Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 
x 	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the fiscal year ended: December 31, 2008
OR
 
¨ 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from             to             
Commission file number: 001-32903

THE WESTERN UNION COMPANY
(Exact Name of Registrant as Specified in Its Charter)

 
			
Delaware	 	20-4531180	
(State or Other Jurisdiction of
Incorporation or Organization)	 	(I.R.S. Employer
Identification No.)	
THE WESTERN UNION COMPANY
12500 East Belford Avenue
Englewood, Colorado 80112
Telephone: (866) 405-5012
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	 	Name of each exchange on which registered	
Common Stock, $0.01 Par Value	 	The New York Stock Exchange	
Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x     No   ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes   ¨     No   x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer   x     Accelerated filer   ¨     Non-accelerated filer   ¨     Smaller reporting company   ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ¨     No   x
As of June 30, 2008, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $17.9 billion based on the closing sale price of $24.72 of the common stock as reported on the New York Stock Exchange.
As of February 13, 2009, 709,993,946 shares of the registrant’s common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s proxy statement for the 2009 annual meeting of stockholders are incorporated into Part III of this Annual Report on 10-K.

 

Table of Contents
 INDEX

 	  	 	  	Page
Number	
PART I	  		
			
Item 1.	  	Business	  	3	
Item 1A.	  	Risk Factors	  	23	
Item 1B.	  	Unresolved Staff Comments	  	35	
Item 2.	  	Properties	  	36	
Item 3.	  	Legal Proceedings	  	36	
Item 4.	  	Submission of Matters to a Vote of Security Holders	  	36	
		
PART II	  		
Item 5.	  	Market for Registrant’s Common Equity, Related Stockholder Matters  and Issuer Purchases of Equity Securities	  	37	
Item 6.	  	Selected Financial Data	  	38	
Item 7.	  	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	40	
Item 7A.	  	Quantitative and Qualitative Disclosures About Market Risk	  	75	
Item 8.	  	Financial Statements and Supplementary Data	  	78	
Item 9.	  	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	  	139	
Item 9A.	  	Controls and Procedures	  	139	
Item 9B.	  	Other Information	  	139	
		
PART III	  		
Item 10.	  	Directors, Executive Officers and Corporate Governance	  	141	
Item 11.	  	Executive Compensation	  	141	
Item 12.	  	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	  	141	
Item 13.	  	Certain Relationships and Related Transactions, and Director Independence	  	141	
Item 14.	  	Principal Accountant Fees and Services	  	141	
	
PART IV	
Item 15.	  	Exhibits and Financial Statement Schedules	  	142	

Table of Contents
 PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K and materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) (as well as information included in our other written or oral statements) contain or will contain certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “believes,” “estimates,” “guides,” “provides guidance,” “provides outlook” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. You should not rely solely on the forward-looking statements and should consider all uncertainties and risks throughout this Annual Report on Form 10-K, including those described under “Risk Factors.” The statements are only as of the date they are made, and we undertake no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following:
 
 	•	 	changes in general economic conditions and economic conditions in the geographic regions and industries in which we operate;	
 
 	•	 	adverse movements and volatility in capital markets and other events which affect our liquidity, the liquidity of our agents, or the value of, or our ability to recover our investments;	
 
 	•	 	changes in immigration laws, patterns and other factors related to migrants;	
 
 	•	 	technological changes, particularly with respect to e-commerce;	
 
 	•	 	the failure by us, our agents or subagents to comply with our business and technology standards and contract requirements or applicable laws and regulations, especially laws designed to prevent money laundering and terrorist financing;	
 
 	•	 	our ability to attract and retain qualified key employees and to manage our workforce successfully;	
 
 	•	 	changes in foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers;	
 
 	•	 	political conditions and related actions in the United States and abroad which may adversely affect our businesses and economic conditions as a whole;	
 
 	•	 	failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide;	
 
 	•	 	significantly slower growth or declines in the money transfer market and other markets in which we operate;	
 
 	•	 	failure to implement agent contracts according to schedule;	
 
 	•	 	our ability to maintain our agent network and biller relationships under terms consistent with or more advantageous to us than those currently in place;	
 
 	•	 	interruptions of United States government relations with countries in which we have or are implementing material agent contracts;	
 
 	•	 	deterioration in consumers’ and clients’ confidence in our business, or in money transfer providers generally;	
 
 	•	 	failure to manage credit and fraud risks presented by our agents and consumers or non performance of our financial services providers and insurance carriers;	
 
1

Table of Contents

 	•	 	adverse rating actions by credit rating agencies;	
 
 	•	 	liabilities and unanticipated developments resulting from litigation and regulatory investigations and similar matters, including costs, expenses, settlements and judgments;	
 
 	•	 	changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, and governmental or judicial interpretations thereof;	
 
 	•	 	our ability to favorably resolve tax matters with the Internal Revenue Service and other tax jurisdictions;	
 
 	•	 	changes in industry standards affecting our business;	
 
 	•	 	changes in accounting standards, rules and interpretations;	
 
 	•	 	failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other nonbank money transfer services providers, including telecommunications providers, card associations and card-based payment providers;	
 
 	•	 	our ability to grow our core businesses;	
 
 	•	 	our ability to develop and introduce new products, services and enhancements, and gain market acceptance of such products;	
 
 	•	 	our ability to protect our brands and our other intellectual property rights;	
 
 	•	 	our ability to manage the potential both for patent protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection;	
 
 	•	 	any material breach of security of or interruptions in any of our systems;	
 
 	•	 	mergers, acquisitions and integration of acquired businesses and technologies into our company and the realization of anticipated synergies from these acquisitions;	
 
 	•	 	adverse consequences from our spin-off from First Data Corporation, including resolution of certain ongoing matters;	
 
 	•	 	decisions to downsize, sell or close units, or to transition operating activities from one location to another or to third parties, particularly transitions from the United States to other countries;	
 
 	•	 	decisions to change our business mix;	
 
 	•	 	cessation of various services provided to us by third-party vendors;	
 
 	•	 	catastrophic events; and	
 
 	•	 	management’s ability to identify and manage these and other risks.	
 
2

Table of Contents

 ITEM  1.	BUSINESS	
Overview
The Western Union Company (“Western Union” or the “Company”) is a leader in global money transfer, providing people with fast, reliable and convenient ways to send money around the world. The Western Union ® brand is globally recognized. Our services are available through a network of over 375,000 agent locations in more than 200 countries and territories. Each location in our agent network is capable of providing one or more of our services. As of December 31, 2008, approximately 75% of our locations had experienced money transfer activity in the prior 12 months. Our consumer-to-consumer money transfer service enables people to send money around the world in minutes. Our consumer-to-business service provides consumers with flexible and convenient options for making one-time or recurring bill payments.
We believe that brand strength, size and reach of our global network, and convenience and reliability for our consumers have been key to the growth of our business. As we continue to meet the needs of our consumers for fast, reliable and convenient money transfer services, we are also working to enhance our services and provide our consumers with access to an expanding portfolio of payment and other financial services.
History and Development
The Western Union Company was incorporated in Delaware as a wholly-owned subsidiary of First Data Corporation, or “First Data,” on February 17, 2006 in anticipation of the spin-off described in “The Separation of Western Union from First Data”.
The Western Union Company has roots back to 1851. Western Union stock was first traded on the New York Stock Exchange in 1865. In 1884, the original Western Union was one of the 11 companies included on the first Dow Jones average. Western Union has a long history of providing innovative services, including creating the universal stock ticker and launching the first United States commercial communications satellite service. Western Union introduced our consumer-to-consumer money transfer service in 1871. Western Union began offering consumer-to-business payment services in 1989 when we introduced Western Union Quick Collect ® or “Quick Collect,” providing consumers in the United States with the ability to conveniently pay bills in cash through our agent network.
Over the past decade, we have become a leader in the development of a global remittance market. Today, we offer money transfer services under the Western Union ® , Orlandi Valuta ® and Vigo SM brands in over 200 countries and territories, and various bill payment services, primarily in the United States, under several brands like Speedpay ® , Equity Accelerator ® , Just in Time EFT ® , Western Union Quick Collect and Western Union Convenience Pay ® .
The Western Union Business
Our revenue is principally generated by money transfer and payment transactions. We primarily derive our revenue from two sources. Most of our revenue comes from fees that consumers pay when they send money. In certain consumer money transfer transactions involving different send and payment currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency.
In our consumer-to-consumer segment we provide our third-party agents with our multi-currency, real-time money transfer processing systems used to originate and pay money transfers. Our agents provide the physical infrastructure and staff required to complete the transfers. We generally pay our agents a commission based on a percentage of revenue. The commission is shared between the agent that initiated the transaction, the “send agent,” and the agent that paid the transaction, the “receive agent.” For most agents, the costs of providing the physical infrastructure and staff are typically covered by the agent’s primary business (e.g., postal services,
 
3

Table of Contents
banking, check cashing, travel and retail businesses), making the economics of being a Western Union agent attractive to our agents. Western Union’s global reach and loyal consumer base allow us to attract agents we believe to be of high quality.
In our consumer-to-business segment we process electronic and cash payments to a variety of organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and governmental agencies, which we sometimes refer to as “billers.” We process electronic payments using the consumer’s credit card, debit card or bank account. We process cash payments much like we process consumer-to-consumer transactions. We believe our billers benefit from their relationship with Western Union as their relationship with us provides them with real-time or near real-time posting of their customer payments, reduced expenses that the biller would have otherwise incurred for cash and check handling, and in certain circumstances another source of income.
Geographic Presence
More than 85% of our agent locations are outside the United States. Our consumer-to-consumer services are available in almost every country or territory. We have offices in more than 50 countries. In the United States, Costa Rica, Russia, Mexico, Argentina and the Philippines, our offices include customer service centers, where our employees answer operational questions from agents and consumers and certain of these offices also provide data processing services. Our office in Englewood, Colorado serves as our corporate headquarters, and our office in Dublin, Ireland serves as our international headquarters. Other offices, including regional management offices in Sunrise, Florida, Vienna, Austria and Hong Kong, China, provide sales, marketing, and other services. Our employees and members of senior management reflect the global nature of our business; natives of many countries, they speak many languages.
Western Union agents include large networks such as post offices, banks and retailers. We have agreements with postal organizations in Argentina, Australia, China, France, Germany, India, New Zealand, Russia, Spain and elsewhere. Our services are offered through banks such as Agricultural Bank of China and the State Bank of India. National and international retailers in the network include Kroger and Publix in the United States and Elektra and Travelex internationally. Many of our agents have multiple locations. Our agents know the markets they serve. They work with our management to develop business plans for their markets, and many of our agents contribute financial resources to assist with marketing the business.
Our consumer-to-business services offer bill payment services primarily in the United States. We intend to pursue continued global expansion of consumer-to-business payment services through our existing agent network and through acquisitions and alliances as demonstrated by our 2006 acquisition of Servicio Electronico de Pago S.A. and related entities (“SEPSA” or Pago Fácil SM ) and the recent offering of our bill payment service in Peru and Panama.
Financial information relating to our international and domestic revenues and long-lived assets is set forth in Note 17 to our Consolidated Financial Statements in Item 8.
Our Strengths
We believe our strengths enable us to continue being the provider of choice for millions of consumers when they need to send or receive money and pay bills. Our strengths include our:
Strong relationships with high quality agents and businesses . We interact with millions of consumers around the world, primarily through our global agent network. Our agents facilitate the global distribution and convenience associated with our Western Union brand, which in turn helps create demand for our services and helps us to recruit and retain agents. Our agents tend to be established organizations that provide other consumer products and services. Many are open outside of traditional banking hours, for example on nights and weekends,
 
4

Table of Contents
making it easier for consumers to use our services. Our top 40 agents globally have been with us an average of approximately 13 years, and in 2008, these long-standing agents were involved in transactions that generated more than 60% of our consumer-to-consumer revenue. We occasionally acquire interests in, and enter into alliances with, certain of our agents to better align our long-term interests. For example, in August 2008, we acquired the money transfer assets from our existing money transfer agent in Panama and, in December 2008, we acquired 80% of our existing money transfer agent in Peru. We also hold a majority interest in an alliance with our agent in France, and we hold minority interests in agents that have a presence in the United Kingdom, Spain, Ireland, Greece, Jamaica, Singapore and Italy, among others. In February 2009, we entered into an agreement to acquire the money transfer services business of the agent in Ireland in which we currently hold an ownership interest. The agent provides services in the United Kingdom, Spain, Ireland and various other European countries. See Item 7, “Subsequent Event” within Management’s Discussion and Analysis of Financial Condition and Results of Operations.
We have relationships with more than 6,300 businesses and other billers, approximately 2,100 of which primarily relate to our bill payment business in Argentina, Pago Fácil. These relationships are a core component of our consumer-to-business payment services. In 2008, our top 20 billers represented approximately 40% of our consumer-to-business revenue. On average, we have provided our bill payment services to our top 20 billers for more than 13 years.
Global distribution network . Our agent networks are the foundation of our international presence. We have more than 375,000 agent locations worldwide offering at least one of our consumer-to-consumer money transfer services, with the vast majority offering Western Union branded service. Our global footprint results from more than a decade of building relationships with agents worldwide.
Success in the consumer-to-consumer money transfer business depends in large part on providing quality service at convenient send and receive locations. Our global network, extending to over 200 countries and territories, provides that convenience. Over the last several years, we have emphasized the development of our receive network around the world to optimize send and receive corridors. Today, we believe we are well-positioned to meet consumer demand in key receive markets, such as China, India, Mexico and the Philippines.
To complement the convenience offered by our network’s global physical locations, in certain countries we have made our services available through other channels, such as our internet service, westernunion.com (which allows consumers to send funds through our website), our telephone money transfer service, our direct-to-bank money transfer service (which allows consumers to send money directly to a bank account) and our newly piloted mobile telephone money transfer service. These services represent approximately 3% of our consolidated revenues. For financial information regarding our foreign and United States operations, see Item 7 of Part II and our historical financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.
Established brands. Our Western Union brand is built on a foundation of more than 150 years of history and consumer-focused service. The Western Union brand represents speed, reliability, trust and convenience. The international expansion of our agent network over the past decade has taken the Western Union brand nearly everywhere consumers send and receive money. As people move and travel around the world, they are able to use the services of a well recognized brand to transfer funds.
We also offer money transfer services under the Orlandi Valuta and Vigo brands. During the past five years, Western Union branded transactions have grown the fastest of the three consumer money transfer brands.
Through Western Union Quick Collect, Western Union Convenience Pay, Pago Fácil, Speedpay, Just in Time EFT, Equity Accelerator and other brands, we offer consumer-to-business payment services.
Our operating results over the past several years have allowed us to invest significantly each year to support our brands. In 2008, we invested approximately $285 million to market, advertise and promote our brand and services, and many of our agents have contributed significant financial resources to assist with marketing the business.
 
5

Table of Contents
Consumer relationships. One of our strengths has been our focus on our consumers and offering them fast, reliable money transfer and payment services. Our global loyalty program is available in a growing number of countries. We launched our Western Union Gold Card, the principal vehicle of the program, in the United States in 2002. As of December 31, 2008, the Gold Card program was available in 72 countries and had approximately 11 million active cards, an increase in the number of active cards of 16% from December 31, 2007. The Gold Card offers consumers faster service at the point-of-sale and other benefits which, depending on the country, could include service fee reductions on future Western Union branded transactions, discounts at retailers or a rechargeable prepaid phone card embedded within the Gold Card. On average, a Gold Card consumer initiates more transactions and has a higher rate of retention than a non-carded consumer. In the United States, approximately 50% of Western Union branded consumer-to-consumer transactions are initiated using a Gold Card. We have also seen increases in usage in Europe and Asia where we began offering the Gold Card in 2004. The global Gold Card program is one component of our consumer relationship management activities designed to support and enhance long-term relationships with our consumers. Consumer databases supplement these efforts by providing insight on consumer preferences so that we can selectively target consumer communications and marketing.
Operational excellence. Our systems enable us to provide worldwide, multi-currency and real-time money transfer processing with a high degree of reliability. We provide many of our largest agents and billers dynamic computer host-to-host interfaces that enable them to offer money transfer and payment services within their own computer environment. We also provide settlement and reconciliation software to our agents and billers with reporting and analysis tools to help them monitor many aspects of their money transfer business, including transactions, profitability and cash flow. Behind the scenes, our settlement systems facilitate the routine settlement of accounts between our company and our agents and billers. Our systems and processes enable our agents to pay money transfers in more than 120 currencies worldwide. Many of our agents can pay in multiple currencies at a single location.
Flexibility is another important component of operational excellence. We continue to work to implement consumer focused enhancements to our services, like telephone and internet services, and money transfers paid directly to a bank account or to a stored-value card.
Global compliance programs . We have developed and continue to enhance global compliance programs, including an anti-money laundering compliance program comprised of policies, procedures, systems and internal controls to monitor and address various aspects of our legal and regulatory requirements. Our money transfer network operates through third-party agents in most countries, and, therefore, our legal and practical ability to control those agents’ compliance activities is limited. As of December 31, 2008, we have approximately 300 employees in a number of our offices around the world dedicated to our global compliance programs and we spend over $40 million annually on these efforts.
Attractive financial profile . Our revenue and net cash flow have provided us with opportunities to invest in our core business growth, new services and new markets. In 2008, we generated $5.3 billion in revenues, had an operating profit margin of 26% and generated approximately $1.3 billion in net cash provided by operating activities.
Our Strategy
We believe that our strengths position us well to continue to pursue global markets and remain focused on our consumers and agents, and their needs. To do so, our strategies include:
Accelerate profitable growth in our existing consumer-to-consumer business. We are focused on selectively expanding our agent network. Examples of this strategy and our recent success in implementing it include:
 
 	•	 	Continuing to align the number of send and receive agent locations in our markets to correspond to the send and receive demands of our consumers in each market. We have focused on building receive networks in countries with large inbound remittance markets, particularly in Latin America, Africa and	
 
6

Table of Contents

 	Eastern Europe as well as key countries in Asia like China, the Philippines and India. This increased number of locations in receive markets provides consumers from these geographies confidence that money they send home will be delivered to a convenient location. In the United States, Western Europe and other predominantly send markets, we add agent locations in places that tend to attract consumers.	
 
 	•	 	Acquiring equity interests in, and entering into alliances with, certain of our agents to better align our long-term interests. For example, in August 2008, we acquired the money transfer assets from our existing money transfer agent in Panama and in December 2008, we acquired 80% of our money transfer agent in Peru.	
 
 	•	 	Adding or enhancing services allowing consumers in many countries to send and receive money transfers within the same country. In 2008, we grew our non-United States intra-country money transfer transactions by over 20%, which generated in excess of $100 million in revenues.	
 
 	•	 	Continuing to develop services to meet consumers’ needs for convenience, choice and speed. For example, our account to cash service allows consumers to debit their bank accounts and send the money through Western Union for payment at any agent location.	
 
 	•	 	Continuing to identify and create opportunities to generate new revenue from our existing distribution channels. For example, during 2008 we expanded the service offering under our Vigo brand to certain countries in Western Europe to expand this brand from its United States and Latin American presence.	
 
 	•	 	Launching our internet service internationally. As of December 31, 2008, westernunion.com is available in 12 countries outside of the United States.	
Expand and globalize our consumer-to-business segment and increase the number of bill payment options. We offer bill payment services primarily in the United States. We intend to pursue continued global expansion of consumer-to-business payment services by expanding and extending our core cash and electronic payments offerings. We intend to execute this expansion using both our existing agent network and through acquisitions and alliances. Examples of this strategy include:
 
 	•	 	Expanding our international bill payment business outside of Argentina. For example, Western Union recently began offering a walk-in, cash bill payment service that will provide consumers in Peru and Panama with a convenient way to pay for services such as phone, utilities and other recurring household bills.	
 
 	•	 	Offering bill payment services in the United States under our Vigo brand, which is currently only a consumer-to-consumer brand.	
 
 	•	 	Developing our relationships with United States banks and other partners to allow their consumers to pay bills immediately through the bank’s existing on-line banking websites, which will link to our proprietary platforms.	
Innovate to provide new products and services to our target consumer. Developing new technologies through innovation is a key focus area. We have, or will have, a number of pilot projects in the market which, although they do not contribute meaningfully to revenue now, will allow us to evaluate the merits of each new service. We will thus ensure that we invest appropriately to drive future growth and attract new consumers to Western Union. For example, we are currently piloting through relationships with Smart Communications, Globe Telecom, Orascom Telecom and Vodafone, to assess the potential of our mobile money transfer service which will provide consumers with the ability to transfer money via mobile phones and will allow the consumer to send or receive funds at select Western Union agent locations.
 
7

Table of Contents
Improve our profitability by leveraging our scale, reducing costs and effectively utilizing capital. We are constantly exploring opportunities to improve cost efficiency and profitability in order to help us achieve our strategic goals and to give us more flexibility to invest in our future. Examples of our efforts to improve cost competitiveness include:
 
 	•	 	Closing several facilities in the United States and transitioning these operations to more cost-efficient locations. In addition, we have eliminated certain positions around the world. Beginning in 2009, we expect over $40 million in operating expense savings annually as a result of these restructuring and related activities undertaken in 2008.	
 
 	•	 	Successfully renegotiating agreements with key agents around the world to reduce commission expense, while providing both parties with the opportunity to enjoy a long-term relationship.	
 
 	•	 	Prioritizing our investments with a global perspective and evaluating those investments to maximize our return on investment.	
 
 	•	 	Continuing to focus on gaining cost efficiencies through a global organizational realignment that streamlines our global operations into two regional structures: the Americas and Europe/Middle East/Africa/Asia.	
Our Segments
We manage our business around the consumers we serve and the type of services we offer. Each segment addresses a different combination of consumer needs, distribution networks and services. Our segments are consumer-to-consumer and consumer-to-business. Our other businesses not included in these segments include Western Union branded money orders available through a network of third-party agents primarily in the United States and Canada, and prepaid services. Prepaid services include a Western Union branded prepaid MasterCard ® card sold through select agents in the United States and the internet, a Western Union branded prepaid Visa ® card sold on the internet, and top-up services for third parties that allow consumers to pay in advance for mobile phone and other services.
The table below presents the components of our consolidated revenue:

 	  	2008	 	 	2007	 	 	2006	 	
Consumer-to-consumer (a)	  			 			 			
EMEASA	  	44	%	 	40	%	 	38	%	
Americas	  	34	%	 	37	%	 	41	%	
APAC	  	7	%	 	6	%	 	5	%	
	  	 	 	 	 	 	 	 	 	
Total Consumer-to-consumer	  	85	%	 	83	%	 	84	%	
Consumer-to-business	  	14	%	 	15	%	 	14	%	
Other	  	1	%	 	2	%	 	2	%	
	  	 	 	 	 	 	 	 	 	
	  	100	%	 	100	%	 	100	%	

(a)	The geographic split is determined based upon the region where the money transfer is initiated and the region where the money transfer is paid. For transactions originated and paid in different regions, we split the revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the revenue is attributed to that region.	
Consumer-to-Consumer Segment
Individual money transfers from one consumer to another are the core of our business, representing 85% of our total consolidated revenues for 2008. We offer consumers a variety of ways to send money. Although most remittances are sent in cash at one of our more than 375,000 agent locations worldwide, in some countries we offer the ability to send money over the internet or the telephone, using a credit or debit card. Some agent
 
8

Table of Contents
locations accept debit cards to initiate a transaction. We also offer consumers several options to receive a money transfer. While the vast majority of transfers are paid in cash at agent locations, in some places we offer payout directly to the receiver’s bank account, to a stored-value card, to a mobile phone or through the issuance of a money order.
Operations
Our revenue is derived primarily from transaction fees charged to consumers to transfer money. In money transfers involving different send and receive currencies, we also generate revenue based on the difference between the exchange rate set by Western Union to the consumer and the rate at which we or our agents are able to acquire currency.
In a typical money transfer transaction, a consumer goes to one of our agent locations, completes a form specifying, among other things, the name and address of the recipient, and delivers it, along with the principal amount of the money transfer and the fee, to the agent. This sending agent enters the transaction information into our data processing system and the funds are made available for payment, usually within minutes. The recipient enters an agent location in the designated receiving area or country, presents identification and is paid the transferred amount. Recipients do not pay a fee (although in limited circumstances, a tax may be imposed on the payment of the remittance). We determine the fee paid by the sender, which generally is based on the principal amount of the transaction and the locations to and from which the funds are sent and are to be transferred.
Over 85% of our consumer-to-consumer transactions involve at least one non-United States location. No individual country outside the United States accounted for more than 10% of the segment’s revenue for the years ended December 31, 2008, 2007 and 2006. Certain of our agents facilitate a large number of transactions; however, no individual agent accounted for greater than 10% of the segment’s revenue during these periods.
Seasonality
Consumer-to-consumer segment revenue typically increases sequentially from the first quarter to the fourth quarter each year and declines from the fourth quarter to the first quarter of the following year. This seasonal fluctuation is related to the holiday season in various countries during the fourth quarter.
Services
We offer money transfer services worldwide. In 2008, over 90% of our consumer-to-consumer transactions were cash money transfers involving our walk-in agent locations around the world. In order to enhance the convenience of our services, we offer a number of options for sending and receiving funds; although, historically, demand for in-person, cash money transfers has been the strongest, we continue to develop services that enhance consumer convenience and choice and are customized to meet the needs of consumers. The different ways consumers can send or receive money include the following:
Walk-in money transfer service. The majority of our remittances constitute transactions in which cash is collected by the agent and payment (usually cash) is available for pick-up at another agent location in the designated receive country, usually within minutes. In some United States outbound corridors and in select international corridors, we provide a “Direct to Bank” service, enabling a consumer to send a transaction from an agent location directly to a bank account in another country. In certain countries, our agents offer a bank deposit service, in which the paying agent provides the receiver the option to direct funds to a bank account or to a stored-value card. Also, under our Vigo brand, we offer Direct to Bank service in certain countries. We also provide a “Cash to Card” service that provides consumers an option to direct funds to a stored-value card in certain locations.
Our “Next Day” delivery option is a money transfer that is available for payment the morning after the money transfer is sent. This option is available in certain markets for domestic service within the United States, and in select United States outbound and international corridors, including Mexico. The Next Day delivery service gives our consumers a lower-priced option for money transfers that do not need to be received within minutes, while still offering the convenience, reliability and ease-of-use that our consumers expect.
 
9

Table of Contents
Our “Money Transfer by Phone” service is available in select agent locations in the United States. In a Money Transfer by Phone transaction, the consumer is able to use a telephone in the agent location to speak to a company representative in one of several languages. Typically the sender provides the information necessary to complete the transaction to the company operator on the phone and is given a transaction number, which the sender takes to the agent’s in-store representative to send the funds.
Online money transfer service. Our internet website, westernunion.com, allows consumers to send funds on-line, using a credit or debit card, for payment at most Western Union branded agent locations around the world. As of December 31, 2008, we are now providing send service in 12 countries outside the United States.
Telephone money transfer service. Our Telephone Money Transfer service allows Western Union consumers to send funds by telephone without visiting an agent location. Consumers call a toll-free number in the United States, Canada, Ireland or the United Kingdom and use a debit card or credit card to initiate a transaction. The money transfer is then available for pay-out at an agent location.
Account to cash. Our service that allows consumers to debit their bank accounts and send the money through Western Union for pay-out at an agent location.
Distribution and Marketing Channels
We offer our consumer-to-consumer service through our global network of third-party agents and the other initiation and payment methods discussed above. Western Union provides central operating functions such as transaction processing, settlement, marketing support and customer relationship management to our agents.
Some of our agents outside the United States manage subagents. We refer to these agents as superagents. As of December 31, 2008, we have over 700 superagents located throughout the world. Although our subagents are under contract with these superagents (and not with Western Union directly), the subagent locations typically have access to the same technology and services that our other agent locations do.
Our international agents often customize services as appropriate for their geographic markets. In some markets, individual agents are independently offering specific services such as stored-value card payout options and Direct to Bank service. Our marketing relies on feedback from our agents and consumers, and in many of our markets, our agents fund their own marketing activities.
The Gold Card offers consumers faster service at the point-of-sale and, in certain countries, other benefits which could include reward points, service fee reductions on future Western Union branded transactions, discounts at retailers or a rechargeable prepaid phone card embedded within the Gold Card. As of December 31, 2008, the Gold Card program was available in 72 countries and had approximately 11 million active cards.
Western Union International Bank began operations in February 2005. We chartered the bank to meet requirements presented by the growing trend among the member states of the European Union to regulate the money transfer business, and to give us a regulatory platform for new products and services. Western Union International Bank holds a full credit institution license, allowing it to offer a range of financial services throughout the 27 member states of the European Union and the three additional states of the European Economic Area. As of December 31, 2008, the bank was offering retail service in approximately 36 owned and operated locations and is present in five countries.
Industry Trends
Over the last several years, the money transfer industry has experienced growth. Trends in the money transfer business tends to correlate to migration trends, global economic opportunity and related employment rates worldwide. The top four inbound remittance markets in the world, the countries of India, China, Mexico
 
10

Table of Contents
and the Philippines, cumulatively receive an estimated $100 billion annually according to The World Bank. However, due to the weakening global economy, including declines in consumer confidence and rising unemployment, the demand for money transfers has softened, as reflected by The World Bank’s projection of a 0.9% to a 5.7% decline in remittances in 2009. However, we expect that the remittance market will begin to recover as the global economy improves. The World Bank projects a 1.2% to 6.1% growth in remittances in 2010. As the World Bank is focused on remittances to developing countries and not total worldwide remittances, we consider this information as well as other sources when assessing market opportunities.
In 2008, consumers transferred $74 billion in consumer-to-consumer transactions, of which $67 billion related to cross-border transactions, which represented an increase of 16% in consumer-to-consumer transactions and a 17% increase in cross-border transactions over prior year.
Another significant trend impacting the money transfer industry is the increase in regulation in recent years. Regulation in the United States and elsewhere focuses, in part, on anti-money laundering and anti-terrorist activities. Regulations require money transfer providers, banks and other financial institutions to develop systems to detect, monitor and report certain transactions.
Competition
We face robust competition in the highly-fragmented consumer-to-consumer money transfer industry. We compete with a variety of money transfer service providers, including:
 
 	•	 	Global money transfer providers —Global money transfer providers allow consumers to send money to a wide variety of locations, in both their home countries and abroad.	
 
 	•	 	Regional money transfer providers —Regional money transfer providers, or “niche” players, provide the same services as global money transfer providers, but focus on a small group of corridors or services within one region, such as North America to the Caribbean, Central or South America, or Western Europe to North Africa.	
 
 	•	 	Banks —Banks of all sizes compete with us in a number of ways, including bank wire services and card-based services. We believe that banks offer consumers wire transfer services and other money transfer methods as an incentive to those consumers to purchase other services and products.	
 
 	•	 	Informal networks —Informal networks enable people to transfer funds without formal mechanisms, such as receipts, and often without compliance with government reporting requirements. We believe that such networks comprise a significant share of the market.	
 
 	•	 	Electronic commerce —Online money transfer services allowing consumers to send and receive money electronically using the internet.	
 
 	•	 	Alternative channels —Alternative channels for sending and receiving money include mail and commercial courier services, money transfers using mobile phones, and card-based options, such as ATM cards and stored-value cards.	
The most significant competitive factors in consumer-to-consumer remittances relate to brand recognition, trust and reliability, distribution network, consumer experience and price.
For additional details regarding our consumer-to-consumer segment, including financial information regarding our international and United States operations, see Item 7 of Part II and our financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.
Consumer-to-Business Segment
We provide a portfolio of electronic and cash payment options that provide consumers with fast and convenient ways to make one-time or recurring payments to billers. Revenues from this segment represented 14% of our revenue in 2008.
 
11

Table of Contents
Operations
Our revenue in this segment is derived primarily from transaction fees paid by the consumer or the biller. These fees are typically less than the fees charged in our consumer-to-consumer segment. In order to make an electronic payment, the consumer or biller initiates a transaction over the telephone or the internet which we process using the consumer’s credit card, debit card or ACH. In order to make a cash payment, the consumer goes to an agent location and makes the payment to the agent. In addition, we generate revenue from upfront enrollment fees received for our Equity Accelerator service, and we earn investment income on funds received from services sold in advance of settlement with payment recipients. The segment’s revenue was primarily generated in the United States for all periods presented. No individual biller accounted for greater than 10% of this segment’s revenue during all periods presented.
Services
Our consumer-to-business services strive to give consumers choices as to the payment channel and method of payment, and include the following:
Electronic payments. Consumers use our Speedpay service principally in the United States to make payments to a variety of billers using credit cards, debit cards and ACH. Payments are initiated over the telephone or the internet.
Our Equity Accelerator service is provided in the mortgage service industry, enabling consumers to make mortgage payments by ACH. It is marketed as a convenient way for homeowners to schedule additional recurring principal payments on their mortgages. Consumers who enroll in this service make mortgage payments based on an accelerated program, which results in interest savings and a lower mortgage balance.
Cash payments. Consumers use our Quick Collect service to send funds to businesses and government agencies across the United States and Canada, using cash and, in certain locations, a debit card. This service is also offered in other select international locations, and is referred to as Quick Pay SM in those locations. We also offer Quick Cash ® , a cash disbursement service used by businesses and government agencies to send money to employees or individuals with whom they have accounts or other business relationships.
Consumers use our Convenience Pay service to send payments by cash or check from a smaller number of Convenience Pay agent locations primarily to utilities and telecommunication providers.
In addition, Pago Fácil provides a walk-in bill payment service in Argentina under the Pago Fácil brand. In the fourth quarter of 2008, Western Union began offering a walk-in, cash bill payment service that will provide consumers in Peru and Panama with a way to pay for services such as mobile phone, utilities and other recurring bills.
Distribution and Marketing Channels
Our electronic payment services are available primarily through the telephone and the internet, while our cash-based services are available through our agent networks. Billers market our services to consumers in a number of ways, and we market our services directly to consumers using a variety of means, including advertising materials and promotional activities at our agent locations. Consumers can also participate in the Western Union Gold Card program when using our Quick Collect service to make cash payments to billers.
As part of our strategy, we are focused on expanding and globalizing our consumer-to-business segment and increasing our number of bill payment options. We have begun expanding our international bill payment business outside of Argentina to Peru and Panama and we are beginning to offer bill payment services under our Vigo brand.
 
12

Table of Contents
Industry Trends
The consumer-to-business payment industry has evolved with technological innovations that created new methods of processing payments from individuals to businesses. We believe that the United States is in the midst of a trend away from cash and paper checks toward electronic payment methods accessible through multiple technologies. Furthermore, due to the recent weakening in the United States economy, we believe some consumers who are likely to use our services are having difficulty paying their bills and are unable to obtain credit in any form, resulting in us handling fewer bill payments. We expect this trend to continue in 2009.
The consumer-to-business payment industry outside the United States is at varying stages of development. In some countries, walk-in cash payments at a biller’s office or through a third-party network are widely used, while in other countries electronic payment options, particularly through direct debit, are widely accepted.
Competition
Western Union competes with a diverse set of bill payment service providers offering both cash and electronic-based payment solutions. Competition in electronic payments includes financial institutions (which may offer bill-payment services in their own name or may “host” payment services operated under the names of their clients), billers offering their own or third-party services to their own customers, and third-party providers of all sizes offering services directly to consumers. In many cases, competitors specialize in a small number of industries. Competitors for cash payments include a biller’s own walk-in locations, or those provided by others, some only on a regional basis, as well as mail and courier services. There is also competition between electronic and cash-based payments methods.
The most significant competitive factors in this segment relate to brand recognition, trust and reliability, convenience, speed, variety of payment methods and price.
For additional details regarding our consumer-to-business segment, see Item 7 of Part II and our historical financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.
Other
Our remaining business units are grouped in the “Other” category, which includes money orders and prepaid services.
We market Western Union branded money orders, issued by a third-party, to consumers at non-bank retail locations primarily in the United States and Canada. On July 18, 2008, an agreement was executed with Integrated Payment Systems Inc. (“IPS”), a subsidiary of First Data, whereby we will assume the responsibility for issuing money orders effective October 1, 2009 (the “Transition Date”). Prior to the Transition Date, money order revenue is generated through a combination of commissions collected from IPS and per item fees for money orders sold. In a money order transaction, a consumer purchases a money order from an agent. The agent selling the money order generally remits the funds collected from the consumer to IPS promptly following the sale date. IPS holds those funds to meet regulatory requirements and to pay money orders presented for payment. Agents generally receive no commissions from us on money order sales, but rather earn revenue by charging a fee to the consumer for the purchase of the money order. IPS currently holds the settlement assets related to our money order business. Under the terms of the agreement, beginning on October 1, 2009, IPS will assign and transfer to us certain operating assets used by IPS to issue money orders and an amount of cash sufficient to satisfy all outstanding money order liabilities, which vary from day to day but approximate $800 million. After the Transition Date, the settlement assets transferred to us will be subject to regulatory requirements for the money order business under our existing licenses and we will no longer provide to IPS the services required under the original money order agreement or receive from IPS the fee for such services. Subsequent to the Transition Date, a substantial portion of our revenues, which will replace the fee we currently earn from IPS, will be earned from investment income on the float balance of unpaid money order obligations. However, IPS will
 
13

Table of Contents
continue to provide to us clearing services necessary for payment of the money orders in exchange for the payment by us to IPS of a per-item administrative fee.
We also offer prepaid services consisting of:
 
 	•	 	a Western Union branded prepaid MasterCard card and Visa card; and	
 
 	•	 	third-party top-up services in the United States and Argentina.	
The Western Union branded prepaid MasterCard card is sold through select agents in the United States and on the internet, and our Western Union branded prepaid Visa card is also sold on the internet. Our “top-up” services allow consumers to pre-pay for mobile phone or other services, and otherwise store value with service providers that can be accessed by the consumer in the future.
Expenses incurred in connection with the development of certain new service offerings, including costs to develop mobile money transfer services and new prepaid service offerings, and non-recurring costs incurred to effect the spin-off are included in “Other”.
Intellectual Property
The Western Union brand, consisting of trademark registrations in many countries, is material to our company. The loss of the Western Union trademark or a diminution in the perceived quality associated with the name would harm our growth. The Vigo, Orlandi Valuta, Speedpay, Paymap ® , Equity Accelerator, Just in Time EFT, Western Union Quick Collect, Quick Pay, Quick Cash, Convenience Pay, Pago Fácil (registered in Argentina) and other trademarks and service marks are also important to our company.
We own patents and patent applications covering aspects of our processes and services. We have been, are and in the future may be, subject to claims and suits alleging that our technology or business methods infringe patents owned by others, both in and out of the United States. Unfavorable resolution of these claims could require us to change how we deliver services, result in significant financial consequences, or both, which could adversely affect our business, financial position and results of operations.
Risk Management
Our company has a credit risk management department that evaluates and monitors our agent-related credit and fraud risks. We are exposed to credit risk related to receivable balances from agents in the money transfer, walk-in bill payment and money order settlement process. We also are exposed to credit risk directly from consumer transactions particularly through our online services and electronic consumer-to-business channels, where transactions are originated through means other than cash, and may therefore be subject to “chargebacks,” insufficient funds or other collection impediments, such as fraud. Our credit risk management team performs a credit review before each agent signing and conducts periodic analyses. As a result, our losses associated with bad debts have been less than 1% of our annual revenue in each of the last three fiscal years. However, the recent global economic crisis may increase our losses associated with bad debts.
To manage our exposures to credit risk with respect to investment securities, money market fund investments and other credit risk exposures resulting from our relationships with banks and financial institutions, we regularly review investment concentrations, trading levels, credit spreads and credit ratings, and we maintain our largest relationships with globally diversified financial institutions. We also limit our investment level with respect to individual funds.
A key component of the Western Union business model is our ability to manage financial risk associated with conducting transactions worldwide. We settle accounts with the majority of our agents in United States dollars or euros. We utilize currency exchange contracts, primarily forward contracts, to mitigate the risks
 
14

Table of Contents
associated with currency fluctuations. Limited foreign currency risk arises with respect to the agent settlement process. The foreign currency exchange risk is limited because the majority of money transfer transactions are paid within 24 hours after they are initiated and agent settlements occur within a few days in most instances.
Our results may fluctuate due to changes in interest rates. We manage this risk by targeting specific durations on investments and by managing the fixed and floating mix of debt either through issuance of fixed or floating securities directly or through the use of interest rate swaps.
International Investment
We have accumulated approximately $1.6 billion of foreign earnings at December 31, 2008, for which no provision has been made for United States federal and state income taxes, as we have reinvested or expect to reinvest these earnings outside the United States indefinitely. We believe the investment of these earnings over a number of years will assist us in executing our international strategies, including expanding and diversifying global distribution and exploring new service offerings, as follows:
 
 	•	 	providing us with the ability to acquire companies outside the United States that complement our existing businesses worldwide;	
 
 	•	 	providing us with the ability to strategically invest in joint ventures and increase our ownership interest in certain of our agents, such as our acquisition of the money transfer assets from our existing money transfer agent in Panama and our acquisition of 80% of our existing money transfer agent in Peru;	
 
 	•	 	developing new or enhancing existing software to support the expansion of our international agent network;	
 
 	•	 	expanding our service offerings;	
 
 	•	 	expanding our international operating sites; and	
 
 	•	 	funding our operating cash requirements outside the United States.	
The timing of these investments will be based on specific opportunities.
Regulation
Our business is subject to a wide range of laws and regulations enacted by the United States federal government, each of the states, many localities and other countries. These include financial services regulations, consumer disclosure and consumer protection laws, currency control regulations, money transfer and payment instrument licensing regulations, escheat laws and laws covering consumer privacy, data protection and information security. Our services also are subject to an increasingly strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing and other illicit activity. Failure to comply with any of these requirements—by either Western Union or its agents (who are third parties, over whom Western Union has limited legal and practical control)—could result in the suspension or revocation of a license or registration required to provide money transfer services, the limitation, suspension or termination of services, the seizure of our assets, and/or the imposition of civil and criminal penalties, including fines and restrictions on our ability to offer services. We continue to implement policies and programs and adapt our business practices and strategies to help us comply with current and evolving legal standards and industry practices. These programs include dedicated compliance personnel, training and monitoring programs, suspicious activity reporting, regulatory outreach and education, and support and guidance to our agent network on regulatory compliance.
Money Transfer and Payment Instrument Licensing and Regulation
In the United States, most states license money transfer services providers. Many states exercise authority over the operations of our money transfer services and, as part of this authority, regularly examine us. Many states require us to invest the proceeds of money transfers in high-quality, investment grade securities, and our
 
15

Table of Contents
use of such investments is restricted to satisfy outstanding settlement obligations. We regularly monitor credit risk and attempt to mitigate our exposure by making high-quality investments in compliance with these regulations. The significant majority of our investment securities, classified within “settlement assets” in the consolidated balance sheets, most of which relate to state licensing requirements in the United States, have credit ratings of “AA-” or better from a major credit rating agency as of December 31, 2008.
These licensing laws also cover matters such as government approval of controlling shareholders and senior management of our licensed entities, regulatory approval of agent locations, consumer disclosures and the filing of periodic reports by the licensee, and require the licensee to demonstrate and maintain certain net worth levels. Many states also require money transmitters and their agents to comply with federal and/or state anti-money laundering laws and regulations.
Our money transfer and money order services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001 (collectively, the “BSA”) and similar state laws and regulations. The BSA, among other things, requires money transfer companies and the issuers and sellers of money orders, to develop and implement risk-based anti-money laundering programs, report large cash transactions and suspicious activity, and in some cases, to collect and maintain information about consumers who use their services and maintain other transaction records. Many states impose similar and, in some cases, more stringent requirements. These requirements also apply to our agents. In addition, the United States Department of the Treasury has interpreted the BSA to require money transfer companies to conduct due diligence into and risk-based monitoring of their agents inside and outside the United States.
IPS is subject to similar licensing and regulatory requirements with respect to the issuance of Western Union branded money orders. Western Union provides services in support of IPS’s compliance efforts. After the Transition Date, Western Union will assume responsibility for the licensing and regulatory requirements associated with the Western Union branded money orders.
Economic and trade sanctions programs administered by the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) prohibit or restrict transactions to or from (or dealings with) certain countries, their governments, and in certain circumstances, their nationals, as well as with specifically-designated individuals and entities such as narcotics traffickers, terrorists and terrorist organizations. We provide very limited consumer-to-consumer services to individuals in Cuba, Syria and Sudan pursuant to and as authorized by advisory opinions of, or licenses granted by, OFAC.
Outside of the United States, our money transfer business is subject to some form of regulation in all of the countries and territories in which we offer those services. These laws and regulations may include limitations on what types of entities may offer money transfer services, limitations on the amount of principal that can be sent into or out of a country, limitations on the number of money transfers that may be sent or received by a consumer, and agreements on the rates of exchange between currencies. They may also include laws and regulations intended to help detect and prevent money laundering or terrorist financing. In most countries, our agents are required to obtain licenses or permits to offer money transfer services.
We have developed and continue to enhance global compliance programs to monitor and address various aspects of these legal and regulatory requirements. Our money transfer network operates through third-party agents in most countries, and our legal and practical ability to control those agents’ compliance activities is limited. To assist in managing and monitoring money laundering and terrorist financing risks, we have developed and continue to enhance our global compliance programs, including an anti-money laundering compliance program comprised of policies, procedures, systems and internal controls. As of December 31, 2008, we have approximately 300 employees in a number of our offices around the world dedicated to our global compliance programs and we spend over $40 million annually on these efforts.
 
16

Table of Contents
Government agencies both inside and outside the United States may impose new or additional rules on money transfers affecting us or our agents, including regulations that:
 
 	•	 	prohibit transactions in, to or from certain countries, governments and individuals and entities;	
 
 	•	 	impose additional identification, reporting or recordkeeping requirements;	
 
 	•	 	limit the entities capable of providing money transfer services or imposing additional licensing or registration requirements;	
 
 	•	 	impose minimum capital or other financial requirements on us or our agents;	
 
 	•	 	limit or restrict the revenue which may be generated from money transfers, including transaction fees and revenue derived from foreign exchange;	
 
 	•	 	require additional disclosures to consumers;	
 
 	•	 	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; or	
 
 	•	 	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.	
One example of such new rules is the Payment Services Directive (“PSD”) which was adopted in the European Union (“EU”) in November 2007. Under the PSD, the licensing and other legal requirements for offering money transfer and other payment services within EU countries will be harmonized. Currently, the laws regarding licensing and the provision of these services differ significantly among these countries. The PSD will impose new rules on payment service providers like Western Union and its EU-based agents, as well as present new opportunities to engage agents in classes of trade that were previously not permissible in certain member states. The PSD will be effective on November 1, 2009. We are developing plans to capitalize on these new opportunities and are evaluating the legal and operational requirements and impact the PSD will have on our business and the competitive environment in Europe.
Escheat Regulations
Our company is subject to unclaimed or abandoned property (escheat) laws in the United States and abroad. These laws require us to turn over to certain government authorities the property of others held by our company that has been unclaimed for a specified period of time, such as unpaid money transfers. We hold property subject to escheat laws and we have an ongoing program to comply with the laws. Although we believe we are in compliance with all applicable laws, we are subject to audits with regard to our escheatment practices.
Privacy and Information Security Regulations
The collection, transfer, use and storage of personal information is required to provide our services. These activities are subject to information security, data privacy and related laws and regulations in the United States and other countries. In the United States, data privacy laws such as the federal Gramm-Leach-Bliley Act, California SB1/ SB1386 and various state laws apply directly to a broad range of financial institutions including money transmitters like Western Union, and indirectly to companies that provide services to those institutions. Many state laws require us to provide notification to affected individuals, state officers and consumer reporting agencies in the event of a security breach of computer databases or physical documents that contain certain types of non public personal information. These regulations and laws also impose requirements for safeguarding personal information through the issuance of internal data security standards, controls or guidelines.
The collection, transfer, use and storage of personal information required to provide our services is subject to data privacy laws outside of the United States, such as laws adopted pursuant to the European Union’s 95/46 EC Directive of the European Parliament (the “Data Protection Directive”), Canada’s Personal Information
 
17

Table of Contents
Protection and Electronic Documents Act, individual European national laws and data privacy laws of other provinces or countries. In some cases, the laws of a country may be more restrictive than the Gramm-Leach-Bliley Act or the laws developed under the Data Protection Directive and may impose additional duties on companies. Each of these laws may restrict the collection, transfer, processing, storage, use and disclosure of sensitive personal information, may require notice to individuals of privacy practices and may give individuals certain rights to prevent the use or disclosure of sensitive personal information. These regulations and laws may also impose requirements for safeguarding personal information through the issuance of internal data security standards, controls or guidelines.
In connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations, Western Union makes information available to United States federal and state, as well as certain foreign government agencies, when required by law. In recent years, these agencies have increased their requests for such information from Western Union and other companies (both financial service providers and others), particularly in connection with efforts to prevent terrorist financing. During the same period, there has also been increased public attention regarding the corporate use and disclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information security and consumer privacy. These regulatory goals—the prevention of money laundering and terrorist financing and the protection of consumer privacy—may conflict, and the law in these areas is not consistent or settled. While we believe that Western Union is compliant with its regulatory responsibilities, the legal, political and business environments in these areas are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could expose Western Union to increased program costs, liability and reputational damage.
Banking Regulation
Western Union International Bank operates under a banking license granted by the Austrian Financial Market Authority (“FMA”), allowing the bank to offer a range of financial services in the 27 member states of the European Union and the three additional states of the European Economic Area. The banking license subjects our bank to the Austrian Banking Act regulation by the FMA and the Austrian National Bank. The bank also is subject to regulation, examination and supervision by the New York State Banking Department (the “Banking Department”), which has regulatory authority over our subsidiary that holds all interest in the bank, a limited liability investment company organized under Article XII of the New York Banking Law. An Agreement of Supervision with the Banking Department imposes various regulatory requirements including operational limitations, capital requirements, affiliate transaction limitations, and notice and reporting requirements. Banking Department approval is required under the New York Banking Law and the Agreement of Supervision prior to any change in control of the Article XII investment company.
Since Western Union International Bank does not operate any banking offices in the United States and does not conduct business in the United States except as may be incidental to its activities outside the United States, our company’s affiliation with Western Union International Bank does not cause it to be subject to the provisions of the Bank Holding Company Act.
In Brazil, we have submitted applications to the Central Bank of Brazil for commercial bank and exchange broker licenses. Such licenses will enable us to engage in financial services which we are unable to provide today, including domestic money transfer and bill payments.
Other
Some of our services are subject to card association rules and regulations. For example, an independent standards-setting organization, the Payment Card Industry (“PCI”) Security Standards Council, including American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa Inc. International developed a set of comprehensive requirements concerning payment card account security through
 
18

Table of Contents
the transaction process, called the Payment Card Industry Data Security Standard (“PCI DSS”). All merchants and service providers that store, process and transmit payment card data are required to comply with PCI DSS as a condition to accepting credit cards. We are subject to annual reviews to ensure compliance with PCI regulations worldwide and are subject to fines if we are found to be non-compliant. We are currently working with the company that performed the annual review on a plan to remediate non-compliance with certain provisions of PCI DSS.
Stored-value services offered by Western Union prepaid services are subject to federal and state laws and regulations related to consumer protection, licensing, escheat and money laundering. These laws are evolving, unclear and sometimes inconsistent, and the extent to which these laws apply to Western Union or its consumers is in a state of change. We are unable to determine the impact that the clarification of these laws and their future interpretations may have on these services.
The Separation of Western Union from First Data
Until September 29, 2006, the Company was a wholly owned subsidiary of First Data. The spin-off by First Data of its money transfer and consumer payments businesses became effective on September 29, 2006 through a distribution of 100% of the common stock of The Western Union Company to the holders of record of First Data’s common stock (the “Distribution”). We have received a private letter ruling from the Internal Revenue Service and an opinion from tax counsel indicating that the spin-off was tax free to the First Data stockholders, First Data and Western Union. Refer to Item 1A of Part I for additional details on tax risks associated with the spin-off from First Data.
We entered into various agreements with First Data prior to the spin-off which will have potential impacts on our business in future periods, including:
 
 	•	 	Separation and Distribution Agreement— This agreement defines our ongoing relationship with First Data following the spin-off, and provides for cross-indemnities, principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of First Data’s retained businesses with First Data.	
 
 	•	 	Tax Allocation Agreement— We entered into a tax allocation agreement with First Data setting forth the rights and obligations of First Data and us with respect to taxes imposed on our respective businesses both prior to and after the spin-off. Based on the private letter ruling from the Internal Revenue Service and the opinion from tax counsel noted above, we expect that the spin-off qualifies for tax-free treatment under the Internal Revenue Code for First Data stockholders, First Data and Western Union. Even so, the tax allocation agreement sets forth the rights and obligations of First Data and us with respect to taxes and other liabilities that could be imposed as a result of a final determination that is inconsistent with the anticipated tax consequences of the spin-off (as set forth in the private letter ruling and tax opinion) (“Spin-off Related Taxes”). Specifically, we will be liable to First Data for any Spin-off Related Taxes attributable solely to actions taken by or with respect to us. In addition, we will also be liable for 50% of any Spin-off Related Taxes (i) that would not have been imposed but for the existence of both an action by us and an action by First Data or (ii) where we and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. First Data generally will be liable for all Spin-off Related Taxes, other than those described above. 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 position, results of operations and cash flows. For a more complete discussion on the Tax Allocation Agreement refer to Note 10 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10K.	
 
 	•	 	Money Order Agreement— IPS, a subsidiary of First Data, has agreed to issue Western Union ® branded money orders for us. On July 18, 2008, the Company entered into an agreement with IPS, which modified the existing business relationship with respect to the issuance and processing of money orders. Under the terms of the agreement, beginning on October 1, 2009, IPS will assign and transfer to	
 
19

Table of Contents

 	us certain operating assets used by IPS to issue money orders and an amount of cash sufficient to satisfy all outstanding money order liabilities, which vary from day to day but approximate $800 million. IPS will continue to provide to us clearing services necessary for payment of the money orders in exchange for the payment by us to IPS of a per-item administrative fee. We will no longer provide to IPS the services required under the original money order agreement or receive from IPS the fee for such services.	
Employees and Labor
As of January 31, 2009, our businesses employed approximately 5,900 employees.
Available Information
The Western Union Company is a Delaware corporation and its principal executive offices are located at 12500 East Belford Avenue, Englewood, CO, 80112, telephone (866) 405-5012. The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Financial Information” portion of the Company’s web site, www.westernunion.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission, or the “SEC.” The SEC maintains a web site, www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically with the SEC by the Company.
Executive Officers of the Registrant
As of February 18, 2009 our executive committee consists of the individuals listed below:

Name	 	Age	 	Position	
Christina A. Gold	 	61	 	President, Chief Executive Officer and Director	
Liz Alicea-Velez	 	52	 	Executive Vice President, Latin America/Caribbean	
Guy A. Battista	 	60	 	Executive Vice President and President of Western Union Financial Services, Inc.	
Royal Cole	 	47	 	Executive Vice President and General Manager, Payment Services	
Hikmet Ersek	 	48	 	Executive Vice President and Managing Director, Europe/Middle East/Africa/Asia	
Gail Galuppo	 	45	 	Executive Vice President and Chief Marketing Officer	
Robin Heller	 	43	 	Executive Vice President, Operations and IT	
Anne McCarthy	 	49	 	Executive Vice President of Communications and Corporate Affairs	
Scott Scheirman	 	46	 	Executive Vice President and Chief Financial Officer	
David Schlapbach	 	50	 	Executive Vice President, General Counsel and Secretary	
Stewart Stockdale	 	47	 	Executive Vice President and President, The Americas	
Grover Wray	 	48	 	Executive Vice President of Human Resources	
Christina A. Gold is our President, Chief Executive Officer and one of our directors. Prior to taking these positions in September 2006, she was a Senior Executive Vice President of First Data and President of Western Union since May 2002. From October 1999 to May 2002, she was Chairman, President and Chief Executive Officer of Excel Communications, Inc. Ms. Gold served as President and Chief Executive Officer of The Beaconsfield Group from March 1998 to October 1999. In 1970, she joined Avon Products, Inc., serving as President of Avon Canada from 1989 to 1993, President of Avon North America from 1993 to 1997 and Executive Vice President of Global Development from 1997 to 1998. Ms. Gold is a Director of ITT Corporation and New York Life Insurance Company.
Liz Alicea-Velez is our Executive Vice President, Latin America/Caribbean. Prior to taking this position in February 2007, she served as Senior Vice President and General Manager of Western Union’s Latin America/Caribbean region, President of Orlandi Valuta and President of Vigo Remittance Corporation from February 2006 to February 2007. From September 2002 to February 2006, Ms. Alicea-Velez served as Senior Vice
 
20

Table of Contents
President and General Manager of Western Union’s Domestic Money Transfer and Retail Money Order businesses, and as President of Orlandi Valuta. Prior to that time, she served as Area Vice President of Western Union’s Latin America/Caribbean region from January 1999 to September 2002. Ms. Alicea-Velez joined First Data in 1992.
Guy A. Battista is our Executive Vice President and President of Western Union Financial Services, Inc. Prior to taking this position in September 2006, he was an Executive Vice President and Chief Information Officer of First Data since March 2001. Mr. Battista joined First Data in 1990.
Royal Cole is our Executive Vice President and General Manager, Payment Services. Mr. Cole has had responsibility for Western Union’s Payment Services including Retail Money Orders and Prepaid Services since December 2005. Mr. Cole also led our United States Agent Network Management group from February 2007 until June 2008. From December 2001 to December 2005, he was Senior Vice President and General Manager of Agent Network Management for Western Union. Prior to that time, Mr. Cole was Senior Vice President and General Manager of ValueLink from November 1999 to November 2001. Prior to joining Western Union in 1991, Mr. Cole held sales and sales management positions with the Pepsi-Cola Company.
Hikmet Ersek is our Executive Vice President and Managing Director, Europe/Middle East/Africa/Asia. From September 2006 to December 2008, Mr. Ersek served as Executive Vice President and Managing Director, Europe/Middle East/Africa/South Asia. Prior to September 2006, Mr. Ersek held various positions with Western Union. From March 2004 to September 2006, he was Senior Vice President, Europe/Middle East/Africa/South Asia and from October 2002 to March 2004 he was Senior Vice President, Europe/Middle East/Africa. Prior to that time, Mr. Ersek was Regional Vice President, Central and Eastern Europe from July 2001 to October 2002. Prior to joining Western Union in September 1999, Mr. Ersek was with GE Capital specializing in European payment systems and consumer finance.
Gail Galuppo is our Executive Vice President and Chief Marketing Officer. Prior to joining Western Union in September 2007, Ms. Galuppo was the Chief Marketing and Customer Officer of Standard Chartered Bank from August 2006, and the Global Head of Credit Cards of Standard Chartered Bank from September 2005 to August 2006. From April 2001 to August 2005, Ms. Galuppo led brand management, promotional retail marketing and product category strategy for Sears, Roebuck and Company, most recently serving as its Vice President, Brand and Category Strategy.
Robin Heller is our Executive Vice President, Operations and IT. Prior to taking this position in September 2006, she was Senior Vice President, Global Operations for First Data since November 2004. From July 2003 to November 2004, Ms. Heller served in a similar capacity with Western Union. Prior to that time, she was Senior Vice President, Sales, Marketing and Operations for Western Union Commercial Services from July 2002 until June 2003 and Senior Vice President, Operations and Client Management for IPS, a First Data subsidiary, from July 2000 until June 2002. Ms. Heller joined First Data in 1988.
Anne McCarthy is our Executive Vice President of Communications and Corporate Affairs. Prior to joining Western Union in March 2007, Ms. McCarthy was the Senior Vice President of Global Communications of SAP A.G. starting in August 2003. She served as Vice President of Communications for the DuPont Company from April 2002 until July 2003.
Scott Scheirman is our Executive Vice President and Chief Financial Officer of our company. Prior to taking this position in September 2006, Mr. Scheirman held a variety of positions with First Data, including Senior Vice President and Chief Financial Officer for Western Union from 1999 to September 2006. Prior to joining First Data in 1992, Mr. Scheirman was with Ernst & Young LLP.
David Schlapbach is our Executive Vice President, General Counsel and Secretary. Prior to taking these positions in September 2006, Mr. Schlapbach held a variety of positions at First Data since joining it in 1996, including Deputy General Counsel—International, with responsibility for First Data’s legal matters outside the
 
21

Table of Contents
United States. In this capacity, he worked in First Data’s Paris office for four years, returning in 2004 to become General Counsel for Western Union. Prior to joining First Data, Mr. Schlapbach was an attorney at the law firm of Blackwell Sanders Peper Martin LLP in St. Louis, Missouri. Mr. Schlapbach also serves as the Chairman of the Board of the Western Union Foundation.
Stewart A. Stockdale is our Executive Vice President and President, The Americas. Prior to taking this position in November 2008, Mr. Stockdale served as Executive Vice President and President, United States and Canada, from June 2008 with Western Union. Prior to joining Western Union in June 2008, Mr. Stockdale served as the President of Simon Brand Ventures and as Chief Marketing Officer of Simon Property Group since 2002.
Grover Wray is our Executive Vice President of Human Resources. Prior to taking this position in September 2006, Mr. Wray joined First Data as Senior Vice President, Human Resources for Western Union in October 2005. Prior to joining Western Union, from January 2004 to September 2005, Mr. Wray was Vice President, Leadership and Professional Development and Staffing, for Janus Capital Group. Previously, Mr. Wray served as Chief Human Resource Officer, North America for Heidrick & Struggles from 2003 to 2004. From 1988 to 2003, he held increasingly responsible senior management roles at Arthur Andersen LLP, culminating in the role of Managing Partner of Human Resources in North America.
 
22

Table of Contents

 ITEM  1A.	RISK FACTORS	
There are many factors that affect our business, financial position and results of operations, some of which are beyond our control. The following is a description of some important factors that may cause the actual results of operations in future periods to differ materially from those currently expected or desired. The risks identified below are not all-encompassing but should be considered in establishing an opinion of the Company’s future operations.
Risks Relating to Our Business and Industry
Current difficult conditions in the global financial markets and continued financial market disruptions could adversely affect our business, financial condition and results of operations.
The global capital and credit markets are experiencing unprecedented volatility and disruption. As a result, we may face certain risks in connection with these events. Further, we believe that the risk of other adverse events occurring is increased. In particular:
 
 	•	 	Our agents or billers may have 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. Our billers may have fewer customers making payments to them, particularly billers in those industries that may be more affected by an economic downturn such as the automobile, mortgage and financial services industries.	
 
 	•	 	Short-term borrowings in the commercial paper markets through which we finance a portion of our operations may be subject to increases in interest rates or become unavailable. Those increases and the tightening of the credit markets in general may adversely impact our ability to access the commercial paper markets in the future, through which we customarily supply liquidity to our daily operations.	
 
 	•	 	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 were unable or unwilling 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.	
 
 	•	 	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 and other purposes.	
 
 	•	 	The market value of the securities in our investment portfolio may substantially decline. The impact of that decline in value may adversely affect our results of operations and financial condition.	
 
 	•	 	The derivative financial instruments that we use reduce our exposure to various market risks including changes in interest rates and foreign exchange rates. Our counterparties to our derivative instruments may fail to honor their obligations, which could expose us to risks we had sought to mitigate. That failure could have a material adverse effect on our financial condition and results of operations.	
 
 	•	 	The third-party service providers on whom we depend may experience adverse effects in their businesses due to market conditions, which may have an adverse effect on their ability to provide services and a potential adverse effect on us. The impact of a change or temporary stoppage of services may have an adverse effect on our business, results of operations and financial condition.	
 
 	•	 	Banks upon which we rely to conduct our businesses could fail. This could lead to our inability to access funds and/or credit losses for us and could adversely impact our ability to conduct our business.	
If current levels of market disruption and volatility continue or worsen, we could experience a material adverse effect on our ability to access capital and on our business, financial condition and results of operations.
 
23

Table of Contents
Interruptions in migration patterns, including as a result of the current economic conditions, could adversely affect our business, financial condition and results of operations.
Our money transfer business relies in part on migration, which bring workers into countries with greater economic opportunities than their native countries. A significant portion of money transfers are initiated by international migrants. Migration is affected by, among other things, the availability of job opportunities and overall economic conditions, changes in immigration laws and political or other events (such as war, terrorism or health emergencies) that would make it more difficult for workers to migrate or work abroad and could adversely affect our remittance volume and could have an adverse effect on our business, financial position and results of operations.
Our customers tend to have job opportunities in industries that may be more quickly or significantly impacted by deteriorating economic conditions than other industries. Reduced job opportunities, in particular in construction, manufacturing, hospitality, agriculture and retail, or an overall slowdown in the economy in the United States or other countries, such as that currently being experienced, could adversely affect the principal amounts transferred and correspondingly our results of operations. If general market softness in those national economies important to migrant workers continues, our results of operations could be adversely impacted. Additionally, if our consumer transactions decline, the amount of money that consumers send per transaction declines, or migration patterns shift due to deteriorating economic conditions, we may be unable to timely and effectively reduce our operating costs or take other actions in response, which could adversely affect our results of operations.
Our ability to adopt technology in response to changing industry and consumer needs or trends poses a challenge to our business.
Our ability to compete in the markets we serve may be threatened by change, including changes in technology, changes with respect to consumer needs, competition and industry standards. We actively seek solutions that respond in a timely manner to new technology-based money transfer services such as internet, land and mobile phone based money transfer services and prepaid, stored-value and other card-based money transfer services. Failure to respond well to these challenges could adversely impact our business, financial position and results of operations.
Our business is subject to a wide range of laws and regulations, especially laws designed to prevent money laundering and terrorist financing. Failure by us, our agents or subagents to comply with those laws and regulations could have an adverse effect on our business, financial position and results of operations.
As described under Item 1 of Part I, our business is subject to a wide range of laws and regulations. These include financial services regulations, consumer disclosure and consumer protection laws, currency control regulations, money transfer and payment instrument licensing regulations, escheat laws and laws covering consumer privacy, data protection and information security. Our services also are subject to an increasingly strict set of legal and regulatory requirements intended to help detect and prevent money laundering, terrorist financing and other illicit activity; the interpretation of such requirements by judges, regulatory bodies and enforcement agencies is changing, often quickly and with little notice. Economic and trade sanctions programs that are administered by the Treasury Department’s Office of Foreign Assets Control prohibit or restrict transactions to or from or dealings with specified countries, their governments, and in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations. As federal and state legislative and regulatory scrutiny and enforcement action in these areas increase, we expect that our costs of complying with these requirements will increase, perhaps substantially. Failure to comply with any of these requirements—by either us, our agents or subagents (both of whom are third parties, over whom we have limited legal and practical control) could result in the suspension or revocation of a license or registration required to provide money transfer services, the limitation, suspension or termination of services, the seizure and/or forfeiture of our assets and/or the imposition of civil and criminal penalties, including fines. In addition to those direct costs, a failure by us, our agents or subagents to comply with applicable laws and regulations also could seriously damage our reputation and brands, and result in diminished revenue and profit and increased operating costs.
 
24

Table of Contents
In connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations, we make information available to United States federal and state, as well as certain foreign, government agencies, when required by law. In recent years, these agencies have increased their requests for such information from us and other companies (both financial service providers and others), particularly in connection with efforts to prevent terrorist financing. During the same period, there has also been increased public attention regarding the corporate use and disclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information security and consumer privacy. These regulatory goals—the prevention of money laundering and terrorist financing and the protection of consumer privacy—may conflict, and the law in these areas is not consistent or settled. While we believe that we are compliant with our regulatory responsibilities, the legal, political and business environments in these areas are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage.
Changes in the regulatory environment may also impact the manner in which we may operate our business or may change the competitive landscape. One example of such a change is the Payment Services Directive (“PSD”) which was adopted in the European Union (“EU”) in November 2007. The PSD will change the domestic and cross border payments market in the EU. Under the PSD, the licensing and other legal requirements for offering these services within EU countries will be harmonized. Currently, the laws regarding licensing and the provision of these services differ significantly among these countries. The PSD will also impose new rules on payment service providers like Western Union and certain of its EU-based agents and on banks and non-bank payments services providers which may offer these services. The PSD will be effective on November 1, 2009. Such changes could result in increased costs to comply with these new rules, or in the event we are unable to comply, could have an adverse impact on our business, financial position and results of operations. Such changes could also increase competition in some or all of our areas of service.
Our fees and/or foreign exchange spreads may be reduced or limited because of regulatory initiatives or proceedings that are either industry wide or specifically targeted at our company. For example, initiatives both in the United States and at G-8 summit meetings have focused on lowering international remittance costs. These initiatives may have an adverse impact on our business, financial position and results of operations.
Risks associated with operations outside the United States could adversely affect our business, financial position and results of operations.
Because an increasing portion of our revenue is generated in currencies other than the United States dollar, we are subject to risks related to changes in currency rates and foreign exchange regulation. We use foreign currency forward contracts to mitigate the risks associated with changes in foreign currency. However, these derivative contracts do not eliminate all of the risks related to foreign currency translation.
A significant portion of our business is generated outside of the United States and much of the cash and cash equivalents from this business are held by our foreign entities. Repatriating these funds to the United States would, in many cases, result in significant tax obligations because most of these funds have been taxed at relatively low foreign tax rates compared to our combined federal and state tax rates in the United States. If repatriation of these funds is required or if a change in legislation requires a different tax treatment, it could have an adverse impact on our business, financial position and results of operations.
Money transfers to, from or within or between countries may be limited or prohibited by law. At times in the past, we have been required to cease operations in particular countries due to political uncertainties or government restrictions imposed by foreign governments or the United States. Additionally, economic or political instability or natural disasters may make money transfers to, from or within a particular country difficult, such as when banks are closed, when currency devaluation makes exchange rates difficult to manage or when natural disasters or civil unrest makes access to agent locations unsafe. These risks could negatively impact our ability to make payments to or receive payments from international agents or our ability to recoup funds that
 
25

Table of Contents
have been advanced to international agents and could adversely affect our business, financial position and results of operations. In addition, the general state of telecommunications and infrastructure in some lesser developed countries, including countries where we have a large number of transactions, creates operational risks for us and our agents that generally are not present in our operations in the United States and other more developed countries.
As noted above, many of our agents outside the United States are post offices, which are usually owned and operated by national governments. These governments may decide to change the terms under which they allow post offices to offer remittances and other financial services. For example, governments may decide to separate financial service operations from postal operations, or mandate the creation or privatization of a “post bank” or they may require multiple service providers in their network. These changes could have an adverse effect on our ability to distribute, offer or price our services in countries that are material to our business.
Our consolidated balance sheet may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, financial position and results of operations.
We have substantial indebtedness as of December 31, 2008. Our regulators expect us to possess sufficient financial soundness and strength to adequately support our regulated subsidiaries. In addition, although we are not a bank holding company for purposes of United States law or the law of any other jurisdiction, as a global provider of payments services and in light of the changing regulatory environment in various jurisdictions, we could become subject to new capital requirements introduced or imposed by our regulators that could require us to issue securities that would qualify as Tier 1 regulatory capital under the Basel Committee accords or retain earnings over a period of time. Any of these requirements could adversely affect our business, financial position and results of operations.
If we are unable to maintain our agent or biller networks under terms consistent with those currently in place, or if our agents or subagents fail to comply with Western Union business and technology standards and contract requirements or applicable laws and regulations, our business, financial position and results of operations would be adversely affected.
Most of our consumer-to-consumer revenue is derived through our agent network. In addition, our international agents may have subagent relationships in which we are not directly involved. Transaction volumes at existing agent and subagent locations often increase over time and new agents and subagents provide us with additional revenue. If agents decide to leave our network, if we are unable to sign new agents or maintain our agent network under terms consistent with those currently in place, or if our agents are unable to maintain relationships with or sign new subagents, our revenue and profit growth rates may be adversely affected. Agent attrition might occur for a number of reasons, including a competitor engaging an agent or an agent’s dissatisfaction with its relationship with us or the revenue derived from that relationship. In addition, agents may generate fewer transactions or less revenue for various reasons, including increased competition or changes in the economy. Because an agent is a third party that engages in a variety of activities in addition to providing our services, it may encounter business difficulties unrelated to its provision of our services, which could cause the agent to reduce its number of locations, hours of operation, or cease doing business altogether.
In some cases, we rely on our agents’ information systems and processes to obtain transaction data. If an agent or subagent loses information, if there is a significant disruption to the information systems of an agent or subagent, or if an agent or subagent does not maintain the appropriate controls over their systems, we may experience reputational harm which could result in losses to the Company.
The types of enterprises that are legally authorized to act as our agents vary significantly from one country to another. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute
 
26

Table of Contents
our services and the cost of providing such services, both by us and our agents. For example, a requirement that a money transfer provider be a bank or other highly regulated financial entity could increase significantly the cost of providing our services in many countries where that requirement does not exist today or could prevent us from offering our services in an affected country. Further, any changes in law that would require us to provide directly the money transfer services to consumers as opposed to through an agent network—effectively changing our business model—could significantly adversely impact our ability to provide our services, and/or the cost of our services, in the relevant jurisdiction.
Our agents are subject to a variety of regulatory requirements, which differ from jurisdiction to jurisdiction and are subject to change. A material change in the regulatory requirements necessary to offer money transfer services in a jurisdiction important to our business could mean increased costs and/or operational demands on our agents, which could result in the attrition of agents and subagents, a decrease in the number of locations at which money transfer services are offered and other negative consequences. The regulatory status of our agents could affect their ability to offer our services. For example, our agents in the United States are considered Money Service Businesses, or “MSBs,” under the Bank Secrecy Act. An increasing number of banks view MSBs, as a class, as higher risk customers for purposes of their anti-money laundering programs. If a significant number of agents are unable to maintain existing or establish new banking relationships, they may not be able to continue to offer our services.
Although most of our Orlandi Valuta and Vigo branded agents are not exclusive, nearly all of the Western Union branded agents have offered our services on an exclusive basis—that is, they have agreed by contract not to provide any non-Western Union branded money transfer services. While we believe that these agreements generally are valid and enforceable, changes in laws regulating competition or in the interpretation of those laws could undermine our ability to enforce them in the future. Recently, several countries in the Commonwealth of Independent States, Africa and South Asia have promulgated laws or regulations that effectively prohibit payment service providers, such as money transfer companies, from agreeing to exclusive arrangements with agents in those countries. The inability to enforce our exclusivity rights under our contracts could adversely affect our operations and revenue by, for example, allowing competitors to benefit from the goodwill associated with the Western Union brand at our agent locations.
We have relationships with more than 6,300 businesses and other billers, including approximately 2,100 biller relationships relating to Pago Fácil, which was acquired in December 2006. These relationships are a core component of our consumer-to-business payment services, and we derive a substantial portion of our consumer-to-business revenue through these biller relationships. If we are unable to sign new billers or maintain our biller relationships under terms consistent with those currently in place, our revenue and profit growth rates may be adversely affected.
If consumers’ confidence in our business, or in traditional money transfer providers generally deteriorates, our business, financial position and results of operations could be adversely affected.
Our business is built on consumers’ confidence in our brands and our ability to provide fast, reliable money transfer services. Any erosion in consumers’ confidence in our business, or in traditional money transfer providers as a means to transfer money, could adversely impact transaction volumes which would in turn adversely impact our business, financial position and results of operations.
A number of factors could adversely affect consumers’ confidence in our business, or in traditional money transfer providers generally, many of which are beyond our control, and could have an adverse impact on our results of operations. These factors include:
 
 	•	 	changes or proposed changes in laws or regulations that have the effect of making it more difficult for consumers to transfer money using traditional money transfer providers;	
 
 	•	 	actions by federal, state or foreign regulators, including those that threaten the reliability of our money transfer services, such as the attempts by the Arizona Attorney General in 2006 to seize money transfer funds from states other than Arizona to Sonora, Mexico;	
 
27

Table of Contents

 	•	 	any significant interruption in our systems, including by fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, unauthorized entry and computer viruses; and	
 
 	•	 	any breach of our security policies or applicable legal requirements resulting in a compromise of consumer data.	
Many of our consumers are migrants. Consumer advocacy groups or governmental agencies could consider the migrants to be disadvantaged and entitled to protection, enhanced consumer disclosure, or other different treatment. If governments implement new laws or regulations that limit our right to set fees, or if consumer advocacy groups are able to generate widespread support for positions that are detrimental to our business, then our business, financial position and results of operations could be adversely affected.
We face credit, liquidity and fraud risks from our agents and from consumers that could adversely affect our business, financial position and results of operations.
The vast majority of our global funds transfer business is conducted through third-party agents that provide our services to consumers at their retail locations. These agents sell our services, collect funds from consumers and are required to pay the proceeds from these transactions to us. As a result, we have credit exposure to our agents. In some countries, our agent networks include superagents that establish subagent relationships; these agents must collect funds from their subagents in order to pay us. We are not insured against credit losses, except in certain circumstances related to agent theft or fraud. If an agent becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to pay money order, money transfer or payment services proceeds to us, we must nonetheless pay the money order, complete the money transfer or payment services on behalf of the consumer.
The liquidity of our agents is necessary for our business to remain strong and to continue to provide our services. If our agents are unable to settle with us in a timely manner, our liquidity could be affected.
From time to time, we have made, and may in the future make, short term advances and longer term loans to our agents. These advances and loans generally are secured by settlement funds payable by us to these agents. However, the failure of these borrowing agents to repay these advances and loans constitutes a credit risk to us.
We offer consumers the ability to transfer money utilizing their credit or debit card through various distribution channels such as the internet or telephone. Because they are not face-to-face transactions, these transactions involve a greater risk of fraud. We apply verification and other tools to help authenticate transactions and protect against fraud. However, these tools may not always be successful in protecting us against fraud. As the merchant of these transactions, we may bear the financial risk of the full amount sent in some of the fraudulent transactions. Issuers of credit and debit cards may also incur losses due to fraudulent transactions on our distribution channels and may elect to block transactions by their cardholders on those channels with or without notice. For example, during 2007, we received notification from several issuing banks that credit or debit cards issued by them were blocked from transacting on westernunion.com. Although these banks subsequently have allowed our consumers to use their cards again on our website, there is no certainty that these banks will not issue a similar restriction in the future, and as a result, we may continue to be impacted by notifications such as these in the future.
Interruptions in our systems or disruptions in our workforce may have a significant effect on our business.
Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer information systems. Any significant interruptions could harm our business and reputation and result in a loss of consumers. Our systems and operations could be exposed to damage or interruption from fire, natural disaster, power loss, telecommunications failure, terrorism, vendor failure, unauthorized entry and computer viruses or other causes, many of which may be beyond our control. Although we have taken steps to prevent a
 
28

Table of Contents
system failure, our measures may not be successful and we may experience problems other than system failures. We also may experience software defects, development delays, installation difficulties and other systems problems, which would harm our business and reputation and expose us to potential liability which may not be fully covered by our business interruption insurance. In addition, any strikes, work stoppages or other labor actions by employees who support our systems or perform any of our major functions could adversely affect our business. Our data applications may not be sufficient to address technological advances, regulatory requirements, changing market conditions or other developments.
Our business, financial position and results of operations could be harmed by adverse rating actions by credit rating agencies.
Currently, each of the major credit rating agencies has given our outstanding indebtedness an investment grade rating. If our current rating is downgraded, or if a negative outlook is provided by a rating agency, our business, financial position and results of operations could be adversely affected and perceptions of our financial strength could be damaged. This could adversely affect our relationships with our agents, particularly those agents that are financial institutions or post offices. In addition, if a downgrade or a negative outlook is provided by a rating agency, it could result in regulators imposing additional capital and other requirements on us, including imposing restrictions on the ability of our regulated subsidiaries to pay dividends. Also, a significant downgrade could increase our costs of borrowing money, adversely affecting our business, financial position and results of operations.
Western Union has been the subject of class-action litigation, and remains the subject of other litigation as well as consent agreements with or enforcement actions by regulators.
Western Union has been the subject of class-action litigation in the United States, alleging that its foreign exchange rate disclosures failed to adequately inform consumers about the revenue that Western Union and its agents derive from international remittances. These suits were all settled in or before 2004, without an admission of liability, and we have made changes in our advertising and consumer forms. It is possible that because of changes in law or future litigation or regulatory action, we could be required to modify our disclosures or our practices further. These modifications could be costly to implement, restrict our ability to advertise or promote our services and/or limit the amount of our foreign exchange income.
In addition, as a company that provides global financial services primarily to consumers, we could be subject to future class-action lawsuits, other litigation or regulatory action alleging violations of consumer protection or other laws. For example, we recently appealed to the Arizona Supreme Court a ruling from the Arizona Court of Appeals which overturned a trial court’s favorable decision regarding the authority of the Arizona Attorney General to seize money transfers originated in states other than Arizona and intended for payment in Mexico. The case was argued in January; however, the Arizona Supreme Court has not yet rendered a decision. In a separate set of issues, on January 8, 2009, the Arizona Superior Court ruled in Western Union’s favor and held that certain subpoenas for Western Union transaction data issued by the Arizona Attorney General were over-broad and unenforceable. The Company remains subject to scrutiny in Arizona by law enforcement and regulatory agencies. The Arizona Attorney General has and continues to make extensive data requests of the Company regarding its operations, its agents and its consumers. The legal and regulatory environment in Arizona remains challenging, and the Company could become subject to additional civil and possibly criminal actions. Additional civil actions or any criminal actions or an unfavorable resolution of the case described above could adversely affect our business, financial position and results of operations. We also are subject to claims asserted by consumers based on individual transactions.
We are subject to unclaimed or abandoned property (escheat) laws in the United States and abroad which require us to turn over to certain government authorities the property of others held by us that has been unclaimed for a specified period of time, such as unpaid money transfers. We hold property subject to escheat laws and we have an ongoing program to comply with those laws. In addition, we are subject to audits
 
29

Table of Contents
with regard to our escheatment practices. Any difference between the amounts we have accrued for unclaimed property and amounts that are claimed by a state or foreign jurisdiction could have a significant impact on our results of operations and cash flows. See “—Escheat Regulations” for further discussion.
Our consumer payments business is subject to various United States federal, state and local laws and regulations, as well as laws and regulations outside the United States. Our United States business is subject to reporting, recordkeeping and anti-money laundering provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and to regulatory oversight and enforcement by the United States Department of Treasury’s Financial Crimes Enforcement Network, or “FinCEN.” In addition, as a money transmitter, we are subject to licensing, regulation and examination by almost all the states and the District of Columbia.
Over the past several years, we have entered into a number of consent agreements with federal and state authorities, including FinCEN, the New York State Banking Department, the California Department of Financial Institutions and the Arizona Department of Financial Institutions, relating to the Bank Secrecy Act and anti-money laundering requirements and related consumer identification matters. These agreements required us to pay civil penalties and to take certain measures to enhance our compliance with recordkeeping, reporting, training and agent oversight requirements under applicable state and federal law. The consent agreements with the New York State Banking Department and the California Department of Financial Institutions were lifted during 2007; however, the financial services industry and businesses like ours continue to be under significant federal and state regulatory scrutiny with respect to the Bank Secrecy Act and anti-money laundering compliance matters. It is possible that as a result of periodic examinations or otherwise, we could be subject to deficiency findings, fines, criminal penalties, asset seizures or enforcement actions that could adversely affect our business, financial position and results of operations.
Unfavorable resolution of tax contingencies could adversely affect our tax expense.
Our tax returns and positions are subject to review and audit by federal, state, local and international taxing authorities. An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting our results of operations. We have established contingency reserves for material, known tax exposures, including potential tax audit adjustments with respect to our international operations which were restructured in 2003, whereby our income from certain foreign-to-foreign money transfer transactions has been taxed at relatively low foreign tax rates compared to our combined federal and state tax rates in the United States. Our reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve, and such resolution could have a material affect on our effective tax rate, financial position, results of operations and cash flows in the current period and/or future periods. With respect to these reserves, our income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e. new information) surrounding a tax issue, and (ii) any difference from the Company’s tax position as recorded in the financial statements and the final resolution of a tax issue during the period.
The Internal Revenue Service (“IRS”) completed its examination of the United States federal consolidated income tax returns of First Data for 2003 and 2004, of which Western Union was a part, and issued a Notice of Deficiency in December 2008. The Notice of Deficiency alleges significant additional taxes, interest and penalties owed with respect to a variety of adjustments involving us and our subsidiaries, and we generally have responsibility for taxes associated with these potential Company-related adjustments under the tax allocation agreement with First Data executed at the time of the Spin-off. We agree with a number of the adjustments in the Notice of Deficiency; however, we do not agree with the Notice of Deficiency regarding several substantial adjustments representing total alleged additional tax and penalties due of approximately $114 million. As of December 31, 2008, interest on the alleged amounts due for these unagreed adjustments would be approximately $23 million. A substantial part of the alleged amounts due for unagreed adjustments relates to our international restructuring,
 
30

Table of Contents
which took effect in the fourth quarter 2003, and, accordingly, the alleged amounts due related to such restructuring largely are attributable to 2004. We expect to contest those adjustments with which we do not agree by filing a petition in the United States Tax Court. We believe our overall reserves are adequate, including those associated with the adjustments alleged in the Notice of Deficiency. If the IRS’ position in the Notice of Deficiency is sustained, our tax provision related to 2003 and later years would materially increase.
We face competition from global and niche or corridor money transfer providers, United States and international banks, card associations, card-based payments providers and a number of other types of service providers. Our continued growth depends on our ability to compete effectively in the industry.
Money transfer and consumer payments are highly competitive industries which include service providers from a variety of financial and non-financial business groups. Our competitors include banks, credit unions, ATM providers and operators, card associations, card-based payments providers such as issuers of e-money, travel cards or stored-value cards, informal remittance systems, web-based services, telephone payment systems (including mobile phone networks), postal organizations, retailers, check cashers, mail and courier services, currency exchanges and traditional money transfer companies. These services are differentiated by features and functionalities such as speed, convenience, network size, hours of operations, loyalty programs, reliability and price. Our continued growth depends on our ability to compete effectively in these industries. We have made periodic pricing decreases in response to competition and to implement our brand investment strategy, which includes better meeting consumer needs, maximizing market opportunities and strengthening our overall competitive positioning. Pricing decreases generally reduce margins, but are done in anticipation that they will result in increased transaction volumes. In addition, failure to compete on service differentiation could significantly affect our future growth potential and related profitability.
Recently, card associations have become more active in promoting stored-value cards and other services that compete with our money transfer and consumer payments businesses. These associations, as well as debit networks, can be effective competitors because of the ubiquity of their brands, their large number of financial institution issuers and their extensive merchant networks. In addition, we offer consumers the ability to use debit cards in connection with certain of our services. The card associations and debit networks set the interchange fee that we as a merchant must pay for accepting their cards. Their association and network rules also categorize transactions or cause us to categorize transactions in a manner that can affect the cost of the transaction to us or the consumer. Changes to interchange fees could increase our costs to accept cards in payment for services, while changes in how our services are categorized could make the use of cards to pay for our services less attractive to the consumer.
Many of our agents outside the United States are national post offices. These entities are usually governmental organizations that may enjoy special privileges or protections that could allow them to simultaneously develop their own money transfer businesses. International postal organizations could agree to establish a money transfer network among themselves. Due to the size of these organizations and the number of locations they have, any such network could represent significant competition to us. Because these entities are governmental organizations, they may be able to—or be required to—offer their money transfer services to the public at, near or below their cost of providing such services.
Our ability to remain competitive depends in part on our ability to protect our brands and our other intellectual property rights and to defend ourselves against potential patent infringement claims.
The Western Union brand, consisting of trademark registrations in various countries, is material to our company. The loss of the Western Union trademark or a diminution in the perceived quality associated with the name would harm our business. Similar to the Western Union trademark, the Vigo, Orlandi Valuta, Speedpay, Paymap, Equity Accelerator, Just in Time EFT, Pago Fácil, Western Union Quick Collect, Quick Pay, Quick Cash and Convenience Pay trademarks and service marks are also important to our company and a loss of the service mark or trademarks or a diminution in the perceived quality associated with these names could harm our business.
 
31

Table of Contents
The laws of certain foreign countries in which we do business either do not recognize intellectual property rights or do not protect them to the same extent as do the laws of the United States. Adverse determinations in judicial or administrative proceedings in the United States or in foreign countries could impair our ability to sell our services or license or protect our intellectual property, which could adversely affect our business, financial position and results of operations.
We have been, are and in the future may be, subject to claims alleging that our technology or business methods infringe patents owned by others, both inside and outside the United States. Unfavorable resolution of these claims could require us to change how we deliver a service, result in significant financial consequences, or both, which could adversely affect our business, financial position and results of operations.
Breaches of our information security policies or safeguards could adversely affect our ability to operate and could damage our reputation, business, financial position and results of operations.
We collect, transfer and retain consumer data as part of our business. These activities are subject to laws and regulations in the United States and other jurisdictions. These requirements, which often differ materially among the many jurisdictions, are designed to protect the privacy of consumers’ personal information and to prevent that information from being inappropriately disclosed. We have developed and maintain technical and operational safeguards designed to comply with applicable legal requirements. However, despite those safeguards, it is possible that hackers, employees acting contrary to our policies or others could improperly access our systems or improperly obtain or disclose data about our consumers. Further, because some consumer data is collected and stored by our agents, it is possible that our agents could intentionally or negligently disclose personal data in violation of law. Any breach of our security policies or applicable legal requirements resulting in a compromise of consumer data could expose us to regulatory enforcement action, limit our ability to provide services, subject us to litigation and/or damage our reputation.
Acquisitions and integration of new businesses create risks and may affect operating results.
We occasionally acquire businesses both inside and outside the United States. The acquisition and integration of businesses involve a number of risks. The core risks involve valuation (negotiating a fair price for the business based on inherently limited due diligence) and integration (managing the complex process of integrating the acquired company’s people, products and services, technology and other assets in an effort to realize the projected value of the acquired company and the projected synergies of the acquisition). In addition, complying with regulatory requirements, including anti-money laundering requirements, is another risk associated with acquiring companies, especially companies which have not previously been subject to such regulations. International acquisitions often involve additional or increased risks including, for example:
 
 	•	 	managing geographically separated organizations, systems and facilities;	
 
 	•	 	integrating personnel with diverse business backgrounds and organizational cultures;	
 
 	•	 	integrating systems that may not have been designed or maintained to the same standards as those in the United States;	
 
 	•	 	complying with foreign and domestic regulatory requirements;	
 
 	•	 	fluctuations in currency exchange rates;	
 
 	•	 	enforcement of intellectual property rights in some foreign countries;	
 
 	•	 	difficulty entering new markets due to, among other things, customer acceptance and business knowledge of these new markets; and	
 
 	•	 	general economic and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular.	
 
32

Table of Contents
Integrating operations could cause an interruption of, or divert resources from, one or more of our businesses and could result in the loss of key personnel. The diversion of management’s attention and any delays or difficulties encountered in connection with an acquisition and the integration of the acquired company’s operations could have an adverse effect on our business, financial position and results of operations.
As of December 31, 2008, we had $1,674.2 million of goodwill comprising approximately 30% of our total assets. An impairment review of goodwill is conducted at least once a year and more frequently if events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. If we are unsuccessful in integrating the businesses we have acquired or acquire in the future, or if these acquired businesses experience declines in operating income or cash flows, adverse changes in the business climate, or if we are unable to successfully execute our strategy for these businesses, we may be required to write down the goodwill on our balance sheet associated with these acquisitions, which could have a material impact on our financial position and results of operations in future periods.
Material changes in the market value or liquidity of the securities we hold may adversely affect our results of operations and financial condition.
As of December 31, 2008, we held $405.6 million in investment securities, substantially all of which are high quality investment grade state and municipal debt instruments. We regularly monitor our credit risk and attempt to mitigate our exposure by making high quality investments. At December 31, 2008, the significant majority of our investment securities had credit ratings of “AA-” or better from a major credit rating agency. Despite those ratings, it is possible that the value of our portfolio may decline in the future due to any number of factors, including general market conditions, credit issues, the viability of the issuer of the security, failure by a fund manager to manage the investment portfolio consistently with the fund prospectus or increases in interest rates. Any such decline in value may adversely affect our results of operations and financial condition.
The master trust which holds the assets of our pension plans has assets totaling approximately $290 million as of December 31, 2008, our most recent measurement date. The fair value of these assets held in the master trust are compared to the plans’ projected benefit obligation to determine the pension funding liability of $107.1 million recorded within “Other liabilities” in our consolidated balance sheet as of December 31, 2008. We attempt to mitigate risk through diversification, and we regularly monitor investment risk on our portfolio through quarterly investment portfolio reviews and periodic asset and liability studies. Despite these measures, it is possible that the value of our portfolio may decline in the future due to any number of factors, including general market conditions and credit issues. Such declines could have an impact on the funded status of our pension plans and future funding requirements.
On July 18, 2008, we entered into an agreement with Integrated Payment Systems Inc., or “IPS”, a subsidiary of First Data, which modified the existing business relationship with respect to the issuance and processing of money orders. Under the terms of the agreement, beginning on October 1, 2009 (“Transition Date”), IPS will assign and transfer to the Company certain operating assets used by IPS to issue money orders and an amount of cash sufficient to satisfy all outstanding money order liabilities (which vary from day to day but approximate $800 million). On the Transition Date, we will assume IPS’s role as issuer of the money orders and IPS will no longer pay us a fixed return on the outstanding money order balances. Following the Transition Date, Western Union will invest the cash received from IPS in high-quality, investment grade securities in accordance with applicable regulations, which are the same or similar to those currently governing the investment of the Company’s United States originated money transfer principal. Revenue will be derived from both fees collected from consumers and earnings generated from the investment portfolio. Revenue generated from the management of the investment portfolio will be retained by the Company and will not be shared with its agents. The risks associated with the management of this portfolio will be similar to the risks associated with the Company’s existing money transfer portfolio, however, the potential impact on our results of operations and financial condition will be greater due to the increase in the size of the portfolio.
 
33

Table of Contents
We receive services from third-party vendors that would be difficult to replace if those vendors ceased providing such services which could cause temporary disruption to our business.
Some services relating to our business, such as software application support, the development, hosting and maintenance of our operating systems, money order issuance, check clearing, and processing of returned checks are outsourced to third-party vendors, which would be difficult to replace quickly. If our third-party vendors were unwilling or unable to provide us with these services in the future, our business and operations could be adversely affected.
We have substantial debt obligations that could restrict our operations.
As of December 31, 2008, we had approximately $3.1 billion in consolidated indebtedness, and we may also incur additional indebtedness in the future.
Our indebtedness could have adverse consequences, including:
 
 	•	 	limiting our ability to pay dividends to our stockholders;	
 
 	•	 	increasing our vulnerability to changing economic, regulatory and industry conditions;	
 
 	•	 	limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry;	
 
 	•	 	limiting our ability to borrow additional funds; and	
 
 	•	 	requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions and other purposes.	
There would be adverse tax consequences associated with using certain earnings generated outside the United States to pay the interest and principal on our indebtedness. Accordingly, this portion of our cash flow will be unavailable under normal circumstances to service our debt obligations.
Risks Relating to the Spin-Off
If the spin-off does not qualify as a tax-free transaction, First Data and its stockholders could be subject to material amounts of taxes and, in certain circumstances, our company could be required to indemnify First Data for material taxes pursuant to indemnification obligations under the tax allocation agreement.
First Data received a private letter ruling from the Internal Revenue Service to the effect that, among other things, the spin-off (including certain related transactions) qualifies as tax-free to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code, assuming, among other things, the accuracy of the representations made by First Data with respect to certain matters on which the Internal Revenue Service did not rule. If the factual assumptions or representations made in the private letter ruling request, including those described above, were untrue or incomplete, then First Data will not be able to rely on the ruling.
The spin-off was conditioned upon First Data’s receipt of an opinion of Sidley Austin LLP, counsel to First Data, to the effect that, with respect to requirements on which the Internal Revenue Service did not rule, those requirements would be satisfied. The opinion was based on, among other things, certain assumptions and representations as to factual matters made by First Data and us which, if untrue or incomplete, would jeopardize the conclusions reached by counsel in its opinion. The opinion is not binding on the Internal Revenue Service or the courts, and the Internal Revenue Service or the courts may not agree with the opinion.
If, notwithstanding receipt of the private letter ruling and opinion of tax counsel, the spin-off were determined to be a taxable transaction, each holder of First Data common stock who received shares of our
 
34

Table of Contents
common stock in connection with the spin-off would generally be treated as receiving a taxable distribution in an amount equal to the fair market value of our common stock received. First Data would recognize taxable gain equal to the excess of the fair market value of the consideration received by First Data in the contribution over First Data’s tax basis in the assets contributed to us in the contribution. If First Data were unable to pay any taxes for which it is responsible under the tax allocation agreement, the IRS might seek to collect such taxes from Western Union.
With respect to taxes and other liabilities that could be imposed as a result of a final determination that is inconsistent with the anticipated tax consequences of the spin-off (as set forth in the private letter ruling and relevant tax opinion) (“Spin-off Related Taxes”), we will be liable to First Data for any such Spin-off Related Taxes attributable solely to actions taken by or with respect to us. In addition, we will also be liable for 50% of any Spin-off Related Taxes (i) that would not have been imposed but for the existence of both an action by us and an action by First Data or (ii) where we and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. We may be similarly liable if we breach certain representations or covenants set forth in the tax allocation agreement. If we are required to indemnify First Data for taxes incurred as a result of the spin-off being taxable to First Data, it likely would have a material adverse effect on our business, financial position, results of operations and cash flows.
Under some circumstances, we could be prevented from engaging in strategic or capital raising transactions, and we could be liable to First Data for any resulting adverse tax consequences.
Even if the spin-off otherwise qualified as a tax-free distribution under section 355 of the Internal Revenue Code, the spin-off may result in significant United States federal income tax liabilities to First Data if 50% or more of First Data’s stock or our stock (in each case, by vote or value) is treated as having been acquired, directly or indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the spin-off. For purposes of this test, any acquisitions of First Data stock or our stock, or any understanding, arrangement or substantial negotiations regarding an acquisition of First Data stock or our stock, within two years before or after the spin-off are subject to special scrutiny.
The process for determining whether a change in control prohibited under the foregoing rules has occurred is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. If a direct or indirect acquisition of First Data stock or our stock resulted in a change in control prohibited under those rules, First Data (but not its stockholders) would recognize a taxable gain. Under the tax allocation agreement, we will be liable to First Data (i) for any such taxes or liabilities attributable solely to actions taken by or with respect to us, one of our affiliates, or any person that, after the spin-off, is an affiliate thereof. In addition, we will be liable for 50% of any such taxes or liabilities (i) that would not have been imposed but for the existence of both an action by us and an action by First Data or (ii) where we and First Data each take actions that, standing alone, would have resulted in the imposition of such taxes or liabilities. We may be similarly liable if we breach certain representations or covenants set forth in the tax allocation agreement. If we are required to indemnify First Data for taxes incurred as a result of a prohibited change in control under the rules noted above, it likely would have a material adverse effect on our business, financial position, results of operations and cash flows.
 
 ITEM  1B.	UNRESOLVED STAFF COMMENTS	
Not applicable.
 
35

Table of Contents

 ITEM 2.	PROPERTIES	
Properties and Facilities
As of December 31, 2008, we owned or leased 242 domestic and international properties. Our owned and leased facilities are used for operational, sales and administrative purposes in support of both our consumer-to-consumer and consumer-to-business segments and are all currently being utilized.

 	  	Leased
Facilities	  	Owned
Facilities	
United States facilities	  	27	  	3	
International facilities	  	212	  	—  	
Our owned facilities include our corporate headquarters located in Englewood, Colorado. We believe that our facilities are suitable and adequate for our current business; however, we periodically review our facility requirements and may acquire new facilities to meet the needs of our businesses or consolidate and dispose of or sublet facilities which are no longer required.
 
 ITEM 3.	LEGAL PROCEEDINGS	
We are party to a variety of legal proceedings that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our results of operations or financial position.
 
 ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	
None.
 
36

Table of Contents
 PART II
 
 ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	
Our common stock trades on the New York Stock Exchange under the symbol “WU.” There were 4,727 stockholders of record as of February 13, 2009. This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. The following table presents the high and low prices of the common stock on the New York Stock Exchange as well as dividends declared per share during the calendar quarter indicated.

 	  	Common Stock
Market Price	  	Dividends
Declared
per Share	
	  	High	  	Low	  		
2008	  			  			  			
First Quarter	  	$	24.31	  	$	18.56	  	$	—  	
Second Quarter	  	 	26.15	  	 	19.86	  	 	—  	
Third Quarter	  	 	28.62	  	 	22.90	  	 	—  	
Fourth Quarter	  	 	24.64	  	 	10.48	  	 	0.04	
				
2007	  			  			  			
First Quarter	  	$	23.56	  	$	20.74	  	$	—  	
Second Quarter	  	 	23.76	  	 	20.20	  	 	—  	
Third Quarter	  	 	21.69	  	 	17.96	  	 	—  	
Fourth Quarter	  	 	24.83	  	 	18.33	  	 	0.04	
The following table sets forth stock repurchases for each of the three months of the quarter ended December 31, 2008:

 	  	Total Number of
Shares Purchased*	  	Average Price
Paid per Share	  	Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs**	  	Remaining Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (in millions)	
October 1 – 31	  	1,760,742	  	$	15.13	  	1,760,000	  	$	1,022.1	
November 1 – 30	  	4,155,000	  	$	14.12	  	4,155,000	  	$	963.5	
December 1 – 31	  	1,839,229	  	$	12.93	  	1,839,200	  	$	939.7	
	  	 	  	 	 	  	 	  			
Total	  	7,754,971	  	$	14.07	  	7,754,200	  			

*	These amounts represent both shares authorized by the Board of Directors for repurchase under a publicly announced plan, as described below, as well as shares withheld from employees to cover tax withholding obligations on restricted stock awards and units that have vested.	
**	Since September 2006, the Board of Directors has authorized common stock repurchases of up to $3.0 billion consisting of a $1.0 billion authorization in June 2008 (“2008 Authorization”), a $1.0 billion authorization in December 2007 (“2007 Authorization”) and a $1.0 billion authorization in September 2006. Both the 2007 Authorization and the authorization in September 2006 have been fully utilized. As of December 31, 2008, $939.7 million remains available under the 2008 Authorization for purchases through December 31, 2009. Management has and may continue to establish prearranged written plans pursuant to Rule 10b5-1. A Rule 10b5-1 plan permits the Company to repurchase shares at times when we may otherwise be unable to do so, provided the plan is adopted when the Company is not aware of material non-public information.	
Refer to Note 16 of the Company’s Consolidated Financial Statements for information related to our equity compensation plans.
 
37

Table of Contents
Dividend Policy
On December 11, 2008, our Board of Directors declared an annual cash dividend of $0.04 per share payable on December 31, 2008 to shareholders of record on December 22, 2008. On December 4, 2007, our Board of Directors declared an annual cash dividend of $0.04 per share payable on December 28, 2007 to shareholders of record on December 14, 2007. The declaration and amount of future dividends will be determined by our Board of Directors and will depend on our financial condition, earnings, capital requirements, regulatory constraints, industry practice and any other factors that our Board of Directors believes are relevant. As a holding company with no material assets other than the capital stock of our subsidiaries, our ability to pay dividends in future periods will be dependent on our receiving dividends from our operating subsidiaries. Many of our operating subsidiaries are highly regulated and may be subject to restrictions on their ability to pay dividends to us.
 
 ITEM 6.	SELECTED FINANCIAL DATA	
The financial information in this Annual Report on Form 10-K for periods ending on or after the Distribution is presented on a consolidated basis and includes the accounts of the Company and our majority-owned subsidiaries. The financial information for the periods presented prior to the Distribution is presented on a combined basis and represents those entities that were ultimately transferred to the Company as part of the spin-off. The assets and liabilities presented have been reflected on a historical basis, as prior to the Distribution such assets and liabilities presented were 100% owned by First Data. However, the financial statements for the periods presented prior to the Distribution do not include all of the actual expenses that would have been incurred had Western Union been a stand-alone entity during the periods presented and do not reflect Western Union’s combined results of operations, financial position and cash flows had Western Union been a stand-alone company during the periods presented.
Our selected historical financial data are not necessarily indicative of our future financial position, future results of operations or future cash flows.
You should read the information set forth below in conjunction with our historical consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K.

(in millions, except per share data)	 	Year ended December 31,	 	
	 	2008	 	 	2007	 	 	2006	 	 	2005	 	 	2004	 	
Statements of Income Data:	 				 				 				 				 				
Revenues	 	$	5,282.0	 	 	$	4,900.2	 	 	$	4,470.2	 	 	$	3,987.9	 	 	$	3,547.6	 	
Operating expenses (a) (b)	 	 	3,927.0	 	 	 	3,578.2	 	 	 	3,158.8	 	 	 	2,718.7	 	 	 	2,435.5	 	
Operating income (a) (b)	 	 	1,355.0	 	 	 	1,322.0	 	 	 	1,311.4	 	 	 	1,269.2	 	 	 	1,112.1	 	
Interest income (c)	 	 	45.2	 	 	 	79.4	 	 	 	40.1	 	 	 	7.6	 	 	 	1.8	 	
Interest expense (d)	 	 	(171.2	)	 	 	(189.0	)	 	 	(53.4	)	 	 	(1.7	)	 	 	(1.7	)	
Other income/(expense), net, excluding interest income and interest expense (e)	 	 	9.7	 	 	 	10.0	 	 	 	37.0	 	 	 	69.0	 	 	 	(13.6	)	
Income before income taxes (a) (b) (c) (d) (e)	 	 	1,238.7	 	 	 	1,222.4	 	 	 	1,335.1	 	 	 	1,344.1	 	 	 	1,098.6	 	
Net income (a) (b) (c) (d) (e)	 	 	919.0	 	 	 	857.3	 	 	 	914.0	 	 	 	927.4	 	 	 	751.6	 	
Depreciation and amortization	 	 	144.0	 	 	 	123.9	 	 	 	103.5	 	 	 	79.5	 	 	 	79.2	 	
Cash Flow Data:	 				 				 				 				 				
Net cash provided by operating activities	 	 	1,253.9	 	 	 	1,103.5	 	 	 	1,108.9	 	 	 	1,002.8	 	 	 	930.2	 	
Capital expenditures (f)	 	 	(153.7	)	 	 	(192.1	)	 	 	(202.3	)	 	 	(65.0	)	 	 	(49.5	)	
Shares repurchased (g)	 	 	(1,314.5	)	 	 	(726.8	)	 	 	(19.9	)	 	 	—  	 	 	 	—  	 	
Dividends to First Data	 	 	—  	 	 	 	—  	 	 	 	2,953.9	 	 	 	417.2	 	 	 	659.8	 	
Earnings Per Share Data:	 				 				 				 				 				
Basic (a) (b) (c) (d) (e) (h)	 	$	1.26	 	 	$	1.13	 	 	$	1.20	 	 	$	1.21	 	 	$	0.98	 	
Diluted (a) (b) (c) (d) (e) (h)	 	$	1.24	 	 	$	1.11	 	 	$	1.19	 	 	$	1.21	 	 	$	0.98	 	
Cash dividends to public stockholders per common share	 	$	0.04	 	 	$	0.04	 	 	$	0.01	 	 	 	—  	 	 	 	—  	 	
Key Indicators (unaudited):	 				 				 				 				 				
Consumer-to-consumer transactions (i)	 	 	188.1	 	 	 	167.7	 	 	 	147.1	 	 	 	118.5	 	 	 	96.7	 	
Consumer-to-business transactions (j)	 	 	412.1	 	 	 	404.5	 	 	 	249.4	 	 	 	215.1	 	 	 	192.6	 	
 
38

Table of Contents

 	 	As of December 31,	
 	 	2008	 	 	2007	 	2006	 	 	2005	 	2004	
Balance Sheet Data:	 				 			 				 			 			
Settlement assets	 	$	1,207.5	 	 	$	1,319.2	 	$	1,284.2	 	 	$	914.4	 	$	702.5	
Total assets	 	 	5,578.3	 	 	 	5,784.2	 	 	5,321.1	 	 	 	4,591.7	 	 	3,315.8	
Settlement obligations	 	 	1,207.5	 	 	 	1,319.2	 	 	1,282.5	 	 	 	912.0	 	 	696.6	
Total borrowings (k)	 	 	3,143.5	 	 	 	3,338.0	 	 	3,323.5	 	 	 	—  	 	 	—  	
Total liabilities	 	 	5,586.4	 	 	 	5,733.5	 	 	5,635.9	 	 	 	1,779.9	 	 	1,381.3	
Total stockholders’ (deficiency)/equity/Net Investment in The Western Union Company (k)	 	 	(8.1	)	 	 	50.7	 	 	(314.8	)	 	 	2,811.8	 	 	1,934.5	

(a)	We adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment,” or “SFAS No. 123R,” following the modified prospective method effective January 1, 2006. SFAS No. 123R requires all stock-based payments to employees to be recognized in the income statement based on their respective grant date fair values over the corresponding service periods and also requires an estimation of forfeitures when calculating compensation expense. Stock-based compensation expense, including stock compensation expense allocated by First Data prior to the spin-off on September 29, 2006 and the impact of adopting SFAS No. 123R, was $26.3 million, $50.2 million and $30.1 million for the years ended December 31, 2008, 2007 and 2006, respectively. Our stock-based compensation expense in 2007 included a non-recurring charge of $22.3 million related to the vesting of the remaining converted unvested Western Union stock-based awards upon the completion of the acquisition of First Data on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co. (“KKR”).	
(b)	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.	
(c)	Interest income is attributed primarily to international cash balances and loans made to several agents. On the spin-off date, the Company received cash in connection with the settlement of intercompany notes with First Data (net of certain other payments made to First Data) which significantly increased our international cash balances.	
(d)	Interest expense primarily relates to debt incurred in connection with the spin-off from First Data and the refinancing of such debt. Interest expense has been significantly higher since September 29, 2006 due to higher borrowings balances.	
(e)	Amounts were primarily recognized prior to the spin-off and include derivative gains and losses, net, interest income due from First Data, and the net foreign exchange effect on notes receivable from First Data and related foreign currency swaps with First Data. Prior to the spin-off, we did not have any forward contracts that qualified as hedges, and therefore, the gains and losses on these contracts were reflected in income prior to that date. On September 29, 2006, we entered into foreign currency forward positions to qualify for cash flow hedge accounting. During the years ended December 31, 2008, 2007, 2006, 2005, and 2004, the pre-tax derivative (loss)/gain was $(6.9) million, $8.3 million, $(21.2) million, $45.8 million, and $(30.2) million, respectively. Notes receivable from First Data affiliates and related foreign currency swap agreements were settled in cash in connection with the spin-off. During the years ended December 31, 2006, 2005 and 2004, the interest income, net recognized from First Data, including the impact of foreign exchange translation of the underlying notes, was $45.8 million, $18.4 million and $16.6 million, respectively.	
(f)	Capital expenditures include capitalization of contract costs, capitalization of purchased and developed software and purchases of property and equipment.	
(g)	Since September 2006, the Board of Directors has authorized common stock repurchases of up to $3.0 billion consisting of a $1.0 billion authorization in June 2008, a $1.0 billion authorization in December 2007 (“2007 Authorization”) and a $1.0 billion authorization in September 2006. Both the 2007 Authorization and the authorization in 2006 have been fully utilized. During the years ended December 31, 2008 and 2007 and the period from September 29, 2006 through December 31, 2006, we repurchased 58.1 million, 34.7 million and 0.9 million shares, respectively, pursuant to these authorizations.	
(h)	For all periods prior to September 29, 2006 (the date of our spin-off from First Data), basic and diluted earnings per share were computed utilizing the basic shares outstanding at September 29, 2006.	
(i)	Consumer-to-consumer transactions include consumer-to-consumer money transfer services worldwide. Amounts include Vigo Remittance Corp. transactions since the acquisition date of October 21, 2005.	
(j)	Consumer-to-business transactions include Quick Collect, Western Union Convenience Pay, Speedpay, Equity Accelerator, Just in Time EFT and Pago Fácil transactions processed by us. Amounts include Pago Fácil transactions since its acquisition in December 2006.	
(k)	In connection with the spin-off, we reported a $4.1 billion dividend to First Data in the consolidated statements of stockholders’ (deficiency)/equity/net investment in The Western Union Company, consisting of notes issued to First Data of $3.4 billion and a cash payment to First Data of $100.0 million. The remaining dividend was comprised of cash, consideration for an ownership interest held by a First Data subsidiary in a Western Union agent, settlement of net intercompany receivables, and transfers of certain liabilities, net of assets. Subsequent to the spin-off date, the Company had no outstanding borrowings to First Data. Since the amount of the dividend exceeded the historical cost of our net assets as of September 29, 2006, a capital deficiency resulted.	
 
39

Table of Contents

 ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
You should read the following discussion in conjunction with the consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Annual Report on Form 10-K. See “Risk Factors” and “Forward-looking Statements.”
Overview
We are a leading provider of money transfer services, operating in two business segments:
 
 	•	 	Consumer-to-consumer money transfer services, provided primarily through a global network of third-party agents using our multicurrency, real-time money transfer processing systems. This service is available for international cross-border transfers—that is, the transfer of funds from one country to another—and, in certain countries, intra-country transfers—that is, money transfers from one location to another in the same country.	
 
 	•	 	Consumer-to-business payment services, which allow consumers to send funds to businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies (all sometimes referred to as “billers”) through our network of third-party agents and various electronic channels. While we continue to pursue international expansion of our offerings in selected markets, as demonstrated by our December 2006 acquisition of Servicio Electronico de Pago S.A. and related entities (“SEPSA” or “Pago Fácil”) in Argentina and our recent offerings of a walk-in, cash bill payment service in Peru and Panama, the segment’s revenue was primarily generated in the United States during all periods presented.	
Businesses not considered part of the segments described above are categorized as “Other” and represented 2% or less of consolidated revenue during the three years ended December 31, 2008, 2007 and 2006, and include Western Union branded money orders available through a network of third-party agents primarily in the United States and Canada, and prepaid services. Prepaid services include a Western Union branded prepaid MasterCard ® card sold through select agents in the United States and the internet, a Western Union branded prepaid Visa ® card sold on the internet, and top-up services for third parties that allow consumers to pay in advance for mobile phone and other services.
Also included in “Other” are expenses incurred in connection with the development of certain new service offerings, including costs to develop mobile money transfer services and new prepaid service offerings. In 2007 and 2006, “Other” included recruiting and relocation expenses associated with hiring senior management positions new to our company and consulting costs used to develop ongoing processes in connection with completing the spin-off.
The consumer-to-consumer money transfer service is available through an extensive network of agent locations that offer Western Union services around the world. Some of our agent locations only pay out and do not send money. In addition to our agent locations, we are expanding the ability of consumers to send money through other channels, such as our internet site, westernunion.com, and the telephone. Consumer-to-consumer money transfer service is available through the Western Union ® , Orlandi Valuta ® and Vigo SM brands. The consumer-to-business service allows consumers to transfer money to a biller. This service is available at many of our Western Union agent locations, primarily in the United States, and through the internet or by telephone.
 
40

Table of Contents
Significant Financial and Other Highlights
Significant financial and other highlights for the year ended December 31, 2008 include:
 
 	•	 	We generated $5,282.0 million in total consolidated revenues and $1,355.0 million in consolidated operating income, resulting in year-over-year growth of 8% and 2% in total consolidated revenues and operating income, respectively.	
 
 	•	 	We incurred $82.9 million of restructuring and related expenses as described within “Operating expenses overview.” During the year ended December 31, 2007, we incurred a $22.3 million accelerated stock-based compensation vesting charge related to an affiliate of Kohlberg Kravis Roberts & Co’s (“KKR”) acquisition of First Data Corporation (“First Data”) on September 24, 2007 as described within “Operating expenses overview.”	
 
 	•	 	Our operating income margin was 26% during the year ended December 31, 2008 resulting in a year-over-year decline of 1% due primarily to the restructuring and related expenses described above.	
 
 	•	 	Consolidated net income during 2008 was $919.0 million, representing an increase of 7% from 2007.	
 
 	•	 	We completed 188.1 million consumer-to-consumer transactions worldwide, an increase of 12% over 2007.	
 
 	•	 	Our consumers transferred $74 billion in consumer-to-consumer transactions, of which $67 billion related to cross-border transactions, which represented an increase of 16% in consumer-to-consumer transactions and a 17% increase in cross-border transactions over prior year.	
 
 	•	 	We completed 412.1 million consumer-to-business transactions, representing an increase of 2% over the prior year.	
 
 	•	 	Consolidated cash flow provided by operating activities was $1,253.9 million, an increase of 14% over 2007.	
Factors that we believe are important to our long-term success include accelerating profitable growth in our existing consumer-to-consumer business, expanding and globalizing our consumer-to-business segment and increasing the number of bill payment options, innovating to provide new products and services to our target consumer, and improving our profitability by leveraging our scale, reducing costs and effectively utilizing capital. Significant factors affecting our financial position and results of operations include:
 
 	•	 	Transaction volume is the primary generator of revenue in our businesses. Transaction volume in our consumer-to-consumer segment is affected by, among other things, the size of the international migrant population and individual needs to transfer funds in emergency situations. As noted elsewhere in this Annual Report on Form 10-K, a reduction in the size of the migrant population, interruptions in migration patterns or reduced employment opportunities including those resulting from any changes in immigration laws, economic development patterns or political events, could adversely affect our transaction volume. For discussion on how these factors have impacted us in recent periods, refer to the consumer-to-consumer segment discussion below.	
 
 	•	 	Revenue is also impacted by changes in the fees we charge consumers, the amount of money sent, and by the variance in the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency. We intend to continue to implement strategic pricing reductions, actions to reduce foreign exchange spreads, where appropriate, taking into account growth opportunities and including competitive factors. Decreases in our fees or foreign exchange spreads generally reduce margins, but are done in anticipation that they will result in increased transaction volumes and increased revenues over time.	
 
 	•	 	As mentioned above, revenue is impacted by the principal per transaction. In 2008, our consumer-to-consumer principal per transaction increased 3% over the prior year. However, in the fourth quarter 2008 versus the comparable period in the prior year, consumer-to-consumer principal per transaction declined 4%, a trend we expect to continue in 2009.	
 
41

Table of Contents

 	•	 	The weakening economy in the United States has adversely impacted our consumer-to-consumer and consumer-to-business segments throughout the year and the more recent global economic crisis has adversely impacted our fourth quarter 2008 results and continues to impact us.	
 
 	•	 	We continue to face robust competition in both our consumer-to-consumer and consumer-to-business segments from a variety of money transfer and consumer payment providers. We believe the most significant competitive factors in the consumer-to-consumer segment relate to brand recognition, trust and reliability, distribution network, consumer experience and price and in the consumer-to-business segment relate to brand recognition, trust and reliability, convenience, speed, variety of payment methods and price.	
 
 	•	 	Regulation of the money transfer industry is increasing. 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 continue to implement policies and programs and adapt our business practices and strategies to help us comply with current legal requirements, as well as with new and changing legal requirements affecting particular services, or the conduct of our business in general. Our activities include dedicated compliance personnel, training and monitoring programs, government relations and regulatory outreach efforts, and support and guidance to the agent network on compliance programs. These efforts increase our costs of doing business.	
The Separation of Western Union from First Data
On January 26, 2006, the First Data Board of Directors announced its intention to pursue the distribution of 100% of its money transfer and consumer payments businesses related assets, through a tax-free distribution to First Data shareholders. Effective on September 29, 2006, First Data completed the separation and the distribution of these businesses (the “Distribution”). Prior to the Distribution, our company had been a segment of First Data.
Subsequent to the spin-off from First Data, we have recognized higher interest expense as a result of the debt that was issued to effect the spin-off. We have also recorded higher expenses related to being a stand-alone company, as further described below in “Basis of Presentation.”
Basis of Presentation
The financial statements in this Annual Report on Form 10-K for periods ending on or after the Distribution are presented on a consolidated basis and include the accounts of our company and its majority-owned subsidiaries. The financial statements for the periods presented prior to the Distribution are presented on a combined basis and represent those entities that were ultimately transferred to our company in connection with the spin-off. All significant intercompany accounts and transactions between our company’s segments have been eliminated. The historical consolidated statements of income include expense allocations for certain corporate functions historically provided to Western Union by First Data, including treasury, tax, accounting and reporting, mergers and acquisitions, risk management, legal, internal audit, procurement, human resources, investor relations and information technology. If possible, these allocations were made on a specific identification basis. Otherwise, the expenses related to services provided to Western Union by First Data were allocated to Western Union based on the relative percentages, as compared to First Data’s other businesses, of headcount or other appropriate methods depending on the nature of each item of cost to be allocated. Pursuant to a transition services agreement we entered into with First Data prior to the spin-off, First Data provided Western Union with certain of these services at prices agreed upon by First Data and Western Union. The transition services agreement expired on September 29, 2007. The costs historically allocated to us by First Data for the services provided to us were lower than the costs we have incurred and will continue to incur following the spin-off.
Certain expenses related to being a stand-alone company, reflected in the consolidated statements of income, are higher than the historical amounts prior to the spin-off. The financial information presented in this Annual Report on Form 10-K prior to the spin-off date of September 29, 2006 does not reflect what our
 
42

Table of Contents
consolidated financial position, results of operations or cash flows would have been as a stand-alone company during the periods presented and is not necessarily indicative of our future consolidated financial position, results of operations or cash flows.
Subsequent Event
In February 2009, we entered into an agreement to acquire the money transfer business of European-based FEXCO, one of our largest agents providing services in the United Kingdom, Spain, Ireland and other European countries. Prior to the acquisition, we hold a 24.65% interest in FEXCO Group Holdings (FEXCO Group), which is a holding company for both the money transfer business as well as various unrelated businesses. We will surrender our 24.65% interest in FEXCO Group and pay €123.1 million (approximately $160 million based on currency exchange rates at deal signing) as consideration for the overall money transfer business. The acquisition is expected to close in the first half of 2009, subject to regulatory approvals and satisfaction of closing conditions. The acquisition will be recognized at 100% of the fair value of the money transfer business, which will exceed the cash consideration of €123.1 million given the non-cash consideration conveyed via the sale of our interest in FEXCO Group. The fair value of the money transfer business will be determined upon closing and is subject to fluctuation due to changes in exchange rates and other valuation inputs.
Adoption of Accounting Standards
Statement of Financial Accounting Standards (“ SFAS”) No. 157
Effective January 1, 2008, we determine the fair market values of our financial assets and liabilities, as well as non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis, based on the fair value hierarchy established in SFAS No. 157, “ Fair Value Measurements” (“SFAS No. 157”). The standard describes three levels of inputs that may be used to measure fair value.
 
 	•	 	Level 1: Quoted prices in active markets for identical assets or liabilities. Western Union’s financial instruments that base fair value determinations on Level 1 inputs are not material.	
 
 	•	 	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. Most of our assets and liabilities fall within Level 2 and include state and municipal debt instruments, other foreign investment securities, and derivative assets and liabilities. We utilize pricing services to value our Level 2 financial instruments. For most of these assets, we utilize pricing services that use multiple prices as inputs to determine daily market values.	
 
 	•	 	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. We currently have no Level 3 assets or liabilities that are measured at fair value on a recurring basis.	
Pursuant to the Financial Accounting Standards Boards (“FASB”) Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP No. 157-2”), the effective date of SFAS No. 157 for certain non-financial assets and liabilities that are measured at fair value but are recognized or disclosed at fair value on a non-recurring basis has been deferred to fiscal years beginning after November 15, 2008. We are primarily impacted by this deferral as it relates to non-financial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and fair value measurements in impairment testing. We adopted these remaining provisions of SFAS No. 157 effective January 1, 2009. We do not expect the impact to be significant on our financial position, results of operations and cash flows.
Due to the nature of our investment securities, there have been no material changes to our valuation techniques during the year ended December 31, 2008.
 
43

Table of Contents
FASB Interpretation No. 48
We adopted the provisions of the FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. FIN 48 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under FIN 48, we recognize the tax benefits 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. As a result of the implementation of FIN 48, we recognized an increase in our liability for unrecognized tax benefits plus associated accrued interest and penalties of $0.6 million, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings.
Refer to “Note 10—Income Taxes” in our historical consolidated financial statements for a more detailed discussion of the adoption of FIN 48.
Components of Revenue and Expenses
The following briefly describes the components of revenue and expenses as presented in the consolidated statements of income. Descriptions of our revenue recognition policies are included in Note 2—“Summary of Significant Accounting Policies” in our consolidated financial statements.
Transaction fees —Transaction fees are charged for sending money transfers and consumer-to-business payments. Consumer-to-consumer transaction fees generally vary according to the principal amount of the money transfer and the locations from and to which the funds are sent. Transaction fees represented 80% of Western Union’s total consolidated revenues for the year ended December 31, 2008.
Foreign exchange revenue —In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency. Foreign exchange revenue growth has historically been driven principally by growth in international cross-currency transactions. Foreign exchange revenue represented 17% of Western Union’s total consolidated revenues for the year ended December 31, 2008.
Commission and other revenues —Commission and other revenues represented 3% of our total consolidated revenue for the year ended December 31, 2008. Commission and other revenues primarily consist of commissions we receive in connection with the sale of money orders, enrollment fees received when consumers enroll in our Equity Accelerator ® program (a recurring mortgage payment service program), and investment income primarily derived from interest generated on money transfer and payment services settlement assets as well as realized net gains and losses from such assets.
Cost of services— Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations, and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation and amortization and other expenses incurred in connection with providing money transfer and other payment services.
Selling, general and administrative —Selling, general and administrative, or “SG&A,” primarily consists of salaries, wages and related expenses paid to sales and administrative personnel, as well as certain advertising and promotional costs and other selling and administrative expenses. Prior to September 29, 2006, the date of the spin-off, SG&A also included allocations of general corporate overhead costs from First Data.
Interest income —Interest income consists of interest earned on cash balances not required to satisfy settlement obligations and in connection with loans made to several agents.
Interest expense —Interest expense represents interest incurred in connection with outstanding borrowings payable, including applicable amounts associated with interest rate swaps, to third parties.
 
44

Table of Contents
Interest income from First Data, net —Interest income from First Data, net consists of interest income earned on notes receivable from First Data, net of interest expense incurred on notes payable to First Data. All notes receivable and payable were settled in connection with the spin-off on September 29, 2006.
Derivative (losses)/gains, net —Represents the portion of the change in fair value that is excluded from the measure of effectiveness related to contracts designated as accounting hedges entered into on or after September 29, 2006. Those amounts include (a) differences between changes in forward rates and spot rates, and (b) gains or losses on the contract and any offsetting positions during the periods in which the instrument is not designated as a hedge. Derivative gains and losses do not include fluctuations in foreign currency forward contracts intended to mitigate exposures on settlement activities of our money transfer business or on certain foreign currency denominated cash positions. Gains and losses associated with those foreign currency forward contracts are included in cost of services, consistent with exchange rate fluctuations on the related settlement assets, obligations and cash positions. Derivative gains and losses also include realized and unrealized gains and losses associated with certain foreign currency forward contracts that did not qualify as hedges under derivative accounting rules prior to September 29, 2006.
Foreign exchange effect on notes receivable from First Data, net —Certain of the notes receivable from First Data in our consolidated balance sheets prior to September 29, 2006, the spin-off date, were repayable in euros, and certain of those euro denominated notes also had foreign currency swap agreements associated with them. These notes receivable were translated based on current exchange rates between the euro and the United States dollar, and changes in fair value of the related foreign currency swap agreements were recorded based on current market valuations. The effect of translation adjustments and recording the foreign currency swaps to market is reflected in our consolidated statements of income as foreign exchange effect on notes receivable from First Data. All notes receivable and payable with First Data were settled in connection with the spin-off on September 29, 2006.
Other income, net —Other  income, net is comprised primarily of equity earnings from equity method investments and other income and expenses.
Results of Operations
The following discussion of our consolidated results of operations and segment results refers to the year ended December 31, 2008 compared to the same period in 2007 and the year ended December 31, 2007 compared to the same period in 2006. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the consolidated statements of income. All significant intercompany accounts and transactions between our company’s segments have been eliminated.
We incurred expenses of $82.9 million for the year ended December 31, 2008 for restructuring and related activities, which have not been allocated to our segments. While these items are identifiable to our segments, they are not included in the measurement of segment operating profit provided to the chief operating decision maker (“CODM”) for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on restructuring and related activities refer to “Operating expenses overview.”
For the year ended December 31, 2007, we incurred a $22.3 million accelerated stock-based compensation vesting charge related to KKR’s acquisition of First Data, which was allocated to our segments. For additional information refer to “Operating expenses overview.”
 
45

Table of Contents
The following table sets forth our consolidated results of operations for the years ended December 31, 2008, 2007 and 2006.

 	  	Years Ended December 31,	 	 	% Change	 	
(in millions, except per share amounts)	  	2008	 	 	2007	 	 	2006	 	 	2008
vs. 2007	 	 	2007
vs. 2006	 	
Revenues:	  				 				 				 			 			
Transaction fees	  	$	4,240.8	 	 	$	3,989.8	 	 	$	3,696.6	 	 	6	%	 	8	%	
Foreign exchange revenue	  	 	896.3	 	 	 	771.3	 	 	 	653.9	 	 	16	%	 	18	%	
Commission and other revenues	  	 	144.9	 	 	 	139.1	 	 	 	119.7	 	 	4	%	 	16	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	  	 	5,282.0	 	 	 	4,900.2	 	 	 	4,470.2	 	 	8	%	 	10	%	
						
Expenses:	  				 				 				 			 			
Cost of services	  	 	3,093.0	 	 	 	2,808.4	 	 	 	2,430.5	 	 	10	%	 	16	%	
Selling, general and administrative	  	 	834.0	 	 	 	769.8	 	 	 	728.3	 	 	8	%	 	6	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total expenses	  	 	3,927.0	 	 	 	3,578.2	 	 	 	3,158.8	 	 	10	%	 	13	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	  	 	1,355.0	 	 	 	1,322.0	 	 	 	1,311.4	 	 	2	%	 	1	%	
						
Other (expense)/income:	  				 				 				 			 			
Interest income	  	 	45.2	 	 	 	79.4	 	 	 	40.1	 	 	(43	)%	 	98	%	
Interest expense	  	 	(171.2	)	 	 	(189.0	)	 	 	(53.4	)	 	(9	)%	 	254	%	
Derivative (losses)/gains, net	  	 	(6.9	)	 	 	8.3	 	 	 	(21.2	)	 	*	 	 	*	 	
Foreign exchange effect on notes receivable from First Data, net	  	 	—  	 	 	 	—  	 	 	 	10.1	 	 	—  	 	 	*	 	
Interest income from First Data, net	  	 	—  	 	 	 	—  	 	 	 	35.7	 	 	—  	 	 	*	 	
Other income, net	  	 	16.6	 	 	 	1.7	 	 	 	12.4	 	 	*	 	 	*	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total other (expense)/income, net	  	 	(116.3	)	 	 	(99.6	)	 	 	23.7	 	 	17	%	 	*	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Income before income taxes	  	 	1,238.7	 	 	 	1,222.4	 	 	 	1,335.1	 	 	1	%	 	(8	)%	
Provision for income taxes	  	 	319.7	 	 	 	365.1	 	 	 	421.1	 	 	(12	)%	 	(13	)%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Net income	  	$	919.0	 	 	$	857.3	 	 	$	914.0	 	 	7	%	 	(6	)%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Earnings per share:	  				 				 				 			 			
Basic	  	$	1.26	 	 	$	1.13	 	 	$	1.20	 	 	12	%	 	(6	)%	
Diluted	  	$	1.24	 	 	$	1.11	 	 	$	1.19	 	 	12	%	 	(7	)%	
Weighted-average shares outstanding:	  				 				 				 			 			
Basic	  	 	730.1	 	 	 	760.2	 	 	 	764.5	 	 			 			
Diluted	  	 	738.2	 	 	 	772.9	 	 	 	768.6	 	 			 			

*	Calculation not meaningful	
Revenues overview
The following provides highlights of revenue growth while a more detailed discussion is included in “—Segment Discussion.”
The majority of transaction fees and foreign exchange revenue are contributed by our consumer-to-consumer segment, which is discussed in greater detail in “Segment Discussion.” Consolidated revenue growth of 8% and 10% during the years ended December 31, 2008 and 2007, respectively, was primarily driven by revenue growth internationally, particularly in the Europe, Middle East, Africa and South Asia (“EMEASA”) region, due to increased money transfers at existing agent locations, and to a lesser extent, money transfers at new agent locations and due to the impact of translating foreign currency denominated revenues into the United States dollar, specifically the euro, discussed below. Our international consumer-to-consumer transactions that were originated outside of the United States also continued to experience strong revenue and
 
46

Table of Contents
transaction growth for the years ended December 31, 2008 and 2007 compared to the corresponding periods in the prior year. We experienced strong growth in our money transfer business to India, and in the Gulf States, which offset slower growth in certain European markets for the year ended 2008 compared to 2007.
However, during the fourth quarter of 2008, revenue was impacted by the weakening global economy and its effect on Western Union customers. In the fourth quarter, transaction growth rates slowed sequentially compared to the first nine months of 2008. In addition, the amount of money remitted per transaction declined in the fourth quarter of 2008 compared to the fourth quarter of 2007. These factors resulted in less transaction fee and foreign exchange revenue in the fourth quarter of 2008 compared to the fourth quarter of 2007.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States dollar for the year ended December 31, 2008 have resulted in a benefit to transaction fee and foreign exchange revenue of $96 million, over the previous year, net of foreign currency hedges, that would not have occurred had there been constant currency rates. The positive impact to operating profit derived from foreign currency exchange rates increasing against the United States dollar during the year was offset by the impact of foreign currency derivative losses for those foreign currency derivatives not designated as hedges and the portion of fair value that is excluded from the measure of effectiveness for these contracts designated as hedges thereby resulting in a minimal impact to overall earnings per share. Transactions in the euro, which represent the majority of the Company’s foreign currency denominated business, benefited revenue by $82 million and operating income by $19 million during the year. The benefit in the first three quarters of 2008 was slightly offset by the negative impact to consumer-to-consumer transaction fee and foreign exchange revenue in the fourth quarter of 2008 due to the strengthening of the United States dollar relative to certain other currencies, including the euro. However, the impact to our operating income was positive to the fourth quarter of 2008 due to our derivative hedges. If exchange rates between the United States dollar and other currencies remain constant with those experienced at the end of 2008, or if other currencies continue to weaken against the United States dollar, we expect a negative impact on our revenue in 2009. However, the impact to earnings per share is expected to be less due to the impact of translation on our expenses and our hedging program.
The fluctuation in the exchange rate between the euro and the United States dollar (which contributed to the majority of the impact of translating foreign currency denominated revenues and expenses into United States dollars) for the year ended December 31, 2007 resulted in a benefit to consumer-to-consumer transaction fee and foreign exchange of $79 million, over the previous year, net of foreign currency hedges, that would not have occurred had there been a constant exchange rate. For the year ended December 31, 2007 the related benefit to operating income was $12 million.
Our Asia Pacific (“APAC”) region also experienced strong transaction and revenue growth during the years ended December 31, 2008 and 2007 compared to the corresponding previous periods, including growth contributed by the inbound market of the Philippines. Revenue growth slowed in APAC during the fourth quarter 2008 compared to the same period in 2007, in part due to the weakening global economy described previously and the decline in high revenue transactions from small entrepreneurs that typically make purchases in China.
Within our Americas region (which includes North America, Latin America, the Caribbean, and South America), our United States to Mexico, United States outbound and transactions in our domestic (between and within the United States and Canada) businesses continued to be impacted by the overall weakening in the United States economy. The immigration debate and market softness, in part due to the slowdown in the construction industry, began adversely impacting the United States businesses in the second quarter of 2006. We responded to these factors by launching distribution, pricing, advertising, promotion and community outreach initiatives in 2006 and 2007. Although the United States businesses revenue decline experienced in 2008 moderated compared with 2007, we experienced increased revenue declines in the fourth quarter of 2008 compared to the third quarter of 2008, due to the weakening in the United States economy.
Foreign exchange revenue increased for the years ended December 31, 2008 and 2007 over the corresponding previous periods, due to an increase in cross-currency transactions primarily as a result of growth
 
47

Table of Contents
in international consumer-to-consumer transactions. As described above, foreign exchange revenue also benefited during the year ended December 31, 2008 compared to 2007 from the strengthening of other currencies most notably the euro, against the United States dollar.
We have historically implemented and will likely implement future strategic fee reductions and actions to reduce foreign exchange spreads, where appropriate, taking into account growth opportunities and competitive factors. Fee decreases and foreign exchange actions generally reduce margins, but are done in anticipation that they will result in increased transaction volumes and increased revenues over time. Such fee decreases and foreign exchange actions have impacted our annual consolidated revenue on average approximately 3% during 2006 and 2007 and approximately 1% in 2008.
Pago Fácil, which was acquired in December 2006, contributed $67.7 million and $3.6 million of revenue for the years ended December 31, 2007 and 2006, respectively, and also contributed to consolidated revenue growth in 2007 compared to 2006.
Operating expenses overview
The following factors impacted both cost of services and selling, general and administrative expenses during the periods presented:
 
 	•	 	Restructuring and Related Activities— In 2008, we incurred restructuring and related expenses in conjunction with the decision to close our facilities in Missouri and Texas, including the elimination of approximately 650 positions held by union employees and certain management positions in these same facilities, as well as other reorganizations. The $82.9 million of expenses incurred in 2008 were offset by operating expense savings of approximately $10 million in 2008 and are expected to be offset by approximately $40 million annually beginning in 2009.	
 
 	•	 	2007 Stock Compensation Charge —At the time of the spin-off, First Data converted stock options, restricted stock awards, and restricted stock units (collectively, “stock-based awards”) of First Data stock held by Western Union and First Data employees. Both Western Union and First Data employees received converted Western Union stock-based awards. All converted stock-based awards, which had not vested prior to September 24, 2007, were subject to the terms and conditions applicable to the original First Data stock-based awards, including change of control provisions which require full vesting upon a change of control of First Data. Accordingly, upon the completion of the acquisition of First Data on September 24, 2007 by an affiliate of KKR, all of these remaining converted unvested Western Union stock-based awards vested. In connection with this accelerated vesting, we incurred a non-cash pre-tax charge of $22.3 million during the third quarter of 2007. Approximately one-third of this charge was recorded within “cost of services” and two-thirds was recorded within “selling, general and administrative expenses” in the consolidated statements of income.	
 
 	•	 	Incremental Independent Public Company Expenses —We recorded recurring incremental independent public company expenses of $59.1 million and $25.1 million in 2007 and 2006, respectively, in the consolidated statements of income. These expenses are those in excess of amounts allocated to us by First Data prior to September 29, 2006 or beyond amounts we presume First Data would have allocated subsequently thereto. Most of these expenses continue to be incurred in subsequent periods.	
Cost of services
In addition to the restructuring costs described above, cost of services increased for the year ended December 31, 2008 compared to the corresponding period in 2007 primarily due to agent commissions which increase as revenues increase. Cost of services as a percentage of revenue was 59%, 57% and 54% for the years ended December 31, 2008, 2007 and 2006, respectively. The majority of the increase in cost of services as a percentage of revenue for the year ended December 31, 2008 compared to the corresponding period in 2007 was
 
48

Table of Contents
primarily due to restructuring and related expenses of $62.8 million as described above, and the shift in our business mix reflecting stronger growth from our international consumer-to-consumer business, which carries higher cost of services compared to our United States originated businesses. Selected consumer-to- consumer international agent commissions have been lowered but were partially offset by certain higher commissions in the United States. In addition, a higher percentage of our consumer-to-business services were generated from our United States electronic-based payments and payments related to Pago Fácil, each of which had higher cost of services as a percentage of revenue compared to our United States cash-based payments business. The increase was partially offset by lower stock compensation charges for the year ended December 31, 2008 compared to the corresponding period in 2007, as described above and below, that did not recur in 2008.
The majority of the increase in cost of services as a percentage of revenue for the year ended December 31, 2007 compared to the corresponding period in 2006 was attributable to the shift in our business mix reflecting stronger growth from our international business, as described above. The Pago Fácil business, which carries a lower margin than our existing consumer-to-business services, also contributed to the increase in cost of services. The stock compensation charge resulting from the acquisition of First Data, as described above, and incremental public company expenses were additional factors leading to the increase in cost of services in 2007.
Selling, general and administrative
Selling, general and administrative (“SG&A”) expenses increased for the year ended December 31, 2008 compared to the same period in the prior year due to higher employee compensation expenses and restructuring and related expenses of $20.1 million, offset by better leverage of our marketing expenses as well as lower stock compensation charges in 2008, as described above.
SG&A expenses increased for the year ended December 31, 2007 compared to the corresponding period in 2006 primarily due to incremental public company expenses and the stock compensation charge related to KKR’s acquisition of First Data, as described above. In addition, costs associated with the inclusion of the Pago Fácil business contributed to the increase in 2007 from 2006.
During the year ended December 31, 2008, marketing related expenditures, principally classified within SG&A, were approximately 5.0% of revenue due to better leveraging of our marketing expenditures. For the years ended December 31, 2007 and 2006, marketing related expenditures were approximately 6.0% and 6.5% of revenue, respectively. Marketing related expenditures include advertising, events, loyalty programs and the cost of employees dedicated to marketing activities. When making decisions with respect to marketing investments, we review opportunities for advertising and other marketing related expenditures together with opportunities for fee adjustments and other initiatives in order to best maximize the return on these investments. Such fee decreases and foreign exchange actions have impacted our annual consolidated revenue on average approximately 3% during 2006 and 2007 and approximately 1% in 2008. For further discussion regarding the impact of pricing decreases refer to the “Revenues overview” discussion within the consumer-to-consumer segment section.
Interest income
Interest income decreased during the year ended December 31, 2008 compared to 2007 due primarily to lower short-term interest rates, and to a lesser extent, lower average interest-bearing cash balances. Interest income increased during the year ended December 31, 2007 compared to 2006 due to higher international cash balances resulting from the net cash received in connection with the settlement of intercompany notes with First Data (net of certain other payments made to First Data) on the spin-off date, and from cash generated through our international operations. Also contributing to higher interest income in 2007 compared to 2006 was interest income recorded in connection with a $140.0 million loan made to one of our agents in the first quarter of 2006.
 
49

Table of Contents
Interest expense
Interest expense decreased for the year ended December 31, 2008 compared to 2007 due to decreases in interest rates related to our floating rate debt. Interest expense increased for the year ended December 31, 2007 compared to 2006 due to interest expense on our outstanding borrowings that arose in connection with the spin-off on September 29, 2006. Interest expense was significantly higher in 2007 since the related borrowings were outstanding for the full year 2007 compared to three months during 2006.
Derivative (losses)/gains, net
Derivative (losses)/gains, net for the years ended December 31, 2008 and 2007 relate primarily to the portion of the change in fair value of foreign currency accounting hedges that is excluded from the measurement of effectiveness, which includes (a) differences between changes in forward rates and spot rates, and (b) gains or losses on the contract and any offsetting positions during periods in which the instrument is not designated as a hedge. Although the majority of changes in the value of our hedges are deferred in accumulated other comprehensive income or loss until settlement (i.e. spot rate changes), the remaining portion of changes in value are recognized in income as they occur. The significant volatility in the fluctuation in foreign currency forward rates compared to spot rates primarily related to the euro has resulted in charges of $6.9 million in the year ended December 31, 2008 compared to gains of $8.3 million in 2007.
Prior to September 29, 2006, we did not have any forward contracts that qualified as hedges, and therefore the unrealized gains and losses on these contracts were reflected within this line item in the consolidated statements of income prior to that date. Our foreign currency forward contracts that did not qualify as hedges under applicable derivative accounting rules were held primarily in the euro and British pound and had maturities of one year or less. Since these instruments did not qualify for hedge accounting treatment, there was resulting volatility in our net income for the periods presented prior to September 29, 2006. On September 29, 2006, we established our foreign currency forward positions to qualify for cash flow hedge accounting.
Foreign exchange effect on notes receivable from First Data, net
All euro denominated notes receivable with First Data, and related foreign currency swap agreements were settled in connection with the spin-off on September 29, 2006. Accordingly, no amounts related to the revaluation of such notes or related swaps were recorded during the years ended December 31, 2008 and 2007, explaining the decrease from the year ended December 31, 2006. No such amounts will be recognized in future periods.
Prior to the spin-off, the revaluation to fair market value of these euro denominated notes receivable from First Data and the related foreign currency swap arrangements benefited income before income taxes for the year ended December 31, 2006 by $10.1 million due to changes in the value of the euro compared to the United States dollar.
Interest income from First Data, net
Interest income from First Data, net consists of interest income earned on notes receivable from First Data, partially offset by interest incurred on notes payable to First Data. All notes receivable and payable were settled in connection with the spin-off on September 29, 2006, and accordingly, no such amounts were recognized during the years ended December 31, 2008 and 2007.
Other income, net
Changes in other income, net during the years ended December 31, 2008 and 2007 compared to the previous corresponding years were primarily attributable to fluctuations in equity earnings from equity method investments.
Income taxes
Our effective tax rates on pretax income were 25.8%, 29.9% and 31.5% for the years ended December 31, 2008, 2007 and 2006, respectively. We continue to benefit from an increasing proportion of profits being
 
50

Table of Contents
foreign-derived and therefore taxed at lower rates than our combined federal and state tax rates in the United States. In addition, the decreasing effective tax rate in 2008 compared to 2007 is also attributed to the implementation of foreign tax efficient strategies consistent with our overall tax planning and the favorable resolution of certain United States tax matters.
We have established contingency reserves for material, known tax exposures, including potential tax audit adjustments with respect to our international operations restructured in 2003, whereby our income from certain foreign-to-foreign money transfer transactions has been taxed at relatively low foreign tax rates compared to our combined federal and state tax rates in the United States. As of December 31, 2008, the total amount of unrecognized tax benefits is a liability of $397.0 million, including accrued interest and penalties. Our reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. With respect to these reserves, our income tax expense would include (i) any changes in tax reserves arising from material changes during the period in facts and circumstances (i.e. new information) surrounding a tax issue, and (ii) any difference from our tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in our consolidated financial statements in future periods.
The United States Internal Revenue Service (“IRS”) completed its examination of the United States federal consolidated income tax returns of First Data for 2003 and 2004, of which we are a part, and issued a Notice of Deficiency in December 2008. The Notice of Deficiency alleges significant additional taxes, interest and penalties owed with respect to a variety of adjustments involving us and our subsidiaries, and we generally have responsibility for taxes associated with these potential Western Union-related adjustments under the tax allocation agreement with First Data executed at the time of the spin-off. We agree with a number of the adjustments in the Notice of Deficiency; however, we do not agree with the Notice of Deficiency regarding several substantial adjustments representing total alleged additional tax and penalties due of approximately $114 million. As of December 31, 2008, interest on the alleged amounts due for unagreed adjustments would be approximately $23 million. A substantial part of the alleged amounts due for these unagreed adjustments relates to our international restructuring, which took effect in the fourth quarter 2003, and, accordingly, the alleged amounts due related to such restructuring largely are attributable to 2004. We expect to contest those adjustments with which we do not agree with by filing a petition in the United States Tax Court. We believe our overall reserves are adequate, including those associated with adjustments alleged in the Notice of Deficiency. If the IRS’ position in the Notice of Deficiency is sustained, our tax provision related to 2003 and later years would materially increase.
Earnings per share
During the years ended December 31, 2008, 2007 and 2006, basic earnings per share were $1.26, $1.13 and $1.20, respectively, and diluted earnings per share were $1.24, $1.11 and $1.19, respectively. All issued and outstanding shares of Western Union common stock until the spin-off on September 29, 2006, consisting of 100 shares, were held by First Data. Accordingly, for all periods presented prior to the spin-off date of September 29, 2006, basic and diluted earnings per share were computed using our basic shares outstanding as of the spin-off date.
Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options on the presented dates are exercised and shares of restricted stock have vested. As of December 31, 2008, 2007 and 2006, there were 8.0 million, 10.4 million and 4.9 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation under the treasury stock method as their effect is anti-dilutive. The treasury stock method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options and restricted stock are available to acquire shares at an average price throughout the year, and therefore, reduce the dilutive effect throughout the year. Of the
 
51

Table of Contents
43.6 million, 59.4 million and 73.8 million outstanding options to purchase shares of our common stock as of December 31, 2008, 2007 and 2006, respectively, approximately 47%, 58% and 60%, respectively, are held by employees of First Data.
Diluted earnings per share increased during the year ended December 31, 2008 compared to 2007 due to the increased net income as a result of the previously described factors and lower weighted-average diluted shares outstanding. The lower number of diluted shares outstanding was driven by stock repurchases exceeding stock option exercises in 2008 compared to 2007.
Diluted earnings per share decreased during the year ended December 31, 2007 compared to the previous period due to the decrease in net income as a result of the previously described factors and the increase in diluted shares outstanding. Prior to the September 29, 2006 spin-off date, there were no potentially dilutive instruments outstanding and, accordingly, the potentially dilutive shares arising in connection with the spin-off had minimal impact to 2006 due to the impact of weighting. In 2007, the dilutive shares outstanding were outstanding for a full year.
Segment Discussion
We manage our business around the consumers we serve and the types of services we offer. Each of our two segments addresses a different combination of consumer groups, distribution networks and services offered. Our segments are consumer-to-consumer and consumer-to-business, as described earlier. Businesses not considered part of these segments are categorized as “Other.”
The business segment measurements provided to, and evaluated by, our CODM are computed in accordance with the following principles:
 
 	•	 	The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies.	
 
 	•	 	Corporate and other overhead is allocated to the segments primarily based on a percentage of the segments’ revenue.	
 
 	•	 	Expenses incurred in connection with the development of certain new service offerings, including costs to develop mobile money transfer services, new prepaid service offerings and non-recurring costs incurred to effect the spin-off are included in “Other.”	
 
 	•	 	Restructuring and related activities of $82.9 million for the year ended December 31, 2008 have not been allocated to the segments. While these items are identifiable to our segments, they are 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.	
 
52

Table of Contents
The following table sets forth the components of segment revenues as a percentage of the consolidated totals for the years ended December 31, 2008, 2007 and 2006.

 	  	Years Ended December 31,	 	
 	  	2008	 	 	2007	 	 	2006	 	
Consumer-to-consumer (a)	  			 			 			
EMEASA	  	44	%	 	40	%	 	38	%	
Americas	  	34	%	 	37	%	 	41	%	
APAC	  	7	%	 	6	%	 	5	%	
	  	 	 	 	 	 	 	 	 	
Total Consumer-to-consumer	  	85	%	 	83	%	 	84	%	
Consumer-to-business	  	14	%	 	15	%	 	14	%	
Other	  	1	%	 	2	%	 	2	%	
	  	 	 	 	 	 	 	 	 	
Total	  	100	%	 	100	%	 	100	%	

(a)	The geographic split is determined based upon the region where the money transfer is initiated and the region where the money transfer is paid. For transactions originated and paid in different regions, we split the revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the revenue is attributed to that region.	
Consumer-to-Consumer Segment
The following table sets forth our consumer-to-consumer segment results of operations for the years ended December 31, 2008, 2007 and 2006.

 	  	Years Ended December 31,	 	 	% Change	 	
(dollars and transactions in millions)	  	2008	 	 	2007	 	 	2006	 	 	2008
vs. 2007	 	 	2007
vs. 2006	 	
Revenues:	  				 				 				 			 			
Transaction fees	  	$	3,532.9	 	 	$	3,286.6	 	 	$	3,059.0	 	 	7	%	 	7	%	
Foreign exchange revenue	  	 	893.1	 	 	 	769.3	 	 	 	652.4	 	 	16	%	 	18	%	
Other revenues	  	 	45.6	 	 	 	37.2	 	 	 	33.5	 	 	23	%	 	11	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	  	$	4,471.6	 	 	$	4,093.1	 	 	$	3,744.9	 	 	9	%	 	9	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	  	$	1,222.7	 	 	$	1,078.3	 	 	$	1,069.7	 	 	13	%	 	1	%	
Operating margin	  	 	27	%	 	 	26	%	 	 	29	%	 			 			
Key indicators:	  				 				 				 			 			
Consumer-to-consumer transactions	  	 	188.1	 	 	 	167.7	 	 	 	147.1	 	 	12	%	 	14	%	
The table below sets forth transaction and revenue growth/(decline) rates by region for the years ended December 31, 2008 and 2007.

 	  	Years Ended December 31,	 	
 	  	2008	 	 	2007	 	
Consumer-to-consumer transaction growth (a):	  			 			
EMEASA	  	23	%	 	26	%	
Americas	  	2	%	 	5	%	
APAC	  	27	%	 	34	%	
Consumer-to-consumer revenue growth/(decline) (a):	  			 			
EMEASA	  	16	%	 	18	%	
Americas	  	(1	)%	 	(2	)%	
APAC	  	22	%	 	34	%	

(a)	In determining the revenue and transaction growth rates under the regional view in the above table, the geographic split is determined based upon the region where the money transfer is initiated and the region	
 
53

Table of Contents

 	where the money transfer is paid. For transactions originated and paid in different regions, we split the transaction count and revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the revenue and transactions are attributed to that region.	
When referring to revenue and transaction growth rates for individual countries in the following discussion, all transactions to, from and within those countries, and 100% of the revenue associated with each transaction to, from and within those countries are included. India and China combined represented approximately 6%, 5% and 4% of consolidated Western Union revenues during the years ended December 31, 2008, 2007 and 2006, respectively. Mexico represented approximately 7%, 7% and 8% of consolidated Western Union revenues during the years ended December 31, 2008, 2007 and 2006, respectively.
Revenues overview
2008 compared to 2007
The primary drivers of consumer-to-consumer revenue growth are transaction fees and foreign exchange revenue. Consumer-to-consumer money transfer revenue growth was 9% for the year ended December 31, 2008 over the same period in 2007. This increase was driven by revenue growth of 13% in our international business on transaction growth of 17%. Our international business represents all transactions other than transactions between and within the United States and Canada and transactions to and from Mexico. Our international consumer-to-consumer business outside of the United States also continued to experience strong revenue growth for the year ended December 31, 2008 as a result of strong transaction growth.
However, during the fourth quarter of 2008, revenue was impacted by the weakening global economy and its effect on Western Union customers. In the fourth quarter, transaction growth rates slowed sequentially compared to the first nine months of 2008. In addition, the amount of money remitted per transaction declined in the fourth quarter of 2008 compared to the fourth quarter of 2007. These factors resulted in less transaction fee and foreign exchange revenue in the fourth quarter of 2008 compared to the fourth quarter of 2007.
Revenue growth in our EMEASA region was 16% on transaction growth of 23% for the year ended December 31, 2008 over the same period in 2007. The growth in our EMEASA region during the year ended December 31, 2008, was primarily driven by transaction growth and the impact of translating foreign currency denominated revenues into the United States dollar, specifically the euro, as further described below. Contributing to the growth in the EMEASA region was strong transaction growth of over 60% in our money transfer business to India for the year ended December 31, 2008 compared to the corresponding period in 2007, resulting in revenue growth of over 45%. Over the same period, revenue growth in the Gulf States continued to be strong. However, revenue growth in some European markets during the year ended December 31, 2008 slowed over the previous year, especially during the fourth quarter of 2008 as certain countries within Europe, such as Spain, have experienced declines in the housing industry and rising unemployment.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United States dollar for the year ended December 31, 2008 have resulted in a benefit to transaction fee and foreign exchange revenue of $96 million, over the previous year, net of foreign currency hedges, that would not have occurred had there been constant currency rates. The positive impact to operating profit derived from foreign currency exchange rates increasing against the United States dollar during the year was offset by the impact of foreign currency derivative losses for those foreign currency derivatives not designated as hedges and the portion of fair value that is excluded from the measure of effectiveness for these contracts designated as hedges thereby resulting in a minimal impact to overall earnings per share. Transactions in the euro, which represent the majority of the Company’s foreign currency denominated business, benefited revenue by $82 million and operating income by $19 million during the year. If exchange rates between the United States dollar and other currencies remain constant with those experienced at the end of 2008, or if the euro and certain other currencies continue to weaken against the United States dollar, we expect a negative impact on our revenue in 2009. However, the impact to earnings per share is expected to be less due to the impact of translation on our expenses and our hedging program.
 
54

Table of Contents
Americas revenue declined 1% for the year ended December 31, 2008 compared to the corresponding period in 2007 but transactions grew 2% for the same period. The United States domestic and the United States outbound revenue continued to decline, due to the overall weakening in the United States economy and rising unemployment, for the year ended December 31, 2008. Within the Americas region, revenue declines in our domestic (transactions between and within the United States and Canada) business, which represents approximately 10% of consolidated revenue for the year ended December 31, 2008, continued to occur due to the factors described above. Although the domestic and United States outbound revenue declines experienced in 2008 have moderated compared to those experienced in 2007, we did experience increased revenue declines in the fourth quarter of 2008 compared to the third quarter of 2008, due to the further weakening in the United States economy.
Domestic revenue declined 6% on transaction declines of 3% for the year ended December 31, 2008 compared to the corresponding period in 2007. In addition, United States telephone money transfer revenues continued to decline, and website money transfer revenues were flat for the year ended December 31, 2008.
Revenue in our Mexico business was down 2% on transaction declines of 1% for the year ended December 31, 2008 compared to the same period in 2007. The Mexico business continues to be impacted by the weakening in the United States economy, noted earlier, with such declines increasing in the fourth quarter of 2008. During a few weeks in the fourth quarter 2008, the value of the Mexican peso decreased dramatically against the United States dollar and, as a result, we experienced a spike in transactions as United States senders took advantage of the more favorable exchange rates. As the devaluation of the peso was sudden and unusual, we needed to acquire pesos at less favorable rates in order to meet the demand for immediate payout in Mexico, which impacted the overall decline in revenue by less than $5 million.
In early July 2008, the Arizona Court of Appeals overturned a trial court’s ruling in Western Union’s favor regarding the authority of the Arizona Attorney General to seize money transfers originated in states other than Arizona and intended for payment in Mexico. In December, the Arizona Supreme Court agreed to hear the case, which was argued on January 13, 2009. However, a decision has not yet been rendered. The Arizona Attorney General has not attempted to resume the type of seizures that are at issue in this litigation. However, we remain subject to scrutiny in Arizona by law enforcement and regulatory agencies. The Arizona Attorney General has and continues to make extensive data requests of us regarding our operations, our agents and our consumers. On January 8, 2009, the Arizona Superior Court ruled in Western Union’s favor and held that certain subpoenas for Western Union transaction data issued by the Arizona Attorney General were over-broad and unenforceable. However, the legal and regulatory environment in Arizona remains challenging, and we could become subject to additional civil and possibly criminal actions. To date, we have not experienced any measurable impact to our Americas business as a result of the recent Arizona Court of Appeals decision or the data requests by the Arizona Attorney General. However, additional civil or criminal actions or an unfavorable resolution of the case described above could adversely affect our business, financial position and results of operations.
Revenue and transaction growth in the APAC region for the year ended December 31, 2008 compared to the same period in 2007 was driven by strong inbound growth to the region, especially to the Philippines. China revenue and transactions grew at 13% and 11% for the year ended December 31, 2008 compared to the corresponding period in 2007, respectively. Revenue growth rates slowed to China during the third quarter of 2008, with revenue declining in the fourth quarter of 2008 compared to the same period in 2007, in part due to the weakening economic situation described previously and the decline in high revenue transactions from small entrepreneurs that typically make purchases in China.
Foreign exchange revenue increased for the year ended December 31, 2008 compared to the same period in the prior year due to an increase in cross-currency transactions primarily as a result of growth in international consumer-to-consumer transactions. As described above, foreign exchange revenue also benefited during the year ended December 31, 2008 compared to 2007 from the exchange rate between other currencies against the United States dollar, despite the negative impact of currency rate fluctuations in the fourth quarter of 2008.
 
55

Table of Contents
We have historically implemented and will likely implement future strategic fee reductions and actions to reduce foreign exchange spreads, where appropriate, taking into account growth opportunities and competitive factors. Fee decreases and foreign exchange actions generally reduce margins, but are done in anticipation that they will result in increased transaction volumes and increased revenues over time. During the year ended December 31, 2008, fee decreases and foreign exchange actions have occurred at a significantly lower rate than in previous years. Such fee decreases and foreign exchange actions have impacted our annual consolidated revenue on average approximately 3% during 2006 and 2007 and approximately 1% in 2008.
Contributing to the increase in total consumer-to-consumer money transfer revenue and transaction growth in all periods presented was the growth in transactions at existing agent locations, the increased number of agent locations and marketing campaigns promoting the Western Union brand and services. The majority of transaction growth is derived from more mature agent locations; new agent locations typically contribute only marginally to revenue growth in the first few years of their operation. Increased productivity, measured by transactions per location, is often experienced as locations mature. We believe that new agent locations will help drive growth by increasing the number of locations available to send and receive money. We generally refer to locations with more than 50% of transactions being initiated (versus paid) as “send locations” and to the balance of locations as “receive locations.” Send locations are the engine that drives consumer-to-consumer revenue. They contribute more transactions per location than receive locations. However, a wide network of receive locations is necessary to build each corridor and to help ensure global distribution and convenience for consumers to generate transactions. The number of send and receive transactions at an agent location can vary significantly due to such factors as customer demographics around the location, immigration patterns, the location’s class of trade, hours of operation, length of time the location has been offering our services, regulatory limitations and competition. Each of the more than 375,000 agent locations in our agent network is capable of providing one or more of our services; however, not every location completes a transaction in a given period. For example, as of December 31, 2008, more than 85% of agent locations in the United States, Canada and Western Europe (representing at least one of our three money transfer brands) experienced money transfer activity in the previous 12 months. In the developing regions of Asia and other areas where there are primarily receive locations, approximately 70% of locations experienced money transfer activity in the previous 12 months. We periodically review locations to determine whether they remain enabled to perform money transfer transactions.
2007 compared to 2006
Consumer-to-consumer money transfer revenue growth was 9% for the year ended December 31, 2007 over 2006. This increase was driven by revenue growth of 15% in our international business on transaction growth of 20%. Our international consumer-to-consumer business outside of the United States also continued to experience strong revenue growth for the year ended December 31, 2007 as a result of strong transaction growth.
Revenue growth in our EMEASA region was 18% on transaction growth of 26% for the year ended December 31, 2007 over the same period in 2006. The growth in our EMEASA region during the year ended December 31, 2007, was primarily driven by transaction growth and the impact of the euro, as further described below. Contributing to the growth in the EMEASA region was strong transaction growth of 75% in our money transfer business to India for the year ended December 31, 2007, resulting in revenue growth of 44% for the year ended December 31, 2007.
In addition, fluctuations in the exchange rate between the euro and the United States dollar have resulted in a benefit to consumer-to-consumer transaction fee and foreign exchange revenue of $79 million for the year ended December 31, 2007 over 2006, that would not have occurred had there been a constant exchange rate. For the years ended December 31, 2007, the related benefit to operating income was $12 million.
Americas revenue declined 2% for the year ended December 31, 2007 but transactions grew 5% for the same period. The United States to Mexico, United States domestic and the United States outbound revenue were adversely impacted by various factors in the United States for the year ended December 31, 2007. These factors,
 
56

Table of Contents
which began in the second quarter 2006, include the immigration debate and market softness, in part due to the slowdown in the construction industry. We responded to these factors by launching distribution, pricing, advertising, promotion and community outreach initiatives.
Within the Americas region, revenue declines in our domestic business, which represents approximately 11% of consolidated revenue for the year ended December 31, 2007, continued to occur due to the factors described above. Domestic revenue declined 10% on transaction declines of 4% for the year ended December 31, 2007 over the same period in 2006. Domestic revenue declined at a higher rate than transactions, due in part to the impact of price decreases and lower principal amounts sent. In addition, transactions and revenues for money transfers initiated on our website and through the telephone declined for the year ended December 31, 2007 compared to the same period in 2006. Transactions initiated in the United States were impacted by tightened controls implemented beginning in early 2007 by Western Union, card issuing banks and card associations in response to credit and debit card fraud in the United States. These tightened controls have directly impacted our consumers’ ability to use their debit and credit cards to send money on our website and through the telephone, decreasing the volume of transactions. Card issuing banks and card associations have begun to allow more consumer transactions to be processed, in part in response to Western Union’s own increased scrutiny of these transactions.
Revenue in our Mexico business, which represented 7% of consolidated revenue for the year ended December 31, 2007, declined 4% for the year ended December 31, 2007 compared to 2006, despite increased transaction growth of 4% for the same period due to price reductions taken in the early part of 2007. However, Mexico revenue and transaction growth rates began to converge during each sequential quarter in 2007 as there were no significant pricing reductions after the early part of 2007.
Revenue and transaction growth in the APAC region for the year ended December 31, 2007 compared to the same period in 2006 was driven by strong inbound growth to the region, especially to the Philippines. China revenue and transactions grew at 37% and 25% for the year ended December 31, 2007 compared to the corresponding period in 2006, respectively.
Foreign exchange revenue increased for the year ended December 31, 2007 compared to the same period in the prior year due to an increase in cross-currency transactions primarily as a result of strong growth in international consumer-to-consumer transactions, partially offset by reduced foreign exchange rate spreads in selected markets.
Operating income
2008 compared to 2007
Consumer-to-consumer operating income increased for the year ended December 31, 2008 compared to 2007, primarily driven by higher revenue and related profits from increased transactions internationally and lower stock-based compensation expenses. Of the $22.3 million accelerated stock-based compensation vesting charge in 2007 taken in connection with the change in control of First Data, that did not recur in 2008, $18.9 million was allocated to this segment in 2007. During the year ended December 31, 2008 compared to 2007, the operating income increase was partially offset by revenue declines in our United States businesses, and higher employee compensation expenses. The ongoing shift in our business mix reflecting stronger growth in our international business, which carries lower profit margins than in our United States originated business, also impacted consumer-to-consumer operating income during the year ended December 31, 2008. As described earlier in the revenues overview and due to the same factors, operating income growth for the consumer-to-consumer segment was lower in the fourth quarter of 2008 than that experienced in the previous nine months.
Consumer-to-consumer operating income margin also increased during the year ended December 31, 2008 compared to 2007, primarily due to lower stock-based compensation expense, as described above. This increase was partially offset by revenue declines in our United States businesses and the ongoing shift in our business mix
 
57

Table of Contents
reflecting stronger growth in our international business, which carries lower profit margins than in our United States originated business as noted earlier. However, we have been experiencing a convergence between international operating profits margins and profit margins of our United States originated businesses.
2007 compared to 2006
The consumer-to-consumer segment’s operating income increased by 1% for the year ended December 31, 2007 compared to the corresponding period in 2006. This increase was primarily driven by increased revenue in our international business. Operating income during the year ended December 31, 2007 was impacted by the ongoing shift in our business mix reflecting stronger growth in our international business, which carries lower profit margins than in our United States originated businesses. However, we have been experiencing a convergence between international operating profit margins and profit margins of our United States originated businesses. Operating income during the year ended December 31, 2007 was adversely impacted by incremental public company expenses which are incremental to both costs allocated by First Data prior to the spin-off and presumed overhead allocations from First Data had we remained part of First Data. Such incremental public company expenses include salaries, benefits, equipment, supplies and other costs incurred in connection with operating as a separate public company. In addition, we recognized an accelerated non-cash stock compensation charge of $22.3 million taken in connection with the change in control of First Data, of which 85% was  allocated to the consumer-to-consumer segment.
Consumer-to-Business Segment
The following table sets forth our consumer-to-business segment results of operations for the years ended December 31, 2008, 2007 and 2006.

 	  	Years Ended December 31,	 	 	% Change	 	
(dollars and transactions in millions)	  	2008	 	 	2007	 	 	2006	 	 	2008
vs. 2007	 	 	2007
vs. 2006	 	
Revenues:	  				 				 				 			 			
Transaction fees	  	$	668.1	 	 	$	665.5	 	 	$	593.7	 	 	—  	 	 	12	%	
Other revenues	  	 	51.7	 	 	 	54.4	 	 	 	42.5	 	 	(5	)%	 	28	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Total revenues	  	$	719.8	 	 	$	719.9	 	 	$	636.2	 	 	—  	 	 	13	%	
	  	 	 	 	 	 	 	 	 	 	 	 	 			 			
Operating income	  	$	199.4	 	 	$	223.7	 	 	$	223.3	 	 	(11	)%	 	—  	 	
Operating margin	  	 	28	%	 	 	31	%	 	 	35	%	 			 			
Key indicators:	  				 				 				 			 			
Consumer-to-business transactions	  	 	412.1	 	 	 	404.5	 	 	 	249.4	 	 	2	%	 	62	%	
Revenues
2008 compared to 2007
During the year ended December 31, 2008, overall revenue was flat compared to the corresponding period in 2007, as revenue growth in the Pago Fácil business was offset by a decline in United States cash-based bill payment revenue. The consumer-to-business segment, including the United States electronic-based bill payments business which experienced flat revenues year over year, was adversely impacted in the last half of 2008 due to the weakening economy in the United States. Some consumers who are likely to use our services are having difficulty paying their bills and are unable to obtain credit in any form, resulting in us handling fewer bill payments.
2007 compared to 2006
Transaction growth of 62% and revenue growth of 13% in the year ended December 31, 2007 compared to the same period in 2006 primarily resulted from the acquisition of Pago Fácil and growth in electronic bill payments, partially offset by slight declines in United States cash-based bill payments.
 
58

Table of Contents
In December 2006, we acquired the remaining 75% interest in Pago Fácil. Prior to the acquisition, we held a 25% interest in Pago Fácil. This acquisition contributed $67.7 million and $3.6 million in revenue for the years ended December 31, 2007 and 2006, respectively, of which $64.4 million and $3.6 million related to our consumer-to-business segment in the years ended December 31, 2007 and 2006, respectively. Revenue growth for the year ended December 31, 2007 compared to the same period in 2006, excluding Pago Fácil, was 4%. Transaction growth, excluding Pago Fácil, was 1% during the year ended December 31, 2007, compared to the same period in 2006.
Operating income
2008 compared to 2007
Operating income for the consumer-to-business segment decreased for the year ended December 31, 2008 compared to 2007 primarily due to operating income declines in the United States-based bill payments businesses, partially offset by growth in Pago Fácil payments. Operating income margins also declined as United States electronic-based and Pago Fácil payments, which cumulatively represented a higher percentage of consumer-to-business revenues in 2008 compared to 2007, have lower operating margins than the declining higher margin United States cash-based bill payments business. Partially offsetting operating income declines for the year ended December 31, 2008 compared to 2007 was lower stock-based compensation expenses as described in the “consumer-to-consumer” operating income discussion.
2007 compared to 2006
Operating income for the consumer-to-business segment was unchanged for the year ended December 31, 2007 compared to the same period in 2006 because of the impact of Pago Fácil and revenue growth in the segment’s electronic-based services businesses, and was offset by incremental public company expenses and the accelerated stock compensation charge taken in connection with the change in control of First Data. Operating income for the period grew at a lower rate than revenues as Pago Fácil and the electronic-based services have lower operating margins compared to the higher margin United States cash-based bill payments  business, as well as the incremental public company expenses and accelerated stock compensation charge noted above.
Other
The following table sets forth other results for the years ended December 31, 2008, 2007 and 2006.

 	  	Years Ended December 31,	 	 	% Change	 	
(dollars and transactions in millions)	  	2008	 	 	2007	 	 	2006	 	 	2008
vs. 2007	 	 	2007
vs. 2006	 	
Revenues	  	$	90.6	 	 	$	87.2	 	 	$	89.1	 	 	4	%	 	(2	)%	
Operating income	  	$	15.8	 	 	$	20.0	 	 	$	18.4	 	 	(21	)%	 	9	%	
Operating income margin	  	 	17	%	 	 	23	%	 	 	21	%	 			 			
Revenues
2008 compared to 2007
Revenue increased for the year ended December 31, 2008 over the same period in 2007 due to revenue growth in our prepaid services business generated outside of the United States.
First Data, through its subsidiary Integrated Payment Systems Inc. (“IPS”), issues our Western Union branded money orders, pursuant to a five year agreement that was executed in conjunction with the spin-off. On July 18, 2008, we entered into an agreement with IPS which modified the existing business relationship with respect to the issuance and processing of money orders. Under the terms of that agreement beginning on October 1, 2009 (the “Transition Date”), IPS will assign and transfer to us certain operating assets used by IPS to
 
59

Table of Contents
issue money orders and an amount of cash sufficient to satisfy all outstanding money order liabilities. On the Transition Date, we will assume IPS’s role as issuer of the money orders, including its obligation to pay outstanding money orders and will terminate the existing agreement whereby IPS pays us a fixed return on the outstanding money order balances (which vary from day to day but approximate $800 million). Following the Transition Date, we will invest the cash received from IPS in high-quality, investment grade securities in accordance with applicable regulations, which are the same as those currently governing the investment of our United States originated money transfer principal. In anticipation of our exposure to fluctuations in interest rates, we have entered into interest rate swaps on certain of our fixed rate notes. Through a combination of the revenue generated from these investment securities and the anticipated interest expense savings resulting from these interest rate swaps, we estimate that we should be able to retain subsequent to the Transition Date, on a pre-tax income basis through 2011, a comparable rate of return as we are receiving under our current agreement with IPS. However, revenue may be lower.
Subsequent to the Transition Date, all revenue generated from the management of the investment portfolio will be retained by us and none will be shared with our agents. IPS will continue to provide to us clearing services necessary for payment of the money orders in exchange for the payment by us to IPS of a per-item administrative fee. We will no longer provide to IPS the services required under the original money order agreement or receive from IPS the fee for such services.
2007 compared to 2006
Our money order and prepaid services businesses, including prepaid services acquired through our acquisition of Pago Fácil, accounted for 100% and 94% of “Other” revenue in 2007 and 2006, respectively. We previously operated messaging and international prepaid cellular top-up businesses, which were shut down or disposed of in early 2006. Revenue remained relatively constant for the year ended December 31, 2007, due to moderate growth in our money order and prepaid services businesses, offset by the loss of revenue from our shut-down or disposed of businesses, which generated revenue for a portion of 2006, while neither business generated revenue in 2007.
Operating Income
2008 compared to 2007
For the year ended December 31, 2008, the decrease in operating income was driven by operating income declines related to our money order business, costs incurred to develop mobile money transfer services and our prepaid business within the United States, offset by increased revenue and related profits from our prepaid services business outside of the United States.
2007 compared to 2006
For the year ended December 31, 2007, the increase in operating income was driven by modest growth from our prepaid services.
Further financial information relating to each of our segments’ external revenue, operating profit measures and total assets is set forth in Note 17 to our consolidated financial statements.
Capital Resources and Liquidity
Our primary source of liquidity has been cash generated from our operating activities, derived primarily from net income, and fluctuations in working capital. Our working capital is affected by the timing of interest payments on our outstanding borrowings, timing of income tax payments, and collections on receivables, among other items. The majority of our interest payments are due in the second and fourth quarters which results in a decrease in the amount of cash provided by operating activities in those quarters, and a corresponding increase to the first and third quarters.
 
60

Table of Contents
Our future cash flows generated from operating activities could be impacted by a variety of factors, some of which are out of our control, including changes in economic conditions, especially those impacting the migrant population, and changes in income tax laws or the status of income tax audits.
A significant portion of our cash flows from operating activities has been generated from subsidiaries, some of which are regulated entities. These subsidiaries may transfer all excess cash to the parent company for general corporate use, except for assets subject to legal or regulatory restrictions. Such assets include those located in countries outside of the United States containing restrictions from being transferred outside of those countries and cash and investment balances that are maintained by our regulated subsidiary to secure certain money transfer obligations initiated in the United States in accordance with applicable state regulations in the United States. Significant changes in the regulatory environment for money transmitters could impact our primary source of liquidity.
On December 5, 2008, we entered into a senior, unsecured, 364-day term loan in an aggregate principal amount of $500 million (the “Term Loan”) with a syndicate of lenders. The Term Loan was used for general corporate purposes, including the repayment of commercial paper utilized to retire $500 million of floating rate notes that came due on November 17, 2008. As market conditions allow, we intend to refinance our Term Loan in 2009 with new financing sources. Based on market conditions at the time such re-financing occurs, we may not be able to obtain new financing under similar conditions as historically reported.
Taking into account our projected share repurchases, dividends, our pending acquisition, capital expenditures, and debt service during 2009, we believe our cash flows generated from operating activities and available financing sources will provide us with an adequate source of liquidity to meet the needs of our business.
Cash and Investment Securities
As of December 31, 2008, we have cash and cash equivalents of $1.3 billion. Our foreign entities held $597.9 million of our cash and cash equivalents at December 31, 2008. Our ongoing cash management strategies to fund our business needs could cause United States and foreign cash balances to fluctuate.
Repatriating foreign funds to the United States would, in many cases, result in significant tax obligations because most of these funds have been taxed at relatively low foreign tax rates compared to our combined federal and state tax rate in the United States. We expect to use foreign funds to expand and fund our international operations and to acquire businesses internationally.
On September 15, 2008, we requested redemption of our shares in the Reserve International Liquidity Fund, Ltd. (the “Fund”), a money market fund, totaling $298.1 million. We did not receive any portion of the redemption payment prior to December 31, 2008, and accordingly, we have reclassified the total amount due from “Cash and cash equivalents” to “Other assets” in the consolidated balance sheet as of December 31, 2008. This surplus cash was not required or used for daily operations. At the time the redemption request was made, we were informed by the Reserve Management Company, the Fund’s investment advisor (the “Manager”), that our redemption trades would be honored at a $1.00 per share net asset value. On January 30, 2009, we received a partial distribution from the Fund of $193.6 million. We expect to receive the remaining redemption amount based on written and verbal representations from the Manager to date and our current legal position regarding our redemption priority. We expect to receive the remaining payment based on the maturities of the underlying investments in the Fund and the outcome of the litigation process. There is a risk the redemption process could be delayed and that we could receive less than the $1.00 per share net asset value, should a pro-rata distribution occur. Based on net asset information provided by the Fund, our exposure related to pro-rata distribution could be $12 million, excluding settlement costs incurred by the Fund. We believe that, despite this situation, we have adequate liquidity to meet our business needs through our existing cash balances, our ability to generate cash flows through operations, and the amounts available to borrow under our commercial paper program and our revolving credit facility, as described under “Financing Resources” below.
 
61

Table of Contents
In many cases, we receive funds from money transfers and certain other payment services before we settle the payment of those transactions. These funds, referred to as “settlement assets” on our consolidated balance sheets, are not used to support our operations. However, we earn income from investing these funds. We maintain a portion of these settlement assets in highly liquid investments, classified as “cash and cash equivalents” within “settlement assets,” to fund settlement obligations.
A portion of our settlement assets are held in investment securities, substantially all of which are highly rated state and municipal debt instruments, totaling $405.6 million as of December 31, 2008. Most state regulators in the United States require us to maintain specific high-quality, investment grade securities and such investments are intended to secure relevant outstanding settlement obligations in accordance with applicable regulations. We do not hold financial instruments for trading purposes, and all of our investment securities are classified as available-for-sale and recorded at fair value.
Investment securities are exposed to market risk due to changes in interest rates and credit risk. We regularly monitor credit risk and attempt to mitigate our exposure by making high quality investments. As of December 31, 2008, the significant majority of our investment securities had credit ratings of “AA-” or better from a major credit rating agency. Our investment securities are also actively managed with respect to concentration. As of December 31, 2008, there were no investments with a single issuer or individual securities representing more than 10% of our investment securities portfolio.
IPS, our third-party issuer of Western Union money orders, holds the settlement assets generated from the sale of money orders, and maintains the responsibility for investing those funds. Based on the terms of the agreement with IPS, we are provided with a fixed rate of return on the funds awaiting settlement. In connection with the July 18, 2008 agreement we entered into with IPS, on October 1, 2009 we will assume the responsibility for the settlement of money orders and will have responsibility for managing the investment portfolio. On the same date, we will receive an amount of cash sufficient to satisfy all outstanding money order liabilities, which vary from day to day but approximate $800 million. In anticipation of our exposure to fluctuations in interest rates, we have entered into interest rate swaps on certain of our fixed rate notes. Through a combination of the revenue generated from these investment securities and the anticipated interest expense savings resulting from these interest rate swaps, we estimate that we should be able to retain subsequent to the Transition Date, on a pre-tax income basis through 2011, a comparable rate of return as we are receiving under our current agreement with IPS.
Cash Flows from Operating Activities
During the years ended December 31, 2008 and 2007, cash provided by operating activities was $1,253.9 million and $1,103.5 million, respectively. Cash flows provided by operating activities increased due to increased net income and working capital fluctuations in 2008.
During the years ended December 31, 2007 and 2006, cash provided by operating activities was $1,103.5 million and $1,108.9 million, respectively. Cash flows provided by operating activities was consistent between 2007 and 2006, despite decreased net income. The decrease in net income was, in part, due to increased non-cash charges which did not decrease cash flows. Cash flows from operating activities also benefited from favorable working capital fluctuations in 2007.
 
62

Table of Contents
Financing Resources
As of December 31, 2008 and 2007, we have the following outstanding borrowings (in millions):

 	  	2008	  	2007	
Due in less than one year:	  			  			
Commercial paper	  	$	82.9	  	$	338.2	
Term loan	  	 	500.0	  	 	—  	
Floating rate notes, due November 2008 (a)	  	 	—  	  	 	500.0	
			
Due in greater than one year:	  			  			
5.400% notes, net of discount, due 2011 (b)	  	 	1,042.8	  	 	1,002.8	
5.930% notes, net of discount, due 2016 (c)	  	 	1,014.4	  	 	999.7	
6.200% notes, net of discount, due 2036	  	 	497.4	  	 	497.3	
Other borrowings	  	 	6.0	  	 	—  	
	  	 	 	  	 	 	
Total borrowings	  	$	3,143.5	  	$	3,338.0	

(a)	The floating rate notes were redeemed upon maturity on November 17, 2008.	
(b)	At December 31, 2008 and 2007, we held interest rate swaps related to the 5.400% notes due 2011 (“2011 Notes”) with an aggregate notional amount of $550 million and $75 million, respectively. The carrying value of the 2011 Notes has been adjusted for the impact of these hedges. During the fourth quarter of 2008, we terminated an aggregate notional amount of $195 million of interest rate swaps. We received cash of $10.7 million on the termination of these swaps, the offset of which is reflected in “Borrowings” and will be reclassified as a reduction to “Interest expense” over the life of the 2011 notes.	
(c)	At December 31, 2008, we held an interest rate swap related to the 5.930% notes due 2016 (“2016 Notes”) with an aggregate notional amount of $110 million. The carrying value of the 2016 Notes has been adjusted for the impact of these hedges.	
Commercial Paper
Pursuant to our commercial paper program, we may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time. Our commercial paper borrowings may have maturities of up to 397 days from date of issuance. Interest rates for borrowings are based on market rates at the time of issuance. Our commercial paper borrowings at December 31, 2008 and 2007 had a weighted-average interest rate of approximately 4.1% and 5.5%, respectively, and weighted-average initial terms of 27 days and 36 days, respectively.
Revolving Credit Facility
Our revolving credit facility expires in 2012 and includes a $1.5 billion revolving credit facility, a $250.0 million letter of credit sub-facility and a $150.0 million swing line sub-facility (the “Revolving Credit Facility”). Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an interest rate margin of 19 basis points. A facility fee of 6 basis points on the total facility is payable quarterly regardless of usage. The facility fee percentage is determined based on our credit rating assigned by Standard & Poor’s Ratings Services (“S&P”) and/or Moody’s Investor Services, Inc. (“Moody’s”). In addition, to the extent the aggregate outstanding borrowings under the Revolving Credit Facility exceed 50% of the related aggregate commitments, a utilization fee of 5 basis points as of December 31, 2008 based upon such ratings is payable to the lenders on the aggregate outstanding borrowings.
As of December 31, 2008, we had no outstanding borrowings and had approximately $1.4 billion available to borrow, which is net of our current commercial paper borrowings backed by this Revolving Credit Facility. Our Revolving Credit Facility, which is diversified through a group of 15 participating institutions, is used to
 
63

Table of Contents
provide general liquidity for us and to support our commercial paper program, which we believe enhances our short term credit rating. The largest commitment from any single financial institution within the total committed balance of $1.5 billion is approximately 20%. All banks within this group were rated at least an A- or better as of December 31, 2008. If the amount available to borrow under the Revolving Credit Facility decreased, or if the Revolving Credit Facility were eliminated, the cost and availability of borrowing under the commercial paper program may be impacted.
Term Loan
On December 5, 2008, we entered into a senior, unsecured, 364-day term loan in an aggregate principal amount of $500 million (the “Term Loan”) with a syndicate of lenders. The Term Loan was used for general corporate purposes, including the repayment of commercial paper utilized to retire $500 million of floating rate notes that came due on November 17, 2008. The Term Loan allows the selection between two different interest rate calculations. For the current period, we selected an interest rate calculation using the one-month LIBOR plus a 2% applicable margin (3.875% at December 31, 2008). A loan fee is also payable quarterly, beginning December 31, 2008, on the total loan (50 basis points as of December 31, 2008). The applicable margin and loan fee percentage are determined based on our credit ratings assigned by S&P and/or Moody’s. A duration fee is payable 90 days and 180 days after the closing date of December 5, 2008 equal to 0.25% and 0.50%, respectively, of the loan balance on each date.
Notes
On September 29, 2006, we issued $1.0 billion aggregate principal amount of unsecured notes maturing on October 1, 2016. Interest on the 2016 Notes is payable semiannually on April 1 and October 1 each year. We may redeem the 2016 Notes at any time prior to maturity at the applicable treasury rate plus 20 basis points.
On November 17, 2006, we issued $2 billion aggregate principal amount of unsecured fixed and floating rate notes, comprised of $500 million aggregate principal amount of our Floating Rate Notes due 2008 (the “Floating Rate Notes”), $1 billion aggregate principal amount notes due 2011 and $500 million aggregate principal amount of notes due 2036 (the “2036 Notes”). The Floating Rate Notes were redeemed upon maturity in November 2008.
Interest with respect to the 2011 Notes and 2036 Notes is payable semiannually in arrears on May 17 and November 17 each year. We may redeem the 2011 Notes and the 2036 Notes at any time prior to maturity at the applicable treasury rate plus 15 basis points and 25 basis points, respectively.
Credit Ratings and Debt Covenants
The credit ratings on our debt are an important consideration in managing our financing costs and facilitating access to additional capital on favorable terms. Factors that we believe are important in assessing our credit ratings include earnings, cash flow generation, leverage, available liquidity and overall business risks.
Our Revolving Credit Facility contains a facility fee and a utilization fee, and our Term Loan contains a loan fee and an application margin, all of which is determined based on our credit rating assigned by S&P and/or Moody’s, as further described above. We do not have any other terms within our debt agreements or other contracts that are tied to changes in our credit ratings. The table below summarizes our credit ratings as of December 31, 2008:

 	  	December 31, 2008	
 	  	S&P	  	Moody’s	  	Fitch	
Short-term rating	  	A-2	  	P-2	  	F2	
Senior unsecured	  	A-	  	A3	  	A-	
Ratings outlook	  	Stable	  	Stable	  	Stable	
 
64

Table of Contents
These ratings are not a recommendation to buy, sell or hold any of our securities. Our credit ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. We cannot ensure that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. A downgrade or a negative outlook provided by the rating agencies could result in the following:
 
 	•	 	Our access to the commercial paper market may be limited, and if we were downgraded below investment grade, our access to the commercial paper market would likely be eliminated;	
 
 	•	 	Our borrowing costs on certain existing borrowings would increase;	
 
 	•	 	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 agent relationships may be adversely impacted, particularly those agents that are financial institutions or post offices.	
The indenture governing our notes, the Revolving Credit Facility and the Term Loan all contain covenants which, among other things, limit or restrict our ability to sell or transfer assets or enter into a merger or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into sale and leaseback transactions, or incur certain subsidiary level indebtedness. In addition, the Revolving Credit Facility and Term Loan require us to maintain a consolidated adjusted EBITDA interest coverage ratio of greater than 2:1 and 3:1, respectively, (ratio of consolidated adjusted EBITDA, defined as net income plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) any other non-cash deductions, losses or changes made in determining net income for such period and (f) extraordinary losses or charges, and minus extraordinary gains, in each case determined in accordance with United States GAAP for such period, to interest expense) for each period comprising the four most recent consecutive fiscal quarters. Our consolidated interest coverage ratio was 10:1 as of December 31, 2008. Prepayments under the Term Loan are allowed and are required based on the cash proceeds from other indebtedness, issuance of equity, or sale of assets over $250 million.
As of December 31, 2008, we are in compliance with our debt covenants. A violation of our debt covenants could impair our ability to borrow, and outstanding amounts borrowed could become due, thereby restricting our ability to use our excess cash for other purposes.
Cash Priorities
Capital Expenditures
The total aggregate amount capitalized for contract costs, purchases of property and equipment, and purchased and developed software was $153.7 million, $192.1 million and $202.3 million in 2008, 2007 and 2006, respectively. Amounts capitalized for new and renewed agent contracts were $82.8 million, $80.9 million and $124.1 million in 2008, 2007 and 2006, respectively. Such contract costs vary depending on the terms of existing contracts as well as the timing of new and renewed contract signings. Other capital expenditures during 2008, 2007 and 2006 included purchased and developed software costs and purchases of property and equipment representing investments in our information technology infrastructure and the renovation of certain facilities.
Acquisition of businesses, net of cash acquired
In December 2008, we acquired 80% of our existing money transfer agent in Peru for a purchase price of $35.0 million. The aggregate consideration paid was $29.7 million, net of a holdback reserve of $3.0 million and cash acquired of $2.3 million.
On August 1, 2008, we acquired the money transfer assets from our existing money transfer agent in Panama for a purchase price of $18.3 million, which is net of cash acquired. The consideration paid was $14.3 million, net of a holdback reserve of $4.0 million.
 
65

Table of Contents
In December 2006, we acquired Pago Fácil for a total purchase price of $69.8 million, less cash acquired of $3.0 million. Prior to December 2006, we held a 25% interest in Pago Fácil, which was treated as an equity method investment. As a result of acquiring the additional 75% ownership, our entire investment in and results of operations of Pago Fácil have been included in the consolidated financial statements since the acquisition date.
We expect that we will continue to pursue opportunities to acquire companies, particularly outside of the United States, that complement our existing businesses worldwide.
Share Repurchases and Dividends
Since September 2006, the Board of Directors has authorized common stock repurchases of up to $3.0 billion consisting of a $1.0 billion authorization in June 2008 (“2008 Authorization”), a $1.0 billion authorization in December 2007 (“2007 Authorization”) and a $1.0 billion authorization in September 2006. Both the 2007 Authorization and the authorization in 2006 have been fully utilized. During the years ended December 31, 2008, 2007 and 2006, 58.1 million, 34.7 million and 0.9 million shares, respectively, were repurchased for $1,313.9 million, $726.5 million and $19.9 million, respectively, excluding commissions, at an average cost of $22.60, $20.93 and $22.78 per share, respectively. As of December 31, 2008, $939.7 million remains available under the 2008 Authorization for purchases through December 31, 2009.
During the fourth quarter of 2008, our Board of Directors declared an annual cash dividend of $0.04 per common share, representing $28.4 million, which was paid in December 2008. During the fourth quarter of 2007, our Board of Directors declared an annual cash dividend of $0.04 per common share, representing $30.0 million, which was paid in December 2007. During the fourth quarter of 2006, our Board of Directors declared a cash dividend of $0.01 per common share, representing $7.7 million, which was paid in December 2006.
Equity Investments In and Loans to Certain Key Agents
In October 2007, we entered into agreements totaling $18.3 million to convert our non-participating interest in a joint venture with our Singapore agent, Hersing Corporation Ltd., into a fully participating 49% equity interest and extended the agent relationship at more favorable commission rates to Western Union. As a result, we earn a pro-rata share of profits and have enhanced voting rights. We also have the right to add additional agent relationships in Singapore under this agreement. In October 2007, we completed an agreement to acquire a 25% ownership interest in GraceKennedy Money Services Caribbean SRL (“GraceKennedy”), an agent in Jamaica (which also acts as our agent in several other Caribbean countries), and to extend the term of the agent relationship for $29.0 million. The aggregate consideration paid resulted in $20.2 million of identifiable intangible assets, including capitalized contract costs, which are being amortized over seven to 10 years.
From time to time, we also make advances and loans to agents. Most significantly, in the first quarter 2006, we signed a six year agreement with one of our existing agents which included a four year loan of $140.0 million to the agent, of which $40.0 million, $30.0 million and $20.0 million were repaid in the years ended December 31, 2008, 2007 and 2006, respectively. The terms of the loan agreement require that a percentage of commissions earned by the agent (64% in 2009) be withheld as repayment of the loan and the agent remains obligated to repay the loan if commissions earned are not sufficient. The remaining loan receivable balance relating to this agent as of December 31, 2008 and 2007, net of discount, was $47.0 million and $67.5 million, respectively.
As opportunities arise, we expect we will continue to strategically invest in agents to further strengthen our business.
Debt Service Requirements
Our 2009 debt service requirements will include the $500 million Term Loan principal balance, payments on existing borrowings and any future borrowings under our commercial paper program and interest payments on all outstanding indebtedness. We have the ability to use existing financing sources, such as our Revolving Credit Facility and commercial paper program, to meet debt obligations as they arise. As market conditions allow, we intend to refinance our Term Loan with new financing sources. Based on market conditions at the time such re-financing occurs, we may not be able to obtain new financings under similar conditions as historically reported.
 
66

Table of Contents
Our ability to continue to grow the business, make acquisitions, return capital to shareholders, primarily through share repurchases, and service our debt will depend on our ability to continue to generate excess operating cash through our operating subsidiaries and to continue to receive dividends from those operating subsidiaries, our ability to obtain adequate financing and our ability to identify the appropriate acquisitions that will align with our long-term strategy.
Prior to Spin-Off from First Data
Prior to the spin-off, excess cash generated from our domestic operations that was not required to meet certain regulatory requirements was periodically advanced to First Data and was reflected as a receivable from First Data. In addition, we periodically paid dividends to First Data.
First Data and its subsidiaries provided a number of services on behalf of our business, including shared services, which were reimbursed periodically. Also, when we were a segment of First Data, we benefited from First Data’s financing resources.
Off-Balance Sheet Arrangements
Other than facility and equipment leasing arrangements disclosed in Note 12 to our consolidated financial statements, we have no material off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Pension Plans
We have two frozen defined benefit plans that together had a recorded unfunded pension obligation of $107.1 million as of December 31, 2008. During the period from 2006 to 2008, we did not make contributions to these plans. Due to the impact of recent legislation enacted, we will not be required to contribute to these plans during 2009, but estimate we will be required to fund approximately $20 to $25 million in 2010.
Our most recent measurement date for our pension plans is December 31, 2008. The calculation of the funded status and net periodic benefit income is dependent upon two primary assumptions: 1) expected long-term return on plan assets; and 2) discount rate. Our expected long-term return on plan assets was 7.50% for 2008 and 2007. If actual asset returns exceed the expected return on plan assets by 100 basis points, the plans’ funded status would improve by $3 million. The discount rate assumption for the company’s benefit obligation was 6.26% and 6.02% for 2008 and 2007, respectively. A 100 basis point change in the discount rate would change the funded status by $30 million. Due to the frozen status of our plans, a 100 basis point change in these assumptions would not be significant to the net periodic benefit income or expense of our plans.
 
67

Table of Contents
Contractual Obligations
The following table summarizes our contractual obligations to third parties as of December 31, 2008 and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in millions).

 	  	Payments Due by Period	
 	  	Total	  	Less than
1 Year	  	1-3 Years	  	3-5 Years	  	After
5 Years	
Borrowings, including interest (a)	  	$	4,593.0	  	$	731.3	  	$	1,299.1	  	$	177.2	  	$	2,385.4	
Purchase obligations (b)	  	 	160.2	  	 	42.3	  	 	42.7	  	 	30.2	  	 	45.0	
Foreign currency forward contracts (c)	  	 	10.8	  	 	8.4	  	 	2.4	  	 	—  	  	 	—  	
Operating leases	  	 	102.6	  	 	23.5	  	 	30.4	  	 	19.4	  	 	29.3	
Unrecognized tax benefits (d)	  	 	397.0	  	 	—  	  	 	—  	  	 	—  	  	 	—  	
Capitalized contract costs (e)	  	 	0.9	  	 	0.9	  	 	—  	  	 	—  	  	 	—  	
Estimated pension funding (f)	  	 	123.1	  	 	—  	  	 	43.7	  	 	39.8	  	 	39.6	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
	  	$	5,387.6	  	$	806.4	  	$	1,418.3	  	$	266.6	  	$	2,499.3	

(a)	We have estimated our interest payments based on i) projected LIBOR rates in calculating interest on commercial paper borrowings and our Term Loan, ii) projected commercial paper borrowings outstanding throughout 2009, and the assumption that no such amounts will be outstanding beyond 2009, and iii) the assumption that no debt issuances or renewals will occur upon the maturity dates of our fixed notes and Term Loan. Our Term Loan matures in December 2009 and we plan to refinance this facility in 2009 with new financing sources.	
(b)	Many of our contracts contain clauses that allow us to terminate the contract with notice, and with or without a termination penalty. Termination penalties are generally an amount less than the original obligation. Certain contracts also have an automatic renewal clause if we do not provide written notification of our intent to terminate the contract. 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.	
(c)	Represents the liability position of our foreign currency forward contracts as of December 31, 2008, which will fluctuate based on market conditions.	
(d)	The timing of cash payments on unrecognized tax benefits, including accrued interest and penalties, 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 accrued and unpaid initial payments for new and renewed agent contracts as of December 31, 2008.	
(f)	We have estimated our pension plan funding requirements, including interest, using assumptions that are consistent with current pension funding rates. The actual minimum required amounts each year will vary based on the actual discount rate and asset returns when the funding requirement is calculated.	
Other Commercial Commitments
We had $77.0 million in outstanding letters of credit and bank guarantees at December 31, 2008, with expiration dates through 2015, certain of which contain a one-year renewal option. The letters of credit and bank guarantees are primarily held in connection with lease arrangements and certain agent agreements. We expect to renew the letters of credit and bank guarantees prior to expiration in most circumstances.
 
68

Table of Contents
Critical Accounting Policies and Estimates
Management’s discussion and analysis of results of operations and financial condition is based on our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that management make estimates and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities and other related disclosures. Actual results may or may not differ from these estimates. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies , of the notes to consolidated financial statements, included in Item 8, Financial Statements and Supplementary Data .
Our critical accounting policies and estimates, described below, are very important to the portrayal of our financial position and our results of operations and applying them requires our management to make difficult, subjective and complex judgments. We believe that the understanding of these key accounting policies and estimates is essential in achieving more insight into our operating results and financial condition.

Description	  	Judgments and Uncertainties	  	Effect if Actual Results Differ from
                   Assumptions                    	
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 analyses and judgments required under the provisions of SFAS No. 109, “ Accounting for Income Taxes ,” and FIN 48.	  	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.	  	At December 31, 2008, no provision had been made for United States federal and state income taxes on foreign earnings of approximately $1.6 billion, which are expected to be reinvested outside the United States indefinitely.
 
Upon distribution of those earnings to the United States in the form of actual or constructive dividends, 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 position, 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.	
 
69

Table of Contents

Description	  	Judgments and Uncertainties	  	Effect if Actual Results Differ from
                    Assumptions                     	
Income tax contingencies	  	 	  	 	
 	 	 	
Under the provisions of FIN 48, 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 material, known tax exposures, a substantial portion of which relate to potential tax audit adjustments with respect to our international operations, which were restructured in 2003, whereby our income from certain foreign-to-foreign money transfer transactions has been taxed at relatively low foreign tax rates compared to our combined federal and state tax rates in the United States.
 
The Internal Revenue Service (“IRS”) has completed audits of the United States federal consolidated income tax returns of First Data for the years 2002 through 2004, which include our taxable results for those years. Refer to Note 10 to our consolidated financial statements for a detailed discussion of these audits.	  	Our tax contingency reserves for our uncertain tax positions as of December 31, 2008 were $397.0 million including interest and penalties. While we believe that our reserves are adequate to cover reasonably expected tax risks, in the event that the ultimate resolution of our uncertain tax positions differ from our estimates, particularly with respect to our 2003 restructuring of our international operations, we may be exposed to material increases in income tax expense, which could materially impact our financial position, results of operations and cash flows.
 
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 through 2008. 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 position, results of operations and cash flows.	
 
70

Table of Contents

Description	  	Judgments and Uncertainties	  	Effect if Actual Results Differ from
                    Assumptions                     	
Derivative Financial Instruments	  	 	  	 	
 	 	 	
We utilize derivative instruments to mitigate foreign currency and interest rate risk. We recognize all derivative instruments 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 hedges in accordance with SFAS No. 133, “ Accounting for Derivative Instruments and Hedging Activities ” as amended and interpreted (“SFAS No. 133”).
 
Cash Flow hedges—Cash flow hedges consist of foreign currency hedging of forecasted sales and hedges of anticipated fixed rate debt issuances. Derivative 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 portion of the change in fair value that is either considered ineffective or is excluded from the measure of effectiveness is recognized immediately in “Derivative (losses)/gains, 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, 2008, the cumulative pre-tax unrealized gains 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 $52.0 million.
 
As of December 31, 2008, 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 $58.1 million gain.	
 
71

Table of Contents

Description	  	Judgments and Uncertainties	  	Effect if Actual Results Differ from
                  Assumptions                       	
Capitalized Costs	  	 	  	 	
 	 	 	
We capitalize certain initial payments for new and renewed agent contracts.
 
These capitalized costs are classified in our consolidated balance sheets as “other intangible assets”. We evaluate such other intangible assets for impairment annually and whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets 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 contracts is subject to strict accounting policy criteria and requires management judgment as to the appropriate time to initiate capitalization. Our accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees we would receive in the event of early termination of the contract.	  	Disruptions to an agent relationship, significant declines in cash flows or transaction volumes associated with an agent contract, or other issues significantly impacting an agent’s business could require us to evaluate the recoverability of our capitalized initial payments for new and renewed agent contracts prior to the annual assessment.
 
These types of events and the resulting analyses could result in impairment charges in the future which could significantly impact our reported earnings in the periods such charges occur. We did not record any impairment charges related to other intangible assets during the years ended December 31, 2008, 2007 or 2006.
 
The net carrying value of our capitalized contract costs at December 31, 2008 was $213.2 million.	
 	 	 	
Goodwill Impairment Testing	  		  	 	
 	 	 	
We evaluate goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. Goodwill impairment is determined using a two-step process. The first step is to identify if a potential impairment exists by comparing the fair value of each reporting unit to its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine the implied fair value of a reporting unit’s goodwill, by comparing the reporting unit’s fair value to the allocated fair	  	We calculate the fair value of each reporting unit 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.
 
The determination of the reporting units also requires judgment.	  	We could be required to evaluate the recoverability of goodwill prior to the annual assessment if we experience disruptions to the business, unexpected significant declines in operating results, a divestiture of a significant component of our business, significant declines in market capitalization or other triggering events. In addition, as our business or the way we manage our business changes, our reporting units may also change. These types of events and the resulting analyses could result in goodwill impairment charges in the future which could materially impact our reported earnings in the periods such charges occur.	
 
72

Table of Contents

Description	 	Judgments and Uncertainties	 	Effect if Actual Results Differ from
                    Assumptions                     	
values of all assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination. If the carrying amount of goodwill exceeds its implied fair value, an impairment is recognized in an amount equal to that excess.
 
Reporting units are defined as an operating segment or one level below an operating segment, referred to as a component.	 	 	 	The carrying value of goodwill as of December 31, 2008 was $1,674.2 million which represented approximately 30% of our consolidated assets.
 
We have not recorded any goodwill impairments during the three years ended December 31, 2008.	
 	 	 	
Stock-Based Compensation	 	 	 	 	
 	 	 	
We have stock-based compensation plans, which include stock options, restricted stock awards and units, unrestricted stock awards, and other equity-based awards granted to employees and other key individuals who perform services for the Company. See Note 2, Summary of Significant Accounting Policies , and Note 16, Stock Compensation Plans , in the notes to the consolidated financial statements for a complete discussion of our stock-based compensation programs.
 
We currently utilize the Black-Scholes option pricing model to measure the fair value of stock options granted to employees and directors.	 	Option-pricing models require us to estimate a number of key valuation inputs including expected volatility, expected dividend yield, expected term and risk-free interest rate. The most subjective estimates are the expected volatility of the underlying stock and the expected term when determining the fair market value of an option granted.
 
Beginning in 2008, we used a blend of implied volatility and peer group historical volatility. Our peer group historical volatility was determined using companies in similar industries and/or market capitalization. Our implied volatility was calculated using the market prices of traded options on our common stock. Prior to 2008, our volatility was determined based entirely on the calculated peer group historical volatility since there was not sufficient trading history for our common stock or traded options.
 
In addition, our expected option terms are based in part on stock option exercise activity when we were part of First Data.	 	Our volatility and expected option term assumptions could be significantly different going forward than what we have estimated for historical grants which could impact our stock-based compensation expense in future periods.
 
A 10% change in our stock-based compensation expense for the year ended December 31, 2008, would have affected pre-tax income by approximately $2.6 million.	
 
73

Table of Contents

Description	 	Judgments and Uncertainties	 	Effect if Actual Results Differ from
                    Assumptions                     	
Restructuring and Related Activities	 	 	 	 	
 		 	
We have engaged in restructuring actions and activities associated with productivity improvement initiatives and expense reduction measures, which are accounted for under SFAS No. 112, “ Employers’ Accounting for Post-Employment Benefit” (“SFAS No. 112”), SFAS No. 146, “ Accounting for Costs Associated with Exit or Disposal Activities ” (“SFAS No. 146”) and SFAS No. 88, “ Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits .” We also evaluate impairment issues associated with restructuring activities under the provisions of SFAS No. 144, “ Accounting for the Impairment or Disposal of Long-Lived Assets .”
 
Restructuring and related expenses consist of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure and migration of our IT infrastructure; other expenses related to relocation of various operations to existing company facilities and third-party providers, including hiring, training, relocation, travel, and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and acceleration of depreciation and amortization.	 	These costs represent management’s best estimate, until all such amounts are paid and settled. As such, these costs require assumptions about the activities that may change over time.
 
The decision to include a cost in the restructuring disclosure requires an assessment of whether the cost is direct and incremental to the productivity improvement initiatives and expense reduction measures. This assessment can require judgment depending on the nature of the cost.
 
The timing of recording these costs was determined by the applicable accounting guidance under SFAS No. 112 and SFAS No. 146. This judgment significantly impacted the restructuring and related expenses recognized on a quarterly basis. However, as all of the restructuring and related expenses were incurred during 2008, the judgment required at year end in determining the appropriate accounting estimate is significantly reduced.	 	The restructuring and related expenses are evaluated periodically to determine if an adjustment is required. Should the actual amounts differ from our estimates, the amount of the restructuring and related expenses could be materially impacted.
 
For the year ended December 31, 2008, we incurred $82.9 million of restructuring and related expenses. As of December 31, 2008, $25.8 million remains unpaid related to restructuring and related expenses.	
New Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, “ Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133 ” (“SFAS No. 161”). SFAS No. 161 is required for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and early adoption is permitted. SFAS No. 161 requires additional disclosures about how and why we use derivatives, how derivatives and related hedged items are accounted for under SFAS No. 133, and how derivatives and related hedged items affect our financial position, results of operations, and cash flows. Our derivative disclosures already incorporate many of the provisions outlined in SFAS No. 161. Accordingly, we do not expect that the adoption of this pronouncement in 2009 will have a significant impact on our financial position, results of operations and cash flows.
 
74

Table of Contents
In December 2007, the FASB issued SFAS No. 141R, “ Business Combinations ” (“SFAS No. 141R”). This statement establishes a framework to disclose and account for business combinations. The adoption of the requirements of SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after fiscal years beginning after December 15, 2008 and may not be early adopted. The impact of the adoption of SFAS No. 141R will depend upon the nature and terms of business combinations that we consummate on or after January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, “ Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ” (“SFAS No. 160”). The statement establishes accounting and reporting standards for a noncontrolling interest in a subsidiary. The adoption of the requirements of SFAS No. 160 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2008 and may not be early adopted. We do not expect the impact of adopting SFAS No. 160 to be significant on the financial position, results of operations and cash flows, as our current non-controlling interests are immaterial.
 
 ITEM  7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	
We are exposed to market risks arising from changes in market rates and prices, including changes in foreign currency exchange rates and interest rates. A risk management program is in place to manage these risks.
Foreign Currency Exchange Rates
We provide money transfer services in more than 200 countries and territories. We manage foreign exchange risk through the structure of the business and an active risk management process. We settle with the vast majority of our agents in United States dollars or euros. However, in certain circumstances, we settle in other currencies. We typically require the agent to obtain local currency to pay recipients; thus, we generally are not reliant on international currency markets to obtain and pay illiquid currencies. The foreign currency exposure that does exist is limited by the fact that the majority of transactions are paid within 24 hours after they are initiated. To mitigate this risk further, we enter into short-term foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations between transaction initiation and settlement. We also utilize foreign currency forward contracts, typically with terms of less than one year at inception, to offset foreign exchange rate fluctuations on certain foreign currency denominated cash positions. In certain consumer money transfer transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer and the rate at which we or our agents are able to acquire currency, helping to provide protection against currency fluctuations. Our policy is not to speculate in foreign currencies and we promptly buy and sell foreign currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.
We use longer-term foreign currency forward contracts to mitigate risks associated with changes in foreign currency exchange rates on revenues denominated primarily in the euro, British pound and Canadian dollar, and to a lesser degree in other European currencies and the Australian dollar. We use contracts with maturities of up to 36 months at inception to mitigate some of the risk that changes in foreign currency exchanges rates could have on forecasted revenues, with a targeted weighted-average maturity of approximately one year at any point in time. We believe the use of longer-term foreign currency forward contracts provides predictability of future cash flows from our international operations and allows us to better manage and mitigate risks associated with changes in foreign currency exchange rates.
Prior to September 29, 2006, we did not have any derivative instruments that were designated as hedges under the provisions of SFAS No. 133. As a result, changes in the fair market value of our outstanding derivative instruments, which are impacted primarily by fluctuations in the euro, have been recognized in “derivative (losses)/gains, net” in the consolidated statement of income for all derivatives entered into prior to September 29, 2006. Since these instruments were not designated to qualify for hedge accounting treatment, there was resulting volatility in our net income for the periods presented prior to September 29, 2006. For example, during the year ended December 31, 2006 we had pre-tax derivative losses of $21.2 million.
 
75

Table of Contents
At December 31, 2008 and 2007, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our profits are generated would result in a decrease/increase to pretax annual income of approximately $24 million and $28 million, respectively, based on the Company’s forecast of unhedged exposure to foreign currency in the following year. There are inherent limitations in this sensitivity analysis, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous, that the unhedged exposure is static, and that the company would not hedge any additional exposure. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.
Interest Rates
We invest in several types of interest bearing assets, with a total value at December 31, 2008 of $1.5 billion. Approximately $1.3 billion of these assets bear interest at floating rates and are therefore sensitive to changes in interest rates. These assets primarily include money market funds and variable rate municipal securities and are included in our consolidated balance sheets within “cash and cash equivalents” and “settlement assets.” Such assets classified as “cash and cash equivalents” are highly liquid investments with maturities of three months or less at the date of purchase and are readily convertible to cash. To the extent these assets are held in connection with money transfers and other related payment services awaiting redemption, they are classified as “settlement assets.” Earnings on these investments will increase and decrease with changes in the underlying short-term interest rates.
Substantially all of the remainder of our interest bearing assets consist of highly rated, fixed rate municipal bonds, which may include investments made from cash received from our money transfer business and other related payment services awaiting redemption classified within “settlement assets” in the consolidated balance sheets. As interest rates rise, the fair market value of these fixed rate interest-bearing securities will decrease; conversely, a decrease to interest rates would result in an increase to the fair market values of the securities. We have classified these investments as available-for-sale within “settlement assets” in the consolidated balance sheets, and accordingly, recorded these instruments at their fair market value with the net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from our total stockholders’ equity on our consolidated balance sheets.
As of December 31, 2008, $1,242.9 million of our total $3,143.5 million in debt carries a floating interest rate or matures in such a short period that the financing is effectively a floating rate position. Of this floating rate debt, $82.9 million represents commercial paper with a weighted-average interest rate of approximately 4.1% and a weighted-average initial term of 27 days, $500 million represents our Term Loan due 2009 and $660.0 million is fixed-rate debt that has effectively been changed to LIBOR-based floating rate debt through interest rate swap agreements, with spreads ranging from 0.0025 percent below LIBOR to 1.8125 percent above LIBOR. Refer to “Cash and Investment Securities” above for further discussion related to the agreements with IPS.
We review our overall exposure to floating and fixed rates by evaluating our net asset or liability position in each, also considering duration of the individual positions. We actively manage this mix of fixed versus floating exposure in an attempt to minimize risk, reduce costs, and optimize returns. Portfolio exposure to interest rates can be modified by changing the mix of our interest bearing assets, as well as adjusting the mix of fixed versus floating rate debt. The latter is accomplished primarily through the use of interest rate swaps and the decision regarding terms of any new debt issuances (i.e., fixed versus floating). We use interest rate swaps designated as hedges, to increase the percent of floating rate debt, subject to market conditions. Our weighted-average interest rate on our borrowings, including our hedges, outstanding at December 31, 2008 was approximately 5.1%.
A hypothetical uniform 100 basis point increase in interest rates would result in a decrease to pre-tax income of approximately $12.4 million and $9.1 million annually based on borrowings on December 31, 2008 and 2007, respectively, that are sensitive to interest rate fluctuations. The same 100 basis point increase in interest rates, if applied to our cash and investment balances on December 31, 2008 and 2007 that are sensitive to
 
76

Table of Contents
interest rate fluctuations, would result in an offsetting benefit to pre-tax income of approximately $13.0 million and $16.7 million annually, respectively. There are inherent limitations in the sensitivity analysis presented, primarily due to the assumption that interest rate changes would be instantaneous. As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, including changes in credit risk regarding our investments, which may positively or negatively affect income. In addition, the current mix of fixed versus floating rate debt and investments and the level of assets and liabilities will change over time.
Credit Risk
Our interest earning assets include investment securities, substantially all of which are highly-rated state and municipal debt instruments, which are classified in “settlement assets” and accounted for as available-for-sale securities, and money market fund investments, which are classified in “cash and cash equivalents.” The significant majority of our investment securities are rated “AA-” or better from a major credit rating agency.
On September 15, 2008, we requested redemption of our shares in the Reserve International Liquidity Fund, Ltd., a money market fund, (the “Fund”) totaling $298.1 million. We did not receive any portion of the redemption payment prior to December 31, 2008, and accordingly, we have reclassified the total amount due from “Cash and cash equivalents” to “Other assets” in the consolidated balance sheet as of December 31, 2008. At the time the redemption request was made, we were informed by the Fund’s investment advisor that our redemption trades would be honored at a $1.00 per share net asset value. On January 30, 2009, we received a partial distribution from the Fund of $193.6 million. We expect to receive the remaining redemption amount based on written and verbal representations from the Manager to date and our current legal position regarding our redemption priority. We expect to receive the remaining payment based on the maturities of the underlying investments in the Fund and the outcome of the litigation process. There is a risk the redemption process could be delayed and that we could receive less than the $1.00 per share net asset value should pro-rata distribution occur. Based on the net asset information provided by the Fund, our exposure related to pro-rata distribution could be $12 million, excluding settlement costs incurred by the Fund. However, based on written and verbal representations from the manager to date and our current legal position regarding our redemption priority, we believe that we are entitled to such funds and are vigorously pursuing collection of the remaining distribution.
To manage our exposures to credit risk with respect to investment securities, money market fund investments and other credit risk exposures resulting from our relationships with banks and financial institutions, we regularly review investment concentrations, trading levels, credit spreads and credit ratings, and we maintain our largest relationships with globally diversified financial institutions. We also limit our investment level with respect to individual funds.
We are also exposed to credit risk related to receivable balances from agents in the money transfer, walk-in bill payment and money order settlement process. In addition, we are exposed to credit risk directly from consumer transactions particularly through our online services and electronic consumer-to-business channels, where transactions are originated through means other than cash, and therefore are subject to “chargebacks,” insufficient funds or other collection impediments, such as fraud. We perform a credit review before each agent signing and conduct periodic analyses when an agent’s balance exceeds a minimum threshold. Our losses associated with agent and consumer bad debts have been less than 1% of our annual revenue in all periods presented.
 
77

Table of Contents

 ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	
 THE WESTERN UNION COMPANY
Index To Consolidated Financial Statements

Management’s Reports on the Financial Statements and Internal Control Over Financial Reporting	  	79	
		
Reports of Independent Registered Public Accounting Firm	  	80	
		
Consolidated Statements of Income for each of the three years in the period ended December 31, 2008	  	82	
		
Consolidated Balance Sheets as of December 31, 2008 and 2007	  	83	
		
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2008	  	84	
		
Consolidated Statements of Stockholders’ (Deficiency)/Equity/Net Investment in The Western Union Company for each of the three years in the period ended December 31, 2008	  	85	
		
Notes to Consolidated Financial Statements	  	87	
		
Schedule I—Condensed Financial Information of the Registrant (Parent Company Only)	  	135	
All other financial statement schedules for The Western Union Company have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the respective consolidated financial statements or notes thereto.
 
78

Table of Contents
Management’s Report on the Financial Statements
Our management is responsible for the preparation, integrity and objectivity of the accompanying consolidated financial statements and the related financial information. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and necessarily include certain amounts that are based on estimates and informed judgments. Our management also prepared the related financial information included in this Annual Report on Form 10-K and is responsible for its accuracy and consistency with the financial statements.
As stated in their report included elsewhere in this Annual Report on Form 10-K, the consolidated financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm who conducted their audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) as of December 31, 2008 and 2007, and for each of the three years in the period ended December 31, 2008. The independent registered public accounting firm’s responsibility is to express an opinion as to the fairness with which such financial statements present our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.
 Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Western Union Company’s (“Western Union” or the “Company”) internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Western Union’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Western Union’s internal control over financial reporting as of December 31, 2008, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment and those criteria, management determined that Western Union’s internal control over financial reporting was effective as of December 31, 2008. Western Union’s internal control over financial reporting as of December 31, 2008 has been audited by Ernst & Young LLP, Western Union’s independent registered public accounting firm, as stated in their attestation report included in this Annual Report on Form 10-K.
 
79

Table of Contents
 Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of The Western Union Company
We have audited The Western Union Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). The Western Union Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, The Western Union Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of The Western Union Company as of December 31, 2008 and 2007, and the related consolidated statements of income, cash flows, and stockholders’ (deficiency)/equity/net investment in The Western Union Company for each of the three years in the period ended December 31, 2008 and our report dated February 18, 2009 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2009
 
80

Table of Contents
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of The Western Union Company
We have audited the accompanying consolidated balance sheets of The Western Union Company as of December 31, 2008 and 2007, and the related consolidated statements of income, cash flows, and stockholders’ (deficiency)/equity/net investment in The Western Union Company for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Western Union Company at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.”
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Western Union Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2009 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2009
 
81

Table of Contents
 THE WESTERN UNION COMPANY
Consolidated Statements of Income
(in millions, except per share amounts)

 	  	Year Ended December 31,	 	
	  	2008	 	 	2007	 	 	2006	 	
Revenues:	  				 				 				
Transaction fees	  	$	4,240.8	 	 	$	3,989.8	 	 	$	3,696.6	 	
Foreign exchange revenue	  	 	896.3	 	 	 	771.3	 	 	 	653.9	 	
Commission and other revenues	  	 	144.9	 	 	 	139.1	 	 	 	119.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	5,282.0	 	 	 	4,900.2	 	 	 	4,470.2	 	
				
Expenses:	  				 				 				
Cost of services	  	 	3,093.0	 	 	 	2,808.4	 	 	 	2,430.5	 	
Selling, general and administrative	  	 	834.0	 	 	 	769.8	 	 	 	728.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total expenses *	  	 	3,927.0	 	 	 	3,578.2	 	 	 	3,158.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating income	  	 	1,355.0	 	 	 	1,322.0	 	 	 	1,311.4	 	
				
Other (expense)/income:	  				 				 				
Interest income	  	 	45.2	 	 	 	79.4	 	 	 	40.1	 	
Interest expense	  	 	(171.2	)	 	 	(189.0	)	 	 	(53.4	)	
Derivative (losses)/gains, net	  	 	(6.9	)	 	 	8.3	 	 	 	(21.2	)	
Foreign exchange effect on notes receivable from First Data, net	  	 	—  	 	 	 	—  	 	 	 	10.1	 	
Interest income from First Data, net	  	 	—  	 	 	 	—  	 	 	 	35.7	 	
Other income, net	  	 	16.6	 	 	 	1.7	 	 	 	12.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total other (expense)/income, net	  	 	(116.3	)	 	 	(99.6	)	 	 	23.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	1,238.7	 	 	 	1,222.4	 	 	 	1,335.1	 	
Provision for income taxes	  	 	319.7	 	 	 	365.1	 	 	 	421.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	919.0	 	 	$	857.3	 	 	$	914.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share:	  				 				 				
Basic	  	$	1.26	 	 	$	1.13	 	 	$	1.20	 	
Diluted	  	$	1.24	 	 	$	1.11	 	 	$	1.19	 	
				
Weighted-average shares outstanding:	  				 				 				
Basic	  	 	730.1	 	 	 	760.2	 	 	 	764.5	 	
Diluted	  	 	738.2	 	 	 	772.9	 	 	 	768.6	 	

*	As further described in Note 5, total expenses include amounts paid to related parties of $305.9 million, $256.6 million and $364.6 million for the years ended December 31, 2008, 2007 and 2006, respectively.	
 
See Notes to Consolidated Financial Statements.
 
82

Table of Contents
 THE WESTERN UNION COMPANY
Consolidated Balance Sheets
(in millions, except per share amounts)

 	  	December 31,	 	
	  	2008	 	 	2007	 	
Assets	  				 				
Cash and cash equivalents	  	$	1,295.6	 	 	$	1,793.1	 	
Settlement assets	  	 	1,207.5	 	 	 	1,319.2	 	
Property and equipment, net of accumulated depreciation of $284.0 and $251.5, respectively	  	 	192.3	 	 	 	200.3	 	
Goodwill	  	 	1,674.2	 	 	 	1,639.5	 	
Other intangible assets, net of accumulated amortization of $276.5 and $236.8, respectively	  	 	350.6	 	 	 	334.1	 	
Other assets	  	 	858.1	 	 	 	498.0	 	
	  	 	 	 	 	 	 	 	
Total assets	  	$	5,578.3	 	 	$	5,784.2	 	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ (Deficiency)/Equity	  				 				
Liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	385.7	 	 	$	350.1	 	
Settlement obligations	  	 	1,207.5	 	 	 	1,319.2	 	
Income taxes payable	  	 	381.6	 	 	 	279.7	 	
Deferred tax liability, net	  	 	270.1	 	 	 	263.6	 	
Borrowings	  	 	3,143.5	 	 	 	3,338.0	 	
Other liabilities	  	 	198.0	 	 	 	182.9	 	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	5,586.4	 	 	 	5,733.5	 	
			
Commitments and contingencies (Note 6)	  				 				
			
Stockholders’ (Deficiency)/Equity:	  				 				
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued	  	 	—  	 	 	 	—  	 	
Common stock, $0.01 par value; 2,000 shares authorized and 709.6 and 749.8 shares issued and outstanding at December 31, 2008 and 2007, respectively	  	 	7.1	 	 	 	7.5	 	
Capital deficiency	  	 	(14.4	)	 	 	(341.1	)	
Retained earnings	  	 	29.2	 	 	 	453.1	 	
Accumulated other comprehensive loss	  	 	(30.0	)	 	 	(68.8	)	
	  	 	 	 	 	 	 	 	
Total stockholders’ (deficiency)/equity	  	 	(8.1	)	 	 	50.7	 	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ (deficiency)/equity	  	$	5,578.3	 	 	$	5,784.2	 	

See Notes to Consolidated Financial Statements.
 
83

Table of Contents
 THE WESTERN UNION COMPANY
Consolidated Statements of Cash Flows
(in millions)

 	 	Year Ended December 31,	 	
	 	2008	 	 	2007	 	 	2006	 	
Cash flows from operating activities	 				 				 				
Net income	 	$	919.0	 	 	$	857.3	 	 	$	914.0	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 				 				 				
Depreciation	 	 	61.7	 	 	 	49.1	 	 	 	34.8	 	
Amortization	 	 	82.3	 	 	 	74.8	 	 	 	68.7	 	
Deferred income tax provision	 	 	15.9	 	 	 	4.2	 	 	 	12.9	 	
Realized gain on derivative instruments	 	 	—  	 	 	 	—  	 	 	 	(4.1	)	
Stock compensation expense	 	 	26.3	 	 	 	50.2	 	 	 	23.3	 	
Other non-cash items, net	 	 	42.9	 	 	 	14.6	 	 	 	24.3	 	
Increase/(decrease) in cash, excluding the effects of acquisitions and dispositions, resulting from changes in:	 				 				 				
Other assets	 	 	6.9	 	 	 	16.2	 	 	 	(60.7	)	
Accounts payable and accrued liabilities	 	 	35.2	 	 	 	43.4	 	 	 	59.8	 	
Income taxes payable	 	 	91.2	 	 	 	15.3	 	 	 	63.4	 	
Other liabilities	 	 	(27.5	)	 	 	(21.6	)	 	 	(27.5	)	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	1,253.9	 	 	 	1,103.5	 	 	 	1,108.9	 	
				
Cash flows from investing activities	 				 				 				
Capitalization of contract costs	 	 	(82.8	)	 	 	(80.9	)	 	 	(124.1	)	
Capitalization of purchased and developed software	 	 	(17.0	)	 	 	(27.7	)	 	 	(14.4	)	
Purchases of property and equipment	 	 	(53.9	)	 	 	(83.5	)	 	 	(63.8	)	
Notes receivable issued to agents	 	 	(1.0	)	 	 	(6.1	)	 	 	(140.0	)	
Repayments of notes receivable issued to agents	 	 	41.9	 	 	 	32.0	 	 	 	20.0	 	
Acquisition of businesses, net of cash acquired	 	 	(42.8	)	 	 	—  	 	 	 	(66.5	)	
Increase in receivable for securities sold	 	 	(298.1	)	 	 	—  	 	 	 	—  	 	
Cash received on maturity of foreign currency forwards	 	 	—  	 	 	 	—  	 	 	 	4.1	 	
Purchase of equity method investments	 	 	—  	 	 	 	(35.8	)	 	 	—  	 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(453.7	)	 	 	(202.0	)	 	 	(384.7	)	
				
Cash flows from financing activities	 				 				 				
Net (repayments)/proceeds from commercial paper	 	 	(255.3	)	 	 	13.6	 	 	 	324.6	 	
Net (repayments)/proceeds from net borrowings under credit facilities	 	 	—  	 	 	 	(3.0	)	 	 	3.0	 	
Proceeds from issuance of borrowings	 	 	500.0	 	 	 	—  	 	 	 	4,386.0	 	
Principal payments on borrowings	 	 	(500.0	)	 	 	—  	 	 	 	(2,400.0	)	
Proceeds from exercise of options	 	 	300.5	 	 	 	216.1	 	 	 	80.8	 	
Cash dividends to public stockholders	 	 	(28.4	)	 	 	(30.0	)	 	 	(7.7	)	
Common stock repurchased	 	 	(1,314.5	)	 	 	(726.8	)	 	 	(19.9	)	
Advances from affiliates of First Data	 	 	—  	 	 	 	—  	 	 	 	160.2	 	
Repayments of notes payable to First Data	 	 	—  	 	 	 	—  	 	 	 	(154.5	)	
Additions to notes receivable from First Data	 	 	—  	 	 	 	—  	 	 	 	(7.5	)	
Proceeds from repayments of notes receivable from First Data	 	 	—  	 	 	 	—  	 	 	 	776.2	 	
Dividends to First Data	 	 	—  	 	 	 	—  	 	 	 	(2,953.9	)	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash (used in)/provided by financing activities	 	 	(1,297.7	)	 	 	(530.1	)	 	 	187.3	 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	 	 	(497.5	)	 	 	371.4	 	 	 	911.5	 	
Cash and cash equivalents at beginning of year	 	 	1,793.1	 	 	 	1,421.7	 	 	 	510.2	 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of year	 	$	1,295.6	 	 	$	1,793.1	 	 	$	1,421.7	 	
	 	 	 	 	 	 	 	 	 	 	 	 	
Supplemental cash flow information	 				 				 				
Interest paid (prior to the September 29, 2006 spin-off, amounts were paid primarily to First Data)	 	$	171.6	 	 	$	185.8	 	 	$	26.4	 	
Income taxes paid (prior to the September 29, 2006 spin-off, amounts were paid primarily to First Data)	 	 	230.3	 	 	 	340.9	 	 	 	271.6	 	
Notes issued in conjunction with dividend to First Data, net of debt issue costs and discount	 	 	—  	 	 	 	—  	 	 	 	995.1	 	
Net liabilities transferred from First Data in connection with the September 29, 2006 spin-off	 	 	—  	 	 	 	—  	 	 	 	148.2	 	
 
See Notes to Consolidated Financial Statements.
 
84

Table of Contents
 THE WESTERN UNION COMPANY
Consolidated Statements of Stockholders’ (Deficiency)/Equity/Net Investment in
The Western Union Company
(in millions)

 	 	Common Stock	 	 	Treasury Stock	 	 	Net Investment
in The
Western Union
Company	 	 	Capital
Deficiency	 	 	Retained
Earnings	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Total
Stockholders’
(Deficiency)/
Equity/ Net
Investment in
The Western
Union Company	 	 	Comprehensive
Income (Loss)	 	
	 	Shares	 	 	Amount	 	 	Shares	 	 	Amount	 	 			 			 			 			 			 			
Balance, January 1, 2006	 	—  	 	 	$	—  	 	 	—  	 	 	$	—  	 	 	$	2,873.9	 	 	$	—  	 	 	$	—  	 	 	$	(62.1	)	 	$	2,811.8	 	 				
Net income	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	698.3	 	 	 	—  	 	 	 	215.7	 	 	 	—  	 	 	 	914.0	 	 	$	914.0	 	
Dividends to First Data	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	(4,097.2	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(4,097.2	)	 				
Conversion of net investment in The Western Union Company into capital	 	765.3	 	 	 	7.7	 	 	—  	 	 	 	—  	 	 	 	525.0	 	 	 	(532.7	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 				
Stock-based compensation	 	1.3	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	14.2	 	 	 	—  	 	 	 	—  	 	 	 	14.2	 	 				
Common stock dividends	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(7.7	)	 	 	—  	 	 	 	(7.7	)	 				
Purchase of treasury shares	 	—  	 	 	 	—  	 	 	(0.9	)	 	 	(19.9	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(19.9	)	 				
Shares issued under stock-based compensation plans	 	5.4	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	80.8	 	 	 	—  	 	 	 	—  	 	 	 	80.8	 	 				
Tax benefits from employee stock option plans	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.6	 	 	 	—  	 	 	 	—  	 	 	 	0.6	 	 				
Unrealized losses on investment securities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.4	)	 	 	(0.4	)	 	 	(0.4	)	
Unrealized losses on hedging activities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(29.3	)	 	 	(29.3	)	 	 	(29.3	)	
Foreign currency translation adjustment, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	7.5	 	 	 	7.5	 	 	 	7.5	 	
Pension liability adjustment, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	10.8	 	 	 	10.8	 	 	 	10.8	 	
	 			 				 			 				 				 				 				 				 				 	 	 	 	
Comprehensive income	 			 				 			 				 				 				 				 				 				 	$	902.6	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2006	 	772.0	 	 	 	7.7	 	 	(0.9	)	 	 	(19.9	)	 	 	—  	 	 	 	(437.1	)	 	 	208.0	 	 	 	(73.5	)	 	 	(314.8	)	 				
Cumulative effect of adoption of FIN 48	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.6	)	 	 	—  	 	 	 	(0.6	)	 				
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 				
Revised balance at January 1, 2007	 	772.0	 	 	 	7.7	 	 	(0.9	)	 	 	(19.9	)	 	 	—  	 	 	 	(437.1	)	 	 	207.4	 	 	 	(73.5	)	 	 	(315.4	)	 				
Net income	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	857.3	 	 	 	—  	 	 	 	857.3	 	 	$	857.3	 	
Stock-based compensation	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	50.2	 	 	 	—  	 	 	 	—  	 	 	 	50.2	 	 				
Common stock dividends	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(30.0	)	 	 	—  	 	 	 	(30.0	)	 				
Purchase of treasury shares	 	—  	 	 	 	—  	 	 	(32.4	)	 	 	(677.5	)	 	 	—  	 	 	 	—  	 	 	 	(0.9	)	 	 	—  	 	 	 	(678.4	)	 				
Repurchase and retirement of common shares	 	(2.3	)	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(53.8	)	 	 	—  	 	 	 	(53.8	)	 				
Cancellation of treasury stock	 	(22.7	)	 	 	(0.2	)	 	22.7	 	 	 	462.0	 	 	 	—  	 	 	 	—  	 	 	 	(461.8	)	 	 	—  	 	 	 	—  	 	 				
Shares issued under stock-based compensation plans	 	2.8	 	 	 	—  	 	 	10.6	 	 	 	235.4	 	 	 	—  	 	 	 	41.5	 	 	 	(65.1	)	 	 	—  	 	 	 	211.8	 	 				
Tax benefits from employee stock option plans	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	4.3	 	 	 	—  	 	 	 	—  	 	 	 	4.3	 	 				
Unrealized losses on investment securities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(1.5	)	 	 	(1.5	)	 	 	(1.5	)	
Unrealized losses on hedging activities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(14.4	)	 	 	(14.4	)	 	 	(14.4	)	
Foreign currency translation adjustment, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	5.3	 	 	 	5.3	 	 	 	5.3	 	
Pension, liability adjustment net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	15.3	 	 	 	15.3	 	 	 	15.3	 	
	 			 				 			 				 				 				 				 				 				 	 	 	 	
Comprehensive income	 			 				 			 				 				 				 				 				 				 	$	862.0	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2007	 	749.8	 	 	 	7.5	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(341.1	)	 	 	453.1	 	 	 	(68.8	)	 	 	50.7	 	 				
 
85

Table of Contents
THE WESTERN UNION COMPANY
Consolidated Statements of Stockholders’ (Deficiency)/Equity/Net Investment in
The Western Union Company—(Continued)
(in millions)

 	 	Common Stock	 	 	Treasury Stock	 	Net Investment
in The
Western Union
Company	 	Capital
Deficiency	 	 	Retained
Earnings	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Total
Stockholders’
(Deficiency)/
Equity/ Net
Investment in
The Western
Union Company	 	 	Comprehensive
Income (Loss)	 	
	 	Shares	 	 	Amount	 	 	Shares	 	Amount	 		 			 			 			 			 			
Net income	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	919.0	 	 	 	—  	 	 	 	919.0	 	 	$	919.0	 	
Stock-based compensation	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	26.3	 	 	 	—  	 	 	 	—  	 	 	 	26.3	 	 				
Common stock dividends	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	(28.4	)	 	 	—  	 	 	 	(28.4	)	 				
Repurchase and retirement of common shares	 	(58.1	)	 	 	(0.6	)	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	(1,314.6	)	 	 	—  	 	 	 	(1,315.2	)	 				
Shares issued under stock-based compensation plans	 	17.9	 	 	 	0.2	 	 	—  	 	 	—  	 	 	—  	 	 	289.5	 	 	 	—  	 	 	 	—  	 	 	 	289.7	 	 				
Tax benefits from employee stock option plans	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	10.9	 	 	 	—  	 	 	 	—  	 	 	 	10.9	 	 				
Effects of pension plan measurement date change pursuant to SFAS 158	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	0.1	 	 	 	—  	 	 	 	0.1	 	 				
Unrealized gains on investment securities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	1.2	 	 	 	1.2	 	 	 	1.2	 	
Unrealized gains on hedging activities, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	89.2	 	 	 	89.2	 	 	 	89.2	 	
Foreign currency translation adjustment, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	(5.2	)	 	 	(5.2	)	 	 	(5.2	)	
Pension liability adjustment, net of tax	 	—  	 	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	—  	 	 	 	—  	 	 	 	(46.4	)	 	 	(46.4	)	 	 	(46.4	)	
	 			 				 		 			 			 				 				 				 				 	 	 	 	
Comprehensive income	 			 				 		 			 			 				 				 				 				 	$	957.8	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2008	 	709.6	 	 	$	7.1	 	 	—  	 	$	—  	 	$	—  	 	$	(14.4	)	 	$	29.2	 	 	$	(30.0	)	 	$	(8.1	)	 				

 

 
See Notes to Consolidated Financial Statements.
 
86

Table of Contents
 THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Formation of the Entity and Basis of Presentation
The Western Union Company (“Western Union” or the “Company”) is a leader in global money transfer, providing people with fast, reliable and convenient ways to send money around the world. The Western Union ® brand is globally recognized. The Company’s services are available through a network of agent locations in more than 200 countries and territories. Each location in the Company’s agent network is capable of providing one or more of the Company’s services.
The Western Union business consists of the following segments:
 
 	•	 	Consumer-to-consumer—money transfer services between consumers, primarily through a global network of third-party agents using the Company’s multi-currency, real-time money transfer processing systems. This service is available for international cross-border transfers—that is, the transfer of funds from one country to another—and, in certain countries, intra-country transfers—that is, money transfers from one location to another in the same country.	
 
 	•	 	Consumer-to-business—the processing of payments from consumers to businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies, referred to as “billers,” through Western Union’s network of third-party agents and various electronic channels. The segment’s revenue was primarily generated in the United States during all periods presented.	
All businesses that have not been classified into the consumer-to-consumer or consumer-to-business segments are reported as “Other” and include the Company’s money order and prepaid services businesses. The Company’s money orders are issued by Integrated Payment Systems Inc. (“IPS”), a subsidiary of First Data Corporation (“First Data”), to consumers at retail locations primarily in the United States and Canada. See Note 7, “Investment Securities” for discussion regarding the agreement executed between the Company and IPS on July 18, 2008 whereby the Company will assume the responsibility for issuing money orders effective October 1, 2009. Western Union also markets a Western Union branded prepaid MasterCard ® card, a Western Union branded prepaid Visa ® card, and provides top-up services for third parties that allow consumers to pay in advance for mobile phone and other services.
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located, or which constitute undistributed earnings of affiliates of the Company accounted for under the equity method of accounting. However, there are generally no limitations on the use of these assets within those countries. As of December 31, 2008, the amount of net assets subject to these limitations totaled approximately $193 million.
Various aspects of the Company’s services and businesses are subject to United States federal, state and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations.
Spin-off from First Data
On January 26, 2006, the First Data Board of Directors announced its intention to pursue the distribution of 100% of its money transfer and consumer payments businesses and its interest in a Western Union money transfer agent, as well as related assets, including real estate, through a tax-free distribution to First Data shareholders (the “Separation” or “Spin-off”). Effective on September 29, 2006, First Data completed the separation and the distribution of these businesses by distributing The Western Union Company common stock to First Data shareholders (the “Distribution”). Prior to the Distribution, the Company had been a segment of First Data.
 
87

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
In connection with the Spin-off, the Company reported a $4.1 billion dividend to First Data in the accompanying consolidated statements of stockholders’ (deficiency)/equity/net investment in The Western Union Company, consisting of the issuance of $3.4 billion in debt and a cash payment to First Data of $100.0 million. The remaining dividend was comprised of cash, consideration for an ownership interest held by a First Data subsidiary in a Western Union agent which had already been reflected as part of the Company, settlement of net intercompany receivables (exclusive of certain intercompany notes as described in the following paragraph), and transfers of certain liabilities, net of assets. Since the amount of the dividend exceeded the historical cost of the Company’s net assets at the time of the Spin-off, a capital deficiency resulted.
The Company also settled certain intercompany notes receivable and payable with First Data along with related interest and currency swap agreements associated with such notes as part of the Spin-off. The net settlement of the principal and related swaps resulted in a net cash inflow of $724.0 million to the Company’s cash flows from financing activities. The net settlement of interest on such notes receivable and payable of $40.7 million was reflected in cash flows from operating activities in the Company’s Consolidated Statement of Cash Flows.
As part of the Spin-off, the Company also executed several non-cash transactions, including the issuance of $1.0 billion in notes to First Data in partial consideration for the contribution by First Data to the Company of its money transfer and consumer payments businesses (Note 15). The Company did not receive any proceeds from the subsequent private offering of the notes. In addition, First Data transferred to the Company its headquarters in Englewood, Colorado and certain other fixed assets with a net book value of $66.5 million, the Company transferred to First Data certain investments with a net book value of $20.9 million, and reclassified certain tax and employee-related obligations from intercompany liabilities totaling $193.8 million. First Data also distributed 765.3 million shares of Western Union’s common stock to holders of First Data common stock.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K for periods ending on or after the Distribution are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. The financial statements for the period presented prior to the Distribution are presented on a combined basis and represent those entities that were ultimately transferred to the Company as part of the Spin-off. The assets and liabilities presented have been reflected on a historical basis, as prior to the Distribution such assets and liabilities presented were 100% owned by First Data. The Consolidated Statement of Income for the year ended December 31, 2006 includes expense allocations for certain corporate functions historically provided to Western Union by First Data, including treasury, tax, accounting and reporting, mergers and acquisitions, risk management, legal, internal audit, procurement, human resources, investor relations and information technology. If possible, these allocations were made on a specific identification basis. Otherwise, the expenses related to services provided to Western Union by First Data were allocated to Western Union based on the relative percentages, as compared to First Data’s other businesses, of headcount or other appropriate methods depending on the nature of each item of cost to be allocated. However, the financial statements for the period presented prior to the Distribution do not include all of the actual expenses that would have been incurred had Western Union been a stand-alone entity during the period presented and do not reflect Western Union’s combined results of operations and cash flows had Western Union been a stand-alone company during the period presented.
All significant intercompany transactions and accounts have been eliminated.
Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature of Western Union’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities.
 
88

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Principles of Consolidation
Western Union consolidates financial results when it will absorb a majority of an entity’s expected losses or residual returns or when it has the ability to exert control over the entity. Control is normally established when ownership interests exceed 50% in an entity. However, when Western Union does not have the ability to exercise control over a majority-owned entity as a result of other investors having contractual rights over the management and operations of the entity, it accounts for the entity under the equity method. As of December 31, 2008 and 2007, there were no greater-than-50%-owned affiliates whose financial statements were not consolidated. Western Union utilizes the equity method of accounting when it is able to exercise significant influence over the entity’s operations, which generally occurs when Western Union has an ownership interest of between 20% and 50% in an entity.
Restructuring and Related Expenses
The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 112, “ Employers’ Accounting for Post-Employment Benefits ” for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other exit costs are accounted for under the provisions of SFAS No. 146, “ Accounting for Costs Associated with Exit or Disposal Activities .” Costs arising under the Company’s defined benefit pension plans from curtailing future service of employees participating in the plans and providing enhanced benefits are accounted for under the provisions of SFAS No. 88, “ Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits .” The Company also evaluates impairment issues associated with restructuring activities under the provisions of SFAS No. 144, “ Accounting for the Impairment or Disposal of Long-Lived Assets .” Restructuring and related expenses consist of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure and migration of the Company’s IT infrastructure; other expenses related to relocation of various operations to existing Company facilities and third-party providers, including hiring, training, relocation, travel and professional fees. Also included in facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and acceleration of depreciation and amortization. For more information on the Company’s restructuring and related expenses see Note 3, “Restructuring and Related Expenses.”
Earnings Per Share
The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Prior to September 29, 2006, all outstanding shares of Western Union were owned by First Data. Accordingly, for the period prior to the completion of the Distribution on September 29, 2006, basic and diluted earnings per share are computed using Western Union’s shares outstanding as of that date. Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share subsequent to September 29, 2006 reflects the potential dilution that could occur if outstanding stock options at the presented date are exercised and shares of
 
89

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options and restricted stock are available to acquire shares at an average price throughout the year, and therefore, reduce the dilutive effect throughout the year.
As of December 31, 2008, 2007 and 2006, there were 8.0 million, 10.4 million and 4.9 million, respectively, outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation under the treasury stock method as their effect was anti-dilutive. Prior to the September 29, 2006 spin-off date, there were no potentially dilutive instruments outstanding. Of the 43.6 million outstanding options to purchase shares of common stock of the Company, approximately 47% are held by employees of First Data.
The following table provides the calculation of diluted weighted-average shares outstanding, and only considers the potential dilution for stock options, restricted stock awards and restricted stock units for the periods subsequent to the spin-off date of September 29, 2006 (in millions):

 	  	For the Year Ended
December 31,	
 	  	2008	  	2007	  	2006	
Basic weighted-average shares	  	730.1	  	760.2	  	764.5	
Common stock equivalents	  	8.1	  	12.7	  	4.1	
	  	 	  	 	  	 	
Diluted weighted-average shares outstanding	  	738.2	  	772.9	  	768.6	
	  	 	  	 	  	 	
Fair Value Measurements
Effective January 1, 2008, the Company determines the fair market values of its financial assets and liabilities, as well as non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis, based on the fair value hierarchy established in SFAS No. 157, “ Fair Value Measurements ” (“SFAS No. 157”). The standard describes three levels of inputs that may be used to measure fair value.
 
 	•	 	Level 1: Quoted prices in active markets for identical assets or liabilities. Western Union’s financial instruments that base fair value determinations on Level 1 inputs are not material.	
 
 	•	 	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. Most of Western Union’s assets or liabilities fall within Level 2 and include state and municipal debt instruments, other foreign investment securities, and derivative assets and liabilities. Western Union utilizes pricing services to value its Level 2 financial instruments. For most of these assets, the Company utilizes pricing services that use multiple prices as inputs to determine daily market values.	
 
 	•	 	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 currently has no Level 3 assets or liabilities that are measured at fair value on a recurring basis.	
Pursuant to the Financial Accounting Standards Boards (“FASB”) Staff Position No. 157-2, “ Effective Date of FASB Statement No. 157 ” (“FSB No. 157-2”), the effective date of SFAS No. 157 for certain non-financial assets and liabilities that are measured at fair value but are recognized or disclosed at fair value on a non-recurring basis has been deferred to fiscal years beginning after November 15, 2008. The Company is primarily impacted by this deferral as it relates to non-financial assets and liabilities initially measured at fair
 
90

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
value in a business combination (but not measured at fair value in subsequent periods) and fair value measurements in impairment testing. The Company will adopt these remaining provisions of SFAS No. 157 effective January 1, 2009. The Company does not expect the impact to be significant on its financial position, results of operations and cash flows.
Except as it pertains to an investment redemption discussed in Note 9, carrying amounts for Western Union financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, settlement receivables, settlement obligations, borrowings under the commercial paper program and other short-term notes payable, approximate fair value due to their short maturities. Investment securities, included in settlement assets, and derivative financial instruments are carried at fair value and included in Note 8, “Fair Value Measurements.” Fixed and floating rate notes are carried at their discounted notional amounts, except for portions of notes hedged by interest rate swap agreements as disclosed in Note 14. The fair market values of fixed and floating rate notes are also disclosed in Note 15 and are based on market quotations.
For more information on the fair value of financial instruments see Note 8, “Fair Value Measurements.”
Cash and Cash Equivalents
Highly liquid investments (other than those included in settlement assets) with maturities of three months or less at the date of purchase (that are readily convertible to cash), are considered to be cash equivalents and are stated at cost, which approximates market value.
Western Union maintains cash and cash equivalent balances with various financial institutions, including a substantial portion in money market funds. Western Union limits the concentration of its cash and cash equivalents with any one institution; however, such balances often exceed United States federal deposit insurance limits. Western Union regularly reviews investment concentrations and credit worthiness of these institutions, and has relationships with a globally diversified list of banks and financial institutions.
Allowance for Doubtful Accounts
Western Union records an allowance for doubtful accounts when it is probable that the related receivable balance will not be collected based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, and other matters the Company identifies in its routine collection monitoring. The allowance for doubtful accounts was $21.6 million and $13.8 million at December 31, 2008 and 2007, respectively, and is recorded in the same Consolidated Balance Sheet caption as the related receivable. During the years ended December 31, 2008, 2007 and 2006, the provision for doubtful accounts reflected in the Consolidated Statements of Income was $26.6 million, $23.5 million and $24.4 million, respectively.
Settlement Assets and Obligations
Settlement assets represent funds received or to be received from agents for unsettled money transfers and consumer payments. Western Union records corresponding settlement obligations relating to amounts payable under money transfer and payment service arrangements.
Settlement assets consist of cash and cash equivalents, receivables from selling agents and investment securities. Cash received by Western Union agents generally becomes available to Western Union within one week after initial receipt by the agent. Cash equivalents consist of short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents represent funds collected by such agents, but in transit to Western Union. Western Union has a large and diverse agent base, thereby reducing the credit
 
91

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
risk of the Company from any one agent. In addition, Western Union performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. See Note 7 for information concerning the Company’s investment securities.
Settlement obligations consist of money transfer and payment service payables and payables to agents. Money transfer payables represent amounts to be paid to transferees when they request their funds. Most agents typically settle with transferees first and then obtain reimbursement from Western Union. Due to the agent funding and settlement process, payables to agents represent amounts due to agents for money transfers that have been settled with transferees. Payment service payables represent amounts to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers, government agencies and others.
Settlement assets and obligations are comprised of the following (in millions):

 	  	December 31,	
 	  	2008	  	2007	
Settlement assets:	  			  			
Cash and cash equivalents	  	$	42.3	  	$	203.5	
Receivables from selling agents	  	 	759.6	  	 	921.9	
Investment securities	  	 	405.6	  	 	193.8	
	  	 	 	  	 	 	
	  	$	1,207.5	  	$	1,319.2	
	  	 	 	  	 	 	
Settlement obligations:	  			  			
Money transfer and payment service payables	  	$	799.5	  	$	870.8	
Payables to agents	  	 	408.0	  	 	448.4	
	  	 	 	  	 	 	
	  	$	1,207.5	  	$	1,319.2	
	  	 	 	  	 	 	
Property and Equipment
Property and equipment are stated at cost, except for acquired assets which are recorded at fair market value under purchase accounting rules. Depreciation is computed using the straight-line method over the lesser of the estimated life of the related assets (generally three to 10 years for equipment, furniture and fixtures, and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the respective assets, are charged to expense as incurred.
Property and equipment consists of the following (in millions):

 	  	December 31,	 	
 	  	2008	 	 	2007	 	
Equipment	  	$	319.2	 	 	$	289.1	 	
Leasehold improvements	  	 	38.9	 	 	 	37.4	 	
Furniture and fixtures	  	 	25.2	 	 	 	29.0	 	
Land and improvements	  	 	16.9	 	 	 	16.9	 	
Buildings	  	 	74.8	 	 	 	70.6	 	
Projects in process	  	 	1.3	 	 	 	8.8	 	
	  	 	 	 	 	 	 	 	
	  	 	476.3	 	 	 	451.8	 	
Less accumulated depreciation	  	 	(284.0	)	 	 	(251.5	)	
	  	 	 	 	 	 	 	 	
Property and equipment, net	  	$	192.3	 	 	$	200.3	 	

92

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Amounts charged to expense for depreciation of property and equipment were $61.7 million, $49.1 million and $34.8 million during the years ended December 31, 2008, 2007 and 2006, respectively.
Deferred Customer Set Up Costs
The Company capitalizes direct incremental costs not to exceed related deferred revenues associated with the enrollment of customers in the Equity Accelerator program, a service that allows consumers to complete automated clearing house (“ACH”) transactions to make recurring mortgage payments. Deferred customer set up costs, included in “Other assets” in the Consolidated Balance Sheets, are amortized to “Cost of services” in the Consolidated Statements of Income over the length of the customer’s expected participation in the program, generally five to seven years. Actual customer attrition data is assessed at least annually and the amortization period is adjusted prospectively.
Goodwill
Goodwill represents the excess of purchase price over the fair value of tangible and other intangible assets acquired, less liabilities assumed arising from business combinations. The Company’s annual goodwill impairment test did not identify any goodwill impairment during the years ended December 31, 2008, 2007 and 2006.
Other Intangible Assets
Other intangible assets primarily consist of contract costs (primarily amounts paid to agents in connection with establishing and renewing long-term contracts) and software. Other intangible assets are amortized on a straight-line basis over the length of the contract or benefit periods. Included in “Cost of services” in the Consolidated Statements of Income is amortization expense of approximately $82.3 million, $74.8 million and $68.7 million for the years ended December 31, 2008, 2007 and 2006, respectively.
The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations, contractual minimums and/or penalties in the case of early termination. The Company’s accounting policy is to limit the amount of capitalized costs for a given contract to the lesser of the estimated future cash flows from the contract or the termination fees the Company would receive in the event of early termination of the contract.
The Company develops software that is used in providing services. Software development costs are capitalized once technological feasibility of the software has been established. Costs incurred prior to establishing technological feasibility are expensed as incurred. Technological feasibility is established when the Company has completed all planning and designing activities that are necessary to determine that a product can be produced to meet its design specifications, including functions, features and technical performance requirements. Capitalization of costs ceases when the product is available for general use. Software development costs and purchased software are generally amortized over a term of three to five years.
 
93

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The following table provides the components of other intangible assets (in millions):

 	  	December 31, 2008	  	December 31, 2007	
 	  	Weighted-
Average
Amortization
Period
(in years)	  	Initial
Cost	  	Net of
Accumulated
Amortization	  	Initial
Cost	  	Net of
Accumulated
Amortization	
Capitalized contract costs	  	6.3	  	$	316.2	  	$	213.2	  	$	274.0	  	$	193.1	
Acquired contracts	  	9.4	  	 	78.1	  	 	49.4	  	 	74.1	  	 	42.8	
Acquired trademarks	  	24.7	  	 	43.7	  	 	38.2	  	 	44.7	  	 	41.0	
Developed software	  	4.2	  	 	78.2	  	 	15.2	  	 	74.6	  	 	15.2	
Purchased or acquired software	  	3.4	  	 	82.3	  	 	29.7	  	 	74.9	  	 	32.5	
Other intangibles	  	6.8	  	 	28.6	  	 	4.9	  	 	28.6	  	 	9.5	
	  		  	 	 	  	 	 	  	 	 	  	 	 	
Total other intangibles	  	7.4	  	$	627.1	  	$	350.6	  	$	570.9	  	$	334.1	
	  		  	 	 	  	 	 	  	 	 	  	 	 	
The estimated future aggregate amortization expense for existing other intangible assets as of December 31, 2008 is expected to be $81.6 million in 2009, $72.9 million in 2010, $59.9 million in 2011, $39.4 million in 2012, $26.8 million in 2013 and $70.0 million thereafter.
Other intangible assets are reviewed for impairment on an annual basis and whenever events indicate that their carrying amount may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets or operations are compared with their carrying values to determine if a write-down to fair value (normally measured by the present value technique) is required. Western Union did not record any impairment related to other intangible assets during the years ended December 31, 2008, 2007 and 2006.
Revenue Recognition
The Company’s revenues are primarily derived from consumer money transfer transaction fees that are based on the principal amount of the money transfer and the locations from and to which funds are transferred. Consumer money transfer transaction fees are set by the Company and recorded as revenue at the time of sale. In certain consumer money transfer transactions involving different send and receive currencies, the Company generates revenue based on the difference between the exchange rate set by Western Union to the consumer and the rate at which Western Union or its agents are able to acquire currency. This foreign exchange revenue is recorded at the time the related transaction fee revenue is recognized.
The Company also offers several consumer-to-business payment services, including payments from consumers to billers. Revenues for these services are primarily derived from transaction fees, which are recorded as revenue when payments are sent to the intended recipients.
The Company’s Equity Accelerator service requires a consumer to pay an upfront enrollment fee to participate in this mortgage payment service. These enrollment fees are deferred and recognized into income over the length of the customer’s expected participation in the program, generally five to seven years. Actual customer attrition data is assessed at least annually and the period over which revenue is recognized is adjusted prospectively. Many factors impact the duration of the expected customer relationship, including interest rates, refinance activity and trends in consumer behavior.
The Company sells money orders issued by IPS under the Western Union brand and manages the agent network through which such money orders are sold. Western Union recognizes monthly commissions from IPS based on a fixed investment yield on the average investable balance resulting from the sale of money orders.
 
94

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Western Union also recognizes transaction fees collected from the Company’s agents at the time a money order is issued to the consumer. See Note 7, “Investment Securities” for discussion regarding the agreement executed between the Company and IPS on July 18, 2008 whereby the Company will assume the responsibility for issuing money orders effective October 1, 2009.
Loyalty Program
Western Union operates a loyalty program which consists of points that are awarded to program participants. Such points may be redeemed for either a discount on future money transfers or merchandise. The Company estimates the distribution between awards of merchandise and discounts based on recent redemption history and trends, measured on a quarterly basis. Revenue is deferred for the portion of points expected to be ultimately redeemed for discounts in a manner that reflects the consumer’s progress toward earning such discounts. Costs associated with the redemption of merchandise are reflected in operating expenses in the Consolidated Statements of Income.
Cost of Services
Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations, and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation and amortization and other expenses incurred in connection with providing money transfer and other payment services.
Advertising Costs
Advertising costs are charged to operating expenses as incurred or at the time the advertising first takes place. Advertising costs for the years ended December 31, 2008, 2007 and 2006 were $247.1 million, $264.2 million and $261.4 million, respectively.
Income Taxes
For periods subsequent to the Spin-off, Western Union files its own United States federal and state income tax returns. Western Union files its own separate tax returns in foreign jurisdictions for periods prior to and subsequent to the Spin-off, and foreign taxes are paid in each respective jurisdiction locally.
Prior to the Spin-off, Western Union’s taxable income was included in the consolidated United States federal income tax return of First Data and also in a number of state income tax returns filed with First Data on a combined or unitary basis. Western Union’s provision for income taxes was computed as if it were a separate tax-paying entity for periods prior to the Spin-off, and federal and state income taxes payable were remitted to First Data prior to the Spin-off.
Western Union accounts for income taxes under the liability method, which requires that deferred tax assets and liabilities be determined based on the expected future income tax consequences of events that have been recognized in the consolidated financial statements. Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the temporary differences are expected to reverse.
The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. FIN 48 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under FIN 48, the Company recognizes the tax benefits from an uncertain tax position only when it is more likely than not,
 
95

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
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. As a result of the implementation of FIN 48, the Company recognized an increase in the liability for unrecognized tax benefits plus associated accrued interest and penalties of $0.6 million, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings.
Foreign Currency Translation
The U.S. dollar is the functional currency for all of Western Union’s businesses except certain investments and subsidiaries located primarily in Ireland, Argentina and Peru. Foreign currency denominated assets and liabilities for those entities for which the local currency is the functional currency are translated into United States dollars based on exchange rates prevailing at the end of the period. Revenues and expenses are translated at average exchange rates prevailing during the period. The effects of foreign exchange gains and losses arising from the translation of assets and liabilities of those entities where the functional currency is not the United States dollar are included as a component of “Accumulated other comprehensive loss.” Foreign currency translation gains and losses on assets and liabilities of foreign operations in which the United States dollar is the functional currency are recognized in operations.
Derivatives
Western Union utilizes derivatives to mitigate foreign currency and interest rate risk. The Company recognizes all derivatives in the “Other assets” and “Other liabilities” captions in the accompanying Consolidated Balance Sheets at their fair value. All cash flows associated with derivatives are included in cash flows from operating activities in the Consolidated Statements of Cash Flows other than those previously designated as cash flow hedges that were determined to not qualify for hedge accounting as described in Note 14.
 
 	•	 	Cash Flow hedges—Changes in the fair value of derivatives that are designated and qualify as cash flow hedges in accordance with SFAS No. 133, “ Accounting for Derivative Instruments and Hedging Activities ,” as amended and interpreted (“SFAS No. 133”) are recorded in “Accumulated other comprehensive loss.” Cash flow hedges consist of foreign currency hedging of forecasted revenues, as well as, from time to time, hedges of anticipated fixed rate debt issuances. Derivative fair value changes that are captured in Accumulated other comprehensive loss are reclassified to revenues in the same period or periods the hedged item affects earnings. The portion of the change in fair value that is excluded from the measure of effectiveness is recognized immediately in “Derivative (losses)/gains, net.”	
 
 	•	 	Fair Value hedges—Changes in the fair value of derivatives that are designated as fair value hedges of fixed rate debt in accordance with SFAS No. 133 are recorded in interest expense. The offsetting change in value attributable to changes in the benchmark interest rate of the related debt instrument is also recorded in interest expense consistent with the related derivative’s change.	
 
 	•	 	Undesignated—Derivative contracts entered into to reduce the variability related to (a) settlement assets and obligations, generally with maturities of a few days up to one month, and (b) certain foreign currency denominated cash positions, generally with maturities of less than one year, are not designated as hedges for accounting purposes and, as such, changes in their fair value are included in “Cost of services” consistent with foreign exchange rate fluctuations on the related settlement assets and obligations or cash positions.	
 
96

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The Company also had certain other foreign currency swap arrangements with First Data, prior to September 29, 2006, to mitigate the foreign exchange impact on certain euro denominated notes receivable with First Data. These foreign currency swaps did not qualify for hedge accounting and, accordingly, the fair value changes of these agreements were reported in the accompanying Consolidated Statements of Income as “Foreign exchange effect on notes receivable from First Data, net.” The fair value of these swaps were settled in cash along with the related notes receivable in connection with the Spin-off.
The fair value of the Company’s derivatives is derived from standardized models that use market based inputs (e.g., forward prices for foreign currency).
Stock-Based Compensation
The Company currently has a stock-based compensation plan that provides for the granting of Western Union stock options, restricted stock awards and restricted stock units to employees and other key individuals who perform services for the Company. In addition, the Company has a stock-based compensation plan that provides for grants of Western Union stock options and stock unit awards to non-employee directors of the Company. Prior to the Spin-off, employees of Western Union participated in First Data’s stock-based compensation plans.
All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period and also requires an estimate of forfeitures when calculating compensation expense. The Company recognizes compensation expense on awards on a straight-line basis over the requisite service period for the entire award. Refer to Note 16 for additional discussion regarding details of the Company’s stock-based compensation plans.
New Accounting Pronouncements
In March 2008, the FASB issued SFAS No. 161, “ Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133 ” (“SFAS No. 161”). SFAS No. 161 is required for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and early adoption is permitted. SFAS No. 161 requires additional disclosures about how and why the companies use derivatives, how derivatives and related hedged items are accounted for under SFAS No. 133, and how derivatives and related hedged items affect a company’s financial position, results of operations, and cash flows. The Company’s derivative disclosures already incorporate many of the provisions outlined in SFAS No. 161. Accordingly, the Company does not expect that the adoption of this pronouncement in 2009 will have a significant impact on the Company’s financial position, results of operations and cash flows.
In December 2007, the FASB issued SFAS No. 141R, “ Business Combinations ” (“SFAS No. 141R”). This statement establishes a framework to disclose and account for business combinations. The adoption of the requirements of SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after fiscal years beginning after December 15, 2008 and may not be early adopted. The impact of the adoption of SFAS No. 141R will depend upon the nature and terms of business combinations that the Company consummates on or after January 1, 2009.
In December 2007, the FASB issued SFAS No. 160, “ Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ” (“SFAS No. 160”). The statement establishes accounting and reporting standards for a noncontrolling interest in a subsidiary. The adoption of the requirements of SFAS No. 160 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15,
 
97

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
2008 and may not be early adopted. The Company does not expect the impact of the adoption of SFAS No. 160 to be significant on the financial position, results of operations and cash flows, as the Company’s current non-controlling interests are immaterial.
3. Restructuring and Related Expenses
Missouri and Texas Closures
On February 25, 2008, the Company decided to pursue decision bargaining negotiations with our union employees regarding the possible closure of the Company’s facilities in Missouri and Texas. On March 14, 2008, the Company announced its decision to close substantially all of its facilities in Missouri and Texas and enter into effects bargaining with the union regarding severance and other benefits for the approximately 650 affected union employees, responsible for performing certain call center, settlement and operational accounting functions. On May 29, 2008, the Company and the union entered into a Memorandum of Agreement which resolved the effects of the restructuring decisions on the affected union employees and concluded that the Company’s collective bargaining agreement with the union would not be renewed. The decision also resulted in the elimination of certain management positions in these same facilities. The Company completed the transition of these operations to existing Company facilities and third-party providers during the fourth quarter of 2008.
In conjunction with the decision, the Company incurred severance and employee related benefit expenses for all union and certain affected management employees, facility closure expenses and other expenses associated with the relocation of these operations to existing Company facilities and third-party providers, including costs related to hiring, training, relocation, travel and professional fees. Included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and acceleration of depreciation and amortization.
Other Reorganizations
During 2008, in addition to the Missouri and Texas closures, the Company restructured some of its operations and relocated or eliminated certain shared service and call center positions. The relocated positions were moved to the Company’s existing facilities or outsourced service providers. The Company has incurred all of the expenses related to these reorganization activities during 2008 and expects substantially all remaining accruals, primarily related to severance for terminated employees, to be paid in 2009.
 
98

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Activity
The following table summarizes the activity for the restructuring and related expenses discussed above and the related restructuring accruals for the year ended December 31, 2008 (in millions):

 	 	Severance
and
Employee
Related	 	 	Asset Write-
Offs and
Incremental
Depreciation	 	 	Lease
Terminations	 	 	Other (e)	 	 	Total	 	
Missouri and Texas Closures:	 				 				 				 				 				
Balance, December 31, 2007	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	
Expenses (a)	 	 	13.1	 	 	 	7.3	 	 	 	7.8	 	 	 	18.1	 	 	 	46.3	 	
Cash payments	 	 	(17.1	)	 	 	—  	 	 	 	(1.8	)	 	 	(17.8	)	 	 	(36.7	)	
Non-cash (charges)/benefits (a):	 				 				 				 				 				
Loan assumption (b)	 	 	—  	 	 	 	—  	 	 	 	(6.0	)	 	 	—  	 	 	 	(6.0	)	
Employee related costs (c)	 	 	6.7	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	6.7	 	
Asset write-offs (d)	 	 	—  	 	 	 	(7.3	)	 	 	—  	 	 	 	—  	 	 	 	(7.3	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2008	 	$	2.7	 	 	$	—  	 	 	$	—  	 	 	$	0.3	 	 	$	3.0	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other Reorganizations:	 				 				 				 				 				
Balance, December 31, 2007	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	
Expenses (a)	 	 	31.2	 	 	 	0.6	 	 	 	—  	 	 	 	4.8	 	 	 	36.6	 	
Cash payments	 	 	(8.3	)	 	 	—  	 	 	 	—  	 	 	 	(4.1	)	 	 	(12.4	)	
Non-cash charges (a):	 				 				 				 				 				
Asset write-offs (d)	 	 	—  	 	 	 	(0.6	)	 	 	—  	 	 	 	—  	 	 	 	(0.6	)	
Stock compensation charges (f)	 	 	(0.8	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.8	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2008	 	$	22.1	 	 	$	—  	 	 	$	—  	 	 	$	0.7	 	 	$	22.8	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Plans:	 				 				 				 				 				
Balance, December 31, 2007	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	 	$	—  	 	
Expenses (a)	 	 	44.3	 	 	 	7.9	 	 	 	7.8	 	 	 	22.9	 	 	 	82.9	 	
Cash payments	 	 	(25.4	)	 	 	—  	 	 	 	(1.8	)	 	 	(21.9	)	 	 	(49.1	)	
Non-cash (charges)/benefits (a):	 				 				 				 				 				
Loan assumption (b)	 	 	—  	 	 	 	—  	 	 	 	(6.0	)	 	 	—  	 	 	 	(6.0	)	
Employee related costs (c)	 	 	6.7	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	6.7	 	
Asset write-offs (d)	 	 	—  	 	 	 	(7.9	)	 	 	—  	 	 	 	—  	 	 	 	(7.9	)	
Stock compensation charges (f)	 	 	(0.8	)	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.8	)	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2008	 	$	24.8	 	 	$	—  	 	 	$	—  	 	 	$	1.0	 	 	$	25.8	 	

(a)	Non-cash expenses and expense reductions discussed in footnotes (b), (c), (d) and (f) below are included in “Expenses.” However, these amounts were recognized outside of the restructuring accrual.	
(b)	In connection with the termination of a lease, the Company assumed a market rate loan from the landlord, which is included in other borrowings as of December 31, 2008, in lieu of a cash payment.	
(c)	Employee related costs include an expense reduction from the curtailment of certain employee benefits and additional employee benefit plan costs. The curtailment of certain employee benefits relates to accrued benefits for certain union employees, where the union employees were no longer entitled to such benefits upon the expiration of the union contract in August 2008. Such curtailment resulted in a reduction to expenses of $9.5 million. The offsetting employee benefit plan costs of $2.8 million relate to the termination of certain retirement eligible union and management plan participants in our defined benefit pension plans.	
 
99

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
(d)	Asset write-offs include write-offs of fixed assets and leasehold improvements and accelerated depreciation and amortization.	
(e)	Other expenses related to the relocation of various operations to existing Company facilities and third-party providers include hiring, training, relocation, travel and professional fees.	
(f)	Stock compensation charges represent costs associated with the modification of stock options and restricted stock awards and units for terminated employees.	
Restructuring and related expenses are reflected in the Consolidated Statements of Income as follows (in millions):

 	  	Year Ended
December 31, 2008	
Cost of services	  	$	62.8	
Selling, general and administrative	  	 	20.1	
	  	 	 	
Total restructuring and related expenses, pre-tax	  	$	82.9	
	  	 	 	
Total restructuring and related expenses, net of tax	  	$	51.6	
	  	 	 	
While these items are identifiable to the Company’s segments, these expenses have been excluded from the measurement of segment operating profit provided to the chief operating decision maker (“CODM”) for purposes of assessing segment performance and decision making with respect to resource allocation. Of the Company’s total restructuring and related expenses of $82.9 million, $56.1 million, $23.4 million and $3.4 million are attributable to the Company’s consumer-to-consumer, consumer-to-business and other segments, respectively.
4. Acquisitions
In December 2008, the Company acquired 80% of its existing money transfer agent in Peru for a purchase price of $35.0 million. The aggregate consideration paid was $29.7 million, net of a holdback reserve of $3.0 million. The Company acquired cash of $2.3 million as part of the acquisition. The $3.0 million holdback reserve will be paid in annual $1.0 million increments beginning December 2009, subject to the terms of the agreement. The results of operations of the acquiree have been included in the Company’s consolidated financial statements since the acquisition date. The preliminary purchase price allocation resulted in $10.1 million of identifiable intangible assets, a significant portion of which were attributable to the acquiree’s network of subagents. The identifiable intangible assets are being amortized over three to 10 years and goodwill of $24.8 million was recorded, which is expected to be deductible for income tax purposes. The purchase price allocation is preliminary and subject to change after the valuation of identifiable assets and certain other assets and liabilities is finalized. In addition, the Company has the option to acquire the remaining 20% of the money transfer agent and the money transfer agent has the option to sell the remaining 20% to the Company within 12 months after December 2013 at fair value.
On August 1, 2008, the Company acquired the money transfer assets from its existing money transfer agent in Panama for a purchase price of $18.3 million. The consideration paid was $14.3 million, net of a holdback reserve of $4.0 million. The $4.0 million holdback reserve is scheduled to be paid $0.5 million, $1.2 million, $1.2 million and $1.1 million in February 2009, August 2009, August 2010 and August 2011, respectively, subject to the terms of the agreement. The results of operations of the acquiree have been included in the Company’s consolidated financial statements since the acquisition date. The preliminary purchase price allocation resulted in $5.6 million of identifiable intangible assets, a significant portion of which were attributable to the acquiree’s network of subagents. The identifiable intangible assets are being amortized over three to seven years and goodwill of $14.2 million was recorded, which is not expected to be deductible for income tax purposes. The purchase price allocation is preliminary and subject to change after the valuation of identifiable assets and certain other assets and liabilities is finalized.
 
100

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
In October 2007, the Company entered into agreements totaling $18.3 million to convert its non-participating interest in an agent in Singapore to a fully participating 49% equity interest and to extend the agent relationship at more favorable commission rates to Western Union. As a result, the Company earns a pro-rata share of profits and has enhanced voting rights. The Company also has the right to add additional agent relationships in Singapore. In addition, in October 2007, the Company completed an agreement to acquire a 25% ownership interest in an agent in Jamaica and to extend the term of the agent relationship for $29.0 million. The aggregate consideration paid resulted in $20.2 million of identifiable intangible assets, including capitalized contract costs, which are being amortized over seven to 10 years. Western Union’s investments in these agents are accounted for under the equity method of accounting.
In December 2006, the Company acquired Servicio Electronico de Pago S.A. and related entities (“SEPSA”), which operates under the brand name Pago Fácil SM , for a total purchase price of $69.8 million, less cash acquired of $3.0 million. Pago Fácil provides consumer-to-business payments and prepaid mobile phone top-up services in Argentina. Previously, the Company held a 25% interest in Pago Fácil, which was treated as an equity method investment. As a result of acquiring the additional 75% ownership, the Company’s entire investment in and results of operations of Pago Fácil have been included in the consolidated financial statements since the acquisition date. The purchase price allocation resulted in $28.1 million of identifiable intangible assets, a significant portion of which were attributable to the Pago Fácil service mark and acquired agent and biller relationships. The identifiable intangible assets were calculated based on the additional 75% ownership interest acquired, and are being amortized over two to 25 years. After adjusting the additional acquired net assets to fair value, goodwill of $44.5 million was recorded, substantially all of which is eligible for amortization for tax purposes across various jurisdictions.
The pro forma impact of all acquisitions on net income in 2008, 2007 and 2006 was immaterial.
The following table presents changes to goodwill for the years ended December 31, 2008 and 2007 (in millions):

 	  	Consumer-to-
Consumer	 	 	Consumer-to-
Business	 	 	Other	 	 	Total	 	
January 1, 2007 balance	  	$	1,392.0	 	 	$	243.1	 	 	$	12.9	 	 	$	1,648.0	 	
Purchase price adjustments	  	 	(3.0	)	 	 	(5.9	)	 	 	1.7	 	 	 	(7.2	)	
Currency translation	  	 	—  	 	 	 	(1.3	)	 	 	—  	 	 	 	(1.3	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2007 balance	  	$	1,389.0	 	 	$	235.9	 	 	$	14.6	 	 	$	1,639.5	 	
Acquisitions	  	 	39.0	 	 	 	—  	 	 	 	—  	 	 	 	39.0	 	
Purchase price adjustments	  	 	(1.0	)	 	 	—  	 	 	 	—  	 	 	 	(1.0	)	
Currency translation	  	 	—  	 	 	 	(3.2	)	 	 	(0.1	)	 	 	(3.3	)	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
December 31, 2008 balance	  	$	1,427.0	 	 	$	232.7	 	 	$	14.5	 	 	$	1,674.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
5. Related Party Transactions
Related Party Transactions with First Data
The Consolidated Statement of Income for the year ended December 31, 2006 prior to the Spin-off includes expense allocations for certain corporate functions historically provided to Western Union by First Data. If possible, these allocations were made on a specific identification basis. Otherwise, the expenses related to services provided to Western Union by First Data were allocated to Western Union based on relative percentages, as compared to First Data’s other businesses, of headcount or other appropriate methods depending on the nature of each item or cost to be allocated.
 
101

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Charges for functions historically provided to Western Union by First Data are primarily attributable to First Data’s performance of many shared services that the Company utilized prior to the Spin-off. First Data continued to provide certain of these services subsequent to the Spin-off through a transition services agreement until September 29, 2007. In addition, prior to the Spin-off, the Company participated in certain First Data insurance, benefit and incentive plans, and it received services directly related to the operations of its businesses such as call center services, credit card processing, printing and mailing. The Consolidated Statement of Income reflects charges incurred prior to the Spin-off from First Data and its affiliates for these services of $152.4 million for the year ended December 31, 2006. Included in these charges are amounts recognized for stock-based compensation expense, as well as net periodic benefit income associated with the Company’s pension plans.
Included in “Interest income from First Data, net” in the Consolidated Statement of Income for the year ended December 31, 2006 was interest income of $37.4 million earned on notes receivable from First Data subsidiaries and interest expense of $1.7 million incurred on notes payable to First Data which were settled in connection with the Spin-off. Certain of the notes receivable were euro denominated, and as such, the Company had related foreign currency swap agreements to mitigate the foreign exchange impact to the Company on such notes. Included in “Foreign exchange effect on notes receivable from First Data, net” in the Consolidated Statement of Income during the year ended December 31, 2006 are foreign exchange gains of $10.1 million from the revaluation of these euro denominated notes receivable and related foreign currency swap agreements.
During the period from January 1, 2006 through September 29, 2006, the Company recognized commission revenues from a First Data subsidiary in connection with its money order business of $23.6 million. Subsequent to the Spin-off, the Company continues to recognize commission revenue from this First Data subsidiary.
Other Related Party Transactions
The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents, as it does its other agents, commissions for money transfer and other services provided on the Company’s behalf. Commissions paid to these agents for the years ended December 31, 2008, 2007 and 2006 totaled $305.9 million, $256.6 million and $212.2 million, respectively. For those agents where an ownership interest was acquired during the year, only amounts paid subsequent to the investment date have been reflected as a related party transaction.
6. Commitments and Contingencies
In the normal course of business, Western Union is subject to claims and litigation. Management of Western Union believes such matters involving a reasonably possible chance of loss will not, individually or in the aggregate, result in a material adverse effect on Western Union’s financial position, results of operations and cash flows. Western Union accrues for loss contingencies as they become probable and estimable.
On September 25, 2008, the Company was served with a purported class action complaint alleging that Western Union willfully and negligently violated the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”) by providing debit and credit card expiration dates on electronically printed receipts for transactions initiated on the Company’s website. On November 12, 2008, the Company received notification that the class action complaint was voluntarily dismissed.
The Company has $77.0 million in outstanding letters of credit and bank guarantees at December 31, 2008 with expiration dates through 2015, certain of which contain a one-year renewal option. The letters of credit and bank guarantees are primarily held in connection with lease arrangements and certain agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.
 
102

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Pursuant to the separation and distribution agreement with First Data in connection with the Spin-off (see Note 1), First Data and the Company are each liable for, and agreed to perform, all liabilities with respect to their respective businesses. In addition, the separation and distribution agreement also provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of the Company’s business with the Company and financial responsibility for the obligations and liabilities of First Data’s retained businesses with First Data. The Company also entered into a tax allocation agreement that sets forth the rights and obligations of First Data and the Company with respect to taxes imposed on their respective businesses both prior to and after the Spin-off as well as potential tax obligations for which the Company may be liable in conjunction with the Spin-off (see Note 10).
7. Investment Securities
Investment securities, classified within “Settlement assets” in the Consolidated Balance Sheets, consist primarily of high-quality state and municipal debt instruments. Substantially all of the Company’s investment securities were marketable securities during all periods presented. The Company is required to maintain specific high-quality, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable state regulations. Western Union does not hold financial instruments for trading purposes. All investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by making high-quality investments. At December 31, 2008, the significant majority of the Company’s investment securities had credit ratings of “AA-” or better from a major credit rating agency.
Unrealized gains and losses on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive income or loss, net of related deferred taxes. Proceeds from the sale and maturity of available-for-sale securities during the years ended December 31, 2008, 2007 and 2006 were $2,811.5 million, $177.7 million and $62.6 million, respectively.
During 2008, the Company increased its investment securities primarily through the addition of various state and municipal variable rate demand note securities which can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week, but that have maturity dates ranging from 2012 to 2046. Generally, these securities are used by the Company for short-term liquidity needs and are held for short periods of time, typically less than 30 days. As a result, this has increased the frequency of purchases and proceeds received by the Company. At December 31, 2008, 53% of the Company’s investments in state and municipal debt securities were variable rate demand notes and the remainder are fixed rate securities.
Gains and losses on investments are calculated using the specific-identification method and are recognized during the period the investment is sold or when an investment experiences an other-than-temporary decline in value below cost or amortized cost. When an investment is deemed to have an other-than-temporary decline in value it is reduced to its fair value, which becomes the new cost basis of the investment. Western Union considers both qualitative and quantitative indicators when judging whether a decline in value of an investment is other-than-temporary in nature, including, but not limited to, the length of time the investment has been in an unrealized loss position, the significance of the unrealized loss relative to the carrying amount of the investment and our intent and ability to hold the investment until a forecasted recovery.
 
103

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The components of investment securities, all of which are classified as available-for-sale, are as follows (in millions):

December 31, 2008	  	Amortized
Cost	  	Fair
Value	  	Gross
Unrealized
Gains	  	Gross
Unrealized
Losses	 	 	Net
Unrealized
Gains/(Losses)	 	
State and municipal obligations	  	$	400.1	  	$	401.7	  	$	2.5	  	$	(0.9	)	 	$	1.6	 	
Debt securities issued by foreign governments	  	 	4.0	  	 	3.9	  	 	—  	  	 	(0.1	)	 	 	(0.1	)	
	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
	  	$	404.1	  	$	405.6	  	$	2.5	  	$	(1.0	)	 	$	1.5	 	

																		
December 31, 2007	  	Amortized
Cost	  	Fair
Value	  	Gross
Unrealized
Gains	  	Gross
Unrealized
Losses	 	 	Net
Unrealized
Gains/(Losses)	 	
State and municipal obligations	  	$	187.3	  	$	188.0	  	$	0.7	  	$	—  	 	 	$	0.7	 	
Preferred stock of a government sponsored enterprise	  	 	6.9	  	 	5.8	  	 	—  	  	 	(1.1	)	 	 	(1.1	)	
	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
	  	$	194.2	  	$	193.8	  	$	0.7	  	$	(1.1	)	 	$	(0.4	)	
	  	 	 	  	 	 	  	 	 	  	 	 	 	 	 	 	 	
There were no investments with a single issuer or individual securities representing greater than 10% of total investment securities as of December 31, 2008 and 2007.
The following summarizes contractual maturities of investment securities as of December 31, 2008 (in millions):

 	  	Amortized
Cost	  	Fair
Value	
Due within 1 year	  	$	45.9	  	$	46.2	
Due after 1 year through 5 years	  	 	127.8	  	 	128.7	
Due after 5 years through 10 years	  	 	2.4	  	 	2.5	
Due after 10 years	  	 	228.0	  	 	228.2	
	  	 	 	  	 	 	
	  	$	404.1	  	$	405.6	
	  	 	 	  	 	 	
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation back to the issuer prior to its contractual maturity.
During the year ended December 31, 2008, the Company recognized an other-than-temporary impairment of $1.7 million on its preferred stock investments in the Federal Home Loan Mortgage Corporation, a government sponsored enterprise, and a realized loss of $2.9 million on the later sale of these investments during the year ended December 31, 2008, for a total impact of $4.6 million. As of December 31, 2008, the Company has no remaining investments in preferred stock of government sponsored enterprises.
On July 18, 2008, the Company entered into an agreement with IPS, a subsidiary of First Data, which modified the existing business relationship with respect to the issuance and processing of money orders. Under the terms of the agreement, beginning on October 1, 2009 (the “Transition Date”), IPS will assign and transfer to the Company certain operating assets used by IPS to issue money orders and an amount of cash sufficient to satisfy all outstanding money order liabilities. On the Transition Date, the Company will assume IPS’s role as issuer of the money orders, including its obligation to pay outstanding money orders, and will terminate the
 
104

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
existing agreement whereby IPS pays Western Union a fixed return on the outstanding money order balances (which vary from day to day but approximate $800 million). Following the Transition Date, Western Union will invest the cash received from IPS in high-quality, investment grade securities in accordance with applicable regulations, which are the same as those currently governing the investment of the Company’s United States originated money transfer principal. In anticipation of the Company’s exposure to fluctuations in interest rates, the Company has entered into interest rate swaps on certain of its fixed rate notes. Through a combination of the revenue generated from these investment securities and the anticipated interest expense savings resulting from the interest rate swaps, the Company estimates that it should be able to retain subsequent to the Transition Date, on a pre-tax income basis through 2011, a comparable rate of return as it is receiving under its current agreement with IPS. Refer to Note 14 for additional information on the interest rate swaps.
Subsequent to the Transition Date, all revenue generated from the management of the investment portfolio will be retained by the Company and none will be shared with its agents. IPS will continue to provide to the Company clearing services necessary for payment of the money orders in exchange for the payment by the Company to IPS of a per-item administrative fee. The Company will no longer provide to IPS the services required under the original money order agreement or receive from IPS the fee for such services.
8. Fair Value Measurements
As discussed in Note 2, the Company adopted the provisions of SFAS No. 157 on January 1, 2008. SFAS No. 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how Western Union measures fair value, refer to Note 2, “Summary of Significant Accounting Policies.”
The following table reflects assets and liabilities that are measured and carried at fair value on a recurring basis as of December 31, 2008 (in millions):

 	  	Fair Value Measurement Using	  	Assets/Liabilities
at Fair Value	
 	  	    Level 1    	  	    Level 2    	  	    Level 3    	  		
Assets	  			  			  			  			
State and municipal debt instruments	  	$	—  	  	$	401.7	  	$	—  	  	$	401.7	
Debt securities issued by foreign governments	  	 	0.1	  	 	3.8	  	 	—  	  	 	3.9	
Derivatives	  	 	—  	  	 	116.8	  	 	—  	  	 	116.8	
	  	 	 	  	 	 	  	 	 	  	 	 	
Total assets	  	$	0.1	  	$	522.3	  	$	—  	  	$	522.4	
	  	 	 	  	 	 	  	 	 	  	 	 	
Liabilities	  			  			  			  			
Derivatives	  	$	—  	  	$	10.8	  	$	—  	  	$	10.8	
	  	 	 	  	 	 	  	 	 	  	 	 	
Total liabilities	  	$	—  	  	$	10.8	  	$	—  	  	$	10.8	

105

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
9. Other Assets and Other Liabilities
The following table summarizes the components of other assets and other liabilities (in millions):

 	  	December 31,	
 	  	2008	  	2007	
Other assets:	  			  			
Receivable for securities sold	  	$	298.1	  	$	—  	
Equity method investments	  	 	213.1	  	 	211.3	
Derivatives	  	 	116.8	  	 	8.1	
Amounts advanced to agents, net of discounts	  	 	69.3	  	 	93.1	
Deferred customer set up costs	  	 	34.6	  	 	41.9	
Receivables from First Data	  	 	26.3	  	 	9.1	
Prepaid expenses	  	 	20.6	  	 	19.8	
Accounts receivable, net	  	 	19.8	  	 	22.5	
Debt issue costs	  	 	14.0	  	 	13.5	
Prepaid commissions	  	 	3.0	  	 	22.5	
Other	  	 	42.5	  	 	56.2	
	  	 	 	  	 	 	
Total other assets	  	$	858.1	  	$	498.0	
	  	 	 	  	 	 	
Other liabilities:	  			  			
Pension obligations	  	$	107.1	  	$	27.6	
Deferred revenue	  	 	59.4	  	 	74.2	
Derivatives	  	 	10.8	  	 	37.2	
Other	  	 	20.7	  	 	43.9	
	  	 	 	  	 	 	
Total other liabilities	  	$	198.0	  	$	182.9	
	  	 	 	  	 	 	
Receivable for securities sold
On September 15, 2008, Western Union requested redemption of its shares in the Reserve International Liquidity Fund, Ltd., a money market fund, (the “Fund”) totaling $298.1 million. The Company had not received any portion of the redemption payment prior to December 31, 2008, and accordingly, reclassified the total amount due from “Cash and cash equivalents” to “Other assets” in the Consolidated Balance Sheet as of December 31, 2008. At the time the redemption request was made, the Company was informed by the Reserve Management Company, the Fund’s investment advisor (the “Manager”), that the Company’s redemption trades would be honored at a $1.00 per share net asset value. On January 30, 2009, the Company received a partial distribution from the Fund of $193.6 million. The Company expects to receive the remaining payment based on the maturities of the underlying investments in the Fund and the status of the litigation process. The Company believes that due to uncertainty surrounding the outcome of litigation facing the Fund, as well as potential variability in the ultimate amount and related timing of the recovery of this balance, the fair value of this financial asset may be less than the related carrying value. There is a risk that the redemption process could be delayed and that the Company could receive less than the $1.00 per share net asset value should pro-rata distribution occur. Based on net asset information provided by the Fund, the Company’s exposure related to pro-rata distribution could be $12 million, excluding settlement costs incurred by the Fund. However, based on written and verbal representations from the Manager to date and the Company’s current legal position regarding the Company’s redemption priority, the Company believes that it is entitled to such funds, and is vigorously pursuing collection of the remaining distribution.
 
106

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Amounts advanced to agents, net of discounts
From time to time, the Company makes advances and loans to agents. In 2006, the Company signed a six year agreement with one of its existing agents which included a four year loan of $140.0 million to the agent. The terms of the loan agreement require that a percentage of commissions earned by the agent (64% in 2009) be withheld by us as repayment of the loan and the agent remains obligated to repay the loan if commissions earned are not sufficient. The Company imputes interest on this below-market rate note receivable, and has recorded the note net of a discount of $3.0 million and $22.5 million as of December 31, 2008 and 2007, respectively. The remaining loan receivable balance relating to this agent as of December 31, 2008 and 2007, net of discount, was $47.0 million and $67.5 million, respectively. Other advances and loans outstanding as of December 31, 2008 and 2007 were $22.3 million and $25.6 million, respectively.
10. Income Taxes
The components of pretax income, generally based on the jurisdiction of the legal entity, are as follows (in millions):

 	  	Year Ended December 31,	
 	  	2008	  	2007	  	2006	
Components of pretax income:	  			  			  			
Domestic	  	$	416.3	  	$	529.3	  	$	707.1	
Foreign	  	 	822.4	  	 	693.1	  	 	628.0	
	  	 	 	  	 	 	  	 	 	
	  	$	1,238.7	  	$	1,222.4	  	$	1,335.1	
	  	 	 	  	 	 	  	 	 	
The provision for income taxes is as follows (in millions):

 	  	Year Ended December 31,	
 	  	2008	  	2007	  	2006	
Federal	  	$	234.8	  	$	287.7	  	$	331.1	
State and local	  	 	30.3	  	 	26.3	  	 	34.5	
Foreign	  	 	54.6	  	 	51.1	  	 	55.5	
	  	 	 	  	 	 	  	 	 	
	  	$	319.7	  	$	365.1	  	$	421.1	
	  	 	 	  	 	 	  	 	 	
Domestic taxes have been incurred on certain pre-tax income amounts that were generated by the Company’s foreign operations. Accordingly, the percentage obtained by dividing the total federal, state and local tax provision by the domestic pretax income, all as shown in the preceding tables, may be higher than the statutory tax rates in the United States.
The Company’s effective tax rates differ from statutory rates as follows:

 	  	Year Ended December 31,	 	
 	  	  2008  	 	 	  2007  	 	 	  2006  	 	
Federal statutory rate	  	35.0	%	 	35.0	%	 	35.0	%	
State income taxes, net of federal income tax benefits	  	1.3	%	 	1.7	%	 	2.0	%	
Foreign rate differential	  	(11.4	)%	 	(7.7	)%	 	(6.3	)%	
Federal tax credits	  	—  	%	 	—  	%	 	(0.3	)%	
Other	  	0.9	%	 	0.9	%	 	1.1	%	
	  	 	 	 	 	 	 	 	 	
Effective tax rate	  	25.8	%	 	29.9	%	 	31.5	%	

107

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Western Union’s provision for income taxes consists of the following components (in millions):

 	  	Year Ended December 31,	 	
 	  	2008	 	 	2007	  	2006	 	
Current:	  				 			  				
Federal	  	$	219.6	 	 	$	284.9	  	$	314.0	 	
State and local	  	 	34.5	 	 	 	25.5	  	 	33.1	 	
Foreign	  	 	49.7	 	 	 	50.5	  	 	61.1	 	
	  	 	 	 	 	 	 	  	 	 	 	
Total current taxes	  	 	303.8	 	 	 	360.9	  	 	408.2	 	
				
Deferred:	  				 			  				
Federal	  	 	15.2	 	 	 	2.8	  	 	17.1	 	
State and local	  	 	(4.2	)	 	 	0.8	  	 	1.4	 	
Foreign	  	 	4.9	 	 	 	0.6	  	 	(5.6	)	
	  	 	 	 	 	 	 	  	 	 	 	
Total deferred taxes	  	 	15.9	 	 	 	4.2	  	 	12.9	 	
	  	 	 	 	 	 	 	  	 	 	 	
	  	$	319.7	 	 	$	365.1	  	$	421.1	 	
	  	 	 	 	 	 	 	  	 	 	 	
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of Western Union’s assets and liabilities. The following table outlines the principal components of deferred tax items (in millions):

 	  	December 31,	
 	  	2008	  	2007	
Deferred tax assets related to:	  			  			
Reserves and accrued expenses	  	$	45.4	  	$	40.2	
Pension obligations	  	 	39.5	  	 	11.8	
Deferred revenue	  	 	3.1	  	 	4.4	
Other	  	 	6.8	  	 	14.3	
	  	 	 	  	 	 	
Total deferred tax assets	  	 	94.8	  	 	70.7	
	  	 	 	  	 	 	
Deferred tax liabilities related to:	  			  			
Property, equipment and intangibles	  	 	349.0	  	 	321.8	
Other	  	 	15.9	  	 	12.5	
	  	 	 	  	 	 	
Total deferred tax liabilities	  	 	364.9	  	 	334.3	
	  	 	 	  	 	 	
Net deferred tax liability	  	$	270.1	  	$	263.6	
	  	 	 	  	 	 	
Uncertain Tax Positions
The Company has established contingency reserves for material, known tax exposures, including potential tax audit adjustments with respect to its international operations, which were restructured in 2003. The Company’s tax reserves reflect management’s judgment as to the resolution of the issues involved if subject to judicial review. While the Company believes its reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed its related reserve. With respect to these reserves, the Company’s income tax expense would include (i) any changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e. new information) surrounding a tax issue, and (ii) any difference from the Company’s tax position as recorded in the financial statements and the final resolution of a tax issue during the period.
 
108

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The Company adopted the provisions of FIN 48 on January 1, 2007. The cumulative effect of applying this interpretation resulted in a reduction of $0.6 million to the January 1, 2007 balance of retained earnings.
Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the Company’s financial statements, and are reflected in “Income taxes payable” in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in millions):

 	  	2008	 	 	2007	 	
Balance at January 1,	  	$	251.4	 	 	$	166.0	 	
Increases—positions taken in current period (a)	  	 	93.8	 	 	 	78.0	 	
Increases—positions taken in prior periods (b)	  	 	28.4	 	 	 	12.8	 	
Decreases—positions taken in prior periods	  	 	(7.9	)	 	 	—  	 	
Decreases—settlements with taxing authorities	  	 	(0.2	)	 	 	(0.7	)	
Decreases—lapse of applicable statute of limitations	  	 	(4.3	)	 	 	(4.7	)	
	  	 	 	 	 	 	 	 	
Balance at December 31,	  	$	361.2	 	 	$	251.4	 	

(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.	
A substantial portion of the Company’s unrecognized tax benefits relate to the 2003 restructuring of the Company’s international operations whereby the Company’s income from certain foreign-to-foreign money transfer transactions has been taxed at relatively low foreign tax rates compared to the Company’s combined federal and state tax rates in the United States. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $352.4 million and $243.2 million as of December 31, 2008 and 2007, respectively, excluding interest and penalties.
The Company recognizes interest and penalties with respect to unrecognized tax benefits in income tax expense and records the associated liability in “Income taxes payable” in its Consolidated Balance Sheets. The Company recognized $11.6 million, $13.5 million and $5.6 million in interest and penalties during the years ended December 31, 2008, 2007 and 2006, respectively. The Company has accrued $35.8 million and $24.8 million for the payment of interest and penalties at December 31, 2008 and 2007, respectively.
The Company has identified no uncertain tax position for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months, except for recurring accruals on existing uncertain tax positions. The change in unrecognized tax benefits during the years ended December 31, 2008 and 2007 is substantially attributable to such recurring accruals and the resolution of certain tax Spin-off matters with First Data.
The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and for various non-United States jurisdictions, and the Company has identified the United States and Ireland as its two major tax jurisdictions. The United States federal income tax returns of First Data, which include the Company, are eligible to be examined for the years 2002 through 2006. The Company’s United States federal income tax returns since the Spin-off are also eligible to be examined. The United States Internal Revenue Service (“IRS”) has issued a report of the results of its examination of the United States federal consolidated income tax return of First Data for 2002, and the Company believes that the resolution of the adjustments that
 
109

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
affect the Company proposed in the report will not result in a material change to the Company’s financial position. In addition, the IRS completed its examination of the United States federal consolidated income tax returns of First Data for 2003 and 2004, which included the Company, and issued a Notice of Deficiency in December 2008. The Notice of Deficiency alleges significant additional taxes, interest and penalties owed with respect to a variety of adjustments involving the Company and its subsidiaries, and the Company generally has responsibility for taxes associated with these potential Company-related adjustments under the tax allocation agreement with First Data executed at the time of the Spin-off. The Company agrees with a number of the adjustments in the Notice of Deficiency; however, the Company does not agree with the Notice of Deficiency regarding several substantial adjustments representing total alleged additional tax and penalties due of approximately $114 million. As of December 31, 2008, interest on the alleged amounts due for unagreed adjustments would be approximately $23 million. A substantial part of the alleged amounts due for these unagreed adjustments relates to the Company’s international restructuring, which took effect in the fourth quarter 2003, and, accordingly, the alleged amounts due related to such restructuring largely are attributable to 2004. The Company expects to contest those adjustments with which it does not agree with by filing a petition in the United States Tax Court. The Company believes its overall reserves are adequate, including those associated with the adjustments alleged in the Notice of Deficiency. If the IRS’ position in the Notice of Deficiency is sustained, the Company’s tax provision related to 2003 and later years would materially increase. The Irish income tax returns of certain subsidiaries for the years 2004 and forward are eligible to be examined by the Irish tax authorities, although no examinations have commenced.
At December 31, 2008, no provision had been made for United States federal and state income taxes on foreign earnings of approximately $1.6 billion, which are expected to be reinvested outside the United States indefinitely. Upon distribution of those earnings to the United States in the form of actual or constructive dividends, the Company would be subject to United States income taxes (subject to an adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign countries. Determination of this amount of unrecognized deferred United States tax liability is not practicable because of the complexities associated with its hypothetical calculation.
Tax Allocation Agreement with First Data
The Company and First Data each are liable for taxes imposed on their respective businesses both prior to and after the Spin-off. If such taxes have not been appropriately apportioned between First Data and the Company, subsequent adjustments may occur that may impact the Company’s financial position or results of operations.
Also under the tax allocation agreement, with respect to taxes and other liabilities that result from a final determination that is inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private letter ruling and relevant tax opinion), (“Spin-off Related Taxes”), the Company will be liable to First Data for any such Spin-off Related Taxes attributable solely to actions taken by or with respect to the Company. In addition, the Company will also be liable for 50% of any Spin-off Related Taxes (i) that would not have been imposed but for the existence of both an action by the Company and an action by First Data or (ii) where the Company and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. The Company may be similarly liable if it breaches certain representations or covenants set forth in the tax allocation agreement. If the Company is required to indemnify First Data for taxes incurred as a result of the Spin-off being taxable to First Data, it likely would have a material adverse effect on the Company’s business, financial position and results of operations. First Data generally will be liable for all Spin-off Related Taxes, other than those described above.
 
110

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
11. Employee Benefit Plans
Defined Contribution Plans
The Company’s Board of Directors approved The Western Union Company Incentive Savings Plan (“401(k)”) as of September 29, 2006, covering eligible non-union employees on the United States payroll of Western Union after the spin-off date. Employees that make voluntary contributions to this plan receive up to a 4% Western Union matching contribution. All matching contributions are immediately 100% vested.
The Company has a 401(k) plan covering its former union employees. Due to the restructuring and related activities discussed in Note 3, the Company’s expenses under this plan are immaterial.
The Company administers 16 defined contribution plans in various countries globally on behalf of approximately 600 employee participants as of December 31, 2008. Such plans have vesting and employer contribution provisions that vary by country.
In addition, Western Union’s Board of Directors adopted a non-qualified deferred compensation plan for highly compensated employees. The plan provides tax-deferred contributions, matching and the restoration of Company matching contributions otherwise limited under the 401(k).
Prior to the spin-off from First Data, eligible full-time non-union employees of the Company were covered under a First Data sponsored defined contribution incentive savings plan. Employees who made voluntary contributions to this plan, received up to a 3% Western Union matching contribution, service related contributions of 1.5% to 3% of eligible employee compensation, certain other additional employer contributions, and additional discretionary Company contributions. In addition, First Data provided non-qualified deferred compensation plans for certain highly compensated employees. These plans provided tax-deferred contributions, matching and the restoration of Company contributions under the defined contribution plans otherwise limited by IRS or plan limits.
The aggregate amount charged to expense in connection with all of the above plans was $12.5 million, $11.6 million and $10.8 million during the years ended December 31, 2008, 2007 and 2006, respectively.
Defined Benefit Plans
On January 1, 2008, the Company adopted the remaining provisions of SFAS No. 158, “ Employers Accounting for Defined Benefit Pension and Other Postretirement Plans—An Amendment of SFAS No. 87, 88, 106 and 132(R) ” (“SFAS No. 158”), which required the Company to change its plan measurement date to December 31 effective January 1, 2008. The Company elected the alternative transition method, and accordingly, the Company prepared a 15-month projection of net periodic benefit income for the period from October 1, 2007 through December 31, 2008. The pro-rated portion of net periodic benefit income of $0.1 million for the period from October 1, 2007 through December 31, 2007 was reflected as an increase to “Retained earnings” on January 1, 2008.
The Company has two frozen defined benefit pension plans for which it had a recorded unfunded pension obligation of $107.1 million as of December 31, 2008, included in “Other liabilities” in the Consolidated Balance Sheets. No contributions were made to these plans by First Data or Western Union during the years ended December 31, 2008, 2007 and 2006. Due to the impact of recently enacted legislation, the Company will not be required to contribute to these plans during 2009, but estimates it will be required to contribute approximately $20 to $25 million in 2010.
The Company recognizes the funded status of its pension plans in its Consolidated Balance Sheets with a corresponding adjustment to “Accumulated other comprehensive loss,” net of tax.
 
111

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The following table provides a reconciliation of the changes in the pension plans’ benefit obligations, fair value of assets and a statement of the funded status (in millions):

 	  	2008	 	 	2007	 	
Change in benefit obligation	  				 				
Projected benefit obligation at October 1,	  	$	426.0	 	 	$	459.0	 	
SFAS 158 measurement date adjustment (a)	  	 	6.1	 	 	 	—  	 	
Interest costs	  	 	24.4	 	 	 	24.6	 	
Actuarial gain	  	 	(5.6	)	 	 	(12.5	)	
Benefits paid	  	 	(54.9	)	 	 	(45.1	)	
Employee termination benefits	  	 	2.8	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	
Projected benefit obligation at December 31, 2008 and September 30, 2007	  	$	398.8	 	 	$	426.0	 	

Change in plan assets	  				 				
Fair value of plan assets at October 1,	  	$	398.4	 	 	$	406.1	 	
Actual return on plan assets	  	 	(51.8	)	 	 	37.4	 	
Benefits paid	  	 	(54.9	)	 	 	(45.1	)	
	  	 	 	 	 	 	 	 	
Fair value of plan assets at December 31, 2008 and September 30, 2007	  	 	291.7	 	 	 	398.4	 	
	  	 	 	 	 	 	 	 	
Funded status of the plan	  	$	(107.1	)	 	$	(27.6	)	
	  	 	 	 	 	 	 	 	
Accumulated benefit obligation	  	$	398.8	 	 	$	426.0	 	

(a)	Represents the adjustment to retained earnings of $0.1 million for the period from October 1, 2007 through December 31, 2007. This adjustment consists of interest costs of $6.1 million, offset by $6.2 million which represents the expected return on plan assets less amortization of the actuarial loss.	
Differences in expected returns on plan assets estimated at the beginning of the year versus actual returns, and assumptions used to estimate the beginning of year projected benefit obligation versus the end of year obligation (principally discount rate and mortality assumptions) are, on a combined basis, considered actuarial gains and losses. Such actuarial gains and losses are recognized as a component of “Comprehensive income” and amortized to income over the average remaining life expectancy of the plan participants. Included in “Accumulated other comprehensive loss” at December 31, 2008 is $3.6 million ($2.3 million, net of tax) of actuarial losses that are expected to be recognized in net periodic pension cost during the year ended December 31, 2009.
The following table provides the amounts recognized in the Consolidated Balance Sheets (in millions):

 	  	December 31,	 	
 	  	2008	 	 	2007	 	
Accrued benefit liability	  	$	(107.1	)	 	$	(27.6	)	
Accumulated other comprehensive loss	  	 	150.3	 	 	 	73.1	 	
	  	 	 	 	 	 	 	 	
Net amount recognized	  	$	43.2	 	 	$	45.5	 	

112

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The following table provides the components of net periodic benefit cost/(income) for the plans (in millions):

 	  	December 31,	 	
 	  	2008	 	 	2007	 	 	2006	 	
Interest cost	  	$	24.4	 	 	$	24.6	 	 	$	24.8	 	
Expected return on plan assets	  	 	(27.5	)	 	 	(28.4	)	 	 	(29.9	)	
Amortization of actuarial loss	  	 	2.7	 	 	 	3.6	 	 	 	4.2	 	
Employee termination costs	  	 	2.8	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit cost/(income)	  	$	2.4	 	 	$	(0.2	)	 	$	(0.9	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
During 2008, the Company recorded $2.8 million of expense relating to the termination of certain retirement eligible union and management plan participants in connection with the restructuring and related activities disclosed in Note 3.
The pension liability included in other accumulated comprehensive loss, net of tax, increased/(decreased) $46.4 million, ($15.3) million and ($10.8) million in 2008, 2007 and 2006, respectively. The significant comprehensive loss in 2008 was caused by a decline in the fair value of plan assets, which was primarily attributable to a decrease in the value of the equity securities within the plan asset portfolio.
The weighted-average rate assumptions used in the measurement of the Company’s benefit obligation are as follows:

 	  	2008	 	 	2007	 	
Discount rate	  	6.26	%	 	6.02	%	
The weighted-average rate assumptions used in the measurement of the Company’s net cost (income) are as follows:

 	  	2008	 	 	2007	 	 	2006	 	
Discount rate	  	6.02	%	 	5.62	%	 	5.24	%	
Expected long-term return on plan assets	  	7.50	%	 	7.50	%	 	7.50	%	
SFAS No. 87 requires the sponsor of a defined benefit plan to measure the plan’s obligations and annual expense using assumptions that reflect best estimates and are consistent to the extent that each assumption reflects expectations of future economic conditions. As the bulk of the pension benefits will not be paid for many years, the computation of pension expenses and benefits is based on assumptions about future interest rates and expected rates of return on plan assets. In general, pension obligations are most sensitive to the discount rate assumption, and it is set based on the rate at which the pension benefits could be settled effectively. The discount rate is determined by matching the timing and amount of anticipated payouts under the plans to the rates from a AA spot rate yield curve. The curve is derived from AA bonds of varying maturities.
Western Union employs a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established using a building block approach with proper consideration of diversification and re-balancing. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
 
113

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Pension plan asset allocation at December 31, 2008 and September 30, 2007, and target allocations based on investment policies, are as follows:

Asset Category	  	Percentage of Plan Assets
at Measurement Date	 	
	  	2008	 	 	2007	 	
Equity securities	  	24	%	 	41	%	
Debt securities	  	75	%	 	58	%	
Other	  	1	%	 	1	%	
	  	 	 	 	 	 	
	  	100	%	 	100	%	

				
 	  	Target Allocation	 	
Equity securities	  	25-35	%	
Debt securities	  	65-75	%	
In consideration of the frozen status of the Plans, the Company decided to implement a risk reduction strategy in 2008. As a result, the Company increased its allocation to debt securities from equity securities.
Certain members of the Company’s Board of Directors and management are affiliated with companies whose securities are held in Western Union’s pension trust, which is managed by independent asset managers. Therefore, these affiliated companies are considered related parties. The following table details plan assets invested in these related party securities as of December 31, 2008 and September 30, 2007:

Plan Corporate Bond Holdings	  	2008	 	
	  	Principal
(in millions)	  	Fair Market
Value
(in millions)	  	% of Total
Plan Assets	 	
Allstate Corporation corporate bond	  	$	0.8	  	$	0.7	  	0.23	%	
Hasbro Inc. corporate bond	  	$	0.2	  	$	0.2	  	0.06	%	
Bristol-Myers Squibb corporate bond	  	$	0.7	  	$	0.7	  	0.24	%	
HBOS PLC corporate bond	  	$	0.3	  	$	0.2	  	0.08	%	
New York Life Insurance Company corporate bond	  	$	0.5	  	$	0.4	  	0.14	%	

Plan Corporate Bond Holdings	  	2007	 	
	  	Principal
(in millions)	  	Fair Market
Value
(in millions)	  	% of Total
Plan Assets	 	
Allstate Corporation corporate bond	  	$	0.8	  	$	0.8	  	0.20	%	
Hasbro Inc. corporate bond	  	$	0.2	  	$	0.2	  	0.05	%	
Mellon FDG corporate bond	  	$	0.3	  	$	0.3	  	0.08	%	
New York Life Insurance Company corporate bond	  	$	0.4	  	$	0.4	  	0.10	%	
The maturities of debt securities at December 31, 2008 range from less than one year to approximately 60 years with a weighted-average maturity of 20 years.
The assets of the Company’s defined benefit plans are managed in a third-party master trust. The investment policy and allocation of the assets in the master trust are overseen by the Company’s Investment Council. Western Union employs a total return investment approach whereby a mix of equities and fixed income investments are used in an effort to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities and plan funded status. The investment portfolio contains a diversified blend of equity and fixed-income investments. Furthermore, equity investments
 
114

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
are diversified across United States and non-United States stocks, as well as securities deemed to be growth, value, and small and large capitalizations. Other assets, primarily private equity, are used judiciously in an effort to enhance long-term returns while improving portfolio diversification. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies.
The estimated future benefit payments are expected to be $43.7 million in 2009, $42.4 million in 2010, $41.1 million in 2011, $39.9 million in 2012, $38.5 million in 2013 and $169.1 million in 2014 through 2018.
12. Operating Lease Commitments
Western Union leases certain real properties for use as customer service centers and administrative and sales offices. Western Union also leases data communications terminals, computers and office equipment. Certain of these leases contain renewal options and escalation provisions. Total rent expense under operating leases was $39.7 million, $31.6 million and $29.2 million during the years ended December 31, 2008, 2007 and 2006, respectively.
As of December 31, 2008, the minimum aggregate rental commitments under all noncancelable operating leases, net of sublease income commitments aggregating $8.2 million through 2014, are as follows (in millions):

Year Ending December 31,	  	 	
2009	  	$	23.5	
2010	  	 	17.5	
2011	  	 	12.9	
2012	  	 	10.2	
2013	  	 	9.2	
Thereafter	  	 	29.3	
	  	 	 	
Total future minimum lease payments	  	$	102.6	
	  	 	 	
13. Stockholders’ Equity
Accumulated other comprehensive loss
Accumulated other comprehensive loss includes all changes in equity during a period that have yet to be recognized in income, except those resulting from transactions with shareholders. The major components include foreign currency translation adjustments, pension liability adjustments, unrealized gains and losses on investment securities and gains or losses from cash flow hedging activities.
The assets and liabilities of foreign subsidiaries whose functional currency is not the United States dollar are translated using the appropriate exchange rate as of the end of the year. Foreign currency translation adjustments represent unrealized gains and losses on assets and liabilities arising primarily from the difference in the foreign country currency compared to the United States dollar. These gains and losses are accumulated in comprehensive income. When a foreign subsidiary is substantially liquidated, the cumulative translation gain or loss is removed from “Accumulated other comprehensive loss” and is recognized as a component of the gain or loss on the sale of the subsidiary.
A pension liability adjustment associated with our defined benefit pension plans is recognized for the difference between estimated assumptions (e.g., asset returns, discount rates, mortality) and actual results. The
 
115

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
amount in “Accumulated other comprehensive loss” is amortized to income over the remaining life expectancy of the plan participants. Details of the pension plans’ assets and obligations are explained further in Note 11.
We record unrealized gains and losses on investment securities that are available for sale, primarily municipal securities, in accumulated other comprehensive income until the investment is either sold or deemed other-than-temporarily impaired. See Note 7 for further discussion.
The effective portion of the change in fair value of derivatives that qualify as cash flow hedges are recorded in accumulated other comprehensive income. Generally, amounts are recognized in income when the related forecasted transaction affects earnings. See Note 14 for further discussion.
The income tax effects allocated to and the cumulative balance of each component of accumulated other comprehensive loss are as follows (in millions):

 	  	2008	 	 	2007	 	 	2006	 	
Beginning balance, January 1	  	$	(68.8	)	 	$	(73.5	)	 	$	(62.1	)	
Net unrealized gains/(losses) on investment securities:	  				 				 				
Unrealized losses, net of tax benefits of $(0.9) in 2008, $(0.7) in 2007 and $(0.3) in 2006	  	 	(1.5	)	 	 	(1.4	)	 	 	(0.5	)	
Reclassification adjustment for losses/(gains) included in net income, net of tax benefit/(expense) of $1.6 in 2008, $(0.1) in 2007, and $0.0 in 2006	  	 	2.7	 	 	 	(0.1	)	 	 	0.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net unrealized gains/(losses) on investment securities	  	 	1.2	 	 	 	(1.5	)	 	 	(0.4	)	
				
Net unrealized gains/(losses) on hedging activities:	  				 				 				
Unrealized gains/(losses), net of tax expense/(benefit) of $15.0 in 2008, $(14.6) in 2007 and $(1.6) in 2006	  	 	67.6	 	 	 	(41.3	)	 	 	(27.8	)	
Reclassification adjustment for losses /(gains) included in net income, net of tax benefit/(expense) of $3.5 in 2008, $4.4 in 2007, and $(0.1) in 2006	  	 	21.6	 	 	 	26.9	 	 	 	(1.5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net unrealized gains/(losses) on hedging activities	  	 	89.2	 	 	 	(14.4	)	 	 	(29.3	)	
				
Net foreign currency translation adjustments and loss on disposal:	  				 				 				
Foreign currency translation adjustments, net of tax (benefit)/expense of $(2.8) in 2008, $2.8 in 2007, and $4.2 in 2006	  	 	(5.2	)	 	 	5.3	 	 	 	6.4	 	
Reclassification adjustment for loss on disposal included in net income	  	 	—  	 	 	 	—  	 	 	 	1.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net foreign currency translation adjustments and loss on disposal	  	 	(5.2	)	 	 	5.3	 	 	 	7.5	 	
				
Net unrealized (losses)/gains on pension liability:	  				 				 				
Unrealized (losses)/gains, net of tax (benefit)/expense of $(28.0) in 2008, $7.9 in 2007, and $0.3 in 2006	  	 	(48.1	)	 	 	13.0	 	 	 	8.2	 	
Reclassification adjustment for losses included in net income, net of tax benefit of $1.0 in 2008, $1.3 in 2007, and $1.6 in 2006	  	 	1.7	 	 	 	2.3	 	 	 	2.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net unrealized (losses)/gains on pension liability	  	 	(46.4	)	 	 	15.3	 	 	 	10.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income/(loss)	  	 	38.8	 	 	 	4.7	 	 	 	(11.4	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Ending balance, December 31	  	$	(30.0	)	 	$	(68.8	)	 	$	(73.5	)	

116

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The components of accumulated other comprehensive loss were as follows (in millions):

 	  	2008	 	 	2007	 	 	2006	 	
Unrealized (losses)/gains on investment securities	  	$	0.9	 	 	$	(0.3	)	 	$	1.2	 	
Unrealized (losses)/gains on hedging activities	  	 	45.5	 	 	 	(43.7	)	 	 	(29.3	)	
Foreign currency translation adjustment	  	 	18.1	 	 	 	23.3	 	 	 	18.0	 	
Pension liability adjustment	  	 	(94.5	)	 	 	(48.1	)	 	 	(63.4	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(30.0	)	 	$	(68.8	)	 	$	(73.5	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash Dividends Paid
During the fourth quarter of 2008, the Company’s Board of Directors declared a cash dividend of $0.04 per common share, representing $28.4 million which was paid on December 31, 2008 to shareholders of record on December 22, 2008.
During the fourth quarter of 2007, the Company’s Board of Directors declared a cash dividend of $0.04 per common share, representing $30.0 million which was paid on December 28, 2007 to shareholders of record on December 14, 2007.
During the fourth quarter of 2006, the Company’s Board of Directors declared a cash dividend of $0.01 per common share, representing $7.7 million which was paid in December 2006.
Share Repurchases
Since September 2006, the Board of Directors has authorized common stock repurchases of up to $3.0 billion consisting of a $1.0 billion authorization in June 2008 (“2008 Authorization”), a $1.0 billion authorization in December 2007 (“2007 Authorization”) and a $1.0 billion authorization in September 2006. Both the 2007 Authorization and the authorization in September 2006 have been fully utilized. During the years ended December 31, 2008, 2007 and 2006, 58.1 million, 34.7 million and 0.9 million shares, respectively, have been repurchased for $1,313.9 million, $726.5 million and $19.9 million, respectively, excluding commissions, at an average cost of $22.60, $20.93 and $22.78 per share, respectively. As of December 31, 2008, $939.7 million remains available under the 2008 Authorization for purchases through December 31, 2009.
During December 2007, the Company’s Board of Directors adopted resolutions to retire all of its existing treasury stock, thereby restoring the status of the Company’s common stock held in treasury as “authorized but unissued”. The resulting impact to the Company’s Consolidated Balance Sheet was the elimination of $462.0 million held in “Treasury stock” and a decrease in “Common stock” of $0.2 million and “Retained earnings” of $461.8 million. There is no change to the Company’s overall equity position as a result of this retirement. All shares repurchased by the Company subsequent to this resolution will also be retired at the time such shares are reacquired.
14. Derivatives
The Company is exposed to foreign currency risk resulting from fluctuations in exchange rates, primarily the euro, and to a lesser degree the British pound, Canadian dollar, other European currencies, and the Australian dollar, related to forecasted revenues and also on settlement assets and obligations denominated in these and other currencies. Additionally, the Company is exposed to interest rate risk related to changes in market rates
 
117

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
both prior to and subsequent to the issuance of debt. The Company uses derivatives to minimize its exposures related to adverse changes in foreign currency exchange rates and interest rates and not to engage in speculative derivative activities. Foreign currency forward contracts and interest rate swaps of varying maturities are used in these risk management activities.
The Company executes derivative financial instruments, which it designates as hedges, with established financial institutions having credit ratings of “A” or better from major rating agencies. The credit risk inherent in these agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the hedge, on a quarterly basis and as circumstances warrant. The Company also monitors the concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action (including termination of contracts) when doubt arises about the counterparties’ ability to perform. The Company’s foreign currency exposures are in liquid currencies, consequently there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future.
The details of each designated hedging relationship are formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, how effectiveness is being assessed and how ineffectiveness, if any, will be measured. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly on a retrospective and prospective basis.
Foreign Currency Hedging
The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to three years at inception and a targeted weighted-average maturity of approximately one year at any point in time, to mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies. At December 31, 2008, the Company’s longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted average maturity of one year. The Company assesses the effectiveness of these foreign currency forward contracts based on changes in the spot rate of the affected currencies during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in “Derivative (losses)/gains, net” within the Company’s Consolidated Statements of Income. Differences between changes in the forward rates and spot rates, along with all changes in the fair value during periods in which the instrument was not designated as a hedge, were excluded from the measure of effectiveness. Prior to September 29, 2006, the Company did not have derivatives that qualified for hedge accounting in accordance with SFAS No. 133. As such, the effect of the changes in the fair value of these hedges prior to September 29, 2006 is included in “Derivative (losses)/gains, net”. On September 29, 2006 and during the fourth quarter of 2006, the Company began entering into new derivative contracts in accordance with its revised foreign currency derivatives and hedging processes, which were designated and qualify as cash flow hedges under SFAS No. 133.
The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash positions. None of these contracts are designated as hedges pursuant to SFAS No. 133.
 
118

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The aggregate United States dollar notional amount of foreign currency forward contracts held by the Company as of December 31, 2008 are (in millions):

Contracts not designated as hedges:	  			
Euro	  	$	276.2	
British pound	  	$	34.6	
Other	  	$	26.6	
		
Contracts designated as hedges:	  			
Euro	  	$	556.3	
British pound	  	$	106.8	
Canadian dollar	  	$	101.3	
Other	  	$	75.2	
Interest Rate Hedging
The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes due 2011 and 2016 from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The Company designates these derivatives as fair value hedges utilizing the short-cut method in SFAS No. 133, which permits an assumption of no ineffectiveness if certain criteria are met. The change in fair value of the interest rate swaps is offset by a change in the balance of the debt being hedged within the Company’s “Borrowings” in the Consolidated Balance Sheets and interest expense has been adjusted to include the effects of payments made and received under the swaps.
At December 31, 2008 and 2007, the Company held interest rate swaps in an aggregate notional amount of $660 million and $75 million, respectively. The notional amounts outstanding at December 31, 2008 included interest rate swaps entered into by the Company to reduce the economic exposure from fluctuations in interest rates that will impact the return on pre-tax income the Company receives under its existing agreement with IPS (Note 7).
During the fourth quarter of 2008, the Company terminated an aggregate notional amount of $195 million of interest rate swaps. The Company received cash of $10.7 million on the termination of these swaps, the offset of which was recognized in “Borrowings” and will be reclassified as a reduction to “Interest expense” over the life of the 2011 notes.
In 2006, the Company executed forward starting interest rate swaps designated as cash flow hedges to fix the interest rate in connection with an anticipated issuance of fixed rate debt securities. The Company terminated the interest rate swaps in conjunction with the November 2006 issuance of the 2011 and 2036 Notes described in Note 15 by paying cash of approximately $18.6 million to the counterparties, resulting in ineffectiveness of $0.6 million, which was immediately recognized in “Derivative gains/(losses), net” in the Consolidated Statements of Income. The remaining $18.0 million loss on the hedges was included in “Accumulated other comprehensive loss” and is being reclassified as an increase to “Interest expense” over the life of the related notes.
 
119

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Balance Sheet
The following table summarizes the fair value of derivatives reported in the Consolidated Balance Sheets as of December 31, 2008 and 2007 (in millions).

 	  	Asset Derivatives	  	Liability Derivatives	
 	  	Balance Sheet
Location	  	Fair Value	  	Balance Sheet
Location	  	Fair Value	
	  		  	2008	  	2007	  		  	2008	  	2007	
Derivatives—hedges:	  		  			  			  		  			  			
Interest rate fair value hedges	  	Other assets	  	$	48.9	  	$	3.6	  	Other liabilities	  	$	—  	  	$	—  	
Foreign currency cash flow hedges	  	Other assets	  	 	65.0	  	 	1.6	  	Other liabilities	  	 	6.7	  	 	34.7	
	  		  	 	 	  	 	 	  		  	 	 	  	 	 	
Total	  		  	$	113.9	  	$	5.2	  		  	$	6.7	  	$	34.7	
	  		  	 	 	  	 	 	  		  	 	 	  	 	 	
Derivatives—undesignated:	  		  			  			  		  			  			
Foreign currency	  	Other assets	  	$	2.9	  	$	2.9	  	Other liabilities	  	$	4.1	  	$	2.5	
	  		  	 	 	  	 	 	  		  	 	 	  	 	 	
Total	  		  	$	2.9	  	$	2.9	  		  	$	4.1	  	$	2.5	
	  		  	 	 	  	 	 	  		  	 	 	  	 	 	
Total derivatives	  		  	$	116.8	  	$	8.1	  		  	$	10.8	  	$	37.2	
	  		  	 	 	  	 	 	  		  	 	 	  	 	 	
The following table summarizes the fair value of derivatives held at December 31, 2008 and their expected maturities (in millions):

 	  	Total	 	 	2009	 	 	2010	  	2011	  	2012	  	2013	  	Thereafter	
Foreign currency hedges—cash flow	  	$	58.3	 	 	$	40.5	 	 	$	17.8	  	$	—  	  	$	—  	  	$	—  	  	$	—  	
Foreign currency hedges—undesignated	  	 	(1.2	)	 	 	(1.2	)	 	 	—  	  	 	—  	  	 	—  	  	 	—  	  	 	—  	
Interest rate hedges—fair value	  	 	48.9	 	 	 	16.0	 	 	 	15.2	  	 	10.6	  	 	1.8	  	 	1.5	  	 	3.8	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	106.0	 	 	$	55.3	 	 	$	33.0	  	$	10.6	  	$	1.8	  	$	1.5	  	$	3.8	

120

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income segregated by designated, qualifying SFAS No. 133 hedging instruments and those that are not, for the years ended December 31, 2008, 2007 and 2006 (in millions).
Fair Value Hedges – Gain/(Loss)

Derivatives	 	Gain/(Loss) Recognized in Income on
Derivative	 	Hedged Items	 	Gain/(Loss) Recognized in Income on
Related Hedged Item	
	 	Location	 	Amount	 		 	Location	 	Amount	
	 	 	 	  2008  	 	  2007  	 	  2006  	 		 	 	 	  2008  	 	 	  2007  	 	 	  2006  	
Interest rate contracts (a)	 	Interest expense	 	$	58.5	 	$	3.6	 	$	—  	 	Fixed-rate debt	 	Interest expense	 	$	(54.6	)	 	$	(3.6	)	 	$	—  	
	 		 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	 	 	 	
Total gain/(loss)	 		 	$	58.5	 	$	3.6	 	$	—  	 		 		 	$	(54.6	)	 	$	(3.6	)	 	$	—  	
	 		 	 	 	 	 	 	 	 	 	 		 		 	 	 	 	 	 	 	 	 	 	 	
Cash Flow Hedges – Gain/(Loss)

Derivatives	 	Amount of Gain/(Loss)
Recognized in OCI on
Derivative (Effective
Portion)	 	 	Gain/(Loss) Reclassified from
Accumulated OCI into Income
(Effective Portion)	 	 	Gain/(Loss) Recognized in Income on
Derivative (Ineffective Portion and Amount
Excluded from Effectiveness Testing) (b)	 	
	 			 	Location	 	Amount	 	 	Location	 	Amount	 	
	 	  2008  	 	  2007  	 	 	  2006  	 	 	 	 	  2008  	 	 	  2007  	 	 	  2006  	 	 	 	 	  2008  	 	 	  2007  	 	  2006  	 	
Foreign currency contracts	 	$	82.6	 	$	(55.9	)	 	$	(11.4	)	 	Revenue	 	$	(23.4	)	 	$	(29.6	)	 	$	1.8	 	 	Derivative
(losses)/gains, net	 	$	(9.9	)	 	$	8.7	 	$	1.3	 	
Interest rate
contracts (c)	 	 	—  	 	 	—  	 	 	 	(18.0	)	 	Interest expense	 	 	(1.7	)	 	 	(1.7	)	 	 	(0.2	)	 	Derivative
(losses)/gains, net	 	 	—  	 	 	 	—  	 	 	(0.6	)	
	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	
Total gain/(loss)	 	$	82.6	 	$	(55.9	)	 	$	(29.4	)	 		 	$	(25.1	)	 	$	(31.3	)	 	$	1.6	 	 		 	$	(9.9	)	 	$	8.7	 	$	0.7	 	
	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	
Undesignated – Gain/(Loss)

Derivatives	  	Gain/(Loss) Recognized in Income on Derivative	 	
	  	Location	  	Amount	 	
	  	 	  	  2008  	  	  2007  	 	 	  2006  	 	
Foreign currency contracts (d)	  	Cost of services	  	$	13.0	  	$	(21.1	)	 	$	(19.9	)	
Foreign currency contracts (e)	  	Derivative (losses)/gains, net	  	 	3.9	  	 	(2.9	)	 	 	(22.7	)	
	  		  	 	 	  	 	 	 	 	 	 	 	
Total gain/(loss)	  		  	$	16.9	  	$	(24.0	)	 	$	(42.6	)	

(a)	The net gain of $3.9 million in interest expense in 2008 from the fair value hedges represents the net interest received on the swaps during the year. The fair value of all future receipts and payments on the swaps are completely offset by changes in the value of the hedged debt.	
 
121

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
(b)	The portion of 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. The ineffectiveness recognized in interest rate contracts is attributable to certain forecasted debt hedges and the timing of the related debt issuance changing from original expectation.	
(c)	The Company incurred an $18.0 million loss on the termination of these swaps which is included in “Accumulated other comprehensive loss” and is reclassified as an increase to interest expense over the life of the related notes.	
(d)	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.	
(e)	The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract. In 2006, the loss also includes losses associated with certain foreign currency forward contracts that did not qualify as hedges under derivative accounting rules prior to September 29, 2006.	
An accumulated other comprehensive pre-tax gain of $44.5 million related to the foreign currency forward contracts is expected to be reclassified into revenue within the next 12 months as of December 31, 2008. Approximately $1.7 million of losses on the forecasted debt issuance hedges are expected to be recognized in interest expense within the next 12 months as of December 31, 2008. No amounts have been reclassified into earnings as a result of the underlying transaction being considered probable of not occurring within the specified time period.
15. Borrowings
The Company’s outstanding borrowings at December 31, 2008 and 2007 consist of the following (in millions):

 	  	December 31, 2008	  	December 31, 2007	
	  	Carrying Value	  	Fair Value (d)	  	Carrying Value	  	Fair Value (d)	
Due in less than one year:	  			  			  			  			
Commercial paper	  	$	82.9	  	$	82.9	  	$	338.2	  	$	338.2	
Term loan	  	 	500.0	  	 	500.0	  	 	—  	  	 	—  	
Floating rate notes, due November 2008 (a)	  	 	—  	  	 	—  	  	 	500.0	  	 	495.2	
					
Due in greater than one year:	  			  			  			  			
5.400% notes, net of discount, due 2011 (b)	  	 	1,042.8	  	 	962.9	  	 	1,002.8	  	 	1,012.0	
5.930% notes, net of discount, due 2016 (c)	  	 	1,014.4	  	 	903.5	  	 	999.7	  	 	1,001.2	
6.200% notes, net of discount, due 2036	  	 	497.4	  	 	391.4	  	 	497.3	  	 	473.1	
Other borrowings	  	 	6.0	  	 	6.0	  	 	—  	  	 	—  	
	  	 	 	  	 	 	  	 	 	  	 	 	
Total borrowings	  	$	3,143.5	  	$	2,846.7	  	$	3,338.0	  	$	3,319.7	

(a)	The floating rate notes were redeemed upon maturity on November 17, 2008.	
(b)	At December 31, 2008 and 2007, the Company held interest rate swaps related to the 5.400% notes due 2011 (“2011 Notes”) with an aggregate notional amount of $550 million and $75 million, respectively. The carrying value of the 2011 Notes has been adjusted for the impact of these hedges. During the fourth quarter of 2008, the Company terminated an aggregate notional amount of $195 million of interest rate swaps. The Company received cash of $10.7 million on the termination of these swaps, the offset of which is reflected in “Borrowings” and will be reclassified as a reduction to “Interest expense” over the life of the 2011 notes. For further information regarding the interest rate swaps, refer to Note 14, “Derivatives.”	
 
122

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
(c)	At December 31, 2008, the Company held an interest rate swap related to the 5.930% notes due 2016 (“2016 Notes”) with an aggregate notional amount of $110 million. The carrying value of the 2016 Notes has been adjusted for the impact of these hedges. For further information regarding the interest rate swap, refer to Note 14, “Derivatives.”	
(d)	The fair value of commercial paper approximates its carrying value due to the short term nature of the obligations. The fair value of the term loan approximates its carrying value as it is a variable rate loan and Western Union credit spreads did not move significantly between the date of the borrowing (December 5, 2008) and December 31, 2008. The fair value of the fixed rate notes is determined by obtaining quotes from multiple, independent banks.	
Exclusive of discounts and the fair value of the interest rate swaps, maturities of borrowings as of December 31, 2008 are $582.9 million in 2009, $1.0 billion in 2011 and $1.5 billion thereafter. There are no contractual maturities on borrowings during 2010 and 2012.
The Company’s obligations with respect to its outstanding borrowings, as described below, rank equally.
Commercial Paper Program
On November 3, 2006, the Company established a commercial paper program pursuant to which the Company may issue unsecured commercial paper notes (the “Commercial Paper Notes”) in an amount not to exceed $1.5 billion outstanding at any time. The Commercial Paper Notes may have maturities of up to 397 days from date of issuance. Interest rates for borrowings are based on market rates at the time of issuance. The Company’s commercial paper borrowings at December 31, 2008 and 2007 had weighted-average interest rates of approximately 4.1% and 5.5%, respectively, and weighted-average initial terms of 27 days and 36 days, respectively.
Revolving Credit Facility
On September 27, 2006, the Company entered into a five-year unsecured revolving credit facility, which includes a $1.5 billion revolving credit facility, a $250.0 million letter of credit sub-facility and a $150.0 million swing line sub-facility (the “Revolving Credit Facility”). The Revolving Credit Facility contains certain covenants that, among other things, limit or restrict the ability of the Company and other significant subsidiaries to grant certain types of security interests, incur debt or enter into sale and leaseback transactions. The Company is also required to maintain compliance with a consolidated interest coverage ratio covenant.
On September 28, 2007, the Company entered into an amended and restated credit agreement, the primary purpose of which was to extend the maturity by one year from its original five-year $1.5 billion facility entered into in 2006. No other material changes were made in the amended and restated facility. As of December 31, 2008, the Company had $1.4 billion available to borrow, which is net of the Company’s current commercial paper borrowings backed by this revolving credit facility. The revolving credit facility, which is diversified through a group of globally recognized banks, is used to provide general liquidity for the Company and to support the commercial paper program, which the Company believes enhances its short-term credit rating.
Interest due under the Revolving Credit Facility is fixed for the term of each borrowing and is payable according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an interest rate margin of 19 basis points. A facility fee of 6 basis points on the total facility is also payable quarterly, regardless of usage. The facility fee percentage is determined based on the Company’s credit rating assigned by Standard & Poor’s Ratings Services (“S&P”) and/or Moody’s Investor Services, Inc. (“Moody’s”).
 
123

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
In addition, to the extent the aggregate outstanding borrowings under the Revolving Credit Facility exceed 50% of the related aggregate commitments, a utilization fee of 5 basis points as of December 31, 2008 based upon such ratings is payable to the lenders on the aggregate outstanding borrowings.
Term Loan
On December 5, 2008, the Company entered into a senior, unsecured, 364-day term loan in an aggregate principal amount of $500 million (the “Term Loan”) with a syndicate of lenders. The Term Loan contains covenants which, among other things, limit or restrict the Company’s ability to sell or transfer assets or enter into a merger or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary dividends, enter into sale and leaseback transactions, or incur certain subsidiary level indebtedness. The Company is also required to maintain compliance with a consolidated interest coverage ratio covenant. Prepayments of loans are allowed and are required based on the cash proceeds from other indebtedness, issuance of equity, or sale of assets over $250 million.
The Term Loan allows the selection between two different respective interest rate calculations. For the current interest rate, the Company selected an interest rate calculated using the one-month LIBOR plus a 2% applicable margin (3.875% at December 31, 2008). A loan fee is also payable quarterly, beginning December 31, 2008, on the total loan (50 basis points as of December 31, 2008). The applicable margin and loan fee percentage are determined based on our credit ratings assigned by S&P and/or Moody’s. A duration fee is payable 90 days and 180 days after the closing date of December 5, 2008 equal to 0.25% and 0.50%, respectively, of the loan balance on each date.
Notes
On September 29, 2006, the Company issued to First Data $1.0 billion aggregate principal amount of unsecured notes maturing on October 1, 2016 in partial consideration for the contribution by First Data to the Company of its money transfer and consumer payments businesses in connection with the Spin-off.
Interest on the 2016 Notes is payable semiannually on April 1 and October 1 each year based on a fixed per annum interest rate of 5.930%. The indenture governing the 2016 Notes contains covenants that, among other things, limit or restrict the ability of the Company and other significant subsidiaries to grant certain types of security interests, incur debt (in the case of significant subsidiaries) or enter into sale and leaseback transactions. The Company may redeem the 2016 Notes at any time prior to maturity at the applicable treasury rate plus 20 basis points.
On November 17, 2006, the Company issued $2 billion aggregate principal amount of the Company’s unsecured fixed and floating rate notes, comprised of $500 million aggregate principal amount of the Company’s Floating Rate Notes due 2008 (the “Floating Rate Notes”), $1 billion aggregate principal amount of 5.400% Notes due 2011 and $500 million aggregate principal amount of 6.200% Notes due 2036 (the “2036 Notes”). The Floating Rate Notes were redeemed upon maturity in November 2008.
Interest with respect to the 2011 Notes and 2036 Notes is payable semiannually on May 17 and November 17 each year based on fixed per annum interest rates of 5.400% and 6.200%, respectively. The indenture governing the 2011 Notes and 2036 Notes contains covenants that, among other things, limit or restrict the ability of the Company and other significant subsidiaries to grant certain types of security interests, incur debt (in the case of significant subsidiaries), or enter into sale and leaseback transactions. The Company may redeem the 2011 Notes and the 2036 Notes at any time prior to maturity at the applicable treasury rate plus 15 basis points and 25 basis points, respectively.
 
124

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
16. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company 2006 Long-Term Incentive Plan
The Western Union Company 2006 Long-Term Incentive Plan (“2006 LTIP”) provides for the granting of stock options, restricted stock awards and units, unrestricted stock awards, and other equity-based awards, to employees and other key individuals who perform services for the Company. A maximum of 120.0 million shares of common stock may be awarded under the 2006 LTIP, of which 37.3 million shares are available as of December 31, 2008.
Options granted under the 2006 LTIP are issued with exercise prices equal to the fair market value of Western Union common stock on the grant date, have 10-year terms, and vest over four equal annual increments beginning 12 months after the date of grant. Compensation expense related to stock options is recognized over the requisite service period. The requisite service period for stock options is the same as the vesting period, with the exception of retirement eligible employees, who have shorter requisite service periods ending when the employees become retirement eligible.
Restricted stock awards and units granted under the 2006 LTIP typically become 100% vested on the three year anniversary of the grant date. The fair value of the awards granted is measured based on the fair market value of the shares on the date of grant, and the related compensation expense is recognized over the requisite service period which is the same as the vesting period.
On September 29, 2006, the Company awarded a founders’ grant of either restricted stock awards or units to certain employees who are not otherwise eligible to receive stock-based awards under the 2006 LTIP. These awards vested in two equal annual increments on the first and second anniversary of the grant date. The fair value of the awards granted was measured based on the when-issued closing price of the Company’s common stock of $19.13 on the grant date and was recognized ratably over the vesting period. Included in the 3.5 million restricted stock awards and units issued under the 2006 LTIP described in the preceding paragraph, were 0.3 million restricted stock awards or units issued in connection with the founders’ grant.
The Western Union Company 2006 Non-Employee Director Equity Compensation Plan
The Western Union Company 2006 non-employee director equity compensation plan (“2006 Director Plan”) provides for the granting of equity-based awards to non-employee directors of the Company. Options granted under the 2006 Director Plan are issued with exercise prices equal to the fair market value of Western Union common stock at the grant date, have 10-year terms, and vest immediately. Since options and stock units under this plan vest immediately, compensation expense is recognized on the date of grant based on the fair market value of the awards when granted. Awards under the plan may be settled immediately unless the participant elects to defer the receipt of the common shares under applicable plan rules. A maximum of 1.5 million shares of common stock may be awarded under the 2006 Director Plan. As of December 31, 2008, the Company has issued 0.4 million options and 0.1 million unrestricted stock units to non-employee directors of the Company.
First Data Stock Options and Employee Stock Purchase Plan Rights
Prior to the Spin-off, Western Union participated in the First Data plans that provided for the granting of stock options to employees and other key individuals who performed services for the Company. Options granted under the First Data plans were issued with exercise prices equivalent to the fair market value of First Data common stock on the dates of grant, substantially all had 10-year terms and became exercisable in four equal
 
125

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
annual increments beginning 12 months after the dates of grant. The requisite service period for stock options was the same as the vesting period, with the exception of retirement eligible employees who have shorter requisite service periods ending when the employees become retirement eligible. Compensation expense related to stock options was recognized over the requisite service period, except as discussed further under “Stock-Based Compensation” below for certain options granted prior to the adoption of SFAS No. 123R.
During the first quarter of 2006, First Data issued restricted stock awards or restricted stock units to certain employees which were contingent upon the achievement of certain performance criterion which were met on the date of Distribution. The awards had provisions to vest at a rate of 33% per year on the anniversary date of the grant. The fair value of the awards granted in February 2006 were measured based on the fair market value of the shares on the date of grant.
Prior to the Spin-off, employees of the Company were able to participate in a First Data instituted employee stock purchase plan (“ESPP”). Amounts accumulated through payroll deductions elected by eligible employees were used to make quarterly purchases of First Data common stock at a 15% discount from the lower of the market price at the beginning or end of the quarter. The fair value of these awards was recognized as compensation expense in the Consolidated Statements of Income for the year ended December 31, 2006 in accordance with the provisions of SFAS No. 123R. Western Union has not adopted an employee stock purchase plan.
First Data received all cash proceeds related to the exercise of stock options and ESPP shares sold by Western Union employees during all periods prior to the Spin-off.
Impact of Spin-Off to Stock–Based Awards Granted Under First Data Plans
At the time of the Spin-off, First Data converted stock options, restricted stock awards and restricted stock units (collectively, “Stock-Based Awards”) of First Data stock held by Western Union and First Data employees. For Western Union employees, outstanding First Data Stock-Based Awards were converted to new Western Union Stock-Based Awards at a conversion ratio of 2.1955 Western Union Stock-Based Awards for every First Data Stock-Based Award held prior to the Spin-off. The conversion was based on the pre-distribution First Data closing price with due bills of $42.00 relative to the Western Union when-issued closing price of $19.13 on September 29, 2006. For First Data employees, each First Data Stock-Based Award held prior to the Spin-off was converted into one replacement First Data Stock-Based Award and one Western Union Stock-Based Award. The new Western Union and First Data Stock-Based Awards maintained their pre-conversion aggregate intrinsic values, and, in the case of stock options, their ratio of the exercise price per share to their fair market value per share.
All converted Stock-Based Awards, which had not vested prior to September 24, 2007, were subject to the terms and conditions applicable to the original First Data Stock-Based Awards, including change of control provisions which required full vesting upon a change of control of First Data. Accordingly, upon the completion of the acquisition of First Data on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co.’s (“KKR”), all of these remaining converted unvested Western Union Stock-Based Awards vested. In connection with this accelerated vesting, the Company incurred a non-cash pre-tax charge of $22.3 million during the year ended December 31, 2007 for such awards held by Western Union employees. Approximately one-third of this charge was recorded within “Cost of services” and two-thirds was recorded within “Selling, general and administrative expense” in the Consolidated Statements of Income. As a result of this accelerated vesting, there is no remaining unamortized compensation expense associated with such converted Stock-Based Awards.
 
126

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The conversion of each stock option held by Western Union employees on the date of the Spin-off constituted a modification of those stock option awards under the provisions of SFAS No. 123R resulting in total additional stock based compensation charges of $3.4 million, of which $1.5 million and $1.9 million were recognized during the years ended December 31, 2007 and 2006, respectively.
After the Spin-off, the Company receives all cash proceeds related to the exercise of all Western Union stock options, and recognizes all stock compensation expense and retains the resulting tax benefits relating to Western Union awards held by Western Union employees. First Data recognizes all stock-based compensation expense and retains all associated tax benefits for Western Union  Stock-Based Awards held by First Data employees.
Stock Option Activity
A summary of Western Union stock option activity relating to Western Union and First Data employees for the year ended December 31, 2008 is as follows (options and aggregate intrinsic value in millions):

 	  	Year Ended December 31, 2008	
	  	Options	 	 	Weighted-Average
Exercise Price	  	Weighted-Average
Remaining
Contractual Term
(Years)	  	Aggregate
Intrinsic
Value	
Outstanding at January 1,	  	59.4	 	 	$	18.32	  		  			
Granted	  	3.8	 	 	 	21.26	  		  			
Exercised	  	(17.6	)	 	 	16.47	  		  			
Cancelled / forfeited	  	(2.0	)	 	 	22.72	  		  			
	  	 	 	 			  		  			
Outstanding at December 31,	  	43.6	 	 	$	19.11	  	5.7	  	$	6.8	
	  	 	 	 			  		  			
Western Union options exercisable at December 31,	  	37.6	 	 	$	18.90	  	5.3	  	$	6.7	
	  	 	 	 			  		  			
The Company received $289.7 million, $211.8 million and $80.8 million in cash proceeds related to the exercise of stock options during the years ended December 31, 2008, 2007 and 2006, respectively. Upon the exercise of stock options, shares of common stock are issued from authorized common shares. The Company maintains a share repurchase program (Note 13).
The Company’s calculated pool of excess tax benefits available to absorb write-offs of deferred tax assets in subsequent periods was approximately $15.3 million as of December 31, 2008. The Company realized total tax benefits during the years ended December 31, 2008, 2007 and 2006 from stock option exercises of $13.5 million, $10.7 million and $1.9 million, respectively.
The total intrinsic value of stock options exercised during the years ended December 31, 2008, 2007 and 2006 was $134.0 million, $91.0 million and $42.1 million, respectively.
 
127

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Restricted Stock Awards and Restricted Stock Units
A summary of Western Union activity for restricted stock awards and units relating to Western Union and First Data employees for the year ended December 31, 2008 is listed below (awards/units in millions):

 	  	Year Ended December 31, 2008	
	  	Number
Outstanding	 	 	Weighted-Average
Grant-Date Fair Value	
Non-vested at January 1, 2008	  	1.0	 	 	$	19.39	
Granted	  	0.5	 	 	 	21.86	
Vested	  	(0.2	)	 	 	19.28	
Forfeited	  	(0.1	)	 	 	20.32	
	  	 	 	 			
Non-vested at December 31, 2008	  	1.2	 	 	$	20.32	
	  	 	 	 			
Stock-Based Compensation
The following table sets forth the total impact on earnings for stock-based compensation expense recognized in the Consolidated Statements of Income resulting from stock options, restricted stock awards, restricted stock units and ESPP rights for Western Union employees for the years ended December 31, 2008, 2007 and 2006 (in millions, except per share data). Although Western Union has not adopted an employee stock purchase plan, the Company’s employees were allowed to participate in First Data’s ESPP prior to the Spin-off. A benefit to earnings is reflected as a positive and a reduction to earnings is reflected as a negative.

 	  	Year Ended December 31,	 	
	  	2008	 	 	2007	 	 	2006	 	
Stock-based compensation expense impact on income before income taxes	  	$	(26.3	)	 	$	(50.2	)	 	$	(30.1	)	
Income tax benefit from stock-based compensation expense	  	 	7.7	 	 	 	15.1	 	 	 	9.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income impact	  	$	(18.6	)	 	$	(35.1	)	 	$	(20.4	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share:	  				 				 				
Basic	  	$	(0.03	)	 	$	(0.05	)	 	$	(0.03	)	
Diluted	  	$	(0.03	)	 	$	(0.05	)	 	$	(0.03	)	
As discussed previously, the Company incurred a pre-tax charge of $22.3 million during the year ended December 31, 2007 upon the completion of the acquisition of First Data on September 24, 2007 by an affiliate of KKR. Also included in stock-based compensation expense above for the year ended December 31, 2006 is $6.8 million of allocated stock-based compensation related to employees of First Data providing administrative services to the Company prior to the Spin-off. There was no stock-based compensation capitalized during the years ended December 31, 2008, 2007 and 2006.
As of December 31, 2008, there was $33.4 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.6 years, and there was $10.0 million of total unrecognized compensation cost, net of assumed forfeitures, related to non-vested restricted stock awards and restricted stock units which is expected to be recognized over a weighted-average period of 1.8 years.
 
128

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Fair Value Assumptions
The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of First Data stock options and ESPP rights granted to Western Union employees before the Spin-off and the value of Western Union options granted to such employees after the Spin-off.

 	  	Year Ended December 31,	 	
	  	2008	 	 	2007	 	 	2006	 	
Stock options granted (post-spin grants):	  				 				 				
Weighted-average risk-free interest rate	  	 	3.0	%	 	 	4.5	%	 	 	4.6	%	
Weighted-average dividend yield	  	 	0.2	%	 	 	0.2	%	 	 	0.2	%	
Volatility	  	 	31.8	%	 	 	23.8	%	 	 	26.4	%	
Expected term (in years)	  	 	5.9	 	 	 	6.2	 	 	 	6.6	 	
Weighted-average fair value	  	$	7.57	 	 	$	7.35	 	 	$	7.12	 	
				
Stock options granted (pre-spin grants):	  				 				 				
Weighted-average risk-free interest rate	  	 	—  	 	 	 	—  	 	 	 	4.6	%	
Weighted-average dividend yield	  	 	—  	 	 	 	—  	 	 	 	0.6	%	
Volatility	  	 	—  	 	 	 	—  	 	 	 	23.5	%	
Expected term (in years)	  	 	—  	 	 	 	—  	 	 	 	5	 	
Weighted-average fair value (pre-spin)	  	 	—  	 	 	 	—  	 	 	$	12.39	 	
				
ESPP:	  				 				 				
Weighted-average risk-free interest rate	  	 	—  	 	 	 	—  	 	 	 	4.9	%	
Weighted-average dividend yield	  	 	—  	 	 	 	—  	 	 	 	0.6	%	
Volatility	  	 	—  	 	 	 	—  	 	 	 	23.0	%	
Expected term (in years)	  	 	—  	 	 	 	—  	 	 	 	0.25	 	
Weighted-average fair value (pre-spin)	  	 	—  	 	 	 	—  	 	 	$	8.94	 	
For periods presented prior to the spin-off date of September 29, 2006, all stock-based compensation awards were made by First Data, and used First Data assumptions for volatility, dividend yield and term. Western Union assumptions, which are described in the paragraphs below, were utilized for grants made by Western Union on September 29, 2006 and subsequent thereto.
Expected volatility —Expected volatility varies by group based on the expected option term. For the Company’s Board of Directors and executives, the expected volatility for the 2008, 2007 and 2006 grants was 31.3%, 26.9% and 28.4%, respectively. The expected volatility for the Company’s non-executive employees was 31.9%, 22.8% and 24.7% for the 2008, 2007 and 2006 grants, respectively. Beginning in 2008, Western Union used a blend of implied volatility and peer group historical volatility. The Company’s peer group historical volatility was determined using companies in similar industries and/or market capitalization. The Company’s implied volatility was calculated using the market price of traded options on Western Union’s common stock. Prior to 2008, Western Union’s volatility was determined based entirely on the calculated peer group historical volatility since there was not sufficient trading history for Western Union’s common stock or traded options. Beginning in 2006, First Data used the implied volatility method for estimating expected volatility for all stock options granted and ESPP rights. First Data calculated its implied volatility using the market price of traded options on First Data’s common stock.
Expected dividend yield —The Company’s expected annual dividend yield is the calculation of the annualized Western Union dividend of $0.04 per common share divided by a rolling 12 month average Western Union stock price on each respective grant date. First Data’s dividend yield was the calculation of the annualized
 
129

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
First Data dividend amount of $0.24 divided by a rolling 12 month average First Data stock price as of the most recent grant date for which First Data granted options to Western Union employees.
Expected term —Western Union’s expected term is 5.8 years for non-executive employees, and 7.5 years for the Board of Directors and executives. The Company’s expected term of options was based upon, among other things, historical exercises (including the exercise history of First Data’s awards), the vesting term of the Company’s options, the cancellation history of the Company’s employees options in First Data stock and the options’ contractual term of ten years. First Data has also aggregated stock option awards into classes. For each class, the expected term is primarily based on the results of a study performed on the historical exercise and post-vesting employment termination behavior for similar grants. First Data’s expected terms were as follows: 4.5 years for non-executive employees, 7 years for the Board of Directors and 7.5 years for its executives. The expected term of ESPP rights were determined to be 0.25 years as purchase rights are achieved over the course of the quarter in which the employee participated in the ESPP. Once the shares have been purchased, the employee can sell their respective shares.
Risk-free interest rate —The risk-free rate for stock options granted during the period is determined by using a U.S. Treasury rate for the period that coincided with the expected terms listed above.
The assumptions used to calculate the fair value of options granted will be evaluated and revised, as necessary, to reflect market conditions and the Company’s historical experience and future expectations. The calculated fair value is recognized as compensation cost in the Company’s financial statements over the requisite service period of the entire award. Compensation cost is recognized only for those options expected to vest, with forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Company’s historical experience and future expectations. Any change in the forfeiture assumption will be accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the financial statements of the period in which the change is made. In the future, as more historical data is available to calculate the volatility of Western Union stock and the actual terms Western Union employees hold options, expected volatility and expected term may change which could substantially change the grant-date fair value of future stock option awards and, ultimately, the recorded compensation expense.
17. Segments
As previously described in Note 1, the Company classifies its businesses into two reportable segments: consumer-to-consumer and consumer-to-business. Operating segments are defined by SFAS No. 131, “ Disclosures About Segments of an Enterprise and Related Information ,” as components of an enterprise which constitute businesses, about which separate financial information is available that is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding where to allocate resources and in assessing performance.
The consumer-to-consumer reporting segment is viewed as one global network where a money transfer can be sent from one location to another, anywhere in the world. The segment is now managed as two regions, primarily to coordinate agent network management and marketing activities. The CODM makes decisions regarding resource allocation and monitors performance based on specific corridors within and across these regions, but also reviews total revenue and operating profit of each region. These regions frequently interact on transactions with consumers and share processes, systems and licenses, thereby constituting one global consumer-to-consumer money transfer network. Each region and corridor also offer generally the same services distributed by the same agent network, have the same types of customers, are subject to similar regulatory requirements, are processed on the same system, and have similar economic characteristics, allowing the geographic regions to be aggregated into one reporting segment.
 
130

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Consumer-to-consumer segment revenue typically increases sequentially from the first quarter to the fourth quarter each year and declines from the fourth quarter to the first quarter of the following year. This seasonal fluctuation is related to the holiday season in various countries in the fourth quarter.
All businesses that have not been classified into consumer-to-consumer or consumer-to-business are reported as “Other.” These businesses primarily include the Company’s money order and prepaid services businesses.
The Company’s reportable segments are reviewed separately below because each reportable segment represents a strategic business unit that offers different products and serves different markets. The business segment measurements provided to, and evaluated by, the Company’s CODM are computed in accordance with the following principles:
 
 	•	 	The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.	
 
 	•	 	Corporate and other overhead is allocated to the segments primarily based on a percentage of the segments’ revenue.	
 
 	•	 	Expenses incurred in connection with the development of certain new service offerings, including costs to develop mobile money transfer services, new prepaid service offerings and non-recurring costs incurred to effect the Spin-off are included in “Other”.	
 
 	•	 	Restructuring and related activities of $82.9 million for the year ended December 31, 2008 have not been allocated to the segments. While these items are identifiable to the Company’s segments, they are 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 3.	
 
 	•	 	In connection with the change in control of First Data, the Company incurred an accelerated stock-based compensation vesting charge of $22.3 million during the year ended December 31, 2007. Of the $22.3 million charge, $18.9 million, $3.0 million and $0.4 million were allocated to the consumer-to-consumer, consumer-to-business and other segments, respectively.	
 
 	•	 	All items not included in operating income are excluded.	
 
131

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
The following table presents the Company’s reportable segment results for the years ended December 31, 2008, 2007 and 2006, respectively (in millions):

 	  	Years Ended December 31,	
	  	2008	 	 	2007	  	2006	
Revenues:	  				 			  			
Consumer-to-Consumer:	  				 			  			
Transaction fees	  	$	3,532.9	 	 	$	3,286.6	  	$	3,059.0	
Foreign exchange revenue	  	 	893.1	 	 	 	769.3	  	 	652.4	
Other revenues	  	 	45.6	 	 	 	37.2	  	 	33.5	
	  	 	 	 	 	 	 	  	 	 	
	  	 	4,471.6	 	 	 	4,093.1	  	 	3,744.9	
Consumer-to-Business:	  				 			  			
Transaction fees	  	 	668.1	 	 	 	665.5	  	 	593.7	
Foreign exchange revenue	  	 	3.2	 	 	 	2.0	  	 	1.5	
Other revenues	  	 	48.5	 	 	 	52.4	  	 	41.0	
	  	 	 	 	 	 	 	  	 	 	
	  	 	719.8	 	 	 	719.9	  	 	636.2	
Other:	  				 			  			
Transaction fees	  	 	39.8	 	 	 	37.7	  	 	43.9	
Commission and other revenues	  	 	50.8	 	 	 	49.5	  	 	45.2	
	  	 	 	 	 	 	 	  	 	 	
	  	 	90.6	 	 	 	87.2	  	 	89.1	
	  	 	 	 	 	 	 	  	 	 	
Total revenues	  	$	5,282.0	 	 	$	4,900.2	  	$	4,470.2	
	  	 	 	 	 	 	 	  	 	 	
Operating income:	  				 			  			
Consumer-to-Consumer	  	$	1,222.7	 	 	$	1,078.3	  	$	1,069.7	
Consumer-to-Business	  	 	199.4	 	 	 	223.7	  	 	223.3	
Other	  	 	15.8	 	 	 	20.0	  	 	18.4	
	  	 	 	 	 	 	 	  	 	 	
Total segment operating income	  	 	1,437.9	 	 	$	1,322.0	  	$	1,311.4	
Restructuring and related expenses	  	 	(82.9	)	 	 	—  	  	 	—  	
	  	 	 	 	 	 	 	  	 	 	
Total consolidated operating income	  	$	1,355.0	 	 	$	1,322.0	  	$	1,311.4	
	  	 	 	 	 	 	 	  	 	 	
Assets:	  				 			  			
Consumer-to-Consumer	  	$	4,305.0	 	 	$	4,734.7	  	$	4,456.0	
Consumer-to-Business	  	 	819.5	 	 	 	885.6	  	 	740.2	
Other	  	 	453.8	 	 	 	163.9	  	 	124.9	
	  	 	 	 	 	 	 	  	 	 	
Total assets	  	$	5,578.3	 	 	$	5,784.2	  	$	5,321.1	
	  	 	 	 	 	 	 	  	 	 	
Depreciation and amortization:	  				 			  			
Consumer-to-Consumer	  	$	111.0	 	 	$	98.5	  	$	80.6	
Consumer-to-Business	  	 	21.1	 	 	 	21.8	  	 	18.1	
Other	  	 	4.0	 	 	 	3.6	  	 	4.8	
	  	 	 	 	 	 	 	  	 	 	
Total segment depreciation and amortization	  	 	136.1	 	 	$	123.9	  	$	103.5	
Restructuring and related expenses	  	 	7.9	 	 	 	—  	  	 	—  	
	  	 	 	 	 	 	 	  	 	 	
Total depreciation and amortization	  	$	144.0	 	 	$	123.9	  	$	103.5	
	  	 	 	 	 	 	 	  	 	 	
Capital expenditures:	  				 			  			
Consumer-to-Consumer	  	$	114.8	 	 	$	155.7	  	$	174.8	
Consumer-to-Business	  	 	30.5	 	 	 	28.1	  	 	21.1	
Other	  	 	8.4	 	 	 	8.3	  	 	6.4	
	  	 	 	 	 	 	 	  	 	 	
Total capital expenditures	  	$	153.7	 	 	$	192.1	  	$	202.3	

132

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
Information concerning principal geographic areas was as follows (in millions):

 	  	Years Ended December 31,	
	  	2008	  	2007	  	2006	
Revenue:	  			  			  			
United States	  	$	1,760.0	  	$	1,825.3	  	$	1,889.3	
International	  	 	3,522.0	  	 	3,074.9	  	 	2,580.9	
	  	 	 	  	 	 	  	 	 	
Total	  	$	5,282.0	  	$	4,900.2	  	$	4,470.2	
	  	 	 	  	 	 	  	 	 	
Long-lived assets:	  			  			  			
United States	  	$	162.3	  	$	172.3	  	$	157.3	
International	  	 	30.0	  	 	28.0	  	 	18.8	
	  	 	 	  	 	 	  	 	 	
Total	  	$	192.3	  	$	200.3	  	$	176.1	
	  	 	 	  	 	 	  	 	 	
The geographic split of revenue above has been determined based upon the country where a money transfer is initiated and the country where a money transfer is paid with revenue being split 50% between the two countries. Long-lived assets, consisting of “Property and equipment, net,” are presented based upon the location of the assets.
A majority of Western Union’s consumer-to-consumer transactions involve at least one non-United States location. Based on the method used to attribute revenue between countries described in the paragraph above, no individual country outside the United States accounted for more than 10% of segment revenue for the years ended December 31, 2008, 2007 and 2006. In addition, no individual agent or biller accounted for greater than 10% of consumer-to-consumer or consumer-to-business segment revenue, respectively, during these periods.
18. Subsequent Event
In February 2009, the Company entered into an agreement to acquire the money transfer business of European-based FEXCO, one of the Company’s largest agents providing services in the United Kingdom, Spain, Ireland and other European countries. Prior to the acquisition, the Company holds a 24.65% interest in FEXCO Group Holdings (FEXCO Group), which is a holding company for both the money transfer business as well as various unrelated businesses. The Company will surrender its 24.65% interest in FEXCO Group and pay €123.1 million (approximately $160 million based on currency exchange rates at deal signing) as consideration for the overall money transfer business. The acquisition is expected to close in the first half of 2009, subject to regulatory approvals and satisfaction of closing conditions. The acquisition will be recognized at 100% of the fair value of the money transfer business, which will exceed the cash consideration of €123.1 million given the non-cash consideration conveyed via the sale of our interest in FEXCO Group. The fair value of the money transfer business will be determined upon closing and is subject to fluctuation due to changes in exchange rates and other valuation inputs.
 
133

Table of Contents
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED
 
19. Quarterly Financial Information (Unaudited)
Summarized quarterly results for the years ended December 31, 2008 and 2007 are as follows (in millions):

2008 by Quarter:	  	Q1	  	Q2	  	Q3	  	Q4	  	Year Ended
December 31,
2008	
Revenues	  	$	1,265.9	  	$	1,347.1	  	$	1,377.4	  	$	1,291.6	  	$	5,282.0	
Expenses (a)	  	 	956.6	  	 	1,010.9	  	 	1,002.2	  	 	957.3	  	 	3,927.0	
Other expense, net	  	 	16.8	  	 	28.2	  	 	42.2	  	 	29.1	  	 	116.3	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Income before income taxes	  	 	292.5	  	 	308.0	  	 	333.0	  	 	305.2	  	 	1,238.7	
Provision for income taxes	  	 	85.4	  	 	76.5	  	 	92.2	  	 	65.6	  	 	319.7	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Net income	  	$	207.1	  	$	231.5	  	$	240.8	  	$	239.6	  	$	919.0	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Earnings per share:	  			  			  			  			  			
Basic	  	$	0.28	  	$	0.31	  	$	0.33	  	$	0.34	  	$	1.26	
Diluted	  	$	0.27	  	$	0.31	  	$	0.33	  	$	0.34	  	$	1.24	
						
Weighted-average shares outstanding:	  			  			  			  			  			
Basic	  	 	746.7	  	 	736.5	  	 	724.9	  	 	712.5	  	 	730.1	
Diluted	  	 	756.8	  	 	747.5	  	 	737.2	  	 	713.8	  	 	738.2	

(a)	Includes $24.2 million in the first quarter, $22.9 million in the second quarter, $3.2 million in the third quarter and $32.6 million in the fourth quarter of restructuring and related expenses. For more information, see Note 3, “Restructuring and Related Expenses.”	

2007 by Quarter:	  	Q1	  	Q2	  	Q3	  	Q4	  	Year Ended
December 31,
2007	
Revenues	  	$	1,131.0	  	$	1,202.9	  	$	1,257.2	  	$	1,309.1	  	$	4,900.2	
Expenses (b)	  	 	826.4	  	 	880.2	  	 	927.1	  	 	944.5	  	 	3,578.2	
Other expense, net	  	 	22.5	  	 	24.5	  	 	23.2	  	 	29.4	  	 	99.6	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Income before income taxes	  	 	282.1	  	 	298.2	  	 	306.9	  	 	335.2	  	 	1,222.4	
Provision for income taxes	  	 	88.9	  	 	93.7	  	 	90.6	  	 	91.9	  	 	365.1	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Net income	  	$	193.2	  	$	204.5	  	$	216.3	  	$	243.3	  	$	857.3	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Earnings per share:	  			  			  			  			  			
Basic	  	$	0.25	  	$	0.27	  	$	0.29	  	$	0.32	  	$	1.13	
Diluted	  	$	0.25	  	$	0.26	  	$	0.28	  	$	0.32	  	$	1.11	
						
Weighted-average shares outstanding:	  			  			  			  			  			
Basic	  	 	768.2	  	 	764.8	  	 	757.5	  	 	749.5	  	 	760.2	
Diluted	  	 	783.3	  	 	779.0	  	 	767.4	  	 	761.7	  	 	772.9	

(b)	Includes a non-cash pre-tax stock compensation accelerated vesting charge of $22.3 million during the third quarter of 2007. For more information, see Note 16.	
 
134

Table of Contents
 THE WESTERN UNION COMPANY
SCHEDULE I—CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
The following lists the condensed financial information for the parent company as of December 31, 2008 and 2007 and statements of income and cash flows for each of the three years in the period ended  December 31, 2008.
THE WESTERN UNION COMPANY
CONDENSED BALANCE SHEETS
(PARENT COMPANY ONLY)
(in millions, except per share amounts)

 	  	December 31,	 	
	  	2008	 	 	2007	 	
Assets	  				 				
Cash and cash equivalents	  	$	281.0	 	 	$	36.1	 	
Property and equipment, net of accumulated depreciation of $3.1 and $14.1, respectively	  	 	33.1	 	 	 	66.6	 	
Other assets	  	 	106.4	 	 	 	51.8	 	
Investment in subsidiaries	  	 	3,387.0	 	 	 	3,564.9	 	
	  	 	 	 	 	 	 	 	
Total assets	  	$	3,807.5	 	 	$	3,719.4	 	

Liabilities and Stockholders’ (Deficiency)/Equity	  				 				
Liabilities:	  				 				
Accounts payable and accrued liabilities	  	 	54.2	 	 	 	72.8	 	
Payable to subsidiaries, net	  	 	622.2	 	 	 	254.9	 	
Borrowings	  	 	3,137.5	 	 	 	3,338.0	 	
Other liabilities	  	 	1.7	 	 	 	3.0	 	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	3,815.6	 	 	 	3,668.7	 	
			
Stockholders’ (Deficiency)/Equity:	  				 				
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued	  	 	—  	 	 	 	—  	 	
Common stock, $0.01 par value; 2,000 shares authorized and 709.6 and 749.8 shares issued and outstanding at December 31, 2008 and 2007, respectively	  	 	7.1	 	 	 	7.5	 	
Capital deficiency	  	 	(14.4	)	 	 	(341.1	)	
Retained earnings	  	 	29.2	 	 	 	453.1	 	
Accumulated other comprehensive loss	  	 	(30.0	)	 	 	(68.8	)	
	  	 	 	 	 	 	 	 	
Total stockholders’ (deficiency)/equity	  	 	(8.1	)	 	 	50.7	 	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ (deficiency)/equity	  	$	3,807.5	 	 	$	3,719.4	 	
	  	 	 	 	 	 	 	 	
See Notes to Condensed Financial Statements.
 
135

Table of Contents
THE WESTERN UNION COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(PARENT COMPANY ONLY)
(in millions)

 	  	For the Years Ended December 31,	 	
	  	2008	 	  	2007	 	  	2006	 	
Revenues	  	$	—  	 	  	$	—  	 	  	$	—  	 	
Expenses	  	 	—  	 	  	 	—  	 	  	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Operating income	  	 	—  	 	  	 	—  	 	  	 	—  	 	
Interest income	  	 	2.8	 	  	 	1.1	 	  	 	1.9	 	
Interest expense	  	 	(171.0	)	  	 	(188.7	)	  	 	(34.7	)	
Derivative losses, net	  	 	—  	 	  	 	—  	 	  	 	(0.6	)	
	  	 	 	 	  	 	 	 	  	 	 	 	
Loss before equity in earnings of affiliates and income taxes	  	 	(168.2	)	  	 	(187.6	)	  	 	(33.4	)	
Equity in earnings of affiliates, net of tax	  	 	1,022.3	 	  	 	972.3	 	  	 	934.9	 	
Income tax benefit	  	 	64.9	 	  	 	72.6	 	  	 	12.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net income	  	$	919.0	 	  	$	857.3	 	  	$	914.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
See Notes to Condensed Financial Statements.
 
136

Table of Contents
THE WESTERN UNION COMPANY
CONDENSED STATEMENTS OF CASH FLOW
(PARENT COMPANY ONLY)
(in millions)

 	  	For the Years Ended December 31,	 	
 	  	2008	 	 	2007	 	 	2006	 	
Cash flows from operating activities	  				 				 				
Net cash provided by operating activities	  	$	1,145.2	 	 	$	772.2	 	 	$	2,914.2	 	
				
Cash flows from investing activities	  				 				 				
Purchases of property and equipment	  	 	(0.1	)	 	 	(2.0	)	 	 	(0.6	)	
Capital contributed to subsidiary	  	 	(0.2	)	 	 	(379.9	)	 	 	(2,400.0	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(0.3	)	 	 	(381.9	)	 	 	(2,400.6	)	
				
Cash flows from financing activities	  				 				 				
Advances from subsidiaries	  	 	397.7	 	 	 	166.2	 	 	 	83.2	 	
Proceeds from issuance of borrowings	  	 	500.0	 	 	 	—  	 	 	 	1,986.0	 	
Principal payments on borrowings	  	 	(500.0	)	 	 	—  	 	 	 	—  	 	
Net (repayments)/proceeds from commercial paper	  	 	(255.3	)	 	 	13.6	 	 	 	324.6	 	
Net (repayments)/proceeds from net borrowings under credit facilities	  	 	—  	 	 	 	(3.0	)	 	 	3.0	 	
Proceeds from exercise of options	  	 	300.5	 	 	 	216.1	 	 	 	80.8	 	
Cash dividends to public stockholders	  	 	(28.4	)	 	 	(30.0	)	 	 	(7.7	)	
Common stock repurchased	  	 	(1,314.5	)	 	 	(726.8	)	 	 	(19.9	)	
Dividends to First Data	  	 	—  	 	 	 	—  	 	 	 	(2,953.9	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in financing activities	  	 	(900.0	)	 	 	(363.9	)	 	 	(503.9	)	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net change in cash and cash equivalents	  	 	244.9	 	 	 	26.4	 	 	 	9.7	 	
Cash and cash equivalents at beginning of year	  	 	36.1	 	 	 	9.7	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of year	  	$	281.0	 	 	$	36.1	 	 	$	9.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
See Notes to Condensed Financial Statements.
 
137

Table of Contents
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The Western Union Company (“the Parent”) is a holding company that conducts substantially all of its business operations through its subsidiaries. Under a parent company only presentation, the Parent’s investments in its consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. The financial statements for the periods presented prior to September 29, 2006 do not include all of the actual expenses that would have been incurred had the Parent been a stand-alone entity during the period presented and do not reflect the Parent’s results of operations, financial position and cash flows had it been a stand-alone company during the period presented. These financial statements should be read in conjunction with The Western Union Company’s consolidated financial statements.
2. Restricted Net Assets
Certain assets of the Parent’s subsidiaries totaling approximately $193 million constitute restricted net assets, as there are legal or regulatory limitations on transferring such assets outside of the countries where the respective assets are located, or because they constitute undistributed earnings of affiliates of the Parent accounted for under the equity method of accounting. As of December 31, 2008, the Parent is in a stockholders’ deficiency position of $8.1 million, and as such, all of the restricted net assets of the Parent’s subsidiaries currently exceeds 25% of the consolidated net assets of the Parent and its subsidiaries, thus requiring this Schedule I, “Condensed Financial Information of the Registrant”.
3. Related Party Transactions
Excess cash generated from operations of the Parent’s subsidiaries that is not required to meet certain regulatory requirements is paid periodically to the Parent and is reflected as “Payable to subsidiaries, net” in the Condensed Balance Sheet as of December 31, 2008. The Parent’s subsidiaries periodically distribute excess cash balances to the Parent in the form of a dividend.
During the year ended December 31, 2006 and in connection with the spin-off from First Data on September 29, 2006, the Parent paid a dividend to First Data as consideration for the contribution by First Data of its money transfer and consumer payments businesses (see Note 1 to The Western Union Company Consolidated Financial Statements).
The Parent files a consolidated U.S. federal income tax return, and also a number of consolidated state income tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax payments on behalf of the consolidated group. The Parent’s provision for income taxes has been computed as if it were a separate tax-paying entity.
4. Commitments and Contingencies
The Parent provides guarantees of the performance on property leases to its subsidiaries for properties located in various facilities in the United States and Mexico.
The Company provides a parental guarantee to one of its subsidiaries for letters of credit to certain agents. These letters of credit are amended quarterly. As of December 31, 2008, $33.6 million of letters of credit were outstanding.
 
138

Table of Contents

 ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	
None.
 
 ITEM 9A.	CONTROLS AND PROCEDURES	
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our controls and procedures related to our reporting and disclosure obligations as of December 31, 2008, which is the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2008, the disclosure controls and procedures were effective to ensure that information required to be disclosed by us, including our consolidated subsidiaries, in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported, as applicable, within the time periods specified in the rules and forms of the Securities and Exchange Commission, and are designed to ensure that information required to be disclosed by us in the reports that we file or submit are accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Management’s report on Western Union’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934), and the related Report of Independent Registered Public Accounting Firm, are set forth under Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes that occurred during the fiscal quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
As announced on March 14, 2008, we have closed substantially all of our facilities in Missouri and Texas. These closures resulted in the elimination or relocation of employees who, among other functions, staffed our money transfer settlement and operational accounting functions. As a result of this transition of the operations to other of our facilities, the personnel responsible for executing controls over these processes changed. These new locations began processing transactions in the third quarter of 2008. Management believes it took the necessary steps to monitor and maintain appropriate internal controls during the period of change.
 
 ITEM 9B.	OTHER INFORMATION	
Equity Grants
On February 17, 2009, the Compensation and Benefits Committee (the “Compensation Committee”) of the Company’s Board of Directors granted its executives long-term incentive awards under the Company’s 2006 Long-Term Incentive Plan (“LTIP”). The awards consisted of performance-based cash awards, stock option awards and restricted stock units. The performance-based cash awards are based on strategic performance objectives (revenue and channel diversification, technology enhancements and customer satisfaction) for the next two years and, subject to the terms of the award agreements, are payable in equal installments on December 31, 2010 and December 31, 2011. The Compensation Committee has the discretion to pay up to 200% of the target award, based on actual performance. All nonqualified stock option grants have ten year terms and are subject to four year graded vesting schedules (25% vesting each year for four years), subject to the terms and conditions of the LTIP and the Severance Plan. All restricted stock unit awards, other than the Career Shares, are subject to
 
139

Table of Contents
three year cliff vesting schedules (no vesting during the first three years, after which the awards are 100% vested), subject to the terms and conditions of the LTIP and the Severance Plan. The Career Shares are subject to four year cliff vesting, subject to the terms and conditions of the LTIP and the Severance Plan. All restricted stock unit awards are to be settled in shares of Western Union common stock.
The Company’s named executive officers received the following awards:

 	  	Options	  	Restricted Stock
Units	  	Performance-Based
Cash Award	  	Restricted
Stock Unit
“Career
Shares”	
Christina A. Gold	  	313,927	  	154,582	  	$	1,833,333	  	168,635	
Scott T. Scheirman	  	57,078	  	28,106	  	$	333,333	  	—  	
Guy Battista	  	45,663	  	22,485	  	$	266,667	  	—  	
Hikmet Ersek	  	142,695	  	70,265	  	$	833,333	  	84,318	
Ian Marsh did not receive an award under the terms of his October 2008 Retirement Transition and Advisory Agreement.
Amendments to the Long-Term Incentive Plan and Severance Plan
On February 17, 2009, the Compensation Committee amended the Company’s Severance Plan and LTIP. The amendments provide for a change in control “double trigger” vesting of LTIP awards made on or after February 17, 2009. Upon a change in control of the Company, awards made to an executive (or any other employee) under the LTIP on or after February 17, 2009 will not immediately vest. They will fully vest if the executive is also involuntarily terminated other than for “cause” or the executive terminates for “good reason” within twenty-four months after the change in control. The amendments also provide that if an executive is terminated other than for cause without a change in control, unvested option awards made on or after February 17, 2009 will vest on a prorated basis effective on the termination date. The proration is calculated on a grant-by-grant basis by multiplying the unvested portion of each award by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the termination date and the denominator of which is the number of days between the grant date and the date the award would have become fully vested had the executive not terminated his or her employment, treating each separate vesting installment of the option as a separate grant. Unvested option awards made prior to February 17, 2009 remain subject to the terms of the original grant and continue to vest for an established period of time after the termination date, typically two years. This description of the amended Severance Plan and LTIP is qualified in its entirety by reference to the full text of those documents, which are filed as Exhibit 10.13 (Severance Plan) and Exhibit 10.10 (LTIP) to this Annual Report on Form 10-K and are incorporated herein by reference.
 
140

Table of Contents
 PART III
 
 ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	
Except for the information required by this item with respect to our executive officers included in Item 1 of Part I of this Annual Report on Form 10-K and our Code of Ethics, the information required by this Item 10 is incorporated herein by reference to the discussion in “Proposals Submitted for Shareholder Vote—Proposal 1—Election of Directors,” “Board of Directors Information,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Corporate Governance—Committees of the Board of Directors” of our definitive proxy statement for the 2009 annual meeting of stockholders.
Code of Ethics
The Company’s Directors’ Code of Conduct, Code of Ethics for Senior Financial Officers, Auditing Complaint Procedure, Professional Conduct Policy for Attorneys, and the Code of Conduct are available without charge through the “Corporate Governance” portion of the company’s web site, www.westernunion.com, or by writing to the attention of: Investor Relations, The Western Union Company, 12500 East Belford Avenue, Englewood, Colorado 80112. In the event of an amendment to, or a waiver from, the Company’s Code of Ethics for Senior Financial Officers, the Company intends to post such information on its website, www.westernunion.com.
 
 ITEM 11.	EXECUTIVE COMPENSATION	
The information required by this Item 11 is incorporated herein by reference to the discussion in “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation of Directors,” and “Compensation and Benefits Committee Report” of our definitive proxy statement for the 2009 annual meeting of stockholders; provided that the Compensation and Benefits Committee Report shall not be deemed filed in this Form 10-K.
 
 ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	
The information required by this Item 12 is incorporated herein by reference to the discussion in “Stock Beneficially Owned by Directors, Executive Officers and Our Largest Stockholders,” and “Equity Compensation Plan Information” of our definitive proxy statement for the 2009 annual meeting of stockholders.
 
 ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	
The information required by this Item 13 is incorporated herein by reference to the discussion of “Corporate Governance—Independence of Directors” of our definitive proxy statement for the 2009 annual meeting of stockholders.
 
 ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	
The information required by this Item 14 is incorporated herein by reference to the discussion in “Proposal 2 —Ratification of Selection of Auditors” of our definitive proxy statement for the 2009 annual meeting of stockholders.
 
141

Table of Contents
 PART IV
 
 ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	
(a) The following documents are filed as part of this report:
1. Financial Statements (See Index to Consolidated Financial Statements on page 78 of this Annual Report on Form 10-K);
2. Financial Statement Schedule
(See Index to Consolidated Financial Statements on page 78 of this Annual Report on Form 10-K);
3. The exhibits listed in the “Exhibit Index” attached to this Annual Report on Form 10-K.
 
142

Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 	  	THE WESTERN UNION COMPANY (Registrant)	
			
February 18, 2009	  	By:	 	/ S /    C HRISTINA A. G OLD        	
	  		 	Christina A. Gold, President and
Chief Executive Officer	
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and the dates indicated.

Signature	  	Title	 	Date	
			
/ S /    C HRISTINA A. G OLD        
Christina A. Gold	  	President, Chief Executive Officer and Director
(Principal Executive Officer)	 	February 18, 2009	
			
/ S /    S COTT T. S CHEIRMAN        
Scott T. Scheirman	  	Executive Vice President and Chief Financial Officer
(Principal Financial Officer)	 	February 18, 2009	
			
/ S /    A MINTORE T.X. S CHENKEL        
Amintore T.X. Schenkel	  	Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)	 	February 18, 2009	
			
/ S /    J ACK M. G REENBERG        
Jack M. Greenberg	  	Non-Executive Chairman of the Board of Directors	 	February 18, 2009	
			
/ S /    D INYAR S. D EVITRE        
Dinyar S. Devitre	  	Director	 	February 18, 2009	
			
/ S /    B ETSY D. H OLDEN        
Betsy D. Holden	  	Director	 	February 18, 2009	
			
/ S /    A LAN J. L ACY        
Alan J. Lacy	  	Director	 	February 18, 2009	
			
/ S /    L INDA F AYNE L EVINSON        
Linda Fayne Levinson	  	Director	 	February 18, 2009	
			
/ S /    R OBERTO G. M ENDOZA        
Roberto G. Mendoza	  	Director	 	February 18, 2009	
			
/ S /    M ICHAEL A. M ILES , J R .        
Michael A. Miles, Jr.	  	Director	 	February 18, 2009	
			
/ S /    D ENNIS S TEVENSON        
Dennis Stevenson	  	Director	 	February 18, 2009	
 
143

Table of Contents
EXHIBIT INDEX

Exhibit
Number	  	Description	
2.1	  	Separation and Distribution Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company (filed as Exhibit 2.1 to the 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 (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (registration no. 333-137665) and incorporated herein by reference thereto).	
		
3.2	  	The Western Union Company By-laws, as amended on December 11, 2008 (filed as Exhibit 3.1(ii) to the Company’s Current Report on Form 8-K filed on December 17, 2008 and incorporated herein by reference thereto).	
		
4.1	  	Indenture, dated as of September 29, 2006, between The Western Union Company and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the 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 5.400% Note due 2011 (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on November 20, 2006 and incorporated herein by reference thereto).	
		
4.9	  	Form of 6.200% Note due 2036 (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on November 20, 2006 and incorporated herein by reference thereto).	
		
4.10	  	Form of 5.400% Note due 2011 (filed as Exhibit 4.13 to the Company’s Registration Statement on Form S-4 filed on December 22, 2006 and incorporated herein by reference thereto).	
		
4.11	  	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).	
		
4.12	  	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).	
 
144

Table of Contents

Exhibit
Number	  	Description	
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	  	Retail Money Order Issuance and Management Agreement, dated as of August 14, 2006, between Integrated Payment Systems Inc. and Western Union Financial Services Inc. (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 3, 2006 and incorporated herein by reference thereto).	
		
10.6	  	Agreement dated as of July 18, 2008, among Integrated Payment Systems Inc. and Western Union Financial Services, Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 23, 2008 and incorporated herein by reference thereto).	
		
10.7	  	Amended and Restated Credit Agreement, dated as of September 28, 2007, among The Western Union Company, the banks named therein, as lenders, Wells Fargo Bank, National Association, as syndication agent, Citibank, N.A., as administrative agent, and Citigroup Global Markets Inc. and Wells Fargo Bank, National Association, as joint lead arrangers and joint book runners (filed as Exhibit 10 to the Company’s Current Report on Form 8-K filed on October 3, 2007 and incorporated herein by reference thereto).	
		
10.8	  	Credit Agreement, dated as of December 5, 2008, among The Western Union Company, the banks named therein, as lenders, Bank of America, N.A., as a syndication agent, 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 December 11, 2008 and incorporated herein by reference thereto).	
		
10.9	  	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).*	
		
10.10	  	The Western Union Company 2006 Long-Term Incentive Plan, as Amended and Restated Effective February 17, 2009.*	
		
10.11	  	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).*	
		
10.12	  	The Western Union Company Non-Employee Director Deferred Compensation Plan, as Amended and Restated Effective December 31, 2008.*	
		
10.13	  	The Western Union Company Severance/Change in Control Policy, as Amended and Restated Effective February 17, 2009.*	
		
10.14	  	The Western Union Company Senior Executive Annual Incentive Plan (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2007 and incorporated herein by reference thereto).*	
 
145

Table of Contents

Exhibit
Number	  	Description	
10.15	  	The Western Union Company Supplemental Incentive Savings Plan, as Amended and Restated Effective December 31, 2008.*	
		
10.16	  	The Western Union Company Grandfathered Supplemental Incentive Savings Plan (filed as Exhibit 10.17 to the Company’s Current Report on Form 8-K filed on October 3, 2006 and incorporated herein by reference thereto).*	
		
10.17	  	Form of Unrestricted Stock Unit Award Agreement Under The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (filed as Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*	
		
10.18	  	Form of Nonqualified Stock Option Award Agreement Under The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (filed as Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 and incorporated herein by reference thereto).*	
		
10.19	  	Form of Restricted Stock Award Agreement for Executive Committee Members Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.20 to the Company’s Quarterly Report on Form 10-Q filed on November 8, 2006 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 Executive Committee Members Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan.*	
		
10.28	  	Form of Nonqualified Stock Option Award Agreement for Executive Committee Member Residing in Austria Under The Western Union Company 2006 Long-Term Incentive Plan.*	
 
146

Table of Contents

Exhibit
Number	  	Description	
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.*	
		
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.*	
		
10.31	  	Form of Restricted Stock Unit Award Agreement (Career Shares) for Executive Committee Members Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan.*	
		
10.32	  	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.*	
		
10.33	  	Form of Cash Performance Grant Award Agreement for Executive Committee Members.*	
		
10.34	  	Employment Agreement, dated as of April 29, 1999, between Western Union Financial Services GmbH and Hikmet Ersek (filed as Exhibit 10.12 to the Company’s Registration Statement on Form 10 (file no. 001-32903) and incorporated herein by reference thereto).*	
		
10.35	  	Letter Agreement, dated May 22, 2008, between The Western Union Company and Stewart A. Stockdale (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 5, 2008 and incorporated herein by reference thereto).*	
		
10.36	  	Employment Agreement, dated as of January 30, 2004, between Western Union Hong Kong Limited and Ian Marsh (filed as Exhibit 10.11 to the Company’s Registration Statement on Form 10 (file no. 001-32903) and incorporated herein by reference thereto).*	
		
10.37	  	Retirement and Advisory Agreement dated October 30, 2008 by and between Western Union Financial Services Hong Kong Limited and Ian K. Marsh (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 3, 2008 and incorporated herein by reference thereto).*	
		
12	  	Computation of Ratio of Earnings to Fixed Charges	
		
14	  	The Western Union Company Code of Ethics for Senior Financial Officers (filed as Exhibit 14 to the Company’s Annual Report on Form 10-K filed on February 27, 2007 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	
		
32.1	  	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code	

*	Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.	
 
147

Exhibit 10.10
THE WESTERN UNION COMPANY
2006 LONG-TERM INCENTIVE PLAN
(As Amended and Restated on February 17, 2009)
I. INTRODUCTION
1.1. Purposes . The purposes of The Western Union Company 2006 Long-Term Incentive Plan, as amended and restated on February 17, 2009, (the “Plan”) are (i) to advance the interests of The Western Union Company (the “Company”) by attracting and retaining high caliber employees, and other key individuals who perform services for the Company, a Subsidiary or an Affiliate, (ii) to align the interests of the Company’s stockholders and recipients of awards under this Plan by increasing the proprietary interest of such recipients in the Company’s growth and success and (iii) to motivate award recipients to act in the long-term best interests of the Company and its stockholders. 
1.2. Definitions .
“ 2006 LTIP ” shall mean The Western Union Company 2006 Long-Term Incentive Plan as adopted on September 28, 2006 by First Data in its capacity as the sole stockholder of the Company.
“ Affiliate ” shall mean any entity of which the Company owns or controls, directly or indirectly, less than 50% but at least 20% of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Agreement ” shall mean the written agreement evidencing an award hereunder between the Company and the recipient of such award and shall include any terms and conditions that may apply to such award.
“ Board ” shall mean the Board of Directors of the Company.
“ Bonus Stock ” shall mean shares of Common Stock that are not subject to a Restriction Period or Performance Measures.
“ Bonus Stock Award ” shall mean an award of Bonus Stock.
“ Cause ” shall mean the willful and continued failure to substantially perform the duties assigned by the Company, a Subsidiary or an Affiliate (other than a failure resulting from the award recipient’s Disability), the willful engaging in conduct which is demonstrably injurious to the Company, a Subsidiary or an Affiliate (monetarily or otherwise), any act of dishonesty, the commission of a felony, the continued failure to meet performance standards, excessive absenteeism, or a significant violation of any statutory or common law duty of loyalty to the Company, a Subsidiary or an Affiliate.

“ Change in Control ” shall mean:
(a) the acquisition by any individual, entity or group (a “ Person ”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of either (i) the then outstanding shares of common stock of the Company (the “ Outstanding Common Stock ”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Voting Securities ”); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this definition; provided further, that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of 25% or more of the Outstanding Common Stock or 25% or more of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(b) The cessation of individuals, who constitute the Board (the “ Incumbent Board ”) as of the date this Plan is adopted by the Board, to constitute at least a majority of such Incumbent Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(c) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “ Corporate Transaction ”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
 
- 2 -

(d) the consummation of a plan of complete liquidation or dissolution of the Company.
“ Code ” shall mean the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
“ Committee ” shall mean the Compensation and Benefits Committee of the Board or its delegate, or any other committee comprised entirely of “non-employee” directors within the meaning of Section 16 of the Exchange Act that the Board may designate to administer this Plan.
“ Common Stock ” shall mean the common stock of the Company.
“ Company ” has the meaning specified in Section 1.1.
“ Corporate Transaction ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Disability ” shall mean the inability of the holder of an award to perform substantially such holder’s duties and responsibilities due to a physical or mental condition (i) that would entitle such holder to benefits under the Company’s Long-Term Disability Plan (or similar disability plan of the Company, a Subsidiary or an Affiliate in which such holder is a participant) or if the Committee deems it relevant, any disability rights provided as a matter of local law or (ii) if such holder is not eligible for long-term disability benefits under any plan sponsored by the Company, a Subsidiary, or an Affiliate, that would, as determined by the Committee, entitle such holder to benefits under the Company’s Long-Term Disability Plan if such holder were eligible therefor. In the case of Incentive Stock Options, the term “Disability” shall have the same meaning as “Permanent and Total Disability” as such term is defined in this Section 1.2.
“ Employee Matters Agreement ” shall mean the agreement entered into by the Company and First Data as of September 29, 2006.
“ Exchange Act ” shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Fair Market Value ” shall mean the closing price of a share of Common Stock as reported on the New York Stock Exchange trading on a “when issued” basis or in the New York Stock Exchange Composite Transactions, as the case may be, on the date as of which such value is being determined; provided, however, that if there shall be no reported transactions for such date, Fair Market Value shall be based on the appropriate closing price on the next preceding date for which transactions were reported; and provided further that if Fair Market Value for any date cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate. Notwithstanding the preceding sentence, solely for purposes of determining an award holder’s tax payment obligations under Section 5.5, in lieu of the definition of Fair Market Value in the preceding sentence, the Committee may determine that Fair Market Value shall mean the average of the high and low transaction prices of a share of Common Stock as reported in the New York Stock Exchange Composite Transactions on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported.
 
- 3 -

“ Family Entity ” shall mean a trust in which one or more Family Members have more than fifty percent of the beneficial interest, a foundation in which the award holder and/or one or more Family Members control the management of assets and any other entity in which the award holder and/or one or more Family Members own more than fifty percent of the voting interests.
“ Family Member ” shall mean an award holder’s spouse, parent, child, stepchild, grandchild, sibling, mother or father-in-law, son or daughter-in-law, stepparent, grandparent, former spouse, niece, nephew or brother or sister-in-law, including adoptive relationships, or any person sharing the award holder’s household (other than a tenant or employee).
“ First Data ” shall mean First Data Corporation, including any subsidiary or affiliate thereof. A subsidiary of First Data Corporation shall mean any entity of which First Data Corporation owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power). An affiliate of First Data Corporation shall mean any entity of which First Data Corporation owns or controls, directly or indirectly, less than 50% of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Incentive Stock Option ” shall mean an option to purchase shares of Common Stock that meets the requirements of Section 422 of the Code, or any successor provision, which is intended by the Committee to constitute an Incentive Stock Option.
“ Incumbent Board ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Mature Shares ” shall mean previously-acquired shares of Common Stock for which the holder thereof has good title, free and clear of all liens and encumbrances and which such holder either (i) has held for at least six months or (ii) has purchased on the open market.
“ Nonqualified Stock Option ” shall mean an option (including a Purchased Stock Option) to purchase shares of Common Stock which is not an Incentive Stock Option.
“ Outstanding Common Stock ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
“ Outstanding Voting Securities ” shall have the meaning set forth in the definition of “Change in Control” in this Section 1.2.
 
- 4 -

“ Performance Grant ” shall mean an award conferring a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive shares of Common Stock, Restricted Stock, Restricted Stock Units, cash, or any combination thereof, as determined by the Committee or as evidenced in the Agreement relating to such Performance Grant.
“ Performance Measures ” shall mean the criteria and objectives that may be established by the Committee, which must be satisfied or met (i) as a condition to the exercisability of all or a portion of a Stock Option or SAR, (ii) as a condition to the grant of a Stock Award or (iii) during the applicable Restriction Period or Performance Period as a condition to the holder’s receipt, in the case of a Stock Award, of the shares of Common Stock subject to such award and/or of payment with respect to such award, or, in the case of a Performance Grant, of the shares of Common Stock, Restricted Stock or Restricted Stock Units subject to such award and/or of payment with respect to such award. Such criteria and objectives may include one or more of the following: the attainment by a share of Common Stock of a specified value within or for a specified period of time, earnings per share, earnings before interest expense and taxes, return to stockholders (including dividends), return on equity, earnings, revenues, cash flow or cost reduction goals, operating income, pretax return on total capital, economic value added, or any combination of the foregoing. Such criteria and objectives may relate to results obtained by the individual, the Company, a Subsidiary, an Affiliate, or any business unit or division thereof, or may apply to results obtained relative to a specific industry or a specific index. If the Committee desires that compensation payable pursuant to any award subject to Performance Measures be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the Performance Measures (i) shall be established by the Committee no later than the end of the first quarter of the Performance Period or Restriction Period, as applicable (or such other time designated by the United States Internal Revenue Service) and (ii) shall satisfy all other applicable requirements imposed under United States Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such Performance Measures be stated in terms of an objective formula or standard.
“ Performance Period ” shall mean any period designated by the Committee or specified in an Agreement during which the Performance Measures applicable to a Performance Grant shall be measured.
“ Permanent and Total Disability ” shall have the meaning set forth in Section 22(e)(3) of the Code or any successor thereto.
“ Person ” shall have the meaning set forth in the definition of “Change in Control” set forth in this Section 1.2.
“ Plan ” shall have the meaning set forth in Section 1.1.
“ Plan Share Limit ” shall have the meaning set forth in Section 1.5.
“ Post-Termination Exercise Period ” shall mean the period specified in or pursuant to Section 2.3(a), Section 2.3(b), Section 2.3(d) or Section 2.3(e) following termination of employment with or service to the Company during which a Stock Option or SAR may be exercised.
 
- 5 -

“ Purchased Stock Option ” shall mean a Nonqualified Stock Option that is sold to eligible individuals at a price determined by the Committee, has an exercise price equal to the Fair Market Value of the Common Stock subject to such Stock Option on the date such Stock Option is sold to the eligible individual, and contains such additional terms and conditions as the Committee deems appropriate.
“ Related Employment ” shall mean the employment or performance of services by an individual for an employer that is neither the Company nor a Subsidiary nor an Affiliate, provided that (i) such employment or performance of services is undertaken by the individual at the request of the Company, a Subsidiary or an Affiliate, (ii) immediately prior to undertaking such employment or performance of services, the individual was employed by or performing service for the Company, a Subsidiary, or an Affiliate or was engaged in Related Employment and (iii) such employment or performance of services is in the best interests of the Company as determined by the Committee and is recognized by the Committee, in its discretion, as Related Employment. The death or Disability of an individual or his or her involuntary termination of employment during a period of Related Employment shall be treated, for purposes of this Plan, as if the death, Disability or involuntary termination had occurred while the individual was employed by or performing services for the Company, a Subsidiary or an Affiliate.
“ Replacement and Substitute Award ” shall mean a Stock Option, Restricted Stock Award, or Restricted Stock Unit Award granted in connection with the spin-off of the Company to certain current and former employees and directors of First Data pursuant to the terms of the Employee Matters Agreement.
“ Restricted Stock ” shall mean shares of Common Stock which are subject to a Restriction Period.
“ Restricted Stock Award ” shall mean an award of Restricted Stock under this Plan.
“ Restricted Stock Unit ” shall mean the right to receive one share of Common Stock or the Fair Market Value thereof in cash, which shall be contingent upon the expiration of a specified Restriction Period and subject to such additional restrictions as may be contained in the Agreement relating thereto. The Committee shall specify in the Agreement whether a Restricted Stock Unit Award shall be payable in Common Stock, cash, or any combination thereof.
“ Restricted Stock Unit Award ” shall mean an award of Restricted Stock Units under this Plan.
“ Restriction Period ” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award or (ii) the vesting conditions applicable to a Restricted Stock Unit Award shall remain in effect.
“ Retirement ” shall mean an employee’s termination of employment with or service to the Company by reason of retirement on or after (i) age 65, or (ii) age 55, provided the employee has completed at least 10 Years of Service.
 
- 6 -

“ SAR ” shall mean the right to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.
“ Stock Award ” shall mean a Restricted Stock Award, a Restricted Stock Unit Award, or a Bonus Stock Award.
“ Stock Option ” shall mean a Nonqualified Stock Option or an Incentive Stock Option.
“ Subsidiary ” shall mean any entity of which the Company owns or controls, directly or indirectly, 50% or more of the outstanding shares of stock normally entitled to vote for the election of directors (or comparable equity participation and voting power).
“ Tax Date ” shall have the meaning set forth in Section 5.5.
“ Ten Percent Holder ” shall have the meaning set forth in Section 2.1(a).
“ Years of Service ” shall mean (i) the number of years of service credited to an individual under the Company’s Incentive Savings Plan (“ISP”) or (ii) if the individual is not eligible to participate in the ISP, the number of such individual’s years of service, computed as if the individual had been eligible to participate in the ISP while employed by the Company or a Subsidiary, provided, however, that unless otherwise provided in the Agreement, the computed number of years of service shall not include any period of an individual’s employment with an Affiliate.
1.3. Administration . This Plan shall be administered by the Committee. The Committee may grant any one or a combination of the following awards under this Plan to eligible persons: (i) Stock Options (in the form of Nonqualified Stock Options or Incentive Stock Options), (ii) SARs, (iii) Restricted Stock Awards, (iv) Restricted Stock Unit Awards, (v) Bonus Stock Awards, and (vi) Performance Grants.
The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan and determine the form, amount and timing of each award to such persons, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award.
The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof, establish, amend and revoke rules and regulations it deems necessary or desirable for the administration of this Plan, adopt sub-plans applicable to specific Subsidiaries, Affiliates or locations and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities to the extent permitted under local law. The Committee may require, as a condition to the issuance, exercise, settlement or acceptance of an award under this Plan, that the award recipient agree to mandatory arbitration to settle any disputes relating to such award. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive.
 
- 7 -

In exercising its power and authority hereunder with respect to Replacement and Substitute Awards held by current and former employees (other than Business Employees, as such term is defined in the Employee Matters Agreement) and directors of First Data (and their respective transferees), the Company shall (i) act in good faith and (ii) cooperate with and give due regard to any information provided by First Data. In addition, with respect to such Replacement and Substitute Awards, the Company shall not, without the prior written consent of the First Data Compensation Committee, take any discretionary action to accelerate vesting of any such awards.
To the extent permitted by applicable law, the Committee may delegate some or all of its power and authority hereunder to another entity or committee, a member of the Board, or one or more officers of the Company as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority to another entity or committee, a member of the Board, or one or more officers of the Company with regard to (i) the grant of an award to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the period an award hereunder to such employee would be outstanding, (ii) the selection for participation in this Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer or other person, and (iii) any decision regarding the impact of a Change in Control on awards issued under the Plan.
No member of the Committee, and no entity, committee, member of the Board or officer to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Committee and such entities, committees, members of the Board or officers shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law.
A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.
1.4. Eligibility . All employees of the Company, Subsidiaries and Affiliates and other individuals who perform services for the Company, a Subsidiary or an Affiliate are eligible to receive awards under this Plan, as the Committee in its sole discretion may select from time to time. In connection with the spin-off of the Company, certain current and former employees and directors of First Data will receive Replacement and Substitute Awards. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time.
1.5. Shares Available .
(a) Plan Share Limit . Subject to adjustment as provided in Section 5.7, 120,000,000 shares of Common Stock shall be available under this Plan (the “Plan Share Limit”).
 
- 8 -

(b) Deductions . Shares of Common Stock subject to Stock Options and SARs shall apply against and reduce the Plan Share Limit as one share for every one share subject thereto. Shares of Common Stock subject to Stock Awards and Performance Grants shall apply against and reduce the Plan Share Limit as one share for every one share subject thereto or payable pursuant thereto; provided, however, that if and during any period when more than 30,000,000 of the shares of Common Stock available under the Plan Share Limit are subject to Stock Awards and Performance Grants, the remaining shares of Common Stock available under the Plan Share Limit shall be reduced by three shares for every one share awarded pursuant to Stock Awards and Performance Grants in excess of 30,000,000 of the Plan Share Limit. Dividend equivalents paid in cash with respect to awards shall not apply against or reduce the Plan Share Limit.
(c) Increases . The Plan Share Limit, as reduced pursuant to Section 1.5(b), shall be increased (but not above the number of shares set forth in Section 1.5(a)) by shares of Common Stock subject to an outstanding award that are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award. The Plan Share Limit shall not be increased by (i) shares of Common Stock delivered or withheld to pay all or a portion of the exercise price of an award, (ii) shares of Common Stock delivered or withheld to satisfy all or a portion of the tax withholding obligations relating to an award, (iii) shares subject to a SAR that is exercised, whether or not shares of Common Stock are issued to the Participant upon exercise of the SAR, or (iv) shares of Common Stock that are repurchased by the Company with the proceeds from the exercise of an award. Increases in the Plan Share Limit pursuant to this Section 1.5(c) shall be made in a manner consistent with the Plan Share Limit deductions in effect at the time such increase occurs under Section 1.5(b).
(d) Performance-based Compensation . To the extent necessary for an award to be qualified performance-based compensation under Section 162(m) of the Code, the maximum aggregate number of shares of Common Stock with respect to which Stock Options, SARs, Stock Awards or Performance Grants may be issued to any individual during a calendar year shall be one-half of one percent of the total number of outstanding shares of Common Stock of the Company as of the preceding December 31 st . The maximum amount of cash payable during a calendar year to any person in connection with a Performance Grant shall be $8,000,000.
(e) Source of Shares . Shares of Common Stock shall be made available from authorized but unissued shares, treasury shares, reacquired shares, or any combination thereof.
1.6 Employment . Unless otherwise expressly provided herein, references to “employment” with the Company or “employment with or service to the Company” shall mean the employment with or service to the Company, a Subsidiary or an Affiliate, including transfers of employment between the Company, a Subsidiary and an Affiliate, approved leaves of absence, and Related Employment.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1. Stock Options . The Committee may, in its discretion, grant Stock Options to such eligible persons as may be selected by the Committee. An Incentive Stock Option may not be granted to any person who is not an employee of the Company or any parent or subsidiary (as defined in Section 424 of the Code). Each Incentive Stock Option shall be granted within ten years of the date this Plan is adopted by the Board. To the extent the aggregate Fair Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or subsidiary as defined in Section 424 of the Code) exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Stock Options.
 
- 9 -

Stock Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of Shares and Purchase Price . The number of shares of Common Stock subject to a Stock Option shall be determined by the Committee. The purchase price per share of Common Stock purchasable upon exercise of a Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such Stock Option; provided, however, that if an Incentive Stock Option shall be granted to any person who, at the time such Incentive Stock Option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424 of the Code) (a “ Ten Percent Holder ”), the purchase price per share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.
(b) Option Period and Exercisability . The period during which a Stock Option may be exercised shall be determined by the Committee; provided, however, that no Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such Incentive Stock Option shall not be exercised later than five years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of a Stock Option or to the exercisability of all or a portion of a Stock Option. The Committee shall determine whether a Stock Option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable Stock Option, or portion thereof, may be exercised only with respect to whole shares of Common Stock.
(c) Method of Exercise . A Stock Option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Mature Shares having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, or (D) by a combination of (A) and (B), in each case to the extent set forth in the Agreement relating to the Stock Option, and (ii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No certificate or other indicia of ownership representing Common Stock shall be delivered until the full purchase price therefor, and any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).
 
- 10 -

(d) Minimum Vesting Period . Except as provided in this subsection or as otherwise provided under the Plan, no Stock Option award may become exercisable in full until three years from the date such Stock Option was granted and no portion of a Stock Option award may become exercisable until one year from the date such Stock Option was granted. The limitations of the preceding sentence shall not apply in the case of a Stock Option that becomes exercisable as a result of the attainment of a specified Performance Measure or in the case of a Stock Option granted as an employee recognition award, a retention award, or to a newly hired employee; provided that except as provided for under the Plan no portion of any such Stock Option may become exercisable until six months from the date the Stock Option was granted. The exceptions in the preceding sentence to the general minimum vesting provisions of this subsection, other than the exception applying to a Stock Option that becomes exercisable as a result of the attainment of a specified Performance Measure, are intended to be applied only in special circumstances as determined by the Committee (or its delegate).
(e) Repricing and Discounting . Subject to Section 5.7, the repricing or discounting of Stock Options is expressly disallowed under this Plan.
2.2. Stock Appreciation Rights . The Committee may, in its discretion, grant SARs to such eligible persons as may be selected by the Committee.
SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a) Number of SARs and Base Price . The number of SARs subject to an award shall be determined by the Committee. The base price of an SAR shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date such SAR is granted.
(b) Exercise Period and Exercisability . The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR shall be exercised later than ten years after its date of grant. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate or certificates or other indicia of ownership representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR and shall have rights as a stockholder of the Company in accordance with Section 5.10.
(c) Method of Exercise . An SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.
 
- 11 -

(d) Minimum Vesting Period . Except as provided in this subsection or as otherwise provided under the Plan, no SAR award may become exercisable in full until three years from the date such SAR was granted and no portion of a SAR award may become exercisable until one year from the date such SAR was granted. The limitations of the preceding sentence shall not apply in the case of a SAR that becomes exercisable as a result of the attainment of a specified Performance Measure or in the case of a SAR granted as an employee recognition award, a retention award, or to a newly hired employee; provided that except as provided for under the Plan no portion of any such SAR may become exercisable until six months from the date the SAR was granted. The exceptions in the preceding sentence to the general minimum vesting provisions of this subsection, other than the exception applying to a SAR that becomes exercisable as a result of the attainment of a specified Performance Measure, are intended to be applied only in special circumstances as determined by the Committee (or its delegate).
(e) Repricing and Discounting . Subject to Section 5.7, the repricing or discounting of SARs is expressly disallowed under this Plan.
2.3. Termination of Employment or Service .
(a) Disability . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of Disability, each Stock Option and SAR held by such holder shall become fully vested and exercisable and may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is one year after the effective date of such holder’s termination of employment or service, or if earlier, the expiration date of the term of such Stock Option or SAR.
(b) Retirement . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of Retirement, each Stock Option and SAR held by such holder shall continue to vest in accordance with its terms, and to the extent vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is four years after the effective date of such holder’s termination of employment or service, or if earlier, the expiration date of the term of such Stock Option or SAR.
(c) Death . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates by reason of death, each Stock Option and SAR held by such holder shall become fully vested and exercisable and may thereafter be exercised by such holder’s executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of such Stock Option or SAR.
(d) Involuntary Termination Without Cause . Unless otherwise specified in the Agreement, and except as provided in Section 5.8, if the employment with or service to the Company of the holder of a Stock Option or SAR is terminated by the Company, a Subsidiary or an Affiliate without Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of such Stock Option or SAR.
 
- 12 -

(e) Termination for Cause . If the employment with or service to the Company of the holder of a Stock Option or SAR is terminated for Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of such holder’s termination of employment or service. If the New York Stock Exchange is closed at the time of such holder’s termination of employment, then such Stock Option or SAR shall be forfeited at the time such holder’s employment is terminated and shall be canceled by the Company.
(f) Other Termination . Unless otherwise specified in the Agreement, if the employment with or service to the Company of the holder of a Stock Option or SAR terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause, or termination for Cause, each Stock Option and SAR held by such holder shall cease to vest, and to the extent already vested, may thereafter be exercised by such holder (or such holder’s legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following such holder’s termination of employment or service. If the New York Stock Exchange is closed on such date, then such Stock Option or SAR shall be forfeited and shall be canceled by the Company effective with the close of the New York Stock Exchange on the next following day in which the New York Stock Exchange is open.
(g) Death Following Termination of Employment or Service . Unless otherwise specified in the Agreement, if the holder of a Stock Option or SAR dies during the applicable Post-Termination Exercise Period, each Stock Option and SAR held by such holder shall be exercisable only to the extent that such Stock Option or SAR is exercisable on the date of such holder’s death and may thereafter be exercised by the holder’s executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of such Stock Option or SAR.
III. STOCK AWARDS
3.1. Stock Awards . The Committee may, in its discretion, grant Stock Awards to such eligible persons as may be selected by the Committee. The Agreement relating to the Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award, or a Bonus Stock Award.
3.2. Terms of Stock Awards . Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Number of Shares and Other Terms . The number of shares of Common Stock subject to a Stock Award and the Performance Measures (if any) and the Restriction Period applicable to a Restricted Stock Award or a Restricted Stock Unit Award shall be determined by the Committee.
(b) Vesting and Forfeiture . The Agreement relating to a Restricted Stock Award or Restricted Stock Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of the shares of Common Stock subject to such award, in the case of a Restricted Stock Award, or for the vesting of the Restricted Stock Unit Award itself, in the case of Restricted Stock Unit Award, (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment of or service to the Company during the specified Restriction Period, and for the forfeiture of all or a portion of the shares of Common Stock subject to such award in the case of a Restricted Stock Award, or for the forfeiture of the Restricted Stock Unit Award itself, in the case of a Restricted Stock Unit Award, (x) if specified Performance Measures are not satisfied or met during the specified Restriction Period or (y) if the holder of such award does not remain continuously in the employment of or service to the Company during the specified Restriction Period.
 
- 13 -

Bonus Stock Awards shall not be subject to any Performance Measures or Restriction Periods.
(c) Share Certificates/Indicia of Ownership . During the Restriction Period, a certificate or certificates or other indicia of ownership representing a Restricted Stock Award may be registered in the holder’s name or a nominee name at the discretion of the Company and may bear a legend, in addition to any legend which may be required pursuant to Section 5.6, indicating that the ownership of the shares of Common Stock represented thereby is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock Award. As determined by the Committee, all certificates or other indicia of ownership registered in the holder’s name shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of any applicable Performance Measures), or upon the grant of a Bonus Stock Award, in each case subject to the Company’s right to require payment of any taxes in accordance with Section 5.5, a certificate or certificates evidencing ownership, or such other indicia of ownership as determined by the Committee, of the requisite number of shares of Common Stock shall be delivered to the holder of such award.
(d) Rights with Respect to Restricted Stock Awards . Unless otherwise set forth in the Agreement relating to a Restricted Stock Award, and subject to the Committee’s right to cause such Award to be cancelled pursuant to an adjustment under Section 5.7, the holder of such award shall have all rights as a stockholder of the Company, including voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that unless the Committee determines otherwise, a distribution with respect to shares of Common Stock, including a regular cash dividend, shall be deposited with the Company and replaced with additional Restricted Stock Awards with a Fair Market Value equal to such distribution and otherwise subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.
(e) Rights and Provisions Applicable to Restricted Stock Unit Awards . The Agreement relating to a Restricted Stock Unit Award shall specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Restricted Stock Unit Award, the holder thereof shall not have any rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award, except to the extent that the Committee, in its sole discretion, may grant dividend equivalents on Restricted Stock Unit Awards which are settled in shares of Common Stock. No shares of Common Stock and no certificates or other indicia of ownership representing shares of Common Stock that are subject to a Restricted Stock Unit Award shall be issued upon the grant of a Restricted Stock Unit Award. Instead, shares of Common Stock subject to Restricted Stock Unit Awards and the certificates or other indicia of ownership representing such shares of Common Stock shall only be distributed at the time of settlement of such Restricted Stock Unit Awards in accordance with the terms and conditions of this Plan and the Agreement relating to such Restricted Stock Unit Award.
 
- 14 -

(f) Minimum Restriction Period . Except as provided in this subsection or as otherwise provided under the Plan, the Restriction Period applicable to a Restricted Stock Award or Restricted Stock Unit Award may not lapse in full until three years from the date such award was granted and no portion of the Restriction Period applicable to a Restricted Stock Award or Restricted Stock Unit Award may lapse until one year from the date such award was granted. The limitations of the preceding sentence shall not apply in the case of a Restricted Stock Award or Restricted Stock Unit Award that vests as a result of the attainment of a specified Performance Measure or in the case of a Restricted Stock Award or Restricted Stock Unit Award granted as a founder’s grant, an employee recognition award, a retention award, or to a newly hired employee; provided that except as provided for under the Plan the minimum Restriction Period applicable to such award shall be six months. The exceptions in the preceding sentence to the general minimum vesting provisions of this subsection, other than the exception applying to a Restricted Stock Award or Restricted Stock Unit Award that vests as a result of the attainment of a specified Performance Measure, are intended to be applied only in special circumstances as determined by the Committee (or its delegate).
3.3. Termination of Employment or Service .
(a) Disability and Death . Unless otherwise set forth in the Agreement relating to a Stock Award, if the employment with or service to the Company of the holder of such award terminates by reason of Disability or death, the Restriction Period shall terminate as of the effective date of such holder’s termination of employment or service and all Performance Measures applicable to such award shall be deemed to have been satisfied at the maximum level.
(b) Other Termination . Unless otherwise set forth in the Agreement relating to a Stock Award, and except as provided in Section 5.8, if the employment with or service to the Company of the holder of a Stock Award terminates for any reason other than Disability or death, the portion of such award which is subject to a Restriction Period on the effective date of such holder’s termination of employment or service shall be immediately forfeited by such holder and canceled by the Company.
IV. PERFORMANCE GRANTS
4.1. Performance Grants . The Committee may, in its discretion, make Performance Grants to such eligible persons as may be selected by the Committee.
 
- 15 -

4.2. Terms of Performance Grants . Performance Grants shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) Amount of Performance Grant and Performance Measures . The Agreement shall set forth the amount of the Performance Grant and a description of the Performance Measures and the Performance Period applicable to such Performance Grant, as determined by the Committee in its discretion.
(b) Vesting and Forfeiture . The Agreement shall provide, in the manner determined by the Committee in its discretion, for the vesting of a Performance Grant, if specified Performance Measures are satisfied during the specified Performance Period, and for the forfeiture of all or a portion of such award, if specified Performance Measures are not satisfied during the specified Performance Period.
(c) Settlement of Vested Performance Grants . The Agreement (i) shall specify whether a Performance Grant may be settled in shares of Common Stock, Restricted Stock, Restricted Stock Units, cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend equivalents, and, if determined by the Committee, interest on or the deemed reinvestment of any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award, if any. If a Performance Grant is settled in shares of Restricted Stock, a certificate or certificates or other indicia of ownership representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Grant in shares of Common Stock or Restricted Stock the holder of such award shall have no rights as a stockholder of the Company with respect to any shares of Common Stock subject to such award and shall have rights as a stockholder of the Company in accordance with Section 5.10. 
(d) Minimum Performance Period . The minimum Performance Period for any Performance Grant is one year from the date such grant is made.
4.3. Termination of Employment or Service .
(a) Disability, Retirement and Death . Unless otherwise set forth in the Agreement, if the employment with or service to the Company of the holder of a Performance Grant terminates during the Performance Period by reason of Disability, Retirement or death, the Performance Period shall continue and the holder, or the holder’s executor, administrator, legal representative, beneficiary or similar person, as applicable, shall be entitled to a prorated award. Such prorated award shall be equal to the value of the award at the end of the Performance Period multiplied by a fraction, the numerator of which shall equal the number of months such holder was employed with or performing services for the Company during the Performance Period (fractional months shall be ignored) and the denominator of which shall equal the number of months in the Performance Period; provided, however, that such holder, or such holder’s executor, administrator, legal representative, beneficiary or similar person, as applicable, shall not be entitled to payment or distribution of such Performance Grant earlier than the date set forth in the Agreement.
 
- 16 -

(b) Other Termination . Unless otherwise set forth in the Agreement, if the employment with or service to the Company of the holder of a Performance Grant terminates during the Performance Period for any reason other than Disability, Retirement or death, each Performance Grant that is not vested shall be immediately forfeited.
V. GENERAL
5.1. Effective Date and Term of Plan . This Plan shall be submitted to the stockholders of the Company for approval and, if approved, shall become effective as of September 28, 2006, the date on which the 2006 LTIP was approved by First Data in its capacity as sole stockholder of the Company. This Plan shall terminate on the tenth anniversary of the date of approval of the Plan by the Board or Committee, or if earlier when shares of Common Stock are no longer available for the grant, exercise or settlement of awards, unless terminated earlier by the Board or the Committee. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. If this Plan is not approved by the stockholders of the Company, this Plan shall be null and void and the 2006 LTIP shall remain in full force and effect.
5.2. Amendments . The Board or the Committee may amend or terminate this Plan, and except as provided in Sections 2.1(e) and 2.2(e), the Committee may amend outstanding awards under this Plan in any manner as it shall deem advisable in its sole discretion, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) and Section 422 of the Code and the rules of the New York Stock Exchange; provided, however, that no amendment of the Plan shall be made without stockholder approval if such amendment would increase the maximum number of shares of Common Stock available under this Plan (subject to Section 5.7). No amendment of the Plan or an outstanding award may impair the rights of a holder (the determination of which shall be made by the Committee in its sole discretion) of an outstanding award without the consent of such holder.
5.3. Agreement . The Company may condition an award holder’s right (a) to exercise, vest or settle the award and (b) to receive delivery of shares, on the execution and delivery to the Company of the Agreement and the completion of other requirements, including, but not limited to, the execution of a nonsolicitation agreement by the recipient and delivery thereof to the Company. Notwithstanding anything contained herein to the contrary, the Committee may approve an Agreement that, upon the termination of an award holder’s employment or service, provides that, or may, in its sole discretion based on a review of all relevant facts and circumstances, otherwise take action regarding an Agreement such that (i) any or all outstanding Stock Options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any outstanding Stock Award shall lapse, (iii) all or a portion of the Performance Period applicable to any outstanding Performance Grant shall lapse and (iv) the Performance Measures applicable to any outstanding award (if any) shall be deemed to be satisfied at the maximum or any other level.
5.4. Transferability of Stock Options . Stock Options may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by the holder thereof, except by will or the laws of descent and distribution; provided, however, that unless otherwise specified in the Agreement, as long as the holder continues employment with or service to the Company, such holder may transfer Stock Options to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of Stock Options to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an equity interest in the limited liability company or partnership to which the transfer is made. Any transfer of Stock Options shall be in a form acceptable to the Committee, shall be signed by the holder and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If a Stock Option is transferred to a Family Member or to a Family Entity, such Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution.
 
- 17 -

5.5. Tax Withholding . The Company shall have the right to require, as of the grant, vesting, or exercise of an award, the sale of any shares of Common Stock, the receipt of any dividends or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any federal, state, local or other income, social insurance, payroll or other tax-related items which may be required to be withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “ Tax Date ”) in the amount necessary to satisfy any such obligation, or withhold an amount of cash which would otherwise be payable to a holder, including withholding from wages or other cash compensation otherwise due to the holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the case of the exercise of a Stock Option, a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, in each case to the extent set forth in the Agreement relating to an award, or (E) any combination of (A) and (B). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.
5.6. Restrictions on Shares . Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting, exercise or settlement of such award or the delivery of shares thereunder, such award shall not vest, be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. In addition, the Committee may condition the grant of an award on compliance with certain listing, registration or other qualifications applicable to the award under any law or any obligation to obtain the consent or approval of a governmental body. The Company may require that certificates or other indicia of ownership evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.
 
- 18 -

5.7. Adjustment . In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) available under this Plan, the maximum number of securities available for Stock Awards and Performance Grants, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding Stock Option and the purchase price per security, the terms of each outstanding Stock Option, the maximum number of securities with respect to which Stock Options or SARs (or a combination thereof), or Stock Awards or Performance Grants may be made or granted during any calendar year to any person, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding SAR and the base price per SAR, the terms of each outstanding SAR, the number, class and kind of securities (including, for this purpose, securities of any other entity that is a party to any such transaction) subject to each outstanding Stock Award or Performance Grant, and the terms of each outstanding Stock Award or Performance Grant shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding Stock Options and SARs without an increase in the aggregate purchase price or base price. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive. If any such adjustment would result in a fractional security being (a) available under this Plan, such fractional security shall be disregarded, or (b) subject to an award under this Plan, the Company shall pay the holder of such award, in connection with the adjustment or first vesting, exercise or settlement of such award in whole or in part occurring after such adjustment, as the Committee may determine , an amount in cash determined by multiplying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the vesting, exercise or settlement date over (B) the exercise or base price, if any, of such award.
5.8. Change in Control . 
(a) Awards Granted On and After February 17, 2009 . Effective for awards granted under the Plan on and after February 17, 2009, if an award holder’s employment is terminated by the Company, a Subsidiary or an Affiliate without Cause (or otherwise terminates for an eligible reason according to the terms of the Company severance policy applicable to the holder as of the effective date of a Change in Control) during the period commencing on and ending twenty-four months after the effective date of the Change in Control, then effective on the holder’s date of termination of employment (i) each outstanding Stock Option and SAR held by such holder shall become fully vested and exercisable, and (ii) the Restriction Period applicable to each outstanding Stock Award held by such holder shall lapse; provided, however, that awards that will vest or become exercisable or payable only if specified Performance Measures are attained and awards that provide for a deferral of compensation within the meaning of Code § 409A shall vest or be exercisable or payable in accordance with the applicable Agreements, subject to the terms of the Plan. All other awards granted under the Plan to such holder, including Performance Grants, shall vest or be exercisable or payable, if at all, in accordance with the applicable Agreements, subject to the terms of the Plan. Notwithstanding any provision of this Plan to the contrary, each Stock Option or SAR granted to such holder shall remain exercisable by the holder (or his or her legal representative or similar person) until the earlier of (y) the end of the severance period applicable to the holder under the Company severance policy (if any) applicable to the holder as of the effective date of a Change in Control or, if later, the end of the otherwise applicable Post-Termination Exercise Period, or (z) the expiration date of the term of the Stock Option or SAR.
 
- 19 -

(b) Awards Granted Prior to February 17, 2009 . Effective for awards granted under the Plan prior to February 17, 2009, as of the effective date of a Change in Control (i) each outstanding Stock Option and SAR shall become fully vested and exercisable, (ii) the Restriction Period applicable to each outstanding Stock Award shall lapse, (iii) the Performance Period applicable to any outstanding Performance Grant shall lapse, and (iv) the Performance Measures applicable to any outstanding award shall be deemed to be satisfied at the target level (or if greater, at the performance level actually attained). Notwithstanding any provision of this Plan to the contrary, each Stock Option or SAR granted to a holder whose employment is terminated for an eligible reason according to the terms of the Company severance policy applicable to the holder as of the effective date of a Change in Control during the period commencing on and ending twenty-four months after the effective date of the Change in Control shall remain exercisable by such holder (or his or her legal representative or similar person) until the earlier of (y) the end of the severance period applicable to the holder under such severance policy or, if later, the end of the otherwise applicable Post-Termination Exercise Period, or (z) the expiration date of the term of the Stock Option or SAR.
5.9. No Right of Participation or Employment . No person shall have any right to participate in this Plan. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any Affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any Affiliate of the Company to terminate the employment of any person at any time without liability hereunder.
5.10. Rights as Stockholder . No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.
5.11. Designation of Beneficiary . If permitted by the Committee, the holder of an award may file with the Committee a written designation of one or more persons as such holder’s beneficiary or beneficiaries (both primary and contingent) in the event of the holder’s death. To the extent an outstanding Stock Option or SAR granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such Stock Option or SAR to the extent permitted under local law.
Each beneficiary designation shall become effective only when filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations.
 
- 20 -

If a holder fails to designate a beneficiary, or if all designated beneficiaries of a holder predecease the holder, then each outstanding Stock Option and SAR hereunder held by such holder, to the extent exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person.
5.12. Governing Law . This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
5.13. Replacement and Substitute Awards . Notwithstanding anything in this Plan to the contrary, any Stock Option or Stock Award that is intended to be a Replacement or Substitute Award granted in connection with the spin-off of the Company shall be subject to the same terms and conditions as the original First Data award to which it relates; provided, however that such awards shall be administered by the Committee.
5.14. Foreign Employees . The Committee may adopt, amend or rescind rules, procedures or sub-plans relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures and to foster and promote achievement of the purposes of this Plan. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that limit or modify rights on death, Disability or Retirement or on termination of employment; available methods of exercise or settlement of an award; payment of income, social insurance contributions and payroll taxes; the withholding procedures and handling of any stock certificates or other indicia of ownership which vary with local requirements. The Committee may also adopt rules, procedures or sub-plans applicable to particular Subsidiaries, Affiliates or locations. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Sections 1.5 and 5.2, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.
5.15. Termination of Employment or Service . Unless otherwise determined by the Committee, an award holder employed by or providing service to an entity that is a Subsidiary or an Affiliate under this Plan shall be deemed to have terminated employment with or service to the Company for purposes of this Plan on the date that such entity ceases to be a Subsidiary or an Affiliate hereunder.
 
- 21 -

Exhibit 10.12
THE WESTERN UNION COMPANY
NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective December 31, 2008)
1. Purpose . The purpose of The Western Union Company Non-Employee Director Deferred Compensation Plan (the “Plan”) is to provide members of the Board of Directors of The Western Union Company (the “Company”) who are not employees of the Company or its subsidiaries or affiliates with the opportunity to (i) convert all or a portion of the annual cash retainer fees otherwise payable to them in their capacity as non-employee directors of the Company to non-qualified stock options and/or unrestricted stock units to be granted under The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (the “Equity Plan”) and (ii) make elections concerning the settlement of unrestricted stock units to be granted to such non-employee directors under the Equity Plan. Capitalized terms not defined herein shall have the respective meanings assigned to such terms by the Equity Plan.
2. Administration . The Plan shall be administered by the Committee. Before the beginning of each year, the Committee, at its sole discretion will determine which members of the Board will be offered participation in the Plan.
The Committee shall, subject to the terms of this Plan, interpret this Plan and the application thereof and establish, amend and revoke rules and regulations as it deems necessary or desirable for the administration of the Plan. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive. A majority of the Committee shall constitute a quorum. The acts of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum is present or (ii) acts approved in writing by all of the members of the Committee without a meeting. The Committee may authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Committee.
No member of the Board or the Committee, and no officer of the Company to whom the Committee delegates any of its power and authority hereunder, shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good faith, and the members of the Board and the Committee and such officers shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including attorneys’ fees) arising therefrom to the full extent permitted by law.
3. Eligibility . Each member of the Board who is not an employee of the Company or any of its subsidiaries or affiliates (an “Eligible Director”) shall be eligible to participate in the Plan, if selected by the Committee, and to make the elections provided hereunder.

4. Conversion of Retainer .
(a) Annual Elections . Prior to the first day of each calendar year, each Eligible Director shall be permitted to elect, in accordance with rules and procedures established by the Committee, that 100 percent, or a lesser percentage as the Committee may determine in its sole discretion, of such Eligible Director’s retainer to be earned in such calendar year not be paid to the Eligible Director, but, at the election of such Eligible Director, be replaced by grant under the Equity Plan of either (i) a combination of (A) an immediately exercisable NQO to purchase a number of whole shares of the Company’s common stock such that the NQO has a fair value, as determined by the Company using a methodology consistent with that used by the Company under SFAS 123R (or comparable rule if Western Union adopts International Financial Reporting Standards in its consolidated financial statements) of 75% (and/or such other percentage as may be designated by the Committee prior to the date on which Directors elections hereunder become irrevocable with respect to any calendar year) of the amount to be deferred pursuant to such election, and (B) unrestricted stock units representing shares of the Company’s common stock with a Fair Market Value equal to the remainder of the amount to be deferred pursuant to such election, provided that any fractional shares shall be rounded up to the next whole share, or (ii) unrestricted stock units representing shares of the Company’s common stock with a Fair Market Value equal to the entire amount subject to such election, provided that any fractional shares shall be rounded up to the next whole share. Any election made under this Section 4 shall become irrevocable as of December 31 of the year prior to the year in which the services relating to the annual retainer fee are performed. Such NQO and unrestricted stock units shall not be granted at the time of such election, but shall be granted as of such date as shall be determined by the Committee consistent with section 409A of the Code and the terms of the Equity Plan, and the number of shares subject to each such NQO and the number of unrestricted stock units granted shall be determined based on the Fair Market Value of a share of the Company’s common stock as of such date. Notwithstanding anything in this Section 4(a) to the contrary, the Committee shall have the discretion to require an Eligible Director to receive in lieu of all or part of the Eligible Director’s annual retainer fee either the grant of a NQO and unrestricted stock units under the Equity Plan determined in accordance with subsection (i) above or, if the Eligible Director so elects, the grant of unrestricted stock units under the Equity Plan determined in accordance with subsection (ii) above.
(b) Initial Elections . An individual who becomes an Eligible Director for the first time after a calendar year has commenced shall be permitted to make a deferral election under this Plan not later than the 30 th day following the date the individual becomes an Eligible Director with respect to the amount of annual retainer earned and payable to such Eligible Director after the date of such election.
(c) Effect of Elections . Any election made pursuant to Sections 4(a) or 4(b) above, as the case may be, once made, shall remain in effect for future calendar years unless the Eligible Director makes a new election in accordance with Section 4(a) above. In order to elect a deferral for any subsequent calendar year, an Eligible Director must make a new election prior to the calendar year for which the new election is to be effective. In no event shall a deferral election apply to compensation payable for services rendered prior to the date on which such election is received by the Company. Each Eligible Director’s retainer shall be reduced by the amount subject to the deferral election made on his or her behalf.
 
2

5. Distributions With Respect to Unrestricted Stock Units .
(a) Specified Date Election . Prior to the first day of each calendar year, each Eligible Director shall be permitted to elect, in accordance with rules and procedures established by the Committee, to specify a date on which any unrestricted stock units granted to the Eligible Director under the Equity Plan in the subsequent calendar year (including grants made in lieu of annual retainer fees as well as any other grants of unrestricted stock units under the Equity Plan) will be settled, provided that such date shall not be later than the default payment date specified in Section 5(b) below. Any election made under this Section 5(a) shall become irrevocable as of December 31 of the year prior to the year in which the unrestricted stock units relating to such election are granted. Notwithstanding the foregoing, an individual who becomes an Eligible Director for the first time after a calendar year has commenced shall be permitted to specify a date on which will be settled any unrestricted stock units granted to the Eligible Director under the Equity Plan after the date of such election, provided that such election is made and becomes irrevocable not later than the 30 th day following the date the individual first becomes an Eligible Director, and provided further that such date is not later than the default payment date specified in Section 5(b) below.
(b) Default Payment Date . Except to the extent an Eligible Director has elected an earlier settlement date in accordance with Section 5(a) hereof, on the first business day of January next following the date on which the Eligible Director’s services as a member of the Board terminate for any reason, the Eligible Director (or his or her estate or beneficiary, as the case may be) shall receive a distribution of shares of the Company’s common stock represented by all the unrestricted stock units granted to the Eligible Director under the Equity Plan.
(c) Effect of Elections . Any election made pursuant to Section 5(a) above or deemed to be made under Section 5(b) above, shall remain in effect for unrestricted stock unit grants received in future calendar years unless the Eligible Director makes a new election complying with the requirements of Section 5(a) or 5(b), as the case may be. In no event shall a new election apply to any unrestricted stock units granted in or before the year in which the new election is made.
(d) Unforeseeable Emergency . If an Eligible Director provides satisfactory evidence of an unforeseeable emergency, the Eligible Director may request, and the Committee may, in its sole discretion, authorize a distribution of all or a portion of the Eligible Director’s deferral accounts maintained under the Plan prior to the date on which payments would have commenced under Section 5(a) or 5(b) hereof, as applicable. An “Unforeseeable Emergency” shall mean (i) a severe financial hardship to an Eligible Director resulting from an illness or accident of the Eligible Director, or the spouse or a dependent of the Eligible Director as defined in section 152 of the Code (without regard to sections 152(b)(1), (b)(2) and (d)(1)(B) of the Code), (ii) the loss of an Eligible Director’s property due to casualty or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Eligible Director. The amount of any distribution under this Section 5(d) shall not exceed the amount reasonably necessary to satisfy the emergency (including amounts necessary to pay any federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution).
(e) Election Changes Permitted On or Before December 31, 2008 Pursuant to Internal Revenue Service Transition Relief . Notwithstanding anything in this Section 5 to the contrary, an Eligible Director may be permitted to make a new election on or before December 31, 2008 to specify a date on which the unrestricted stock units previously granted to the Eligible Director under the Equity Plan will be settled, provided that such date shall not be later than the default payment date specified in Section 5(b) above, and provided further that any such new election shall apply only to unrestricted stock units that would not otherwise be settled in 2008 and may not cause unrestricted stock units to be settled in 2008 that would not otherwise be settled in 2008.
 
3

6. Unfunded Plan . No funds, securities or other property of any nature shall be segregated or earmarked for any current or former Eligible Director, beneficiary or other person. Accordingly, no current or former Eligible Director, beneficiary or other person, individually or as a member of a group, shall have any right, title or interest in any Plan account, in any fund or specific sum of money, in any asset or in any shares of stock which may be acquired by the Company in respect of its obligations hereunder, the sole right of the Eligible Director being to receive a distribution as a general creditor of the Company with an unsecured claim against its general assets.
7. Amendment . The Board and the Committee shall each have the right to amend the Plan from time to time, except that no amendment shall reduce the amount credited or awarded to an Eligible Director hereunder or adversely affect the rights of any Eligible Director or his or her beneficiary with respect to amounts previously deferred under the Plan, or change the timing of distributions in a manner inconsistent with section 409A of the Code, without the consent of such Eligible Director or, if the Eligible Director is deceased, his or her beneficiary. Any amendment shall be adopted by action of the Board or Committee; provided , however , that the Equity Plan Committee of the Company and the Chief Executive Officer of the Company shall be, and each hereby is, also authorized to amend the Plan, but only to the extent that such amendment: (i) is required or deemed advisable as the result of legislation or regulation; (ii) concerns solely routine ministerial or administrative matters; or (iii) is not routine, ministerial or administrative, but does not materially increase any cost to the Company. Notwithstanding the foregoing, the Plan may be amended at any time, without the consent of any Eligible Director or beneficiary, as necessary or desirable to comply with the requirements, or avoid the application, of section 409A of the Code.
8. General Provisions
(a) Non-Alienation of Benefits . An Eligible Director’s rights to the amounts represented by unrestricted stock units granted under the Equity Plan in respect of elections made hereunder shall not be salable, transferable, pledgeable or otherwise assignable, in whole or in part, by the voluntary or involuntary acts of any person, or by operation of law, and shall not be liable or taken for any obligation of such person. Any such attempted grant, transfer, pledge or assignment shall be null and void and without any legal effect.
(b) Code Section 409A . Notwithstanding any provision of the Plan, the Plan will be construed, administered or deemed amended as necessary to comply with the requirements of section 409A of the Code to avoid taxation under section 409A(a)(1) of the Code to the extent subject to section 409A of the Code. The Committee, in its sole discretion shall determine the requirements of section 409A of the Code applicable to the Plan and shall interpret the terms of the Plan consistently therewith. Under no circumstances, however, shall the Company or any affiliate or any of its or their employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under section 409A of the Code.
 
4

(c) Severability . If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be enforced as if the invalid provisions had never been set forth therein.
(d) Successors in Interest . The obligation of the Company under the Plan shall be binding upon any successor or successors of the Company, whether by merger, consolidation, sale of assets or otherwise, and for this purpose reference herein to the Company shall be deemed to include any such successor or successors.
(e) Governing Law; Interpretation . The Plan shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware. The Company intends that transactions under the Plan shall be exempt under Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended.
(f) Termination of the Plan . The Board of Directors of the Company may terminate the Plan at any time; provided , however , that termination of the Plan shall not adversely affect the rights of an Eligible Director or his or her beneficiary with respect to amounts previously deferred under the Plan without the consent of such Eligible Director and that of such Eligible Director’s beneficiary. Any termination of the Plan will be made in compliance with the requirements of Code § 409A and the regulations thereunder.
 
5

Exhibit 10.13
THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
Amended and Restated Effective February 17, 2009
 
1.	Purpose	
This severance/change in control policy (the “Policy”) is maintained by The Western Union Company, a Delaware corporation (“Western Union”), to enable Western Union to offer a form of income protection to its Eligible Executives in the event their employment with the Company is involuntarily terminated other than for Cause or, in the event of a Change in Control, if their employment terminates involuntarily other than for Cause or for Good Reason during the twenty-four months following the Change in Control.
This Policy shall constitute a “welfare plan” within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and shall be construed in a manner consistent with such intent.
 
2.	Effective Date	
This Policy was originally adopted as of September 29, 2006 (the “Effective Date”). The Policy is hereby amended and restated effective February 17, 2009.
 
3.	Definitions	
Base Salary means the Eligible Executive’s current annualized rate of base cash compensation as paid on each regularly scheduled payday for the Eligible Executive’s regular work schedule as of his or her Termination Date, including any before-tax contributions that are deducted for Company benefit plan purposes. Base Salary shall not include taxable or nontaxable fringe benefits or awards, vacation, performance awards, bonus, commission or other incentive pay, or any payments which are not made on each regular payday, regardless of how such payments may be characterized.
Board means the Board of Directors of Western Union.
Cause means the willful and continued failure by an Eligible Executive to substantially perform the duties assigned by the Company (other than a failure resulting from Disability), the willful engagement by an Eligible Executive in conduct which is demonstrably injurious to the Company (monetarily or otherwise), any act of dishonesty, the commission of a felony, the continued failure by an Eligible Executive to meet performance standards, an Eligible Executive’s excessive absenteeism or a significant violation by an Eligible Executive of any statutory or common law duty of loyalty to the Company.
Change in Control means
 
 	(a)	the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of either (i) the then outstanding shares of common stock of Western Union (the “Outstanding Common Stock”) or (ii) the combined voting power of the then outstanding securities of Western Union entitled to vote generally in the election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A) any acquisition directly from Western Union (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired	

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	directly from Western Union), (B) any acquisition by Western Union, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by Western Union or any corporation controlled by Western Union or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this definition; provided further, that for purposes of clause (B), if any Person (other than Western Union or any employee benefit plan (or related trust) sponsored or maintained by Western Union or any corporation controlled by Western Union) shall become the beneficial owner of 25% or more of the Outstanding Common Stock or 25% or more of the Outstanding Voting Securities by reason of an acquisition by Western Union, and such Person shall, after such acquisition by Western Union, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;	
 
 	(b)	the cessation of individuals who constitute the Board (the “Incumbent Board”) as of the date this Policy is adopted by the Committee, to constitute at least a majority of such Incumbent Board; provided that any individual who becomes a director of Western Union subsequent to the date this Policy is adopted by the Committee whose election, or nomination for election by Western Union’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of Western Union as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;	
 
 	(c)	the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Western Union (a “Corporate Transaction”); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns Western Union or all or substantially all of Western Union’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than Western Union; any employee benefit plan (or related trust) sponsored or maintained by Western Union or any corporation controlled by Western Union; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or	
 
- 2 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	(d)	the consummation of a plan of complete liquidation or dissolution of Western Union.	
Committee means the Compensation and Benefits Committee of the Board or its delegate or successor.
Company means Western Union, including any of its 50% or more owned or controlled subsidiaries or any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise, including, without limitation, any successor due to a Change in Control) to substantially all of the business or assets of Western Union, except that for purposes of Section 16, the definition of Change in Control, and other provisions where the context so requires, Company means Western Union or any such successor.
Disability means the inability of the Eligible Executive to substantially perform such Eligible Executive’s duties and responsibilities due to a physical or mental condition (i) that would entitle such Eligible Executive to benefits under the Company’s long-term disability plan under which he or she is covered or, if the Committee deems it relevant, any disability rights provided as a matter of local law or (ii) if such Eligible Executive is not eligible for long-term disability benefits under any plan sponsored by the Company, that would, as determined by the Committee, entitle such Eligible Executive to benefits under the Company’s long-term disability plan if the Eligible Executive were eligible therefor.
Eligible Executive means, effective prior to October 1, 2008, an individual who is designated by Western Union as an insider for purposes of Section 16 of the Exchange Act and who is a member of Western Union’s Executive Committee on the earlier of his or her Termination Date or the date of a Change in Control. Effective October 1, 2008, Eligible Executive means an individual who is designated by Western Union as an insider for purposes of Section 16 of the Exchange Act and who is the Chief Executive Officer of Western Union or is an Executive Vice President of Western Union who reports directly to the Chief Executive Officer on the earlier of his or her Termination Date or the date of a Change in Control, provided that individuals who were Eligible Executives as defined under this Policy as of September 30, 2008 shall remain eligible for this Policy (other than individuals who have waived their eligibility for this Policy in writing).
Exchange Act means the Securities Exchange Act of 1934, as amended.
Good Reason means any one or more of the following: (i) action by the Company resulting in a material diminution of the Eligible Executive’s titles or positions with the Company, (ii) a reduction in the Eligible Executive’s Base Salary or bonus, or (iii) action by the Company to require the relocation of the Eligible Executive more than fifty (50) miles from the Eligible Executive’s current principal work location without the executive’s consent. Within 30 days after the Eligible Executive becomes aware of one or more actions or inactions described in the preceding sentence, the Eligible Executive shall deliver written notice to the Company of the action(s) or inaction(s) (the “Good Reason Notice”). The Company shall have 30 days after the Good Reason Notice is delivered to cure the particular action(s) or inaction(s). If the Company so effects a cure, the Good Reason Notice will be deemed rescinded and of no further force and effect.
 
- 3 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
Severance Benefits means the benefits payable to an Eligible Executive pursuant to this Policy, other than the Change in Control benefits payable pursuant to Sections 7(c)(ii)(b) and 8 hereof.
Severance Period means with respect to Western Union’s Chief Executive Officer, the 36 consecutive month period commencing on the executive’s Termination Date, and with respect to all other Eligible Executives, the 24 consecutive month period commencing on the Eligible Executive’s Termination Date.
Termination Date means the date on which the Eligible Executive’s employment with the Company terminates for a reason set forth under Section 5.
 
4.	Eligibility	
All Eligible Executives who have been on the Company’s payroll for at least three months are eligible to receive benefits according to the terms of this Policy. Eligible Executives are not eligible for any benefits under this Policy during the first three months of their employment.
 
5.	Eligible Termination Reasons	
 
 	(a)	Prior to the occurrence of a Change in Control, action by the Company to involuntarily terminate the employment of an Eligible Executive with the Company, but not including a separation from service on account of death, Disability or for Cause.	
 
 	(b)	After the occurrence of a Change in Control, (i) action by the Company to involuntarily terminate the employment of an Eligible Executive with the Company, but not including a separation from service on account of death, Disability or for Cause, or (ii) voluntary separation from service from the Company by an Eligible Executive for Good Reason during the twenty-four (24) month period commencing on the date of the Change in Control.	
An Eligible Executive shall not be entitled to any benefits under this Policy upon a separation from service for an eligible termination reason under this Section 5 if the Eligible Executive becomes employed by any subsidiary or affiliate of Western Union (as determined under Internal Revenue Code (“Code”) Section 414(b) or (c), but substituting a 50 percent ownership level for the 80 percent ownership level therein) immediately following his or her termination of employment from the Company by which the Eligible Executive is employed.
 
6.	Non-Eligible Termination Reasons	
A non-eligible termination reason is any reason for an Eligible Executive’s separation from service by or from the Company that is not an eligible termination reason described in Section 5.
 
7.	Severance and Change in Control Benefits . The provisions of this Section 7 are subject, without limitation, to the provisions of Section 9 hereof.	
 
 	(a)	Severance Pay . If an Eligible Executive’s employment with the Company is terminated after the Effective Date for any reason set forth in Section 5, the Company shall pay to the Eligible Executive the following amounts in accordance with Section 10:	
 
 	(i)	An amount equal to 2 multiplied by the sum of (1) the Eligible Executive’s Base Salary and (2) the target bonus payable to the Eligible Executive pursuant to the Company’s Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive), for the year in which the Termination Date occurs.	
 
- 4 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	(ii)	A prorated amount of the Eligible Executive’s target bonus under the Company’s Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive) for the year in which the Termination Date occurs. Such prorated amount shall be equal to the product of (1) the Eligible Executive’s target bonus for the year in which the Termination Date occurs and (2) the ratio of the number of days elapsed during such year prior to the Termination Date to 365.	
 
 	(iii)	For purposes of this subsection (a), if an Eligible Executive’s annual target bonus has not yet been established for the year in which the Termination Date occurs, the Eligible Executive’s annual target bonus for the immediately preceding year shall be used to determine the Eligible Executive’s severance pay. If no such prior year target bonus exists with respect to the Eligible Executive, the target bonus established for a similarly situated Eligible Executive shall be used, as determined by the Committee.	
 
 	(b)	Continued Benefits Coverage . If an Eligible Executive’s employment with the Company terminates after the Effective Date for any reason set forth in Section 5, the Eligible Executive and his or her eligible dependents shall be given the opportunity to elect continued group health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”) with respect to all group health plans that are subject to COBRA in which the Eligible Executive and his or her dependents were participating immediately prior to such termination. Provided that the Eligible Executive (and/or his or her dependents) timely elects such coverage, the Company shall pay to the Eligible Executive, as an additional Severance Benefit, a lump sum approximately equal to the difference in cost between COBRA premiums and active employee premiums for 18 months of COBRA coverage as calculated by the Company in its discretion as of the Termination Date, which payment shall constitute taxable income to the Eligible Executive and which shall be paid in a lump sum in accordance with Section 10 .	
An Eligible Executive receiving Severance Benefits under this Policy shall also be entitled to receive during the Severance Period any financial planning benefits which the Eligible Executive was receiving as of the Termination Date, subject to the terms of the Executive Committee Financial Planning Program, but shall not be entitled to receive any other perquisites after the Termination Date. The Eligible Executive’s continued group health coverage under this subsection shall cease as of the date the Eligible Executive becomes eligible to receive such benefits under a subsequent employer’s benefit program, to the extent permitted under COBRA. Eligible Executives receiving Severance Benefits under this Policy are not eligible to continue contributions to the Company’s qualified retirement plans or nonqualified deferred compensation program.
 
- 5 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	(c)	Long-Term Incentive Awards	
 
 	(i)	Non-Change in Control .	
 
 	a.	Long-Term Incentive Awards Granted On and After February 17, 2009 . Effective for awards granted on and after February 17, 2009 to an Eligible Executive under The Western Union Company 2006 Long-Term Incentive Plan (or a successor plan) (the “LTIP”), if the Eligible Executive’s employment with the Company is terminated for an eligible termination reason described in Section 5(a), then awards held by the Eligible Executive that are eligible to become fully vested and exercisable or payable contingent upon the Eligible Executive’s continued employment and the passage of time (whether or not the Company or the Eligible Executive have attained any specified performance goals) (“Time Vested Awards”), other than awards classified by the Committee at the time of grant as “Career Shares” (if applicable to the Eligible Executive) and awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall vest on a prorated basis effective on the Eligible Executive’s Termination Date. Such prorated vesting shall be calculated on a grant-by-grant basis by multiplying the unvested portion of each such award by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the Eligible Executive’s Termination Date and the denominator of which is the number of days between the grant date and the date the award would have become fully vested had the Eligible Executive not terminated his or her employment. For awards subject to a graduated vesting schedule, the foregoing calculation shall be performed as if each vesting tranche of the award was a separate grant. Fractions of a share resulting from the calculations shall be rounded to the nearest whole share. The prorated portion of any nonqualified stock option and stock appreciation right awards that become vested in accordance with this subsection shall be exercisable until the end of the Eligible Executive’s Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter.	
If an Eligible Executive’s employment with the Company is terminated during a performance period for an eligible termination reason described in Section 5(a), any cash Performance Grants (as defined in the LTIP) awarded to the Eligible Executive under the LTIP (if applicable) with respect to such performance period shall be payable on a prorated basis based upon actual performance results at the end of the applicable performance period as determined by the Committee in its sole discretion, and shall be paid at the time specified in the applicable award (and if applicable, deferral) agreement. Such prorated payment shall be calculated on a grant-by-grant basis by multiplying the Performance Grant award the Eligible Executive would have received had the Eligible Executive remained employed (based upon actual performance results at the end of the applicable performance period as determined by the Committee) by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the Eligible Executive’s Termination Date and the denominator of which is the number of days in the performance period. All other outstanding awards granted to the Eligible Executive under the LTIP on and after February 17, 2009, and any Time Vested Awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall be payable, if at all, in accordance with the terms of the LTIP and the applicable award (and, if applicable, deferral) agreements.
 
- 6 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	b.	Long-Term Incentive Awards Granted Prior to February 17, 2009 . Effective for awards granted prior to February 17, 2009 to an Eligible Executive under the LTIP, if the Eligible Executive’s employment with the Company is terminated for an eligible termination reason described in Section 5(a), all outstanding nonqualified stock options held by the Eligible Executive shall continue to vest solely on account of the passage of time during the Eligible Executive’s Severance Period and, to the extent vested, shall be exercisable in accordance with their terms until the end of the Eligible Executive’s Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. All Stock Awards (as defined in the LTIP) held by an Eligible Executive whose employment with the Company is terminated for an eligible termination reason described in Section 5(a) shall vest on a prorated basis effective on the Eligible Executive’s Termination Date. Such prorated vesting shall be calculated on a grant-by-grant basis by multiplying the number of unvested shares subject to each Stock Award by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the Eligible Executive’s Termination Date and the denominator of which is the number of days between the grant date and the date the shares would have become fully vested had the Eligible Executive not terminated his or her employment. Fractions of a share resulting from the calculations shall be rounded to the nearest whole share.	
 
 	(ii)	Change in Control .	
 
 	a.	Long-Term Incentive Awards Granted On and After February 17, 2009 . Effective for awards granted on and after February 17, 2009 to an Eligible Executive under the LTIP, if the Eligible Executive’s employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period commencing on the effective date of a Change in Control, then Time Vested Awards held by the Eligible Executive (including but not limited to grants of nonqualified stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards), other than awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall become fully vested and exercisable or payable effective on the Eligible Executive’s Termination Date. In the event this subsection applies, nonqualified stock options and stock appreciation rights granted to an Eligible Executive shall be exercisable until the end of the Eligible Executive’s Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. If an Eligible Executive’s employment with the Company terminates for an eligible termination reason described in Section 5(b) after the 24-month period commencing on the effective date of a Change in Control, then Time Vested Awards held by the Eligible Executive, other than awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall vest on a prorated basis effective on the Eligible Executive’s Termination Date, and such prorated vesting shall be calculated in the manner described in Section 7(c)(i)a above.	
 
- 7 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
In the event of a Change in Control, any cash Performance Grants awarded to an Eligible Executive under the LTIP (if applicable) shall be converted into restricted cash (representing only a contingent, unfunded and unsecured obligation of the Company) as of the effective date of the Change in Control, such conversion to be based upon target performance if less than 50% of the performance period has elapsed as of the effective date of the Change in Control, or based upon actual performance results as determined by the Committee in its sole discretion if 50% or more of the performance period has elapsed as of the effective date of the Change in Control. If the Eligible Executive’s employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period commencing on the effective date of a Change in Control, then such restricted cash shall be paid to the Eligible Executive in a lump sum within 30 days following the six month anniversary of the Eligible Executive’s separation from service (or, if different, on the date specified in the applicable award and, if applicable, deferral agreement). In the event of a Change in Control, all other outstanding awards granted to the Eligible Executive under the LTIP, and any awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall be payable, if at all, in accordance with the terms of the LTIP and the applicable award (and, if applicable, deferral) agreements.
 
 	b.	Long-Term Incentive Awards Granted Prior to February 17, 2009 . In the event of a Change in Control, all outstanding awards granted prior to February 17, 2009 to an Eligible Executive under the LTIP shall become fully vested and exercisable or payable as of the effective date of the Change in Control. In the event this subsection applies, if the Eligible Executive’s employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period beginning on the effective date of the Change in Control, then nonqualified stock options granted to the Eligible Executive shall remain exercisable until the end of the Eligible Executive’s Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter.	
 
 	(d)	Legal Fees . Effective for Termination Dates occurring on or after the date of a Change in Control, if after exhausting the administrative remedies provided for in Section 20 herein, an Eligible Executive commences litigation regarding a bona fide claim for damages or other relief arising as a result of a claim for benefits under the Policy, and as a result thereof, whether by judgment or settlement, becomes entitled to receive benefits in an amount greater than prior to such litigation, the Company shall reimburse the reasonable legal fees and related expenses that are incurred by the Eligible Executive in connection with such litigation. Any such reimbursement shall be paid during the fourth calendar year following the calendar year in which such Eligible Executive’s “separation from service” (as defined under Code Section 409A and the final regulations thereunder) occurs.	
 
- 8 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
8.	Certain Additional Payments	
 
 	(a)	Notwithstanding anything in this Policy to the contrary, in the event it is determined that any payments or benefits provided by the Company to or on behalf of an Eligible Executive (whether pursuant to the terms of this Policy or otherwise) (any such payments or benefits being referred to in this Section as “Payments”), but determined without taking into account any additional payments required under this Section, would be subject to the excise tax imposed by Code Section 4999, or any interest or penalties are incurred by the Eligible Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively referred to herein as the “Excise Tax”), then the Eligible Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount so that after payment by the Eligible Executive of all federal, state and local taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any federal, state or local income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Eligible Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing, if it is determined that the Eligible Executive otherwise would be entitled to a Gross-Up Payment, but that the Payments to the Eligible Executive do not exceed 110% of the amount which is one dollar less than the smallest amount that would give rise to any Excise Tax (the “Reduced Amount”), then no Gross-Up Payment shall be made to the Eligible Executive and the Payments shall be reduced to the Reduced Amount. In such event, the reduction will occur in the following order: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards; and (iii) reduction of other employee benefits. If acceleration of vesting of compensation from an Eligible Executive’s equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant unless the Eligible Executive elects in writing a different order for cancellation. Any Gross-Up Payment made pursuant to this Section 8(a) shall be made to the Eligible Executive no later than December 31 of the year following the year in which any Excise Tax is remitted to the taxing authority.	
 
 	(b)	Subject to the provisions of Section 8(c), all determinations required to be made under this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by the independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control (the “Accounting Firm”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized independent registered public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide its calculations, together with detailed supporting documentation, to the Company and the Eligible Executive within fifteen (15) calendar days after the date on which the Eligible Employee’s right to Payment is triggered (if requested at that time by the Company or the Eligible Executive) or such other time as agreed between the Company and the Eligible Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Eligible Executive within five business days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Eligible Executive, it shall furnish the Eligible Executive with a written opinion that no Excise Tax will be imposed. Any good faith determination by the Accounting Firm shall be binding upon the Company and the Eligible Executive. As a result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that	
 
- 9 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8(c) and the Eligible Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Eligible Executive. If the related Excise Taxes have been remitted to the taxing authority by the Eligible Executive, the Company shall reimburse the Eligible Executive for the Underpayment no later than December 31 of the year following the year in which the Excise Taxes were remitted to the taxing authority.	
 
 	(c)	The Eligible Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Eligible Executive is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Eligible Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Eligible Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Eligible Executive in writing prior to the expiration of such period that it desires to contest such claim, the Eligible Executive shall:	
 
 	(i)	give the Company any information reasonably requested by the Company relating to such claim;	
 
 	(ii)	take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;	
 
 	(iii)	cooperate with the Company in good faith in order effectively to contest such claim; and	
 
 	(iv)	permit the Company to participate in any proceedings relating to such claim;	
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred by the Eligible Executive in connection with such contest and shall indemnify and hold the Eligible Executive harmless, on an after-tax basis, for any Excise Tax or federal, state or local income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Eligible Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Eligible Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial
 
- 10 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
jurisdiction and in one or more appellate courts, as the Company shall determine; provided further, that if the Company directs the Eligible Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Eligible Executive on an interest-free basis and shall indemnify and hold the Eligible Executive harmless, on an after-tax basis, from any Excise Tax or federal, state or local income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Eligible Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Eligible Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. Any payment or cost owed to the Eligible Executive pursuant to this Section 8(c) shall be made no later than December 31 of the year following the year in which the related taxes are remitted to the taxing authority or, if no taxes are paid, the end of the taxable year following the year in which such contest is finally resolved.
 
 	(d)	If, after the receipt by the Eligible Executive of an amount advanced by the Company pursuant to Section 8(c), the Eligible Executive becomes entitled to receive, and receives, any refund with respect to such claim, the Eligible Executive shall (subject to the Company’s complying with the requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Eligible Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Eligible Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Eligible Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.	
 
9.	Requirement of Release and Restrictive Covenant	
The provision of Severance Benefits under this Policy is conditioned upon the Eligible Executive timely signing an Agreement and Release (in a form satisfactory to the Company) which will include restrictive covenants and a comprehensive release of all claims. In this Agreement and Release, the Eligible Executive will be asked to release the Company and its directors, officers, employees and agents from any and all claims the Eligible Executive may have against them, including but not limited to any contract, tort, or wage and hour claims, and any claims under Title VII, the ADEA, the ADA, ERISA, and other federal, state, local or foreign laws. Under the Agreement and Release, the Eligible Executive must also agree not to solicit business similar to any business offered by the Company from any Company customer, not to advise any entity to cancel or limit its business with the Company, not to recruit, solicit, or encourage any employee to leave their employment with the Company, not to perform the same or substantially the same functions or job duties that the Eligible Executive performed for the Company for any business enterprise engaging in activities that compete with the business activities of the Company, not to disclose any of Company’s trade secrets or confidential information, and not to disparage the Company or its employees in any way. These obligations are in addition to any other non-solicitation, noncompete, nondisclosure, or confidentiality agreements the Eligible Executive may have executed while employed by Company. No Severance Benefits will commence under this Policy prior to the eighth day following the date on which the Company has received the Eligible Executive’s fully executed Agreement and Release.
 
- 11 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
10.	Method of Payment of Severance Benefits Under Sections 7(a) and 7(b)	
 
 	(a)	Severance Benefits payable hereunder to an Eligible Executive pursuant to Section 7(a) of this Policy on account of a separation from service for an eligible termination reason under Section 5(a) shall be paid in substantially equal installments consistent with the Company’s payroll practice during the Eligible Executive’s Severance Period and shall be paid in full no later than the end of such period; provided that any amounts otherwise payable prior to the six month anniversary of the Eligible Executive’s separation from service shall be delayed until and paid in a lump sum on the first payroll date coinciding with or next following the six month anniversary of the Eligible Executive’s separation from service. The cash payment referenced in Section 7(b) of this Policy shall be made in a lump sum on the first date on which the Eligible Executive begins to receive severance payments in accordance with the immediately preceding sentence.	
 
 	(b)	Severance Benefits payable hereunder to an Eligible Executive pursuant to Sections 7(a) and 7(b) of this Policy on account of a separation from service for an eligible termination reason under Section 5(b) shall be paid, if the Change in Control which makes Section 5(b) applicable constitutes a “change in control event” under Treasury Regulation §1.409A-3(i)(5), in a lump sum within 30 days following the six month anniversary of the Eligible Executive’s separation from service, and, if such Change in Control does not constitute a “change in control event” under Treasury Regulation §1.409A-3(i)(5), in the manner set forth in Section 10(a).	
 
 	(c)	If an Eligible Executive dies after becoming eligible for Severance Benefits and executing an Agreement and Release but before full receipt of Severance Benefits, the remaining Severance Benefits, if any, will be paid to the Eligible Executive’s estate in one lump sum upon the Eligible Executive’s death. If an Eligible Executive dies after becoming eligible for Severance Benefits but prior to executing an Agreement and Release, his or her estate or representative may not execute an Agreement and Release and no Severance Benefits will be paid under this Policy. All payments will be net of amounts withheld with respect to taxes, offsets, or other obligations.	
 
11.	Offsets	
 
 	(a)	Non-duplication of Benefits . The Company may, in its discretion and to the extent permitted under applicable law, offset against the Eligible Executive’s Severance Benefits under this Policy any other severance, termination, or similar benefits payable to the Eligible Executive by the Company, including, but not limited to any amounts paid under any employment agreement or other individual contractual arrangement, amounts paid pursuant to federal, state, or local workers’ notification or office closing requirements, or statutory severance benefits or payments made on account of notice periods during which the Eligible Executive is released from further duties as provided pursuant to the law of any country or political subdivision thereof.	
 
- 12 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
 	(b)	Debts and Property . The Company also may, in its discretion and to the extent permitted under applicable law, offset against the Eligible Executive’s Severance Benefits under this Policy the value of unreturned property and any outstanding loan, debt or other amount the Eligible Executive owes to the Company. The entire amount of any offset taken pursuant to this Section 11(b) shall not exceed $5,000 in any taxable year, and the offset shall be taken at the same time and in the same amount as such amount would have been otherwise due from the Eligible Executive.	
 
 	(c)	Overpayment . The Company may recover any overpayment of Severance Benefits made to an Eligible Executive or an Eligible Executive’s estate under this Policy or, to the extent permitted by applicable law, offset any other overpayment made to the Eligible Executive against any Severance Benefits or other amount the Company owes the Eligible Executive or the Eligible Executive’s estate. 	
 
12.	Outplacement	
In the Committee’s sole and absolute discretion, Eligible Executives who are eligible for Severance Benefits under the Policy also may be eligible for outplacement services selected by the Company. Eligibility for and the scope of any outplacement services will be determined in the sole discretion of the Committee. Under no circumstances shall any Eligible Executive be eligible to receive a cash payment or any other benefit in lieu of outplacement services.
Any outplacement services provided under this Section 12 must be provided to the Eligible Employee no later than December 31 of the second calendar year following the calendar year in which the Termination Date occurs.
 
13.	Re-employment and Other Employment	
In the event an Eligible Executive is re-employed by the Company prior to the commencement of or within the Severance Period, the payment of any Severance Benefits payable with respect to the prior termination immediately will cease and such Severance Benefits shall no longer be payable under this Policy.
Subject to Section 9 of this Policy, if an Eligible Executive obtains employment (other than with the Company) while receiving Severance Benefits, the Eligible Executive shall continue to receive any remaining cash Severance Benefits in accordance with the payment schedule then in effect, but, except as otherwise required under applicable law, he or she will no longer be eligible to receive continued benefits under Section 7(b) of this Policy as of the date the Eligible Executive becomes eligible to receive such benefits under a subsequent employer’s benefit programs.
 
14.	Funding	
This Policy is not funded, and payment of benefits hereunder shall be made solely from the general assets of the Company. An Eligible Executive entitled to benefits hereunder shall have only the rights of a general creditor of the Company.
 
- 13 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
15.	Administration	
This Policy shall be administered by the Committee, which as the Named Fiduciary shall have the absolute discretion and exclusive right to interpret, construe and administer the Policy and to make final determinations on all questions arising under the Policy, including but not limited to questions concerning eligibility for, the amount of and receipt of Policy benefits. All decisions of the Committee will be conclusive, final and binding upon the parties. Notwithstanding the foregoing, upon the occurrence of a Change in Control, determinations of the Committee hereunder shall be subject to de novo judicial review.
 
16.	Amendment or Termination of the Policy	
Western Union reserves the right to amend or terminate this Policy at any time in its sole discretion, provided, however , that during the period commencing upon the earliest of (a) the signing of a definitive agreement that, if consummated, would result in a Change in Control, (b) the filing of a tender offer with the Securities and Exchange Commission that, if accepted, would result in a Change in Control, or (c) the election of a director to the Board who is not a member of the Incumbent Board (each, a “Triggering Event”) and ending upon the earlier of (x) the date on which the Committee in its sole discretion determines that the Triggering Event will not actually result in a Change in Control, or (y) the 36-month anniversary of the Change in Control, the Company shall not amend or terminate this Policy as it applies to an Eligible Executive without the consent of such affected Eligible Executive. Notwithstanding the foregoing, this Policy may be amended at any time, without the consent of any Eligible Executive, as necessary or desirable to comply with the requirements, or avoid the application, of Code Section 409A.
 
17.	Limitation on Individually Negotiated Severance Arrangements	
As of the Effective Date, this Policy is intended to be the sole source of severance and change in control benefits for Eligible Executives. Absent prior Board approval, no individual agreement shall be entered into with any Eligible Executive or any person being considered for promotion or hire as an Eligible Executive which would provide severance or change in control-type benefits.
 
18.	Section 409A	
Notwithstanding any provision of this Policy, the Policy will be construed, administered or deemed amended as necessary to comply with the requirements of Code Section 409A to avoid taxation under Code Section 409A(a)(1) to the extent subject to Code Section 409A. The Committee, in its sole discretion shall determine the requirements of Code Section 409A applicable to the Plan and shall interpret the terms of the Plan consistently therewith. Under no circumstances, however, shall the Company or any affiliate or any of its or their employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Code Section 409A.
 
19.	Miscellaneous	
No Eligible Executive shall vest in any entitlement to or eligibility for benefits under this Policy until he or she has satisfied all requirements for eligibility and the conditions required to receive the benefits specified in this Policy have been satisfied. No interest shall accrue on any benefit to which an Eligible Executive may be entitled under this Policy. No benefits hereunder, whether or not in pay status, shall be subject to any pledge or assignment, and no creditor may attach or garnish any Eligible Executive’s Policy benefits. This Policy does not create any contract of employment or right to employment for any period of time. Employment with the Company is at-will, and may be terminated by either the Company or the Eligible Executive at any time for any reason.
 
- 14 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
20.	Review Procedure	
Executives eligible to receive benefits under this Policy will be notified of such eligibility as soon as administratively practicable after the event occurs which gives rise to the provision of Policy benefits. If an executive who believes he or she is eligible to receive Policy benefits does not receive such notice or disagrees with the amount of benefits set forth in such notice, or if an executive is informed that he or she is not eligible for benefits under this Policy, the executive (or his or her legal representative) may file a written claim for benefits with the Company’s senior human resources executive or such other officer or body designated by the Committee for this purpose. The written claim must include the facts supporting the claim, the amount claimed, and the executive’s name and mailing address.
If the claim is denied in part or in full, the Company’s senior human resources executive (or other designated officer or body) will notify the executive by mail no later than 90 days after receipt of the written claim. If special circumstances require an extension of time for processing the claim, the executive will be notified in writing before the end of the initial 90-day period. If the claim is denied, the notice of denial will state the specific reasons for the denial, the provisions of the Policy on which the denial is based, a description of any additional information or material required by the Committee to consider the claim (if applicable), as well as an explanation as to why such information or material is necessary, an explanation of the Policy’s review procedures and the time limits applicable to such procedures, as well as a statement of the executive’s right to bring a civil action under ERISA Section 502(a) in the event of an adverse determination upon review.
An executive (or his or her legal representative) may appeal a denial by filing a written appeal with the Committee. The written appeal must be received no later than 60 days after the executive or legal representative received the notice of denial. During the same 60-day period, the executive or legal representative may have reasonable access to relevant documents, records, or other information and may submit written comments and supporting documents, records and other materials to the Committee. A document, record, or other information shall be considered relevant to the claim if such document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, or (iii) demonstrates compliance with the administrative processes and safeguards designed to ensure and verify that benefit claim determinations are made in accordance with the Policy and that, where appropriate, the Policy provisions have been applied consistently with respect to similarly situated executives or designated beneficiaries.
The Committee will review the appeal and notify the executive or legal representative by mail of its final decision within 60 days. If special circumstances require and extension of time for processing the claim, the executive will be notified in writing before the end of the initial 60-day period. If the claim is denied, the notice of denial will state the reason for the denial, references to the specific Sections of the Policy on which the denial is based, a statement that the executive may receive, upon request and free of charge, copies of all documents and information relevant to the appeal, a description of the Policy’s claims and appeals procedures, and a statement of the executive’s right to bring an action under Section 502 of ERISA.
 
- 15 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
Rights Under the Employee Retirement Income Security Act (ERISA)
As a participant in the Policy, an Eligible Executive is entitled to certain rights and protections under ERISA which provides that all Policy participants shall be entitled to:
Receive Information About The Policy And Benefits
The executive may examine, without charge, at the Policy administrator’s office and at other specified locations such as worksites, all documents governing the policy and a copy of the latest annual report (Form 5500 Series) filed with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
The executive may obtain, upon written request to the Policy administrator, copies of documents governing the operation of the Policy including copies of the latest annual report (Form 5500 Series). The Policy administrator may make a reasonable charge for the copies.
The executive may receive a summary of the Policy’s annual financial report. The Policy administrator is required by law to furnish each participant with a copy of this summary annual report.
Prudent Actions by Policy Fiduciaries
In addition to creating rights for Policy participants, ERISA imposes duties upon the people who are responsible for the operation of the Policy. The people who operate the Policy, called “fiduciaries” of the Policy, have a duty to do so prudently and in the interest of the Policy participants and beneficiaries. No one, including an executive’s employer or any other person, may fire an executive or otherwise discriminate against an executive in any way to prevent such executive from obtaining a welfare benefit or exercising his or her rights under ERISA.
Enforcement of Rights
If an executive’s claim for benefits is denied or ignored, in whole or in part, the executive has a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps that can be taken to enforce the above rights. For example, if an executive requests a copy of Policy documents or the latest annual report from the Policy and does not receive them within 30 days, the executive may file suit in a Federal court. In such a case, the court may require the Policy administrator to provide the materials, and pay the executive up to $110 a day until the executive receives the materials, unless the materials were not sent because of reasons beyond the control of the Policy administrator. If an executive has a claim for benefits which is denied or ignored, in whole or in part, he or she may file suit in a state or Federal Court. If it should happen that the fiduciaries misuse Policy money, or if an executive is discriminated against for asserting his or her rights, the executive may seek assistance from the U.S. Department of Labor, or may file a suit in a Federal court. The court will decide who should pay court costs and legal fees. If the executive is successful the court may order the person the executive has sued to pay these costs and fees. If the executive loses, the court may order the executive to pay these costs and fees, for example, if it finds the executive’s claim is frivolous.
 
- 16 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
Assistance With Questions
An executive who has questions about the Policy should contact the Policy administrator. If an executive has any questions about this statement or about his or her rights under ERISA, or if the executive needs assistance in obtaining documents from the Policy administrator, he or she should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in a telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, NW, Washington, D.C. 20210. The executive may also obtain certain publications about his or her rights and responsibilities under ERISA by calling the publication’s hotline of the Employee Benefits Security Administration .
ADDITIONAL INFORMATION
The details on the following chart are provided for the Eligible Executive’s information and possible use.

Name of Policy	  	Type of Policy	  	Policy Year:	
The Western Union Company Severance/	  		  		
Change in Control Policy	  	Welfare	  	1/1 - 12/31	
(Executive Committee Level)	  		  		
Type of Policy Administration
Self-Administered
Policy Sponsor
The Western Union Company
12500 E. Belford Avenue
Englewood, CO 80112
Policy Administrator
Compensation and Benefits Committee of the Board of Directors
c/o The Western Union Company
Office of the General Counsel
12500 E. Belford Avenue
Englewood, CO 80112
 
- 17 -

THE WESTERN UNION COMPANY
SEVERANCE/CHANGE IN CONTROL POLICY
(Executive Committee Level)
 
Agent for Service of Legal Process
The Western Union Company
Office of the General Counsel
12500 E. Belford Avenue
Englewood, CO 80112
In addition, service of legal process may be made upon the Policy administrator.
Identification Number (Policy Sponsor)
20-4531180
Identification Number (Policy)
506
THIS DESCRIPTION OF THE WESTERN UNION COMPANY SEVERANCE/CHANGE IN CONTROL POLICY FOR EXECUTIVE COMMITTEE-LEVEL PARTICIPANTS SERVES AS THE OFFICIAL POLICY DOCUMENT AND AS THE LEGAL SUMMARY PLAN DESCRIPTION. 
 
- 18 -

Exhibit 10.15
The Western Union Company
Supplemental Incentive Savings Plan
ARTICLE I
PURPOSE AND HISTORY OF THE PLAN
1.1 Plan History . The Western Union Company Supplemental Incentive Savings Plan (the “Plan”) was established effective as of September 29, 2006, the date that The Western Union Company (the “Company”) was spun off from First Data Corporation (the “Spin-Off Date”). As further described herein, certain liabilities under the First Data SISP were transferred to the Plan as of that time. The Plan is hereby amended and restated effective as of December 31, 2008.
1.2 Accounts Transferred From the First Data SISP . The following accrued liabilities were transferred from the First Data SISP to the Plan as of the Spin-Off Date:
 
 	(a)	liability equal to the bookkeeping accounts for deferrals contributed after December 31, 2004, plus related earnings, by Participants who are Business Employees.	
 
 	(b)	liability equal to the bookkeeping accounts for employer matching contributions, Service-Related Contributions, and ISP Plus Contributions to the extent non-vested as of December 31, 2004, and for employer matching contributions, Service-Related Contributions, and ISP Plus Contributions credited after December 31, 2004, plus related earnings, by Participants who are Business Employees.	
For purposes of this Section 1.2, “Business Employee” means a Transferred Employee or any other individual employed at any time on or prior to the Spin-Off Date by the Company or its Affiliates who has, as of the Spin-Off Date, or who, immediately prior to his or her termination of employment with all of First Data Corporation and its affiliates, had employment duties primarily related to the business of providing consumer to consumer money transfer services, consumer to business payment services, retail money order services and certain prepaid services. For purposes of this Section 1.2, “Transferred Employee” means an employee of First Data Corporation or any of its affiliates (other than the Company or any of its Affiliates) whose employment is transferred to the Company or any of its Affiliates immediately prior to the Spin-Off Date.
1.3 Purpose of the Plan . The purpose of the Plan is to further the growth and development of the Company by enhancing the Company’s ability to attract and retain select employees by providing a select group of senior management and highly compensated employees of the Company and its Affiliates the opportunity to defer a portion of their cash compensation. The Plan is intended to provide Participants with an opportunity to supplement their retirement income through deferral of current compensation. The Plan is
an unfunded plan that is intended to comply with the requirements of Code § 409A. The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE II
DEFINITIONS
2.1 “ Account ” means any of the unfunded notional accounts established for a Participant under the Plan, including the Participant’s Deferral Account, Western Union Matching Account, First Data Matching Account, First Data ISP Plus Contributions Account, First Data Service-Related Contributions Account, and First Data eOne Global Employer Basic Contributions Account, if applicable.
2.2 “ Affiliate ” means any entity that is treated as a single employer together with the Company pursuant to Code § 414(b) or (c). 
2.3 “ Base Salary ” means a Participant’s annualized base salary, without taking into account (a) commissions, bonus amounts of any kind, reimbursements of expenses, income realized upon exercise of stock options or sales of stock, or (b) deferrals of income under this Plan or any other employee benefit plan of the Company or an Affiliate.
2.4 “ Board ” means the Board of Directors of the Company.
2.5 “ Bonus ” means the payout amount earned by a Participant under one of the Company’s annual bonus or incentive compensation plans.
2.6 “Change in Control” means Change in Control as defined in The Western Union Company 2006 Long-Term Incentive Plan, or a successor plan.
2.7 “ Code ” means the United States Internal Revenue Code of 1986, as amended.
2.8 “ Committee ” means The Western Union Company Employee Benefits Committee, or its successor.
2.9 “ Company ” means The Western Union Company.
2.10 “ Deferral Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) account balance liabilities accumulated under the First Data SISP with respect to deferred salary and bonus amounts which were transferred from the First Data SISP to this Plan as of the Spin-off Date, (b) Salary, Bonus and/or Performance Grant amounts deferred pursuant to this Plan, and (c) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.

	  		  	2	

2.11 “ Deferred Compensation Agreement ” means, collectively, the written agreements between a Participant and the Company (or an Affiliate), or between a Participant and First Data Corporation (or any of First Data Corporation’s affiliates), in the form prescribed by the Committee, whereby a Participant makes a Distribution Election and may agree to defer a portion of his or her Salary, Bonus and/or Performance Grants.
2.12 “ Designated Beneficiary ” means the person or persons designated by a Participant pursuant to rules prescribed by the Committee to receive any benefits payable pursuant to the Plan upon his or her death. In the absence of a beneficiary designation, or if a Participant’s Designated Beneficiary dies prior to the Participant’s death, the Participant’s Designated Beneficiary shall be his or her surviving spouse, if any, and if none, his or her estate.
2.13 “ Disability ” means that the Participant (a) is unable to engage in any substantially gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under a disability or accident or health plan covering employees of the Company and Affiliates.
2.14 “ Distribution Election ” means the election by a Participant made in accordance with Articles III and VI that specifies the time and form in which the Participant’s Account will be distributed.
2.15 “ Employee ” means a full-time employee on the United States payroll of the Company or an Affiliate.
2.16 “ First Data eOne Global Employer Basic Contributions Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) account balances accumulated under the First Data SISP with respect to First Data eOne Global Employer Basic Contributions (as defined under the First Data SISP) the liability for which was transferred from the First Data SISP to this Plan, and (b) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.
2.17 “ First Data ISP Plus Contributions Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) account balances accumulated under the First Data SISP with respect to ISP Plus Contributions (as defined under the First Data SISP) the liability for which was transferred from the First Data SISP to this Plan, and (b) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.

	  		  	3	

2.18 “ First Data Service-Related Contributions Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) account balances accumulated under the First Data SISP with respect to Service-Related Contributions (as defined under the First Data SISP) the liability for which was transferred from the First Data SISP to this Plan, and (b) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.
2.19 “ First Data SISP ” means the First Data Corporation Supplemental Incentive Savings Plan and the First Data Corporation Supplemental Incentive Savings Plan-2.
2.20 “ First Data Matching Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) account balances accumulated under the First Data SISP with respect to employer matching contributions the liability for which was transferred from the First Data SISP to this Plan, and (b) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.
2.21 “ Incentive Savings Plan ” or “ ISP ” means The Western Union Company Incentive Savings Plan, as amended from time to time.
2.22 “ Investment Fund ” means any of the notional investments or hypothetical investment measures as may be designated by the Company from time to time for purposes of determining the gains or losses to be assigned to the Accounts. Investment Funds shall be notional, unfunded, and used solely for the purpose of determining imputed gains or losses in a Participant’s Account. Except as may otherwise be determined by the Company in its sole discretion, the available Investment Funds shall be the same investment options available to participants under the Incentive Savings Plan, excluding any brokerage account option or any employer stock fund.
2.23 “ LTIP ” means The Western Union Company 2006 Long-Term Incentive Plan, as amended from time to time.
2.24 “ Participant ” means an Employee who has satisfied the Plan’s eligibility criteria, has entered into a written Deferred Compensation Agreement in accordance with the provisions of the Plan, and has not received a complete distribution of his Accounts.
2.25 “ Performance Grant ” means the cash amount payable with respect to a Performance Grant under the LTIP that is “performance-based compensation” within the meaning of Code § 409A and the regulations thereunder.
2.26 “ Performance Measures ” means the term Performance Measures as defined in the LTIP.

	  		  	4	

2.27 “ Person ” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as modified, and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
2.28 “ Plan ” means The Western Union Company Supplemental Incentive Savings Plan.
2.29 “ Plan Year ” means the calendar year.
2.30 “ Potential Change in Control ” means any of the following: (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control of the Company; (b) the Company or any Person publicly announces an intention to take or consider taking actions which if consummated would constitute a Change in Control of the Company; (c) any Person becomes the beneficial owner, directly or indirectly, of securities of the Company representing 9.5% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities; unless that Person has filed a schedule under Section 13 of the Securities Exchange Act of 1934 and the rules and regulations promulgated under Section 13, and that schedule (including any and all amendments) indicates that the Person has no intention to (i) control or influence the management or policies of the Company, or (ii) take any action inconsistent with a lack of intention to control or influence the management or policies of the Company; or (d) the Board adopts a resolution to the effect that a Potential Change in Control has occurred.
2.31 “ Salary ” means a Participant’s Base Salary plus commissions and incentive compensation, other than Bonus or Performance Grants, paid to the Participant for personal services rendered by the Participant to the Company or an Affiliate during a calendar year.
2.32 “ Separation from Service ” means a “separation from service” under Code § 409A. A Separation from Service occurs if the facts and circumstances indicate that the Company and its Affiliates and the Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an Employee or as an independent contractor) will decrease to no more than 20 percent of the average level of bona fide services performed (whether as an Employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services if the Participant has been providing services for less than 36 months). Notwithstanding the foregoing, the employment relationship is treated as continuing while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six months, or if longer, so long as the Participant retains the right to reemployment with the Company or an Affiliate under an applicable statute or contract.

	  		  	5	

2.33 “ Severe Financial Hardship ” means an unforeseeable emergency causing severe financial hardship to the Participant resulting from one or more of the following:
 
 	(a)	Accident or illness of the Participant, the Participant’s spouse or dependent (as defined in Code § 152, without regard to Code § 152(b)(1), (b)(2) and (d)(1)(B));	
 
 	(b)	Loss of the Participant’s property due to casualty; or	
 
 	(c)	Similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.	
The purchase of a home or payment of college tuition is not a Severe Financial Hardship. Whether a Participant has experienced a Severe Financial Hardship and the amount available to the Participant as a result of a Severe Financial Hardship shall be determined by the Committee in accordance with Code § 409A based on the relevant facts and circumstances.
2.34 “ Specified Employee ” means a Participant who is a “key employee” (as defined in Code § 416(i)(1)(A)(i), (ii) or (iii) without regard to Code § 416(i)(5)) at any time during the 12 month period ending on the December 31 of a Plan Year (the “Identification Date”). An Employee shall be treated as a Specified Employee only for the 12 month period beginning on the next April 1 following the Identification Date (each such April 1 being the “Specified Employee Effective Date”). Notwithstanding the foregoing, compensation that is excluded from an employee’s gross income on account of the location of the services or the identity of the employer that is not effectively connected with a trade or business within the United States and is excludable as foreign compensation under Code § 415 shall not be treated as compensation for purposes of determining Specified Employees.
2.35 “ Spin-Off Date ” means September 29, 2006, the date that the Company was spun off from First Data Corporation.
2.36 “ Vested Interest ” means a Participant’s nonforfeitable interest in his or her Account, determined in accordance with Article V.
2.37 “ Western Union Matching Account ” means the record maintained by the Company for each Participant who has an account balance for the cumulative amount of (a) Company matching contributions pursuant to this Plan, and (b) imputed gains or losses on those amounts accrued as provided in Article IV of the Plan.
2.38 “ Year of Service ” means a year of service as defined in the Incentive Savings Plan.

	  		  	6	

ARTICLE III
PARTICIPANT DEFERRALS AND COMPANY CONTRIBUTIONS
3.1 Eligibility . The Company shall identify those Employees who are eligible to defer amounts under the Plan. Eligibility to be a Participant in the Plan and to defer amounts under the Plan is entirely at the discretion of the Company and shall be limited to a select group of senior management or highly compensated employees. Eligibility to defer amounts under the Plan for any calendar year shall not confer the right to defer amounts for any subsequent year.
3.2 Deferrals . A Participant may elect to defer up to 80% of the Participant’s Salary and Bonus and up to 100% of a Performance Grant, subject to such additional guidelines and limitations adopted by the Committee, by entering into a Deferred Compensation Agreement in accordance with Section 3.3. The Salary and Bonus otherwise payable to a Participant for each Plan Year beginning after the date of the election and any Performance Grant specified in a Deferred Compensation Agreement shall be reduced by the amount elected to be deferred, and the Participant’s Deferral Account shall be credited for the amount deferred. Participants shall make separate elections with respect to deferrals of Salary, Bonus and Performance Grants. Deferrals from Salary shall be withheld in substantially equal amounts from Salary payable for the Plan Year to which the Deferred Compensation Agreement relates. Deferrals from Bonus shall be withheld from the Bonus otherwise payable for the Plan Year to which the Deferred Compensation Agreement relates, and deferrals from a Performance Grant shall be withheld from the Performance Grant specified in the Deferred Compensation Agreement. Elections to defer Salary, Bonus and Performance Grants are irrevocable, except as otherwise provided in the Plan. With respect to Business Employees who continue to be eligible to defer amounts under the Plan, Deferred Compensation Agreements entered into before the Spin-Off Date shall be continued as if the Deferred Compensation Agreements had been made under this Plan and will be continued as provided in Section 3.3.
3.3 Elections to Defer .
 
 	(a)	Newly Eligible Employees . An eligible Employee who has not previously been eligible to participate in the Plan (or any other plan required to be aggregated with the Plan pursuant to Code § 409A) and who wishes to participate in the Plan must execute a Deferred Compensation Agreement within 30 days after he or she first becomes eligible to participate in the Plan (or any other plan required to be aggregated with the Plan pursuant to Code § 409A). The Deferred Compensation Agreement shall be irrevocable with respect to the current Plan Year, except as otherwise provided in the Plan, and shall be effective only with respect to compensation payable for services performed subsequent to the execution of the Deferred Compensation Agreement. The Employee may change his or her Deferred Compensation Agreement election with respect to services to be performed in any subsequent Plan Year under the provisions in Section 3.3(c).	
In the Employee’s first year of participation, if the Bonus or Performance Grant for which the election is made is an annual bonus or is otherwise based on a specified performance period, then the Employee’s Deferred Compensation Agreement election with respect to the Bonus or Performance Grant will apply only to the portion of the Bonus or Performance Grant equal to the total amount of the Bonus or Performance Grant multiplied by the ratio of the number of days remaining in the performance period after the date of the Deferred Compensation Agreement over the total number of days in the performance period.

	  		  	7	

 	(b)	Former Participants with No Account Balance and Employees Ineligible for Two Years . If a former Participant has been paid all amounts deferred under the Plan (and all other plans required to be aggregated with the Plan pursuant to Code § 409A) and on or before the date of the last payment was not eligible to continue to participate in the Plan (or any other plan required to be aggregated with the Plan pursuant to Code § 409A) for periods after the last payment (other than through an election of a different time and form of payment with respect to amounts paid), the Employee may be treated as newly eligible to participate in the Plan pursuant to Section 3.3(a) as of the first date following such payment that the Employee again becomes eligible to participate in the Plan. If an Employee has ceased to be eligible to defer amounts under the Plan (and all other plans required to be aggregated with the Plan pursuant to Code § 409A) (other than the accrual of earnings), regardless of whether all amounts deferred under the Plan (and all other plans required to be aggregated with the Plan pursuant to Code § 409A) have been paid, and subsequently becomes eligible to participate in the Plan again, the Employee may be treated as newly eligible to participate pursuant to Section 3.3(a) if the Employee has not been eligible to participate in the Plan (or any other plan required to be aggregated with the Plan pursuant to Code § 409A) (other than the accrual of earnings) at any time during the 24-month period ending on the date that the Employee again becomes eligible to participate in the Plan.	
 
 	(c)	Previously Eligible Employees . An eligible Employee who has previously been eligible to participate in the Plan (or any other plan required to be aggregated with the Plan pursuant to Code § 409A) but is not treated as newly eligible to participate in the Plan under Section 3.3(b) and who wishes to change his or her deferral election or make an initial deferral election must enter into a Deferred Compensation Agreement with respect to compensation paid for services performed during a Plan Year at any time prior to the beginning of that Plan Year. The new Deferred Compensation Agreement election shall be effective for such Plan Year and all subsequent Plan Years, except that the Employee may change his or	

	  		  	8	

 	her Deferred Compensation Agreement deferral election at any time through the December 31 prior to the beginning of a Plan Year. After the December 31 prior to the beginning of the Plan Year, the Deferred Compensation Agreement deferral election shall become irrevocable with respect to that Plan Year, except as otherwise provided in the Plan. The Committee may, in its sole discretion, establish earlier deadlines or annual enrollment periods for such election changes during which such elections must be made.	
 
 	(d)	Elections to Defer Performance Grants . Notwithstanding the forgoing provisions of this Section 3.3, an eligible Employee may elect to defer a Performance Grant at any time on or before the date that is six months before the end of the applicable performance period, provided (i) the Employee has performed services for the Company or an Affiliate continuously from the later of the beginning of the performance period or the date the Performance Measures are established for the Performance Grant in writing (which shall be no later than 90 days after the commencement of the performance period) through the date of this election and (ii) the amount payable in respect of the Performance Grant is not calculable and substantially certain to be paid as of the time of this election.	
 
 	(e)	Cancellation of Deferral Election for 401(k) Plan Hardship Distribution . Notwithstanding a Participant’s deferral election in his or her Deferred Compensation Agreement, a Participant’s deferral election shall be cancelled if required under the 401(k) plan sponsored by the Company or an Affiliate which is the Participant’s Employer due to the Participant’s receipt of a hardship distribution from such 401(k) plan, pursuant to the requirements of Code § 1.401(k)-1(d)(3). After the cancellation required under the 401(k) plan has expired, the Participant may execute a new Deferred Compensation Agreement, in accordance with the timing requirements for previously eligible employees under Section 3.3(c).	
3.4 Company Matching Contributions . For any Plan Year in which a Participant is deferring amounts under the Plan, the Participant’s Western Union Matching Account shall be credited with an amount each pay period, calculated as follows:
 
 	(a)	dollar for dollar on the sum of the Participant’s contributions to the ISP (other than catch-up contributions) and the Participant’s contributions of Salary and Bonus to the Plan, up to the first 3% of the sum of (i) the Participant’s Compensation (as defined in the ISP without regard to the Code § 401(a)(17) limitation) for the pay period, plus (ii) Salary and Bonus amounts deferred under the Plan for the pay period, and $.50 for each dollar on the sum of the Participant’s contributions to the ISP (other than catch-up contributions) and the Participant’s Salary and Bonus contributions to the Plan, up to the next 2% of the sum of (i) the Participant’s Compensation (as defined in the ISP without regard to the Code § 401(a)(17) limitation) for the pay period, plus (ii) Salary and Bonus amounts deferred under the Plan for the pay period,	
 
 	(b)	minus the amount of employer matching contributions contributed to the Participant’s ISP accounts for the pay period;	

	  		  	9	

provided, however, that the amounts credited to the Participant’s Western Union Matching Account for any year pursuant to the foregoing shall not exceed the total employer matching contributions that would be provided under the ISP absent any plan-based restrictions that reflect limits on qualified plan contributions under the Code.
To the extent the Participant receives additional employer matching contributions under the ISP when employer matching contributions are recalculated on an annual basis under the ISP, the Participant’s Western Union Matching Account under the Plan may be reduced by the amount of the additional employer matching contributions contributed to the ISP for the Plan Year.
3.5 Company Discretionary Contributions . For any Plan Year, the Company may, in its discretion, credit a Participant’s Account in an amount determined in the sole discretion of the Committee at any time and without regard to any amount credited to the Account of any other Participant. Company discretionary contributions credited to a Participant’s Account pursuant to this Section 3.5 shall vest in accordance with the schedule applicable to the Participant’s Western Union Matching Account, as set forth in Section 5.2.
ARTICLE IV
DEEMED INVESTMENT OF ACCOUNTS
4.1 Selection of Investment Funds . Except as may otherwise be determined by the Company in its sole discretion, the Investment Funds available under the Plan shall be the same investment options available to participants under the Incentive Savings Plan, excluding any brokerage account option or any employer stock fund. The availability of an Investment Fund shall not give, or be deemed for any purpose to give, a Participant an interest in any asset or investment held by the Company for any purpose.
4.2 Participant Identification of Investment Funds . Participants shall select one or more Investment Funds with respect to which imputed gains or losses shall be calculated and attributed (credited or debited) to the Participant’s Account. Participants who are active Employees may change the Investment Funds with respect to which gains or losses on their future deferrals are calculated on any business day, with any change effective as soon as administratively practicable. All Participants may, upon notice to the Plan’s recordkeeper, change the Investment Funds with respect to which gains or losses on their Account balance will be calculated on any business day. Changes received by the Plan’s recordkeeper prior to the close of trading on the New York Stock Exchange will be effective as of that day. Changes received by the recordkeeper after such time on any day will be effective as of the end of the next trading day on the New York Stock Exchange. If a Participant does not choose any Investment Fund, the gains or losses on the amounts credited to the Participant’s Account shall be calculated by reference to the Target Retirement fund based on the Participant’s age as of the default investment election date.

	  		  	10	

4.3 Daily Valuation . The Committee shall maintain a record of each Participant’s Account. Each Participant’s Account shall be adjusted on a daily basis to reflect the deemed gains or losses of the Investment Funds selected by the Participant.
ARTICLE V
VESTING
5.1 Vesting in Deferral Account, First Data ISP Plus Contributions Account, and First Data Service-Related Contributions Account . Each Participant shall be 100% vested in the Participant’s Deferral Account, First Data ISP Plus Contributions Account, and First Data Service-Related Contributions Account at all times.
5.2 Vesting in Western Union Matching Account . Each Participant shall be vested in the Participant’s Western Union Matching Account in accordance with the following vesting schedule:

Years of Service	  	Vesting Percentage	
    Less than 1	  	0%	
            1	  	25%	
            2	  	50%	
            3	  	75%	
    4 or more	  	100%	
5.3 Vesting in First Data Matching Account and First Data eOne Global Employer Basic Contributions Account . The vested portion in each Participant’s First Data Matching Account at the time of the determination will be equal to the sum of the Participant’s First Data Matching Account in the Plan at the time of the determination and the Participant’s First Data Matching Account under The Western Union Company Grandfathered Supplemental Incentive Savings Plan at the time of the determination, multiplied by the Participant’s vesting percentage at the time of the determination, minus the Participant’s First Data Matching Account under The Western Union Company Grandfathered Supplemental Incentive Savings Plan at the time of the determination. The vested portion in each Participant’s First Data eOne Global Employer Basic Contributions Account at the time of the determination will be equal to the sum of the Participant’s First Data eOne Global Employer Basic Contributions Account in the Plan at the time of the determination and the Participant’s First Data eOne Global Employer Basic Contributions Account under The Western Union Company Grandfathered Supplemental Incentive Savings Plan at the time of the determination, multiplied by the Participant’s vesting percentage at the time of the determination, minus the Participant’s First Data eOne Global Employer Basic Contributions Account under The Western Union Company Grandfathered Supplemental Incentive Savings Plan at the time of the determination.

	  		  	11	

The following vesting schedule applies for purposes of this Section 5.3, based on the Participant’s Years of Service at the time of the determination:

Years of Service	  	Vesting Percentage	
    Less than 1	  	0%	
            1	  	25%	
            2	  	50%	
            3	  	75%	
    4 or more	  	100%	
5.4 100% Vesting Events . Each Participant shall be 100% vested in the Participant’s entire Account to the extent not already vested upon the Participant’s death, the Participant’s Disability, the Participant’s attainment of age 65, or the termination of the Plan.
5.5 Violation of Agreement . If a Participant violates any restrictive covenants agreement or any non-solicitation or non-compete agreement that the Participant has signed with the Company or an Affiliate, the Participant shall forfeit the Participant’s entire Account under the Plan, other than the Participant’s Deferral Account, regardless of whether the Participant was vested in the amounts being forfeited. The Committee shall determine whether a Participant has violated any such agreement in its sole discretion.
ARTICLE VI
DISTRIBUTIONS
6.1 Timing of Commencement of Distributions . A Participant shall elect one of the following times for commencement of distributions with respect to: (a) unvested amounts transferred to this Plan from the First Data SISP that were credited to the Participant’s Account prior to January 1, 2005, (b) amounts credited to the Participant’s Accounts for the 2005 Plan Year and the 2006 Plan Year and (c) amounts credited to the Participant’s Accounts each Plan Year, commencing with the 2007 Plan Year.
 
 	(a)	Specified Payment Date . The date the Participant specifies in a Distribution Election that has not been postponed pursuant to Section 6.4. With respect to elections for Plan Years commencing on and after January 1, 2007, the payment date may be any calendar date that is more than four years following the end of the Plan Year to which the Deferred Compensation Agreement relates.	
 
 	(b)	Separation from Service . The date the Participant has a Separation from Service, or a specified time following the Participant’s Separation from Service. A Separation from Service election may not be postponed pursuant to Section 6.4.	

	  		  	12	

 	A Participant may elect immediate commencement or a time following Separation from Service that is prior to the 5 th anniversary of the Participant’s Separation from Service. Notwithstanding any other provision of the Plan, if the Participant is a Specified Employee on the date of his or her Separation from Service, any amounts otherwise payable prior to the 6 th month anniversary of the Participant’s Separation from Service shall be delayed until the day following the 6 th month anniversary of the Participant’s Separation from Service.	
6.2 Form of Distributions . A Participant shall elect one of the following forms of distribution with respect to: (a) unvested amounts transferred to this Plan from the First Data SISP that were credited to the Participant’s Account prior to January 1, 2005, (b) amounts credited to the Participant’s Accounts for the 2005 Plan Year and the 2006 Plan Year and (c) amounts credited to the Participant’s Accounts each Plan Year, commencing with the 2007 Plan Year. A Participant may elect distribution in the form of a lump sum payment or quarterly or annual installments over a period of up to 10 years. Each installment shall be determined by dividing the Participant’s Account balance as of the end of the month immediately preceding the month of the distribution by the number of remaining installments.
 
 	6.3	Special Distribution Provisions .	
(a) Default Distribution Election . If a Participant fails to make an election (including an election carryover pursuant to Section 6.3(c)) specifying the time or form in which all or any portion of the amounts credited to the Participant’s Account will be paid, the Participant shall be deemed to have elected to receive (i) a lump sum distribution, if the Participant has failed to make an election specifying the form of payment, and (ii) a payment upon Separation from Service, if the Participant has failed to make an election specifying the time of payment. The default election provisions of this section will be effective as of the date the initial Deferred Compensation Agreement is effective, and as of that date, cannot be changed except as provided in the Plan with respect to changing Distribution Elections.
(b) Distribution Elections for Accounts From the First Data SISP . A Participant who was formerly a participant in the First Data SISP and whose balance under the First Data SISP was transferred from the First Data SISP to this Plan shall be deemed to have the same Distribution Election as previously filed with respect to the First Data SISP (if such an election was filed), unless the Participant changes the election in accordance with the procedures in this Plan.
(c) Election Carryover . If a Participant makes a Distribution Election for a Plan Year or has a Distribution Election carried over from the First Data SISP, the Distribution Election will remain in effect for all subsequent Plan Years for which the Participant fails to make a new Distribution Election. The election carryover will apply to all subsequent Plan Years until the Participant actually makes a new Distribution Election for a Plan Year.

	  		  	13	

(d) Small Account Balance . Notwithstanding a Participant’s Distribution Election(s), if the Participant’s Account balance under the Plan (and all plans required to be aggregated with the Plan under Code § 409A) is less than or equal to the applicable dollar amount under Code § 402(g)(1)(B) on the date a distribution is to commence, the recipient shall receive a lump sum payment of the Participant’s Account balance, provided the payment results in the termination and liquidation of the entirety of the Participant’s interest in the Plan (and all plans required to be aggregated with the Plan under Code § 409A).
(e) Election Changes Permitted On or Before December 31, 2008 Pursuant to Internal Revenue Service Transition Relief . Notwithstanding anything in this Article to the contrary, a Participant may be permitted to make a new Distribution Election on or before December 31, 2008 with respect to the time and/or form of payment of (a) unvested amounts transferred to this Plan from the First Data SISP that were credited to the Participant’s Account prior to January 1, 2005, (b) amounts credited to the Participant’s Accounts for the 2005 Plan Year and the 2006 Plan Year, (c) amounts credited to the Participant’s Accounts for the 2007 Plan Year, and (d) amounts credited to the Participant’s Accounts for the 2008 Plan Year. However, any such new Distribution Elections will apply only to amounts that would not otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would not otherwise be payable in 2008. In addition, any such new Distribution Election that specifies a distribution commencement date prior to June 1, 2009 will be deemed to be an election to commence distribution on June 1, 2009.
6.4 Changing Distribution Elections . A Participant may change his or her Distribution Election that is a Specified Payment Date election as to timing and/or form of payment if:
 
 	(a)	the change does not accelerate any payments within the meaning of Code § 409A;	
 
 	(b)	the Participant executes a new Distribution Election at least 12 months prior to the earliest date payment would have commenced under the prior Distribution Election;	
 
 	(c)	any payments under the new Distribution Election will not commence earlier than 5 years from the date the payments would have otherwise commenced under the prior Distribution Election; and	
 
 	(d)	the new Distribution Election will not take effect until 12 months after the date it was executed by the Participant.	
For purposes of this Section 6.4, payments made in the form of installments shall be treated as a single payment.

	  		  	14	

6.5 Designation of Beneficiary . A Participant may designate one or more Designated Beneficiaries (who may be designated contingently or successively) by filing a written notice of designation with the Committee in such form as the Committee may prescribe. Each designation will automatically revoke any prior designations by the same Participant. Any beneficiary designation will be effective as of the date on which the written designation is received by the Committee during the lifetime of the Participant.
6.6 Severe Financial Hardship . In the event of a Severe Financial Hardship of a Participant, the Participant may request distribution of some or all of the Participant’s Account or the cancellation of the Participant’s election to defer Salary or Bonus for the remainder of the Plan Year. The Committee shall require such evidence as is reasonably necessary to determine if a distribution is warranted and satisfies the requirements of a Severe Financial Hardship pursuant to Code § 409A. The Committee shall determine the amount available to the Participant, if any, in its sole discretion based on the relevant facts and circumstances and in accordance with Code § 409A. If the Committee grants a Participant’s request to cancel an election to defer Salary or Bonus, the Participant may again make an election to defer Salary or Bonus only in accordance with Article III.
6.7 Payments on Account of Failure to Comply with Code § 409A . If any portion of the Participant’s Account that has not yet been distributed must be included in the Participant’s taxable income for a calendar year pursuant to Code § 409A, the Committee shall distribute the portion of the Account that has been included in the Participant’s taxable income as soon as administratively practicable.
ARTICLE VII
DEFERRED COMPENSATION AND BENEFITS TRUST
Upon the occurrence of any Potential Change in Control, the Company may in its discretion transfer to a Deferred Compensation and Benefits Trust (“DCB Trust”) an amount of cash, marketable securities, or other property acceptable to the trustee equal in value of up to 105% of the amount necessary to pay the Company’s obligations with respect to Accounts under this Plan (the “Funding Amount”). Any cash, marketable securities, and other property so transferred shall be held, managed, and disbursed by the trustee subject to and in accordance with the terms of the DCB Trust. In addition, from time to time, the Company may make any and all additional transfers of cash, marketable securities, or other property acceptable to the trustee as may be necessary in order to maintain the Funding Amount with respect to this Plan. Any amounts transferred to the DCB Trust under this paragraph shall, at any time prior to the consummation of a Potential Change in Control, be returned to the Company by the Trustee at the Company’s request. The Company and any successor shall continue to be liable for the ultimate payment of Participants’ Accounts.
Notwithstanding the immediately preceding paragraph, the Company will not transfer any cash, securities, or other property to the DCB Trust at a time when such a transfer would cause adverse tax consequences under Code § 409A.

	  		  	15	

ARTICLE VIII
AMENDMENT, MODIFICATION AND TERMINATION
8.1 Amendment and Termination . The Company may, at its sole discretion, amend or terminate the Plan at any time provided that the amendment or termination shall not adversely affect the vested or accrued rights or benefits of any Participant without the Participant’s prior consent. Notwithstanding the foregoing, the Company may amend the Plan at any time, without the consent of any Participant, as necessary or desirable to comply with the requirements, or avoid the application, of Code § 409A. Any termination of the Plan will be made in compliance with the requirements of Code § 409A and the regulations thereunder.
8.2 Further Actions to Conform to Code § 409A . Notwithstanding any provision of the Plan, the Plan will be construed, administered or deemed amended as necessary to comply with the requirements of Code § 409A to avoid taxation under Code § 409A(a)(1) to the extent subject to Code § 409A. The Committee, in its sole discretion shall determine the requirements of Code § 409A applicable to the Plan and shall interpret the terms of the Plan consistently therewith. Under no circumstances, however, shall the Company or any affiliate or any of its or their employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Code § 409A.
ARTICLE IX
ADMINISTRATION AND INTERPRETATION
The Committee shall have final discretion, responsibility, and authority to administer and interpret the Plan. This includes the discretion and authority to determine all questions of fact, eligibility, or benefits relating to the Plan. The Committee may also adopt any rules it deems necessary to administer the Plan. The Committee’s responsibilities for administration and interpretation of the Plan shall be exercised by Company employees who have been assigned those responsibilities by the Company’s management. Any Company employee exercising responsibilities relating to the Plan in accordance with this Article shall be deemed to have been delegated the discretionary authority vested in the Committee with respect to those responsibilities, unless limited in writing by the Committee. Any Participant may appeal any action or decision of these employees to the Committee. Claims for benefits under the Plan and appeals of claim denials shall be in accordance with Articles XI and XII. Any interpretation by the Committee shall be final and binding on the Participants and any Designated Beneficiary.

	  		  	16	

ARTICLE X
MISCELLANEOUS
10.1 Non-assignability . Neither a Participant nor a Designated Beneficiary may voluntarily or involuntarily anticipate, assign, or alienate (either at law or in equity) any benefit under the Plan, and the Committee shall not recognize any such anticipation, assignment, or alienation. Furthermore, a benefit under the Plan shall not be subject to attachment, garnishment, levy, execution, or other legal or equitable process. Any attempted sale, conveyance, transfer, assignment, pledge or encumbrance of the rights, interests, or benefits provided pursuant to the terms of the Plan or the levy of any attachment or similar process thereupon, shall be null and void and without effect.
10.2 Taxes . The Company shall deduct from all payments made under this Plan all applicable federal or state taxes required by law to be withheld.
10.3 Governing Law . To the extent not preempted by federal law, the Plan shall be construed in accordance with, and shall be governed by, the laws of the state of Colorado without regard to any conflict of laws provisions thereunder.
10.4 Form of Communication . Any election, application, claim, notice, or other communication required or permitted to be made by a Participant or Designated Beneficiary to the Committee shall be made in such form as the Committee may prescribe, and shall not be effective until the date specified in the Plan or by the Committee for such communication. If no form or date is specified, such communication shall be effective upon receipt of the communication in writing by the Company’s Senior Vice President, Compensation and Benefits at 12500 East Belford Avenue, Englewood, CO 80112.
10.5 Service Providers . The Company or Committee may, in their sole discretion, retain one or more independent entities to provide services in connection with the operation and administration of the Plan. Except as may be specifically delegated or assigned to any such entity in writing or as otherwise provided in this Plan, the Committee shall retain all discretionary authority under this Plan. No Participant or other person shall be a third party beneficiary with respect to, or have any rights or recourse under, any contractual arrangement between the Company or Committee and any such service provider.
10.6 Unsecured General Creditor . Participants and their beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any property or assets of the Company. The assets of the Company shall not be held under any trust for the benefit of Participants, their beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. Any and all Company assets shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be an unfunded and unsecured promise of the Company to pay money in the future.

	  		  	17	

10.7 Gender and Number . Except when otherwise indicated by the context, the masculine gender shall also include the feminine gender and vice versa, and the singular shall also include the plural and vice versa.
10.8 No Right to Continued Employment . Nothing contained in the Plan shall confer upon any Participant any right with respect to the continuation of the Participant’s employment by, or consulting relationship with, the Company, or interfere in any way with the right of the Company, subject to the terms of any separate employment agreement or other contract to the contrary, at any time to terminate such services or to increase or decrease the compensation of the Participant. Nothing in this Plan shall limit or impair the Company’s right to terminate the employment of any employee. Participation in this Plan is a matter entirely separate from any pension right or entitlement the Participant may have and from the terms or conditions of the Participant’s employment. Any Participant who leaves the employment of the Company shall not be entitled to any compensation for any loss of any right or any benefit or prospective right or benefit under this Plan which the Participant might otherwise have enjoyed whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or otherwise.
10.9 Participation in Other Plans . Nothing in this Plan shall affect any right which the Participant may otherwise have to participate in any retirement plan or agreement which the Company or an Affiliate has adopted or may adopt.
10.10 Entire Understanding . This instrument contains the entire understanding between the Company and the Participants participating in the Plan relating to the Plan, and supersedes any prior agreement between the parties, whether written or oral. Neither this Plan nor any provision of the Plan may be waived, modified, amended, changed, discharged or terminated except as provided in the Plan.
10.11 Provisions Severable . To the extent that any one or more of the provisions of the Plan shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
10.12 Headings . The article and section headings are for convenience only and shall not be used in interpreting or construing the Plan.
10.13 Successors, Mergers, or Consolidations . Any agreement under the Plan shall inure to the benefit of and be binding upon (a) the Company and its successors and assigns and upon any corporation into which the Company may be merged or consolidated, and (b) the Participant and his or her heirs, executors, administrators, and legal representatives.

	  		  	18	

ARTICLE XI
CLAIMS PROCEDURE
Claims for benefits under the Plan shall be filed in writing, within 180 days after the event giving rise to a claim, with the Company’s Senior Vice President, Compensation and Benefits (the “Plan Administrator”), who shall have absolute discretion to determine whether benefits are payable under the Plan, interpret and apply the Plan, evaluate the facts and circumstances, and make a determination with respect to the claim in the name and on behalf of the Committee. The claim shall include a statement of all relevant facts and copies of all documents, materials, or other evidence that the claimant believes relevant to the claim.
The Plan Administrator shall furnish a notice to any claimant whose claim for benefits under the Plan has been denied within 90 days from receipt of the claim. This 90-day period may be extended if special circumstances require an extension, provided that the time period cannot exceed a total of 180 days from the Plan’s receipt of the claimant’s claim and the written notice of the extension is provided before the expiration date of the initial 90-day claim period. If an extension is required, the Plan Administrator shall provide a written notice of the extension that contains the expiration date of the initial 90-day claim period, the special circumstances that require an extension, and the date by which the Plan Administrator expects to render its benefits determination.
If the adverse decision relates to a claim involving the Disability of a Participant, the Plan Administrator shall furnish a notice to the claimant whose claim for benefits has been denied within 45 days from receipt of the claim. This 45-day period may be extended for an additional 30-day period if special circumstances require an extension, and the additional 30-day period may be further extended for up to 30 more days if special circumstances require a further extension. If any extension of the time period for notifying a claimant is required, the Plan Administrator shall provide a written notice of the extension to the claimant containing the expiration date of the then-applicable claim period, the special circumstances that require an extension, and the date by which the Plan Administrator expects to render the benefits determination.
The Plan Administrator’s claim denial notice shall set forth:
 
 	(b)	the specific reason or reasons for the denial;	
 
 	(c)	specific references to pertinent Plan provisions on which the denial is based;	
 
 	(d)	a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; and	
 
 	(e)	an explanation of the Plan’s claims review procedure describing the steps to be taken by a claimant who wishes to submit his or her claim for review, including any applicable time limits, and a statement of the Participant’s or beneficiary’s right to bring a civil action under ERISA § 502(a) if the claim is denied on review.	

	  		  	19	

A claimant who wishes to appeal the adverse determination must submit a request for review in writing to the Plan Administrator within 60 days (180 days in the event of a claim involving a Disability) after the appealing claimant receives notice of the denial of benefits.
ARTICLE XII
CLAIMS REVIEW PROCEDURE
Any Participant, former Participant, or Designated Beneficiary of either, who has been denied a benefit claim, shall be entitled, upon written request, to a review of the denied claim by the Committee. A claimant appealing a denial of benefits (or the authorized representative of the claimant) shall be entitled to:
 
 	(f)	submit in writing any comments, documents, records and other information relating to the claim and request a review;	
 
 	(g)	review pertinent Plan documents; and	
 
 	(h)	upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim. A document, record, or other information shall be considered relevant to the claim if such document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, or (iii) demonstrates compliance with the administrative processes and safeguards designed to ensure and verify that benefit claim determinations are made in accordance with the Plan and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated Participants or Designated Beneficiaries.	
The Committee shall reexamine all facts related to the appeal and make a final determination as to whether the denial of benefits is justified under the circumstances.
Decision on Review . The decision on review of a denied claim shall be made in the following manner:
 
 	(a)	The decision on review shall be made by the Committee, who may in its discretion hold a hearing on the denied claim. The Committee shall make its decision solely on the basis of the written record, including documents and written materials submitted by the Participant or Designated Beneficiary (or the authorized representative of the Participant or Designated Beneficiary). The Committee shall make its decision promptly, which shall ordinarily be not later than 60 days (45 days in the event of a claim involving a Disability) after the Plan’s receipt of the request for review, unless special circumstances (such as the need to hold a hearing) require an extension of time for processing. In that case a decision shall be rendered as soon as possible, but not later than 120 days (90 days in the event of a claim involving a Disability) after receipt of the request for review. If an extension of time is required due to special circumstances, the Committee will provide written notice of the extension to the Participant or Designated Beneficiary prior to the time the extension commences, stating the special circumstances requiring the extension and the date by which a final decision is expected.	

	  		  	20	

 	(b)	The decision on review shall be in writing, written in a manner calculated to be understood by the Participant or Designated Beneficiary. If the claim is denied, the written notice shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement of the Participant’s or Designated Beneficiary’s right to bring an action under ERISA § 502(a), and a statement that the Participant or Designated Beneficiary is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits. A document, record, or other information shall be considered relevant to the claim if such document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, or (iii) demonstrates compliance with the administrative processes and safeguards designed to ensure and verify that benefit claim determinations are made in accordance with the Plan and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated claimants.	
 
 	(c)	The Committee’s decision on review shall be final. In the event the decision on review is not provided to the Participant or Designated Beneficiary within the time required, the claim shall be deemed denied on review.	
ARTICLE XIII
LAWSUITS, JURISDICTION, AND VENUE
No lawsuit claiming entitlement to benefits under this Plan may be filed prior to exhausting the claims and claims review procedures described in Articles XI and XII. Any such lawsuit must be initiated no later than (a) one year after the event(s) giving rise to the claim occurred, or (b) 60 days after a final written decision was provided to the claimant under Article XII, whichever is sooner. Any legal action involving benefits claimed or legal obligations relating to or arising under this Plan may be filed only in

	  		  	21	

Federal District Court in the city of Denver, Colorado. Federal law shall be applied in the interpretation and application of this Plan and the resolution of any legal action. To the extent not preempted by federal law, the laws of the state of Colorado shall apply.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
This Plan, as amended and restated, shall be effective as of December 31, 2008.
The Company hereby agrees to the provisions of the Plan and in witness of its agreement, the Company by its duly authorized officer has executed the Plan on the date written below.

THE WESTERN UNION COMPANY	
		
By:	 	 	
		
Title:	 	 	
		
Date:	 	 	

	  		  	22	

Exhibit 10.27
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
NONQUALIFIED STOCK OPTION GRANT – TERMS AND CONDITIONS
EXECUTIVE COMMITTEE MEMBERS (U.S.)
 
1.	These Terms and Conditions form part of your Stock Option Agreement (the “Agreement”) pursuant to which you have been granted a Nonqualified Stock Option (“Stock Option”) under The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”). A copy of the Plan is enclosed for your convenience. The terms of the Plan are hereby incorporated in this Agreement by reference and made a part hereof. Any capitalized terms used in this Agreement that are not defined herein shall have the meaning set forth in the Plan.	
 
2.	The number of common shares of The Western Union Company (the “Company”) subject to the Stock Option, the grant date of the Stock Option and the option exercise price are all specified in the attached Award Notice (which forms part of the Agreement).	
 
3.	Subject to the other provisions of this Agreement and the terms of the Plan, you will “vest” in, or have the right to exercise, this Stock Option as follows:	
 
 	(a)	On or after the first anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-fourth (25%) of the total number of shares covered hereby;	
 
 	(b)	On or after the second anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-half (50%) of the total number of shares covered hereby;	
 
 	(c)	On or after the third anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to three-fourths (75%) of the total number of shares covered hereby;	
 
 	(d)	On or after the fourth anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option with respect to the total number of shares covered hereby;	
 
 	(e)	No part of this Stock Option may be exercised after the tenth anniversary of the grant date listed in the attached Award Notice.	
 
4.	This Stock Option may not be exercised, in whole or in part, unless the following conditions are met:	
 
 	(a)	Legal counsel for the Company must be satisfied at the time of exercise that the issuance of shares upon exercise will comply with applicable U.S. federal, state, local and foreign laws.	
 
 	(b)	You pay the exercise price as follows: (i) by giving notice to the Company or its designee of the number of whole shares of Common Stock to be purchased and by making payment therefor in full (or arranging for such payment to the Company’s satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Mature Shares having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company and to whom you have submitted an irrevocable notice of exercise (i.e., also known as “cashless exercise”) or (D) by a combination of (A) and (B) and (ii) by executing such documents as the Company may reasonably request.	

 	(c)	You must, at all times during the period beginning with the grant date of this Stock Option and ending on the date of such exercise, have been employed by the Company, a Subsidiary or an Affiliate or have been engaged in a period of Related Employment, with certain exceptions noted below. Service on the Board after receipt of a Stock Option shall not be considered a termination of employment.	
 
 	(d)	You have executed and returned to the Company or accepted electronically an updated restrictive covenant agreement (and exhibits) if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. While a court may sever any provision in the restrictive covenant agreement, you agree by executing or electronically accepting the restrictive covenant agreement that you will forfeit this Stock Option, whether vested or not, if you do not abide by the restrictive covenant agreement as written.	
 
 	(e)	You pay all applicable taxes, withholding obligations, securities fees, or other costs, charges, or fees associated with the exercise. You may elect to satisfy your obligation to pay all applicable taxes, withholding obligations, securities fees, or other costs, charges, or fees by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to you, equal to the amount necessary to satisfy any such obligations, (D) except as may be prohibited by applicable law, a cash payment by a broker-dealer acceptable to the Company to whom you have submitted an irrevocable notice of exercise, or (E) any combination of (A) and (B). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. You (or any beneficiary or person entitled to act on your behalf) shall provide the Company with any forms, documents or other information reasonably required by the Company.	
 
5.	Absent a period of Related Employment or service on the Board subsequent to the grant date, if you terminate employment or cease providing services to the Company, a Subsidiary or an Affiliate while holding this Stock Option, your right to exercise the Stock Option and the time during which you may exercise the Stock Option depends on the reason for your termination.	
 
 	(a)	Disability . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Disability, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by you (or your legal representative or similar person) until the date which is one year after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(b)	Retirement . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Retirement, this Stock Option shall continue to vest in accordance with its terms, and to the extent vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is four years after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option.	

 	(c)	Death . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of death, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(d)	Involuntary Termination Without Cause . Except to the extent paragraph 7 applies, if your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee, this Stock Option shall vest on a prorated basis effective on your termination date. Such prorated vesting shall be calculated by multiplying the unvested portion of the Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and your termination date and the denominator of which is the number of days between the grant date and the date the Stock Option would have become fully vested, treating each separate vesting tranche of the Stock Option as a separate Stock Option award. The portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The prorated portion of the Stock Option that vests in accordance with such calculation may be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option. If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are not an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee on the date of such termination, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(e)	Termination for Cause . If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of your termination of employment or service. If the New York Stock Exchange is closed at the time of your termination of employment, this Stock Option shall be forfeited at the time your employment is terminated and shall be canceled by the Company.	
 
 	(f)	Other Termination . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause or termination for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. If the New York Stock Exchange is closed on the thirtieth (30 th ) day following your termination of employment or service, then your unexpired Stock Option may be exercised until the close of the New York Stock Exchange on the next following day on which the New York Stock Exchange is open, after which time this Stock Option shall be forfeited and canceled by the Company.	

 	(g)	Death Following Termination of Employment or Service . If you die during the applicable Post-Termination Exercise Period, this Stock Option will be exercisable only to the extent that the Stock Option is exercisable on the date of your death and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of your death, or if earlier, the expiration date of the term of this Stock Option.	
 
6.	So long as you continue to be a member of the Executive Committee of the Company, you may transfer this Stock Option to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of this Stock Option to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an entity interest in the limited liability company or partnership to which the transfer is made. Any transfer of this Stock Option shall be in a form acceptable to the Committee, shall be signed by you and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If this Stock Option is transferred to a Family Member or Family Entity, the Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution.	
 
7.	If you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and your employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then this Stock Option shall immediately become fully vested and exercisable effective on the date of your termination and may thereafter be exercised by you (or your legal representative or similar person) until the end of your severance period under such policy or, if earlier, the expiration date of the term of this Stock Option.	
 
8.	The Board or Committee may amend or terminate the Plan and the Committee may amend (or its delegate may amend) these Terms and Conditions. No amendment may impair your rights as an option holder without your consent. The determination of such impairment shall be made by the Committee in its sole discretion.	
 
9.	The Committee (or its delegate) administers the Plan and has discretion to interpret the Plan and this Agreement. Any decision or interpretation rendered by the Committee or its delegate shall be final, conclusive and binding on you and all persons claiming under or through you. By accepting this grant or other benefit under the Plan, you and each person claiming under or through you shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Committee or its delegate.	
 
10.	The validity, construction, interpretation, administration and effect of the Plan and this Agreement shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.	

Exhibit 10.28
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN,
NONQUALIFIED STOCK OPTION GRANT – TERMS AND CONDITIONS
EXECUTIVE COMMITTEE (AUSTRIA)
 
1.	These Terms and Conditions form part of your Stock Option Agreement (the “Agreement”) pursuant to which you have been granted a Nonqualified Stock Option (“Stock Option”) under The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”). A copy of the Plan is enclosed for your convenience. The terms of the Plan are hereby incorporated in this Agreement by reference and made a part hereof. Any capitalized terms used in this Agreement that are not defined herein shall have the meaning set forth in the Plan.	
 
2.	The number of common shares of The Western Union Company (the “Company”) subject to the Stock Option, the grant date of the Stock Option and the option exercise price are all specified in the attached Award Notice (which forms part of the Agreement).	
 
3.	Subject to the other provisions of this Agreement and the terms of the Plan, you will “vest” in, or have the right to exercise, this Stock Option as follows:	
 
 	(a)	On or after the first anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-fourth (25%) of the total number of shares covered hereby;	
 
 	(b)	On or after the second anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-half (50%) of the total number of shares covered hereby;	
 
 	(c)	On or after the third anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to three-fourths (75%) of the total number of shares covered hereby;	
 
 	(d)	On or after the fourth anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option with respect to the total number of shares covered hereby;	
 
 	(e)	No part of this Stock Option may be exercised after the tenth anniversary of the grant date listed in the Award Notice;	
 
 	(f)	If you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and your employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then this Stock Option shall immediately become fully vested and exercisable effective on the date of your termination and may thereafter be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option.	
This option may not be exercised for a fraction of a common share of the Company.
 
4.	This Stock Option may not be exercised, in whole or in part, unless the following conditions are met:	
 
 	(a)	Legal counsel for the Company must be satisfied at the time of exercise that the issuance of shares upon exercise will comply with applicable U.S. federal, state, local and foreign laws.	
 
 	(b)	You pay the exercise price as follows: (i) by giving notice to the Company or its designee of the number of whole shares of Common Stock to be purchased and by making payment therefor in full (or arranging for such payment to the Company’s satisfaction) either (A) in cash, (B) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company and to whom you have submitted an irrevocable notice of exercise (i.e., also known as “cashless exercise”) or (C) by a combination of (A) and (B), and (ii) by executing such documents as the Company may reasonably request.	
 
 	(c)	You must, at all times during the period beginning with the grant date of this Stock Option and ending on the date of such exercise, have been employed by the Company, a Subsidiary or an Affiliate or have been engaged in a period of Related Employment, with certain exceptions noted below. Service on the Board after receipt of a Stock Option shall not be considered a termination of employment.	

5.	Absent a period of Related Employment or service on the Board subsequent to the grant date, if you terminate employment or cease providing services to the Company, a Subsidiary or an Affiliate while holding this Stock Option, your right to exercise the Stock Option and the time during which you may exercise the Stock Option depends on the reason for your termination.	
 
 	(a)	Disability . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Disability, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by you (or your legal representative or similar person) until the date which is one year after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(b)	Retirement . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Retirement, this Stock Option shall continue to vest in accordance with its terms, and to the extent vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is four years after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. In administering the Plan, the Committee reserves the right to treat your termination of employment due to Retirement the same as “Other Termination” (as defined in this Agreement) in the event that application of the immediately preceding sentence would be deemed to be impermissible age discrimination under local law, as determined in the sole discretion of the Committee.	
 
 	(c)	Death . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of death, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(d)	Involuntary Termination Without Cause . Except to the extent paragraph 3(f) applies, if your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee, this Stock Option shall vest on a prorated basis effective on your termination date. Such prorated vesting shall be calculated by multiplying the unvested portion of the Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and your termination date and the denominator of which is the number of days between the grant date and the date the Stock Option would have become fully vested, treating each separate vesting tranche of the Stock Option as a separate Stock Option award. The portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The prorated portion of the Stock Option that vests in accordance with such calculation may be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option. If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are not an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee on the date of such termination, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of this Stock Option.	
 
 	(e)	Termination for Cause . If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of your termination of employment or service. If the New York Stock Exchange is closed at the time of your termination of employment, this Stock Option shall be forfeited at the time your employment is terminated and shall be canceled by the Company.	
 
 	(f)	Other Termination . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause, or termination for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. If the New York Stock Exchange is closed on the thirtieth (30 th ) day following your termination of employment or service, then your unexpired Stock Option may be exercised until the close of the New York Stock Exchange on the next following day on which the New York Stock Exchange is open, after which time this Stock Option shall be forfeited and canceled by the Company.	

	 	2	 		

 	(g)	Death Following Termination of Employment or Service . If you die during the applicable Post-Termination Exercise Period, this Stock Option will be exercisable only to the extent that the Stock Option is exercisable on the date of your death and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of your death, or if earlier, the expiration date of the term of this Stock Option.	
 
6.	Subject to any restrictions imposed by local law, so long as you continue to be a member of the Executive Committee of the Company, you may transfer this Stock Option to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of this Stock Option to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an entity interest in the limited liability company or partnership to which the transfer is made. Any transfer of this Stock Option shall be in a form acceptable to the Committee, shall be signed by you and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If this Stock Option is transferred to a Family Member or Family Entity, the Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution.	
 
7.	The Company shall have the right to require, as of the grant, vesting or exercise of an option and the sale of any shares of stock received upon exercise of an option, that you (or any person acting under Paragraph 5 above):	
 
 	(a)	Pay to the Company or its designee, upon its demand, such amount as may be requested for the purpose of satisfying its obligation or the obligation of any of its Subsidiaries or Affiliates or other person to withhold U.S. federal, state, local or foreign income, employment or other taxes incurred by reason of the shares. You may satisfy your obligation to pay such amounts by authorizing the Company to withhold from your wages or other cash compensation, from proceeds from the sale of shares or from the shares purchased by you pursuant to the exercise shares having a fair market value on the date of exercise equal to the withholding amount. If the amount requested for the purpose of satisfying the withholding obligation is not paid, the Company may refuse to allow you to exercise the option; and	
 
 	(b)	Provide the Company with any forms, documents or other information reasonably required by the Company in connection with the grant.	
 
 	(c)	Regardless of any action the Company takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax Related Items”), you acknowledge that the ultimate liability for all Tax Related Items legally due remains your responsibility and that the Company (i) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the Stock Options, including the grant of the Stock Options, the exercise of the Stock Options, the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at exercise and the receipt of any dividends; and (ii) does not commit to structure the terms of the grant or any aspect of the Stock Options to reduce or eliminate your liability for Tax Related Items.	
 
 	(d)	Prior to the issuance of Shares upon exercise of the Stock Options, you shall pay, or make adequate arrangements satisfactory to the Company (in its sole discretion) to satisfy all withholding and payment on account obligations of the Company. In this regard, you authorize the Company to withhold all applicable Tax Related Items legally payable by you from your wages or other cash compensation payable to you by the Company upon exercise of any Stock Options. Alternatively, or in addition, if permissible under local law, the Company may, in its sole discretion, (i) sell or arrange for the sale of Shares to be issued on the exercise of the Stock Options to satisfy the withholding or payment on account obligation, and/or (ii) withhold in Shares, provided that the Company shall withhold only the amount of Shares necessary to satisfy the minimum withholding amount. You shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of your receipt of the Stock Options, or the exercise of the Stock Options, that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares if you fail to comply with your obligations in connection with the Tax Related Items as described herein.	

	 	3	 		

8.	The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of yours under this Agreement without your written consent.	
 
9.	Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on you and all persons claiming under or through you. By accepting this grant or other benefit under the Plan, you and each person claiming under or through you shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.	
 
10.	The validity, construction, interpretation, administration and effect of the Plan, and of its rules and regulations, and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware. If you have received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.	
 
11.	In accepting the grant, you acknowledge that: (i) the Plan is discretionary in nature and it may be modified, suspended or terminated by the Company or the Committee at any time; (ii) the grant of the Stock Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Stock Options, or benefits in lieu of options, even if options have been granted repeatedly in the past; (iii) all decisions with respect to any such future grants will be at the sole discretion of the Committee; (iv) your participation in the Plan shall not create a right to further employment with your Employer (“Employer”) and shall not interfere with the ability of your Employer to terminate your employment relationship at any time with or without cause; (v) your participation in the Plan is voluntary; (vi) the value of the option is an extraordinary item of compensation which is outside the scope of your employment contract, if any; (vii) the options are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (viii) in the event of involuntary termination of your employment, your right to receive options under the Plan, if any, will terminate effective as of the date that you are no longer actively employed regardless of any reasonable notice period mandated under local law (including but not limited to statutory law, regulatory law and/or common law) and the right to receive grants of options will not continue during any required notice period; (ix) the options have not been granted to you in consideration of your employment with your Employer, but is purely a gratuity extended by the Company at its sole discretion, and the option grant can in no event be understood or interpreted to mean that the Company is your employer or that you have an employment relationship with the Company; (x) the future value of the underlying shares is unknown and cannot be predicted with certainty; (xi) if the underlying shares do not increase in value, the options will have no value; and (xii) no claim or entitlement to compensation or damages arises from termination of the options or diminution in value of the options or shares purchased through exercise of the options and you irrevocably release the Company and your Employer from any such claim that may arise.	
 
12.	You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, your Employer, the Company and the Company’s Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that your Employer and/or the Company hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than your country. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of stock acquired upon exercise of the option. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting in writing your local human resources representative. You understand that withdrawal of consent may affect your ability to exercise or realize benefits from the option.	

	 	4	 		

13.	If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement.	
 
14.	You should be aware that you may be entitled to revoke this Agreement and your acceptance of the grant of the Stock Option pursuant to the Austrian Consumer Protection Act under the following conditions: (a) if you sign this Agreement outside of the business premises of your employer, you may be entitled to revoke the Agreement provided the revocation is made within one week of your acceptance; or (b) if circumstances relevant to your decision to enter into the Agreement, as presented by the Company, either do not materialize or materialize to a significantly reduced extent, though no fault of your own, you may be entitled to revoke the Agreement. This revocation must be made within one week of the time that it is foreseeable that the circumstances mentioned above do not materialize or materialize at a significantly reduced extent. If you revoke under sections (a) or (b) listed above, the revocation must be in written form to be valid. It is sufficient if you return this Agreement to the Company or the Company’s representative with language which can be understood as your refusal to conclude or honor this Agreement.	

I hereby confirm that the foregoing and the documents attached hereto are hereby in all respects accepted and agreed to by the undersigned as of the date of this Agreement:	 		 		 		
					
Signature:	 	 	 		 	Printed Name:	 	 	
					
Date:	 	 	 		 		 		

	 	5	 		

Exhibit 10.29
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT – TERMS AND CONDITIONS
EXECUTIVE COMMITTEE MEMBERS (U.S.)
 
1.	Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to you (“Executive”) an award of Restricted Stock Units (the “Units”), in the amount specified in your Award Notice (which forms part of this Agreement) as of the Grant Date specified in your Award Notice, related to shares of the Company’s common stock (“Shares”), subject to the terms and conditions set forth in this Agreement and the Plan. The terms of the Plan are hereby incorporated in this Agreement by this reference and made a part hereof. Capitalized terms not defined herein shall have the same definitions as set forth in the Plan.	
 
2.	Each Unit shall provide for the issuance and transfer to Executive of one Share upon lapse of the restrictions set forth in paragraph 3 below. Upon issuance and transfer of Shares to the Executive following the Restricted Period (as defined herein), Executive shall have all rights incident to ownership of such Shares, including but not limited to voting rights and the right to receive dividends.	
 
3.	Subject to other provisions of this Agreement and the terms of the Plan, on the third anniversary of the Grant Date, all restrictions on the Units shall lapse and the Shares subject to the Units shall be issued and transferred to Executive. Effective on and after such date, subject to applicable laws and Company policies, Executive may hold, assign, pledge, sell, or transfer the Shares in Executive’s discretion. The three year period in which the Units may be forfeited by the Executive is defined as the “Restricted Period.”	
Notwithstanding any other provision of the Plan or this Agreement, in order for the restrictions on the Units to lapse, you must execute and return to the Company or accept electronically an updated restrictive covenant agreement (and exhibits) if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. Failure to execute or electronically accept such an agreement prior to vesting will cause the Units to continue to be subject to restriction.
Prior to the issuance and transfer of Shares upon vesting, the Units will represent only an unfunded and unsecured obligation of the Company. Any Units that vest in accordance with paragraphs 3, 7 or 9 will be settled as soon as administratively practicable after vesting ( i.e., upon lapse of the restrictions on the Units). If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental authority is necessary or desirable as a condition to the issuance and transfer of Shares to the Executive (or his or her estate), such issuance and transfer will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained.
 
4.	Executive may elect to satisfy his or her obligation to advance the amount of any required income or other withholding taxes (the “Required Tax Payments”) incurred in connection with the issuance and transfer of the Shares by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (3) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, or (4) any combination of (1) and (2). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.	

	 	1	 		

5.	The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, while subject to restrictions. If Executive or anyone claiming under or through Executive attempts to make any such sale, transfer, assignment, pledge or other disposition of Units in violation of this paragraph 5, such attempted violation shall be null, void, and without effect.	
 
6.	Executive shall forfeit Executive’s right to any unvested Units (and any associated dividend equivalents) if Executive’s continuous employment with the Company or a Subsidiary or Affiliate terminates for any reason during the Restricted Period (except solely by reason of a period of Related Employment or as set forth in paragraphs 7 and 9).	
 
7.	Except to the extent paragraph 9 applies, if Executive’s employment with the Company or a Subsidiary or Affiliate is terminated involuntarily and without Cause and on the date of such termination Executive is an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee, any then-restricted Units shall vest on a prorated basis effective on Executive’s termination date. Such prorated vesting shall be calculated by multiplying the number of Units by a fraction, the numerator of which is the number of days that have elapsed between the Grant Date and Executive’s termination date and the denominator of which is the number of days between the Grant Date and the third anniversary of the Grant Date. If Executive dies or incurs a Disability during a period of continuous employment with the Company or a Subsidiary or Affiliate during the Restricted Period, Executive shall immediately vest, as of the date of such termination of employment, in any then-unvested Units. Executive shall not vest in any unvested Units by reason of Retirement.	
 
8.	Prior to the issuance and transfer of Shares upon vesting, Executive will be credited with amounts equal to the regular cash dividends that would be payable to Executive if Executive had been transferred such Shares, which amounts shall accrue during the Restricted Period and be paid in cash upon lapse of the Restricted Period; provided, however, that if the Company adopts a shareholder-wide dividend reinvestment program during the Restricted Period, the Committee may direct that Executive be credited with additional Restricted Stock Units equal to the dividends that would be payable with respect to the Shares on or after the date of adoption of such program if Executive had been transferred such Shares and which shall be subject to the same terms as this Agreement, with the increase in the number of Restricted Stock Units equal to the number of Shares that could be purchased with the dividends based on the value of the Shares at the time such dividends are paid (in lieu of crediting Executive with any fractional Units, the Committee may direct that amounts equal to the fair market value of any such fractional Units accrue during the restricted period and be paid in cash upon lapse of the restrictions). This Paragraph 8 will not apply with respect to record dates for dividends occurring prior to the Grant Date or after the Restricted Period has lapsed. During the Restricted Period, Executive (and any person succeeding to Executive’s rights pursuant to the Plan) will not be a shareholder of record of the Shares underlying the Units and will have no voting or other shareholder rights with respect to such Shares.	

	 	2	 		

9.	If Executive is eligible to participate in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and Executive’s employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then any remaining restrictions applicable to the Units shall immediately lapse effective on the date of Executive’s termination.	
 
10.	The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of Executive under this Agreement without Executive’s written consent.	
 
11.	Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on Executive and all persons claiming under or through Executive. By accepting this grant of Units or other benefit under the Plan, Executive and each person claiming under or through Executive shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.	
 
12.	This grant of Units is discretionary, non-binding for future years and there is no promise or guarantee that such grants will be offered to Executive in future years.	
 
13.	The validity, construction, interpretation, administration and effect of these Terms and Conditions and the Plan and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.	
 
14.	If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed as to foster the intent of this Agreement and the Plan.	
 
15.	Notwithstanding any other provision of the Plan or this Agreement, except as otherwise provided in the case of Executive’s termination of employment due to death, Disability or for an eligible reason under the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee during the 24-month period commencing on the effective date of a Change in Control, in order for the restrictions on the Units to lapse the Company must achieve as a Performance Measure not less than $10 million of operating income during the fiscal year ending December 31, 2009, as determined by the Committee based on the Company’s 2009 annual financial statements.	

	 	3	 		

Exhibit 10.30
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT – TERMS AND CONDITIONS
EXECUTIVE COMMITTEE (AUSTRIA)
 
1.	Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to you (“Executive”) an award of Restricted Stock Units (the “Units”), in the amount specified in your Award Notice (which forms part of this Agreement) as of the Grant Date specified in your Award Notice, related to shares of the Company’s common stock (“Shares”), such grant contingent upon your acceptance of these terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. The terms of the Plan are hereby incorporated in this Agreement by this reference and made a part hereof. Capitalized terms not defined herein shall have the same definitions as set forth in the Plan.	
 
2.	Each Unit shall provide for the issuance and transfer to Executive of one Share upon lapse of the restrictions set forth in paragraph 3 below. Upon issuance and transfer of Shares to the Executive following the Restricted Period (as defined herein), Executive shall have all rights incident to ownership of such Shares, including but not limited to voting rights and the right to receive dividends.	
 
3.	Subject to other provisions of this Agreement and the terms of the Plan, on the third anniversary of the Grant Date, all restrictions on the Units shall lapse and the Shares subject to the Units shall be issued and transferred to Executive. Effective on and after such date, subject to applicable local laws and Company policies, Executive may hold, assign, pledge, sell, or transfer the Shares in Executive’s discretion. The three year period in which the Units may be forfeited by the Executive is defined as the “Restricted Period.” Notwithstanding the foregoing provisions in this paragraph 3, you will forfeit all rights to the Units unless you accept these Terms and Conditions either through on-line electronic acceptance (if permitted by the Company) or by signing and returning to the Company a copy of these Terms and Conditions prior to the third anniversary of the Grant Date. Signed copies of these Terms and Conditions should be sent to the attention of: Western Union Stock Plan Administration, 12500 E. Belford Avenue, M21B2, Englewood, Colorado 80112.	
Prior to the issuance and transfer of Shares upon vesting, the Units will represent only an unfunded and unsecured obligation of the Company. Any Units that vest in accordance with paragraphs 3, 7 or 9 will be settled as soon as administratively practicable after vesting ( i.e., upon lapse of the restrictions on the Units). If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any foreign, state or federal law, or the consent or approval of any governmental authority is necessary or desirable as a condition to the issuance and transfer of Shares to the Executive (or his or her estate), such issuance and transfer will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained.
 
4.	Regardless of any action the Company or Executive’s employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax Related Items”), Executive acknowledges that the ultimate liability for all Tax Related Items legally due by Executive is and remains Executive’s responsibility and that the Company and/or Executive’s employer (i) make no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the Units, including the grant of the Units, the vesting of the Units, the conversion of the Units into Shares, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends or dividend equivalents; and (ii) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate Executive’s liability for Tax Related Items.	

	  	1	  		

Prior to the issuance and transfer of Shares upon vesting of the Units, Executive shall pay, or make adequate arrangements satisfactory to the Company or to Executive’s employer (in their sole discretion) to satisfy all withholding and payment on account obligations of the Company and/or Executive’s employer. In this regard, Executive authorizes the Company or Executive’s employer to withhold all applicable Tax Related Items legally payable by Executive from Executive’s wages or other cash compensation payable to Executive by the Company or Executive’s employer. Alternatively, or in addition, if permissible under local law, the Executive may elect to satisfy his obligations with respect to all applicable Tax Related Items by any of the following means: (1) making a cash payment to the Company or Executive’s employer, (2) authorizing the Company to sell Shares to be issued on vesting of the Units to satisfy such obligation, or (3) authorizing the Company to withhold whole shares of common stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation. Shares of common stock withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Executive shall pay to the Company or to Executive’s employer any amount of Tax Related Items that the Company or Executive’s employer may be required to withhold as a result of Executive’s receipt of the Units, the vesting of the Units, or the conversion of the vested Units to Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Executive if Executive fails to comply with Executive’s obligations in connection with the Tax Related Items as described herein.
 
5.	The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, while subject to restrictions. If Executive or anyone claiming under or through Executive attempts to make any such sale, transfer, assignment, pledge or other disposition of Units in violation of this paragraph 5, such attempted violation shall be null, void, and without effect.	
 
6.	Executive shall forfeit Executive’s right to any unvested Units (and any associated dividend equivalents) if Executive’s continuous employment with the Company or a Subsidiary or Affiliate terminates for any reason during the Restricted Period (except solely by reason of a period of Related Employment or as set forth in paragraphs 7 and 9).	
 
7.	Except to the extent paragraph 9 applies, if Executive’s employment with the Company or a Subsidiary or Affiliate is terminated involuntarily and without Cause and on the date of such termination Executive is an eligible participant in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee, any then-restricted Units shall vest on a prorated basis effective on Executive’s termination date. Such prorated vesting shall be calculated by multiplying the number of Units by a fraction, the numerator of which is the number of days that have elapsed between the Grant Date and Executive’s termination date and the denominator of which is the number of days between the Grant Date and the third anniversary of the Grant Date. If Executive dies or incurs a Disability during a period of continuous employment with the Company or a Subsidiary or Affiliate during the Restricted Period, Executive shall immediately vest, as of the date of such termination of employment, in any then-unvested Units. Executive shall not vest in any unvested Units by reason of Retirement.	

	  	2	  		

8.	Prior to the issuance and transfer of Shares upon vesting, Executive will be credited with amounts equal to the regular cash dividends that would be payable to Executive if Executive had been transferred such Shares, which amounts shall accrue during the Restricted Period and be paid in cash upon lapse of the Restricted Period; provided, however, that if the Company adopts a shareholder-wide dividend reinvestment program during the Restricted Period, the Committee may direct that Executive be credited with additional Restricted Stock Units equal to the dividends that would be payable with respect to the Shares on or after the date of adoption of such program if Executive had been transferred such Shares and which shall be subject to the same terms as this Agreement, with the increase in the number of Restricted Stock Units equal to the number of Shares that could be purchased with the dividends based on the value of the Shares at the time such dividends are paid (in lieu of crediting Executive with any fractional Units, the Committee may direct that amounts equal to the fair market value of any such fractional Units accrue during the restricted period and be paid in cash upon lapse of the restrictions). This Paragraph 8 will not apply with respect to record dates for dividends occurring prior to the Grant Date or after the Restricted Period has lapsed. During the Restricted Period, Executive (and any person succeeding to Executive’s rights pursuant to the Plan) will not be a shareholder of record of the Shares underlying the Units and will have no voting or other shareholder rights with respect to such Shares.	
 
9.	If Executive is eligible to participate in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and Executive’s employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then any remaining restrictions applicable to the Units shall immediately lapse effective on the date of Executive’s termination.	
 
10.	The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of Executive under this Agreement without Executive’s written consent.	
 
11.	Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on Executive and all persons claiming under or through Executive. By accepting this grant of Units or other benefit under the Plan, Executive and each person claiming under or through Executive shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.	

	  	3	  		

12.	In accepting the award of Units, Executive acknowledges that (i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan; (ii) the award of Units is voluntary and occasional and does not create any contractual or other right to receive future awards of Units, or benefits in lieu of Units even if Units have been awarded repeatedly in the past; (iii) all decisions with respect to future awards, if any, will be at the sole discretion of the Company; (iv) Executive’s participation in the Plan is voluntary; (v) the award of Units is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or to Executive’s employer, and the Units are outside the scope of Executive’s employment contract, if any; (vi) the Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (vii) neither the award of the Units nor any provision of this Agreement, the Plan or the policies adopted pursuant to the Plan confer upon Executive any right with respect to employment or continuation of current employment, and in the event that Executive is not an employee of the Company or any Subsidiary or Affiliate, the Units shall not be interpreted to form an employment contract or relationship with the Company or any Subsidiary or Affiliate; (viii) this grant of the Units does not establish or imply an employment relationship between Executive and the Company; (ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty, (x) if Executive receives Shares, the value of such Shares acquired upon vesting of the Units may increase or decrease in value; (xi) no claim or entitlement to compensation or damages arises from termination of the Units, and no claim or entitlement to compensation or damages shall arise from any diminution in value of the Units or Shares received upon the vesting of the Units resulting from termination of the Executive’s employment by the Company or the Executive’s employer (for any reason whatsoever and whether or not in breach of local labor laws) and Executive irrevocably releases the Company and Executive’s employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, Executive shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; and (xii) in the event of involuntary termination of Executive’s employment (whether or not in breach of local labor laws), Executive’s right to receive the Units and vest under the Plan, if any, will terminate effective as of the date that Executive is no longer actively employed and will not be extended by any notice period mandated under local law ( e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary termination of employment (whether or not in breach of local labor laws), Executive’s right to receive Shares pursuant to the Units after termination of employment, if any, will be measured by the date of termination of Executive’s active employment and will not be extended by a notice period mandated under local law; the Committee shall have the exclusive discretion to determine when the Executive is no longer actively employed for purposes of the award of the Units.	
 
13.	The validity, construction, interpretation, administration and effect of these Terms and Conditions and the Plan and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.	

	  	4	  		

14.	You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement by and among, as applicable, your employer, the Company and the Company’s Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.	
You understand that your employer and/or the Company hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, and details of all equity awards to you under the Plan, for the purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, or elsewhere, and that the recipient’s country may have different data privacy laws and protection than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Shares received upon vesting of the Units may be deposited. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data, or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand that refusal or withdrawal of consent may affect your ability to receive a transfer of Shares following the expiration of the Restricted Period. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
 
15.	The Company may, in its sole discretion, decide to deliver any documents related to the Units awarded under the Plan or future Units that may be awarded under the Plan by electronic means or request Executive’s consent to participate in the Plan by electronic means. Executive hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.	
 
16.	If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed as to foster the intent of this Agreement and the Plan.	

	  	5	  		

17.	If Executive has received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version differs from the English version, the English version will control.	
 
18.	Executive should be aware that Executive may be entitled to revoke this Agreement and Executive’s acceptance of the grant of the Units pursuant to the Austrian Consumer Protection Act under the following conditions: (a) if Executive signs this Agreement outside of the business premises of Executive’s employer, Executive may be entitled to revoke the Agreement provided the revocation is made within one week of Executive’s acceptance; or (b) if circumstances relevant to Executive’s decision to enter into the Agreement, as presented by the Company, either do not materialize or materialize to a significantly reduced extent, through no fault of Executive’s, Executive may be entitled to revoke the Agreement. This revocation must be made within one week of the time that it is foreseeable that the circumstances mentioned above do not materialize or materialize at a significantly reduced extent. If Executive revokes under sections (a) or (b) listed above, the revocation must be in written form to be valid. It is sufficient if Executive returns this Agreement to the Company or the Company’s representative with language which can be understood as Executive’s refusal to conclude or honor this Agreement.	
 
19.	Notwithstanding any other provision of the Plan or this Agreement, except as otherwise provided in the case of Executive’s termination of employment due to death, Disability or for an eligible reason under the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee during the 24-month period commencing on the effective date of a Change in Control, in order for the restrictions on the Units to lapse the Company must achieve as a Performance Measure not less than $10 million of operating income during the fiscal year ending December 31, 2009, as determined by the Committee based on the Company’s 2009 annual financial statements.	

On Behalf of The Western Union Company	
		
By:	 	 	
Title:	 		
I accept the Grant of Units under the terms and conditions set forth in this Agreement.

 
Hikmet Ersek	

	  	6	  		

Exhibit 10.31
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT – TERMS AND CONDITIONS
CAREER SHARES AWARD (U.S.)
 
1.	Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to you (“Executive”) an award of Restricted Stock Units (the “Units”), in the amount specified in your Award Notice (which forms part of this Agreement) as of the Grant Date specified in your Award Notice, related to shares of the Company’s common stock (“Shares”), subject to the terms and conditions set forth in this Agreement and the Plan. The terms of the Plan are hereby incorporated in this Agreement by this reference and made a part hereof. Capitalized terms not defined herein shall have the same definitions as set forth in the Plan.	
 
2.	Each Unit shall provide for the issuance and transfer to Executive of one Share upon lapse of the restrictions set forth in paragraph 3 below. Upon issuance and transfer of Shares to the Executive following the Restricted Period (as defined herein), Executive shall have all rights incident to ownership of such Shares, including but not limited to voting rights and the right to receive dividends.	
 
3.	Subject to other provisions of this Agreement and the terms of the Plan, on the fourth anniversary of the Grant Date, all restrictions on the Units shall lapse and the Shares subject to the Units shall be issued and transferred to Executive. Effective on and after such date, subject to applicable laws and Company policies, Executive may hold, assign, pledge, sell, or transfer the Shares in Executive’s discretion. The four year period in which the Units may be forfeited by the Executive is defined as the “Restricted Period.”	
Notwithstanding any other provision of the Plan or this Agreement, in order for the restrictions on the Units to lapse, you must execute and return to the Company or accept electronically an updated restrictive covenant agreement (and exhibits) if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. Failure to execute or electronically accept such an agreement prior to vesting will cause the Units to continue to be subject to restriction.
Prior to the issuance and transfer of Shares upon vesting, the Units will represent only an unfunded and unsecured obligation of the Company. Any Units that vest in accordance with paragraphs 3, 7 or 9 will be settled as soon as administratively practicable after vesting ( i.e., upon lapse of the restrictions on the Units). If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental authority is necessary or desirable as a condition to the issuance and transfer of Shares to the Executive (or his or her estate), such issuance and transfer will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained.
 
4.	Executive may elect to satisfy his or her obligation to advance the amount of any required income or other withholding taxes (the “Required Tax Payments”) incurred in connection with the issuance and transfer of the Shares by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (3) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, or (4) any combination of (1) and (2). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.	

	  	1	  		

5.	The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, while subject to restrictions. If Executive or anyone claiming under or through Executive attempts to make any such sale, transfer, assignment, pledge or other disposition of Units in violation of this paragraph 5, such attempted violation shall be null, void, and without effect.	
 
6.	Executive shall forfeit Executive’s right to any unvested Units (and any associated dividend equivalents) if Executive’s continuous employment with the Company or a Subsidiary or Affiliate terminates for any reason during the Restricted Period (except solely by reason of a period of Related Employment or as set forth in paragraphs 7 and 9).	
 
7.	If Executive dies or incurs a Disability during a period of continuous employment with the Company or a Subsidiary or Affiliate during the Restricted Period, Executive shall immediately vest, as of the date of such termination of employment, in any then-unvested Units. Executive shall not vest in any unvested Units by reason of Retirement.	
 
8.	Prior to the issuance and transfer of Shares upon vesting, Executive will be credited with amounts equal to the regular cash dividends that would be payable to Executive if Executive had been transferred such Shares, which amounts shall accrue during the Restricted Period and be paid in cash upon lapse of the Restricted Period; provided, however, that if the Company adopts a shareholder-wide dividend reinvestment program during the Restricted Period, the Committee may direct that Executive be credited with additional Restricted Stock Units equal to the dividends that would be payable with respect to the Shares on or after the date of adoption of such program if Executive had been transferred such Shares and which shall be subject to the same terms as this Agreement, with the increase in the number of Restricted Stock Units equal to the number of Shares that could be purchased with the dividends based on the value of the Shares at the time such dividends are paid (in lieu of crediting Executive with any fractional Units, the Committee may direct that amounts equal to the fair market value of any such fractional Units accrue during the restricted period and be paid in cash upon lapse of the restrictions). This Paragraph 8 will not apply with respect to record dates for dividends occurring prior to the Grant Date or after the Restricted Period has lapsed. During the Restricted Period, Executive (and any person succeeding to Executive’s rights pursuant to the Plan) will not be a shareholder of record of the Shares underlying the Units and will have no voting or other shareholder rights with respect to such Shares.	

	  	2	  		

9.	If Executive is eligible to participate in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and Executive’s employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then any remaining restrictions applicable to the Units shall immediately lapse effective on the date of Executive’s termination.	
 
10.	The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of Executive under this Agreement without Executive’s written consent.	
 
11.	Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on Executive and all persons claiming under or through Executive. By accepting this grant of Units or other benefit under the Plan, Executive and each person claiming under or through Executive shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.	
 
12.	This grant of Units is discretionary, non-binding for future years and there is no promise or guarantee that such grants will be offered to Executive in future years.	
 
13.	The validity, construction, interpretation, administration and effect of these Terms and Conditions and the Plan and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.	
 
14.	If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed as to foster the intent of this Agreement and the Plan.	
 
15.	Notwithstanding any other provision of the Plan or this Agreement, except as otherwise provided in the case of Executive’s termination of employment due to death, Disability or for an eligible reason under the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee during the 24-month period commencing on the effective date of a Change in Control, in order for the restrictions on the Units to lapse the Company must achieve as a Performance Measure not less than $10 million of operating income during the fiscal year ending December 31, 2009, as determined by the Committee based on the Company’s 2009 annual financial statements.	

	  	3	  		

Exhibit 10.32
THE WESTERN UNION COMPANY 2006 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT — TERMS AND CONDITIONS
CAREER SHARES AWARD (AUSTRIA)
 
1.	Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to you (“Executive”) an award of Restricted Stock Units (the “Units”), in the amount specified in your Award Notice (which forms part of this Agreement) as of the Grant Date specified in your Award Notice, related to shares of the Company’s common stock (“Shares”), such grant contingent upon your acceptance of these terms and conditions and subject to the restrictions set forth in this Agreement and the Plan. The terms of the Plan are hereby incorporated in this Agreement by this reference and made a part hereof. Capitalized terms not defined herein shall have the same definitions as set forth in the Plan.	
 
2.	Each Unit shall provide for the issuance and transfer to Executive of one Share upon lapse of the restrictions set forth in paragraph 3 below. Upon issuance and transfer of Shares to the Executive following the Restricted Period (as defined herein), Executive shall have all rights incident to ownership of such Shares, including but not limited to voting rights and the right to receive dividends.	
 
3.	Subject to other provisions of this Agreement and the terms of the Plan, on the fourth anniversary of the Grant Date, all restrictions on the Units shall lapse and the Shares subject to the Units shall be issued and transferred to Executive. Effective on and after such date, subject to applicable local laws and Company policies, Executive may hold, assign, pledge, sell, or transfer the Shares in Executive’s discretion. The four year period in which the Units may be forfeited by the Executive is defined as the “Restricted Period.” Notwithstanding the foregoing provisions in this paragraph 3, you will forfeit all rights to the Units unless you accept these Terms and Conditions either through on-line electronic acceptance (if permitted by the Company) or by signing and returning to the Company a copy of these Terms and Conditions prior to the fourth anniversary of the Grant Date. Signed copies of these Terms and Conditions should be sent to the attention of: Western Union Stock Plan Administration, 12500 E. Belford Avenue, M21B2, Englewood, Colorado 80112.	
Prior to the issuance and transfer of Shares upon vesting, the Units will represent only an unfunded and unsecured obligation of the Company. Any Units that vest in accordance with paragraphs 3, 7 or 9 will be settled as soon as administratively practicable after vesting ( i.e., upon lapse of the restrictions on the Units). If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any foreign, state or federal law, or the consent or approval of any governmental authority is necessary or desirable as a condition to the issuance and transfer of Shares to the Executive (or his or her estate), such issuance and transfer will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained.
 
4.	Regardless of any action the Company or Executive’s employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax Related Items”), Executive acknowledges that the ultimate liability for all Tax Related Items legally due by Executive is and remains Executive’s responsibility and that the Company and/or Executive’s employer (i) make no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the Units, including the grant of the Units, the vesting of the Units, the conversion of the Units into Shares, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends or dividend equivalents; and (ii) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate Executive’s liability for Tax Related Items.	

	  	1	  		

Prior to the issuance and transfer of Shares upon vesting of the Units, Executive shall pay, or make adequate arrangements satisfactory to the Company or to Executive’s employer (in their sole discretion) to satisfy all withholding and payment on account obligations of the Company and/or Executive’s employer. In this regard, Executive authorizes the Company or Executive’s employer to withhold all applicable Tax Related Items legally payable by Executive from Executive’s wages or other cash compensation payable to Executive by the Company or Executive’s employer. Alternatively, or in addition, if permissible under local law, the Executive may elect to satisfy his obligations with respect to all applicable Tax Related Items by any of the following means: (1) making a cash payment to the Company or Executive’s employer, (2) authorizing the Company to sell Shares to be issued on vesting of the Units to satisfy such obligation, or (3) authorizing the Company to withhold whole shares of common stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation. Shares of common stock withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. Executive shall pay to the Company or to Executive’s employer any amount of Tax Related Items that the Company or Executive’s employer may be required to withhold as a result of Executive’s receipt of the Units, the vesting of the Units, or the conversion of the vested Units to Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares to the Executive if Executive fails to comply with Executive’s obligations in connection with the Tax Related Items as described herein.
 
5.	The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, while subject to restrictions. If Executive or anyone claiming under or through Executive attempts to make any such sale, transfer, assignment, pledge or other disposition of Units in violation of this paragraph 5, such attempted violation shall be null, void, and without effect.	
 
6.	Executive shall forfeit Executive’s right to any unvested Units (and any associated dividend equivalents) if Executive’s continuous employment with the Company or a Subsidiary or Affiliate terminates for any reason during the Restricted Period (except solely by reason of a period of Related Employment or as set forth in paragraphs 7 and 9).	
 
7.	If Executive dies or incurs a Disability during a period of continuous employment with the Company or a Subsidiary or Affiliate during the Restricted Period, Executive shall immediately vest, as of the date of such termination of employment, in any then-unvested Units. Executive shall not vest in any unvested Units by reason of Retirement.	

	  	2	  		

8.	Prior to the issuance and transfer of Shares upon vesting, Executive will be credited with amounts equal to the regular cash dividends that would be payable to Executive if Executive had been transferred such Shares, which amounts shall accrue during the Restricted Period and be paid in cash upon lapse of the Restricted Period; provided, however, that if the Company adopts a shareholder-wide dividend reinvestment program during the Restricted Period, the Committee may direct that Executive be credited with additional Restricted Stock Units equal to the dividends that would be payable with respect to the Shares on or after the date of adoption of such program if Executive had been transferred such Shares and which shall be subject to the same terms as this Agreement, with the increase in the number of Restricted Stock Units equal to the number of Shares that could be purchased with the dividends based on the value of the Shares at the time such dividends are paid (in lieu of crediting Executive with any fractional Units, the Committee may direct that amounts equal to the fair market value of any such fractional Units accrue during the restricted period and be paid in cash upon lapse of the restrictions). This Paragraph 8 will not apply with respect to record dates for dividends occurring prior to the Grant Date or after the Restricted Period has lapsed. During the Restricted Period, Executive (and any person succeeding to Executive’s rights pursuant to the Plan) will not be a shareholder of record of the Shares underlying the Units and will have no voting or other shareholder rights with respect to such Shares.	
 
9.	If Executive is eligible to participate in the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee at the time of a Change in Control and Executive’s employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then any remaining restrictions applicable to the Units shall immediately lapse effective on the date of Executive’s termination.	
 
10.	The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of Executive under this Agreement without Executive’s written consent.	
 
11.	Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on Executive and all persons claiming under or through Executive. By accepting this grant of Units or other benefit under the Plan, Executive and each person claiming under or through Executive shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates.	
 
12.	In accepting the award of Units, Executive acknowledges that (i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan; (ii) the award of Units is voluntary and occasional and does not create any contractual or other right to receive future awards of Units, or benefits in lieu of Units even if Units have been awarded repeatedly in the past; (iii) all decisions with	

	  	3	  		

 	respect to future awards, if any, will be at the sole discretion of the Company; (iv) Executive’s participation in the Plan is voluntary; (v) the award of Units is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or to Executive’s employer, and the Units are outside the scope of Executive’s employment contract, if any; (vi) the Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (vii) neither the award of the Units nor any provision of this Agreement, the Plan or the policies adopted pursuant to the Plan confer upon Executive any right with respect to employment or continuation of current employment, and in the event that Executive is not an employee of the Company or any Subsidiary or Affiliate, the Units shall not be interpreted to form an employment contract or relationship with the Company or any Subsidiary or Affiliate; (viii) this grant of the Units does not establish or imply an employment relationship between Executive and the Company; (ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty, (x) if Executive receives Shares, the value of such Shares acquired upon vesting of the Units may increase or decrease in value; (xi) no claim or entitlement to compensation or damages arises from termination of the Units, and no claim or entitlement to compensation or damages shall arise from any diminution in value of the Units or Shares received upon the vesting of the Units resulting from termination of the Executive’s employment by the Company or the Executive’s employer (for any reason whatsoever and whether or not in breach of local labor laws) and Executive irrevocably releases the Company and Executive’s employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, Executive shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; and (xii) in the event of involuntary termination of Executive’s employment (whether or not in breach of local labor laws), Executive’s right to receive the Units and vest under the Plan, if any, will terminate effective as of the date that Executive is no longer actively employed and will not be extended by any notice period mandated under local law ( e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary termination of employment (whether or not in breach of local labor laws), Executive’s right to receive Shares pursuant to the Units after termination of employment, if any, will be measured by the date of termination of Executive’s active employment and will not be extended by a notice period mandated under local law; the Committee shall have the exclusive discretion to determine when the Executive is no longer actively employed for purposes of the award of the Units.	
 
13.	The validity, construction, interpretation, administration and effect of these Terms and Conditions and the Plan and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware.	
 
14.	You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement by and among, as applicable, your employer, the Company and the Company’s Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.	

	  	4	  		

You understand that your employer and/or the Company hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, and details of all equity awards to you under the Plan, for the purpose of implementing, administering and managing the Plan (“Data”). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, or elsewhere, and that the recipient’s country may have different data privacy laws and protection than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the Shares received upon vesting of the Units may be deposited. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data, or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. You understand that refusal or withdrawal of consent may affect your ability to receive a transfer of Shares following the expiration of the Restricted Period. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
 
15.	The Company may, in its sole discretion, decide to deliver any documents related to the Units awarded under the Plan or future Units that may be awarded under the Plan by electronic means or request Executive’s consent to participate in the Plan by electronic means. Executive hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.	
 
16.	If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed as to foster the intent of this Agreement and the Plan.	
 
17.	If Executive has received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version differs from the English version, the English version will control.	
 
18.	Executive should be aware that Executive may be entitled to revoke this Agreement and Executive’s acceptance of the grant of the Units pursuant to the Austrian Consumer Protection Act under the following conditions: (a) if Executive signs this	

	  	5	  		

 	Agreement outside of the business premises of Executive’s employer, Executive may be entitled to revoke the Agreement provided the revocation is made within one week of Executive’s acceptance; or (b) if circumstances relevant to Executive’s decision to enter into the Agreement, as presented by the Company, either do not materialize or materialize to a significantly reduced extent, through no fault of Executive’s, Executive may be entitled to revoke the Agreement. This revocation must be made within one week of the time that it is foreseeable that the circumstances mentioned above do not materialize or materialize at a significantly reduced extent. If Executive revokes under sections (a) or (b) listed above, the revocation must be in written form to be valid. It is sufficient if Executive returns this Agreement to the Company or the Company’s representative with language which can be understood as Executive’s refusal to conclude or honor this Agreement.	
 
19.	Notwithstanding any other provision of the Plan or this Agreement, except as otherwise provided in the case of Executive’s termination of employment due to death, Disability or for an eligible reason under the Severance/Change in Control Policy applicable to members of the Company’s Executive Committee during the 24-month period commencing on the effective date of a Change in Control, in order for the restrictions on the Units to lapse the Company must achieve as a Performance Measure not less than $10 million of operating income during the fiscal year ending December 31, 2009, as determined by the Committee based on the Company’s 2009 annual financial statements.	

On Behalf of The Western Union Company	
		
By:	 	 	
Title:	 		
I accept the Grant of Units under the terms and conditions set forth in this Agreement.

 	
Hikmet Ersek	

	  	6	  		

Exhibit 10.33
2009 Grants
THE WESTERN UNION COMPANY
G RANT A CCEPTANCE A GREEMENT
Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “LTIP”),                     (“the Participant”) has been granted the Performance Grant Award described below. Certain terms and conditions of the Performance Grant Award are set forth immediately below in this Grant Acceptance Agreement. Other terms and conditions are set forth in the Performance Grant Award Agreement which is appended to this Grant Acceptance Agreement. The Grant Acceptance Agreement and the Performance Grant Award Agreement are together the “Agreement” which is made and entered into between The Western Union Company, a Delaware corporation (“the Company”), and the Participant as of the Grant Date. Capitalized terms not otherwise defined in this Grant Acceptance Agreement are defined in the LTIP or the Performance Grant Award Agreement.

Grant Date:	  	February 17, 2009	
		
Maximum Award:	  	     % of the pool established through which the Performance Grant Awards will be funded (the “Performance Grant Funding Pool”)	
		
Performance Period:	  	January 1, 2009 – December 31, 2010	
		
Performance Grant Funding Pool:	  	0.5% of Combined Consolidated Operating Income for fiscal years 2009 and 2010	
		
First Vesting Date:	  	December 31, 2010 (The Target Award shall become 50% vested)	
		
Second Vesting Date:	  	December 31, 2011 (The remaining 50% of the Target Award shall become vested)	
The Participant acknowledges receipt of copies of the Performance Grant Award Agreement, The Western Union Company Severance/Change in Control Policy (Executive Committee Level) (the “Policy”) and the LTIP (which are incorporated by reference and made a part hereof) and this Grant Acceptance Agreement and agrees to abide by all of the terms and conditions of the Performance Grant Award Agreement, the Policy and the LTIP.
In witness whereof, the parties have executed the Agreement as of                   , 2009.

THE WESTERN UNION COMPANY,	
a Delaware corporation	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
Agreed and Accepted:

 	
Participant	

2009 Grants
PERFORMANCE GRANT AWARD AGREEMENT
THE WESTERN UNION COMPANY
2006 LONG-TERM INCENTIVE PLAN
The Western Union Company, a Delaware corporation (the “Company”), hereby grants to                      (the “Participant”) as of February 17, 2009, pursuant to the provisions of The Western Union Company 2006 Long-Term Incentive Plan (the “LTIP”), a Performance Grant Award (the “Award”), upon and subject to the restrictions, terms and conditions set forth in the LTIP and below. Capitalized terms not defined herein shall have the meanings specified in the LTIP.
1. Award Subject to Acceptance of Agreement . The Award shall be null and void unless the Participant shall accept this Agreement by executing the Grant Acceptance Agreement and returning it to the Company at such time as shall be satisfactory to the Company.
2. Vesting and Forfeiture .
2.1. Service Vesting Requirement . Subject to the satisfaction of the performance vesting requirement set forth in the Grant Acceptance Agreement and subject to the provisions governing the treatment of the Award upon a Change in Control as set forth in Section 2.2 of the Agreement, the Award shall vest and become 50% payable pursuant to the terms of the LTIP if the Participant remains in continuous employment with the Company through December 31, 2010 (the “First Vesting Date”) and the remaining 50% shall become payable pursuant to the terms of the LTIP if the Participant remains in continuous employment with the Company through December 31, 2011 (the “Second Vesting Date”). Except as otherwise provided herein, (i) if the Participant’s employment by the Company terminates prior to the First Vesting Date, the Participant shall forfeit all rights with respect to the Award and the Award shall be cancelled by the Company or (ii) if the Participant’s employment by the Company terminates prior to the Second Vesting Date but after the First Vesting Date, the Participant shall only forfeit all rights with respect to the remaining 50% of the Award and the remaining 50% of the Award shall be cancelled by the Company.
2.2. Change in Control . In the event of a Change in Control, the Award payable to the Participant shall be converted into restricted cash (representing only a contingent, unfunded and unsecured obligation of the Company) (“Restricted Cash”) as of the effective date of the Change of Control, such conversion to be based upon target performance (as established by the Committee on the Grant Date) if less than 50% of the performance period has elapsed as of the effective date of the Change in Control, or based upon actual performance results as determined by the Committee in its sole discretion if 50% or more of the performance period has elapsed as of the effective date of the Change in Control. If the Participant’s employment with the Company terminates for an Eligible Termination Reason (as described in Section 5(b) of the Policy) during the 24-month period beginning on the effective date of a Change in Control, such Participant shall receive such Restricted Cash in a lump sum cash payment during the period beginning on January 1 and ending on March 15 of the calendar year immediately following the year in which the Participant’s employment terminates. If the Participant’s employment with the Company does not terminate during the 24-month period beginning on the effective date of a Change in Control, such Participant shall receive such Restricted Cash payment amount during the period beginning on January 1 and ending on March 15 of the calendar year immediately following the year in which the Second Vesting Date occurs.
 
1

2.3. Termination by Reasons of Death or Disability . If the Participant’s employment with the Company terminates by reason of death or Disability, the Award shall be paid, to the extent earned, based on the actual results at the end of the Performance Period (as determined by the Committee in its sole discretion) to the Participant or the Participant’s executor, administrator, legal representative, beneficiary or similar person (together, the “Beneficiary”), as the case may be, as if the Participant had remained employed with the Company through the Second Vesting Date. Notwithstanding anything herein to the contrary, if a Participant or a Participant’s Beneficiary is entitled to receive payment of an Award relating to a pending Performance Period pursuant to this Section 2.3, such Participant or such Participant’s Beneficiary shall receive such payment in a lump sum cash amount during the period beginning on January 1 and ending on March 15 of the calendar year immediately after the year in which the First Vesting Date occurs.
2.4. Termination by Reason Other Than Voluntary Termination by Participant, Death, Disability or Cause . If the Participant’s employment with the Company terminates for any reason, other than voluntary termination by Participant, death, Disability or for Cause, and Section 2.2 does not apply, the Participant shall be entitled to a prorated Award. Such prorated Award shall be equal to the value of the Award at the end of the Performance Period based on the actual performance results at the end of the Performance Period (as determined by the Committee in its sole discretion) multiplied by a fraction, the numerator of which shall equal the number of days such Participant was employed with the Company during the Performance Period and the denominator of which shall equal the number of days in the Performance Period. Notwithstanding anything herein to the contrary, if a Participant is entitled to receive payment of a prorated Award relating to a pending Performance Period pursuant to this Section 2.4, such Participant shall receive such payment in a lump sum cash amount during the period beginning on January 1 and ending on March 15 of the calendar year immediately following the year in which the First Vesting Date occurs.
2.5. Termination by Reason of Voluntary Termination or Cause . If the Participant’s employment with the Company is terminated voluntarily by the Participant (except for an Eligible Termination Reason described in Section 5(b) of the Policy) or is terminated by the Company for Cause, the Participant’s Award that is unvested as of the date of termination, shall be immediately forfeited.
3. Payment . Except as specifically provided otherwise in this Agreement, if the Award has vested in accordance with the terms of this Agreement, the Participant shall receive, during the period beginning on January 1 and ending on March 15 of the calendar year immediately following the year in which the First Vesting Date occurs, a lump sum cash payment in an amount equal, as determined by the Committee, to 50% of the amount of the Award which shall have vested as of such First Vesting Date, and the Participant shall receive, during the period beginning on January 1 and ending on March 15 of the calendar year immediately following the year in which the Second Vesting Date occurs, a lump sum cash payment from the Company in an amount equal, as determined by the Committee, to 50% of the remaining amount of the Award which shall have vested as of the Second Vesting Date, both payments subject to the deduction of taxes and other amounts pursuant to the LTIP, unless the Participant is eligible to and elects to defer any such Award into The Western Union Company Supplemental Incentive Savings Plan (“SISP”) by an election made no later than 6 months prior to end of the performance period. All payments under this Agreement are intended to be exempt from Section 409A of the Code as “short-term deferrals,” within the meaning of Treasury regulations promulgated under Section 409A of the Code.
 
2

4. Committee Discretion . Notwithstanding anything herein to the contrary, in all cases, the Committee shall have the sole and absolute discretion, taking into account such factors, including those described in Exhibit A hereto, as the Committee deems appropriate, to determine the amount of the maximum Award payable to the Participant or to decide that no payment shall be made.
5. Withholding . All Awards or payments under this Agreement are subject to withholding of any federal, state, local or other income, social insurance, payroll or other tax-related items which may be required to be withheld or paid in connection with such award. At the election of the Participant, such withholding obligations may be satisfied through a cash payment to the Company.
6. Award Confers No Rights to Continued Employment . In no event shall the granting of the Award or its acceptance by the Participant give or be deemed to give the Participant any right to continued employment by the Company, or any Subsidiary or Affiliate of the Company.
7. Nontransferability of Award . The Award and any rights thereunder shall not be transferable other than by will or the laws of descent and distribution or pursuant to any beneficiary designation procedures as may be approved by the Committee for such purpose. Except as permitted by the preceding sentence, the Award shall not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt by the Participant to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights thereunder shall immediately become null and void.
8. Agreement Subject to the LTIP . This Agreement is subject to the provisions of the LTIP and the Policy and shall be interpreted in accordance therewith. The Participant hereby acknowledges receipt of a copy of the LTIP and the Policy.
9. Meaning of Certain Terms . As used herein, employment by the Company shall include employment by a Subsidiary or an Affiliate of the Company.
10. Administration . The authority to administer and interpret this Agreement shall be vested in the Committee, and the Committee shall have all the powers with respect to this Agreement as it has with respect to the LTIP. Any interpretation, determination or other action made or taken by the Committee regarding the LTIP or this Agreement shall be final, binding and conclusive.
11. Amendment and Termination . The Board or Committee may at any time amend or terminate the LTIP, provided that, in the absence of consent to the amendment or termination by the Participant, no such amendment or termination may impair the rights of the Participant awarded hereunder.
 
3

12. Special 409A Provisions . Notwithstanding any other provision of this Agreement to the contrary, if any payment hereunder is subject to section 409A of the Code and if such payment is to be paid on account of the Participant’s separation from service (within the meaning of section 409A of the Code), if the Participant is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code), and if any such payment otherwise is required to be made prior to the first day of the seventh month following the Participant’s separation from service, such payment shall be delayed until the first day of the seventh month following the Participant’s separation from service. To the extent that any payments or benefits under this Agreement are subject to section 409A of the Code and are paid or provided on account of the Participant’s termination of employment, the determination as to whether the Participant has had a termination of employment (or separation from service) shall be made in accordance with section 409A and the guidance issued thereunder.
13. Governing Law . This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not otherwise governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to the conflicts of laws principles.
14. Statute of Limitations . Any action, claim or lawsuit relating to this Agreement must be filed no more than 6 months after the date of the employment action that is the subject of the action, claim or lawsuit. The Participant voluntarily waives any statute of limitations to the contrary.

THE WESTERN UNION COMPANY,	
a Delaware corporation	
		
By:	 	 	
Name:	 	 	
Title:	 	 	
 
4

Exhibit 12
THE WESTERN UNION COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(unaudited)
(in millions)

 	  	2008	 	 	2007	  	2006	 	 	2005	 	 	2004	
Earnings:	  				 			  				 				 			
Income before income taxes	  	$	1,238.7	 	 	$	1,222.4	  	$	1,335.1	 	 	$	1,344.1	 	 	$	1,098.6	
Fixed charges	  	 	184.8	 	 	 	204.1	  	 	56.9	 	 	 	7.9	 	 	 	9.7	
Other adjustments	  	 	(4.6	)	 	 	1.2	  	 	(7.2	)	 	 	(2.3	)	 	 	—  	
	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	
Total earnings (a)	  	$	1,418.9	 	 	$	1,427.7	  	$	1,384.8	 	 	$	1,349.7	 	 	$	1,108.3	
	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	
Fixed charges:	  				 			  				 				 			
Interest expense	  	$	171.2	 	 	$	189.0	  	$	55.2	 	 	$	6.2	 	 	$	8.1	
Other adjustments	  	 	13.6	 	 	 	15.1	  	 	1.7	 	 	 	1.7	 	 	 	1.6	
	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	
Total fixed charges (b)	  	$	184.8	 	 	$	204.1	  	$	56.9	 	 	$	7.9	 	 	$	9.7	
	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	
Ratio of earnings to fixed charges (a/b)	  	 	7.7	 	 	 	7.0	  	 	24.3	 	 	 	170.8	 	 	 	114.3	
	  	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	
For purposes of calculating the ratio of earnings to fixed charges, earnings have been calculated by adding income before income taxes, fixed charges, and distributions from equity method investments, and then subtracting income from equity method investments. Fixed charges consist of interest expense and an estimated interest portion of rental expenses and income tax contingencies. Substantially all of our debt was incurred in connection with our Spin-off from First Data on September 29, 2006, resulting in earnings to fixed charges being lower subsequent to the Spin-off. Debt balances have remained relatively consistent since the Spin-off.

Exhibit 21
LIST OF THE WESTERN UNION COMPANY SUBSIDIARIES
(as of December 31, 2008)

Name of Subsidiary	  	Jurisdiction of
Incorporation	
A. Serviban S.A.	  	Peru	
American Rapid Corporation	  	Delaware, USA	
E Commerce Group Products Inc.	  	New York, USA	
E Commerce Group, Inc.	  	New York, USA	
Western Union Holding (Bermuda) Limited	  	Bermuda	
Western Union (Bermuda) Holding Finance Ltd.	  	Bermuda	
Western Union Management (Bermuda) Limited	  	Bermuda	
First Financial Management Corporation	  	Georgia, USA	
Global Collection Services, S.A.	  	Argentina	
Grant Financial Group, Inc.	  	California, USA	
Grupo Dinámico Empresarial, S.A. de C.V.	  	Mexico	
LawNet, Inc.	  	New York, USA	
LegalTech, Inc.	  	New York, USA	
Montvale Mortgage Associates, LLC	  	Delaware, USA	
MT Caribbean Holdings Srl	  	Barbados	
MT Global Holdings Ltd.	  	Bermuda	
MT Group Ltd.	  	Bermuda	
MT Holdings (Bermuda) Limited	  	Bermuda	
MT International Holdings Limited	  	Bermuda	
MT International Operations Ltd.	  	Bermuda	
MT International Operations Partnership	  	Bermuda	
MT Network Holdings Ltd.	  	Bermuda	
MT Processing Holdings Ltd.	  	Bermuda	
MT Worldwide Holdings Ltd.	  	Bermuda	
OOO Western Union MT East	  	Russian Federation	
Operaciones Internationales de O.V., S de R.L. de C.V.	  	Mexico	
Orlandi de Mexico S.A. de C.V.	  	Mexico	
Red Global SA	  	Argentina	
PayBills.com Inc.	  	New York, USA	
Paymap, Inc.	  	Delaware, USA	
Servicio Electrónico de Pago S.A.	  	Argentina	
Servicio Integral de Envios S. de R.L. de C.V.	  	Mexico	
Servicios de Apoyo GDE, S.A. de C.V.	  	Mexico	
Societe Financiere de Paiements SAS	  	France	
SpeedPay, Inc.	  	New York, USA	
The Western Union Real Estate Holdings LLC	  	Delaware, USA	
Transfer Express de Panama S.A.	  	Panama	
Union del Oeste de Costa Rica SrL	  	Costa Rica	
Vigo Bermuda Ltd.	  	Bermuda	
Vigo Italy S.R.L.	  	Italy	
Vigo MT International Limited	  	Ireland	
Vigo Remittance Canada Company	  	Nova Scotia, Canada	
Vigo Remittance Corporation	  	Delaware, USA	
Vigo Remittance Ireland Limited	  	Ireland	
Vigo UK Limited	  	United Kingdom	
Western Union Acquisition Partnership	  	Australia	
Western Union Benelux MT Limited	  	Ireland	
Western Union Chile Limitada	  	Chile	
Western Union Communications, Inc.	  	Delaware, USA	
Western Union Deutschland GbR	  	Germany	
Western Union do Brasil Servicos e Participacoes Ltda.	  	Brazil	

			
Name of Subsidiary	  	Jurisdiction of
Incorporation	
Western Union (Hellas) International Holdings S.A.	  	Greece	
Western Union Holding (Bermuda) Ltd. & Co. OEG	  	Austria	
Western Union Financial Holdings L.L.C	  	New York, USA	
Western Union Financial Services S.A.	  	Argentina	
Western Union Financial Services (Australia) Pty. Ltd.	  	Australia	
Western Union Financial Services (Belgium) SPRL	  	Belgium	
Western Union Financial Services (Canada), Inc.	  	Ontario, Canada	
Western Union Financial Services Eastern Europe LLC	  	Delaware, USA	
Western Union Financial Services International (France) SARL	  	France	
Western Union Financial Services GmbH	  	Germany	
Western Union Financial Services GmbH	  	Austria	
Western Union Financial Services (Hong Kong) Limited	  	Hong Kong	
Western Union Financial Services (Italia) Srl	  	Italy	
Western Union Financial Services (Korea) Inc.	  	Korea	
Western Union Financial Services (Luxembourg) SARL	  	Luxembourg	
Western Union Financial Services Overseas, Inc.	  	Delaware, USA	
Western Union Financial Services, Inc.	  	Colorado, USA	
Western Union GB Limited	  	United Kingdom	
Western Union Holdings, Inc.	  	Georgia, USA	
Western Union International Bank GmbH	  	Austria	
Western Union International Limited	  	Ireland	
Western Union Ireland Holdings Limited	  	Ireland	
Western Union Italy Holdings Srl	  	Italy	
Western Union, LLC	  	Colorado, USA	
Western Union Morocco SARL	  	Morocco	
Western Union Network (Bermuda) Limited	  	Bermuda	
Western Union Network (Canada) Company	  	Nova Scotia, Canada	
Western Union Network (France) SAS	  	France	
Western Union Network (Ireland) Limited	  	Ireland	
Western Union Northern Europe GmbH	  	Germany	
Western Union Online Limited	  	Ireland	
Western Union Operations (UK) Ltd.	  	United Kingdom	
Western Union Overseas Limited	  	Ireland	
Western Union Peru SAC	  	Peru	
Western Union Processing Limited	  	Ireland	
Western Union Provision of Marketing & Advertising Services (Hellas) MEPE	  	Greece	
Western Union Regional Panama S.A.	  	Panama	
Western Union Holding (Netherlands) CV	  	Netherlands	
Western Union Services, Inc.	  	Maryland, USA	
Western Union Services India Private Limited	  	India	
Western Union Services (Philippines) Inc.	  	Philippines	
Western Union Services Singapore Pte. Ltd.	  	Singapore	
Western Union Services S.L.	  	Spain	
Western Union Services (Spain) S.L.	  	Spain	
Western Union Settlement Holdings Limited	  	Ireland	
Western Union Singapore Limited	  	Bermuda	
Western Union UK Ltd.	  	United Kingdom	
Western Union Consulting Services (Beijing) Ltd.	  	Beijing	
WU BP Peru SRL	  	Peru	

Exhibit 23
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
 
(1)	Registration Statements (Form S-3 Nos. 333-147189 and 333-150722) of The Western Union Company, and	
 
(2)	Registration Statement (Form S-8 No. 333-137665) pertaining to The Western Union Company 2006 Long-Term Incentive Plan, The Western Union Company 2006 Non-Employee Director Equity Compensation Plan, and The Western Union Company Supplemental Incentive Savings Plan;	
of our reports dated February 18, 2009, with respect to the consolidated financial statements and schedule and internal control over financial reporting of The Western Union Company included in this Annual Report (Form 10-K) of The Western Union Company for the year ended December 31, 2008.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2009

Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Christina A. Gold, certify that:
 
1.	I have reviewed this Annual Report on Form 10-K of The Western Union Company;	
 
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date: February 18, 2009	    	/ S / C HRISTINA A. G OLD	
	    	Christina A. Gold
Chief Executive Officer	

Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Scott T. Scheirman, certify that:
 
1.	I have reviewed this Annual Report on Form 10-K of The Western Union Company;	
 
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
 
 	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 
 	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 
 	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 
 	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
 
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	
 
 	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 
 	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date: February 18, 2009	    	/ S / S COTT T. S CHEIRMAN	
	    	Scott T. Scheirman
Executive Vice President and Chief Financial Officer	

Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
The certification set forth below is being submitted in connection with the Annual Report of The Western Union Company on Form 10-K for the period ended December 31, 2008 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Christina A. Gold and Scott T. Scheirman certify that, to the best of her or his knowledge:
 
 	1.	The Report fully complies with the requirements of Section 13(a) or 15(d), of the Exchange Act; and	
 
 	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The Western Union Company.	

Date: February 18, 2009	    	/ S / C HRISTINA A. G OLD	
	    	Christina A. Gold
Chief Executive Officer	
		
Date: February 18, 2009	    	/ S / S COTT T. S CHEIRMAN	
	    	Scott T. Scheirman
Executive Vice President and Chief Financial Officer