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prohibit transactions in, to or from certain countries, governments and individuals and entities;
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•
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impose additional identification, reporting or recordkeeping requirements;
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•
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limit the types of entities capable of providing money transfer services, impose additional licensing or registration requirements on us, our agents, or their subagents, or impose additional requirements on us with regard to monitoring or oversight of our agents or their subagents;
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impose minimum capital or other financial requirements on us or our agents and their subagents;
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limit or restrict the revenue which may be generated from money transfers, including transaction fees and revenue derived from foreign exchange;
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require enhanced disclosures to our money transfer customers;
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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;
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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
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impose taxes or fees on money transfer transactions.
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Name
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Age
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Position
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Hikmet Ersek
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52
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President, Chief Executive Officer and Director
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Rajesh K. Agrawal
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47
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Executive Vice President and President, Western Union Business Solutions
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John R. Dye
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53
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Executive Vice President, General Counsel and Secretary
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Paula S. Larson
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50
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Executive Vice President and Chief Human Resources Officer
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Scott T. Scheirman
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50
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Executive Vice President, Chief Financial Officer
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Diane Scott
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42
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Executive Vice President, Chief Product and Marketing Officer
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J. David Thompson
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46
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Executive Vice President, Global Operations and Chief Information Officer
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•
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Risks Relating to Our Business and Industry;
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•
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Risks Related to Our Regulatory and Litigation Environment; and
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•
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Risks Related to the Spin-Off.
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•
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changes or proposed changes in laws or regulations or regulator or judicial interpretation thereof that have the effect of making it more difficult or less desirable for consumers to transfer money using traditional money transfer and payment service providers, including additional customer due diligence, identification, reporting, and recordkeeping requirements;
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•
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failure of our agents or their subagents to deliver services in accordance with our requirements;
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•
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reputational concerns resulting from actual or perceived events, including those related to fraud;
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•
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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;
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•
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federal, state or foreign legal requirements, including those that require us to provide consumer data to a greater extent than is currently required;
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•
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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
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•
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any breach of our security policies or legal requirements resulting in a compromise of consumer privacy or data use and security.
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•
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Demand for our services could soften compared to historical growth rates, including due to low consumer confidence, high unemployment, or reduced global trade.
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•
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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.
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•
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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.”
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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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.
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•
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managing geographically separated organizations, systems and facilities;
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•
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managing multi-jurisdictional operating, tax and financing structures;
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•
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integrating personnel with diverse business backgrounds and organizational cultures;
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•
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integrating the acquired technologies into our Company;
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•
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realization of anticipated financial benefits from these acquisitions and where necessary, improving internal controls of these acquired businesses;
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•
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complying with regulatory requirements;
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•
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fluctuations in currency exchange rates;
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•
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enforcement of intellectual property rights in some foreign countries;
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•
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difficulty entering new markets with the services of the acquired businesses; and
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•
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general economic and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular.
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•
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limiting our ability to pay dividends to our stockholders;
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•
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increasing our vulnerability to changing economic, regulatory and industry conditions;
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•
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limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry;
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•
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limiting our ability to borrow additional funds; and
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•
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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.
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•
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revisions to agent agreements to increase our ability to oversee the compliance of our agents and their subagents;
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•
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reduced thresholds at which our consumers are required to provide identification for transactions from certain states along the United States southwest border; and
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•
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enhancement of our information systems including migrating customer information for our Orlandi Valuta and Vigo brands onto our Western Union database and migrating to a standard point of sale system.
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ITEM 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
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Common Stock
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Dividends
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||||||||
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Market Price
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Declared
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High
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Low
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per Share
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||||||
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2012
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||||||
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First Quarter
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$
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19.82
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$
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16.99
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$
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0.10
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Second Quarter
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18.68
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15.79
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0.10
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Third Quarter
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19.14
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16.32
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0.10
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Fourth Quarter
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18.60
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11.93
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0.125
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2011
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First Quarter
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$
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22.03
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$
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18.39
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$
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0.07
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Second Quarter
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21.88
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19.22
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0.08
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Third Quarter
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20.54
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15.00
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0.08
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Fourth Quarter
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18.48
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14.55
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0.08
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Total Number of
Shares Purchased*
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Average Price
Paid per Share
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs**
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Remaining Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (In millions)
|
||||||
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October 1 - 31
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2,136,374
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$
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17.20
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2,121,000
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$
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707.8
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November 1 - 30
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14,711,285
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|
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12.58
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|
|
14,706,467
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$
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522.8
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December 1 - 31
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9,937,168
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13.05
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9,897,365
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$
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393.6
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Total
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26,784,827
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|
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$
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13.12
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|
26,724,832
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|
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*
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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 units that have vested.
|
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**
|
On October 30, 2012, the Board of Directors authorized $550 million of common stock repurchases through December 31, 2013, of which $393.6 million remains available as of December 31, 2012. 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.
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|
|
Year Ended December 31,
|
||||||||||||||||||
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(in millions, except per share data)
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
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Revenues (a)
|
$
|
5,664.8
|
|
|
$
|
5,491.4
|
|
|
$
|
5,192.7
|
|
|
$
|
5,083.6
|
|
|
$
|
5,282.0
|
|
|
Operating expenses (b) (c)
|
4,334.8
|
|
|
4,106.4
|
|
|
3,892.6
|
|
|
3,800.9
|
|
|
3,927.0
|
|
|||||
|
Operating income (a) (b) (c)
|
1,330.0
|
|
|
1,385.0
|
|
|
1,300.1
|
|
|
1,282.7
|
|
|
1,355.0
|
|
|||||
|
Interest income (d)
|
5.5
|
|
|
5.2
|
|
|
2.8
|
|
|
9.4
|
|
|
45.2
|
|
|||||
|
Interest expense (e)
|
(179.6
|
)
|
|
(181.9
|
)
|
|
(169.9
|
)
|
|
(157.9
|
)
|
|
(171.2
|
)
|
|||||
|
Other income/(expense), net, excluding interest income and interest expense (f)
|
12.9
|
|
|
66.3
|
|
|
12.2
|
|
|
(2.7
|
)
|
|
9.7
|
|
|||||
|
Income before income taxes (a) (b) (c) (d) (e) (f)
|
1,168.8
|
|
|
1,274.6
|
|
|
1,145.2
|
|
|
1,131.5
|
|
|
1,238.7
|
|
|||||
|
Net income (a) (b) (c) (d) (e) (f) (g)
|
1,025.9
|
|
|
1,165.4
|
|
|
909.9
|
|
|
848.8
|
|
|
919.0
|
|
|||||
|
Depreciation and amortization
|
246.1
|
|
|
192.6
|
|
|
175.9
|
|
|
154.2
|
|
|
144.0
|
|
|||||
|
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net cash provided by operating activities (h)
|
1,185.3
|
|
|
1,174.9
|
|
|
994.4
|
|
|
1,218.1
|
|
|
1,253.9
|
|
|||||
|
Capital expenditures (i)
|
(268.2
|
)
|
|
(162.5
|
)
|
|
(113.7
|
)
|
|
(98.9
|
)
|
|
(153.7
|
)
|
|||||
|
Common stock repurchased (j)
|
(766.5
|
)
|
|
(803.9
|
)
|
|
(581.4
|
)
|
|
(400.2
|
)
|
|
(1,314.5
|
)
|
|||||
|
Earnings Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic (a) (b) (c) (d) (e) (f) (g) (j)
|
$
|
1.70
|
|
|
$
|
1.85
|
|
|
$
|
1.37
|
|
|
$
|
1.21
|
|
|
$
|
1.26
|
|
|
Diluted (a) (b) (c) (d) (e) (f) (g) (j)
|
$
|
1.69
|
|
|
$
|
1.84
|
|
|
$
|
1.36
|
|
|
$
|
1.21
|
|
|
$
|
1.24
|
|
|
Cash dividends to stockholders per common share (k)
|
$
|
0.425
|
|
|
$
|
0.31
|
|
|
$
|
0.25
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
Key Indicators (unaudited):
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Consumer-to-Consumer transactions (l)
|
230.98
|
|
|
225.79
|
|
|
213.74
|
|
|
196.11
|
|
|
188.11
|
|
|||||
|
|
As of December 31,
|
||||||||||||||||||
|
(in millions)
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Settlement assets
|
$
|
3,114.6
|
|
|
$
|
3,091.2
|
|
|
$
|
2,635.2
|
|
|
$
|
2,389.1
|
|
|
$
|
1,207.5
|
|
|
Total assets
|
9,465.7
|
|
|
9,069.9
|
|
|
7,929.2
|
|
|
7,353.4
|
|
|
5,578.3
|
|
|||||
|
Settlement obligations
|
3,114.6
|
|
|
3,091.2
|
|
|
2,635.2
|
|
|
2,389.1
|
|
|
1,207.5
|
|
|||||
|
Total borrowings
|
4,029.2
|
|
|
3,583.2
|
|
|
3,289.9
|
|
|
3,048.5
|
|
|
3,143.5
|
|
|||||
|
Total liabilities
|
8,525.1
|
|
|
8,175.1
|
|
|
7,346.5
|
|
|
6,999.9
|
|
|
5,586.4
|
|
|||||
|
Total stockholders' equity/(deficiency)
|
940.6
|
|
|
894.8
|
|
|
582.7
|
|
|
353.5
|
|
|
(8.1
|
)
|
|||||
|
(a)
|
Revenue for the years ended December 31, 2012 and 2011 included $238.5 million and $35.2 million, respectively, of revenue related to Travelex Global Business Payments (“TGBP”), which was acquired in November 2011. Revenue for the years ended December 31, 2010 and 2009 included $111.0 million and $30.8 million, respectively, of revenue related to the Custom House Ltd. (“Custom House”) acquisition in September 2009. TGBP and Custom House have subsequently been rebranded to “Western Union Business Solutions.”
|
|
|
|
|
(b)
|
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 2012 or 2009.
|
|
|
|
|
(c)
|
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.
|
|
|
|
|
(d)
|
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.
|
|
|
|
|
(e)
|
Interest expense primarily relates to our outstanding borrowings.
|
|
|
|
|
(f)
|
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 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.
|
|
|
|
|
(g)
|
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.
|
|
|
|
|
(h)
|
Net cash provided by operating activities was impacted during the year ended December 2012 by tax payments of $92.4 million made as a result of the IRS Agreement. 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.
|
|
|
|
|
(i)
|
Capital expenditures include capitalization of contract costs, capitalization of purchased and developed software and purchases of property and equipment.
|
|
|
|
|
(j)
|
On October 30, 2012, the Board of Directors authorized $550 million of common stock repurchases through December 31, 2013, of which $393.6 million remains available as of December 31, 2012. During the years ended December 31, 2012, 2011, 2010, 2009 and 2008, we repurchased 51.0 million, 40.3 million, 35.6 million, 24.8 million and 58.1 million shares, respectively.
|
|
|
|
|
(k)
|
During 2012, the Board of Directors declared quarterly cash dividends of $0.125 per common share in the fourth quarter and $0.10 per common share in each of the first three quarters. 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, the Board of Directors declared an annual cash dividend of $0.04 per common share.
|
|
|
|
|
(l)
|
Consumer-to-Consumer transactions include Western Union, Vigo and Orlandi Valuta branded Consumer-to-Consumer money transfer services worldwide.
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
|
|
|
RESULTS OF OPERATIONS
|
|
•
|
Consumer-to-Consumer
- The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. Our multi-currency, real-time money transfer service is viewed by us as one interconnected global network where a money transfer can be sent from one location to another, around the world. Our money transfer services are available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through our websites and account based money transfers.
|
|
•
|
Consumer-to-Business
- The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. This segment consists of United States bill payments, Pago Fácil (bill payments in Argentina), and international bill payments. The significant majority of the segment's revenue was generated in the United States during all periods presented.
|
|
•
|
Business Solutions
- The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The majority of the segment's 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. Travelex Global Business Payments (“TGBP”), which was acquired in November 2011, is included in this segment.
|
|
•
|
We generated
$5,664.8 million
in total consolidated revenues compared to
$5,491.4 million
in the prior year, representing a year-over-year increase of
3%
. The acquisition of TGBP contributed approximately 4% of consolidated revenue growth.
|
|
•
|
We generated
$1,330.0 million
in consolidated operating income compared to
$1,385.0 million
in the prior year, representing a decrease of
4%
. The current year results include $42.8 million of integration expenses resulting from the acquisition of TGBP and
$30.9 million
of expenses related to productivity and cost-savings initiatives. The prior year results include $46.8 million of restructuring and related expenses and $4.8 million of TGBP integration expenses. For additional information on TGBP integration and restructuring and related expenses, refer to “Operating expenses overview.”
|
|
•
|
Our operating income margin was 23% during the year ended
December 31, 2012
, compared to 25% in the prior year. The current year results include TGBP integration expenses; investments in our strategic initiatives, including westernunion.com; increased compliance program costs; and productivity and cost-savings initiatives expenses. The prior year results include the restructuring and related expenses and TGBP integration expenses, as mentioned above.
|
|
•
|
Our effective tax rates were
12.2%
,
8.6%
and
20.5%
for the years ended December 31, 2012, 2011 and 2010, respectively. The significant decrease in our effective tax rate for the years ended December 31, 2012 and 2011 is primarily due to an agreement with the United States Internal Revenue Service (“IRS Agreement”) resolving substantially all of the issues related to our restructuring of our international operations in 2003. We continue to benefit from a significant proportion of our profits being foreign-derived, and therefore taxed at lower rates than our combined federal and state tax rates in the United States. For the years ended December 31, 2012, 2011 and 2010,
92%
,
67%
and
87%
of our pre-tax income was derived from foreign sources, respectively. While the income tax imposed by any one foreign country is not material to us, our overall effective tax rate could be adversely affected by changes in tax laws, both foreign and domestic. Certain portions of our foreign source income are subject to United States federal and state income tax as earned due to the nature of the income, and dividend repatriations of our foreign source income are generally subject to United States federal and state income tax.
|
|
•
|
Consolidated net income was
$1,025.9 million
and
$1,165.4 million
for the years ended
December 31, 2012
and
2011
, respectively, representing a year-over-year decrease of
12%
. Results for 2012 include $30.7 million and
$20.2 million
of TGBP integration and productivity and cost-savings initiatives expenses, net of tax, respectively. The prior year results include a $204.7 million tax benefit related to the adjustment of reserves associated with the IRS Agreement. Results for 2011 include $32.0 million and $3.1 million in restructuring and related expenses and TGBP integration expenses, net of tax, respectively. In addition, for 2011, we recognized gains of $12.7 million and $18.3 million, net of tax, related to our acquisitions of Finint S.r.l (“Finint”) and Angelo Costa S.r.l (“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 $79 billion and $81 billion in Consumer-to-Consumer principal for the years ended
December 31, 2012
and
2011
, respectively, of which $71 billion and $73 billion related to cross-border principal, respectively, which represented a decrease of 2% and 3%, respectively, in Consumer-to-Consumer principal and cross-border principal over the prior year.
|
|
•
|
Consolidated cash flows provided by operating activities were
$1,185.3 million
and
$1,174.9 million
for the years ended
December 31, 2012
and
2011
, respectively. Cash flows provided by operating activities for the year ended December 31, 2012 were impacted by tax payments of $92.4 million made as a result of the IRS Agreement.
|
|
•
|
Strengthening consumer money transfer
- We are implementing key actions in an effort to drive renewed growth in our consumer money transfer business, including: improving the consumer value proposition by making pricing investments in key corridors and enhancing services and the consumer experience; continuing to expand the digital and electronic account based money transfer channels; and further expanding our agent network. We began to implement increased strategic fee reductions and actions to adjust foreign exchange spreads in certain key corridors in the fourth quarter of 2012. We continued such increased fee reductions and actions in the first quarter of 2013 and anticipate further fee reductions and foreign exchange actions in 2013. Fee reductions and foreign exchange actions were approximately 1% of revenue for full year 2012. These actions are expected to increase to approximately 5% of total revenue for full year 2013, if all actions are implemented as contemplated. We also plan to continue connecting the cash and digital worlds for our consumers. Digital and electronic account based money transfer channels delivered strong growth and new customer acquisition in 2012, and actions are planned to accelerate usage in 2013 through added capabilities, enhanced value propositions, and expanded reach.
|
|
•
|
Driving growth in customers and usage in Western Union Business Solutions
- In Western Union Business Solutions, we are working to increase product offerings, expand to new markets, and improve sales force effectiveness to drive new customer acquisition and growth opportunities with existing customers.
|
|
•
|
Generating and deploying cash flow for shareholders
- We currently anticipate continuing to return capital to our shareholders in 2013 through dividends and share repurchases.
|
|
•
|
Transaction volume -
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, individual needs to transfer funds, and global and regional economic trends. For more information, refer to the Consumer-to-Consumer segment discussion below.
|
|
•
|
Competition -
We continue to face robust competition in each of our segments. In the year ended December 31, 2012, competitive pressures, including with respect to pricing in certain key corridors, adversely impacted our Consumer-to-Consumer segment.
|
|
•
|
Consumer Value Proposition -
Revenue is also impacted by our overall value proposition, including with respect to our consumer experience, the fees we charge consumers, the principal sent per transaction and 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 the currency.
|
|
•
|
Regulatory Compliance -
Our services are subject to an increasingly strict set of legal and regulatory requirements. The number and complexity of regulations around the world and the pace at which regulation is changing are factors that pose significant challenges to our business. We have made, and continue to make, enhancements to our processes and systems designed to detect and prevent money laundering, terrorist financing, and fraud and other illicit activity. These and other enhancements have resulted in, and in coming quarters we expect them to continue to result in, changes to certain of our business practices and increased costs. Some of these changes have had, and we believe will continue to have, an adverse effect on our business, financial condition and results of operations. See “Operating Expense Overview - Enhanced Regulatory Compliance” for more information.
|
|
•
|
Cost Structure -
As described earlier, in the fourth quarter of 2012, we began implementing additional initiatives to improve productivity and reduce costs. We expect to implement additional productivity and cost-savings initiatives throughout 2013, and we expect to incur approximately $45 million of expenses related to these initiatives in 2013. These initiatives are expected to result in approximately $30 million of estimated cost savings in 2013 and approximately $45 million of estimated cost savings in 2014, if all actions are implemented as contemplated. Much of our cost structure is comprised of agent commissions, which are generally variable and fluctuate as revenues fluctuate. However, we expect agent commissions as a percentage of revenue to increase in 2013 primarily due to the renewal of certain strategic agent agreements. We also expect to increase expenses in 2013 related to investments to support initiatives to continue expanding the digital and account based electronic channels for money transfers for consumers and to increase product offerings. In addition, we expect increased expenses related to compliance program costs.
|
|
•
|
Exchange Rates -
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.
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
|
Year Ended December 31,
|
|
2012
|
|
2011
|
||||||||||||
|
(in millions, except per share amounts)
|
2012
|
|
2011
|
|
2010
|
|
vs. 2011
|
|
vs. 2010
|
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Transaction fees
|
$
|
4,210.0
|
|
|
$
|
4,220.2
|
|
|
$
|
4,055.3
|
|
|
—
|
%
|
|
4
|
%
|
|
Foreign exchange revenues
|
1,332.7
|
|
|
1,151.2
|
|
|
1,018.8
|
|
|
16
|
%
|
|
13
|
%
|
|||
|
Other revenues
|
122.1
|
|
|
120.0
|
|
|
118.6
|
|
|
2
|
%
|
|
1
|
%
|
|||
|
Total revenues
|
5,664.8
|
|
|
5,491.4
|
|
|
5,192.7
|
|
|
3
|
%
|
|
6
|
%
|
|||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost of services
|
3,194.2
|
|
|
3,102.0
|
|
|
2,978.4
|
|
|
3
|
%
|
|
4
|
%
|
|||
|
Selling, general and administrative
|
1,140.6
|
|
|
1,004.4
|
|
|
914.2
|
|
|
14
|
%
|
|
10
|
%
|
|||
|
Total expenses
|
4,334.8
|
|
|
4,106.4
|
|
|
3,892.6
|
|
|
6
|
%
|
|
5
|
%
|
|||
|
Operating income
|
1,330.0
|
|
|
1,385.0
|
|
|
1,300.1
|
|
|
(4
|
)%
|
|
7
|
%
|
|||
|
Other income/(expense):
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest income
|
5.5
|
|
|
5.2
|
|
|
2.8
|
|
|
6
|
%
|
|
86
|
%
|
|||
|
Interest expense
|
(179.6
|
)
|
|
(181.9
|
)
|
|
(169.9
|
)
|
|
(1
|
)%
|
|
7
|
%
|
|||
|
Derivative gains/(losses), net
|
0.5
|
|
|
14.0
|
|
|
(2.5
|
)
|
|
(96
|
)%
|
|
*
|
|
|||
|
Other income, net
|
12.4
|
|
|
52.3
|
|
|
14.7
|
|
|
(76
|
)%
|
|
*
|
|
|||
|
Total other expense, net
|
(161.2
|
)
|
|
(110.4
|
)
|
|
(154.9
|
)
|
|
46
|
%
|
|
(29
|
)%
|
|||
|
Income before income taxes
|
1,168.8
|
|
|
1,274.6
|
|
|
1,145.2
|
|
|
(8
|
)%
|
|
11
|
%
|
|||
|
Provision for income taxes
|
142.9
|
|
|
109.2
|
|
|
235.3
|
|
|
31
|
%
|
|
(54
|
)%
|
|||
|
Net income
|
$
|
1,025.9
|
|
|
$
|
1,165.4
|
|
|
$
|
909.9
|
|
|
(12
|
)%
|
|
28
|
%
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
1.70
|
|
|
$
|
1.85
|
|
|
$
|
1.37
|
|
|
(8
|
)%
|
|
35
|
%
|
|
Diluted
|
$
|
1.69
|
|
|
$
|
1.84
|
|
|
$
|
1.36
|
|
|
(8
|
)%
|
|
35
|
%
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
604.9
|
|
|
630.6
|
|
|
666.5
|
|
|
|
|
|
|||||
|
Diluted
|
607.4
|
|
|
634.2
|
|
|
668.9
|
|
|
|
|
|
|||||
|
*
|
Calculation not meaningful
|
|
•
|
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.
|
|
•
|
Costs incurred for the investigation and closing of acquisitions are included in “Other.”
|
|
•
|
There were no restructuring and related expenses incurred during the year ended December 31, 2012, but we incurred expenses of
$46.8 million
and
$59.5 million
for the years ended
December 31, 2011
and
2010
, respectively, which were not allocated to the segments. 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.”
|
|
•
|
All items not included in operating income are excluded from the segments.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2012
|
|
2011
|
|
2010
|
|||
|
Consumer-to-Consumer
|
81
|
%
|
|
84
|
%
|
|
84
|
%
|
|
Consumer-to-Business
|
11
|
%
|
|
11
|
%
|
|
12
|
%
|
|
Business Solutions
|
6
|
%
|
|
3
|
%
|
|
2
|
%
|
|
Other
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
|
Year Ended December 31,
|
|
2012
|
|
2011
|
||||||||||||
|
(dollars and transactions in millions)
|
2012
|
|
2011
|
|
2010
|
|
vs. 2011
|
|
vs. 2010
|
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Transaction fees
|
$
|
3,545.6
|
|
|
$
|
3,580.2
|
|
|
$
|
3,434.3
|
|
|
(1
|
)%
|
|
4
|
%
|
|
Foreign exchange revenues
|
988.5
|
|
|
983.1
|
|
|
905.8
|
|
|
1
|
%
|
|
9
|
%
|
|||
|
Other revenues
|
50.2
|
|
|
45.1
|
|
|
43.3
|
|
|
11
|
%
|
|
4
|
%
|
|||
|
Total revenues
|
$
|
4,584.3
|
|
|
$
|
4,608.4
|
|
|
$
|
4,383.4
|
|
|
(1
|
)%
|
|
5
|
%
|
|
Operating income
|
$
|
1,266.9
|
|
|
$
|
1,316.0
|
|
|
$
|
1,243.3
|
|
|
(4
|
)%
|
|
6
|
%
|
|
Operating income margin
|
28
|
%
|
|
29
|
%
|
|
28
|
%
|
|
|
|
|
|||||
|
Key indicator:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Consumer-to-Consumer transactions
|
230.98
|
|
|
225.79
|
|
|
213.74
|
|
|
2
|
%
|
|
6
|
%
|
|||
|
|
Year Ended December 31,
|
||
|
|
2012
|
|
2011
|
|
Consumer-to-Consumer transaction growth/(decline) (a):
|
|
|
|
|
Europe and CIS
|
(1)%
|
|
1%
|
|
North America
|
(1)%
|
|
7%
|
|
Middle East and Africa
|
7%
|
|
3%
|
|
Asia Pacific (“APAC”)
|
3%
|
|
9%
|
|
Latin America and the Caribbean (“LACA”)
|
1%
|
|
5%
|
|
westernunion.com
|
41%
|
|
29%
|
|
|
|
|
|
|
Consumer-to-Consumer revenue growth/(decline) (a):
|
|
|
|
|
Europe and CIS
|
(6)%
|
|
3%
|
|
North America
|
(3)%
|
|
3%
|
|
Middle East and Africa
|
3%
|
|
4%
|
|
APAC
|
3%
|
|
10%
|
|
LACA
|
3%
|
|
7%
|
|
westernunion.com
|
24%
|
|
37%
|
|
|
|
|
|
|
Consumer-to-Consumer revenue as a percentage of consolidated revenue (a):
|
|
|
|
|
Europe and CIS
|
22%
|
|
24%
|
|
North America
|
20%
|
|
22%
|
|
Middle East and Africa
|
15%
|
|
15%
|
|
APAC
|
12%
|
|
12%
|
|
LACA
|
9%
|
|
9%
|
|
westernunion.com
|
3%
|
|
2%
|
|
(a)
|
Significant allocations are made in determining the transaction and revenue growth rates under the regional view in the above table. The geographic split for transactions and revenue 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. For money transfers initiated through our websites (“westernunion.com”), 100% of the revenue and transactions are attributed to westernunion.com.
We view our Consumer-to-Consumer money transfer service as one interconnected global network where a money transfer can be sent from one location to another, around the world, including related transactions that can be initiated through our websites and account based money transfers. The segment includes six regions whose functions are limited to generating, managing and maintaining agent relationships and localized marketing activities. These regions interact on transactions with consumers and share common processes, systems and licenses, thereby constituting one global Consumer-to-Consumer money transfer business and one operating segment.
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
|
Year Ended December 31,
|
|
2012
|
|
2011
|
||||||||||||
|
(dollars in millions)
|
2012
|
|
2011
|
|
2010
|
|
vs. 2011
|
|
vs. 2010
|
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Transaction fees
|
$
|
573.6
|
|
|
$
|
581.8
|
|
|
$
|
576.5
|
|
|
(1
|
)%
|
|
1
|
%
|
|
Foreign exchange revenues
|
3.4
|
|
|
5.7
|
|
|
3.6
|
|
|
(40
|
)%
|
|
58
|
%
|
|||
|
Other revenues
|
26.9
|
|
|
28.4
|
|
|
30.6
|
|
|
(5
|
)%
|
|
(7
|
)%
|
|||
|
Total revenues
|
$
|
603.9
|
|
|
$
|
615.9
|
|
|
$
|
610.7
|
|
|
(2
|
)%
|
|
1
|
%
|
|
Operating income
|
$
|
137.6
|
|
|
$
|
146.9
|
|
|
$
|
146.2
|
|
|
(6
|
)%
|
|
0
|
%
|
|
Operating income margin
|
23
|
%
|
|
24
|
%
|
|
24
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
% Change
|
||||||||
|
|
Year Ended December 31,
|
|
2012
|
|
2011
|
||||||||||
|
(dollars in millions)
|
2012
|
|
2011
|
|
2010
|
|
vs. 2011
|
|
vs. 2010
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||
|
Transaction fees
|
$
|
34.9
|
|
|
$
|
5.9
|
|
|
$
|
1.3
|
|
|
*
|
|
*
|
|
Foreign exchange revenues
|
332.0
|
|
|
154.6
|
|
|
105.0
|
|
|
*
|
|
*
|
|||
|
Other revenues
|
0.5
|
|
|
0.6
|
|
|
0.4
|
|
|
*
|
|
*
|
|||
|
Total revenues
|
$
|
367.4
|
|
|
$
|
161.1
|
|
|
$
|
106.7
|
|
|
*
|
|
*
|
|
Operating loss
|
$
|
(54.8
|
)
|
|
$
|
(9.6
|
)
|
|
$
|
(24.2
|
)
|
|
*
|
|
*
|
|
Operating loss margin
|
(15
|
)%
|
|
(6
|
)%
|
|
(23
|
)%
|
|
|
|
|
|||
|
*
|
Calculation not meaningful
|
|
|
|
|
|
|
|
|
% Change
|
||||||||||
|
|
Year Ended December 31,
|
|
2012
|
|
2011
|
||||||||||||
|
(dollars in millions)
|
2012
|
|
2011
|
|
2010
|
|
vs. 2011
|
|
vs. 2010
|
||||||||
|
Revenues
|
$
|
109.2
|
|
|
$
|
106.0
|
|
|
$
|
91.9
|
|
|
3
|
%
|
|
15
|
%
|
|
Operating loss
|
$
|
(19.7
|
)
|
|
$
|
(21.5
|
)
|
|
$
|
(5.7
|
)
|
|
*
|
|
|
*
|
|
|
*
|
Calculation not meaningful
|
|
Due in less than one year:
|
|
||
|
Floating rate notes (effective rate of 0.9%) due 2013
|
$
|
300.0
|
|
|
Due in greater than one year (a):
|
|
||
|
6.500% notes (effective rate of 5.6%) due 2014
|
500.0
|
|
|
|
2.375% notes (effective rate of 2.4%) due 2015 (b)
|
250.0
|
|
|
|
5.930% notes due 2016 (c)
|
1,000.0
|
|
|
|
2.875% notes (effective rate of 3.0%) due 2017 (b)
|
500.0
|
|
|
|
3.650% notes (effective rate of 4.4%) due 2018
|
400.0
|
|
|
|
5.253% notes due 2020 (c)
|
324.9
|
|
|
|
6.200% notes due 2036 (c)
|
500.0
|
|
|
|
6.200% notes due 2040 (c)
|
250.0
|
|
|
|
Other borrowings
|
5.8
|
|
|
|
Total borrowings at par value
|
4,030.7
|
|
|
|
Fair value hedge accounting adjustments, net (a)
|
20.2
|
|
|
|
Unamortized discount, net
|
(21.7
|
)
|
|
|
Total borrowings at carrying value (d)
|
$
|
4,029.2
|
|
|
(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” in our Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate.
|
|
(b)
|
On December 10, 2012, we issued $250.0 million of aggregate principal amount of 2.375% unsecured fixed rate notes due 2015 (“2015 Notes”) and $500.0 million of aggregate principal amount of 2.875% unsecured fixed rate notes due 2017 (“2017 Notes”). The interest rate on the 2015 Notes and 2017 Notes may be adjusted under certain circumstances as described below.
|
|
(c)
|
The difference between the stated interest rate and the effective interest rate is not significant.
|
|
(d)
|
As of December 31, 2012, our weighted-average effective rate on total borrowings was approximately 4.8%.
|
|
|
S&P
|
|
Moody's
|
|
Fitch
|
|
Short-term rating
|
A-2
|
|
P-2
|
|
F2
|
|
Senior unsecured
|
BBB+
|
|
Baa1
|
|
BBB+
|
|
Ratings outlook
|
Negative
|
|
Negative
|
|
Negative
|
|
•
|
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;
|
|
•
|
the interest rates payable on our 2015 Notes and 2017 Notes would be increased, beginning at a downgrade below investment grade; however, in no event would the interest rate on either the 2015 Notes or 2017 Notes be increased by more than 2.00% above 2.375% and 2.875% per annum, respectively, and the interest rates on the 2015 Notes and 2017 Notes may also be adjusted downward for debt rating upgrades subsequent to any debt rating downgrades but may not be adjusted below 2.375% and 2.875% per annum;
|
|
•
|
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.
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
After 5 Years
|
||||||||||
|
Items related to amounts included on our balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Borrowings, including interest (a)
|
$
|
5,749.9
|
|
|
$
|
486.9
|
|
|
$
|
1,067.4
|
|
|
$
|
1,731.8
|
|
|
$
|
2,463.8
|
|
|
IRS Agreement (b)
|
100.0
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Estimated pension funding (c)
|
67.3
|
|
|
22.6
|
|
|
39.2
|
|
|
5.5
|
|
|
—
|
|
|||||
|
Unrecognized tax benefits (d)
|
123.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Foreign currency and interest rate derivative contracts (e)
|
86.1
|
|
|
80.8
|
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|||||
|
Other (f)
|
24.9
|
|
|
20.1
|
|
|
3.9
|
|
|
0.9
|
|
|
—
|
|
|||||
|
Other Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Purchase obligations (g)
|
90.5
|
|
|
45.7
|
|
|
42.7
|
|
|
2.1
|
|
|
—
|
|
|||||
|
Operating leases
|
149.7
|
|
|
40.3
|
|
|
55.4
|
|
|
32.9
|
|
|
21.1
|
|
|||||
|
|
$
|
6,391.6
|
|
|
$
|
796.4
|
|
|
$
|
1,213.9
|
|
|
$
|
1,773.2
|
|
|
$
|
2,484.9
|
|
|
(a)
|
We have estimated our interest payments based on (i) the assumption that no debt issuances or renewals will occur upon the maturity dates of our notes, and (ii) an estimate of future interest rates on our 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 made cash payments to the IRS and various state tax authorities of $92.4 million during 2012 and expect to make payments of approximately $100 million during 2013 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 our 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.
|
|
(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, 2012, 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, 2012.
|
|
(g)
|
Many of our contracts contain clauses that allow us to terminate the contract with notice and with a termination penalty. Termination penalties are generally an amount less than the original obligation. 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.
|
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ from Assumptions
|
|
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.
|
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 $4.4 billion as of December 31, 2012, which we expect to reinvest outside the United States indefinitely.
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.
|
|
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 tax reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review or other settlement. 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.
|
Our tax contingency reserves for our uncertain tax positions as of December 31, 2012 were $111.9 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 differs 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 use derivatives to (a) minimize our exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions 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 hedges - 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, 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.”
Fair Value hedges - Fair 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.
|
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.
|
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, 2012, 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 $33.7 million.
As of December 31, 2012, 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 $20.2 million gain.
|
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ from Assumptions
|
|
Other Intangible Assets
|
|
|
|
|
|
|
|
We capitalize acquired intangible assets as well as certain initial payments for new and renewed agent contracts and software.
We evaluate such intangible assets for impairment on an annual basis and whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying amounts to determine if a write-down 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 amount to capitalize and the related period of benefit. 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.
The estimated undiscounted cash flows associated with each asset requires us to make estimates and assumptions, including, among other things, revenue growth rates, and operating margins based on our budgets and business plans.
|
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 intangible assets as of December 31, 2012 was $878.9 million.
|
|
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 and in others it is one level below the operating 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 unit's fair value is assessed under certain events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-specific events.
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 unit's goodwill by allocating the determined fair value to all the reporting unit's 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.
|
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, 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 period such charge occurs.
The carrying value of goodwill as of December 31, 2012 was $3,179.7 million which represented approximately 34% of our consolidated assets. As of December 31, 2012, goodwill of $1,947.7 million and $996.0 million resides in our Consumer-to-Consumer and Business Solutions reporting units, respectively. The remaining $236.0 million resides in multiple reporting units which are included in either our Consumer-to-Business segment or Other.
For the reporting units that comprise Consumer-to-Consumer, Consumer-to-Business, and Other, the fair value of the businesses greatly exceed their carrying amounts.
For our Business Solutions reporting unit, which was recently acquired between 2009 and 2011, a decline in estimated fair value of approximately 10% could occur before triggering an impairment of goodwill. We believe the primary assumptions impacting our Business Solutions impairment valuation analysis relate to projected revenue and EBITDA margins. For example, a decrease of 200 basis points in the ten-year projected compound annual growth rate of either revenue or EBITDA margin, assuming all other elements of the cash flow model remain unchanged, would result in such decline.
We have not recorded any goodwill impairments during the three years ended December 31, 2012.
|
|
Description
|
Judgments and Uncertainties
|
Effect if Actual Results Differ from Assumptions
|
|
Acquisitions - Purchase 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.
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.
|
Purchase price allocations require 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 flow and replacement cost analyses.
|
During the last three years, we completed the following acquisitions:
- We acquired TGBP for $961.3 million.
- We acquired Finint for total value of $187.1 million.
- We acquired Costa for total value of $181.9 million.
See Part II, Item 8,
Financial Statements and Supplementary Data
, Note 3, “Acquisitions,” 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, 2012, goodwill of $1,032.1 million and intangibles of $430.4 million were recognized.
|
|
|
/s/ Ernst & Young LLP
|
|
Denver, Colorado
|
|
|
February 22, 2013
|
|
|
|
/s/ Ernst & Young LLP
|
|
Denver, Colorado
|
|
|
February 22, 2013
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Transaction fees
|
$
|
4,210.0
|
|
|
$
|
4,220.2
|
|
|
$
|
4,055.3
|
|
|
Foreign exchange revenues
|
1,332.7
|
|
|
1,151.2
|
|
|
1,018.8
|
|
|||
|
Other revenues
|
122.1
|
|
|
120.0
|
|
|
118.6
|
|
|||
|
Total revenues
|
5,664.8
|
|
|
5,491.4
|
|
|
5,192.7
|
|
|||
|
Expenses:
|
|
|
|
|
|
||||||
|
Cost of services
|
3,194.2
|
|
|
3,102.0
|
|
|
2,978.4
|
|
|||
|
Selling, general and administrative
|
1,140.6
|
|
|
1,004.4
|
|
|
914.2
|
|
|||
|
Total expenses*
|
4,334.8
|
|
|
4,106.4
|
|
|
3,892.6
|
|
|||
|
Operating income
|
1,330.0
|
|
|
1,385.0
|
|
|
1,300.1
|
|
|||
|
Other income/(expense):
|
|
|
|
|
|
||||||
|
Interest income
|
5.5
|
|
|
5.2
|
|
|
2.8
|
|
|||
|
Interest expense
|
(179.6
|
)
|
|
(181.9
|
)
|
|
(169.9
|
)
|
|||
|
Derivative gains/(losses), net
|
0.5
|
|
|
14.0
|
|
|
(2.5
|
)
|
|||
|
Other income, net
|
12.4
|
|
|
52.3
|
|
|
14.7
|
|
|||
|
Total other expense, net
|
(161.2
|
)
|
|
(110.4
|
)
|
|
(154.9
|
)
|
|||
|
Income before income taxes
|
1,168.8
|
|
|
1,274.6
|
|
|
1,145.2
|
|
|||
|
Provision for income taxes
|
142.9
|
|
|
109.2
|
|
|
235.3
|
|
|||
|
Net income
|
$
|
1,025.9
|
|
|
$
|
1,165.4
|
|
|
$
|
909.9
|
|
|
Earnings per share:
|
|
|
|
|
|
||||||
|
Basic
|
$
|
1.70
|
|
|
$
|
1.85
|
|
|
$
|
1.37
|
|
|
Diluted
|
$
|
1.69
|
|
|
$
|
1.84
|
|
|
$
|
1.36
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||
|
Basic
|
604.9
|
|
|
630.6
|
|
|
666.5
|
|
|||
|
Diluted
|
607.4
|
|
|
634.2
|
|
|
668.9
|
|
|||
|
Cash dividends declared per common share
|
$
|
0.425
|
|
|
$
|
0.31
|
|
|
$
|
0.25
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Net income
|
$
|
1,025.9
|
|
|
$
|
1,165.4
|
|
|
$
|
909.9
|
|
|
Other comprehensive income/(loss):
|
|
|
|
|
|
||||||
|
Unrealized gains/(losses) on investment securities:
|
|
|
|
|
|
||||||
|
Unrealized gains/(losses)
|
9.9
|
|
|
9.7
|
|
|
(0.5
|
)
|
|||
|
Tax (expense)/benefit
|
(3.7
|
)
|
|
(3.6
|
)
|
|
0.1
|
|
|||
|
Reclassification of gains into earnings
|
(5.5
|
)
|
|
(6.9
|
)
|
|
(4.7
|
)
|
|||
|
Tax expense
|
2.1
|
|
|
2.6
|
|
|
1.8
|
|
|||
|
Net unrealized gains/(losses) on investment securities
|
2.8
|
|
|
1.8
|
|
|
(3.3
|
)
|
|||
|
Unrealized gains/(losses) on hedging activities:
|
|
|
|
|
|
||||||
|
Unrealized gains/(losses)
|
(20.1
|
)
|
|
(5.2
|
)
|
|
15.8
|
|
|||
|
Tax benefit
|
3.1
|
|
|
5.6
|
|
|
0.7
|
|
|||
|
Reclassification of (gains)/losses into earnings
|
(9.8
|
)
|
|
33.0
|
|
|
(23.0
|
)
|
|||
|
Tax expense/(benefit)
|
(0.2
|
)
|
|
(6.4
|
)
|
|
1.6
|
|
|||
|
Net unrealized gains/(losses) on hedging activities
|
(27.0
|
)
|
|
27.0
|
|
|
(4.9
|
)
|
|||
|
Foreign currency translation adjustments:
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments
|
(4.6
|
)
|
|
(3.7
|
)
|
|
8.4
|
|
|||
|
Tax (expense)/benefit
|
2.4
|
|
|
1.7
|
|
|
(1.8
|
)
|
|||
|
Net foreign currency translation adjustments
|
(2.2
|
)
|
|
(2.0
|
)
|
|
6.6
|
|
|||
|
Defined benefit pension plan:
|
|
|
|
|
|
||||||
|
Unrealized losses
|
(20.5
|
)
|
|
(28.4
|
)
|
|
(13.7
|
)
|
|||
|
Tax benefit
|
6.2
|
|
|
10.9
|
|
|
5.9
|
|
|||
|
Reclassification of losses into earnings
|
10.5
|
|
|
8.1
|
|
|
6.2
|
|
|||
|
Tax benefit
|
(3.9
|
)
|
|
(3.1
|
)
|
|
(2.3
|
)
|
|||
|
Net defined benefit pension plan adjustments
|
(7.7
|
)
|
|
(12.5
|
)
|
|
(3.9
|
)
|
|||
|
Total other comprehensive income/(loss)
|
(34.1
|
)
|
|
14.3
|
|
|
(5.5
|
)
|
|||
|
Comprehensive income
|
$
|
991.8
|
|
|
$
|
1,179.7
|
|
|
$
|
904.4
|
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Assets
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
1,776.5
|
|
|
$
|
1,370.9
|
|
|
Settlement assets
|
3,114.6
|
|
|
3,091.2
|
|
||
|
Property and equipment, net of accumulated depreciation of $384.5 and $429.7, respectively
|
196.1
|
|
|
198.1
|
|
||
|
Goodwill
|
3,179.7
|
|
|
3,198.9
|
|
||
|
Other intangible assets, net of accumulated amortization of $519.7 and $462.5, respectively
|
878.9
|
|
|
847.4
|
|
||
|
Other assets
|
319.9
|
|
|
363.4
|
|
||
|
Total assets
|
$
|
9,465.7
|
|
|
$
|
9,069.9
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
|
Liabilities:
|
|
|
|
||||
|
Accounts payable and accrued liabilities
|
$
|
556.2
|
|
|
$
|
535.0
|
|
|
Settlement obligations
|
3,114.6
|
|
|
3,091.2
|
|
||
|
Income taxes payable
|
218.3
|
|
|
302.4
|
|
||
|
Deferred tax liability, net
|
352.1
|
|
|
389.7
|
|
||
|
Borrowings
|
4,029.2
|
|
|
3,583.2
|
|
||
|
Other liabilities
|
254.7
|
|
|
273.6
|
|
||
|
Total liabilities
|
8,525.1
|
|
|
8,175.1
|
|
||
|
|
|
|
|
||||
|
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; 572.1 shares and 619.4 shares issued and outstanding as of December 31, 2012 and 2011, respectively
|
5.7
|
|
|
6.2
|
|
||
|
Capital surplus
|
332.8
|
|
|
247.1
|
|
||
|
Retained earnings
|
754.7
|
|
|
760.0
|
|
||
|
Accumulated other comprehensive loss
|
(152.6
|
)
|
|
(118.5
|
)
|
||
|
Total stockholders’ equity
|
940.6
|
|
|
894.8
|
|
||
|
Total liabilities and stockholders’ equity
|
$
|
9,465.7
|
|
|
$
|
9,069.9
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Cash flows from operating activities
|
|
|
|
|
|
||||||
|
Net income
|
$
|
1,025.9
|
|
|
$
|
1,165.4
|
|
|
$
|
909.9
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
|
Depreciation
|
61.7
|
|
|
61.0
|
|
|
61.5
|
|
|||
|
Amortization
|
184.4
|
|
|
131.6
|
|
|
114.4
|
|
|||
|
Deferred income tax (benefit)/provision
|
(35.2
|
)
|
|
21.2
|
|
|
28.6
|
|
|||
|
Gain on revaluation of equity interests (Note 3)
|
—
|
|
|
(49.9
|
)
|
|
—
|
|
|||
|
Other non-cash items, net
|
77.2
|
|
|
29.8
|
|
|
37.9
|
|
|||
|
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:
|
|
|
|
|
|
||||||
|
Other assets
|
(27.8
|
)
|
|
(27.7
|
)
|
|
28.1
|
|
|||
|
Accounts payable and accrued liabilities
|
9.3
|
|
|
(43.0
|
)
|
|
10.5
|
|
|||
|
Income taxes payable (Note 10)
|
(79.9
|
)
|
|
(62.3
|
)
|
|
(159.2
|
)
|
|||
|
Other liabilities
|
(30.3
|
)
|
|
(51.2
|
)
|
|
(37.3
|
)
|
|||
|
Net cash provided by operating activities
|
1,185.3
|
|
|
1,174.9
|
|
|
994.4
|
|
|||
|
Cash flows from investing activities
|
|
|
|
|
|
||||||
|
Capitalization of contract costs
|
(174.9
|
)
|
|
(96.7
|
)
|
|
(35.0
|
)
|
|||
|
Capitalization of purchased and developed software
|
(32.4
|
)
|
|
(13.0
|
)
|
|
(25.4
|
)
|
|||
|
Purchases of property and equipment
|
(60.9
|
)
|
|
(52.8
|
)
|
|
(53.3
|
)
|
|||
|
Acquisition of businesses, net of cash acquired (Note 3)
|
10.0
|
|
|
(1,218.6
|
)
|
|
(4.7
|
)
|
|||
|
Net proceeds from settlement of foreign currency forward contracts related to acquisitions
|
—
|
|
|
20.8
|
|
|
—
|
|
|||
|
Proceeds from receivable for securities sold
|
—
|
|
|
—
|
|
|
36.9
|
|
|||
|
Repayments of notes receivable issued to agents
|
—
|
|
|
—
|
|
|
16.9
|
|
|||
|
Net cash used in investing activities
|
(258.2
|
)
|
|
(1,360.3
|
)
|
|
(64.6
|
)
|
|||
|
Cash flows from financing activities
|
|
|
|
|
|
||||||
|
Proceeds from exercise of options
|
53.4
|
|
|
100.0
|
|
|
42.1
|
|
|||
|
Cash dividends paid
|
(254.2
|
)
|
|
(194.2
|
)
|
|
(165.3
|
)
|
|||
|
Common stock repurchased
|
(766.5
|
)
|
|
(803.9
|
)
|
|
(581.4
|
)
|
|||
|
Net (repayments of)/proceeds from commercial paper
|
(297.0
|
)
|
|
297.0
|
|
|
—
|
|
|||
|
Net proceeds from issuance of borrowings
|
742.8
|
|
|
696.3
|
|
|
247.0
|
|
|||
|
Principal payments on borrowings
|
—
|
|
|
(696.3
|
)
|
|
—
|
|
|||
|
Net cash used in financing activities
|
(521.5
|
)
|
|
(601.1
|
)
|
|
(457.6
|
)
|
|||
|
Net change in cash and cash equivalents
|
405.6
|
|
|
(786.5
|
)
|
|
472.2
|
|
|||
|
Cash and cash equivalents at beginning of year
|
1,370.9
|
|
|
2,157.4
|
|
|
1,685.2
|
|
|||
|
Cash and cash equivalents at end of year
|
$
|
1,776.5
|
|
|
$
|
1,370.9
|
|
|
$
|
2,157.4
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||||||
|
Interest paid
|
$
|
181.8
|
|
|
$
|
191.3
|
|
|
$
|
175.5
|
|
|
Income taxes paid (Note 10)
|
$
|
257.1
|
|
|
$
|
144.9
|
|
|
$
|
365.4
|
|
|
Non-cash exchange of 5.400% notes due 2011 for 5.253% notes due 2020 (Note 15)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
303.7
|
|
|
|
|
|
Capital Surplus
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Equity
|
|||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
Balance, December 31, 2009
|
686.5
|
|
|
$
|
6.9
|
|
|
$
|
40.7
|
|
|
$
|
433.2
|
|
|
$
|
(127.3
|
)
|
|
$
|
353.5
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
909.9
|
|
|
—
|
|
|
909.9
|
|
|||||
|
Stock-based compensation and other
|
—
|
|
|
—
|
|
|
34.6
|
|
|
—
|
|
|
—
|
|
|
34.6
|
|
|||||
|
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(165.3
|
)
|
|
—
|
|
|
(165.3
|
)
|
|||||
|
Repurchase and retirement of common shares
|
(35.7
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(586.2
|
)
|
|
—
|
|
|
(586.6
|
)
|
|||||
|
Shares issued under stock-based compensation plans
|
3.2
|
|
|
—
|
|
|
44.1
|
|
|
—
|
|
|
—
|
|
|
44.1
|
|
|||||
|
Tax adjustments from employee stock option plans
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|||||
|
Unrealized losses on investment securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.3
|
)
|
|
(3.3
|
)
|
|||||
|
Unrealized losses on hedging activities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
(4.9
|
)
|
|||||
|
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.6
|
|
|
6.6
|
|
|||||
|
Defined benefit pension plan liability adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
(3.9
|
)
|
|||||
|
Balance, December 31, 2010
|
654.0
|
|
|
6.5
|
|
|
117.4
|
|
|
591.6
|
|
|
(132.8
|
)
|
|
582.7
|
|
|||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,165.4
|
|
|
—
|
|
|
1,165.4
|
|
|||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
31.2
|
|
|
—
|
|
|
—
|
|
|
31.2
|
|
|||||
|
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(194.2
|
)
|
|
—
|
|
|
(194.2
|
)
|
|||||
|
Repurchase and retirement of common shares
|
(40.5
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(802.8
|
)
|
|
—
|
|
|
(803.2
|
)
|
|||||
|
Shares issued under stock-based compensation plans
|
5.9
|
|
|
0.1
|
|
|
98.7
|
|
|
—
|
|
|
—
|
|
|
98.8
|
|
|||||
|
Tax adjustments from employee stock option plans
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||||
|
Unrealized gains on investment securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
1.8
|
|
|||||
|
Unrealized gains on hedging activities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27.0
|
|
|
27.0
|
|
|||||
|
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
(2.0
|
)
|
|||||
|
Defined benefit pension plan liability adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|
(12.5
|
)
|
|||||
|
Balance, December 31, 2011
|
619.4
|
|
|
6.2
|
|
|
247.1
|
|
|
760.0
|
|
|
(118.5
|
)
|
|
894.8
|
|
|||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,025.9
|
|
|
—
|
|
|
1,025.9
|
|
|||||
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
34.0
|
|
|
—
|
|
|
—
|
|
|
34.0
|
|
|||||
|
Common stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(254.2
|
)
|
|
—
|
|
|
(254.2
|
)
|
|||||
|
Repurchase and retirement of common shares
|
(51.3
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
(777.0
|
)
|
|
—
|
|
|
(777.5
|
)
|
|||||
|
Shares issued under stock-based compensation plans
|
4.0
|
|
|
—
|
|
|
51.9
|
|
|
—
|
|
|
—
|
|
|
51.9
|
|
|||||
|
Tax adjustments from employee stock option plans
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||||
|
Unrealized gains on investment securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
2.8
|
|
|||||
|
Unrealized losses on hedging activities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.0
|
)
|
|
(27.0
|
)
|
|||||
|
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
(2.2
|
)
|
|||||
|
Defined benefit pension plan liability adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
(7.7
|
)
|
|||||
|
Balance, December 31, 2012
|
572.1
|
|
|
$
|
5.7
|
|
|
$
|
332.8
|
|
|
$
|
754.7
|
|
|
$
|
(152.6
|
)
|
|
$
|
940.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
•
|
Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company's multi-currency, real-time money transfer service is viewed by the Company as one interconnected global network where a money transfer can be sent from one location to another, around the world. This service is available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through the Company's websites and account based money transfers.
|
|
•
|
Consumer-to-Business - The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. This segment consists of United States bill payments, Pago Fácil (bill payments in Argentina), and international bill payments. The significant majority of the segment's revenue was generated in the United States during all periods presented.
|
|
•
|
Business Solutions - The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals. The majority of the segment's business relates to exchanges of currency at the spot rate which enables customers to make cross-currency payments. In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments. Travelex Global Business Payments (“TGBP”), which was acquired in November 2011 (see Note 3), is included in this segment.
|
|
|
For the Year Ended December 31,
|
|||||||
|
|
2012
|
|
2011
|
|
2010
|
|||
|
Basic weighted-average shares outstanding
|
604.9
|
|
|
630.6
|
|
|
666.5
|
|
|
Common stock equivalents
|
2.5
|
|
|
3.6
|
|
|
2.4
|
|
|
Diluted weighted-average shares outstanding
|
607.4
|
|
|
634.2
|
|
|
668.9
|
|
|
•
|
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. Further, these investments have no redemption restrictions, and redemptions can generally be done monthly or quarterly with required notice ranging from one to 45 days.
|
|
•
|
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 Company's 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.
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Settlement assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
574.5
|
|
|
$
|
712.5
|
|
|
Receivables from selling agents and Business Solutions customers
|
1,025.3
|
|
|
1,046.7
|
|
||
|
Investment securities
|
1,514.8
|
|
|
1,332.0
|
|
||
|
|
$
|
3,114.6
|
|
|
$
|
3,091.2
|
|
|
Settlement obligations:
|
|
|
|
||||
|
Money transfer, money order and payment service payables
|
$
|
2,297.1
|
|
|
$
|
2,242.3
|
|
|
Payables to agents
|
817.5
|
|
|
848.9
|
|
||
|
|
$
|
3,114.6
|
|
|
$
|
3,091.2
|
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Equipment
|
$
|
384.6
|
|
|
$
|
434.8
|
|
|
Buildings
|
80.0
|
|
|
80.1
|
|
||
|
Leasehold improvements
|
65.6
|
|
|
61.1
|
|
||
|
Furniture and fixtures
|
33.4
|
|
|
33.1
|
|
||
|
Land and improvements
|
16.9
|
|
|
16.9
|
|
||
|
Projects in process
|
0.1
|
|
|
1.8
|
|
||
|
|
580.6
|
|
|
627.8
|
|
||
|
Less accumulated depreciation
|
(384.5
|
)
|
|
(429.7
|
)
|
||
|
Property and equipment, net
|
$
|
196.1
|
|
|
$
|
198.1
|
|
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|||||||||||||||
|
|
|
Weighted-
Average
Amortization
Period
(in years)
|
|
Initial Cost
|
|
Net of
Accumulated
Amortization
|
|
Initial Cost
|
|
Net of
Accumulated
Amortization
|
|||||||||
|
Acquired contracts
|
|
11.3
|
|
$
|
627.2
|
|
|
$
|
466.2
|
|
|
$
|
629.5
|
|
|
$
|
526.5
|
|
|
|
Capitalized contract costs
|
|
6.1
|
|
457.2
|
|
|
303.7
|
|
|
399.1
|
|
|
213.8
|
|
|||||
|
Internal use software
|
|
3.2
|
|
221.0
|
|
|
54.7
|
|
|
197.4
|
|
|
61.0
|
|
|||||
|
Acquired trademarks
|
|
22.7
|
|
43.4
|
|
|
28.4
|
|
|
41.5
|
|
|
31.0
|
|
|||||
|
Projects in process
|
|
3.0
|
|
15.4
|
|
|
15.4
|
|
|
0.8
|
|
|
0.8
|
|
|||||
|
Other intangibles
|
|
2.7
|
|
34.4
|
|
|
10.5
|
|
|
41.6
|
|
|
14.3
|
|
|||||
|
Total other intangible assets
|
|
8.4
|
|
$
|
1,398.6
|
|
|
$
|
878.9
|
|
|
$
|
1,309.9
|
|
|
$
|
847.4
|
|
|
|
•
|
Cash Flow hedges - Changes 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, 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.”
|
|
•
|
Fair Value hedges - Changes 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.”
|
|
•
|
Undesignated - Derivative 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, 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 cross-currency Business Solutions payments operations. The duration of these derivative contracts at inception is generally less than one year. The Company aggregates its foreign exchange exposures in its cross-currency Business Solutions payments operations, including the exposure generated by the derivative contracts it 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.”
|
|
|
Travelex Global Business
Payments (b)
|
|
Finint S.r.l.
|
|
Angelo Costa
S.r.l.
|
||||||
|
Assets:
|
|
|
|
|
|
||||||
|
Cash and cash equivalents
|
$
|
30.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Settlement assets
|
160.4
|
|
|
52.2
|
|
|
46.3
|
|
|||
|
Property and equipment
|
5.1
|
|
|
0.5
|
|
|
3.0
|
|
|||
|
Goodwill
|
704.3
|
|
|
153.6
|
|
|
174.2
|
|
|||
|
Other intangible assets
|
314.2
|
|
|
64.8
|
|
|
51.4
|
|
|||
|
Other assets
|
45.3
|
|
|
2.0
|
|
|
1.5
|
|
|||
|
Total assets
|
$
|
1,260.0
|
|
|
$
|
273.1
|
|
|
$
|
276.4
|
|
|
|
|
|
|
|
|
||||||
|
Liabilities:
|
|
|
|
|
|
||||||
|
Accounts payable and accrued liabilities
|
$
|
49.6
|
|
|
$
|
6.1
|
|
|
$
|
10.8
|
|
|
Settlement obligations
|
160.4
|
|
|
57.5
|
|
|
55.7
|
|
|||
|
Income taxes payable
|
1.7
|
|
|
3.1
|
|
|
10.3
|
|
|||
|
Deferred tax liability, net
|
65.5
|
|
|
15.8
|
|
|
15.5
|
|
|||
|
Other liabilities
|
21.5
|
|
|
3.5
|
|
|
2.2
|
|
|||
|
Total liabilities
|
298.7
|
|
|
86.0
|
|
|
94.5
|
|
|||
|
Total consideration (a)
|
$
|
961.3
|
|
|
$
|
187.1
|
|
|
$
|
181.9
|
|
|
(a)
|
Total consideration includes cash consideration transferred and the revaluation of the Company's previous equity interest, if any, to fair value on the acquisition date.
|
|
(b)
|
Amounts include the impact of the acquisition of the French assets of TGBP on May 4, 2012 and the final working capital adjustment in the third quarter of 2012.
|
|
|
Travelex Global Business
Payments (a)
|
|
Finint S.r.l.
|
|
Angelo Costa
S.r.l.
|
||||||
|
Customer and other contractual relationships
|
$
|
264.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Network of subagents
|
—
|
|
|
53.9
|
|
|
44.6
|
|
|||
|
Other
|
49.7
|
|
|
10.9
|
|
|
6.8
|
|
|||
|
Total identifiable intangible assets
|
$
|
314.2
|
|
|
$
|
64.8
|
|
|
$
|
51.4
|
|
|
(a)
|
Amounts include the impact of the acquisition of the French assets of TGBP on May 4, 2012.
|
|
|
Consumer-to-Consumer
|
|
Consumer-to-Business
|
|
Business Solutions
|
|
Other
|
|
Total
|
||||||||||
|
January 1, 2011 balance
|
$
|
1,619.9
|
|
|
$
|
227.2
|
|
|
$
|
289.4
|
|
|
$
|
15.2
|
|
|
$
|
2,151.7
|
|
|
Acquisitions
|
325.4
|
|
|
—
|
|
|
728.7
|
|
|
—
|
|
|
1,054.1
|
|
|||||
|
Currency translation
|
—
|
|
|
(2.3
|
)
|
|
(4.4
|
)
|
|
(0.2
|
)
|
|
(6.9
|
)
|
|||||
|
December 31, 2011 balance
|
$
|
1,945.3
|
|
|
$
|
224.9
|
|
|
$
|
1,013.7
|
|
|
$
|
15.0
|
|
|
$
|
3,198.9
|
|
|
Purchase price adjustments
|
2.4
|
|
|
—
|
|
|
(24.4
|
)
|
|
—
|
|
|
(22.0
|
)
|
|||||
|
Currency translation
|
—
|
|
|
(3.8
|
)
|
|
6.7
|
|
(0.1
|
)
|
|
2.8
|
|||||||
|
December 31, 2012 balance
|
$
|
1,947.7
|
|
|
$
|
221.1
|
|
|
$
|
996.0
|
|
|
$
|
14.9
|
|
|
$
|
3,179.7
|
|
|
|
Severance,
Outplacement
and Related
Benefits
|
|
Other (b)
|
|
Total
|
||||||
|
Balance, January 1, 2012
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Expenses (a)
|
28.9
|
|
|
2.0
|
|
|
30.9
|
|
|||
|
Cash payments
|
(5.2
|
)
|
|
(0.4
|
)
|
|
(5.6
|
)
|
|||
|
Non-cash benefit (a)
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|||
|
Balance, December 31, 2012
|
$
|
25.7
|
|
|
$
|
1.6
|
|
|
$
|
27.3
|
|
|
|
|
|
|
|
|
||||||
|
Cumulative expenses incurred to date
|
$
|
28.9
|
|
|
$
|
2.0
|
|
|
$
|
30.9
|
|
|
Additional expenses expected to be incurred
|
12.0
|
|
|
33.0
|
|
|
45.0
|
|
|||
|
Total expenses
|
$
|
40.9
|
|
|
$
|
35.0
|
|
|
$
|
75.9
|
|
|
____________
|
|
|
|
|
|||||||
|
(a)
|
Expenses include a non-cash benefit for adjustments to stock compensation for awards forfeited by employees.
|
|
(b)
|
Other expenses related to the relocation of various operations to new and existing Company facilities and third-party providers including expenses for hiring, training, relocation, travel and professional fees. All such expenses were recorded when incurred.
|
|
|
Severance,
Outplacement
and Related
Benefits
|
|
Fixed Asset Write-Offs and Accelerated Depreciation
|
|
Lease Terminations
|
|
Other (b)
|
|
Total
|
||||||||||
|
Balance, January 1, 2010
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
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
|
|
|
Cash payments
|
(11.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(12.1
|
)
|
|||||
|
Balance, December 31, 2012
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.8
|
|
|
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 were recorded when incurred.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
|
Productivity and Cost-Savings Initiatives
|
|
Restructuring and Related Expenses
|
||||||||
|
Cost of services
|
$
|
5.5
|
|
|
$
|
10.6
|
|
|
$
|
15.0
|
|
|
Selling, general and administrative
|
25.4
|
|
|
36.2
|
|
|
44.5
|
|
|||
|
Total expenses, pre-tax
|
$
|
30.9
|
|
|
$
|
46.8
|
|
|
$
|
59.5
|
|
|
Total expenses, net of tax
|
$
|
20.2
|
|
|
$
|
32.0
|
|
|
$
|
39.3
|
|
|
Activity
|
|
Consumer-to-Consumer
|
|
Consumer-to-Business
|
|
Business Solutions
|
|
Other
|
|
Total
|
||||||||||
|
2010 Restructuring and Related Expenses
|
|
$
|
44.7
|
|
|
$
|
9.8
|
|
|
$
|
3.0
|
|
|
$
|
2.0
|
|
|
$
|
59.5
|
|
|
2011 Restructuring and Related Expenses
|
|
33.7
|
|
|
6.2
|
|
|
5.0
|
|
|
1.9
|
|
|
46.8
|
|
|||||
|
Total expenses
|
|
$
|
78.4
|
|
|
$
|
16.0
|
|
|
$
|
8.0
|
|
|
$
|
3.9
|
|
|
$
|
106.3
|
|
|
December 31, 2012
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net
Unrealized
Gains/ (Losses)
|
||||||||||
|
State and municipal debt securities (a)
|
$
|
991.5
|
|
|
$
|
1,003.7
|
|
|
$
|
12.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
12.2
|
|
|
State and municipal variable rate demand notes
|
463.3
|
|
|
463.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Corporate debt and other
|
47.7
|
|
|
47.8
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||||
|
|
$
|
1,502.5
|
|
|
$
|
1,514.8
|
|
|
$
|
12.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2011
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net
Unrealized
Gains/ (Losses)
|
||||||||||
|
State and municipal debt securities (a)
|
$
|
858.5
|
|
|
$
|
866.5
|
|
|
$
|
10.4
|
|
|
$
|
(2.4
|
)
|
|
$
|
8.0
|
|
|
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
|
)
|
|||||
|
|
$
|
1,324.1
|
|
|
$
|
1,332.0
|
|
|
$
|
11.0
|
|
|
$
|
(3.1
|
)
|
|
$
|
7.9
|
|
|
(a)
|
The majority of these securities are fixed rate instruments.
|
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
|
Due within 1 year
|
$
|
228.5
|
|
|
$
|
229.5
|
|
|
Due after 1 year through 5 years
|
785.0
|
|
|
795.9
|
|
||
|
Due after 5 years through 10 years
|
79.3
|
|
|
79.6
|
|
||
|
Due after 10 years
|
409.7
|
|
|
409.8
|
|
||
|
|
$
|
1,502.5
|
|
|
$
|
1,514.8
|
|
|
|
Fair Value Measurement Using
|
|
Assets/
Liabilities at
Fair
Value
|
||||||||||||
|
December 31, 2012
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
State and municipal debt securities
|
$
|
—
|
|
|
$
|
1,003.7
|
|
|
$
|
—
|
|
|
$
|
1,003.7
|
|
|
State and municipal variable rate demand notes
|
—
|
|
|
463.3
|
|
|
—
|
|
|
463.3
|
|
||||
|
Corporate debt and other
|
—
|
|
|
47.8
|
|
|
—
|
|
|
47.8
|
|
||||
|
Derivatives
|
—
|
|
|
96.8
|
|
|
—
|
|
|
96.8
|
|
||||
|
Total assets
|
$
|
—
|
|
|
$
|
1,611.6
|
|
|
$
|
—
|
|
|
$
|
1,611.6
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Notes and other borrowings
|
$
|
—
|
|
|
$
|
4,200.8
|
|
|
$
|
—
|
|
|
$
|
4,200.8
|
|
|
Derivatives
|
—
|
|
|
86.1
|
|
|
—
|
|
|
86.1
|
|
||||
|
Total liabilities
|
$
|
—
|
|
|
$
|
4,286.9
|
|
|
$
|
—
|
|
|
$
|
4,286.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fair Value Measurement Using
|
|
Assets/
Liabilities at
Fair
Value
|
||||||||||||
|
December 31, 2011
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
State and municipal debt securities
|
$
|
—
|
|
|
$
|
866.5
|
|
|
$
|
—
|
|
|
$
|
866.5
|
|
|
State and municipal variable rate demand notes
|
—
|
|
|
376.9
|
|
|
—
|
|
|
376.9
|
|
||||
|
Corporate debt and other
|
0.1
|
|
|
88.5
|
|
|
—
|
|
|
88.6
|
|
||||
|
Derivatives
|
—
|
|
|
124.8
|
|
|
—
|
|
|
124.8
|
|
||||
|
Total assets
|
$
|
0.1
|
|
|
$
|
1,456.7
|
|
|
$
|
—
|
|
|
$
|
1,456.8
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Commercial paper
|
$
|
—
|
|
|
$
|
297.0
|
|
|
$
|
—
|
|
|
$
|
297.0
|
|
|
Notes and other borrowings
|
—
|
|
|
3,563.5
|
|
|
—
|
|
|
3,563.5
|
|
||||
|
Total borrowings
|
—
|
|
|
3,860.5
|
|
|
—
|
|
|
3,860.5
|
|
||||
|
Derivatives
|
—
|
|
|
86.6
|
|
|
—
|
|
|
86.6
|
|
||||
|
Total liabilities
|
$
|
—
|
|
|
$
|
3,947.1
|
|
|
$
|
—
|
|
|
$
|
3,947.1
|
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Other assets:
|
|
|
|
||||
|
Derivatives
|
$
|
96.8
|
|
|
$
|
124.8
|
|
|
Prepaid expenses
|
56.9
|
|
|
54.5
|
|
||
|
Equity method investments
|
41.0
|
|
|
41.3
|
|
||
|
Amounts advanced to agents, net of discounts
|
37.7
|
|
|
34.1
|
|
||
|
Other receivables
|
21.4
|
|
|
37.6
|
|
||
|
Debt issue costs
|
17.3
|
|
|
15.8
|
|
||
|
Deferred customer set up costs
|
15.9
|
|
|
18.0
|
|
||
|
Accounts receivable, net
|
15.6
|
|
|
14.8
|
|
||
|
Other
|
17.3
|
|
|
22.5
|
|
||
|
Total other assets
|
$
|
319.9
|
|
|
$
|
363.4
|
|
|
Other liabilities:
|
|
|
|
||||
|
Pension obligations
|
$
|
102.1
|
|
|
$
|
112.7
|
|
|
Derivatives
|
86.1
|
|
|
86.6
|
|
||
|
Deferred revenue
|
30.5
|
|
|
33.6
|
|
||
|
Other
|
36.0
|
|
|
40.7
|
|
||
|
Total other liabilities
|
$
|
254.7
|
|
|
$
|
273.6
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Components of pre-tax income:
|
|
|
|
|
|
||||||
|
Domestic
|
$
|
94.8
|
|
|
$
|
423.9
|
|
|
$
|
151.4
|
|
|
Foreign
|
1,074.0
|
|
|
850.7
|
|
|
993.8
|
|
|||
|
|
$
|
1,168.8
|
|
|
$
|
1,274.6
|
|
|
$
|
1,145.2
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Federal
|
$
|
92.5
|
|
|
$
|
78.1
|
|
|
$
|
132.2
|
|
|
State and local
|
(14.8
|
)
|
|
4.5
|
|
|
39.8
|
|
|||
|
Foreign
|
65.2
|
|
|
26.6
|
|
|
63.3
|
|
|||
|
|
$
|
142.9
|
|
|
$
|
109.2
|
|
|
$
|
235.3
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2012
|
|
2011
|
|
2010
|
|||
|
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
State income taxes, net of federal income tax benefits
|
0.6
|
%
|
|
2.0
|
%
|
|
1.9
|
%
|
|
Foreign rate differential, net of U.S. tax paid on foreign earnings (5.1%, 1.2%, and 5.1%, respectively)
|
(22.5
|
)%
|
|
(14.0
|
)%
|
|
(12.0
|
)%
|
|
IRS Agreement
|
—
|
%
|
|
(16.1
|
)%
|
|
—
|
%
|
|
Other
|
(0.9
|
)%
|
|
1.7
|
%
|
|
(4.4
|
)%
|
|
Effective tax rate
|
12.2
|
%
|
|
8.6
|
%
|
|
20.5
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Current:
|
|
|
|
|
|
||||||
|
Federal
|
$
|
117.2
|
|
|
$
|
36.2
|
|
|
$
|
103.6
|
|
|
State and local
|
(2.5
|
)
|
|
0.6
|
|
|
30.1
|
|
|||
|
Foreign
|
63.4
|
|
|
51.2
|
|
|
73.0
|
|
|||
|
Total current taxes
|
178.1
|
|
|
88.0
|
|
|
206.7
|
|
|||
|
Deferred:
|
|
|
|
|
|
||||||
|
Federal
|
(24.7
|
)
|
|
41.9
|
|
|
28.6
|
|
|||
|
State and local
|
(12.3
|
)
|
|
3.9
|
|
|
9.7
|
|
|||
|
Foreign
|
1.8
|
|
|
(24.6
|
)
|
|
(9.7
|
)
|
|||
|
Total deferred taxes
|
(35.2
|
)
|
|
21.2
|
|
|
28.6
|
|
|||
|
|
$
|
142.9
|
|
|
$
|
109.2
|
|
|
$
|
235.3
|
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Deferred tax assets related to:
|
|
|
|
||||
|
Reserves, accrued expenses and employee-related items
|
$
|
65.7
|
|
|
$
|
40.6
|
|
|
Pension obligations
|
36.7
|
|
|
40.0
|
|
||
|
Tax attribute carryovers
|
4.2
|
|
|
11.9
|
|
||
|
Other
|
22.8
|
|
|
20.6
|
|
||
|
Total deferred tax assets
|
129.4
|
|
|
113.1
|
|
||
|
Deferred tax liabilities related to:
|
|
|
|
||||
|
Intangibles, property and equipment
|
481.5
|
|
|
502.8
|
|
||
|
Total deferred tax liabilities
|
481.5
|
|
|
502.8
|
|
||
|
Net deferred tax liability
|
$
|
352.1
|
|
|
$
|
389.7
|
|
|
|
2012
|
|
2011
|
||||
|
Balance as of January 1,
|
$
|
123.7
|
|
|
$
|
618.7
|
|
|
Increases - positions taken in current period (a)
|
13.1
|
|
|
143.1
|
|
||
|
Increases - positions taken in prior periods (b)
|
—
|
|
|
34.1
|
|
||
|
Increases - acquisitions
|
—
|
|
|
9.7
|
|
||
|
Decreases - positions taken in prior periods
|
(6.1
|
)
|
|
(27.9
|
)
|
||
|
Decreases - settlements with taxing authorities
|
(24.1
|
)
|
|
(650.9
|
)
|
||
|
Decreases - lapse of applicable statute of limitations
|
(3.4
|
)
|
|
(3.1
|
)
|
||
|
Balance as of December 31,
|
$
|
103.2
|
|
|
$
|
123.7
|
|
|
(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.
|
|
|
2012
|
|
2011
|
||||
|
Change in projected benefit obligation
|
|
|
|
||||
|
Projected benefit obligation as of January 1,
|
$
|
414.4
|
|
|
$
|
402.9
|
|
|
Interest cost
|
14.7
|
|
|
17.9
|
|
||
|
Actuarial loss
|
30.2
|
|
|
35.3
|
|
||
|
Benefits paid
|
(40.5
|
)
|
|
(41.7
|
)
|
||
|
Projected benefit obligation as of December 31,
|
$
|
418.8
|
|
|
$
|
414.4
|
|
|
Change in plan assets
|
|
|
|
||||
|
Fair value of plan assets as of January 1,
|
$
|
301.7
|
|
|
$
|
290.1
|
|
|
Actual return on plan assets
|
30.5
|
|
|
28.3
|
|
||
|
Benefits paid
|
(40.5
|
)
|
|
(41.7
|
)
|
||
|
Company contributions
|
25.0
|
|
|
25.0
|
|
||
|
Fair value of plan assets as of December 31,
|
316.7
|
|
|
301.7
|
|
||
|
Funded status of the plan as of December 31,
|
$
|
(102.1
|
)
|
|
$
|
(112.7
|
)
|
|
Accumulated benefit obligation as of December 31,
|
$
|
418.8
|
|
|
$
|
414.4
|
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Accrued benefit liability
|
$
|
(102.1
|
)
|
|
$
|
(112.7
|
)
|
|
Accumulated other comprehensive loss (pre-tax)
|
206.8
|
|
|
196.8
|
|
||
|
Net amount recognized
|
$
|
104.7
|
|
|
$
|
84.1
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Interest cost
|
$
|
14.7
|
|
|
$
|
17.9
|
|
|
$
|
20.1
|
|
|
Expected return on plan assets
|
(20.8
|
)
|
|
(21.3
|
)
|
|
(20.4
|
)
|
|||
|
Amortization of actuarial loss
|
10.5
|
|
|
8.1
|
|
|
6.2
|
|
|||
|
Net periodic benefit cost
|
$
|
4.4
|
|
|
$
|
4.7
|
|
|
$
|
5.9
|
|
|
|
2012
|
|
2011
|
||
|
Discount rate
|
3.03
|
%
|
|
3.72
|
%
|
|
|
2012
|
|
2011
|
|
2010
|
|||
|
Discount rate
|
3.72
|
%
|
|
4.69
|
%
|
|
5.30
|
%
|
|
Expected long-term return on plan assets
|
7.00
|
%
|
|
7.00
|
%
|
|
6.50
|
%
|
|
|
Percentage of Plan Assets
as of Measurement Date
|
||||
|
Asset Class
|
2012
|
|
2011
|
||
|
Equity investments
|
16
|
%
|
|
17
|
%
|
|
Debt securities
|
62
|
%
|
|
61
|
%
|
|
Alternative investments
|
22
|
%
|
|
22
|
%
|
|
|
Target Allocation
|
|
Equity investments
|
15%
|
|
Debt securities
|
60%
|
|
Alternative investments
|
25%
|
|
December 31, 2012
|
Fair Value Measurement Using
|
|
Total Assets
|
||||||||||||
|
Asset Class
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
at Fair Value
|
||||||||
|
Equity investments:
|
|
|
|
|
|
|
|
||||||||
|
Domestic
|
$
|
24.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24.2
|
|
|
International (a)
|
1.4
|
|
|
25.0
|
|
|
—
|
|
|
26.4
|
|
||||
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
|
Corporate debt (b)
|
—
|
|
|
131.4
|
|
|
—
|
|
|
131.4
|
|
||||
|
U.S. treasury bonds
|
52.3
|
|
|
—
|
|
|
—
|
|
|
52.3
|
|
||||
|
State and municipal debt securities
|
—
|
|
|
4.4
|
|
|
—
|
|
|
4.4
|
|
||||
|
Other
|
—
|
|
|
3.1
|
|
|
—
|
|
|
3.1
|
|
||||
|
Alternative investments:
|
|
|
|
|
|
|
|
||||||||
|
Hedge funds (c)
|
—
|
|
|
44.7
|
|
|
—
|
|
|
44.7
|
|
||||
|
Royalty rights and private equity (d)
|
—
|
|
|
—
|
|
|
23.8
|
|
|
23.8
|
|
||||
|
Total investments of the Trust at fair value
|
$
|
77.9
|
|
|
$
|
208.6
|
|
|
$
|
23.8
|
|
|
$
|
310.3
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
6.4
|
|
||||
|
Total investments of the Trust
|
$
|
77.9
|
|
|
$
|
208.6
|
|
|
$
|
23.8
|
|
|
$
|
316.7
|
|
|
December 31, 2011
|
Fair Value Measurement Using
|
|
Total Assets
|
||||||||||||
|
Asset Class
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
at Fair Value
|
||||||||
|
Equity investments:
|
|
|
|
|
|
|
|
||||||||
|
Domestic
|
$
|
28.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28.1
|
|
|
International
|
—
|
|
|
22.4
|
|
|
—
|
|
|
22.4
|
|
||||
|
Debt securities:
|
|
|
|
|
|
|
|
||||||||
|
Corporate debt (b)
|
—
|
|
|
134.1
|
|
|
—
|
|
|
134.1
|
|
||||
|
U.S. treasury bonds
|
39.8
|
|
|
—
|
|
|
—
|
|
|
39.8
|
|
||||
|
U.S. government agencies
|
—
|
|
|
4.7
|
|
|
—
|
|
|
4.7
|
|
||||
|
Other
|
—
|
|
|
3.0
|
|
|
—
|
|
|
3.0
|
|
||||
|
Alternative investments:
|
|
|
|
|
|
|
|
||||||||
|
Hedge funds (c)
|
—
|
|
|
52.8
|
|
|
—
|
|
|
52.8
|
|
||||
|
Royalty rights and private equity (d)
|
—
|
|
|
—
|
|
|
13.6
|
|
|
13.6
|
|
||||
|
Total investments of the Trust at fair value
|
$
|
67.9
|
|
|
$
|
217.0
|
|
|
$
|
13.6
|
|
|
$
|
298.5
|
|
|
Other assets
|
|
|
|
|
|
|
3.2
|
|
|||||||
|
Total investments of the Trust
|
$
|
67.9
|
|
|
$
|
217.0
|
|
|
$
|
13.6
|
|
|
$
|
301.7
|
|
|
(a)
|
Funds included herein have redemption frequencies of daily to monthly, with redemption notice periods of one to ten business days.
|
|
(b)
|
Substantially all corporate debt securities are investment grade securities.
|
|
(c)
|
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, and therefore are valued using the Net Asset Value (“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, 2012: commodities/currencies (24%), equity long/short (21%), global-macro (16%), relative value (16%), event driven (13%), and multi-strategy (10%). As of December 31, 2012, funds included herein had redemption frequencies of monthly to quarterly, with redemption notice periods of one to 45 days.
|
|
(d)
|
Diversified investments in royalty rights related to the sale of pharmaceutical products by third parties. Also included are private equity funds with a focus on venture capital. These investments are illiquid, with investment distributions expected to be received over the next five to seven years.
|
|
|
Royalty Rights
|
|
Private Equity
|
|
Total
|
||||||
|
Balance, January 1, 2011
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
1.3
|
|
|
Actual return on plan assets:
|
|
|
|
|
|
||||||
|
Relating to assets still held as of the reporting date
|
—
|
|
|
(0.8
|
)
|
|
(0.8
|
)
|
|||
|
Relating to assets sold during the period
|
—
|
|
|
0.9
|
|
|
0.9
|
|
|||
|
Net purchases and sales
|
11.4
|
|
|
0.8
|
|
|
12.2
|
|
|||
|
Balance, December 31, 2011
|
$
|
11.4
|
|
|
$
|
2.2
|
|
|
$
|
13.6
|
|
|
Actual return on plan assets:
|
|
|
|
|
|
||||||
|
Relating to assets still held as of the reporting date
|
1.6
|
|
|
0.1
|
|
|
1.7
|
|
|||
|
Relating to assets sold during the period
|
0.8
|
|
|
(0.1
|
)
|
|
0.7
|
|
|||
|
Net purchases and sales
|
7.6
|
|
|
0.2
|
|
|
7.8
|
|
|||
|
Balance, December 31, 2012
|
$
|
21.4
|
|
|
$
|
2.4
|
|
|
$
|
23.8
|
|
|
Year Ending December 31,
|
|
||
|
2013
|
$
|
40.3
|
|
|
2014
|
30.6
|
|
|
|
2015
|
24.8
|
|
|
|
2016
|
18.5
|
|
|
|
2017
|
14.4
|
|
|
|
Thereafter
|
21.1
|
|
|
|
Total future minimum lease payments
|
$
|
149.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Unrealized gains on investment securities
|
$
|
7.7
|
|
|
$
|
4.9
|
|
|
$
|
3.1
|
|
|
Unrealized gains/(losses) on hedging activities
|
(21.9
|
)
|
|
5.1
|
|
|
(21.9
|
)
|
|||
|
Foreign currency translation adjustment
|
(8.5
|
)
|
|
(6.3
|
)
|
|
(4.3
|
)
|
|||
|
Defined benefit pension liability adjustment
|
(129.9
|
)
|
|
(122.2
|
)
|
|
(109.7
|
)
|
|||
|
|
$
|
(152.6
|
)
|
|
$
|
(118.5
|
)
|
|
$
|
(132.8
|
)
|
|
Contracts not designated as hedges:
|
|
||
|
Euro
|
$
|
254.9
|
|
|
Canadian dollar
|
47.3
|
|
|
|
British pound
|
40.8
|
|
|
|
Other
|
179.8
|
|
|
|
Contracts designated as hedges:
|
|
||
|
Euro
|
$
|
485.2
|
|
|
Canadian dollar
|
126.7
|
|
|
|
British pound
|
95.6
|
|
|
|
Australian dollar
|
48.1
|
|
|
|
Other
|
83.3
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
|
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
|
|
Balance Sheet
Location
|
|
December 31,
2012 |
|
December 31,
2011 |
|
Balance Sheet
Location
|
|
December 31,
2012 |
|
December 31,
2011 |
||||||||
|
Derivatives — hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest rate fair value hedges — Corporate
|
Other assets
|
|
$
|
13.1
|
|
|
$
|
4.4
|
|
|
Other liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Foreign currency cash flow hedges — Consumer-to-Consumer
|
Other assets
|
|
10.8
|
|
|
37.0
|
|
|
Other liabilities
|
|
17.6
|
|
|
6.6
|
|
||||
|
Total
|
|
|
$
|
23.9
|
|
|
$
|
41.4
|
|
|
|
|
$
|
17.6
|
|
|
$
|
6.6
|
|
|
Derivatives — undesignated:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency — Business Solutions
|
Other assets
|
|
$
|
71.9
|
|
|
$
|
79.8
|
|
|
Other liabilities
|
|
$
|
66.5
|
|
|
$
|
67.6
|
|
|
Foreign currency — Consumer-to-Consumer
|
Other assets
|
|
1.0
|
|
|
3.6
|
|
|
Other liabilities
|
|
2.0
|
|
|
12.4
|
|
||||
|
Total
|
|
|
$
|
72.9
|
|
|
$
|
83.4
|
|
|
|
|
$
|
68.5
|
|
|
$
|
80.0
|
|
|
Total derivatives
|
|
|
$
|
96.8
|
|
|
$
|
124.8
|
|
|
|
|
$
|
86.1
|
|
|
$
|
86.6
|
|
|
|
Total
|
|
2013
|
|
2014
|
|
Thereafter
|
||||||||
|
Foreign currency cash flow hedges — Consumer-to-Consumer
|
$
|
(6.8
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(5.0
|
)
|
|
$
|
—
|
|
|
Foreign currency undesignated hedges — Consumer-to-Consumer
|
(1.0
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
||||
|
Foreign currency undesignated hedges — Business Solutions
|
5.4
|
|
|
5.4
|
|
|
—
|
|
|
—
|
|
||||
|
Interest rate fair value hedges — Corporate
|
13.1
|
|
|
—
|
|
|
12.9
|
|
|
0.2
|
|
||||
|
Total
|
$
|
10.7
|
|
|
$
|
2.6
|
|
|
$
|
7.9
|
|
|
$
|
0.2
|
|
|
|
|
Gain/(Loss) Recognized in Income on
Derivatives
|
|
|
|
Gain/(Loss) Recognized in Income on
Related Hedged Item (a)
|
||||||||||||||||||||||||
|
|
|
Income
Statement
Location
|
|
Amount
|
|
|
|
Income
Statement
Location
|
|
Amount
|
||||||||||||||||||||
|
Derivatives
|
|
|
2012
|
|
2011
|
|
2010
|
|
Hedged Item
|
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||||
|
Interest rate contracts
|
|
Interest expense
|
|
$
|
3.9
|
|
|
$
|
11.8
|
|
|
$
|
13.3
|
|
|
Fixed-rate debt
|
|
Interest expense
|
|
$
|
3.7
|
|
|
$
|
12.6
|
|
|
$
|
10.5
|
|
|
Total gain
|
|
|
|
$
|
3.9
|
|
|
$
|
11.8
|
|
|
$
|
13.3
|
|
|
|
|
|
|
$
|
3.7
|
|
|
$
|
12.6
|
|
|
$
|
10.5
|
|
|
|
|
Gain/(Loss) Recognized
|
|
Gain/(Loss) Reclassified
|
|
Gain/(Loss) Recognized in Income on
|
||||||||||||||||||||||||||||||||||
|
|
|
in OCI on Derivatives
|
|
from Accumulated OCI into Income
|
|
Derivatives (Ineffective Portion and Amount
|
||||||||||||||||||||||||||||||||||
|
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
Excluded from Effectiveness Testing) (b)
|
||||||||||||||||||||||||||||||||||
|
|
|
Amount
|
|
Income
Statement Location
|
|
Amount
|
|
Income
Statement Location
|
|
Amount
|
||||||||||||||||||||||||||||||
|
Derivatives
|
|
2012
|
|
2011
|
|
2010
|
|
|
2012
|
|
2011
|
|
2010
|
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||||||||||
|
Foreign currency contracts
|
|
$
|
(20.1
|
)
|
|
$
|
16.4
|
|
|
$
|
20.0
|
|
|
Revenue
|
|
$
|
13.4
|
|
|
$
|
(30.3
|
)
|
|
$
|
24.5
|
|
|
Derivative
gains/(losses), net |
|
$
|
(0.1
|
)
|
|
$
|
(10.2
|
)
|
|
$
|
(1.5
|
)
|
|
Interest rate contracts (c)
|
|
—
|
|
|
(21.6
|
)
|
|
(4.2
|
)
|
|
Interest expense
|
|
(3.6
|
)
|
|
(2.7
|
)
|
|
(1.5
|
)
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||||||
|
Total gain/(loss)
|
|
$
|
(20.1
|
)
|
|
$
|
(5.2
|
)
|
|
$
|
15.8
|
|
|
|
|
$
|
9.8
|
|
|
$
|
(33.0
|
)
|
|
$
|
23.0
|
|
|
|
|
$
|
(0.1
|
)
|
|
$
|
(10.2
|
)
|
|
$
|
(1.6
|
)
|
|
|
|
Gain/(Loss) Recognized in Income on Derivatives (d)
|
||||||||||||
|
|
|
Income Statement Location
|
|
Amount
|
||||||||||
|
Derivatives
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Foreign currency contracts (e)
|
Selling, general and administrative
|
|
$
|
(10.6
|
)
|
|
$
|
5.9
|
|
|
$
|
(1.0
|
)
|
|
|
Foreign currency contracts (f)
|
Derivative gains/(losses), net
|
|
0.6
|
|
|
21.9
|
|
|
0.6
|
|
||||
|
Total gain/(loss)
|
|
|
$
|
(10.0
|
)
|
|
$
|
27.8
|
|
|
$
|
(0.4
|
)
|
|
|
(a)
|
The 2012 gain of
$3.7 million
was comprised of a loss in value on the debt of
$3.9 million
and amortization of hedge accounting adjustments of
$7.6 million
. The 2011 gain of
$12.6 million
was 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
was comprised of a loss in value on the debt of
$13.3 million
and amortization of hedge accounting adjustments of
$23.8 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 derivative’s fair value in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” in the Consolidated Statements of Income over the life of the related notes.
|
|
(d)
|
The Company uses foreign currency forward and option contracts as part of its Business Solutions 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
$7.8 million
,
$(20.5) million
and
$(2.5) million
for the years ended
2012
,
2011
and
2010
, respectively.
|
|
(f)
|
The derivative contracts used in the Company’s 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 “Derivatives gains/(losses), net.”
|
|
|
December 31, 2012
|
|
December 31, 2011
|
||||
|
Due in less than one year:
|
|
|
|
||||
|
Commercial paper
|
$
|
—
|
|
|
$
|
297.0
|
|
|
Floating rate notes (effective rate of 0.9%) due 2013
|
300.0
|
|
|
300.0
|
|
||
|
Due in greater than one year (a):
|
|
|
|
||||
|
6.500% notes (effective rate of 5.6%) due 2014
|
500.0
|
|
|
500.0
|
|
||
|
2.375% notes (effective rate of 2.4%) due 2015 (b)
|
250.0
|
|
|
—
|
|
||
|
5.930% notes due 2016 (c)
|
1,000.0
|
|
|
1,000.0
|
|
||
|
2.875% notes (effective rate of 3.0%) due 2017 (b)
|
500.0
|
|
|
—
|
|
||
|
3.650% notes (effective rate of 4.4%) due 2018
|
400.0
|
|
|
400.0
|
|
||
|
5.253% notes due 2020 (c)
|
324.9
|
|
|
324.9
|
|
||
|
6.200% notes due 2036 (c)
|
500.0
|
|
|
500.0
|
|
||
|
6.200% notes due 2040 (c)
|
250.0
|
|
|
250.0
|
|
||
|
Other borrowings
|
5.8
|
|
|
8.8
|
|
||
|
Total borrowings at par value
|
4,030.7
|
|
|
3,580.7
|
|
||
|
Fair value hedge accounting adjustments, net (a)
|
20.2
|
|
|
23.9
|
|
||
|
Unamortized discount, net
|
(21.7
|
)
|
|
(21.4
|
)
|
||
|
Total borrowings at carrying value (d)
|
$
|
4,029.2
|
|
|
$
|
3,583.2
|
|
|
(a)
|
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” in the Consolidated Statements of Income over the life of the related notes, and cause the effective rate of i
nterest to differ from the notes’ stated rate.
|
|
(b)
|
On December 10, 2012, the Company issued
$250.0 million
of aggregate principal amount of
2.375%
unsecured fixed rate notes due 2015 (“2015 Notes”) and
$500.0 million
of aggregate principal amount of
2.875%
unsecured fixed rate notes due 2017 (“2017 Notes”). The interest rate on the 2015 Notes and 2017 Notes may be adjusted under certain circumstances as described below.
|
|
(c)
|
The difference between the stated interest rate and the effective interest rate is not significant.
|
|
(d)
|
As of
December 31, 2012
, the Company's weighted-average effective rate on total borrowings was approximately
4.8%
.
|
|
|
Year Ended December 31, 2012
|
||||||||||||
|
|
Options
|
|
Weighted-Average
Exercise Price
|
|
Weighted-Average Remaining
Contractual Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
||||||
|
Outstanding as of January 1
|
30.7
|
|
|
$
|
19.05
|
|
|
|
|
|
|||
|
Granted
|
2.7
|
|
|
17.85
|
|
|
|
|
|
||||
|
Exercised
|
(3.0
|
)
|
|
17.15
|
|
|
|
|
|
||||
|
Cancelled/forfeited
|
(3.4
|
)
|
|
24.45
|
|
|
|
|
|
||||
|
Outstanding as of December 31
|
27.0
|
|
|
$
|
18.46
|
|
|
4.2
|
|
|
$
|
2.9
|
|
|
Options exercisable as of December 31
|
22.4
|
|
|
$
|
18.69
|
|
|
3.3
|
|
|
$
|
2.1
|
|
|
|
Year Ended December 31, 2012
|
||||
|
|
Number
Outstanding
|
|
Weighted-Average
Grant-Date Fair Value
|
||
|
Non-vested as of January 1
|
3.9
|
|
$
|
16.85
|
|
|
Granted
|
2.7
|
|
16.68
|
|
|
|
Vested
|
(1.0)
|
|
13.38
|
|
|
|
Forfeited
|
(0.8)
|
|
17.24
|
|
|
|
Non-vested as of December 31
|
4.8
|
|
$
|
17.38
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Stock-based compensation expense
|
$
|
(34.0
|
)
|
|
$
|
(31.2
|
)
|
|
$
|
(35.9
|
)
|
|
Income tax benefit from stock-based compensation expense
|
10.0
|
|
|
9.8
|
|
|
11.6
|
|
|||
|
Net income impact
|
$
|
(24.0
|
)
|
|
$
|
(21.4
|
)
|
|
$
|
(24.3
|
)
|
|
Earnings per share:
|
|
|
|
|
|
||||||
|
Basic and Diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Stock options granted:
|
|
|
|
|
|
||||||
|
Weighted-average risk-free interest rate
|
1.2
|
%
|
|
2.5
|
%
|
|
2.7
|
%
|
|||
|
Weighted-average dividend yield
|
1.8
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
|||
|
Volatility
|
33.2
|
%
|
|
31.0
|
%
|
|
33.9
|
%
|
|||
|
Expected term (in years)
|
6.09
|
|
|
5.80
|
|
|
5.80
|
|
|||
|
Weighted-average grant date fair value
|
$
|
4.90
|
|
|
$
|
5.99
|
|
|
$
|
5.12
|
|
|
•
|
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.
|
|
•
|
Costs incurred for the investigation and closing of acquisitions are included in “Other.”
|
|
•
|
There were no restructuring and related expenses incurred during the year ended December 31, 2012, but the Company incurred expenses of
$46.8 million
and
$59.5 million
for the years ended
December 31, 2011
and
2010
, respectively. These expenses were not allocated to the Company's segments. While these items were identifiable to the Company's 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 Note 4.
|
|
•
|
All items not included in operating income are excluded from the segments.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Revenues:
|
|
|
|
|
|
||||||
|
Consumer-to-Consumer:
|
|
|
|
|
|
||||||
|
Transaction fees
|
$
|
3,545.6
|
|
|
$
|
3,580.2
|
|
|
$
|
3,434.3
|
|
|
Foreign exchange revenues
|
988.5
|
|
|
983.1
|
|
|
905.8
|
|
|||
|
Other revenues
|
50.2
|
|
|
45.1
|
|
|
43.3
|
|
|||
|
|
4,584.3
|
|
|
4,608.4
|
|
|
4,383.4
|
|
|||
|
Consumer-to-Business:
|
|
|
|
|
|
||||||
|
Transaction fees
|
573.6
|
|
|
581.8
|
|
|
576.5
|
|
|||
|
Foreign exchange revenues
|
3.4
|
|
|
5.7
|
|
|
3.6
|
|
|||
|
Other revenues
|
26.9
|
|
|
28.4
|
|
|
30.6
|
|
|||
|
|
603.9
|
|
|
615.9
|
|
|
610.7
|
|
|||
|
Business Solutions:
|
|
|
|
|
|
||||||
|
Transaction fees
|
34.9
|
|
|
5.9
|
|
|
1.3
|
|
|||
|
Foreign exchange revenues
|
332.0
|
|
|
154.6
|
|
|
105.0
|
|
|||
|
Other revenues
|
0.5
|
|
|
0.6
|
|
|
0.4
|
|
|||
|
|
367.4
|
|
|
161.1
|
|
|
106.7
|
|
|||
|
Other:
|
|
|
|
|
|
||||||
|
Total revenues
|
109.2
|
|
|
106.0
|
|
|
91.9
|
|
|||
|
|
109.2
|
|
|
106.0
|
|
|
91.9
|
|
|||
|
Total consolidated revenues
|
$
|
5,664.8
|
|
|
$
|
5,491.4
|
|
|
$
|
5,192.7
|
|
|
Operating income/(loss):
|
|
|
|
|
|
||||||
|
Consumer-to-Consumer
|
$
|
1,266.9
|
|
|
$
|
1,316.0
|
|
|
$
|
1,243.3
|
|
|
Consumer-to-Business
|
137.6
|
|
|
146.9
|
|
|
146.2
|
|
|||
|
Business Solutions (a)
|
(54.8
|
)
|
|
(9.6
|
)
|
|
(24.2
|
)
|
|||
|
Other
|
(19.7
|
)
|
|
(21.5
|
)
|
|
(5.7
|
)
|
|||
|
Total segment operating income
|
1,330.0
|
|
|
1,431.8
|
|
|
1,359.6
|
|
|||
|
Restructuring and related expenses (Note 4)
|
—
|
|
|
(46.8
|
)
|
|
(59.5
|
)
|
|||
|
Total consolidated operating income
|
$
|
1,330.0
|
|
|
$
|
1,385.0
|
|
|
$
|
1,300.1
|
|
|
|
|
|
|
|
|
||||||
|
(a)
|
During the years ended
December 31, 2012
and 2011, the Company incurred
$42.8 million
and
$4.8 million
, respectively, of integration expenses related to the acquisition of TGBP. There were no TGBP integration expenses incurred during the year ended December 31, 2010. TGBP integration expense consists primarily of severance and other benefits, retention, direct and incremental expense consisting of facility relocation, consolidation and closures; IT systems integration; amortization of a transitional trademark license; and other expenses such as training, travel and professional fees. Integration expense does not include costs related to the completion of the TGBP acquisition, which are included in Other.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Assets:
|
|
|
|
|
|
||||||
|
Consumer-to-Consumer
|
$
|
4,854.2
|
|
|
$
|
4,644.6
|
|
|
$
|
5,014.3
|
|
|
Consumer-to-Business
|
1,029.6
|
|
|
955.8
|
|
|
730.1
|
|
|||
|
Business Solutions
|
2,012.6
|
|
|
1,906.2
|
|
|
718.5
|
|
|||
|
Other
|
1,569.3
|
|
|
1,563.3
|
|
|
1,466.3
|
|
|||
|
Total assets
|
$
|
9,465.7
|
|
|
$
|
9,069.9
|
|
|
$
|
7,929.2
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization:
|
|
|
|
|
|
||||||
|
Consumer-to-Consumer
|
$
|
158.2
|
|
|
$
|
141.0
|
|
|
$
|
130.5
|
|
|
Consumer-to-Business
|
14.7
|
|
|
18.8
|
|
|
18.3
|
|
|||
|
Business Solutions
|
65.7
|
|
|
26.8
|
|
|
17.7
|
|
|||
|
Other
|
7.5
|
|
|
4.7
|
|
|
8.5
|
|
|||
|
Total segment depreciation and amortization
|
246.1
|
|
|
191.3
|
|
|
175.0
|
|
|||
|
Restructuring and related expenses (Note 4)
|
—
|
|
|
1.3
|
|
|
0.9
|
|
|||
|
Total consolidated depreciation and amortization
|
$
|
246.1
|
|
|
$
|
192.6
|
|
|
$
|
175.9
|
|
|
|
|
|
|
|
|
||||||
|
Capital expenditures:
|
|
|
|
|
|
||||||
|
Consumer-to-Consumer
|
$
|
219.1
|
|
|
$
|
138.4
|
|
|
$
|
85.3
|
|
|
Consumer-to-Business
|
21.8
|
|
|
13.4
|
|
|
17.5
|
|
|||
|
Business Solutions
|
16.1
|
|
|
6.7
|
|
|
4.0
|
|
|||
|
Other
|
11.2
|
|
|
4.0
|
|
|
6.9
|
|
|||
|
Total capital expenditures
|
$
|
268.2
|
|
|
$
|
162.5
|
|
|
$
|
113.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Revenue:
|
|
|
|
|
|
||||||
|
United States
|
$
|
1,593.1
|
|
|
$
|
1,568.6
|
|
|
$
|
1,516.0
|
|
|
International
|
4,071.7
|
|
|
3,922.8
|
|
|
3,676.7
|
|
|||
|
Total
|
$
|
5,664.8
|
|
|
$
|
5,491.4
|
|
|
$
|
5,192.7
|
|
|
Long-lived assets:
|
|
|
|
|
|
||||||
|
United States
|
$
|
148.2
|
|
|
$
|
152.1
|
|
|
$
|
159.4
|
|
|
International
|
47.9
|
|
|
46.0
|
|
|
37.1
|
|
|||
|
Total
|
$
|
196.1
|
|
|
$
|
198.1
|
|
|
$
|
196.5
|
|
|
2012 by Quarter:
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year Ended December 31, 2012
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Revenues
|
$
|
1,393.4
|
|
|
$
|
1,425.1
|
|
|
$
|
1,421.6
|
|
|
$
|
1,424.7
|
|
|
$
|
5,664.8
|
|
|
|
Expenses (a) (b)
|
1,060.9
|
|
|
1,079.2
|
|
|
1,056.0
|
|
|
1,138.7
|
|
|
4,334.8
|
|
||||||
|
Operating income
|
332.5
|
|
|
345.9
|
|
|
365.6
|
|
|
286.0
|
|
|
1,330.0
|
|
||||||
|
Other expense, net
|
42.4
|
|
|
35.8
|
|
|
41.8
|
|
|
41.2
|
|
|
161.2
|
|
||||||
|
Income before income taxes
|
290.1
|
|
|
310.1
|
|
|
323.8
|
|
|
244.8
|
|
|
1,168.8
|
|
||||||
|
Provision for income taxes
|
42.8
|
|
|
38.9
|
|
|
54.3
|
|
|
6.9
|
|
|
142.9
|
|
||||||
|
Net income
|
$
|
247.3
|
|
|
$
|
271.2
|
|
|
$
|
269.5
|
|
|
$
|
237.9
|
|
|
$
|
1,025.9
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Basic
|
$
|
0.40
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.40
|
|
|
$
|
1.70
|
|
|
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.40
|
|
|
$
|
1.69
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Basic
|
619.1
|
|
|
610.9
|
|
|
601.5
|
|
|
588.0
|
|
|
604.9
|
|
||||||
|
Diluted
|
621.9
|
|
|
613.1
|
|
|
604.2
|
|
|
590.2
|
|
|
607.4
|
|
||||||
|
____________
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(a)
|
Includes
$6.4 million
in the first quarter,
$14.5 million
in the second quarter,
$10.3 million
in the third quarter, and
$11.6 million
in the fourth quarter of integration expenses related to the acquisition of TGBP.
|
|
(b)
|
Includes
$30.9 million
in the fourth quarter of expenses related to productivity and cost-savings initiatives. For more information, see Note 4.
|
|
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
|
|
|
$
|
5,491.4
|
|
|
|
Expenses (c) (d)
|
970.1
|
|
|
1,015.6
|
|
|
1,047.8
|
|
|
1,072.9
|
|
|
4,106.4
|
|
||||||
|
Operating income
|
312.9
|
|
|
350.7
|
|
|
363.0
|
|
|
358.4
|
|
|
1,385.0
|
|
||||||
|
Other expense, net (e)
|
38.2
|
|
|
17.3
|
|
|
49.1
|
|
|
5.8
|
|
|
110.4
|
|
||||||
|
Income before income taxes
|
274.7
|
|
|
333.4
|
|
|
313.9
|
|
|
352.6
|
|
|
1,274.6
|
|
||||||
|
Provision for/(benefit from) income taxes (f)
|
64.5
|
|
|
70.2
|
|
|
74.2
|
|
|
(99.7
|
)
|
|
109.2
|
|
||||||
|
Net income
|
$
|
210.2
|
|
|
$
|
263.2
|
|
|
$
|
239.7
|
|
|
$
|
452.3
|
|
|
$
|
1,165.4
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Basic
|
$
|
0.32
|
|
|
$
|
0.42
|
|
|
$
|
0.38
|
|
|
$
|
0.73
|
|
|
$
|
1.85
|
|
|
|
Diluted
|
$
|
0.32
|
|
|
$
|
0.41
|
|
|
$
|
0.38
|
|
|
$
|
0.73
|
|
|
$
|
1.84
|
|
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Basic
|
646.9
|
|
|
631.1
|
|
|
624.9
|
|
|
619.4
|
|
|
630.6
|
|
||||||
|
Diluted
|
652.1
|
|
|
635.8
|
|
|
627.1
|
|
|
621.7
|
|
|
634.2
|
|
||||||
|
____________
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(c)
|
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.
|
|
(d)
|
Includes
$4.8 million
in the fourth quarter of integration expenses related to the acquisition of TGBP.
|
|
(e)
|
The second quarter includes a gain of $29.4 million, recognized in connection with the remeasurement of the Company's 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 Company's former equity interest in Finint to fair value.
|
|
(f)
|
In December 2011, the Company reached an agreement with the IRS resolving substantially all of the issues related to the Company's 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.
|
|
|
December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
|
Assets
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
383.7
|
|
|
$
|
1.1
|
|
|
Property and equipment, net of accumulated depreciation of $14.4 and $12.3, respectively
|
33.6
|
|
|
32.6
|
|
||
|
Income tax deposit
|
—
|
|
|
250.0
|
|
||
|
Other assets
|
68.4
|
|
|
55.9
|
|
||
|
Investment in subsidiaries
|
5,420.3
|
|
|
4,708.8
|
|
||
|
Total assets
|
$
|
5,906.0
|
|
|
$
|
5,048.4
|
|
|
|
|
|
|
||||
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
|
Liabilities:
|
|
|
|
||||
|
Accounts payable and accrued liabilities
|
$
|
79.3
|
|
|
$
|
72.0
|
|
|
Income taxes payable
|
88.3
|
|
|
406.1
|
|
||
|
Payable to subsidiaries, net
|
773.5
|
|
|
99.7
|
|
||
|
Borrowings
|
4,023.4
|
|
|
3,574.4
|
|
||
|
Other liabilities
|
0.9
|
|
|
1.4
|
|
||
|
Total liabilities
|
4,965.4
|
|
|
4,153.6
|
|
||
|
Stockholders' equity:
|
|
|
|
||||
|
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
|
—
|
|
|
—
|
|
||
|
Common stock, $0.01 par value; 2,000 shares authorized; 572.1 shares and 619.4 shares issued and outstanding as of December 31, 2012 and 2011, respectively
|
5.7
|
|
|
6.2
|
|
||
|
Capital surplus
|
332.8
|
|
|
247.1
|
|
||
|
Retained earnings
|
754.7
|
|
|
760.0
|
|
||
|
Accumulated other comprehensive loss
|
(152.6
|
)
|
|
(118.5
|
)
|
||
|
Total stockholders' equity
|
940.6
|
|
|
894.8
|
|
||
|
Total liabilities and stockholders' equity
|
$
|
5,906.0
|
|
|
$
|
5,048.4
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Expenses
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Operating income
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Interest income
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
|||
|
Interest expense
|
(178.6
|
)
|
|
(181.0
|
)
|
|
(168.7
|
)
|
|||
|
Other expense
|
—
|
|
|
(0.1
|
)
|
|
(3.3
|
)
|
|||
|
Loss before equity in earnings of affiliates and income taxes
|
(178.4
|
)
|
|
(181.0
|
)
|
|
(171.8
|
)
|
|||
|
Equity in earnings of affiliates, net of tax
|
1,136.1
|
|
|
1,276.7
|
|
|
1,012.5
|
|
|||
|
Income tax benefit
|
68.2
|
|
|
69.7
|
|
|
69.2
|
|
|||
|
Net income
|
1,025.9
|
|
|
1,165.4
|
|
|
909.9
|
|
|||
|
Other comprehensive income/(loss), net of tax
|
2.0
|
|
|
(11.7
|
)
|
|
(1.6
|
)
|
|||
|
Other comprehensive income/(loss) of affiliates, net of tax
|
(36.1
|
)
|
|
26.0
|
|
|
(3.9
|
)
|
|||
|
Comprehensive income
|
$
|
991.8
|
|
|
$
|
1,179.7
|
|
|
$
|
904.4
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
|
Cash flows from operating activities
|
|
|
|
|
|
||||||
|
Net cash provided by operating activities
|
$
|
228.3
|
|
|
$
|
698.1
|
|
|
$
|
631.6
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
||||||
|
Purchases of property and equipment
|
(3.3
|
)
|
|
(4.2
|
)
|
|
—
|
|
|||
|
Net cash used in investing activities
|
(3.3
|
)
|
|
(4.2
|
)
|
|
—
|
|
|||
|
Cash flows from financing activities
|
|
|
|
|
|
||||||
|
Advances from/(to) subsidiaries, net
|
679.1
|
|
|
(180.9
|
)
|
|
(112.7
|
)
|
|||
|
Net proceeds from issuance of borrowings
|
742.8
|
|
|
696.3
|
|
|
247.0
|
|
|||
|
Principal payments on borrowings
|
—
|
|
|
(696.3
|
)
|
|
—
|
|
|||
|
Net (repayments of)/proceeds from commercial paper
|
(297.0
|
)
|
|
297.0
|
|
|
—
|
|
|||
|
Proceeds from exercise of options
|
53.4
|
|
|
100.0
|
|
|
42.1
|
|
|||
|
Cash dividends paid
|
(254.2
|
)
|
|
(194.2
|
)
|
|
(165.3
|
)
|
|||
|
Common stock repurchased
|
(766.5
|
)
|
|
(803.9
|
)
|
|
(581.4
|
)
|
|||
|
Net cash provided by/(used in) financing activities
|
157.6
|
|
|
(782.0
|
)
|
|
(570.3
|
)
|
|||
|
Net change in cash and cash equivalents
|
382.6
|
|
|
(88.1
|
)
|
|
61.3
|
|
|||
|
Cash and cash equivalents at beginning of year
|
1.1
|
|
|
89.2
|
|
|
27.9
|
|
|||
|
Cash and cash equivalents at end of year
|
$
|
383.7
|
|
|
$
|
1.1
|
|
|
$
|
89.2
|
|
|
|
The Western Union Company (Registrant)
|
||
|
|
|
||
|
February 22, 2013
|
By:
|
|
/
S
/ H
IKMET
E
RSEK
|
|
|
|
|
Hikmet Ersek
|
|
|
|
|
President and Chief Executive Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Hikmet Ersek
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
February 22, 2013
|
|
Hikmet Ersek
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Scott T. Scheirman
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
February 22, 2013
|
|
Scott T. Scheirman
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Amintore T.X. Schenkel
|
|
Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
|
|
February 22, 2013
|
|
Amintore T.X. Schenkel
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jack M. Greenberg
|
|
Non-Executive Chairman of the Board of Directors
|
|
February 22, 2013
|
|
Jack M. Greenberg
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Dinyar S. Devitre
|
|
Director
|
|
February 22, 2013
|
|
Dinyar S. Devitre
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Richard A. Goodman
|
|
Director
|
|
February 22, 2013
|
|
Richard A. Goodman
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Betsy D. Holden
|
|
Director
|
|
February 22, 2013
|
|
Betsy D. Holden
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Linda Fayne Levinson
|
|
Director
|
|
February 22, 2013
|
|
Linda Fayne Levinson
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Roberto G. Mendoza
|
|
Director
|
|
February 22, 2013
|
|
Roberto G. Mendoza
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael A. Miles, Jr.
|
|
Director
|
|
February 22, 2013
|
|
Michael A. Miles, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Wulf von Schimmelmann
|
|
Director
|
|
February 22, 2013
|
|
Wulf von Schimmelmann
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Solomon D. Trujillo
|
|
Director
|
|
February 22, 2013
|
|
Solomon D. Trujillo
|
|
|
|
|
|
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 Company’s 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, as filed with the Secretary of State of the State of Delaware on May 23, 2012 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 25, 2012 and incorporated herein by reference thereto).
|
|
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of The Western Union Company, as amended as of May 23, 2012 (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 25, 2012 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s Registration Statement on Form S-4 filed on August 5, 2010 and incorporated herein by reference thereto).
|
|
|
|
|
|
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 Company’s 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 Company’s 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 Company’s Current Report on Form 8-K filed on August 22, 2011 and incorporated herein by reference thereto).
|
|
|
|
|
|
4.16
|
|
Form of 2.375% Note due 2015 (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on December 11, 2012 and incorporated herein by reference thereto).
|
|
|
|
|
|
4.17
|
|
Form of 2.875% Note due 2017 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on December 11, 2012 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 on February 23, 2012 and ratified by the Company's stockholders on May 23, 2012 and as further amended and restated on July 19, 2012 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 2, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
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 Company’s 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 Company’s 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 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K filed on February 24, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.11
|
|
The Western Union Company Senior Executive Annual Incentive Plan, as Amended and Restated Effective February 23, 2012 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 1, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.12
|
|
The Western Union Company Supplemental Incentive Savings Plan, as Amended and Restated Effective November 30, 2012.*
|
|
|
|
|
|
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 Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.14
|
|
Form of Unrestricted Stock Unit 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 10.15 to the Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s 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 Company’s Quarterly Report on Form 10-Q filed on May 6, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.20
|
|
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 Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.21
|
|
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 Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.22
|
|
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 Company’s Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.23
|
|
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 Company’s 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 First Data Corporation 1992 Long-Term Incentive Plan (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.25
|
|
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 Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.26
|
|
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 Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.27
|
|
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 Company’s Annual Report on Form 10-K filed on February 25, 2011 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.28
|
|
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 Company’s Annual Report on Form 10-K filed on February 25, 2011 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.29
|
|
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 Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.30
|
|
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 Company’s 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 (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 Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.32
|
|
Form of 2010 Cash Performance Grant Award Agreement for Executive Committee Members (filed as Exhibit 10.33 to the Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.33
|
|
Form of Award Agreement under The Western Union Company Senior Executive Annual Incentive Plan for 2010 (filed as Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.34
|
|
Form of Performance-Based Restricted Stock Unit Award Notice for Executive Committee Members Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K filed on February 24, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.35
|
|
Employment Contract, dated as of November 9, 2009, between Western Union Financial Services GmbH and Hikmet Ersek (filed as Exhibit 10.35 to the Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.36
|
|
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 Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.37
|
|
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 Company’s Quarterly Report on Form 10-Q filed on November 5, 2010 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.38
|
|
Expatriate Letter Agreement, dated as of January 4, 2012, between Western Union, LLC and Rajesh K. Agrawal (filed as Exhibit 10.42 to the Company's Annual Report on Form 10-K filed on February 24, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.39
|
|
Expatriate Letter Agreement, dated as of December 12, 2011, between Western Union, LLC and Robin S. Heller (filed as Exhibit 10.43 to the Company's Annual Report on Form 10-K filed on February 24, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.40
|
|
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 Company’s Current Report on Form 8-K filed on September 29, 2011 and incorporated herein by reference thereto).
|
|
|
|
|
|
10.41
|
|
Form of Bonus Stock Unit Award Agreement for Non-Employee Directors Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 1, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.42
|
|
Form of Bonus Stock Unit Award Agreement for Non-Employee Directors Residing Outside of the United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 1, 2012 and incorporated herein by reference thereto).*
|
|
|
|
|
|
10.43
|
|
Offer Letter, dated as of October 28, 2011, between Western Union, LLC and John Dye.*
|
|
|
|
|
|
10.44
|
|
First Amendment to Offer Letter, dated as of November 15, 2011, between Western Union, LLC and John Dye.*
|
|
|
|
|
|
10.45
|
|
Offer Letter, dated as of April 12, 2012, between Western Union, LLC and John “David” Thompson.*
|
|
|
|
|
|
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 Company’s Annual Report on Form 10-K filed on February 26, 2010 and incorporated herein by reference thereto).
|
|
|
|
|
|
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 13a-14(a) under the Securities Exchange Act of 1934
|
|
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer of The Western Union Company Pursuant to Rule 13a-14(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.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
* Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.
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* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
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