| Segments
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1. | Business and Basis of Presentation |
• | 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. Western Union Business Solutions (“Business Solutions”), which is also included in this segment, facilitates cross-border, cross-currency business-to-business payment transactions. The majority of the segment’s revenue was generated in the United States during all periods presented. However, international expansion and other key strategic initiatives have resulted in international revenue continuing to increase in this segment. |
|
3. | Acquisitions |
Assets:
|
||||
Settlement assets
|
$ | 51.2 | ||
Property and equipment
|
3.0 | |||
Goodwill
|
171.9 | |||
Other intangible assets
|
49.6 | |||
Other assets
|
4.1 | |||
Total assets
|
$ | 279.8 | ||
Liabilities:
|
||||
Accounts payable and accrued liabilities
|
$ | 10.2 | ||
Settlement obligations
|
55.5 | |||
Income taxes payable
|
10.5 | |||
Deferred tax liability, net
|
15.0 | |||
Other liabilities
|
6.7 | |||
Total liabilities
|
97.9 | |||
Total value
|
$ | 181.9 | ||
|
4. | Restructuring and Related Expenses |
Severance, |
Fixed Asset |
|||||||||||||||||||
Outplacement |
Write-Offs and |
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and Related |
Accelerated |
Lease |
||||||||||||||||||
Benefits | Depreciation | Terminations | Other(b) | Total | ||||||||||||||||
Balance, December 31, 2010
|
$ | 34.3 | $ | — | $ | — | $ | 1.1 | $ | 35.4 | ||||||||||
Expenses (a)
|
22.1 | 1.3 | 1.7 | 7.8 | 32.9 | |||||||||||||||
Cash payments
|
(25.3 | ) | — | (1.7 | ) | (8.3 | ) | (35.3 | ) | |||||||||||
Non-cash charges (a)
|
1.2 | (1.3 | ) | — | — | (0.1 | ) | |||||||||||||
Balance, June 30, 2011
|
$ | 32.3 | $ | — | $ | — | $ | 0.6 | $ | 32.9 | ||||||||||
Cumulative expenses incurred to date
|
$ | 70.8 | $ | 2.2 | $ | 1.7 | $ | 17.7 | $ | 92.4 | ||||||||||
Estimated additional expenses expected to be incurred
|
4.2 | — | 2.3 | 6.1 | 12.6 | |||||||||||||||
Total expenses
|
$ | 75.0 | $ | 2.2 | $ | 4.0 | $ | 23.8 | $ | 105.0 | ||||||||||
(a) | Expenses include non-cash write-offs and accelerated depreciation of fixed assets and leasehold improvements. However, these amounts were recognized outside of the restructuring accrual. | |
(b) | Other expenses related to the relocation of various operations to new and existing Company facilities including expenses for hiring, training, relocation, travel and professional fees. All such expenses will be recorded when incurred. |
Three Months Ended |
Six Months Ended |
Three and Six Months Ended |
||||||||||
June 30, 2011 | June 30, 2011 | June 30, 2010 | ||||||||||
Cost of services
|
$ | 0.5 | $ | 7.4 | $ | 9.4 | ||||||
Selling, general and administrative
|
8.4 | 25.5 | 25.1 | |||||||||
Total restructuring and related expenses, pre-tax
|
$ | 8.9 | $ | 32.9 | $ | 34.5 | ||||||
Total restructuring and related expenses, net of tax
|
$ | 5.9 | $ | 22.3 | $ | 22.4 | ||||||
Global |
||||||||||||||||
Consumer-to- |
Business |
|||||||||||||||
Consumer | Payments | Other | Total | |||||||||||||
2010 expenses
|
$ | 44.7 | $ | 12.8 | $ | 2.0 | $ | 59.5 | ||||||||
First quarter 2011
|
19.1 | 3.5 | 1.4 | 24.0 | ||||||||||||
Second quarter 2011
|
6.8 | 1.8 | 0.3 | 8.9 | ||||||||||||
Cumulative expenses incurred to date
|
70.6 | 18.1 | 3.7 | 92.4 | ||||||||||||
Estimated additional expenses expected to be incurred
|
7.8 | 4.6 | 0.2 | 12.6 | ||||||||||||
Total expenses
|
$ | 78.4 | $ | 22.7 | $ | 3.9 | $ | 105.0 | ||||||||
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5. | Fair Value Measurements |
Assets/ |
||||||||||||||||
Liabilities |
||||||||||||||||
Fair Value Measurement Using |
at Fair |
|||||||||||||||
June 30, 2011 | Level 1 | Level 2 | Level 3 | Value | ||||||||||||
Assets:
|
||||||||||||||||
State and municipal debt securities
|
$ | — | $ | 888.9 | $ | — | $ | 888.9 | ||||||||
State and municipal variable rate demand notes
|
— | 384.4 | — | 384.4 | ||||||||||||
Agency mortgage-backed securities and other
|
0.1 | 32.8 | — | 32.9 | ||||||||||||
Derivatives
|
— | 71.6 | — | 71.6 | ||||||||||||
Total assets
|
$ | 0.1 | $ | 1,377.7 | $ | — | $ | 1,377.8 | ||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$ | — | $ | 104.7 | $ | — | $ | 104.7 | ||||||||
Total liabilities
|
$ | — | $ | 104.7 | $ | — | $ | 104.7 | ||||||||
Assets/ |
||||||||||||||||
Liabilities |
||||||||||||||||
Fair Value Measurement Using |
at Fair |
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December 31, 2010 | Level 1 | Level 2 | Level 3 | Value | ||||||||||||
Assets:
|
||||||||||||||||
State and municipal debt securities
|
$ | — | $ | 849.1 | $ | — | $ | 849.1 | ||||||||
State and municipal variable rate demand notes
|
— | 490.0 | — | 490.0 | ||||||||||||
Agency mortgage-backed securities and other
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0.1 | 29.9 | — | 30.0 | ||||||||||||
Derivatives
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— | 69.8 | — | 69.8 | ||||||||||||
Total assets
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$ | 0.1 | $ | 1,438.8 | $ | — | $ | 1,438.9 | ||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$ | — | $ | 80.9 | $ | — | $ | 80.9 | ||||||||
Total liabilities
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$ | — | $ | 80.9 | $ | — | $ | 80.9 | ||||||||
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6. | Commitments and Contingencies |
|
7. | Related Party Transactions |
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8. | Settlement Assets and Obligations |
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
Settlement assets:
|
||||||||
Cash and cash equivalents
|
$ | 159.6 | $ | 133.8 | ||||
Receivables from selling agents and
business-to-business
customers
|
1,119.5 | 1,132.3 | ||||||
Investment securities
|
1,306.2 | 1,369.1 | ||||||
$ | 2,585.3 | $ | 2,635.2 | |||||
Settlement obligations:
|
||||||||
Money transfer, money order and payment service payables
|
$ | 2,015.2 | $ | 2,170.0 | ||||
Payables to agents
|
570.1 | 465.2 | ||||||
$ | 2,585.3 | $ | 2,635.2 | |||||
Net |
||||||||||||||||||||
Gross |
Gross |
Unrealized |
||||||||||||||||||
Amortized |
Fair |
Unrealized |
Unrealized |
Gains/ |
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June 30, 2011 | Cost | Value | Gains | Losses | (Losses) | |||||||||||||||
State and municipal debt securities (a)
|
$ | 878.3 | $ | 888.9 | $ | 12.4 | $ | (1.8 | ) | $ | 10.6 | |||||||||
State and municipal variable rate demand notes
|
384.4 | 384.4 | — | — | — | |||||||||||||||
Agency mortgage-backed securities and other
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32.5 | 32.9 | 0.5 | (0.1 | ) | 0.4 | ||||||||||||||
$ | 1,295.2 | $ | 1,306.2 | $ | 12.9 | $ | (1.9 | ) | $ | 11.0 | ||||||||||
Net |
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Gross |
Gross |
Unrealized |
||||||||||||||||||
Amortized |
Fair |
Unrealized |
Unrealized |
Gains/ |
||||||||||||||||
December 31, 2010 | Cost | Value | Gains | Losses | (Losses) | |||||||||||||||
State and municipal debt securities (a)
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$ | 844.1 | $ | 849.1 | $ | 7.0 | $ | (2.0 | ) | $ | 5.0 | |||||||||
State and municipal variable rate demand notes
|
490.0 | 490.0 | — | — | — | |||||||||||||||
Agency mortgage-backed securities and other
|
29.9 | 30.0 | 0.1 | — | 0.1 | |||||||||||||||
$ | 1,364.0 | $ | 1,369.1 | $ | 7.1 | $ | (2.0 | ) | $ | 5.1 | ||||||||||
(a) | The majority of these securities are fixed-rate instruments. |
Fair |
||||
Value | ||||
Due within 1 year
|
$ | 105.7 | ||
Due after 1 year through 5 years
|
723.6 | |||
Due after 5 years through 10 years
|
133.2 | |||
Due after 10 years
|
343.7 | |||
$ | 1,306.2 | |||
|
9. | Comprehensive Income |
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income
|
$ | 263.2 | $ | 221.0 | $ | 473.4 | $ | 428.9 | ||||||||
Unrealized gains/(losses) on investment securities:
|
||||||||||||||||
Unrealized gains/(losses)
|
6.6 | (1.7 | ) | 7.0 | 0.7 | |||||||||||
Tax (expense)/benefit
|
(2.5 | ) | 0.7 | (2.6 | ) | (0.2 | ) | |||||||||
Reclassification of gains into earnings
|
(0.9 | ) | (0.2 | ) | (1.1 | ) | (1.1 | ) | ||||||||
Tax expense
|
0.3 | — | 0.4 | 0.4 | ||||||||||||
Net unrealized gains/(losses) on investment securities
|
3.5 | (1.2 | ) | 3.7 | (0.2 | ) | ||||||||||
Unrealized gains/(losses) on hedging activities:
|
||||||||||||||||
Unrealized gains/(losses)
|
(22.0 | ) | 49.2 | (57.6 | ) | 84.2 | ||||||||||
Tax benefit/(expense)
|
3.6 | (5.6 | ) | 8.8 | (9.8 | ) | ||||||||||
Reclassification of gains/(losses) into earnings
|
15.0 | (10.2 | ) | 21.2 | (9.8 | ) | ||||||||||
Tax (expense)/benefit
|
(2.6 | ) | 1.0 | (4.0 | ) | 0.6 | ||||||||||
Net unrealized gains/(losses) on hedging activities
|
(6.0 | ) | 34.4 | (31.6 | ) | 65.2 | ||||||||||
Foreign currency translation adjustments:
|
||||||||||||||||
Foreign currency translation adjustments
|
(2.1 | ) | 8.8 | 2.4 | 19.5 | |||||||||||
Tax benefit/(expense)
|
0.4 | (1.7 | ) | (0.6 | ) | (4.1 | ) | |||||||||
Net foreign currency translation adjustments
|
(1.7 | ) | 7.1 | 1.8 | 15.4 | |||||||||||
Pension liability adjustments:
|
||||||||||||||||
Reclassification of losses into earnings
|
2.1 | 1.5 | 4.1 | 3.1 | ||||||||||||
Tax benefit
|
(1.0 | ) | (0.5 | ) | (1.7 | ) | (1.2 | ) | ||||||||
Net pension liability adjustments
|
1.1 | 1.0 | 2.4 | 1.9 | ||||||||||||
Total other comprehensive income
|
$ | 260.1 | $ | 262.3 | $ | 449.7 | $ | 511.2 | ||||||||
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10. | Employee Benefit Plan |
Three Months |
Six Months |
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Ended |
Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest cost
|
$ | 4.5 | $ | 5.0 | $ | 9.0 | $ | 10.0 | ||||||||
Expected return on plan assets
|
(5.4 | ) | (5.1 | ) | (10.7 | ) | (10.2 | ) | ||||||||
Amortization of actuarial loss
|
2.1 | 1.5 | 4.1 | 3.1 | ||||||||||||
Net periodic benefit cost
|
$ | 1.2 | $ | 1.4 | $ | 2.4 | $ | 2.9 | ||||||||
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11. | Derivatives |
Contracts not designated as hedges:
|
||||
Euro
|
$ | 283.0 | ||
Argentine peso
|
36.1 | |||
British pound
|
30.0 | |||
Other
|
58.3 | |||
Contracts designated as hedges:
|
||||
Euro
|
$ | 489.3 | ||
Canadian dollar
|
114.0 | |||
British pound
|
105.2 | |||
Other
|
104.9 |
Derivative Assets | Derivative Liabilities | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Balance Sheet |
June 30, |
December 31, |
Balance Sheet |
June 30, |
December 31, |
|||||||||||||||
Location | 2011 | 2010 | Location | 2011 | 2010 | |||||||||||||||
Derivatives — hedges:
|
||||||||||||||||||||
Interest rate hedges — Corporate
|
Other assets | $ | 17.6 | $ | 8.0 | Other liabilities | $ | 2.4 | $ | 1.6 | ||||||||||
Foreign currency cash flow hedges —
Consumer-to-consumer
|
Other assets | 2.1 | 14.7 | Other liabilities | 53.2 | 31.1 | ||||||||||||||
Total
|
$ | 19.7 | $ | 22.7 | $ | 55.6 | $ | 32.7 | ||||||||||||
Derivatives — undesignated:
|
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Foreign currency — Global business payments
|
Other assets | $ | 51.3 | $ | 46.9 | Other liabilities | $ | 43.5 | $ | 36.2 | ||||||||||
Foreign currency —
Consumer-to-consumer
|
Other assets | 0.6 | 0.2 | Other liabilities | 5.6 | 12.0 | ||||||||||||||
Total
|
$ | 51.9 | $ | 47.1 | $ | 49.1 | $ | 48.2 | ||||||||||||
Total derivatives
|
$ | 71.6 | $ | 69.8 | $ | 104.7 | $ | 80.9 | ||||||||||||
Gain/(Loss) Recognized in Income on |
Gain/(Loss) Recognized in Income on |
|||||||||||||||||||||||||||
Derivatives | Related Hedged Item (a) | |||||||||||||||||||||||||||
Income |
Amount |
Income |
Amount | |||||||||||||||||||||||||
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||||
Derivatives | Location | 2011 | 2010 | Hedged Items | Location | 2011 | 2010 | |||||||||||||||||||||
Interest rate contracts
|
Interest expense | $ | 8.4 | $ | 3.7 | Fixed-rate debt | Interest expense | $ | (1.6 | ) | $ | 1.9 | ||||||||||||||||
Total gain/(loss)
|
$ | 8.4 | $ | 3.7 | $ | (1.6 | ) | $ | 1.9 | |||||||||||||||||||
Gain/(Loss) Recognized in Income on |
Gain/(Loss) Recognized in Income on |
|||||||||||||||||||||||||||
Derivatives | Related Hedged Item (a) | |||||||||||||||||||||||||||
Income |
Amount |
Income |
Amount | |||||||||||||||||||||||||
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||||
Derivatives | Location | 2011 | 2010 | Hedged Items | Location | 2011 | 2010 | |||||||||||||||||||||
Interest rate contracts
|
Interest expense | $ | 8.2 | $ | 9.9 | Fixed-rate debt | Interest expense | $ | 5.7 | $ | 2.6 | |||||||||||||||||
Total gain/(loss)
|
$ | 8.2 | $ | 9.9 | $ | 5.7 | $ | 2.6 | ||||||||||||||||||||
Gain/(Loss) Reclassified from |
||||||||||||||||||||||||||||
Amount of Gain/(Loss) |
Accumulated OCI |
Gain/(Loss) Recognized in Income on |
||||||||||||||||||||||||||
Recognized in OCI on |
into Income |
Derivatives (Ineffective Portion and Amount |
||||||||||||||||||||||||||
Derivatives (Effective |
(Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||
Portion) |
Income |
Amount |
Income |
Amount | ||||||||||||||||||||||||
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||
Derivatives | 2011 | 2010 | Location | 2011 | 2010 | Location | 2011 | 2010 | ||||||||||||||||||||
Foreign currency contracts
|
$ | (19.6 | ) | $ | 56.7 | Revenue | $ | (14.6 | ) | $ | 10.6 |
Derivative gains/(losses), net |
$ | (1.8 | ) | $ | (1.7 | ) | ||||||||||
Interest rate contracts (c)
|
(2.4 | ) | (7.5 | ) | Interest expense | (0.4 | ) | (0.4 | ) | Interest expense | — | (0.1 | ) | |||||||||||||||
Total gain/(loss)
|
$ | (22.0 | ) | $ | 49.2 | $ | (15.0 | ) | $ | 10.2 | $ | (1.8 | ) | $ | (1.8 | ) | ||||||||||||
Gain/(Loss) Reclassified from |
||||||||||||||||||||||||||||
Amount of Gain/(Loss) |
Accumulated OCI |
Gain/(Loss) Recognized in Income on |
||||||||||||||||||||||||||
Recognized in OCI on |
into Income |
Derivatives (Ineffective Portion and Amount |
||||||||||||||||||||||||||
Derivatives (Effective |
(Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||
Portion) |
Income |
Amount |
Income |
Amount | ||||||||||||||||||||||||
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||
Derivatives | 2011 | 2010 | Location | 2011 | 2010 | Location | 2011 | 2010 | ||||||||||||||||||||
Foreign currency contracts
|
$ | (55.2 | ) | $ | 88.4 | Revenue | $ | (20.4 | ) | $ | 10.6 |
Derivative gains/(losses), net |
$ | 0.5 | $ | (3.0 | ) | |||||||||||
Interest rate contracts (c)
|
(2.4 | ) | (4.2 | ) | Interest expense | (0.8 | ) | (0.8 | ) | Interest expense | — | (0.1 | ) | |||||||||||||||
Total gain/(loss)
|
$ | (57.6 | ) | $ | 84.2 | $ | (21.2 | ) | $ | 9.8 | $ | 0.5 | $ | (3.1 | ) | |||||||||||||
Gain/(Loss) Recognized in Income on Derivatives (d) | ||||||||||||||||||
Income Statement Location | Amount | |||||||||||||||||
Three Months |
Six Months |
|||||||||||||||||
Ended |
Ended |
|||||||||||||||||
June 30, | June 30, | |||||||||||||||||
Derivatives | 2011 | 2010 | 2011 | 2010 | ||||||||||||||
Foreign currency contracts (e)
|
Selling, general and administrative | (10.6 | ) | 37.1 | (33.3 | ) | 48.3 | |||||||||||
Foreign currency contracts (f)
|
Derivative gains/(losses), net | (1.1 | ) | 3.4 | (3.1 | ) | 5.0 | |||||||||||
Total gain/(loss)
|
$ | (11.7 | ) | $ | 40.5 | $ | (36.4 | ) | $ | 53.3 | ||||||||
(a) | The net (loss)/gain of ($1.6) million and $1.9 million in the three months ended June 30, 2011 and 2010, respectively, was comprised of a loss in value on the debt of $8.4 million and $3.7 million, respectively, and amortization of hedge accounting adjustments of $6.8 million and $5.6 million, respectively. The net gain of $5.7 million and $2.6 million in the six months ended June 30, 2011 and 2010, respectively, was comprised of a loss in value on the debt of $8.2 million and $9.9 million, respectively, and amortization of hedge accounting adjustments of $13.9 million and $12.5 million, respectively. | |
(b) | The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates. | |
(c) | The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative’s fair value in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” over the life of the related notes. | |
(d) | The Company uses foreign currency forward and option contracts as part of its international business-to-business payments operation. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. | |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gain on settlement assets and obligations and cash balances for the three and six months ended June 30, 2011, were $5.4 million and $25.6 million, respectively. Foreign exchange loss on settlement assets and obligations and cash balances for the three and six months ended June 30, 2010, were $37.8 million and $49.4 million, respectively. | |
(f) | The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract. |
|
12. | Borrowings |
June 30, 2011 | December 31, 2010 | |||||||
Due in less than one year (a):
|
||||||||
5.400% notes (effective rate of 2.7%) due November 2011
|
$ | 696.3 | $ | 696.3 | ||||
Due in greater than one year (a):
|
||||||||
Floating rate notes, due 2013 (b)
|
300.0 | — | ||||||
6.500% notes (effective rate of 5.4%) due 2014
|
500.0 | 500.0 | ||||||
5.930% notes due 2016 (c)
|
1,000.0 | 1,000.0 | ||||||
5.253% notes due 2020 (c)
|
324.9 | 324.9 | ||||||
6.200% notes due 2036 (c)
|
500.0 | 500.0 | ||||||
6.200% notes due 2040 (c)
|
250.0 | 250.0 | ||||||
Other borrowings
|
5.9 | 5.9 | ||||||
Total borrowings at par value
|
3,577.1 | 3,277.1 | ||||||
Fair value hedge accounting adjustments, net (a)
|
30.9 | 36.6 | ||||||
Unamortized discount, net
|
(22.5 | ) | (23.8 | ) | ||||
Total borrowings at carrying value (d)
|
$ | 3,585.5 | $ | 3,289.9 | ||||
(a) | The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to or increases in “Interest expense” over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. | |
(b) | On March 7, 2011, the Company issued $300 million of aggregate principal amount of unsecured floating rate notes due March 7, 2013 (“2013 Notes”). Interest is payable quarterly at a per annum interest rate equal to three-month LIBOR plus 58 basis points (0.83% at June 30, 2011) and is reset quarterly. See below for additional detail relating to the debt issuance. | |
(c) | The difference between the stated interest rate and the effective interest rate is not significant. | |
(d) | At June 30, 2011, the Company’s weighted-average effective rate on total borrowings was approximately 4.8%. |
|
13. | Income Taxes |
|
14. | Stock Compensation Plans |
Stock options granted:
|
||||
Weighted-average risk-free interest rate
|
2.6 | % | ||
Weighted-average dividend yield
|
1.4 | % | ||
Volatility
|
30.9 | % | ||
Expected term (in years)
|
5.8 | |||
Weighted-average grant date fair value
|
$ | 6.08 |
|
15. | Segments |
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues:
|
||||||||||||||||
Consumer-to-consumer:
|
||||||||||||||||
Transaction fees
|
$ | 898.0 | $ | 843.0 | $ | 1,737.8 | $ | 1,650.0 | ||||||||
Foreign exchange revenues
|
245.4 | 220.0 | 472.8 | 431.9 | ||||||||||||
Other revenues
|
11.7 | 10.1 | 22.6 | 21.4 | ||||||||||||
1,155.1 | 1,073.1 | 2,233.2 | 2,103.3 | |||||||||||||
Global business payments:
|
||||||||||||||||
Transaction fees
|
145.3 | 142.4 | 290.9 | 290.4 | ||||||||||||
Foreign exchange revenues
|
33.8 | 29.3 | 62.5 | 55.5 | ||||||||||||
Other revenues
|
7.6 | 7.6 | 15.4 | 15.2 | ||||||||||||
186.7 | 179.3 | 368.8 | 361.1 | |||||||||||||
Other:
|
||||||||||||||||
Transaction fees
|
13.7 | 10.1 | 26.3 | 20.8 | ||||||||||||
Other revenues
|
10.8 | 10.9 | 21.0 | 20.9 | ||||||||||||
24.5 | 21.0 | 47.3 | 41.7 | |||||||||||||
Total consolidated revenues
|
$ | 1,366.3 | $ | 1,273.4 | $ | 2,649.3 | $ | 2,506.1 | ||||||||
Operating income/(loss):
|
||||||||||||||||
Consumer-to-consumer
|
$ | 329.8 | $ | 312.4 | $ | 638.4 | $ | 595.1 | ||||||||
Global business payments
|
37.2 | 33.8 | 67.3 | 71.4 | ||||||||||||
Other
|
(7.4 | ) | (0.7 | ) | (9.2 | ) | (5.2 | ) | ||||||||
Total segment operating income
|
359.6 | 345.5 | 696.5 | 661.3 | ||||||||||||
Restructuring and related expenses (Note 4)
|
(8.9 | ) | (34.5 | ) | (32.9 | ) | (34.5 | ) | ||||||||
Total consolidated operating income
|
$ | 350.7 | $ | 311.0 | $ | 663.6 | $ | 626.8 | ||||||||
|
16. | Subsequent Event |
|
• | 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. Western Union Business Solutions (“Business Solutions”), which is also included in this segment, facilitates cross-border, cross-currency business-to-business payment transactions. The majority of the segment’s revenue was generated in the United States during all periods presented. However, international expansion and other key strategic initiatives have resulted in international revenue continuing to increase in this segment. |
|
Assets:
|
||||
Settlement assets
|
$ | 51.2 | ||
Property and equipment
|
3.0 | |||
Goodwill
|
171.9 | |||
Other intangible assets
|
49.6 | |||
Other assets
|
4.1 | |||
Total assets
|
$ | 279.8 | ||
Liabilities:
|
||||
Accounts payable and accrued liabilities
|
$ | 10.2 | ||
Settlement obligations
|
55.5 | |||
Income taxes payable
|
10.5 | |||
Deferred tax liability, net
|
15.0 | |||
Other liabilities
|
6.7 | |||
Total liabilities
|
97.9 | |||
Total value
|
$ | 181.9 | ||
|
Severance, |
Fixed Asset |
|||||||||||||||||||
Outplacement |
Write-Offs and |
|||||||||||||||||||
and Related |
Accelerated |
Lease |
||||||||||||||||||
Benefits | Depreciation | Terminations | Other(b) | Total | ||||||||||||||||
Balance, December 31, 2010
|
$ | 34.3 | $ | — | $ | — | $ | 1.1 | $ | 35.4 | ||||||||||
Expenses (a)
|
22.1 | 1.3 | 1.7 | 7.8 | 32.9 | |||||||||||||||
Cash payments
|
(25.3 | ) | — | (1.7 | ) | (8.3 | ) | (35.3 | ) | |||||||||||
Non-cash charges (a)
|
1.2 | (1.3 | ) | — | — | (0.1 | ) | |||||||||||||
Balance, June 30, 2011
|
$ | 32.3 | $ | — | $ | — | $ | 0.6 | $ | 32.9 | ||||||||||
Cumulative expenses incurred to date
|
$ | 70.8 | $ | 2.2 | $ | 1.7 | $ | 17.7 | $ | 92.4 | ||||||||||
Estimated additional expenses expected to be incurred
|
4.2 | — | 2.3 | 6.1 | 12.6 | |||||||||||||||
Total expenses
|
$ | 75.0 | $ | 2.2 | $ | 4.0 | $ | 23.8 | $ | 105.0 | ||||||||||
(a) | Expenses include non-cash write-offs and accelerated depreciation of fixed assets and leasehold improvements. However, these amounts were recognized outside of the restructuring accrual. | |
(b) | Other expenses related to the relocation of various operations to new and existing Company facilities including expenses for hiring, training, relocation, travel and professional fees. All such expenses will be recorded when incurred. |
Three Months Ended |
Six Months Ended |
Three and Six Months Ended |
||||||||||
June 30, 2011 | June 30, 2011 | June 30, 2010 | ||||||||||
Cost of services
|
$ | 0.5 | $ | 7.4 | $ | 9.4 | ||||||
Selling, general and administrative
|
8.4 | 25.5 | 25.1 | |||||||||
Total restructuring and related expenses, pre-tax
|
$ | 8.9 | $ | 32.9 | $ | 34.5 | ||||||
Total restructuring and related expenses, net of tax
|
$ | 5.9 | $ | 22.3 | $ | 22.4 | ||||||
Global |
||||||||||||||||
Consumer-to- |
Business |
|||||||||||||||
Consumer | Payments | Other | Total | |||||||||||||
2010 expenses
|
$ | 44.7 | $ | 12.8 | $ | 2.0 | $ | 59.5 | ||||||||
First quarter 2011
|
19.1 | 3.5 | 1.4 | 24.0 | ||||||||||||
Second quarter 2011
|
6.8 | 1.8 | 0.3 | 8.9 | ||||||||||||
Cumulative expenses incurred to date
|
70.6 | 18.1 | 3.7 | 92.4 | ||||||||||||
Estimated additional expenses expected to be incurred
|
7.8 | 4.6 | 0.2 | 12.6 | ||||||||||||
Total expenses
|
$ | 78.4 | $ | 22.7 | $ | 3.9 | $ | 105.0 | ||||||||
|
Assets/ |
||||||||||||||||
Liabilities |
||||||||||||||||
Fair Value Measurement Using |
at Fair |
|||||||||||||||
June 30, 2011 | Level 1 | Level 2 | Level 3 | Value | ||||||||||||
Assets:
|
||||||||||||||||
State and municipal debt securities
|
$ | — | $ | 888.9 | $ | — | $ | 888.9 | ||||||||
State and municipal variable rate demand notes
|
— | 384.4 | — | 384.4 | ||||||||||||
Agency mortgage-backed securities and other
|
0.1 | 32.8 | — | 32.9 | ||||||||||||
Derivatives
|
— | 71.6 | — | 71.6 | ||||||||||||
Total assets
|
$ | 0.1 | $ | 1,377.7 | $ | — | $ | 1,377.8 | ||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$ | — | $ | 104.7 | $ | — | $ | 104.7 | ||||||||
Total liabilities
|
$ | — | $ | 104.7 | $ | — | $ | 104.7 | ||||||||
Assets/ |
||||||||||||||||
Liabilities |
||||||||||||||||
Fair Value Measurement Using |
at Fair |
|||||||||||||||
December 31, 2010 | Level 1 | Level 2 | Level 3 | Value | ||||||||||||
Assets:
|
||||||||||||||||
State and municipal debt securities
|
$ | — | $ | 849.1 | $ | — | $ | 849.1 | ||||||||
State and municipal variable rate demand notes
|
— | 490.0 | — | 490.0 | ||||||||||||
Agency mortgage-backed securities and other
|
0.1 | 29.9 | — | 30.0 | ||||||||||||
Derivatives
|
— | 69.8 | — | 69.8 | ||||||||||||
Total assets
|
$ | 0.1 | $ | 1,438.8 | $ | — | $ | 1,438.9 | ||||||||
Liabilities:
|
||||||||||||||||
Derivatives
|
$ | — | $ | 80.9 | $ | — | $ | 80.9 | ||||||||
Total liabilities
|
$ | — | $ | 80.9 | $ | — | $ | 80.9 | ||||||||
|
June 30, |
December 31, |
|||||||
2011 | 2010 | |||||||
Settlement assets:
|
||||||||
Cash and cash equivalents
|
$ | 159.6 | $ | 133.8 | ||||
Receivables from selling agents and
business-to-business
customers
|
1,119.5 | 1,132.3 | ||||||
Investment securities
|
1,306.2 | 1,369.1 | ||||||
$ | 2,585.3 | $ | 2,635.2 | |||||
Settlement obligations:
|
||||||||
Money transfer, money order and payment service payables
|
$ | 2,015.2 | $ | 2,170.0 | ||||
Payables to agents
|
570.1 | 465.2 | ||||||
$ | 2,585.3 | $ | 2,635.2 | |||||
Net |
||||||||||||||||||||
Gross |
Gross |
Unrealized |
||||||||||||||||||
Amortized |
Fair |
Unrealized |
Unrealized |
Gains/ |
||||||||||||||||
June 30, 2011 | Cost | Value | Gains | Losses | (Losses) | |||||||||||||||
State and municipal debt securities (a)
|
$ | 878.3 | $ | 888.9 | $ | 12.4 | $ | (1.8 | ) | $ | 10.6 | |||||||||
State and municipal variable rate demand notes
|
384.4 | 384.4 | — | — | — | |||||||||||||||
Agency mortgage-backed securities and other
|
32.5 | 32.9 | 0.5 | (0.1 | ) | 0.4 | ||||||||||||||
$ | 1,295.2 | $ | 1,306.2 | $ | 12.9 | $ | (1.9 | ) | $ | 11.0 | ||||||||||
Net |
||||||||||||||||||||
Gross |
Gross |
Unrealized |
||||||||||||||||||
Amortized |
Fair |
Unrealized |
Unrealized |
Gains/ |
||||||||||||||||
December 31, 2010 | Cost | Value | Gains | Losses | (Losses) | |||||||||||||||
State and municipal debt securities (a)
|
$ | 844.1 | $ | 849.1 | $ | 7.0 | $ | (2.0 | ) | $ | 5.0 | |||||||||
State and municipal variable rate demand notes
|
490.0 | 490.0 | — | — | — | |||||||||||||||
Agency mortgage-backed securities and other
|
29.9 | 30.0 | 0.1 | — | 0.1 | |||||||||||||||
$ | 1,364.0 | $ | 1,369.1 | $ | 7.1 | $ | (2.0 | ) | $ | 5.1 | ||||||||||
(a) | The majority of these securities are fixed-rate instruments. |
Fair |
||||
Value | ||||
Due within 1 year
|
$ | 105.7 | ||
Due after 1 year through 5 years
|
723.6 | |||
Due after 5 years through 10 years
|
133.2 | |||
Due after 10 years
|
343.7 | |||
$ | 1,306.2 | |||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income
|
$ | 263.2 | $ | 221.0 | $ | 473.4 | $ | 428.9 | ||||||||
Unrealized gains/(losses) on investment securities:
|
||||||||||||||||
Unrealized gains/(losses)
|
6.6 | (1.7 | ) | 7.0 | 0.7 | |||||||||||
Tax (expense)/benefit
|
(2.5 | ) | 0.7 | (2.6 | ) | (0.2 | ) | |||||||||
Reclassification of gains into earnings
|
(0.9 | ) | (0.2 | ) | (1.1 | ) | (1.1 | ) | ||||||||
Tax expense
|
0.3 | — | 0.4 | 0.4 | ||||||||||||
Net unrealized gains/(losses) on investment securities
|
3.5 | (1.2 | ) | 3.7 | (0.2 | ) | ||||||||||
Unrealized gains/(losses) on hedging activities:
|
||||||||||||||||
Unrealized gains/(losses)
|
(22.0 | ) | 49.2 | (57.6 | ) | 84.2 | ||||||||||
Tax benefit/(expense)
|
3.6 | (5.6 | ) | 8.8 | (9.8 | ) | ||||||||||
Reclassification of gains/(losses) into earnings
|
15.0 | (10.2 | ) | 21.2 | (9.8 | ) | ||||||||||
Tax (expense)/benefit
|
(2.6 | ) | 1.0 | (4.0 | ) | 0.6 | ||||||||||
Net unrealized gains/(losses) on hedging activities
|
(6.0 | ) | 34.4 | (31.6 | ) | 65.2 | ||||||||||
Foreign currency translation adjustments:
|
||||||||||||||||
Foreign currency translation adjustments
|
(2.1 | ) | 8.8 | 2.4 | 19.5 | |||||||||||
Tax benefit/(expense)
|
0.4 | (1.7 | ) | (0.6 | ) | (4.1 | ) | |||||||||
Net foreign currency translation adjustments
|
(1.7 | ) | 7.1 | 1.8 | 15.4 | |||||||||||
Pension liability adjustments:
|
||||||||||||||||
Reclassification of losses into earnings
|
2.1 | 1.5 | 4.1 | 3.1 | ||||||||||||
Tax benefit
|
(1.0 | ) | (0.5 | ) | (1.7 | ) | (1.2 | ) | ||||||||
Net pension liability adjustments
|
1.1 | 1.0 | 2.4 | 1.9 | ||||||||||||
Total other comprehensive income
|
$ | 260.1 | $ | 262.3 | $ | 449.7 | $ | 511.2 | ||||||||
|
Three Months |
Six Months |
|||||||||||||||
Ended |
Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Interest cost
|
$ | 4.5 | $ | 5.0 | $ | 9.0 | $ | 10.0 | ||||||||
Expected return on plan assets
|
(5.4 | ) | (5.1 | ) | (10.7 | ) | (10.2 | ) | ||||||||
Amortization of actuarial loss
|
2.1 | 1.5 | 4.1 | 3.1 | ||||||||||||
Net periodic benefit cost
|
$ | 1.2 | $ | 1.4 | $ | 2.4 | $ | 2.9 | ||||||||
|
Contracts not designated as hedges:
|
||||
Euro
|
$ | 283.0 | ||
Argentine peso
|
36.1 | |||
British pound
|
30.0 | |||
Other
|
58.3 | |||
Contracts designated as hedges:
|
||||
Euro
|
$ | 489.3 | ||
Canadian dollar
|
114.0 | |||
British pound
|
105.2 | |||
Other
|
104.9 |
Derivative Assets | Derivative Liabilities | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Balance Sheet |
June 30, |
December 31, |
Balance Sheet |
June 30, |
December 31, |
|||||||||||||||
Location | 2011 | 2010 | Location | 2011 | 2010 | |||||||||||||||
Derivatives — hedges:
|
||||||||||||||||||||
Interest rate hedges — Corporate
|
Other assets | $ | 17.6 | $ | 8.0 | Other liabilities | $ | 2.4 | $ | 1.6 | ||||||||||
Foreign currency cash flow hedges —
Consumer-to-consumer
|
Other assets | 2.1 | 14.7 | Other liabilities | 53.2 | 31.1 | ||||||||||||||
Total
|
$ | 19.7 | $ | 22.7 | $ | 55.6 | $ | 32.7 | ||||||||||||
Derivatives — undesignated:
|
||||||||||||||||||||
Foreign currency — Global business payments
|
Other assets | $ | 51.3 | $ | 46.9 | Other liabilities | $ | 43.5 | $ | 36.2 | ||||||||||
Foreign currency —
Consumer-to-consumer
|
Other assets | 0.6 | 0.2 | Other liabilities | 5.6 | 12.0 | ||||||||||||||
Total
|
$ | 51.9 | $ | 47.1 | $ | 49.1 | $ | 48.2 | ||||||||||||
Total derivatives
|
$ | 71.6 | $ | 69.8 | $ | 104.7 | $ | 80.9 | ||||||||||||
Gain/(Loss) Recognized in Income on |
Gain/(Loss) Recognized in Income on |
|||||||||||||||||||||||||||
Derivatives | Related Hedged Item (a) | |||||||||||||||||||||||||||
Income |
Amount |
Income |
Amount | |||||||||||||||||||||||||
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||||
Derivatives | Location | 2011 | 2010 | Hedged Items | Location | 2011 | 2010 | |||||||||||||||||||||
Interest rate contracts
|
Interest expense | $ | 8.4 | $ | 3.7 | Fixed-rate debt | Interest expense | $ | (1.6 | ) | $ | 1.9 | ||||||||||||||||
Total gain/(loss)
|
$ | 8.4 | $ | 3.7 | $ | (1.6 | ) | $ | 1.9 | |||||||||||||||||||
Gain/(Loss) Recognized in Income on |
Gain/(Loss) Recognized in Income on |
|||||||||||||||||||||||||||
Derivatives | Related Hedged Item (a) | |||||||||||||||||||||||||||
Income |
Amount |
Income |
Amount | |||||||||||||||||||||||||
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||||
Derivatives | Location | 2011 | 2010 | Hedged Items | Location | 2011 | 2010 | |||||||||||||||||||||
Interest rate contracts
|
Interest expense | $ | 8.2 | $ | 9.9 | Fixed-rate debt | Interest expense | $ | 5.7 | $ | 2.6 | |||||||||||||||||
Total gain/(loss)
|
$ | 8.2 | $ | 9.9 | $ | 5.7 | $ | 2.6 | ||||||||||||||||||||
Gain/(Loss) Reclassified from |
||||||||||||||||||||||||||||
Amount of Gain/(Loss) |
Accumulated OCI |
Gain/(Loss) Recognized in Income on |
||||||||||||||||||||||||||
Recognized in OCI on |
into Income |
Derivatives (Ineffective Portion and Amount |
||||||||||||||||||||||||||
Derivatives (Effective |
(Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||
Portion) |
Income |
Amount |
Income |
Amount | ||||||||||||||||||||||||
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||
Derivatives | 2011 | 2010 | Location | 2011 | 2010 | Location | 2011 | 2010 | ||||||||||||||||||||
Foreign currency contracts
|
$ | (19.6 | ) | $ | 56.7 | Revenue | $ | (14.6 | ) | $ | 10.6 |
Derivative gains/(losses), net |
$ | (1.8 | ) | $ | (1.7 | ) | ||||||||||
Interest rate contracts (c)
|
(2.4 | ) | (7.5 | ) | Interest expense | (0.4 | ) | (0.4 | ) | Interest expense | — | (0.1 | ) | |||||||||||||||
Total gain/(loss)
|
$ | (22.0 | ) | $ | 49.2 | $ | (15.0 | ) | $ | 10.2 | $ | (1.8 | ) | $ | (1.8 | ) | ||||||||||||
Gain/(Loss) Reclassified from |
||||||||||||||||||||||||||||
Amount of Gain/(Loss) |
Accumulated OCI |
Gain/(Loss) Recognized in Income on |
||||||||||||||||||||||||||
Recognized in OCI on |
into Income |
Derivatives (Ineffective Portion and Amount |
||||||||||||||||||||||||||
Derivatives (Effective |
(Effective Portion) | Excluded from Effectiveness Testing) (b) | ||||||||||||||||||||||||||
Portion) |
Income |
Amount |
Income |
Amount | ||||||||||||||||||||||||
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
Statement |
June 30, |
June 30, |
|||||||||||||||||||||
Derivatives | 2011 | 2010 | Location | 2011 | 2010 | Location | 2011 | 2010 | ||||||||||||||||||||
Foreign currency contracts
|
$ | (55.2 | ) | $ | 88.4 | Revenue | $ | (20.4 | ) | $ | 10.6 |
Derivative gains/(losses), net |
$ | 0.5 | $ | (3.0 | ) | |||||||||||
Interest rate contracts (c)
|
(2.4 | ) | (4.2 | ) | Interest expense | (0.8 | ) | (0.8 | ) | Interest expense | — | (0.1 | ) | |||||||||||||||
Total gain/(loss)
|
$ | (57.6 | ) | $ | 84.2 | $ | (21.2 | ) | $ | 9.8 | $ | 0.5 | $ | (3.1 | ) | |||||||||||||
Gain/(Loss) Recognized in Income on Derivatives (d) | ||||||||||||||||||
Income Statement Location | Amount | |||||||||||||||||
Three Months |
Six Months |
|||||||||||||||||
Ended |
Ended |
|||||||||||||||||
June 30, | June 30, | |||||||||||||||||
Derivatives | 2011 | 2010 | 2011 | 2010 | ||||||||||||||
Foreign currency contracts (e)
|
Selling, general and administrative | (10.6 | ) | 37.1 | (33.3 | ) | 48.3 | |||||||||||
Foreign currency contracts (f)
|
Derivative gains/(losses), net | (1.1 | ) | 3.4 | (3.1 | ) | 5.0 | |||||||||||
Total gain/(loss)
|
$ | (11.7 | ) | $ | 40.5 | $ | (36.4 | ) | $ | 53.3 | ||||||||
(a) | The net (loss)/gain of ($1.6) million and $1.9 million in the three months ended June 30, 2011 and 2010, respectively, was comprised of a loss in value on the debt of $8.4 million and $3.7 million, respectively, and amortization of hedge accounting adjustments of $6.8 million and $5.6 million, respectively. The net gain of $5.7 million and $2.6 million in the six months ended June 30, 2011 and 2010, respectively, was comprised of a loss in value on the debt of $8.2 million and $9.9 million, respectively, and amortization of hedge accounting adjustments of $13.9 million and $12.5 million, respectively. | |
(b) | The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates. | |
(c) | The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative’s fair value in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” over the life of the related notes. | |
(d) | The Company uses foreign currency forward and option contracts as part of its international business-to-business payments operation. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. | |
(e) | The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gain on settlement assets and obligations and cash balances for the three and six months ended June 30, 2011, were $5.4 million and $25.6 million, respectively. Foreign exchange loss on settlement assets and obligations and cash balances for the three and six months ended June 30, 2010, were $37.8 million and $49.4 million, respectively. | |
(f) | The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract. |
|
June 30, 2011 | December 31, 2010 | |||||||
Due in less than one year (a):
|
||||||||
5.400% notes (effective rate of 2.7%) due November 2011
|
$ | 696.3 | $ | 696.3 | ||||
Due in greater than one year (a):
|
||||||||
Floating rate notes, due 2013 (b)
|
300.0 | — | ||||||
6.500% notes (effective rate of 5.4%) due 2014
|
500.0 | 500.0 | ||||||
5.930% notes due 2016 (c)
|
1,000.0 | 1,000.0 | ||||||
5.253% notes due 2020 (c)
|
324.9 | 324.9 | ||||||
6.200% notes due 2036 (c)
|
500.0 | 500.0 | ||||||
6.200% notes due 2040 (c)
|
250.0 | 250.0 | ||||||
Other borrowings
|
5.9 | 5.9 | ||||||
Total borrowings at par value
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3,577.1 | 3,277.1 | ||||||
Fair value hedge accounting adjustments, net (a)
|
30.9 | 36.6 | ||||||
Unamortized discount, net
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(22.5 | ) | (23.8 | ) | ||||
Total borrowings at carrying value (d)
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$ | 3,585.5 | $ | 3,289.9 | ||||
(a) | The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to or increases in “Interest expense” over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate. | |
(b) | On March 7, 2011, the Company issued $300 million of aggregate principal amount of unsecured floating rate notes due March 7, 2013 (“2013 Notes”). Interest is payable quarterly at a per annum interest rate equal to three-month LIBOR plus 58 basis points (0.83% at June 30, 2011) and is reset quarterly. See below for additional detail relating to the debt issuance. | |
(c) | The difference between the stated interest rate and the effective interest rate is not significant. | |
(d) | At June 30, 2011, the Company’s weighted-average effective rate on total borrowings was approximately 4.8%. |
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Stock options granted:
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Weighted-average risk-free interest rate
|
2.6 | % | ||
Weighted-average dividend yield
|
1.4 | % | ||
Volatility
|
30.9 | % | ||
Expected term (in years)
|
5.8 | |||
Weighted-average grant date fair value
|
$ | 6.08 |
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues:
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Consumer-to-consumer:
|
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Transaction fees
|
$ | 898.0 | $ | 843.0 | $ | 1,737.8 | $ | 1,650.0 | ||||||||
Foreign exchange revenues
|
245.4 | 220.0 | 472.8 | 431.9 | ||||||||||||
Other revenues
|
11.7 | 10.1 | 22.6 | 21.4 | ||||||||||||
1,155.1 | 1,073.1 | 2,233.2 | 2,103.3 | |||||||||||||
Global business payments:
|
||||||||||||||||
Transaction fees
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145.3 | 142.4 | 290.9 | 290.4 | ||||||||||||
Foreign exchange revenues
|
33.8 | 29.3 | 62.5 | 55.5 | ||||||||||||
Other revenues
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7.6 | 7.6 | 15.4 | 15.2 | ||||||||||||
186.7 | 179.3 | 368.8 | 361.1 | |||||||||||||
Other:
|
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Transaction fees
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13.7 | 10.1 | 26.3 | 20.8 | ||||||||||||
Other revenues
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10.8 | 10.9 | 21.0 | 20.9 | ||||||||||||
24.5 | 21.0 | 47.3 | 41.7 | |||||||||||||
Total consolidated revenues
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$ | 1,366.3 | $ | 1,273.4 | $ | 2,649.3 | $ | 2,506.1 | ||||||||
Operating income/(loss):
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Consumer-to-consumer
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$ | 329.8 | $ | 312.4 | $ | 638.4 | $ | 595.1 | ||||||||
Global business payments
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37.2 | 33.8 | 67.3 | 71.4 | ||||||||||||
Other
|
(7.4 | ) | (0.7 | ) | (9.2 | ) | (5.2 | ) | ||||||||
Total segment operating income
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359.6 | 345.5 | 696.5 | 661.3 | ||||||||||||
Restructuring and related expenses (Note 4)
|
(8.9 | ) | (34.5 | ) | (32.9 | ) | (34.5 | ) | ||||||||
Total consolidated operating income
|
$ | 350.7 | $ | 311.0 | $ | 663.6 | $ | 626.8 | ||||||||
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