WESTERN UNION CO, 10-Q filed on 8/4/2010
Quarterly Report
Document and Entity Information (USD $)
In Billions, except Share data
Jul. 30, 2010
6 Months Ended
Jun. 30, 2010
Jun. 30, 2009
Document and Entity Information [Abstract]
 
 
 
Company Name
 
Western Union CO 
 
Entity Central Index Key (CIK)
 
0001365135 
 
Form Type
 
10-Q 
 
Report Period
 
06/30/2010 
 
Amendment Flag
 
FALSE 
 
Document Fiscal Year Focus
 
2010 
 
Document Fiscal Period Focus
 
Q2 
 
Company Fiscal Year End Date
 
12/31 
 
Company Well-known Seasoned Issuer (WKSI)
 
Yes 
 
Entity Voluntary Filers
 
No 
 
Current with Filings
 
Yes 
 
Accelerated Filing Status
 
Large Accelerated Filer 
 
Public Float
 
 
$ 11.5 
Entity Common Stock, Shares Outstanding
660,120,082 
 
 
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Condensed Consolidated Statements of Income [Abstract]
 
 
 
 
Revenues:
 
 
 
 
Transaction fees
$ 995.5 
$ 1,961.2 
$ 999.9 
$ 1,958.4 
Foreign exchange revenues
249.3 
487.4 
217.2 
422.3 
Commission and other revenues
28.6 
57.5 
37.2 
74.8 
Total revenues
1,273.4 
2,506.1 
1,254.3 
2,455.5 
Expenses:
 
 
 
 
Cost of services
727.7 
1,442.3 
700.3 
1,369.4 
Selling, general and administrative
234.7 
437.0 
212.3 
403.5 
Total expenses
962.4 
1,879.3 
912.6 
1,772.9 
Operating income
311.0 
626.8 
341.7 
682.6 
Other income/(expense):
 
 
 
 
Interest income
0.5 
1.4 
2.8 
6.5 
Interest expense
(41.1)
(79.9)
(39.8)
(79.8)
Derivative gains/(losses), net
0.7 
(0.2)
0.8 
(2.8)
Other income/(expense), net
1.2 
0.2 
(9.8)
(5.6)
Total other expense, net
(38.7)
(78.5)
(46.0)
(81.7)
Income before income taxes
272.3 
548.3 
295.7 
600.9 
Provision for income taxes
51.3 
119.4 
75.5 
156.8 
Net income
221.0 
428.9 
220.2 
444.1 
Earnings per share:
 
 
 
 
Basic
0.33 
0.63 
0.31 
0.63 
Diluted
0.33 
0.63 
0.31 
0.63 
Weighted-average shares outstanding:
 
 
 
 
Basic
669.3 
675.6 
700.6 
703.8 
Diluted
671.6 
677.9 
702.7 
705.2 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions
Jun. 30, 2010
Dec. 31, 2009
Assets
 
 
Cash and cash equivalents
$ 1,746.8 
$ 1,685.2 
Settlement assets
2,341.3 
2,389.1 
Property and equipment, net of accumulated depreciation of $354.8 and $335.4, respectively
196.1 
204.3 
Goodwill
2,156.5 
2,143.4 
Other intangible assets, net of accumulated amortization of $401.7 and $355.4, respectively
471.8 
489.2 
Other assets
435.2 
442.2 
Total assets
7,347.7 
7,353.4 
Liabilities and Stockholders' Equity
 
 
Liabilities:
 
 
Accounts payable and accrued liabilities
469.3 
501.2 
Settlement obligations
2,341.3 
2,389.1 
Income taxes payable
305.7 
519.0 
Deferred tax liability, net
276.6 
268.9 
Borrowings
3,296.5 1
3,048.5 1
Other liabilities
258.6 
273.2 
Total liabilities
6,948.0 
6,999.9 
Commitments and contingencies (Note 7)
 
 
Stockholders' equity:
 
 
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
0.0 
0.0 
Common stock, $0.01 par value; 2,000 shares authorized; 661.6 shares and 686.5 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
6.6 
6.9 
Capital surplus
73.2 
40.7 
Retained earnings
364.9 
433.2 
Accumulated other comprehensive loss
(45.0)
(127.3)
Total stockholders' equity
399.7 
353.5 
Total liabilities and stockholders' equity
$ 7,347.7 
$ 7,353.4 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Per Share data
Jun. 30, 2010
Dec. 31, 2009
Assets
 
 
Accumulated depreciation
$ 354.8 
$ 335.4 
Accumulated amortization
401.7 
355.4 
Stockholders' equity:
 
 
Preferred stock, par value
Preferred stock, shares authorized
10 
10 
Preferred stock, shares issued
Common stock, par value
0.01 
0.01 
Common stock, shares authorized
2,000 
2,000 
Common stock, shares issued
661.6 
686.5 
Common stock, shares outstanding
661.6 
686.5 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions
6 Months Ended
Jun. 30,
2010
2009
Condensed Consolidated Statements of Cash Flows [Abstract]
 
 
Cash flows from operating activities
 
 
Net income
$ 428.9 
$ 444.1 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
30.1 
26.9 
Amortization
55.5 
45.9 
Stock compensation expense
20.6 
16.2 
Other non-cash items, net
(4.9)
28.6 
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:
 
 
Other assets
64.2 
10.7 
Accounts payable and accrued liabilities
(36.3)
(24.0)
Income taxes payable (Note 14)
(213.5)
67.7 
Other liabilities
(18.5)
(9.8)
Net cash provided by operating activities
326.1 
606.3 
Cash flows from investing activities
 
 
Capitalization of contract costs
(13.0)
(5.5)
Capitalization of purchased and developed software
(9.8)
(6.5)
Purchases of property and equipment
(20.8)
(27.9)
Acquisition of business, net of cash acquired
0.0 
(145.2)
Proceeds from receivable for securities sold
0.0 
234.9 
Repayments of notes receivable issued to agents
16.9 
11.1 
Net cash (used in)/provided by investing activities
(26.7)
60.9 
Cash flows from financing activities
 
 
Proceeds from exercise of options
11.9 
5.9 
Cash dividends paid
(80.1)
0.0 
Common stock repurchased
(417.1)
(100.1)
Net repayments of commercial paper
0.0 
(82.8)
Net proceeds from issuance of borrowings
247.5 
496.6 
Principal payments on borrowings
0.0 
(500.0)
Net cash used in financing activities
(237.8)
(180.4)
Net change in cash and cash equivalents
61.6 
486.8 
Cash and cash equivalents at beginning of period
1,685.2 
1,295.6 
Cash and cash equivalents at end of period
1,746.8 
1,782.4 
Supplemental cash flow information:
 
 
Interest paid
77.8 
83.0 
Income taxes paid (Note 14)
341.4 
84.3 
Non-cash exchange of 5.400% notes due 2011 for 5.253% notes due 2020
$ 303.7 
$ 0.0 
Business and Basis of Presentation
Business and Basis of Presentation
 
1.  Business and Basis of Presentation
 
Business
 
The Western Union Company (“Western Union” or the “Company”) is a leader in global money transfer and payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Western Union® brand is globally recognized. The 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.
 
  •   Global business payments—the processing of payments from consumers or businesses to other businesses. The Company’s business payments services allow consumers to make payments to a variety of organizations including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. As described further in Note 4, in September 2009, the Company acquired Canada-based Custom House, Ltd. (“Custom House”), a provider of international business-to-business payment services, which is included in this segment. Custom House facilitates cross-border, cross-currency payment transactions. While the Company continues to pursue further international expansion of its offerings in this segment, the majority of the segment’s revenue was generated in the United States during all periods presented.
 
All businesses that have not been classified into the consumer-to-consumer or global business payments segments are reported as “Other” and primarily include the Company’s money order services business.
 
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located, or which constitute undistributed earnings of affiliates of the Company accounted for under the equity method of accounting. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of June 30, 2010, the amount of net assets subject to these limitations totaled nearly $190 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.
 
Basis of Presentation
 
The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted.
 
The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts have been eliminated.
 
In the opinion of management, these condensed consolidated financial statements include all the normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position and cash flows as of June 30, 2010 and for all periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
 
Consistent with industry practice, the accompanying Condensed 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.
 
Use of Estimates
 
The preparation of financial statements in conformity with 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.
 
Restructuring and Related Expenses
 
The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other exit costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring activities when the carrying amount of the assets may not be fully recoverable, in accordance with the appropriate accounting guidance. Restructuring and related expenses consist of direct and incremental expenses associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure and migration of the Company’s IT infrastructure; and other expenses related to the relocation of various operations to new or existing Company facilities and third-party providers, including hiring, training, relocation, travel and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and the acceleration of depreciation. For more information on the Company’s restructuring and related expenses see Note 3.
 
Consolidation of Variable Interest Entities
 
On January 1, 2010, the Company adopted new accounting standards for the consolidation of variable interest entities. These new accounting standards amend the evaluation criteria to determine whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable interest entity. The new guidance also requires an ongoing reassessment of the primary beneficiary. Adoption of these new requirements did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.
 
Earnings Per Share and Dividends
Earnings Per Share and Dividends
2.  Earnings Per Share and Dividends
 
Earnings Per Share
 
The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options and restricted stock are available to acquire shares at an average market price throughout the year, and therefore, reduce the dilutive effect.
 
For the three months ended June 30, 2010 and 2009, there were 36.8 million and 38.0 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation as their effect was anti-dilutive. For the six months ended June 30, 2010 and 2009, there were 36.2 million and 41.5 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation as their effect was anti-dilutive.
 
The following table provides the calculation of diluted weighted-average shares outstanding (in millions):
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Basic weighted-average shares outstanding
    669.3       700.6       675.6       703.8  
Common stock equivalents
    2.3       2.1       2.3       1.4  
                                 
Diluted weighted-average shares outstanding
    671.6       702.7       677.9       705.2  
                                 
 
Cash Dividends Paid
 
During the first half of 2010, the Company’s Board of Directors declared quarterly cash dividends of $0.06 per common share representing $80.1 million in total dividends. Of this amount, $40.5 million was paid on March 31, 2010 to shareholders of record on March 19, 2010 and $39.6 million was paid on June 30, 2010 to shareholders of record on June 18, 2010. During the first half of 2009, no dividend was declared or paid.
Acquisitions
Acquisitions
4.  Acquisitions
 
Custom House, Ltd.
 
On September 1, 2009, the Company acquired Canada-based Custom House, a provider of international business-to-business payment services, for $371.0 million. The acquisition of Custom House has allowed the Company to enter the international business-to-business payments market. Custom House facilitates cross-border, cross-currency payment transactions. These payment transactions are conducted through various channels including the telephone and internet. The significant majority of Custom House’s revenue is from exchanges of currency at the spot rate enabling customers to make cross-currency payments. In addition, this business writes foreign currency forward and option contracts for their customers to facilitate future payments. The duration of these derivatives contracts is generally nine months or less. The results of operations for Custom House have been included in the Company’s consolidated financial statements from the date of acquisition, September 1, 2009.
 
The Company recorded the assets and liabilities of Custom House at fair value, excluding the deferred tax liability described below. The following table summarizes the preliminary allocation of purchase price:
 
         
Assets:
       
Cash acquired
  $ 2.5  
Settlement assets
    152.5  
Property and equipment
    6.7  
Goodwill
    272.2  
Other intangible assets
    118.1  
Other assets
    78.1  
         
Total assets
  $ 630.1  
         
Liabilities:
       
Accounts payable and accrued liabilities
  $ 23.5  
Settlement obligations
    152.5  
Deferred tax liability, net
    31.9  
Other liabilities
    51.2  
         
Total liabilities
    259.1  
         
Total consideration, including cash acquired
  $ 371.0  
         
 
The valuation of assets acquired resulted in $118.1 million of identifiable intangible assets, $99.8 million of which were attributable to customer and other contractual relationships and were valued using an income approach and $18.3 million of other intangibles, which were valued using both income and cost approaches. These fair values were derived using primarily unobservable Level 3 inputs which require significant management judgment and estimation. For the remaining assets and liabilities excluding goodwill, fair value approximated carrying value. The intangible assets related to customer and other contractual relationships are being amortized over 10 to 12 years. The remaining intangibles are being amortized over three to five years. The goodwill recognized of $272.2 million is attributable to the projected long-term business growth in current and new markets and an assembled workforce. All goodwill relates entirely to the global business payments segment. The assessment of goodwill expected to be deductible for United States income tax purposes is approximately $225.1 million. The net deferred tax liability of $31.9 million and the resulting impacts on goodwill are preliminary and will be completed once the Company finalizes its tax review for this acquisition. In addition, the Company is finalizing its analysis of certain settlement related accounts, which may also result in an adjustment to goodwill.
 
FEXCO
 
On February 24, 2009, the Company acquired the money transfer business of European-based FEXCO, one of the Company’s largest agents providing services in a number of European countries, primarily the United Kingdom, Spain, Sweden and Ireland. The acquisition of FEXCO’s money transfer business has assisted the Company in the implementation of the Payment Services Directive (“PSD”) in the European Union by providing an initial operating infrastructure. The PSD has allowed the Company to operate under a single license in 27 european countries and, in those European Union countries where the Company has been limited to working with banks, post-banks and foreign exchange houses, to expand its network to additional types of businesses. The acquisition does not impact the Company’s revenue, because the Company was already recording all of the revenue arising from money transfers originating at FEXCO’s locations. As of the acquisition date, the Company no longer incurs commission costs for transactions related to FEXCO; rather, the Company now pays commissions directly to former FEXCO subagents, resulting in lower overall commission expense. The Company’s operating expenses include costs attributable to FEXCO’s operations subsequent to the acquisition date.
 
Prior to the acquisition, the Company held a 24.65% interest in FEXCO Group Holdings (“FEXCO Group”), which was a holding company for both the money transfer business as well as various unrelated businesses. The Company surrendered its 24.65% interest in FEXCO Group as non-cash consideration, which had an estimated fair value of $86.2 million on the acquisition date, and paid €123.1 million ($157.4 million) as additional consideration for all of the common shares of the money transfer business, resulting in a total purchase price of $243.6 million. The Company recognized no gain or loss in connection with the disposition of its equity interest in the FEXCO Group, because its estimated fair value approximated its carrying value. The Company recorded the assets and liabilities of FEXCO at fair value, excluding the deferred tax liability.
Receivable for Securities Sold
Receivable for Securities Sold
 
5.  Receivable for Securities Sold
 
On September 15, 2008, Western Union requested redemption of its shares in the Reserve International Liquidity Fund, Ltd. (the “Fund”), a money market fund, totaling $298.1 million. Western Union included the value of the receivable in “Other assets” in the Condensed Consolidated Balance Sheets. 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. In 2009, the Company received partial distributions totaling $255.5 million from the Fund. The Company continues to vigorously pursue collection of the remaining balance and believes it has a right to full payment of the remaining amount based on the written and verbal representations from the Manager and the Company’s legal position. However, given the increased uncertainty surrounding the numerous third-party legal claims associated with the Fund, the Company reserved $12 million representing the estimated impact of a pro-rata distribution of the Fund during the quarter ended June 30, 2009. As of June 30, 2010, the Company had a remaining receivable balance of $30.6 million, net of the related reserve. The Company anticipates receiving a distribution pending the resolution of the legal matters surrounding the Fund. If the Fund incurs significant legal, administrative or other costs during the distribution process, the Company may record additional reserves related to the remaining receivable balance, although such amounts are not expected to be significant.
Fair Value Measurements
Fair Value Measurements
 
6.  Fair Value Measurements
 
Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how Western Union measures fair value, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
 
The following table reflects assets and liabilities that were measured and carried at fair value on a recurring basis as of June 30, 2010 (in millions):
 
                                 
                      Assets/
 
                      Liabilities
 
    Fair Value Measurement Using     at Fair
 
    Level 1     Level 2     Level 3     Value  
 
Assets:
                               
State and municipal obligations
  $     $ 854.9     $     $ 854.9  
State and municipal variable rate demand notes
          351.5             351.5  
Corporate debt securities
          20.5             20.5  
Other
    0.2                   0.2  
Derivatives
          154.8             154.8  
                                 
Total assets
  $ 0.2     $ 1,381.7     $     $ 1,381.9  
                                 
Liabilities:
                               
Derivatives
  $     $ 73.7     $     $ 73.7  
                                 
Total liabilities
  $     $ 73.7     $     $ 73.7  
                                 
 
No non-recurring fair value adjustments were recorded during the three and six months ended June 30, 2010.
 
Other Fair Value Measurements
 
The carrying amounts for Western Union financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, settlement receivables and settlement obligations approximate fair value due to their short maturities. The Company’s borrowings had a carrying value and fair value of $3,296.5 million and $3,535.2 million, respectively, at June 30, 2010 and had a carrying value and fair value of $3,048.5 million and $3,211.3 million, respectively, at December 31, 2009 (see Note 13).
Commitments and Contingencies
Commitments and Contingencies
 
7.  Commitments and Contingencies
 
Letters of Credit and Bank Guarantees
 
The Company had $84.3 million in outstanding letters of credit and bank guarantees at June 30, 2010 with expiration dates through 2015, the significant majority of which contain a one-year renewal option. The letters of credit and bank guarantees are primarily held in connection with lease arrangements and certain agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.
 
Litigation and Related Contingencies
 
The United States Department of Justice (“DOJ”) served one of the Company’s subsidiaries with a grand jury subpoena requesting documents in connection with an investigation into money transfers from the United States to the Dominican Republic during the last several years. The Company is cooperating fully with the DOJ investigation. Due to the stage of the DOJ investigation, the Company is unable to predict the outcome of the investigation or the possible loss or range of loss, if any, associated with the resolution of any charges that may be brought against the Company.
 
During the third quarter of 2009, the Company recorded an accrual of $71.0 million for an anticipated agreement and settlement with the State of Arizona. On February 11, 2010, the Company signed this agreement and settlement, which resolved all outstanding legal issues and claims with the State and requires the Company to fund a multi-state not-for-profit organization promoting safety and security along the United States and Mexico border, in which California, Texas and New Mexico will participate with Arizona. The accrual includes amounts for reimbursement to the State of Arizona for its costs associated with this matter. In addition, as part of the agreement and settlement, the Company expects to make certain investments in its compliance programs along the United States and Mexico border and to engage a monitor for that program, which are expected to cost up to $23 million over the next two to four years. During the six months ended June 30, 2010, cash payments of $41 million were made related to the agreement and settlement.
 
In the normal course of business, Western Union is subject to claims and litigation. Management of the Company believes such matters involving a reasonably possible chance of loss will not, individually or in the aggregate, result in a material adverse effect on the Company’s financial position, results of operations and cash flows. The Company accrues for loss contingencies as they become probable and estimable.
 
In May 2007, the Company initiated litigation against MoneyGram Payment Systems, Inc. (“MoneyGram”) for infringement of the Company’s Money Transfer by Phone patents by MoneyGram’s FormFree service. On September 24, 2009, a jury found that MoneyGram was liable for patent infringement and awarded the Company $16.5 million in damages. This case is on appeal to the United States Court of Appeals for the Federal Circuit. In accordance with its policies, the Company does not recognize gain contingencies in earnings until realization and collectability are assured and, therefore, due to MoneyGram’s challenges to the verdict, the Company has not recognized any amounts in its Condensed Consolidated Statement of Income through June 30, 2010.
 
On January 26, 2006, the First Data Corporation (“First Data”) Board of Directors announced its intention to pursue the distribution of all of its money transfer and consumer payments business and its interest in a Western Union money transfer agent, as well as its related assets, including real estate, through a tax-free distribution to First Data shareholders (the “Separation” or “Spin-off”). The Spin-off resulted in the formation of the Company and these assets and businesses no longer being part of First Data. Pursuant to the separation and distribution agreement with First Data in connection with the Spin-off, First Data and the Company are each liable for, and agreed to perform, all liabilities with respect to their respective businesses. In addition, the separation and distribution agreement also provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of the 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 14).
Related Party Transactions
Related Party Transactions
 
8.  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. Commission expense recognized for these agents for the three months ended June 30, 2010 and 2009 totaled $44.5 million and $46.2 million, respectively, and $89.2 million and $99.7 million for the six months ended June 30, 2010 and 2009, respectively. Commission expense recognized for FEXCO prior to February 24, 2009, the date of the acquisition (see Note 4), was considered a related party transaction.
 
In July 2009, the Company appointed a director who is also a director for a company holding significant investments in two of the Company’s existing agents. These agents had been agents of the Company prior to the director being appointed to the board. The Company recognized commission expense of $12.8 million and $13.2 million for the three months ended June 30, 2010 and 2009, respectively, and $26.3 million and $25.6 million for the six months ended June 30, 2010 and 2009, respectively, related to these agents.
Settlement Assets and Obligations
Settlement Assets and Obligations
 
9.  Settlement Assets and Obligations
 
Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. Western Union records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from and payable to businesses for the value of customer cross-currency payment transactions related to the global business payments segment.
 
Settlement assets and obligations consisted of the following (in millions):
 
                 
    June 30,
    December 31,
 
    2010     2009  
 
Settlement assets:
               
Cash and cash equivalents
  $ 193.8     $ 161.9  
Receivables from selling agents and business-to-business customers
    920.4       1,004.4  
Investment securities
    1,227.1       1,222.8  
                 
    $ 2,341.3     $ 2,389.1  
                 
Settlement obligations:
               
Money transfer, money order and payment service payables
  $ 1,894.5     $ 1,954.8  
Payables to agents
    446.8       434.3  
                 
    $ 2,341.3     $ 2,389.1  
                 
 
Investment securities consist primarily of high-quality state and municipal debt obligations. 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 and foreign country requirements. Western Union does not hold investment securities 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 and through investment diversification. At June 30, 2010, the 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. 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.
 
In the fourth quarter of 2009, the Company received cash from Integrated Payment Systems Inc. (“IPS”), a subsidiary of First Data, in connection with the Company assuming the responsibility of issuing money orders. The Company invested the cash received from IPS in investment securities, including variable rate demand notes. Generally, variable rate demand notes are used by the Company for short-term liquidity needs and are held for short periods of time, typically less than 30 days, although they have varying maturity dates through 2049. As a result, the frequency of purchases and proceeds received by the Company has increased. Proceeds from the sale and maturity of available-for-sale securities during the six months ended June 30, 2010 and 2009 were $7.0 billion and $3.7 billion, respectively.
 
The components of investment securities, all of which are classified as available-for-sale, were as follows (in millions):
 
                                         
                            Net
 
                Gross
    Gross
    Unrealized
 
    Amortized
    Fair
    Unrealized
    Unrealized
    Gains/
 
June 30, 2010   Cost     Value     Gains     Losses     (Losses)  
 
State and municipal obligations (a)
  $ 845.4     $ 854.9     $ 11.3     $ (1.8 )   $ 9.5  
State and municipal variable rate demand notes
    351.5       351.5                    
Corporate debt securities
    20.2       20.5       0.3             0.3  
Other
    0.1       0.2       0.1             0.1  
                                         
    $ 1,217.2     $ 1,227.1     $ 11.7     $ (1.8 )   $ 9.9  
                                         
 
                                         
                            Net
 
                Gross
    Gross
    Unrealized
 
    Amortized
    Fair
    Unrealized
    Unrealized
    Gains/
 
December 31, 2009   Cost     Value     Gains     Losses     (Losses)  
 
State and municipal obligations (a)
  $ 686.4     $ 696.4     $ 10.6     $ (0.6 )   $ 10.0  
State and municipal variable rate demand notes
    513.8       513.8                    
Corporate debt securities
    12.2       12.4       0.2             0.2  
Other
    0.1       0.2       0.1             0.1  
                                         
    $ 1,212.5     $ 1,222.8     $ 10.9     $ (0.6 )   $ 10.3  
                                         
 
 
(a) The majority of these securities are fixed rate instruments.
 
The following summarizes the contractual maturities of investment securities as of June 30, 2010 (in millions):
 
         
    Fair
 
    Value  
 
Due within 1 year
  $ 87.0  
Due after 1 year through 5 years
    737.5  
Due after 5 years through 10 years
    99.0  
Due after 10 years
    303.6  
         
    $ 1,227.1  
         
 
Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable rate demand notes. Variable rate demand notes, having a fair value of $42.5 million, $33.9 million and $275.1 million, are included in the “Due after 1 year through 5 years,” “Due after 5 years through 10 years” and “Due after 10 years” categories, respectively, in the table above.
Comprehensive Income
Comprehensive Income
10.  Comprehensive Income
 
The components of other comprehensive income, net of tax, were as follows (in millions):
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Net income
  $ 221.0     $ 220.2     $ 428.9     $ 444.1  
Unrealized gains/losses on investments securities:
                               
Unrealized gains/(losses)
    (1.7 )     1.0       0.7       3.0  
Tax benefit/(expense)
    0.7       (0.4 )     (0.2 )     (1.1 )
Reclassification of gains into earnings
    (0.2 )           (1.1 )     (1.7 )
Tax expense
                0.4       0.6  
                                 
Net unrealized gains/(losses) on investment securities
    (1.2 )     0.6       (0.2 )     0.8  
Unrealized gains/losses on hedging activities:
                               
Unrealized gains/(losses)
    49.2       (52.7 )     84.2       (20.6 )
Tax benefit/(expense)
    (5.6 )     8.4       (9.8 )     3.8  
Reclassification of gains into earnings
    (10.2 )     (15.5 )     (9.8 )     (32.9 )
Tax expense
    1.0       2.3       0.6       5.0  
                                 
Net unrealized gains/(losses) on hedging activities
    34.4       (57.5 )     65.2       (44.7 )
Foreign currency translation adjustments:
                               
Foreign currency translation adjustments
    8.8       (2.0 )     19.5       (22.3 )
Tax benefit/(expense)
    (1.7 )     0.7       (4.1 )     7.8  
Reclassification of gains into earnings (a)
                      (23.1 )
Tax expense
                      8.1  
                                 
Net foreign currency translation adjustments
    7.1       (1.3 )     15.4       (29.5 )
Pension liability adjustments:
                               
Reclassification of losses into earnings
    1.5       0.9       3.1       1.8  
Tax benefit
    (0.5 )     (0.4 )     (1.2 )     (0.8 )
                                 
Net pension liability adjustments
    1.0       0.5       1.9       1.0  
                                 
Total other comprehensive income
  $ 262.3     $ 162.5     $ 511.2     $ 371.7  
                                 
 
 
(a) The six months ended June 30, 2009 includes the impact to the foreign currency translation account of the surrender of the Company’s interest in FEXCO Group. See Note 4.
Employee Benefit Plans
Employee Benefit Plans
 
11.  Employee Benefit Plans
 
The Company has two frozen defined benefit pension plans for which it had a recorded unfunded pension obligation of $111.0 million and $124.2 million as of June 30, 2010 and December 31, 2009, respectively, included in “Other liabilities” in the Condensed Consolidated Balance Sheets. Through July 2010, the Company has made contributions totaling approximately $22 million to the plans, including a discretionary contribution of $10 million.
 
The following table provides the components of net periodic benefit cost for the plans (in millions):
 
                                 
          Six Months
 
    Three Months Ended
    Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Interest cost
  $ 5.0     $ 5.9     $ 10.0     $ 11.8  
Expected return on plan assets
    (5.1 )     (6.1 )     (10.2 )     (12.3 )
Amortization of actuarial loss
    1.5       0.9       3.1       1.8  
                                 
Net periodic benefit cost
  $ 1.4     $ 0.7     $ 2.9     $ 1.3  
                                 
Derivatives
Derivatives
 
12.  Derivatives
 
The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the euro, and to a lesser degree the British pound, Canadian dollar and other currencies, related to forecasted money transfer revenues and on money transfer settlement assets and obligations. Subsequent to the acquisition of Custom House, the Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency business-to-business payments operations. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency business-to-business payments by writing derivatives to customers.
 
The Company executes derivatives related to its consumer-to-consumer business with established financial institutions, with the substantial majority of these financial institutions having credit ratings of “A−” or better from a major credit rating agency. The Company executes global business payments derivatives, as a result of its acquisition of Custom House, mostly with small and medium size enterprises. The credit risk inherent in both the consumer-to-consumer and global business payments agreements represents the possibility that a loss may occur from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements, but takes action (including termination of contracts) when doubt arises about the counterparties’ ability to perform. The Company’s hedged foreign currency exposures are in liquid currencies, consequently there is minimal risk that appropriate derivatives to maintain the hedging program would not be available in the future.
 
Foreign Currency—Consumer-to-Consumer
 
The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. At June 30, 2010, the Company’s longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in “Derivative gains/(losses), net” within the Company’s Condensed Consolidated Statements of Income.
 
The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations between initiation and settlement. In addition, forward contracts, typically with maturities of less than one year, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash positions. None of these contracts are designated as accounting hedges.
 
The aggregate United States dollar notional amounts of foreign currency forward contracts as of June 30, 2010 were as follows (in millions):
 
         
Contracts not designated as hedges:
       
Euro
  $ 225.5  
British pound
    37.8  
Other
    43.7  
Contracts designated as hedges:
       
Euro
  $ 513.3  
Canadian dollar
    102.0  
British pound
    83.9  
Other
    92.2  
 
Foreign Currency—Global Business Payments
 
As a result of the acquisition of Custom House, the Company writes derivatives, primarily foreign currency forward contracts and, to a much smaller degree, option contracts, mostly with small and medium size enterprises (customer contracts) and derives a currency spread from this activity as part of its global business payments operations. In this capacity, the Company facilitates cross-currency payment transactions for its customers but aggregates its Custom House foreign currency exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of foreign currency positions arising from its cross-currency business-to-business payments operation, which includes significant spot exchanges of currency in addition to forwards and options. None of these contracts are designated as accounting hedges. The duration of these derivative contracts is generally nine months or less.
 
The aggregate United States dollar notional amounts of foreign currency derivative customer contracts held by the Company as of June 30, 2010 were approximately $1.2 billion. The significant majority of customer contracts are written in major currencies such as the Canadian dollar, euro, Australian dollar and the British pound.
 
In 2009, the Company also entered into a forward contract, with a notional amount of approximately 230 million Canadian dollars, to offset foreign exchange rate fluctuations on a Canadian dollar denominated position in connection with the purchase of Custom House. This contract is not designated as an accounting hedge.
 
Interest Rate Hedging—Corporate
 
The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The Company designates these derivatives as fair value hedges utilizing the short-cut method, which permits an assumption of no ineffectiveness if certain criteria are met. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within the Company’s “Borrowings” in the Condensed Consolidated Balance Sheets and “Interest expense” in the Condensed Consolidated Statements of Income has been adjusted to include the effects of interest accrued on the swaps.
 
The Company, at times, utilizes derivatives to hedge the forecasted issuance of fixed rate debt. These derivatives are designated as cash flow hedges of the variability in the fixed rate coupon of the debt expected to be issued. The effective portion of the change in fair value of the derivatives is recorded in “Accumulated other comprehensive loss.” Such derivatives were used in connection with the note exchange and note issuance discussed in Note 13.
 
At both June 30, 2010 and December 31, 2009, the Company held interest rate swaps in an aggregate notional amount of $750 million. Of this aggregate notional amount held at June 30, 2010, $695 million related to notes due in 2011 and $55 million related to notes due in 2014.
 
Balance Sheet
 
The following table summarizes the fair value of derivatives reported in the Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009 (in millions):
 
                                         
    Derivative Assets     Derivative Liabilities  
        Fair Value         Fair Value  
    Balance Sheet
  June 30,
    December 31,
    Balance Sheet
  June 30,
    December 31,
 
    Location   2010     2009     Location   2010     2009  
 
Derivatives—hedges:
                                       
Interest rate fair value hedges – Corporate
  Other assets   $ 3.5     $ 31.0     Other liabilities   $     $  
Foreign currency cash flow hedges – Consumer-to-consumer
  Other assets     68.1       15.1     Other liabilities     6.0       31.0  
                                         
Total
      $ 71.6     $ 46.1         $ 6.0     $ 31.0  
                                         
Derivatives—undesignated:
                                       
Foreign currency – Global business payments
  Other assets   $ 75.7     $ 58.9     Other liabilities   $ 67.1     $ 48.2  
Foreign currency – Consumer-to-consumer
  Other assets     7.5       4.9     Other liabilities     0.6       1.4  
                                         
Total
      $ 83.2     $ 63.8         $ 67.7     $ 49.6  
                                         
Total derivatives
      $ 154.8     $ 109.9         $ 73.7     $ 80.6  
                                         
 
 
Income Statement
 
The following tables summarize the location and amount of gains and losses of derivatives in the Condensed Consolidated Statements of Income segregated by designated, qualifying hedging instruments and those that are not, for the three and six months ended June 30, 2010 and 2009 (in millions):
 
Fair Value Hedges
 
The following table presents the location and amount of gains/(losses) from fair value hedges for the three months ended June 30, 2010 and 2009 (in millions):
 
                                             
    Gain/(Loss) Recognized in Income on
        Gain/(Loss) Recognized in Income on
 
    Derivatives         Related Hedged Item(b)  
    Income Statement
            Income Statement
     
    Location   Amount         Location   Amount  
        June 30,
    June 30,
            June 30,
    June 30,
 
Derivatives       2010     2009     Hedged Items       2010     2009  
 
Interest rate contracts
  Interest expense   $ 3.7     $ (1.1 )   Fixed-rate debt   Interest expense   $ 1.9     $ 5.6  
                                             
Total gain
      $ 3.7     $ (1.1 )           $ 1.9     $ 5.6  
                                             
 
The following table presents the location and amount of gains/(losses) from fair value hedges for the six months ended June 30, 2010 and 2009 (in millions):
 
                                             
    Gain/(Loss) Recognized in Income on
        Gain/(Loss) Recognized in Income on
 
    Derivatives         Related Hedged Item(b)  
    Income Statement
            Income Statement
     
    Location   Amount         Location   Amount  
        June 30,
    June 30,
            June 30,
    June 30,
 
Derivatives       2010     2009     Hedged Items       2010     2009  
 
Interest rate contracts
  Interest expense   $ 9.9     $ 1.0     Fixed-rate debt   Interest expense   $ 2.6     $ 6.7  
                                             
Total gain
      $ 9.9     $ 1.0             $ 2.6     $ 6.7  
                                             
 
Cash Flow Hedges
 
The following table presents the location and amount of gains/(losses) from cash flow hedges for the three months ended June 30, 2010 and 2009 (in millions):
 
                                                         
                Gain/(Loss) Reclassified from
    Gain/(Loss) Recognized in Income on
 
    Amount of Gain/(Loss)
    Accumulated OCI into Income
    Derivatives (Ineffective Portion and Amount
 
    Recognized in OCI on
    (Effective Portion)     Excluded from Effectiveness Testing) (c)  
    Derivatives (Effective
    Income Statement
        Income Statement
     
    Portion)     Location   Amount     Location   Amount  
    June 30,
    June 30,
        June 30,
    June 30,
        June 30,
    June 30,
 
Derivatives   2010     2009         2010     2009         2010     2009  
Foreign currency contracts
  $ 56.7     $ (52.7 )   Revenue   $ 10.6     $ 15.9     Derivative
gains/(losses), net
  $ (1.7 )   $ 2.4  
Interest rate contracts (d)
    (7.5 )         Interest expense     (0.4 )     (0.4 )   Interest expense     (0.1 )      
                                                         
Total gain/(loss)
  $ 49.2     $ (52.7 )       $ 10.2     $ 15.5         $ (1.8 )   $ 2.4  
                                                         
                                                         
 
The following table presents the location and amount of gains/(losses) from cash flow hedges for the six months ended June 30, 2010 and 2009 (in millions):
 
                                                         
                Gain/(Loss) Reclassified from
       
    Amount of Gain/(Loss)
    Accumulated OCI into Income
    Gain/(Loss) Recognized in Income on
 
    Recognized in OCI on
    (Effective Portion)     Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) (c)  
    Derivatives (Effective
    Income Statement
        Income Statement
     
    Portion)     Location   Amount     Location   Amount  
    June 30,
    June 30,
        June 30,
    June 30,
        June 30,
    June 30,
 
Derivatives   2010     2009         2010     2009         2010     2009  
 
Foreign currency contracts
  $ 88.4     $ (20.6 )   Revenue   $ 10.6     $ 33.7     Derivative
gains/(losses), net
  $ (3.0 )   $ (1.7 )
Interest rate contracts (d)
    (4.2 )         Interest expense     (0.8 )     (0.8 )   Interest expense     (0.1 )      
                                                         
Total gain/(loss)
  $ 84.2     $ (20.6 )       $ 9.8     $ 32.9         $ (3.1 )   $ (1.7 )
                                                         
                                                         
 
Undesignated Hedges
 
The following table presents the location and amount of net gains/(losses) from undesignated hedges for the three and six months ended June 30, 2010 and 2009 (in millions):
 
                                     
    Gain/(Loss) Recognized in Income on Derivatives  
    Income Statement Location   Amount  
        Three Months
    Six Months
 
        Ended
    Ended
 
        June 30,     June 30,  
Derivatives       2010     2009     2010     2009  
 
Foreign currency contracts (e)
  Foreign exchange revenue   $ 5.3     $     $ 10.1     $  
Foreign currency contracts (a)
  Selling, general and administrative     37.1       1.5       48.3       13.5  
Foreign currency contracts (f)
  Derivative gains/(losses), net     3.4       (3.5 )     5.0       (1.9 )
                                     
Total gain/(loss)
      $ 45.8     $ (2.0 )   $ 63.4     $ 11.6  
                                     
 
 
(a) 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. The gain of $37.1 million and $48.3 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2010, respectively, was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $37.8 million and $49.4 million, respectively. The foreign exchange gain of $1.5 million and $13.5 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2009, respectively, was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $2.2 million and $17.6 million, respectively.
 
(b) The net gain of $1.9 million and $5.6 million in the three months ended June 30, 2010 and 2009, respectively, was comprised of a (loss)/gain in value on the debt of ($3.7) million and $1.1 million, respectively, and amortization of hedge accounting adjustments of $5.6 million and $4.5 million, respectively. The net gain of $2.6 million and $6.7 million in the six months ended June 30, 2010 and 2009, respectively, was comprised of a loss in value on the debt of $9.9 million and $1.0 million, respectively, and amortization of hedge accounting adjustments of $12.5 million and $7.7 million, respectively.
 
(c) The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates.
 
(d) The Company uses derivatives to hedge the forecasted issuance of fixed rate debt and records the effective portion of the derivative’s fair value in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” over the life of the related notes.
 
(e) The Company uses foreign currency forward and option contracts as part of its international business-to-business payments operation. The derivative contracts are managed as part of a broader currency portfolio that includes non-derivative currency exposures.
 
(f) The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract.
 
An accumulated other comprehensive pre-tax gain of $42.8 million related to the foreign currency forward contracts is expected to be reclassified into revenue within the next 12 months as of June 30, 2010. Approximately $1.6 million of net losses on the forecasted debt issuance hedges are expected to be recognized in interest expense within the next 12 months as of June 30, 2010. 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.
Borrowings
Borrowings
 
13.  Borrowings
 
The Company’s outstanding borrowings consisted of the following (in millions):
 
                 
    June 30, 2010     December 31, 2009  
 
Due in greater than one year (a):
               
5.400% notes (effective rate of 2.8%) due 2011 (b)(c)
  $ 696.3     $ 1,000.0  
6.500% notes due 2014 (d)
    500.0       500.0  
5.930% notes due 2016 (d)
    1,000.0       1,000.0  
5.253% notes due 2020 (b)(d)
    324.9        
6.200% notes due 2036 (d)
    500.0       500.0  
6.200% notes due 2040 (e)
    250.0        
Other borrowings
    6.0       6.0  
                 
Total borrowings at par value
    3,277.2       3,006.0  
Fair value hedge accounting adjustments, net (a)
    44.5       47.1  
Unamortized discount, net (b)
    (25.2 )     (4.6 )
                 
Total borrowings at carrying value (f)
  $ 3,296.5     $ 3,048.5  
                 
 
 
(a) The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to “Interest expense” over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate.
 
(b) On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of the 5.400% notes due 2011 (“2011 Notes”) for 5.253% unsecured notes due 2020 (“2020 Notes”). The 5.7% effective interest rate of the 2020 Notes differs from the stated rate as the notes have a par value of $324.9 million. The $21.2 million premium is being accreted over the life of the 2020 Notes. See below for additional detail relating to the note exchange.
 
(c) The effective interest rate related to the 2011 Notes includes the impact of the interest rate swaps entered into in conjunction with the assumption of the money order investments from IPS.
 
(d) The difference between the stated interest rate and the effective interest rate is not significant.
 
(e) On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of 6.200% unsecured notes due 2040 (the “2040 Notes”). In anticipation of this issuance, the Company entered into interest rate swaps to fix the interest rate of the debt issuance, and recorded a loss on the swaps of $7.5 million, which increased the effective rate to 6.3%, in “Accumulated other comprehensive loss,” which will be amortized into interest expense over the life of the 2040 Notes. See below for additional detail relating to the debt issuance.
 
(f) At June 30, 2010, the Company’s weighted average effective rate on total borrowings was approximately 5.3%.
 
The aggregate fair value of our long-term debt, based on quotes from multiple banks, excluding the impact of discounts and related interest rate swaps, was $3,535.2 million and $3,211.3 million at June 30, 2010 and December 31, 2009, respectively.
 
The Company’s maturities of borrowings at par value as of June 30, 2010 are $700 million in 2011, $500 million in 2014 and $2.1 billion thereafter.
 
The Company’s obligations with respect to its outstanding borrowings, as described above, rank equally.
 
2040 Notes
 
On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of unsecured notes due June 21, 2040. Interest with respect to the 2040 Notes is payable semiannually on June 21 and December 21 each year based on the fixed per annum interest rate of 6.200%. The 2040 Notes contain covenants that, among other things, limit or restrict the ability of the Company and certain of its subsidiaries to grant certain types of security interests or enter into sale and leaseback transactions. The Company may redeem the 2040 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points.
 
2020 Notes
 
On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of the 2011 Notes for unsecured notes due April 1, 2020. Interest with respect to the 2020 Notes is payable semiannually on April 1 and October 1 each year based on the fixed per annum interest rate of 5.253%. In connection with the exchange, note holders were given a 7% premium ($21.2 million), which approximated market value at the exchange date, as additional principal. As this transaction was accounted for as a debt modification, this premium was not charged to expense. Rather, the premium, along with the offsetting hedge accounting adjustments, will be accreted into interest expense over the life of the notes. The 2020 Notes contain covenants that, among other things, limit or restrict the ability of certain subsidiaries of the Company to incur certain indebtedness, and limit or restrict the ability of the Company and certain of its subsidiaries to grant certain types of security interests or enter into sale and leaseback transactions. The Company may redeem the 2020 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 15 basis points.
 
In connection with the issuance of the 2020 Notes on March 30, 2010, the Company entered into a Registration Rights Agreement which will give the holders of the 2020 Notes certain exchange and registration rights, including the Company’s completion of a registered exchange offer within 360 days of the March 30, 2010 settlement date.
Income Taxes
Income Taxes
14.  Income Taxes
 
The Company’s effective tax rates on pre-tax income for the three months ended June 30, 2010 and 2009 were 18.8% and 25.5%, respectively, and 21.8% and 26.1% for the six months ended June 30, 2010 and 2009, respectively. During the three months ended June 30, 2010, the Company continued to benefit from an increasing proportion of profits being foreign-derived, and therefore, taxed at lower rates than its combined federal and state tax rates in the United States. In addition, during the second quarter of 2010 the Company recognized a benefit from the settlement with the United States Internal Revenue Service (“IRS”) of certain issues arising in the 2002-04 tax years.
 
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.
 
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 Condensed Consolidated Balance Sheets. The total amount of unrecognized tax benefits as of June 30, 2010 and December 31, 2009 was $530.4 million and $477.2 million, respectively, excluding interest and penalties. 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 $522.5 million and $468.6 million as of June 30, 2010 and December 31, 2009, respectively, excluding interest and penalties.
 
The Company recognizes interest and penalties with respect to unrecognized tax benefits in “Provision for income taxes” in its Condensed Consolidated Statements of Income, and records the associated liability in “Income taxes payable” in its Condensed Consolidated Balance Sheets. The Company recognized $0.3 million and $2.2 million in interest and penalties during the three months ended June 30, 2010 and 2009, respectively, and $2.7 million and $6.5 million during the six months ended June 30, 2010 and 2009, respectively. The Company has accrued $48.2 million and $45.5 million for the payment of interest and penalties at June 30, 2010 and December 31, 2009, respectively.
 
Subject to the matter referenced in the paragraph below, the Company has identified no other uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within 12 months, except for recurring accruals on existing uncertain tax positions. The change in unrecognized tax benefits during the six months ended June 30, 2010 is substantially attributable to such recurring accruals.
 
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. In the second quarter of 2010, the IRS, First Data and the Company reached a resolution of all outstanding issues related to First Data’s United States federal consolidated income tax return for 2002 (which included issues related to the Company). The resolution did 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 June 30, 2010, interest on the alleged amounts due for unagreed adjustments would be approximately $33 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 of 2003, and, accordingly, the alleged amounts due related to such restructuring largely are attributable to 2004. On March 20, 2009, the Company filed a petition in the United States Tax Court contesting those adjustments with which it does not agree. 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. An examination of the United States federal consolidated income tax returns of First Data that cover the Company’s 2005 and pre-spin-off 2006 taxable periods is ongoing, as is an examination of the Company’s United States federal consolidated income tax returns for the 2006 post-spin-off period, 2007 and 2008. The Irish income tax returns of certain subsidiaries for the years 2005 and forward are eligible to be examined by the Irish tax authorities, although no examinations have commenced.
 
In the first quarter of 2010, the Company made a $250 million refundable tax deposit relating to potential United States federal tax liabilities, including those arising from the Company’s 2003 international restructuring, which have been previously accrued in the Company’s financial statements. The deposit was recorded as a reduction to “Income taxes payable” in the Condensed Consolidated Balance Sheets and a decrease in cash flows from operating activities in the Condensed Consolidated Statement of Cash Flows. Making the deposit limits the further accrual of interest charges with respect to such potential tax liabilities, to the extent of the deposit.
 
At June 30, 2010, no provision had been made for United States federal and state income taxes on foreign earnings of approximately $2.3 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 half of any Spin-off Related Taxes (i) that would not have been imposed but for the existence of both an action by the Company and an action by First Data or (ii) where the Company and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. The Company may be similarly liable if it breaches certain representations or covenants set forth in the tax allocation agreement. If the Company is required to indemnify First Data for taxes incurred as a result of the Spin-off being taxable to First Data, it likely would have a material adverse effect on the 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.
Stock Compensation Plans
Stock Compensation Plans
 
15.  Stock Compensation Plans
 
For the three and six months ended June 30, 2010, the Company recognized stock-based compensation expense of $10.2 million and $20.6 million, respectively, resulting from stock options, restricted stock awards, restricted stock units and deferred stock units in the Condensed Consolidated Statements of Income. For the three and six months ended June 30, 2009, the Company recognized stock-based compensation expense of $7.8 million and $16.2 million, respectively. During the first half of 2010, the Company granted 3.9 million options at a weighted-average exercise price of $16.06 and 1.4 million restricted stock units at a weighted-average grant date fair value of $15.62. During the first half of 2010, the Company had stock option and restricted stock cancellations and forfeitures of 2.8 million and 0.6 million, respectively, mainly due to restructuring activities.
 
As of June 30, 2010, the Company had 43.1 million outstanding options at a weighted-average exercise price of $18.61, and had 35.0 million options exercisable at a weighted-average exercise price of $19.10. Approximately 37% of the outstanding options at June 30, 2010 were held by employees of First Data. The Company had 2.9 million non-vested restricted stock awards and units at a weighted-average grant-date fair value of $15.23 as of June 30, 2010.
 
The Company used the following assumptions for the Black-Scholes option pricing model to determine the value of Western Union options granted in the six months ended June 30, 2010:
 
         
Stock options granted:
       
Weighted-average risk-free interest rate
    2.7 %
Weighted-average dividend yield
    1.3 %
Volatility
    34.0 %
Expected term (in years)
    5.7  
Weighted-average grant date fair value
  $ 5.09  
 
All assumptions used to calculate the fair value of Western Union’s stock options granted during the six months ended June 30, 2010 were determined on a consistent basis with those assumptions disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
Segments
Segments
 
16.  Segments
 
As previously described in Note 1, the Company classifies its businesses into two reportable segments: consumer-to-consumer and global business payments. Operating segments are defined as components of an enterprise that engage in business activities, about which separate financial information is available that is evaluated regularly by the Company’s CODM in deciding where to allocate resources and in assessing performance.
 
The consumer-to-consumer reporting segment is viewed as one global network where a money transfer can be sent from one location to another, around the world. The segment consists of three regions, which primarily coordinate agent network management and marketing activities. The CODM makes decisions regarding resource allocation and monitors performance based on specific corridors within and across these regions, but also reviews total revenue and operating profit of each region. These regions frequently interact on transactions with consumers and share processes, systems and licenses, thereby constituting one global consumer-to-consumer money transfer network. The regions and corridors generally offer the same services distributed by the same agent network, have the same types of customers, are subject to similar regulatory requirements, are processed on the same system and have similar economic characteristics, allowing the geographic regions to be aggregated into one reporting segment.
 
The global business payments segment processes payments from consumers or businesses to other businesses. The results of the Company’s existing consumer-to-business operations as well as the acquired Custom House business have been combined in this segment as both are focused on facilitating payments. For further information on Custom House, see Note 4.
 
All businesses that have not been classified into consumer-to-consumer or global business payments are reported as “Other.” These businesses primarily include the Company’s money order services businesses.
 
During both the three and six months ended June 30, 2010, the Company incurred expenses of $34.5 million for restructuring and related activities, which were not allocated to segments. While these items were identifiable to the Company’s segments, they were not included in the measurement of segment operating profit provided to the CODM for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on restructuring and related activities refer to Note 3.
 
The following table presents the Company’s reportable segment results for the three and six months ended June 30, 2010 and 2009 (in millions):
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Revenues:
                               
Consumer-to-consumer:
                               
Transaction fees
  $ 843.0     $ 835.6     $ 1,650.0     $ 1,621.2  
Foreign exchange revenues
    220.0       216.5       431.9       420.8  
Other revenues
    10.1       13.4       21.4       27.2  
                                 
      1,073.1       1,065.5       2,103.3       2,069.2  
Global business payments:
                               
Transaction fees
    142.4       154.2       290.4       317.2  
Foreign exchange revenues
    29.3       0.7       55.5       1.5  
Other revenues
    7.6       9.5       15.2       19.9  
                                 
      179.3       164.4       361.1       338.6  
Other:
                               
Transaction fees
    10.1       10.1       20.8       20.0  
Commission and other revenues
    10.9       14.3       20.9       27.7  
                                 
      21.0       24.4       41.7       47.7  
                                 
Total consolidated revenues
  $ 1,273.4     $ 1,254.3     $ 2,506.1     $ 2,455.5  
                                 
Operating income/(loss):
                               
Consumer-to-consumer
  $ 312.4     $ 293.6     $ 595.1     $ 580.3  
Global business payments
    33.8       44.1       71.4       94.6  
Other
    (0.7 )     4.0       (5.2 )     7.7  
                                 
Total segment operating income
    345.5       341.7       661.3       682.6  
Restructuring and related expenses
    (34.5 )           (34.5 )      
                                 
Total consolidated operating income
  $ 311.0     $ 341.7     $ 626.8     $ 682.6  
                                 
Business and Basis of Presentation (Policies)
6 Months Ended
Jun. 30, 2010
Business and Basis of Presentation (Policies) [Abstract]
 
Business
Basis of Presentation
Use of Estimates
Restructuring and Related Expenses
Consolidation of Variable Interest Entities Policy
 
Business
 
The Western Union Company (“Western Union” or the “Company”) is a leader in global money transfer and payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Western Union® brand is globally recognized. The 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.
 
  •   Global business payments—the processing of payments from consumers or businesses to other businesses. The Company’s business payments services allow consumers to make payments to a variety of organizations including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. As described further in Note 4, in September 2009, the Company acquired Canada-based Custom House, Ltd. (“Custom House”), a provider of international business-to-business payment services, which is included in this segment. Custom House facilitates cross-border, cross-currency payment transactions. While the Company continues to pursue further international expansion of its offerings in this segment, the majority of the segment’s revenue was generated in the United States during all periods presented.
 
All businesses that have not been classified into the consumer-to-consumer or global business payments segments are reported as “Other” and primarily include the Company’s money order services business.
 
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located, or which constitute undistributed earnings of affiliates of the Company accounted for under the equity method of accounting. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of June 30, 2010, the amount of net assets subject to these limitations totaled nearly $190 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.
 
Basis of Presentation
 
The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted.
 
The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries. Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year. All significant intercompany transactions and accounts have been eliminated.
 
In the opinion of management, these condensed consolidated financial statements include all the normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position and cash flows as of June 30, 2010 and for all periods presented. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
 
Consistent with industry practice, the accompanying Condensed 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.
 
Use of Estimates
 
The preparation of financial statements in conformity with 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.
 
Restructuring and Related Expenses
 
The Company records severance-related expenses once they are both probable and estimable in accordance with the provisions of the applicable accounting guidance for severance provided under an ongoing benefit arrangement. One-time, involuntary benefit arrangements and other exit costs are generally recognized when the liability is incurred. The Company also evaluates impairment issues associated with restructuring activities when the carrying amount of the assets may not be fully recoverable, in accordance with the appropriate accounting guidance. Restructuring and related expenses consist of direct and incremental expenses associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure and migration of the Company’s IT infrastructure; and other expenses related to the relocation of various operations to new or existing Company facilities and third-party providers, including hiring, training, relocation, travel and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and the acceleration of depreciation. For more information on the Company’s restructuring and related expenses see Note 3.
 
Consolidation of Variable Interest Entities
 
On January 1, 2010, the Company adopted new accounting standards for the consolidation of variable interest entities. These new accounting standards amend the evaluation criteria to determine whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance and the ability to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable interest entity. The new guidance also requires an ongoing reassessment of the primary beneficiary. Adoption of these new requirements did not have an impact on the Company’s consolidated financial position, results of operations or cash flows.
 
Earnings Per Share and Dividends (Policies)
Earnings Per Share Policy
 
Earnings Per Share
 
The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options and restricted stock are available to acquire shares at an average market price throughout the year, and therefore, reduce the dilutive effect.
Settlement Assets and Obligations (Policies)
Investment Policy
 
Investment securities consist primarily of high-quality state and municipal debt obligations. 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 and foreign country requirements. Western Union does not hold investment securities 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 and through investment diversification. At June 30, 2010, the 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. 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.
Derivatives (Policies)
6 Months Ended
Jun. 30, 2010
Derivatives( Policies) [Abstract]
 
Derivatives Policy
Foreign Currency Derivatives Policy
Interest Rate Swaps Derivative Policy
 
The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates, primarily the euro, and to a lesser degree the British pound, Canadian dollar and other currencies, related to forecasted money transfer revenues and on money transfer settlement assets and obligations. Subsequent to the acquisition of Custom House, the Company is also exposed to risk from derivative contracts written to its customers arising from its cross-currency business-to-business payments operations. Additionally, the Company is exposed to interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency business-to-business payments by writing derivatives to customers.
 
The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year, to mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. At June 30, 2010, the Company’s longer-term foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation. Accordingly, all changes in the fair value of the hedges not considered effective or portions of the hedge that are excluded from the measure of effectiveness are recognized immediately in “Derivative gains/(losses), net” within the Company’s Condensed Consolidated Statements of Income.
 
 
The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The Company designates these derivatives as fair value hedges utilizing the short-cut method, which permits an assumption of no ineffectiveness if certain criteria are met. The change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within the Company’s “Borrowings” in the Condensed Consolidated Balance Sheets and “Interest expense” in the Condensed Consolidated Statements of Income has been adjusted to include the effects of interest accrued on the swaps.
Earnings Per Share and Dividends (Tables)
Schedule of Earnings Per Share, Diluted, by Common Class
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Basic weighted-average shares outstanding
    669.3       700.6       675.6       703.8  
Common stock equivalents
    2.3       2.1       2.3       1.4  
                                 
Diluted weighted-average shares outstanding
    671.6       702.7       677.9       705.2  
                                 
Acquisitions (Tables)
Business Acquisition, Assets acquired and Liabilities assumed for Custom House
 
         
Assets:
       
Cash acquired
  $ 2.5  
Settlement assets
    152.5  
Property and equipment
    6.7  
Goodwill
    272.2  
Other intangible assets
    118.1  
Other assets
    78.1  
         
Total assets
  $ 630.1  
         
Liabilities:
       
Accounts payable and accrued liabilities
  $ 23.5  
Settlement obligations
    152.5  
Deferred tax liability, net
    31.9  
Other liabilities
    51.2  
         
Total liabilities
    259.1  
         
Total consideration, including cash acquired
  $ 371.0  
         
Fair Value Measurements (Tables)
Fair Value Measurement of Assets and Liabilities
 
                                 
                      Assets/
 
                      Liabilities
 
    Fair Value Measurement Using     at Fair
 
    Level 1     Level 2     Level 3     Value  
 
Assets:
                               
State and municipal obligations
  $     $ 854.9     $     $ 854.9  
State and municipal variable rate demand notes
          351.5             351.5  
Corporate debt securities
          20.5             20.5  
Other
    0.2                   0.2  
Derivatives
          154.8             154.8  
                                 
Total assets
  $ 0.2     $ 1,381.7     $     $ 1,381.9  
                                 
Liabilities:
                               
Derivatives
  $     $ 73.7     $     $ 73.7  
                                 
Total liabilities
  $     $ 73.7     $     $ 73.7  
                                 
Settlement Assets and Obligations (Tables)
6 Months Ended
Jun. 30, 2010
Settlement Assets and Obligations (Tables) [Abstract]
 
Settlement assets and obligations
Available-for-sale Securities
Contractual maturities of investment securities
 
                 
    June 30,
    December 31,
 
    2010     2009  
 
Settlement assets:
               
Cash and cash equivalents
  $ 193.8     $ 161.9  
Receivables from selling agents and business-to-business customers
    920.4       1,004.4  
Investment securities
    1,227.1       1,222.8  
                 
    $ 2,341.3     $ 2,389.1  
                 
Settlement obligations:
               
Money transfer, money order and payment service payables
  $ 1,894.5     $ 1,954.8  
Payables to agents
    446.8       434.3  
                 
    $ 2,341.3     $ 2,389.1  
                 
 
                                         
                            Net
 
                Gross
    Gross
    Unrealized
 
    Amortized
    Fair
    Unrealized
    Unrealized
    Gains/
 
June 30, 2010   Cost     Value     Gains     Losses     (Losses)  
 
State and municipal obligations (a)
  $ 845.4     $ 854.9     $ 11.3     $ (1.8 )   $ 9.5  
State and municipal variable rate demand notes
    351.5       351.5                    
Corporate debt securities
    20.2       20.5       0.3             0.3  
Other
    0.1       0.2       0.1             0.1  
                                         
    $ 1,217.2     $ 1,227.1     $ 11.7     $ (1.8 )   $ 9.9  
                                         
 
                                         
                            Net
 
                Gross
    Gross
    Unrealized
 
    Amortized
    Fair
    Unrealized
    Unrealized
    Gains/
 
December 31, 2009   Cost     Value     Gains     Losses     (Losses)  
 
State and municipal obligations (a)
  $ 686.4     $ 696.4     $ 10.6     $ (0.6 )   $ 10.0  
State and municipal variable rate demand notes
    513.8       513.8                    
Corporate debt securities
    12.2       12.4       0.2             0.2  
Other
    0.1       0.2       0.1             0.1  
                                         
    $ 1,212.5     $ 1,222.8     $ 10.9     $ (0.6 )   $ 10.3  
                                         
 
 
(a) The majority of these securities are fixed rate instruments.
 
         
    Fair
 
    Value  
 
Due within 1 year
  $ 87.0  
Due after 1 year through 5 years
    737.5  
Due after 5 years through 10 years
    99.0  
Due after 10 years
    303.6  
         
    $ 1,227.1  
         
Comprehensive Income (Tables)
Comprehensive Income
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Net income
  $ 221.0     $ 220.2     $ 428.9     $ 444.1  
Unrealized gains/losses on investments securities:
                               
Unrealized gains/(losses)
    (1.7 )     1.0       0.7       3.0  
Tax benefit/(expense)
    0.7       (0.4 )     (0.2 )     (1.1 )
Reclassification of gains into earnings
    (0.2 )           (1.1 )     (1.7 )
Tax expense
                0.4       0.6  
                                 
Net unrealized gains/(losses) on investment securities
    (1.2 )     0.6       (0.2 )     0.8  
Unrealized gains/losses on hedging activities:
                               
Unrealized gains/(losses)
    49.2       (52.7 )     84.2       (20.6 )
Tax benefit/(expense)
    (5.6 )     8.4       (9.8 )     3.8  
Reclassification of gains into earnings
    (10.2 )     (15.5 )     (9.8 )     (32.9 )
Tax expense
    1.0       2.3       0.6       5.0  
                                 
Net unrealized gains/(losses) on hedging activities
    34.4       (57.5 )     65.2       (44.7 )
Foreign currency translation adjustments:
                               
Foreign currency translation adjustments
    8.8       (2.0 )     19.5       (22.3 )
Tax benefit/(expense)
    (1.7 )     0.7       (4.1 )     7.8  
Reclassification of gains into earnings (a)
                      (23.1 )
Tax expense
                      8.1  
                                 
Net foreign currency translation adjustments
    7.1       (1.3 )     15.4       (29.5 )
Pension liability adjustments:
                               
Reclassification of losses into earnings
    1.5       0.9       3.1       1.8  
Tax benefit
    (0.5 )     (0.4 )     (1.2 )     (0.8 )
                                 
Net pension liability adjustments
    1.0       0.5       1.9       1.0  
                                 
Total other comprehensive income
  $ 262.3     $ 162.5     $ 511.2     $ 371.7  
                                 
 
 
(a) The six months ended June 30, 2009 includes the impact to the foreign currency translation account of the surrender of the Company’s interest in FEXCO Group. See Note 4.
Employee Benefit Plans (Tables)
Net Periodic Benefit Cost for the Defined Benefit Pension Plans
 
                                 
          Six Months
 
    Three Months Ended
    Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Interest cost
  $ 5.0     $ 5.9     $ 10.0     $ 11.8  
Expected return on plan assets
    (5.1 )     (6.1 )     (10.2 )     (12.3 )
Amortization of actuarial loss
    1.5       0.9       3.1       1.8  
                                 
Net periodic benefit cost
  $ 1.4     $ 0.7     $ 2.9     $ 1.3  
                                 
Derivatives (Tables)
6 Months Ended
Jun. 30, 2010
Derivatives (Tables) [Abstract]
 
Foreign Currency Hedging
Fair Value of Derivatives
Fair Value Hedges
Cash Flow Hedges
Undesignated Hedges
 
         
Contracts not designated as hedges:
       
Euro
  $ 225.5  
British pound
    37.8  
Other
    43.7  
Contracts designated as hedges:
       
Euro
  $ 513.3  
Canadian dollar
    102.0  
British pound
    83.9  
Other
    92.2  
 
                                         
    Derivative Assets     Derivative Liabilities  
        Fair Value         Fair Value  
    Balance Sheet
  June 30,
    December 31,
    Balance Sheet
  June 30,
    December 31,
 
    Location   2010     2009     Location   2010     2009  
 
Derivatives—hedges:
                                       
Interest rate fair value hedges – Corporate
  Other assets   $ 3.5     $ 31.0     Other liabilities   $     $  
Foreign currency cash flow hedges – Consumer-to-consumer
  Other assets     68.1       15.1     Other liabilities     6.0       31.0  
                                         
Total
      $ 71.6     $ 46.1         $ 6.0     $ 31.0  
                                         
Derivatives—undesignated:
                                       
Foreign currency – Global business payments
  Other assets   $ 75.7     $ 58.9     Other liabilities   $ 67.1     $ 48.2  
Foreign currency – Consumer-to-consumer
  Other assets     7.5       4.9     Other liabilities     0.6       1.4  
                                         
Total
      $ 83.2     $ 63.8         $ 67.7     $ 49.6  
                                         
Total derivatives
      $ 154.8     $ 109.9         $ 73.7     $ 80.6  
                                         
 
 
                                             
    Gain/(Loss) Recognized in Income on
        Gain/(Loss) Recognized in Income on
 
    Derivatives         Related Hedged Item(b)  
    Income Statement
            Income Statement
     
    Location   Amount         Location   Amount  
        June 30,
    June 30,
            June 30,
    June 30,
 
Derivatives       2010     2009     Hedged Items       2010     2009  
 
Interest rate contracts
  Interest expense   $ 3.7     $ (1.1 )   Fixed-rate debt   Interest expense   $ 1.9     $ 5.6  
                                             
Total gain
      $ 3.7     $ (1.1 )           $ 1.9     $ 5.6  
                                             
 
The following table presents the location and amount of gains/(losses) from fair value hedges for the six months ended June 30, 2010 and 2009 (in millions):
 
                                             
    Gain/(Loss) Recognized in Income on
        Gain/(Loss) Recognized in Income on
 
    Derivatives         Related Hedged Item(b)  
    Income Statement
            Income Statement
     
    Location   Amount         Location   Amount  
        June 30,
    June 30,
            June 30,
    June 30,
 
Derivatives       2010     2009     Hedged Items       2010     2009  
 
Interest rate contracts
  Interest expense   $ 9.9     $ 1.0     Fixed-rate debt   Interest expense   $ 2.6     $ 6.7  
                                             
Total gain
      $ 9.9     $ 1.0             $ 2.6     $ 6.7  
                                             
 
                                                         
                Gain/(Loss) Reclassified from
    Gain/(Loss) Recognized in Income on
 
    Amount of Gain/(Loss)
    Accumulated OCI into Income
    Derivatives (Ineffective Portion and Amount
 
    Recognized in OCI on
    (Effective Portion)     Excluded from Effectiveness Testing) (c)  
    Derivatives (Effective
    Income Statement
        Income Statement
     
    Portion)     Location   Amount     Location   Amount  
    June 30,
    June 30,
        June 30,
    June 30,
        June 30,
    June 30,
 
Derivatives   2010     2009         2010     2009         2010     2009  
Foreign currency contracts
  $ 56.7     $ (52.7 )   Revenue   $ 10.6     $ 15.9     Derivative
gains/(losses), net
  $ (1.7 )   $ 2.4  
Interest rate contracts (d)
    (7.5 )         Interest expense     (0.4 )     (0.4 )   Interest expense     (0.1 )      
                                                         
Total gain/(loss)
  $ 49.2     $ (52.7 )       $ 10.2     $ 15.5         $ (1.8 )   $ 2.4  
                                                         
                                                         
 
The following table presents the location and amount of gains/(losses) from cash flow hedges for the six months ended June 30, 2010 and 2009 (in millions):
 
                                                         
                Gain/(Loss) Reclassified from
       
    Amount of Gain/(Loss)
    Accumulated OCI into Income
    Gain/(Loss) Recognized in Income on
 
    Recognized in OCI on
    (Effective Portion)     Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) (c)  
    Derivatives (Effective
    Income Statement
        Income Statement
     
    Portion)     Location   Amount     Location   Amount  
    June 30,
    June 30,
        June 30,
    June 30,
        June 30,
    June 30,
 
Derivatives   2010     2009         2010     2009         2010     2009  
 
Foreign currency contracts
  $ 88.4     $ (20.6 )   Revenue   $ 10.6     $ 33.7     Derivative
gains/(losses), net
  $ (3.0 )   $ (1.7 )
Interest rate contracts (d)
    (4.2 )         Interest expense     (0.8 )     (0.8 )   Interest expense     (0.1 )      
                                                         
Total gain/(loss)
  $ 84.2     $ (20.6 )       $ 9.8     $ 32.9         $ (3.1 )   $ (1.7 )
                                                         
                                                         
 
                                     
    Gain/(Loss) Recognized in Income on Derivatives  
    Income Statement Location   Amount  
        Three Months
    Six Months
 
        Ended
    Ended
 
        June 30,     June 30,  
Derivatives       2010     2009     2010     2009  
 
Foreign currency contracts (e)
  Foreign exchange revenue   $ 5.3     $     $ 10.1     $  
Foreign currency contracts (a)
  Selling, general and administrative     37.1       1.5       48.3       13.5  
Foreign currency contracts (f)
  Derivative gains/(losses), net     3.4       (3.5 )     5.0       (1.9 )
                                     
Total gain/(loss)
      $ 45.8     $ (2.0 )   $ 63.4     $ 11.6  
                                     
 
 
(a) 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. The gain of $37.1 million and $48.3 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2010, respectively, was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $37.8 million and $49.4 million, respectively. The foreign exchange gain of $1.5 million and $13.5 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2009, respectively, was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $2.2 million and $17.6 million, respectively.
 
(b) The net gain of $1.9 million and $5.6 million in the three months ended June 30, 2010 and 2009, respectively, was comprised of a (loss)/gain in value on the debt of ($3.7) million and $1.1 million, respectively, and amortization of hedge accounting adjustments of $5.6 million and $4.5 million, respectively. The net gain of $2.6 million and $6.7 million in the six months ended June 30, 2010 and 2009, respectively, was comprised of a loss in value on the debt of $9.9 million and $1.0 million, respectively, and amortization of hedge accounting adjustments of $12.5 million and $7.7 million, respectively.
 
(c) The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates.
 
(d) The Company uses derivatives to hedge the forecasted issuance of fixed rate debt and records the effective portion of the derivative’s fair value in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” over the life of the related notes.
 
(e) The Company uses foreign currency forward and option contracts as part of its international business-to-business payments operation. The derivative contracts are managed as part of a broader currency portfolio that includes non-derivative currency exposures.
 
(f) The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract.
Borrowings (Tables)
Borrowings
 
                 
    June 30, 2010     December 31, 2009  
 
Due in greater than one year (a):
               
5.400% notes (effective rate of 2.8%) due 2011 (b)(c)
  $ 696.3     $ 1,000.0  
6.500% notes due 2014 (d)
    500.0       500.0  
5.930% notes due 2016 (d)
    1,000.0       1,000.0  
5.253% notes due 2020 (b)(d)
    324.9        
6.200% notes due 2036 (d)
    500.0       500.0  
6.200% notes due 2040 (e)
    250.0        
Other borrowings
    6.0       6.0  
                 
Total borrowings at par value
    3,277.2       3,006.0  
Fair value hedge accounting adjustments, net (a)
    44.5       47.1  
Unamortized discount, net (b)
    (25.2 )     (4.6 )
                 
Total borrowings at carrying value (f)
  $ 3,296.5     $ 3,048.5  
                 
 
 
(a) The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to “Interest expense” over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate.
 
(b) On March 30, 2010, the Company exchanged $303.7 million of aggregate principal amount of the 5.400% notes due 2011 (“2011 Notes”) for 5.253% unsecured notes due 2020 (“2020 Notes”). The 5.7% effective interest rate of the 2020 Notes differs from the stated rate as the notes have a par value of $324.9 million. The $21.2 million premium is being accreted over the life of the 2020 Notes. See below for additional detail relating to the note exchange.
 
(c) The effective interest rate related to the 2011 Notes includes the impact of the interest rate swaps entered into in conjunction with the assumption of the money order investments from IPS.
 
(d) The difference between the stated interest rate and the effective interest rate is not significant.
 
(e) On June 21, 2010, the Company issued $250.0 million of aggregate principal amount of 6.200% unsecured notes due 2040 (the “2040 Notes”). In anticipation of this issuance, the Company entered into interest rate swaps to fix the interest rate of the debt issuance, and recorded a loss on the swaps of $7.5 million, which increased the effective rate to 6.3%, in “Accumulated other comprehensive loss,” which will be amortized into interest expense over the life of the 2040 Notes. See below for additional detail relating to the debt issuance.
 
(f) At June 30, 2010, the Company’s weighted average effective rate on total borrowings was approximately 5.3%.
Stock Compensation Plans (Tables)
Stock Options Pricing Model
 
         
Stock options granted:
       
Weighted-average risk-free interest rate
    2.7 %
Weighted-average dividend yield
    1.3 %
Volatility
    34.0 %
Expected term (in years)
    5.7  
Weighted-average grant date fair value
  $ 5.09  
Segments (Tables)
Segment Results
 
                                 
    Three Months Ended
    Six Months Ended
 
    June 30,     June 30,  
    2010     2009     2010     2009  
 
Revenues:
                               
Consumer-to-consumer:
                               
Transaction fees
  $ 843.0     $ 835.6     $ 1,650.0     $ 1,621.2  
Foreign exchange revenues
    220.0       216.5       431.9       420.8  
Other revenues
    10.1       13.4       21.4       27.2  
                                 
      1,073.1       1,065.5       2,103.3       2,069.2  
Global business payments:
                               
Transaction fees
    142.4       154.2       290.4       317.2  
Foreign exchange revenues
    29.3       0.7       55.5       1.5  
Other revenues
    7.6       9.5       15.2       19.9  
                                 
      179.3       164.4       361.1       338.6  
Other:
                               
Transaction fees
    10.1       10.1       20.8       20.0  
Commission and other revenues
    10.9       14.3       20.9       27.7  
                                 
      21.0       24.4       41.7       47.7  
                                 
Total consolidated revenues
  $ 1,273.4     $ 1,254.3     $ 2,506.1     $ 2,455.5  
                                 
Operating income/(loss):
                               
Consumer-to-consumer
  $ 312.4     $ 293.6     $ 595.1     $ 580.3  
Global business payments
    33.8       44.1       71.4       94.6  
Other
    (0.7 )     4.0       (5.2 )     7.7  
                                 
Total segment operating income
    345.5       341.7       661.3       682.6  
Restructuring and related expenses
    (34.5 )           (34.5 )      
                                 
Total consolidated operating income
  $ 311.0     $ 341.7     $ 626.8     $ 682.6  
                                 
Business and Basis of Presentation (Details) (USD $)
In Millions
Jun. 30, 2010
Business and Basis of Presentation (Numeric) [Abstract]
 
Other Restricted Assets
$ 190 
Earnings Per Share and Dividends (Details) (USD $)
In Millions, except Per Share data
3 Months Ended
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
Mar. 31, 2010
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Earnings Per Share [Abstract]
 
 
 
 
 
Basic weighted-average shares outstanding
669.3 
675.6 
 
700.6 
703.8 
Common stock equivalents (in shares)
2.3 
2.3 
 
2.1 
1.4 
Diluted weighted-average shares outstanding
671.6 
677.9 
 
702.7 
705.2 
Earnings Per Share and Dividends (Numeric) [Abstract]
 
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)
36.8 
36.2 
 
38.0 
41.5 
Cash dividend declared, per share
 
0.06 
 
 
 
Cash dividend declared
 
80.1 
 
 
0.0 
Cash dividends paid
$ 39.6 
$ 80.1 
$ 40.5 
 
$ 0.0 
Acquisitions (Details)
In Millions
Year Ended
Dec. 31, 2010
Jun. 30, 2010
Sep. 1, 2009
Feb. 24, 2009
Feb. 24, 2009
Business Acquisition, Custom House [Member]
 
 
 
 
 
Acquisitions [Abstract]
 
 
 
 
 
Assets:
 
 
 
 
 
Cash acquired
 
$ 2.5 
 
 
 
Settlement assets
 
152.5 
 
 
 
Property and equipment
 
6.7 
 
 
 
Goodwill
 
272.2 
 
 
 
Other intangible assets
 
118.1 
 
 
 
Other assets
 
78.1 
 
 
 
Total assets
 
630.1 
 
 
 
Liabilities:
 
 
 
 
 
Accounts payable and accrued liabilities
 
23.5 
 
 
 
Settlement obligations
 
152.5 
 
 
 
Deferred tax liability, net
 
31.9 
 
 
 
Other liabilities
 
51.2 
 
 
 
Total liabilities
 
259.1 
 
 
 
Total consideration, including cash acquired
 
371.0 
371.0 
 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Identifiable intangible assets resulted from valuation of assets acquired
 
118.1 
 
 
 
Goodwill expected to be deductible for United States income tax purposes
 
225.1 
 
 
 
Deferred tax liability, net
 
31.9 
 
 
 
Business Acquisition, Purchase price
 
371.0 
371.0 
 
 
Business Acquisition, Custom House [Member] | Customer and Other Contractual Relationships [Member]
 
 
 
 
 
Assets:
 
 
 
 
 
Other intangible assets
 
99.8 
 
 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Identifiable intangible assets resulted from valuation of assets acquired
 
99.8 
 
 
 
Amortization of intangible assets, Minimum (in years)
0.00001 
 
 
 
 
Amortization of intangible assets, Maximum (in years)
12 
 
 
 
 
Business Acquisition, Custom House [Member] | Other Intangible Assets [Member]
 
 
 
 
 
Assets:
 
 
 
 
 
Other intangible assets
 
18.3 
 
 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Identifiable intangible assets resulted from valuation of assets acquired
 
18.3 
 
 
 
Amortization of intangible assets, Minimum (in years)
 
 
 
 
Amortization of intangible assets, Maximum (in years)
 
 
 
 
Business Acquisition, Fexco [Member]
 
 
 
 
 
Acquisitions [Abstract]
 
 
 
 
 
Total consideration, including cash acquired
 
 
 
243.6 
 
Acquisitions (Numeric) [Abstract]
 
 
 
 
 
Interest in Acquired Company, prior to acquisition (percentage)
 
 
 
24.65% 
 
Business Acquisition, other noncash consideration
 
 
 
86.2 
 
Business Acquisition, aggregate consideration paid
 
 
 
157.4 
123.1 
Business Acquisition, Purchase price
 
 
 
$ 243.6 
 
Receivable for Securities Sold (Details) (USD $)
In Millions, except Per Share data
6 Months Ended
Jun. 30, 2010
Year Ended
Dec. 31, 2009
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Sep. 15, 2008
Receivable for Securities Sold (Numeric) [Abstract]
 
 
 
 
 
Receivable for Securities Sold
$ 30.6 
 
 
 
$ 298.1 
Receivable Redemption Request, Per Share
 
 
 
 
1.00 
Reserve on Receivable
 
 
12 
 
 
Proceeds from Receivable for Securities Sold
$ 0.0 
$ 255.5 
 
$ 234.9 
 
Fair Value Measurements (Details) (USD $)
In Millions
Jun. 30, 2010
Dec. 31, 2009
Assets:
 
 
State and municipal obligations
$ 854.9 
 
State and municipal variable rate demand notes
351.5 
 
Corporate debt securities
20.5 
 
Other
0.2 
 
Derivatives
154.8 
 
Total assets
1,381.9 
 
Liabilities:
 
 
Derivatives
73.7 
 
Total liabilities
73.7 
 
Fair Value Measurements (Numeric) [Abstract]
 
 
Borrowings, Carrying Value
3,296.5 1
3,048.5 1
Borrowings, Fair Value
3,535.2 
3,211.3 
Level 1 [Member]
 
 
Assets:
 
 
State and municipal obligations
0.0 
 
State and municipal variable rate demand notes
0.0 
 
Corporate debt securities
0.0 
 
Other
0.2 
 
Derivatives
0.0 
 
Total assets
0.2 
 
Liabilities:
 
 
Derivatives
0.0 
 
Total liabilities
0.0 
 
Level 2 [Member]
 
 
Assets:
 
 
State and municipal obligations
854.9 
 
State and municipal variable rate demand notes
351.5 
 
Corporate debt securities
20.5 
 
Other
0.0 
 
Derivatives
154.8 
 
Total assets
1,381.7 
 
Liabilities:
 
 
Derivatives
73.7 
 
Total liabilities
73.7 
 
Level 3 [Member]
 
 
Assets:
 
 
State and municipal obligations
0.0 
 
State and municipal variable rate demand notes
0.0 
 
Corporate debt securities
0.0 
 
Other
0.0 
 
Derivatives
0.0 
 
Total assets
0.0 
 
Liabilities:
 
 
Derivatives
0.0 
 
Total liabilities
$ 0.0 
 
Commitments and Contingencies (Details) (USD $)
In Millions
6 Months Ended
Jun. 30, 2010
Sep. 30, 2009
Sep. 24, 2009
Commitments and Contingencies (Numeric) [Abstract]
 
 
 
Outstanding letters of credit and bank guarantees
$ 84.3 
 
 
Accrual for anticipated agreement and settlement
 
71.0 
 
Settlement aggreement to invest in compliance
23 
 
 
Cash payment related to agreement and settlement
41 
 
 
Recovery of damages for patent infringement
 
 
$ 16.5 
Related Party Transactions (Details) (USD $)
In Millions
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Related Party Transactions (Numeric) [Abstract]
 
 
 
 
Related Party Transaction, Amounts of Transaction
$ 44.5 
$ 89.2 
$ 46.2 
$ 99.7 
Commission expense related to agents
$ 12.8 
$ 26.3 
$ 13.2 
$ 25.6 
Settlement Assets and Obligations (Details) (USD $)
In Millions
6 Months Ended
Jun. 30, 2010
Dec. 31, 2009
6 Months Ended
Jun. 30, 2009
Settlement assets:
 
 
 
Cash and cash equivalents
$ 193.8 
$ 161.9 
 
Receivables from selling agents and business-to-business customers
920.4 
1,004.4 
 
Investment securities
1,227.1 
1,222.8 
 
Total settlement assets
2,341.3 
2,389.1 
 
Settlement obligations:
 
 
 
Money transfer, money order and payment service payables
1,894.5 
1,954.8 
 
Payables to agents
446.8 
434.3 
 
Total settlement obligations
2,341.3 
2,389.1 
 
Available-for-sale investment securities [Abstract]
 
 
 
Amortized Cost
1,217.2 
1,212.5 
 
Fair Value
1,227.1 
1,222.8 
 
Gross Unrealized Gains
11.7 
10.9 
 
Gross Unrealized Losses
(1.8)
(0.6)
 
Net Unrealized Gains/(Losses)
9.9 
10.3 
 
Settlement Assets And Obligations (Numeric) [Abstract]
 
 
 
Variable rate demand notes, period of time held
Less than 30 days 
 
 
Variable rate demand notes, maximum maturity year
Through 2049 
 
 
Proceeds from sale and maturity of available-for-sale securities
7,000 
 
3,700 
Due after 1 year through 5 years
737.5 
 
 
Due after 5 years through 10 years
99.0 
 
 
Due after 10 years
303.6 
 
 
Contractual maturities of investment securities [Abstract]
 
 
 
Due within 1 year
87.0 
 
 
Due after 1 year through 5 years
737.5 
 
 
Due after 5 years through 10 years
99.0 
 
 
Due after 10 years
303.6 
 
 
Total investment securities
1,227.1 
 
 
State and municipal obligations [Member]
 
 
 
Available-for-sale investment securities [Abstract]
 
 
 
Amortized Cost
845.4 1
686.4 1
 
Fair Value
854.9 1
696.4 1
 
Gross Unrealized Gains
11.3 1
10.6 1
 
Gross Unrealized Losses
(1.8)1
(0.6)1
 
Net Unrealized Gains/(Losses)
9.5 1
10.0 1
 
State and municipal variable rate demand notes [Member]
 
 
 
Available-for-sale investment securities [Abstract]
 
 
 
Amortized Cost
351.5 
513.8 
 
Fair Value
351.5 
513.8 
 
Gross Unrealized Gains
0.0 
0.0 
 
Gross Unrealized Losses
0.0 
0.0 
 
Net Unrealized Gains/(Losses)
0.0 
0.0 
 
Settlement Assets And Obligations (Numeric) [Abstract]
 
 
 
Due after 1 year through 5 years
42.5 
 
 
Due after 5 years through 10 years
33.9 
 
 
Due after 10 years
275.1 
 
 
Due after 1 year through 5 years
42.5 
 
 
Due after 5 years through 10 years
33.9 
 
 
Due after 10 years
275.1 
 
 
Corporate debt securities [Member]
 
 
 
Available-for-sale investment securities [Abstract]
 
 
 
Amortized Cost
20.2 
12.2 
 
Fair Value
20.5 
12.4 
 
Gross Unrealized Gains
0.3 
0.2 
 
Gross Unrealized Losses
0.0 
0.0 
 
Net Unrealized Gains/(Losses)
0.3 
0.2 
 
Other [Member]
 
 
 
Available-for-sale investment securities [Abstract]
 
 
 
Amortized Cost
0.1 
0.1 
 
Fair Value
0.2 
0.2 
 
Gross Unrealized Gains
0.1 
0.1 
 
Gross Unrealized Losses
0.0 
0.0 
 
Net Unrealized Gains/(Losses)
$ 0.1 
$ 0.1 
 
Comprehensive Income (Details) (USD $)
In Millions
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 221.0 
$ 428.9 
$ 220.2 
$ 444.1 
Unrealized gains/losses on investments securities:
 
 
 
 
Unrealized gains/(losses)
(1.7)
0.7 
1.0 
3.0 
Tax benefit/(expense)
0.7 
(0.2)
(0.4)
(1.1)
Reclassification of gains into earnings
(0.2)
(1.1)
0.0 
(1.7)
Tax expense
0.0 
0.4 
0.0 
0.6 
Net unrealized gains/(losses) on investment securities
(1.2)
(0.2)
0.6 
0.8 
Unrealized gains/losses on hedging activities:
 
 
 
 
Unrealized gains/(losses)
49.2 
84.2 
(52.7)
(20.6)
Tax benefit/(expense)
(5.6)
(9.8)
8.4 
3.8 
Reclassification of gains into earnings
(10.2)
(9.8)
(15.5)
(32.9)
Tax expense
1.0 
0.6 
2.3 
5.0 
Net unrealized gains/(losses) on hedging activities
34.4 
65.2 
(57.5)
(44.7)
Foreign currency translation adjustments:
 
 
 
 
Foreign currency translation adjustments
8.8 
19.5 
(2.0)
(22.3)
Tax benefit/(expense)
(1.7)
(4.1)
0.7 
7.8 
Reclassification of gains into earnings
0.0 1
0.0 1
0.0 1
(23.1)1
Tax expense
0.0 
0.0 
0.0 
8.1 
Net foreign currency translation adjustments
7.1 
15.4 
(1.3)
(29.5)
Pension liability adjustments:
 
 
 
 
Reclassification of losses into earnings
1.5 
3.1 
0.9 
1.8 
Tax benefit
(0.5)
(1.2)
(0.4)
(0.8)
Net pension liability adjustments
1.0 
1.9 
0.5 
1.0 
Total other comprehensive income
$ 262.3 
$ 511.2 
$ 162.5 
$ 371.7 
Employee Benefit Plans (Details) (USD $)
In Millions
Jan. 1, 2010 - Jul. 31, 2010
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
Dec. 31, 2009
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Employee Benefit Plans [Abstract]
 
 
 
 
 
 
Interest cost
 
$ 5.0 
$ 10.0 
 
$ 5.9 
$ 11.8 
Expected return on plan assets
 
(5.1)
(10.2)
 
(6.1)
(12.3)
Amortization of actuarial loss
 
1.5 
3.1 
 
0.9 
1.8 
Net periodic benefit cost
 
1.4 
2.9 
 
0.7 
1.3 
Employee Benefit Plans (Numeric) [Abstract]
 
 
 
 
 
 
Defined Benefit Plans, Amounts Recognized In Balance Sheet
 
111.0 
111.0 
124.2 
 
 
Defined Benefit Plans, Contributions by Employer
22 
 
 
 
 
 
Defined Benefit Plans, Discretionary Contribution by Employer
$ 10 
 
 
 
 
 
Derivatives (Details)
In Millions
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
Dec. 31, 2009
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Year Ended
Dec. 31, 2009
Fair Value of Derivatives [Abstract]
 
 
 
 
 
 
Derivatives - hedges:
 
 
 
 
 
 
Derivative Asset Designated as Hedging Instrument, Fair Value
$ 71.6 
$ 71.6 
$ 46.1 
 
 
 
Derivative Liability Designated as Hedging Instrument, Fair Value
6.0 
6.0 
31.0 
 
 
 
Derivatives - undesignated:
 
 
 
 
 
 
Derivative Asset Not Designated as Hedging Instrument, Fair Value
83.2 
83.2 
63.8 
 
 
 
Derivative Liability Not Designated as Hedging Instrument, Fair Value
67.7 
67.7 
49.6 
 
 
 
Derivative Asset, Fair Value
154.8 
154.8 
109.9 
 
 
 
Derivative Liability, Fair Value
73.7 
73.7 
80.6 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net
0.7 
(0.2)
 
0.8 
(2.8)
 
Derivatives (Numeric) [Abstract]
 
 
 
 
 
 
Derivative, Higher Remaining Maturity Range (in months)
Maximum 24 months 
Maximum 24 months 
 
 
 
 
Derivative, Weighted Average Maturity (in years)
Approximately 1 year 
Approximately 1 year 
 
 
 
 
Notional Amount of Foreign Currency Cash Flow Hedges Not Designated as Derivatives, Global Business Payments
1,200 
1,200 
 
 
 
 
Notional Amount of Foreign Currency Forward Contract related to Custom House (CAD)
 
 
 
 
 
230 
Notional Amount of Interest Rate Derivatives
750 
750 
750 
 
 
 
Foreign exchange gain/(loss) on settlement assets and obligations and cash balances
(37.8)
(49.4)
 
(2.2)
(17.6)
 
Amortization of hedge accounting adjustments
5.6 
12.5 
 
4.5 
7.7 
 
Accumulated other comprehensive pre-tax (loss)/gain
42.8 
42.8 
 
 
 
 
Losses forecasted on debt issuance hedges
1.6 
1.6 
 
 
 
 
Euro [Member]
 
 
 
 
 
 
Notional amounts of foreign currency forward contracts [Abstract]
 
 
 
 
 
 
Contracts not designated as hedges
225.5 
 
 
 
 
 
Contracts designated as hedges
513.3 
 
 
 
 
 
Canadian Dollar [Member]
 
 
 
 
 
 
Notional amounts of foreign currency forward contracts [Abstract]
 
 
 
 
 
 
Contracts designated as hedges
102.0 
 
 
 
 
 
Brittish Pound [Member]
 
 
 
 
 
 
Notional amounts of foreign currency forward contracts [Abstract]
 
 
 
 
 
 
Contracts not designated as hedges
37.8 
 
 
 
 
 
Contracts designated as hedges
83.9 
 
 
 
 
 
Other Currencies [Member]
 
 
 
 
 
 
Notional amounts of foreign currency forward contracts [Abstract]
 
 
 
 
 
 
Contracts not designated as hedges
43.7 
 
 
 
 
 
Contracts designated as hedges
92.2 
 
 
 
 
 
Notes Payable, 2011 [Member]
 
 
 
 
 
 
Derivatives (Numeric) [Abstract]
 
 
 
 
 
 
Notional Amount of Interest Rate Derivatives
695 
 
 
 
 
 
Notes Payable, 2014 [Member]
 
 
 
 
 
 
Derivatives (Numeric) [Abstract]
 
 
 
 
 
 
Notional Amount of Interest Rate Derivatives
55 
 
 
 
 
 
Fair Value Hedging [Member] | Fixed Rate Debt Hedge [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income on Related Hedged Item
1.9 1
2.6 1
 
5.6 1
6.7 1
 
Fair Value Hedging [Member] | Fixed Rate Debt Hedge [Member] | Interest Expense [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income on Related Hedged Item
1.9 1
2.6 1
 
5.6 1
6.7 1
 
Fair Value Hedging [Member] | Interest Rate Contract [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
3.7 
9.9 
 
(1.1)
1.0 
 
Fair Value Hedging [Member] | Interest Rate Contract [Member] | Interest Expense [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
3.7 
9.9 
 
(1.1)
1.0 
 
Other Assets [Member] | Foreign Exchange Contract, Consumer-to-consumer [Member]
 
 
 
 
 
 
Derivatives - hedges:
 
 
 
 
 
 
Derivative Asset Designated as Hedging Instrument, Fair Value
68.1 
 
15.1 
 
 
 
Derivatives - undesignated:
 
 
 
 
 
 
Derivative Asset Not Designated as Hedging Instrument, Fair Value
7.5 
 
4.9 
 
 
 
Other Assets [Member] | Foreign Exchange Contract, Global Business Payments [Member]
 
 
 
 
 
 
Derivatives - undesignated:
 
 
 
 
 
 
Derivative Asset Not Designated as Hedging Instrument, Fair Value
75.7 
 
58.9 
 
 
 
Other Assets [Member] | Interest Rate Contract [Member]
 
 
 
 
 
 
Derivatives - hedges:
 
 
 
 
 
 
Derivative Asset Designated as Hedging Instrument, Fair Value
3.5 
 
31.0 
 
 
 
Other Liabilities [Member] | Foreign Exchange Contract, Consumer-to-consumer [Member]
 
 
 
 
 
 
Derivatives - hedges:
 
 
 
 
 
 
Derivative Liability Designated as Hedging Instrument, Fair Value
6.0 
 
31.0 
 
 
 
Derivatives - undesignated:
 
 
 
 
 
 
Derivative Liability Not Designated as Hedging Instrument, Fair Value
0.6 
 
1.4 
 
 
 
Other Liabilities [Member] | Foreign Exchange Contract, Global Business Payments [Member]
 
 
 
 
 
 
Derivatives - undesignated:
 
 
 
 
 
 
Derivative Liability Not Designated as Hedging Instrument, Fair Value
67.1 
 
48.2 
 
 
 
Other Liabilities [Member] | Interest Rate Contract [Member]
 
 
 
 
 
 
Derivatives - hedges:
 
 
 
 
 
 
Derivative Liability Designated as Hedging Instrument, Fair Value
0.0 
 
0.0 
 
 
 
Cash Flow Hedging [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income, Effective Portion, Net
49.2 
84.2 
 
(52.7)
(20.6)
 
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net
10.2 
9.8 
 
15.5 
32.9 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net
(1.8)3
(3.1)3
 
2.4 3
(1.7)3
 
Cash Flow Hedging [Member] | Interest Rate Contract [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income, Effective Portion, Net
(7.5)2
(4.2)2
 
0.0 2
0.0 2
 
Cash Flow Hedging [Member] | Interest Rate Contract [Member] | Interest Expense [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net
(0.4)2
(0.8)2
 
(0.4)2
(0.8)2
 
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net
(0.1)3
(0.1)3
 
0.0 3
0.0 3
 
Cash Flow Hedging [Member] | Foreign Exchange Contract [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income, Effective Portion, Net
56.7 
88.4 
 
(52.7)
(20.6)
 
Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | Derivative Gains (Losses), Net [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net
(1.7)3
(3.0)3
 
2.4 3
(1.7)3
 
Cash Flow Hedging [Member] | Foreign Exchange Contract [Member] | Revenue [Member]
 
 
 
 
 
 
Cash Flow Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net
10.6 
10.6 
 
15.9 
33.7 
 
Undesignated [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
45.8 
63.4 
 
(2.0)
11.6 
 
Undesignated [Member] | Foreign Exchange Contract [Member] | Foreign Exchange Revenues [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
5.3 4
10.1 4
 
0.0 4
0.0 4
 
Undesignated [Member] | Foreign Exchange Contract [Member] | Selling, General And Administrative [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
37.1 5
48.3 5
 
1.5 5
13.5 5
 
Undesignated [Member] | Foreign Exchange Contract [Member] | Derivative Gains (Losses), Net [Member]
 
 
 
 
 
 
Hedges [Abstract]
 
 
 
 
 
 
Derivative Instruments, Gain (Loss) Recognized in Income, Net
$ 3.4 6
$ 5.0 6
 
$ (3.5)6
$ (1.9)6
 
[5] 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. The gain of $37.1 million and $48.3 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2010, respectively, was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $37.8 million and $49.4 million, respectively. The foreign exchange gain of $1.5 million and $13.5 million generated by the undesignated foreign currency contracts for the three and six months ended June 30, 2009, respectively was offset by a foreign exchange loss on settlement assets and obligations and cash balances of $2.2 million and $17.6 million, respectively.
Borrowings (Details) (USD $)
In Millions
Jun. 30, 2010
Jun. 21, 2010
Mar. 30, 2010
Dec. 31, 2009
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
$ 3,277.2 
 
 
$ 3,006.0 
Fair value hedge accounting adjustments, net
44.5 6
 
 
47.1 6
Unamortized discount, net
(25.2)1
 
 
(4.6)1
Total borrowings at carrying value
3,296.5 5
 
 
3,048.5 5
Borrowings (Numeric) [Abstract]
 
 
 
 
Total borrowings at par value
3,277.2 
 
 
3,006.0 
Weighted average effective rate on total borrowings
0.053 
 
 
 
Aggregate fair value of debt
3,535.2 
 
 
3,211.3 
Long-term Debt, Maturities, Repayments of Principal in Year Two
700 
 
 
 
Long-term Debt, Maturities, Repayments of Principal in Year Five
500 
 
 
 
Long-term Debt, Maturities, Repayments of Principal after Year Five
2,100 
 
 
 
Notes Payable, 2011 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
696.3 1 4
 
 
1,000.0 1 4
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.4% 
 
 
 
Total borrowings at par value
696.3 1 4
 
 
1,000.0 1 4
Effective rate of notes due
2.8% 
 
 
 
Debt, Principal Amount
 
 
303.7 
 
Notes Payable, 2014 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
500.0 2
 
 
500.0 2
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
6.5% 
 
 
 
Total borrowings at par value
500.0 2
 
 
500.0 2
Notes Payable, 2016 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
1,000.0 2
 
 
1,000.0 2
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.93% 
 
 
 
Total borrowings at par value
1,000.0 2
 
 
1,000.0 2
Notes Payable, 2020 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
324.9 2 1
 
 
0.0 2 1
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
5.253% 
 
 
 
Total borrowings at par value
324.9 2 1
 
 
0.0 2 1
Effective rate of notes due
5.7% 
 
 
 
Debt Exchange Premium
21.2 
 
 
 
Premium given to note holders
7% 
 
 
 
Basis Points
15 
 
 
 
Notes Payable, 2036 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
500.0 2
 
 
500.0 2
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
6.2% 
 
 
 
Total borrowings at par value
500.0 2
 
 
500.0 2
Notes Payable 2040 [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
250.0 3
 
 
0.0 3
Borrowings (Numeric) [Abstract]
 
 
 
 
Debt Instrument, Interest Rate, Stated Percentage
6.2% 
 
 
 
Total borrowings at par value
250.0 3
 
 
0.0 3
Effective rate of notes due
6.3% 
 
 
 
Debt, Principal Amount
 
250 
 
 
Loss on interest rate swaps recorded in "Accumulated other comprehensive loss"
7.5 
 
 
 
Basis Points
0.00003 
 
 
 
Other Borrowings [Member]
 
 
 
 
Borrowings [Abstract]
 
 
 
 
Total borrowings at par value
6.0 
 
 
6.0 
Borrowings (Numeric) [Abstract]
 
 
 
 
Total borrowings at par value
$ 6.0 
 
 
$ 6.0 
Income Taxes (Details) (USD $)
In Millions
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Mar. 31, 2010
Dec. 31, 2009
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Dec. 31, 2008
Sep. 29, 2006
Income Taxes (Numeric) [Abstract]
 
 
 
 
 
 
 
 
Effective tax rates
18.8% 
21.8% 
 
 
25.5% 
26.1% 
 
 
Unrecognized Tax Benefits Excluding Interest and Penalties
$ 530.4 
$ 530.4 
 
$ 477.2 
 
 
 
 
Unrecognized Tax Benefits That Would Impact the Effective Tax Rate
522.5 
522.5 
 
468.6 
 
 
 
 
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense
0.3 
2.7 
 
 
2.2 
6.5 
 
 
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued
48.2 
48.2 
 
45.5 
 
 
 
 
Income Tax Examination Tax and Penalties Accrued
 
 
 
 
 
 
114 
 
Income Tax Examination, Accrued Interest
33 
33 
 
 
 
 
 
 
Refundable tax deposit
 
 
250 
 
 
 
 
 
Spin-off Related Taxes, percentage
 
 
 
 
 
 
 
0.5 
Foreign Earnings
$ 2,300 
$ 2,300 
 
 
 
 
 
 
Stock Compensation Plans (Details) (USD $)
In Millions, except Per Share data
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Stock options granted:
 
 
 
 
Weighted-average risk-free interest rate
 
2.7% 
 
 
Weighted-average dividend yield
 
1.3% 
 
 
Volatility (percentage)
 
34% 
 
 
Expected term (in years)
 
5.7 
 
 
Weighted-average grant date fair value (per share)
 
$ 5.09 
 
 
Stock Compensation Plans (Numeric) [Abstract]
 
 
 
 
Stock-based compensation expense, in millions
10.2 
20.6 
7.8 
16.2 
Options Granted
 
3.9 
 
 
Options Granted, Weighted Average Exercise Price, per share
 
16.06 
 
 
Restricted Stock Granted
 
1.4 
 
 
Restricted Stock Granted, Weighted Average Grant Date Fair Value, per award/unit
 
15.62 
 
 
Options cancellations and forfeitures, Shares
 
2.8 
 
 
Restricted Stock Awards forfeitures, Shares
 
0.6 
 
 
Options Outstanding
43.1 
43.1 
 
 
Options Outstanding, Weighted Average Exercise Price, per share
18.61 
18.61 
 
 
Options Exercisable
35.0 
35.0 
 
 
Options Exercisable, Weighted Average Exercise Price, per share
19.10 
19.10 
 
 
Percentage of Total Options Outstanding
0.37 
0.37 
 
 
Non-vested Restricted Stock
2.9 
2.9 
 
 
Non-vested Restricted Stock, Weighted Average Grant Date Fair Value, per award/unit
$ 15.23 
$ 15.23 
 
 
Segments (Details) (USD $)
In Millions
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
3 Months Ended
Jun. 30, 2009
6 Months Ended
Jun. 30, 2009
Revenues:
 
 
 
 
Transaction fees
$ 995.5 
$ 1,961.2 
$ 999.9 
$ 1,958.4 
Foreign exchange revenues
249.3 
487.4 
217.2 
422.3 
Commission and other revenues
28.6 
57.5 
37.2 
74.8 
Total consolidated revenues
1,273.4 
2,506.1 
1,254.3 
2,455.5 
Operating income/(loss):
 
 
 
 
Total segment operating income
345.5 
661.3 
341.7 
682.6 
Restructuring and related expenses
(34.5)
(34.5)
0.0 
0.0 
Total consolidated operating income
311.0 
626.8 
341.7 
682.6 
Consumer-to-consumer [Member]
 
 
 
 
Revenues:
 
 
 
 
Transaction fees
843.0 
1,650.0 
835.6 
1,621.2 
Foreign exchange revenues
220.0 
431.9 
216.5 
420.8 
Commission and other revenues
10.1 
21.4 
13.4 
27.2 
Total consolidated revenues
1,073.1 
2,103.3 
1,065.5 
2,069.2 
Operating income/(loss):
 
 
 
 
Total segment operating income
312.4 
595.1 
293.6 
580.3 
Restructuring and related expenses
 
(26.2)
 
 
Global business payments [Member]
 
 
 
 
Revenues:
 
 
 
 
Transaction fees
142.4 
290.4 
154.2 
317.2 
Foreign exchange revenues
29.3 
55.5 
0.7 
1.5 
Commission and other revenues
7.6 
15.2 
9.5 
19.9 
Total consolidated revenues
179.3 
361.1 
164.4 
338.6 
Operating income/(loss):
 
 
 
 
Total segment operating income
33.8 
71.4 
44.1 
94.6 
Restructuring and related expenses
 
(6.9)
 
 
Other Segment [Member]
 
 
 
 
Revenues:
 
 
 
 
Transaction fees
10.1 
20.8 
10.1 
20.0 
Commission and other revenues
10.9 
20.9 
14.3 
27.7 
Total consolidated revenues
21.0 
41.7 
24.4 
47.7 
Operating income/(loss):
 
 
 
 
Total segment operating income
(0.7)
(5.2)
4.0 
7.7 
Restructuring and related expenses
 
$ (1.4)