þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended: December 31, 2010 | ||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware | 20-4531180 | |
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.) | |
incorporation or organization)
|
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.01 Par Value
|
The New York Stock Exchange |
Large accelerated filer
þ
|
Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
2
FORWARD-LOOKING STATEMENTS
changes in immigration laws, patterns and other factors related
to migrants;
our ability to adapt technology in response to changing industry
and consumer needs or trends;
our failure to develop and introduce new products, services and
enhancements, and gain market acceptance of such products;
the failure by us, our agents or subagents to comply with our
business and technology standards and contract requirements or
applicable laws and regulations, especially laws designed to
prevent money laundering, terrorist financing and
anti-competitive behavior,
and/or
changing regulatory or enforcement interpretations of those laws;
the impact on our business of the Dodd-Frank Wall Street Reform
and Consumer Protection Act and the rules promulgated
there-under;
changes in United States or foreign laws, rules and regulations
including the Internal Revenue Code, and governmental or
judicial interpretations thereof;
changes in general economic conditions and economic conditions
in the regions and industries in which we operate;
political conditions and related actions in the United States
and abroad which may adversely affect our businesses and
economic conditions as a whole;
interruptions of United States government relations with
countries in which we have or are implementing material agent
contracts;
changes in, and failure to manage effectively exposure to,
foreign exchange rates, including the impact of the regulation
of foreign exchange spreads on money transfers and payment
transactions;
our ability to resolve tax matters with the Internal Revenue
Service and other tax authorities consistent with our reserves;
failure to comply with the settlement agreement with the State
of Arizona;
liabilities and unanticipated developments resulting from
litigation and regulatory investigations and similar matters,
including costs, expenses, settlements and judgments;
mergers, acquisitions and integration of acquired businesses and
technologies into our Company, and the realization of
anticipated financial benefits from these acquisitions;
3
Table of Contents
failure to maintain sufficient amounts or types of regulatory
capital to meet the changing requirements of our regulators
worldwide;
deterioration in consumers and clients confidence in
our business, or in money transfer providers generally;
failure to manage credit and fraud risks presented by our
agents, clients and consumers or non-performance by our banks,
lenders, other financial services providers or insurers;
any material breach of security of or interruptions in any of
our systems;
our ability to attract and retain qualified key employees and to
manage our workforce successfully;
our ability to maintain our agent network and business
relationships under terms consistent with or more advantageous
to us than those currently in place;
failure to implement agent contracts according to schedule;
adverse rating actions by credit rating agencies;
failure to compete effectively in the money transfer industry
with respect to global and niche or corridor money transfer
providers, banks and other money transfer services providers,
including telecommunications providers, card associations,
card-based payment providers and electronic and internet
providers;
our ability to protect our brands and our other intellectual
property rights;
our failure to manage the potential both for patent protection
and patent liability in the context of a rapidly developing
legal framework for intellectual property protection;
cessation of various services provided to us by third-party
vendors;
adverse movements and volatility in capital markets and other
events which affect our liquidity, the liquidity of our agents
or clients, or the value of, or our ability to recover our
investments or amounts payable to us;
decisions to downsize, sell or close units, or to transition
operating activities from one location to another or to third
parties, particularly transitions from the United States to
other countries;
changes in industry standards affecting our business;
changes in accounting standards, rules and interpretations;
significantly slower growth or declines in the money transfer
market and other markets in which we operate;
adverse consequences from our spin-off from First Data
Corporation;
decisions to change our business mix;
catastrophic events; and
managements ability to identify and manage these and other
risks.
4
Table of Contents
ITEM 1.
BUSINESS
2010
2009
2008
44%
45%
44%
31%
32%
34%
9%
8%
7%
84%
85%
85%
14%
14%
14%
2%
1%
1%
100%
100%
100%
5
Table of Contents
(a)
The geographic split is determined based upon the region where
the money transfer is initiated and the region where the money
transfer is paid. For transactions originated and paid in
different regions, we split the revenue between the two regions,
with each region receiving 50%. For money transfers initiated
and paid in the same region, 100% of the revenue is attributed
to that region.
(b)
Represents the Europe, Middle East, Africa and South Asia region
of our
consumer-to-consumer
segment, including India.
(c)
Represents the Americas region of our
consumer-to-consumer
segment, which includes North America, Latin America, the
Caribbean and South America.
(d)
Represents the Asia Pacific region of our
consumer-to-consumer
segment.
6
Table of Contents
7
Table of Contents
8
Table of Contents
Global money transfer providers
Global money
transfer providers allow consumers to send money to a wide
variety of locations, in both their home countries and abroad.
Regional money transfer providers
Regional money
transfer providers, or niche players, provide the
same services as global money transfer providers, but focus on a
small group of corridors or services within one region, such as
North America to the Caribbean, Central or South America, or
Western Europe to North Africa.
Banks and postbanks
Banks and postbanks of all sizes
compete with us in a number of ways, including bank wire
services and card-based services. We believe that banks and
postbanks offer consumers wire transfer services and other money
transfer methods as an incentive to those consumers to purchase
other services and products.
Informal networks
Informal networks enable people to
transfer funds without formal mechanisms and often without
compliance with government reporting requirements. We believe
that such networks comprise a significant share of the market.
Electronic commerce
Online money transfer services
allow consumers to send and receive money electronically using
the internet.
Alternative channels
Alternative channels for
sending and receiving money include mail and commercial courier
services, money transfers using mobile phones, and card-based
options, such as ATM cards and stored-value cards.
9
Table of Contents
10
Table of Contents
11
Table of Contents
12
Table of Contents
13
Table of Contents
14
Table of Contents
prohibit transactions in, to or from certain countries,
governments and individuals and entities;
impose additional identification, reporting or recordkeeping
requirements;
limit the types of entities capable of providing money transfer
services or impose additional licensing or registration
requirements;
impose minimum capital or other financial requirements on us or
our agents and their subagents;
limit or restrict the revenue which may be generated from money
transfers, including transaction fees and revenue derived from
foreign exchange;
require enhanced disclosures to our money transfer customers;
require the principal amount of money transfers originated in a
country to be invested in that country or held in trust until
they are paid; or
limit the number or principal amount of money transfers which
may be sent to or from the jurisdiction, whether by an
individual, through one agent or in aggregate.
15
Table of Contents
16
Table of Contents
Name
Age
Position
50
President, Chief Executive Officer and Director
45
Executive Vice President, Operations and IT
48
Executive Vice President and Chief Financial Officer
52
Executive Vice President, General Counsel and Secretary
49
President, The Americas and Executive Vice President, Global
Cards and Global Key Accounts
50
Executive Vice President of Human Resources
48
Executive Vice President and President, Business Development and
Innovation
17
Table of Contents
18
Table of Contents
ITEM 1A.
RISK
FACTORS
19
Table of Contents
20
Table of Contents
21
Table of Contents
Our agents or clients could experience reduced sales or business
as a result of a deterioration in economic conditions. As a
result, our agents could reduce their numbers of locations or
hours of operation, or cease doing business altogether.
Businesses using our services may make fewer cross-currency
payments or may have fewer customers making payments to them
through us, particularly businesses in those industries that may
be more affected by an economic downturn.
Our revolving credit facility with a consortium of banks is one
source for funding liquidity needs and also backs our commercial
paper program. If any of the banks participating in our credit
facility fails to fulfill its lending commitment to us, our
short-term liquidity and ability to support borrowings under our
commercial paper program could be adversely affected.
We may be unable to refinance our existing indebtedness as it
becomes due or we may have to refinance on unfavorable terms,
which could require us to dedicate a substantial portion of our
cash flow from operations to payments on our debt, thereby
reducing funds available for working capital, capital
expenditures, acquisitions, share repurchases and other purposes.
The market value of the securities in our investment portfolio
may substantially decline. The impact of that decline in value
may adversely affect our results of operations and financial
condition.
The derivative financial instruments that we use reduce our
exposure to various market risks including changes in interest
rates and foreign exchange rates. Our counterparties to our
derivative instruments may fail to honor their obligations,
which could expose us to risks we had sought to mitigate. That
failure could have an adverse effect on our financial condition
and results of operations.
We aggregate our foreign exchange exposures in our Business
Solutions business, including the exposure generated by the
derivative contracts we write to our customers as part of our
cross-currency payments business, and typically hedge the net
exposure through offsetting contracts with established financial
institution counterparties. If our customers fail to honor their
obligations or if the counterparties to our offsetting positions
fail to honor their obligations, our business, financial
position and results of operations could be adversely affected.
Our exposure to receivables from our agents, consumers and
businesses could impact us. For more information on this risk,
see risk factor,
We face credit, liquidity and fraud
risks from our agents, consumers and businesses that could
adversely affect our business, financial position and results of
operations.
The third-party service providers on whom we depend may
experience difficulties in their businesses, which may impair
their ability to provide services to us and have a potential
impact on our own business. The impact of a change or temporary
stoppage of services may have an adverse effect on our business,
results of operations and financial condition.
Banks upon which we rely to conduct our businesses could fail.
This could lead to our inability to access funds
and/or
credit losses for us and could adversely impact our ability to
conduct our business.
If market disruption and volatility occurs, we could experience
difficulty in accessing capital and our business, financial
condition and results of operations could be adversely impacted.
22
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
managing geographically separated organizations, systems and
facilities;
managing multi-jurisdictional operating, tax and financing
structures;
integrating personnel with diverse business backgrounds and
organizational cultures;
integrating the acquired technologies into our Company;
realization of anticipated financial benefits from these
acquisitions and where necessary, improving internal controls of
these acquired businesses;
complying with regulatory requirements;
fluctuations in currency exchange rates;
enforcement of intellectual property rights in some foreign
countries;
difficulty entering new markets with the services of the
acquired business; and
general economic and political conditions, including legal and
other barriers to cross-border investment in general, or by
United States companies in particular.
26
Table of Contents
changes or proposed changes in laws or regulations that have the
effect of making it more difficult for consumers to transfer
money using traditional money transfer providers;
actions by federal, state or foreign regulators that interfere
with our ability to transfer consumers money reliably, for
example, attempts to seize money transfer funds;
federal, state or foreign legal requirements, including those
that require us to provide consumer data to a greater extent
than is currently required;
any significant interruption in our systems, including by fire,
natural disaster, power loss, telecommunications failure,
terrorism, vendor failure, unauthorized entry and computer
viruses; and
any breach of our security policies or legal requirements
resulting in a compromise of consumer data.
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
31
Table of Contents
limiting our ability to pay dividends to our stockholders;
increasing our vulnerability to changing economic, regulatory
and industry conditions;
limiting our ability to compete and our flexibility in planning
for, or reacting to, changes in our business and the industry;
limiting our ability to borrow additional funds; and
requiring us to dedicate a substantial portion of our cash flow
from operations to payments on our debt, thereby reducing funds
available for working capital, capital expenditures,
acquisitions and other purposes.
32
Table of Contents
ITEM 1B.
UNRESOLVED
STAFF COMMENTS
ITEM 2.
PROPERTIES
ITEM 3.
LEGAL
PROCEEDINGS
33
Table of Contents
ITEM 4.
(REMOVED
AND RESERVED)
34
Table of Contents
38
65
66
67
68
69
70
125
ITEM 5.
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
Dividends
Market Price
Declared
High
Low
per Share
$
20.26
$
15.68
$
0.06
19.57
14.83
0.06
17.86
14.65
0.06
18.97
17.33
0.07
$
15.99
$
10.05
$
18.37
12.08
20.64
15.11
20.09
17.81
0.06
Remaining Dollar
Total Number of Shares
Value of Shares that
Purchased as Part of
May Yet Be Purchased
Total Number of
Average Price
Publicly Announced
Under the Plans or
Shares Purchased*
Paid per Share
Plans or Programs**
Programs (In millions)
819,267
$
18.01
810,300
$
471.0
1,627,000
$
17.96
1,627,000
$
441.8
1,429,347
$
18.43
1,424,994
$
415.5
3,875,614
$
18.15
3,862,294
*
These amounts represent both shares authorized by the Board of
Directors for repurchase under a publicly announced plan, as
described below, as well as shares withheld from employees to
cover tax withholding obligations on restricted stock awards and
units that have vested.
**
In December 2009, common stock repurchases of up to
$1 billion were authorized by the Board of Directors
through December 31, 2012, of which $415.5 million
remains available at December 31, 2010. On February 1,
2011, the Board of Directors authorized an additional
$1 billion of common stock repurchases through
December 31, 2012. Management has and may continue to
establish prearranged written plans pursuant to
Rule 10b5-1.
A
Rule 10b5-1
plan permits us to repurchase shares at times when we may
otherwise be unable to do so, provided the plan is adopted when
we are not aware of material non-public information.
35
Table of Contents
36
Table of Contents
ITEM 6.
SELECTED
FINANCIAL DATA
Year ended December 31,
(in millions, except per share data)
2010
2009
2008
2007
2006
$
5,192.7
$
5,083.6
$
5,282.0
$
4,900.2
$
4,470.2
3,892.6
3,800.9
3,927.0
3,578.2
3,158.8
1,300.1
1,282.7
1,355.0
1,322.0
1,311.4
2.8
9.4
45.2
79.4
40.1
(169.9
)
(157.9
)
(171.2
)
(189.0
)
(53.4
)
12.2
(2.7
)
9.7
10.0
37.0
1,145.2
1,131.5
1,238.7
1,222.4
1,335.1
909.9
848.8
919.0
857.3
914.0
175.9
154.2
144.0
123.9
103.5
994.4
1,218.1
1,253.9
1,103.5
1,108.9
(113.7
)
(98.9
)
(153.7
)
(192.1
)
(202.3
)
(581.4
)
(400.2
)
(1,314.5
)
(726.8
)
(19.9
)
2,953.9
$
1.37
$
1.21
$
1.26
$
1.13
$
1.20
$
1.36
$
1.21
$
1.24
$
1.11
$
1.19
$
0.25
$
0.06
$
0.04
$
0.04
$
0.01
213.7
196.1
188.1
167.7
147.1
404.9
414.8
412.1
404.5
249.4
37
Table of Contents
As of December 31,
2010
2009
2008
2007
2006
$
2,635.2
$
2,389.1
$
1,207.5
$
1,319.2
$
1,284.2
7,929.2
7,353.4
5,578.3
5,784.2
5,321.1
2,635.2
2,389.1
1,207.5
1,319.2
1,282.5
3,289.9
3,048.5
3,143.5
3,338.0
3,323.5
7,346.5
6,999.9
5,586.4
5,733.5
5,635.9
582.7
353.5
(8.1
)
50.7
(314.8
)
(a)
Revenue for the years ended December 31, 2010 and 2009
included $111.0 million and $30.8 million,
respectively, of revenue related to the Custom House acquisition
in September 2009, which has subsequently been rebranded to
Western Union Business Solutions.
(b)
Our stock-based compensation expense in 2007 included a charge
of $22.3 million related to the vesting of the remaining
converted unvested Western Union stock-based awards upon the
completion of the acquisition of First Data on
September 24, 2007 by an affiliate of Kohlberg Kravis
Roberts & Co.
(c)
Operating expenses for the year ended December 31, 2010
included $59.5 million of restructuring and related
expenses associated with a restructuring plan designed to reduce
overall headcount and migrate positions from various facilities,
primarily within the United States and Europe, to regional
operating centers. Operating expenses for the year ended
December 31, 2008 included $82.9 million of
restructuring and related expenses associated with the closure
of our facilities in Missouri and Texas and other reorganization
plans. No restructuring and related expenses were incurred
during 2009, 2007, or 2006.
(d)
Operating expenses for the year ended December 31, 2009
included an accrual of $71.0 million resulting from an
agreement and settlement, which resolved all outstanding legal
issues and claims with the State of Arizona and required us to
fund a multi-state
not-for-profit
organization promoting safety and security along the United
States and Mexico border, in which California, Texas and New
Mexico have participated with Arizona. The settlement agreement
was signed on February 11, 2010.
(e)
Interest income is attributed primarily to cash balances and
loans made to several agents. In 2009 and 2008, our interest
income was impacted by a decline in interest rates. On the
Spin-off Date, we received cash in connection with the
settlement of intercompany notes with First Data (net of certain
other payments made to First Data) which significantly increased
our international cash balances.
(f)
Interest expense primarily relates to debt incurred in
connection with the Spin-off from First Data and the refinancing
of such debt. Interest expense has been significantly higher
since September 29, 2006 due to higher borrowings balances.
(g)
In 2009, given the increased uncertainty, at that time,
surrounding the numerous third-party legal claims associated
with our receivable from the Reserve International Liquidity
Fund, Ltd., we reserved $12 million representing the
estimated impact of a pro-rata distribution. In 2010, we
recorded a recovery of this reserve of $6 million due to
the final settlement of this receivable. During the year ended
December 31, 2006, the pre-tax derivative loss on forward
contracts was $21.2 million, as we did not have any forward
contracts that qualified as hedges, prior to the Spin-off. Since
the Spin-off, we have entered into foreign currency forward
contracts that qualified for cash-flow hedge accounting. The
year ended December 31, 2006 also included interest income,
net, recognized on notes receivable from First Data, including
the impact of foreign exchange translation of the underlying
notes of $45.8 million. Notes receivable from First Data
affiliates and related foreign currency swap agreements were
settled in cash in connection with the Spin-off.
(h)
Net cash provided by operating activities decreased during the
year ended December 31, 2010, primarily due to a
$250 million refundable tax deposit made relating to
potential United States federal tax liabilities, including those
arising from our 2003 international restructuring, which have
been previously accrued in our financial statements. By making
this deposit, we have limited the further accrual of interest
charges with respect to such potential tax liabilities, to the
extent of the deposit. Also impacting net cash provided by
Table of Contents
operating activities during the year ended December 31,
2010 were cash payments of $71 million related to the
agreement and settlement with the State of Arizona and other
states.
(i)
Capital expenditures include capitalization of contract costs,
capitalization of purchased and developed software and purchases
of property and equipment.
(j)
At December 31, 2010, $415.5 million remains available
under share repurchase authorizations approved by our board of
directors. On February 1, 2011, the Board of Directors
authorized an additional $1 billion of common stock
repurchases through December 31, 2012. During the years
ended December 31, 2010, 2009, 2008 and 2007 and the period
from September 29, 2006 through December 31, 2006, we
repurchased 35.6 million, 24.8 million,
58.1 million, 34.7 million and 0.9 million
shares, respectively.
(k)
For all periods prior to Spin-off Date, basic and diluted
earnings per share were computed utilizing the basic shares
outstanding at September 29, 2006.
(l)
During 2010, the Companys Board of Directors declared
quarterly cash dividends of $0.07 per common share in the fourth
quarter and $0.06 per common share in each of the first three
quarters. During the fourth quarter of 2009, the Companys
Board of Directors declared an annual cash dividend of $0.06 per
common share. During the fourth quarter of 2008, the
Companys Board of Directors declared an annual cash
dividend of $0.04 per common share.
(m)
Consumer-to-consumer
transactions include Western Union, Vigo and Orlandi Valuta
branded
consumer-to-consumer
money transfer services worldwide.
(n)
Global business payments transactions include the Western Union
Payments service, formerly Quick Collect, Convenience Pay,
Speedpay, Equity Accelerator, Just in Time EFT, Pago Fácil
and Western Union Business Solutions transactions processed by
us. Amounts include Pago Fácil and Western Union Business
Solutions transactions since their acquisitions in December 2006
and September 2009, respectively.
(o)
In connection with the Spin-off, we reported a $4.1 billion
dividend to First Data in the consolidated statements of
stockholders equity/(deficiency), consisting of notes
issued to First Data of $3.4 billion and a cash payment to
First Data of $100.0 million. The remaining dividend was
comprised of cash, consideration for an ownership interest held
by a First Data subsidiary in a Western Union agent, settlement
of net intercompany receivables, and transfers of certain
liabilities, net of assets. Subsequent to the Spin-off date, we
had no outstanding borrowings to First Data. Since the amount of
the dividend exceeded the historical cost of our net assets as
of September 29, 2006, a capital deficiency resulted.
39
Table of Contents
ITEM 7.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Consumer-to-consumermoney
transfer services between consumers, primarily through a global
network of third-party agents using our multi-currency,
real-time money transfer processing systems. This service is
available for international cross-border transfersthat is,
the transfer of funds from one country to anotherand, in
certain countries, intra-country transfersthat is, money
transfers from one location to another in the same country.
Global business paymentsthe processing of payments from
consumers or businesses to other businesses. Our business
payments services allow consumers to make payments to a variety
of organizations, including utilities, auto finance companies,
mortgage servicers, financial service providers, government
agencies and other businesses. In September 2009, we 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, which has been rebranded Western Union Business
Solutions (Business Solutions) in September
2010, facilitates cross-border, cross-currency payment
transactions. The international expansion and other key
strategic initiatives have resulted in international revenue
continuing to increase in this segment. However, the majority of
the segments revenue was generated in the United States
during all periods presented.
We generated $5,192.7 million in total consolidated
revenues compared to $5,083.6 million in the prior year,
representing a
year-over-year
increase of 2%. The acquisition of Custom House contributed
$111.0 million and $30.8 million to revenue for 2010
and 2009, respectively.
We incurred $59.5 million of restructuring and related
expenses as described within Operating expenses
overview. We expect to incur approximately
$50 million in additional expenses in 2011 for a total of
approximately $110 million related to the actions announced
on May 27, 2010 and as subsequently revised. No
restructuring and related expenses were recognized in 2009.
40
Table of Contents
We generated $1,300.1 million in consolidated operating
income compared to $1,282.7 million in the prior year,
representing an increase of 1%. The current year results include
the restructuring and related expenses mentioned above. The
prior year results included an accrual of $71.0 million
resulting from an agreement and settlement which includes the
resolution of all outstanding legal issues and claims with the
State of Arizona and a multi-state agreement to fund a
not-for-profit
organization promoting safety and security along the United
States and Mexico border (the settlement accrual).
Our operating income margin was 25% during the year ended
December 31, 2010, which is flat
year-over-year.
The current year results include the restructuring and related
expenses mentioned above, while the prior year results include
the settlement accrual mentioned above.
Consolidated net income was $909.9 million, representing an
increase of 7% from 2009. The current year results include
$39.3 million in restructuring and related expenses, net of
tax. The prior year results include the settlement accrual of
$53.9 million, net of tax.
Our consumers transferred $76 billion in
consumer-to-consumer
principal, of which $69 billion related to cross-border
principal, which represented an increase of 6% in both
consumer-to-consumer
principal and cross-border principal over the prior year.
Consolidated cash flows provided by operating activities were
$994.4 million, a decrease of 18% over 2009. This decrease
was primarily the result of a $250 million refundable tax
deposit we made relating to potential United States federal tax
liabilities, including those arising from our 2003 international
restructuring, which have been previously accrued for in our
financial statements.
We issued $250 million of aggregate principal amount of our
6.200% notes due 2040 (2040 Notes) during the
year ended December 31, 2010.
We exchanged $303.7 million of aggregate principal amount
of our 5.400% notes due 2011 (2011 Notes) for
$324.9 million aggregate principal amount of 5.253%
(effective rate of 5.7%) notes due 2020 (2020 Notes)
during the year ended December 31, 2010.
Transaction volume is the primary generator of revenue in our
businesses. Transaction volume in our
consumer-to-consumer
segment is affected by, among other things, the size of the
international migrant population and individual needs to
transfer funds in emergency situations. As noted elsewhere in
this Annual Report on
Form 10-K,
a reduction in the size of the migrant population, interruptions
in migration patterns or reduced employment opportunities
including those resulting from any changes in immigration laws,
economic development patterns or political events, could
adversely affect our transaction volume. For discussion on how
these factors have impacted us in recent periods, refer to the
consumer-to-consumer
segment discussion below.
Revenue is also impacted by changes in the fees we charge
consumers, the principal sent per transaction and by the
variance in the exchange rate set by us to the customer and the
rate at which we or our agents are able to acquire currency. We
intend to continue to implement future strategic fee reductions
and actions to reduce foreign exchange spreads, where
appropriate, taking into account growth opportunities and
including competitive factors. Decreases in our fees or foreign
exchange spreads generally reduce margins, but are done in
anticipation that they will result in increased transaction
volumes and increased revenues over time.
A majority of our cost structure is comprised of agent
commissions, which are generally variable and fluctuate as
revenues fluctuate.
Fluctuations in the exchange rate between the United States
dollar and other currencies impact our transaction fee and
foreign exchange revenue. The impact to earnings per share is
less than the revenue impact due to the translation of expenses
and our foreign currency hedging program.
41
Table of Contents
42
Table of Contents
43
Table of Contents
% Change
Years Ended December 31,
2010
2009
(in millions, except per share amounts)
2010
2009
2008
vs. 2009
vs. 2008
$
4,055.3
$
4,036.2
$
4,240.8
%
(5
)%
1,018.8
910.3
896.3
12
%
2
%
118.6
137.1
144.9
(13
)%
(5
)%
5,192.7
5,083.6
5,282.0
2
%
(4
)%
2,978.4
2,874.9
3,093.0
4
%
(7
)%
914.2
926.0
834.0
(1
)%
11
%
3,892.6
3,800.9
3,927.0
2
%
(3
)%
1,300.1
1,282.7
1,355.0
1
%
(5
)%
2.8
9.4
45.2
(70
)%
(79
)%
(169.9
)
(157.9
)
(171.2
)
8
%
(8
)%
(2.5
)
(2.8
)
(6.9
)
*
*
14.7
0.1
16.6
*
*
(154.9
)
(151.2
)
(116.3
)
2
%
30
%
1,145.2
1,131.5
1,238.7
1
%
(9
)%
235.3
282.7
319.1
(17
)%
(12
)%
$
909.9
$
848.8
$
919.0
7
%
(8
)%
$
1.37
$
1.21
$
1.26
13
%
(4
)%
$
1.36
$
1.21
$
1.24
12
%
(2
)%
666.5
698.9
730.1
668.9
701.0
738.2
*
Calculation not meaningful
44
Table of Contents
45
Table of Contents
Restructuring and Related Activities
On May 25,
2010 and as subsequently revised, our Board of Directors
approved a restructuring plan (the Restructuring
Plan) designed to reduce our overall headcount and migrate
positions from various facilities, primarily within the United
States and Europe, to regional operating centers upon completion
of the Restructuring Plan. In conjunction with this decision and
subsequent revisions, we expect to incur approximately
$50 million in additional expenses in 2011 related to the
Restructuring Plan. The total expense for 2010 and 2011 of
approximately $110 million consists of approximately
$80 million for severance and employee related benefits,
approximately $10 million for facility closures, including
lease terminations; and approximately $20 million for other
expenses. Included in these estimated expenses are approximately
$2 million of non-cash expenses related to fixed asset and
leasehold improvement write-offs and accelerated depreciation at
impacted facilities. Subject to complying with and undertaking
the necessary individual and collective employee information and
consultation obligations as may be required by local law for
potentially affected employees, we expect all of these
activities to be completed by the third quarter of 2011. Total
cost savings of approximately $8 million were generated in
2010 and approximately $50 million is expected to be
generated in 2011. Cost savings of approximately
$70 million per year are expected to be generated beginning
in 2012, following completion of the Restructuring Plan.
46
Table of Contents
47
Table of Contents
48
Table of Contents
The accounting policies of the reporting segments are the same
as those described in the summary of significant accounting
policies.
Corporate and other overhead is allocated to the segments
primarily based on a percentage of the segments revenue
compared to total revenue.
Expenses incurred in connection with mergers and acquisitions
are included in Other.
We incurred expenses of $59.5 million and
$82.9 million for restructuring and related activities for
the years ended December 31, 2010 and 2008, respectively,
which were not allocated to segments. No expenses were
recognized for restructurings and related activities in 2009.
While these items were identifiable to our segments, they were
not included in the measurement of segment operating profit
provided to the CODM for purposes of assessing segment
performance and decision making with respect to resource
allocation. For additional information on restructuring and
related activities refer to Operating expenses
overview.
During 2009, we recorded an accrual of $71.0 million
resulting from the multi-state agreement and settlement, which
was not allocated to the segments. While this item was
identifiable to our
consumer-to-consumer
segment, it was not included in the measurement of segment
operating profit provided to the CODM for purposes of assessing
segment performance and decision making with respect to resource
allocation. For additional information on the settlement
accrual, refer to Operating expenses overview.
All items not included in operating income are excluded.
Years Ended December 31,
2010
2009
2008
44%
45%
44%
31%
32%
34%
9%
8%
7%
84%
85%
85%
14%
14%
14%
2%
1%
1%
100%
100%
100%
49
Table of Contents
(a)
The geographic split is determined based upon the region where
the money transfer is initiated and the region where the money
transfer is paid. For transactions originated and paid in
different regions, we split the revenue between the two regions,
with each region receiving 50%. For money transfers initiated
and paid in the same region, 100% of the revenue is attributed
to that region.
% Change
Years Ended December 31,
2010
2009
(dollars and transactions in millions)
2010
2009
2008
vs. 2009
vs. 2008
$
3,434.3
$
3,373.5
$
3,532.9
2
%
(5
)%
905.8
877.1
893.1
3
%
(2
)%
43.3
50.1
45.6
(14
)%
10
%
$
4,383.4
$
4,300.7
$
4,471.6
2
%
(4
)%
$
1,243.3
$
1,175.5
$
1,222.7
6
%
(4
)%
28
%
27
%
27
%
213.7
196.1
188.1
9
%
4
%
Years Ended December 31,
2010
2009
5
%
10
%
11
%
(3
)%
14
%
18
%
%
(1
)%
2
%
(9
)%
13
%
5
%
(a)
In determining the revenue and transaction growth rates under
the regional view in the above table, the geographic split is
determined based upon the region where the money transfer is
initiated and the region where the money transfer is paid. For
transactions originated and paid in different regions, we split
the transaction count and revenue between the two regions, with
each region receiving 50%. For money transfers initiated and
paid in the same region, 100% of the revenue and transactions
are attributed to that region.
50
Table of Contents
51
Table of Contents
52
Table of Contents
% Change
Years Ended December 31,
2010
2009
(dollars and transactions in millions)
2010
2009
2008
vs. 2009
vs. 2008
$
578.0
$
621.9
$
668.1
(7
)%
(7
)%
113.0
33.2
3.2
*
*
30.7
36.6
48.5
(16
)%
(25
)%
$
721.7
$
691.7
$
719.8
4
%
(4
)%
$
122.5
$
171.9
$
199.4
(29
)%
(14
)%
17
%
25
%
28
%
404.9
414.8
412.1
(2
)%
1
%
*
Calculation not meaningful
53
Table of Contents
% Change
Years Ended December 31,
2010
2009
(dollars in millions)
2010
2009
2008
vs. 2009
vs. 2008
$
87.6
$
91.2
$
90.6
(4
)%
1
%
$
(6.2
)
$
6.3
$
15.8
*
(60
)%
*
7
%
17
%
*
Calculation not meaningful
54
Table of Contents
55
Table of Contents
56
Table of Contents
December 31, 2010
$
696.3
500.0
1,000.0
324.9
500.0
250.0
5.9
3,277.1
36.6
(23.8
)
$
3,289.9
(a)
We utilize interest rate swaps designated as fair value hedges
to effectively change the interest rate payments on a portion of
our notes from fixed-rate payments to short-term LIBOR-based
variable rate payments in order to manage our overall exposure
to interest rates. The changes in fair value of these interest
rate swaps result in an offsetting hedge accounting adjustment
recorded to the carrying value of the related note. These hedge
accounting adjustments will be reclassified as reductions to or
increases in interest expense over the life of the
related notes, and cause the effective rate of interest to
differ from the notes stated rate.
(b)
On March 30, 2010, we 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
difference between the carrying value and the par value 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, we issued $250.0 million of
aggregate principal amount of 6.200% unsecured notes due 2040
(the 2040 Notes). In anticipation of this issuance,
we 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 December 31, 2010, our weighted average effective rate
on total borrowings was approximately 5.2%.
57
Table of Contents
58
Table of Contents
December 31, 2010
S&P
Moodys
Fitch
A-2
P-2
F2
A-
A3
A-
Stable
Stable
Stable
Our access to the commercial paper market may be limited, and if
we were downgraded below investment grade, our access to the
commercial paper market would likely be eliminated;
We may be required to pay a higher interest rate in future
financings;
Our potential pool of investors and funding sources may decrease;
Regulators may impose additional capital and other requirements
on us, including imposing restrictions on the ability of our
regulated subsidiaries to pay dividends; and
Our agent relationships may be adversely impacted, particularly
those agents that are financial institutions or post offices.
59
Table of Contents
60
Table of Contents
61
Table of Contents
Payments Due by Period
Total
Less than 1 Year
1-3 Years
3-5 Years
After 5 Years
$
5,166.8
$
876.7
$
314.1
$
752.2
$
3,223.8
671.1
124.6
22.1
45.0
38.3
19.2
80.9
69.7
9.6
1.6
12.6
4.7
5.2
2.7
148.9
52.5
47.0
34.4
15.0
105.9
29.9
38.4
22.6
15.0
152.0
140.0
12.0
$
6,462.8
$
1,195.6
$
471.3
$
851.8
$
3,273.0
(a)
We have estimated our interest payments based on (i) the
assumption that we will continue to have no commercial paper
borrowings outstanding (ii) the assumption that no debt
issuances or renewals will occur upon the maturity dates of our
notes, although we intend to refinance in 2011 the remaining
balance of $696.3 million of our 5.400% Notes which
are scheduled to mature in November 2011 and (iii) an
estimate of future interest rates on our interest rate swap
agreements based on projected LIBOR rates.
(b)
Unrecognized tax benefits include associated interest and
penalties. The timing of related cash payments for substantially
all of these liabilities is inherently uncertain because the
ultimate amount and timing of such liabilities is affected by
factors which are variable and outside our control.
(c)
We have estimated our pension plan funding requirements,
including interest, using assumptions that are consistent with
current pension funding rates. The unfunded pension liability
included in Other liabilities in the Consolidated
Balance Sheets is the present value of the estimated pension
plan funding requirements disclosed above. The actual minimum
required amounts each year will vary based on the actual
discount rate and asset returns when the funding requirement is
calculated. In addition, we may make a discretionary
contribution of up to approximately $3.0 million to the
plan in 2011, which has not been reflected in the table above.
(d)
Represents the liability position of our foreign currency
derivative contracts as of December 31, 2010, which will
fluctuate based on market conditions.
(e)
This line item relates to accrued and unpaid initial payments
for new and renewed agent contracts as of December 31, 2010.
(f)
Many of our contracts contain clauses that allow us to terminate
the contract with notice and with a terminations penalty.
Termination penalties are generally an amount less than the
original obligation. Obligations under certain contracts are
usage-based and are, therefore, estimated in the above amounts.
Historically, we have not had any significant defaults of our
contractual obligations or incurred significant penalties for
termination of our contractual obligations.
(g)
This line item primarily relates to the agreement we entered
into on December 31, 2010 to acquire the remaining 70%
interest, which we currently do not own, in Angelo Costa S.r.l.,
one of our largest money transfer agents in Europe. We will
acquire the 70% interest for cash of 100 million
(approximately $133 million based on currency exchange
rates at December 31, 2010), less a working capital
adjustment
62
Table of Contents
to be determined at closing. The acquisition is expected to
close in the first half of 2011, subject to regulatory approval
and satisfaction of closing conditions. This line item also
includes certain additional investments in our compliance
programs along the United States and Mexico border, which are
expected to cost up to $19 million over the next three
years pursuant to the agreement and settlement with the State of
Arizona and other states.
63
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
Income taxes, as reported in our consolidated financial
statements, represent the net amount of income taxes we expect
to pay to various taxing jurisdictions in connection with our
operations. We provide for income taxes based on amounts that we
believe we will ultimately owe after applying the required
analyses and judgments.
With respect to earnings in certain foreign jurisdictions, we
have provided for income taxes on such earnings at a more
favorable income tax rate than the combined United States
federal and state income tax rates because we expect to reinvest
these earnings outside of the United States indefinitely.
Upon distribution of those earnings to the United States in the form of actual or constructive dividends, we would be subject to United States income taxes (subject to an adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign countries which could result in a material impact to our financial position, results of operations and cash flows in the period such distribution occurred. Determination of the amount of unrecognized deferred United States tax liability is not practicable because of the complexities associated with its hypothetical calculation.
64
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
We recognize the tax benefit from an uncertain tax position only
when it is more likely than not, based on the technical merits
of the position, that the tax position will be sustained upon
examination, including the resolution of any related appeals or
litigation. The tax benefits recognized in the consolidated
financial statements from such a position are measured as the
largest benefit that has a greater than fifty percent likelihood
of being realized upon ultimate resolution.
We have established contingency reserves for material, known tax
exposures, including potential tax audit adjustments with
respect to our international operations, which were restructured
in 2003. Our tax reserves reflect managements judgment as
to the resolution of the issues involved if subject to judicial
review. While we believe our reserves are adequate to cover
reasonably expected tax risks, there can be no assurance that,
in all instances, an issue raised by a tax authority will be
resolved at a financial cost that does not exceed its related
reserve. With respect to these reserves, our income tax expense
would include (i) any changes in tax reserves arising from
material changes during the period in the facts and
circumstances (i.e., new information) surrounding a tax issue
and (ii) any difference from our tax position as recorded in the
financial statements and the final resolution of a tax issue
during the period.
If we are required to indemnify First Data for taxes incurred as a result of the spin-off being taxable to First Data, it likely would have a material adverse effect on our business, financial position, results of operations and cash flows.
Pursuant to the tax allocation agreement signed in connection
with the spin-off from First Data, we believe we have
appropriately apportioned the taxes between First Data and us.
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
Cash Flow hedgesCash flow hedges consist of foreign currency hedging of forecasted money transfer revenues and hedges of anticipated fixed rate debt issuances. Derivative fair value changes that are captured in accumulated other comprehensive loss are reclassified to earnings in the same period or periods the hedged item affects earnings, to the extent the change in the fair value of the instrument is effective in offsetting the change in fair value of the hedged item. The portion of the change in fair value that is either considered ineffective or is excluded from the measure of effectiveness is recognized immediately in Derivative (losses)/gains, net.
Fair Value hedgesFair value hedges consist of hedges of fixed rate debt, through interest rate swaps. The changes in fair value of these hedges, along with offsetting changes in fair value of the related debt instrument are recorded in interest expense.
The details of each designated hedging relationship must be formally documented at the inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risks being hedged, the derivative instrument, how effectiveness is being assessed and how ineffectiveness, if any, will be measured. The derivative must be highly effective in offsetting the changes in cash flows or fair value of the hedged item, and effectiveness is evaluated quarterly.
If the hedge is no longer deemed effective, we discontinue applying hedge accounting to that relationship prospectively.
As of December 31, 2010, the cumulative pre-tax unrealized losses classified within accumulated other comprehensive loss from such cash flow hedges that would be reflected in earnings if our hedges were disqualified from hedge accounting was $31.8 million.
As of December 31, 2010, the cumulative debt adjustments from our fair value hedges that would be reflected in earnings if such hedges were disqualified from hedge accounting was a $36.6 million gain.
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
We evaluate such intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable. In such reviews, estimated undiscounted cash flows associated with these assets are compared with their carrying amounts to determine if a write-down to fair value (normally measured by discounted cash flows) is required.
The estimated undiscounted cash flows associated with each asset requires us to make estimates and assumptions including among other things revenue growth rates, and operating margins based on our budgets and business plans.
If an event described above occurs and causes us to determine that an asset has been impaired, that could result in an impairment charge.
The net carrying value of our other intangible assets at December 31, 2010 was $438.0 million.
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
Goodwill Impairment Testing
Goodwill impairment is determined using a two-step process. The first step is to identify if a potential impairment exists by comparing the fair value of each reporting unit to its carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine the implied fair value of a reporting units goodwill, by comparing the reporting units fair value to the allocated fair values of all assets and liabilities, including any unrecognized intangible assets, as if the reporting unit had been acquired in a business combination. If the carrying amount of goodwill exceeds its implied fair value, an impairment is recognized in an amount equal to that excess.
Reporting units are driven by the level at which segment management reviews operating results. In some cases, that level is the operating segment (e.g., Consumer-to-Consumer money transfer) and in others it is one level below the operating segment (e.g., Business Solutions, which is included in our global business payments segment).
The determination of the reporting units also requires judgment.
If an event described above occurs and causes us to recognize a goodwill impairment charge, it would impact our reported earnings in the periods such charge occurs.
The carrying value of goodwill as of December 31, 2010 was $2,151.7 million which represented approximately 27% of our consolidated assets. As of December 31, 2010, goodwill of $1,619.9 million and $264.3 million resides in our Consumer-to-Consumer and Business Solutions reporting units, respectively.
For the Consumer-to-Consumer reporting unit, the fair value of the business greatly exceeds its carrying amount that providing sensitivity is not meaningful. For the Business Solutions reporting unit, a decline in estimated fair value of up to 15% could occur before triggering an impairment of goodwill. A decline of 30% would trigger an impairment of approximately $55 million. We expect that such a fair value decline would be driven primarily by actual and forecasted revenues that do not meet expectations. We have not recorded any goodwill impairments during the three years ended December 31, 2010.
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
AcquisitionsPurchase Price
Allocation
For most acquisitions, we engage outside appraisal firms to assist in the fair value determination of identifiable intangible assets such as agent networks, customer relationships, tradenames and any other significant assets or liabilities. We adjust the preliminary purchase price allocation, as necessary, after the acquisition closing date through the end of the measurement period of one year or less as we finalize valuations for the assets acquired and liabilities assumed.
Purchase price allocation requires management to make
assumptions and apply judgment to estimate the fair value of
acquired assets and liabilities. Management estimates the fair
value of assets and liabilities primarily using discounted cash
flows and replacement cost analysis.
During the last three years, we completed the following
significant acquisitions:
In September 2009, we acquired Custom House
for $371.0 million.
In February 2009, we acquired the money
transfer business of FEXCO for $243.6 million.
See Note 4,
Acquisitions
, to the Notes to the
Consolidated Financial Statements, included in Item 8, of this
Annual Report on Form 10-K, for more information related to the
purchase price allocations for acquisitions completed during the
last three years.
If estimates or assumptions used to complete the purchase price
allocation and estimate the fair value of acquired assets and
liabilities significantly differed from assumptions made, the
allocation of purchase price between goodwill and intangibles
could significantly differ. Such a difference would impact
future earnings through amortization expense of these
intangibles. In addition, if forecasts supporting the valuation
of the intangibles or goodwill are not achieved, impairments
could arise, as discussed further in Goodwill Impairment
Testing and Other Intangible Assets above. For
all of our acquisitions during the three years ended December
31, 2010, goodwill of $496.2 million and intangibles of $208.7
million were recognized.
Table of Contents
Effect if Actual Results Differ from
Description
Judgments and Uncertainties
Assumptions
Restructuring and Related
Expenses
Restructuring and related expenses consist of direct and incremental costs associated with restructuring and related activities, including severance, outplacement and other employee related benefits; facility closure and migration of IT infrastructure; and other expenses related to the relocation of various operations to existing Company facilities and third-party providers, including hiring, training, relocation, travel, and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and acceleration of depreciation.
The decision to include a cost in the restructuring disclosure requires an assessment of whether the cost is direct and incremental to the productivity improvement initiatives and expense reduction measures. This assessment can require judgment depending on the nature of the cost.
The timing of recording these costs was determined by the applicable accounting guidance. This judgment significantly impacted the timing of the recognition of restructuring and related expenses on a quarterly basis and between the years ended December 31, 2010 and 2011.
For the year ended December 31, 2010, we incurred $59.5 million of restructuring and related expenses, of which $35.4 million remains unpaid. We expect to incur approximately $50 million in additional restructuring and related expenses during the nine months ended September 30, 2011.
Table of Contents
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
71
Table of Contents
72
Table of Contents
73
Table of Contents
ITEM 8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Index To Consolidated Financial Statements
75
76
78
79
80
81
82
126
74
Table of Contents
75
Table of Contents
76
Table of Contents
77
Table of Contents
Consolidated Statements of Income
(in millions, except per share amounts)
Year Ended December 31,
2010
2009
2008
$
4,055.3
$
4,036.2
$
4,240.8
1,018.8
910.3
896.3
118.6
137.1
144.9
5,192.7
5,083.6
5,282.0
2,978.4
2,874.9
3,093.0
914.2
926.0
834.0
3,892.6
3,800.9
3,927.0
1,300.1
1,282.7
1,355.0
2.8
9.4
45.2
(169.9
)
(157.9
)
(171.2
)
(2.5
)
(2.8
)
(6.9
)
14.7
0.1
16.6
(154.9
)
(151.2
)
(116.3
)
1,145.2
1,131.5
1,238.7
235.3
282.7
319.7
$
909.9
$
848.8
$
919.0
$
1.37
$
1.21
$
1.26
$
1.36
$
1.21
$
1.24
666.5
698.9
730.1
668.9
701.0
738.2
*
As further described in Note 5, total expenses include
amounts for related parties of $236.4 million,
$257.4 million and $305.9 million for the years ended
December 31, 2010, 2009 and 2008, respectively.
78
Table of Contents
Consolidated Balance Sheets
(in millions, except per share amounts)
December 31,
2010
2009
$
2,157.4
$
1,685.2
2,635.2
2,389.1
196.5
204.3
2,151.7
2,143.4
438.0
489.2
350.4
442.2
$
7,929.2
$
7,353.4
$
520.4
$
501.2
2,635.2
2,389.1
356.6
519.0
289.9
268.9
3,289.9
3,048.5
254.5
273.2
7,346.5
6,999.9
6.5
6.9
117.4
40.7
591.6
433.2
(132.8
)
(127.3
)
582.7
353.5
$
7,929.2
$
7,353.4
79
Table of Contents
Consolidated Statements of Cash Flows
(in millions)
Year Ended December 31,
2010
2009
2008
$
909.9
$
848.8
$
919.0
61.5
55.9
61.7
114.4
98.3
82.3
28.6
(20.8
)
15.9
35.9
31.9
26.3
2.0
44.1
42.9
28.1
(31.4
)
6.9
10.5
75.5
35.2
(159.2
)
138.3
91.2
(37.3
)
(22.5
)
(27.5
)
994.4
1,218.1
1,253.9
(35.0
)
(27.3
)
(82.8
)
(25.4
)
(11.9
)
(17.0
)
(53.3
)
(59.7
)
(53.9
)
(4.7
)
(515.9
)
(42.8
)
36.9
255.5
(298.1
)
(1.0
)
16.9
35.2
41.9
(64.6
)
(324.1
)
(453.7
)
42.1
23.2
300.5
(165.3
)
(41.2
)
(28.4
)
(581.4
)
(400.2
)
(1,314.5
)
(82.8
)
(255.3
)
247.0
496.6
500.0
(500.0
)
(500.0
)
(457.6
)
(504.4
)
(1,297.7
)
472.2
389.6
(497.5
)
1,685.2
1,295.6
1,793.1
$
2,157.4
$
1,685.2
$
1,295.6
$
175.5
$
150.0
$
171.6
$
365.4
$
162.8
$
230.3
$
303.7
$
$
80
Table of Contents
Consolidated Statements of Stockholders
Equity/(Deficiency)
(in millions)
Accumulated
Total
Capital
Other
Stockholders
Common Stock
Surplus/
Retained
Comprehensive
Equity/
Comprehensive
Shares
Amount
(Deficiency)
Earnings
Loss
(Deficiency)
Income/(Loss)
749.8
$
7.5
$
(341.1
)
$
453.1
$
(68.8
)
$
50.7
919.0
919.0
$
919.0
26.3
26.3
(28.4
)
(28.4
)
(58.1
)
(0.6
)
(1,314.6
)
(1,315.2
)
17.9
0.2
289.5
289.7
10.9
10.9
0.1
0.1
1.2
1.2
1.2
89.2
89.2
89.2
(5.2
)
(5.2
)
(5.2
)
(46.4
)
(46.4
)
(46.4
)
$
957.8
709.6
7.1
(14.4
)
29.2
(30.0
)
(8.1
)
848.8
848.8
$
848.8
31.9
31.9
(41.2
)
(41.2
)
(24.9
)
(0.2
)
(403.6
)
(403.8
)
1.8
23.9
23.9
(0.7
)
(0.7
)
5.5
5.5
5.5
(62.5
)
(62.5
)
(62.5
)
(29.0
)
(29.0
)
(29.0
)
(11.3
)
(11.3
)
(11.3
)
$
751.5
686.5
6.9
40.7
433.2
(127.3
)
353.5
909.9
909.9
$
909.9
34.6
34.6
(165.3
)
(165.3
)
(35.7
)
(0.4
)
(586.2
)
(586.6
)
3.2
44.1
44.1
(2.0
)
(2.0
)
(3.3
)
(3.3
)
(3.3
)
(4.9
)
(4.9
)
(4.9
)
6.6
6.6
6.6
(3.9
)
(3.9
)
(3.9
)
$
904.4
654.0
$
6.5
$
117.4
$
591.6
$
(132.8
)
$
582.7
81
Table of Contents
1.
Formation
of the Entity and Basis of Presentation
Consumer-to-consumermoney
transfer services between consumers, primarily through a global
network of third-party agents using the Companys
multi-currency, real-time money transfer processing systems.
This service is available for international cross-border
transfersthat is, the transfer of funds from one country
to anotherand, in certain countries, intra-country
transfersthat is, money transfers from one location to
another in the same country.
Global business paymentsthe processing of payments from
consumers or businesses to other businesses. The Companys
business payments services allow consumers to make payments to a
variety of organizations including utilities, auto finance
companies, mortgage servicers, financial service providers,
government agencies and other businesses. As described further
in Note 4, in September 2009, the Company acquired
Canada-based Custom House, Ltd. (Custom House),
which has been rebranded Western Union Business
Solutions (Business Solutions) and is included
in this segment. This business facilitates cross-border,
cross-currency
business-to-business
payment transactions. The international expansion and other key
strategic initiatives have resulted in international revenue
continuing to increase in this segment. However, the majority of
the segments revenue was generated in the United States
during all periods presented.
82
Table of Contents
2.
Summary
of Significant Accounting Policies
For the Year Ended December 31,
2010
2009
2008
666.5
698.9
730.1
2.4
2.1
8.1
668.9
701.0
738.2
83
Table of Contents
Level 1:
Quoted prices in active markets for
identical assets or liabilities.
Level 2:
Observable inputs other than Level 1
prices such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs
that are observable or can be corroborated by observable market
data for substantially the full term of the assets or
liabilities. For most of these assets, the Company utilizes
pricing services that use multiple prices as inputs to determine
daily market values. In addition, the Trust has other
investments that fall within Level 2 that are valued at net
asset value which is not quoted on an active market, however,
the unit price is based on underlying investments which are
traded on an active market.
Level 3:
Unobservable inputs that are supported by
little or no market activity and that are significant to the
fair value of the assets or liabilities. Level 3 assets and
liabilities include items where the determination of fair value
requires significant management judgment or estimation. The
Company has Level 3 assets that are recognized and
disclosed at fair value on a non-recurring basis related to the
Companys business combinations, where the values of the
intangible assets and goodwill acquired in a purchase are
derived utilizing one of the three recognized approaches: the
market approach, the income approach or the cost approach.
84
Table of Contents
85
Table of Contents
December 31,
2010
2009
$
133.8
$
161.9
1,132.3
1,004.4
1,369.1
1,222.8
$
2,635.2
$
2,389.1
$
2,170.0
$
1,954.8
465.2
434.3
$
2,635.2
$
2,389.1
December 31,
2010
2009
$
401.5
$
368.5
77.5
75.2
51.9
50.0
30.3
28.1
16.9
16.9
2.0
1.0
580.1
539.7
(383.6
)
(335.4
)
$
196.5
$
204.3
86
Table of Contents
December 31, 2010
December 31, 2009
Weighted-
Average
Amortization
Net of
Net of
Period
Initial
Accumulated
Initial
Accumulated
(in years)
Cost
Amortization
Cost
Amortization
6.7
$
350.3
$
164.6
$
331.0
$
189.7
10.7
256.5
186.8
250.0
205.5
3.7
113.9
30.7
102.7
35.5
4.3
86.1
13.7
78.1
11.0
24.5
42.3
33.4
42.7
35.6
3.0
6.1
6.1
6.0
6.0
4.1
24.0
2.7
34.1
5.9
8.0
$
879.2
$
438.0
$
844.6
$
489.2
87
Table of Contents
88
Table of Contents
Cash Flow hedgesChanges in the fair value of derivatives
that are designated and qualify as cash flow hedges are recorded
in Accumulated other comprehensive loss. Cash flow
hedges consist of foreign currency hedging of forecasted
revenues, as well as, from time to time, hedges of the
forecasted issuance of fixed rate debt. Derivative fair value
changes that are captured in Accumulated other
comprehensive loss are reclassified to earnings in the
same period or periods the hedged item affects earnings. The
portions of the change in fair value that are excluded from the
measure of effectiveness are recognized immediately in
Derivative losses, net.
Fair Value hedgesChanges in the fair value of derivatives
that are designated as fair value hedges of fixed rate debt are
recorded in Interest expense. The offsetting change
in value of the related debt instrument attributable to changes
in the benchmark interest rate is also recorded in
Interest expense.
UndesignatedDerivative contracts entered into to reduce
the variability related to (a) money transfer settlement
assets and obligations, generally with maturities of a few days
up to one month, and (b) certain money transfer related
foreign currency denominated cash positions and intercompany
loans, generally with maturities of less than one year, are not
designated as hedges for accounting purposes and changes in
their fair value are included in Selling, general and
administrative. 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. These contracts have durations generally of
nine months or less. The Company aggregates its foreign exchange
exposures in its Business Solutions business, including the
exposure generated by the derivative contracts it writes to its
customers as part of its cross-currency payments business, and
typically hedges the net exposure through offsetting contracts
with established financial institution counterparties (economic
hedge contract) as part of a broader foreign currency portfolio,
including significant spot exchanges of currency in addition to
forwards and options. To mitigate credit risk, the Company
performs credit reviews of the customer on an ongoing basis. The
changes in fair value related to these contracts are recorded in
Foreign exchange revenues.
89
Table of Contents
3.
Restructuring
and Related Expenses
90
Table of Contents
Severance
Fixed Asset
and
Write-Offs and
Employee
Accelerated
Lease
Related
Depreciation
Terminations
Other (b)
Total
$
$
$
$
$
48.7
0.9
9.9
59.5
(13.7
)
(8.8
)
(22.5
)
(0.7
)
(0.9
)
(1.6
)
$
34.3
$
$
$
1.1
$
35.4
$
48.7
$
0.9
$
$
9.9
$
59.5
31.3
1.1
8.0
10.1
50.5
$
80.0
$
2.0
$
8.0
$
20.0
$
110.0
(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.
91
Table of Contents
Year Ended
Year Ended
December 31, 2010
December 31, 2008
$
15.0
$
62.8
44.5
20.1
$
59.5
$
82.9
$
39.3
$
51.6
Global
Consumer-to-
Business
Consumer
Payments
Other
Total
$
44.7
$
12.8
$
2.0
$
59.5
34.3
14.2
2.0
50.5
$
79.0
$
27.0
$
4.0
$
110.0
4.
Acquisitions
92
Table of Contents
$
2.5
153.6
6.7
264.3
118.1
77.6
$
622.8
$
23.3
153.6
23.6
51.3
251.8
$
371.0
93
Table of Contents
Consumer-to-
Global Business
Consumer
Payments
Other
Total
$
1,427.0
$
232.7
$
14.5
$
1,674.2
190.6
272.2
462.8
2.3
2.3
4.3
(0.2
)
4.1
$
1,619.9
$
509.2
$
14.3
$
2,143.4
(7.9
)
(7.9
)
16.3
(0.1
)
16.2
$
1,619.9
$
517.6
$
14.2
$
2,151.7
5.
Related
Party Transactions
94
Table of Contents
6.
Commitments
and Contingencies
95
Table of Contents
7.
Investment
Securities
96
Table of Contents
Gross
Gross
Net
Amortized
Fair
Unrealized
Unrealized
Unrealized
December 31, 2010
Cost
Value
Gains
Losses
Gains/(Losses)
$
844.1
$
849.1
$
7.0
$
(2.0
)
$
5.0
490.0
490.0
29.9
30.0
0.1
0.1
$
1,364.0
$
1,369.1
$
7.1
$
(2.0
)
$
5.1
Gross
Gross
Net
Amortized
Fair
Unrealized
Unrealized
Unrealized
December 31, 2009
Cost
Value
Gains
Losses
Gains/(Losses)
$
686.4
$
696.4
$
10.6
$
(0.6
)
$
10.0
513.8
513.8
12.3
12.6
0.3
0.3
$
1,212.5
$
1,222.8
$
10.9
$
(0.6
)
$
10.3
(a)
The majority of these securities are fixed rate instruments.
Amortized
Fair
Cost
Value
$
114.7
$
115.0
659.7
664.4
156.0
155.9
433.6
433.8
$
1,364.0
$
1,369.1
97
Table of Contents
8.
Fair
Value Measurements
Fair Value Measurement Using
Assets/Liabilities
December 31, 2010
Level 1
Level 2
Level 3
at Fair Value
$
$
849.1
$
$
849.1
490.0
490.0
0.1
29.9
30.0
69.8
69.8
$
0.1
$
1,438.8
$
$
1,438.9
$
$
80.9
$
$
80.9
$
$
80.9
$
$
80.9
Fair Value Measurement Using
Assets/Liabilities
December 31, 2009
Level 1
Level 2
Level 3
at Fair Value
$
$
696.4
$
$
696.4
513.8
513.8
0.2
12.4
12.6
109.4
0.5
109.9
$
0.2
$
1,332.0
$
0.5
$
1,332.7
$
$
80.6
$
$
80.6
$
$
80.6
$
$
80.6
98
Table of Contents
9.
Other
Assets and Other Liabilities
December 31,
2010
2009
$
85.7
$
87.4
69.8
109.9
50.1
27.1
26.2
63.4
25.3
37.5
24.1
24.8
20.4
26.1
13.8
12.1
12.8
12.3
30.6
22.2
11.0
$
350.4
$
442.2
$
112.8
$
124.2
80.9
80.6
37.3
45.4
23.5
23.0
$
254.5
$
273.2
99
Table of Contents
10.
Income
Taxes
Year Ended December 31,
2010
2009
2008
$
151.4
$
249.7
$
416.3
993.8
881.8
822.4
$
1,145.2
$
1,131.5
$
1,238.7
Year Ended December 31,
2010
2009
2008
$
132.2
$
217.3
$
234.8
39.8
28.0
30.3
63.3
37.4
54.6
$
235.3
$
282.7
$
319.7
Year Ended December 31,
2010
2009
2008
35
.0%
35
.0%
35
.0%
1
.9%
1
.5%
1
.3%
(15
.3)%
(12
.5)%
(11
.4)%
(1
.1)%
1
.0%
0
.9%
20
.5%
25
.0%
25
.8%
100
Table of Contents
Year Ended December 31,
2010
2009
2008
$
103.6
$
235.8
$
219.6
30.1
26.0
34.5
73.0
41.8
49.7
206.7
303.6
303.8
28.6
(18.5
)
15.2
9.7
2.0
(4.2
)
(9.7
)
(4.4
)
4.9
28.6
(20.9
)
15.9
$
235.3
$
282.7
$
319.7
December 31,
2010
2009
$
61.6
$
91.0
38.7
43.5
3.6
3.6
20.5
10.7
124.4
148.8
411.8
416.7
2.5
1.0
414.3
417.7
$
289.9
$
268.9
101
Table of Contents
2010
2009
$
477.2
$
361.2
134.1
124.3
33.4
0.4
(21.8
)
(0.8
)
(4.4
)
(3.4
)
(4.3
)
$
618.7
$
477.2
(a)
Includes recurring accruals for issues which initially arose in
previous periods.
(b)
Changes to positions taken in prior periods relate to changes in
estimates used to calculate prior period unrecognized tax
benefits.
102
Table of Contents
11.
Employee
Benefit Plans
103
Table of Contents
2010
2009
$
400
.1
$
398
.8
20
.1
23
.6
25
.3
21
.1
(42
.6)
(43
.4)
$
402
.9
$
400
.1
$
275
.9
$
291
.7
31
.9
23
.5
(42
.6)
(43
.4)
24
.9
4
.1
290
.1
275
.9
$
(112
.8)
$
(124
.2)
$
402
.9
$
400
.1
104
Table of Contents
December 31,
2010
2009
$
(112.8
)
$
(124.2
)
176.5
169.0
$
63.7
$
44.8
Year Ended December 31,
2010
2009
2008
$
20.1
$
23.6
$
24.4
(20.4
)
(24.7
)
(27.5
)
6.2
3.6
2.7
2.8
$
5.9
$
2.5
$
2.4
2010
2009
4.69
%
5.30
%
2010
2009
2008
5.30
%
6.26
%
6.02
%
6.50
%
7.50
%
7.50
%
105
Table of Contents
Percentage of Plan Assets
at Measurement Date
Asset Class
2010
2009
31%
32%
69%
68%
100%
100%
Target Allocation
25-35
%
65-75
%
106
Table of Contents
December 31, 2010
Fair Value Measurement Using
Total Assets
Asset Class
Level 1
Level 2
Level 3
at Fair Value
$
3.1
$
40.9
$
$
44.0
45.2
45.2
1.3
1.3
117.3
117.3
57.9
57.9
6.8
6.8
6.0
6.0
9.0
9.0
$
61.0
$
225.2
$
1.3
$
287.5
2.6
$
61.0
$
225.2
$
1.3
$
290.1
December 31, 2009
Fair Value Measurement Using
Total Assets
Asset Class
Level 1
Level 2
Level 3
at Fair Value
$
5.7
$
35.4
$
$
41.1
43.1
43.1
2.0
2.0
119.3
119.3
46.6
46.6
9.6
9.6
8.7
8.7
2.9
2.9
$
52.3
$
219.0
$
2.0
$
273.3
2.6
$
52.3
$
219.0
$
2.0
$
275.9
(a)
Substantially all corporate debt securities are investment grade
securities.
107
Table of Contents
Private equity
For the year ended December 31, 2010
securities
$
2
.0
(0
.4)
0
.2
(0
.5)
$
1
.3
Asset-backed
Private equity
For the year ended December 31, 2009
securities
securities
Total
$
9.8
$
2.8
$
12
.6
1.0
(0.8)
0
.2
0.2
0
.2
(2.3)
(2
.3)
(8.7)
(8
.7)
$
$
2.0
$
2
.0
(a)
Market liquidity for these assets has significantly improved
since 2008 resulting in improved price transparency.
12.
Operating
Lease Commitments
Year Ending December 31,
$
29.9
21.6
16.8
12.5
10.1
15.0
$
105.9
108
Table of Contents
13.
Stockholders
Equity
109
Table of Contents
2010
2009
2008
$
(127.3
)
$
(30.0
)
$
(68.8
)
(0.5
)
11.5
(2.4
)
0.1
(4.3
)
0.9
(4.7
)
(2.7
)
4.3
1.8
1.0
(1.6
)
(3.3
)
5.5
1.2
15.8
(43.6
)
82.6
0.7
8.9
(15.0
)
(23.0
)
(32.9
)
25.1
1.6
5.1
(3.5
)
(4.9
)
(62.5
)
89.2
8.4
(21.6
)
(8.0
)
(1.8
)
7.6
2.8
(23.1
)
8.1
6.6
(29.0
)
(5.2
)
(13.7
)
(22.2
)
(76.1
)
5.9
8.7
28.0
6.2
3.6
2.7
(2.3
)
(1.4
)
(1.0
)
(3.9
)
(11.3
)
(46.4
)
(5.5
)
(97.3
)
38.8
$
(132.8
)
$
(127.3
)
$
(30.0
)
(a)
The year ended December 31, 2009 includes the impact to the
foreign currency translation account of the surrender of the
Companys interest in FEXCO Group. See Note 4.
2010
2009
2008
$
3.1
$
6.4
$
0.9
(21.9
)
(17.0
)
45.5
(4.3
)
(10.9
)
18.1
(109.7
)
(105.8
)
(94.5
)
$
(132.8
)
$
(127.3
)
$
(30.0
)
110
Table of Contents
14.
Derivatives
111
Table of Contents
$
206.5
26.6
48.4
$
485.3
107.7
94.3
87.4
112
Table of Contents
Derivative Assets
Derivative Liabilities
Balance Sheet
Fair Value
Balance Sheet
Fair Value
Location
2010
2009
Location
2010
2009
Other assets
$
8.0
$
31.0
Other liabilities
$
1.6
$
Other assets
14.7
15.1
Other liabilities
31.1
31.0
$
22.7
$
46.1
$
32.7
$
31.0
Other assets
$
46.9
$
58.9
Other liabilities
$
36.2
$
48.2
Other assets
0.2
4.9
Other liabilities
12.0
1.4
$
47.1
$
63.8
$
48.2
$
49.6
$
69.8
$
109.9
$
80.9
$
80.6
Total
2011
2012
2013
2014
Thereafter
$
(16.4
)
$
(9.6
)
$
(6.8
)
$
$
$
(11.8
)
(11.8
)
10.7
10.6
0.1
6.4
3.8
2.6
$
(11.1
)
$
(7.0
)
$
(6.7
)
$
$
2.6
$
Gain/(Loss) Recognized in Income on Related
Gain/(Loss) Recognized in Income on Derivatives
Hedged Item (a)
Income Statement
Amount
Income Statement
Amount
Derivatives
Location
2010
2009
2008
Hedged Items
Location
2010
2009
2008
Interest expense
$
13.3
$
12.9
$
58.5
Fixed-rate debt
Interest expense
$
10.5
$
11.1
$
(54.6
)
$
13.3
$
12.9
$
58.5
$
10.5
$
11.1
$
(54.6
)
113
Table of Contents
Amount of Gain/(Loss)
Gain/(Loss) Recognized in Income on Derivative
Recognized in OCI on
Gain/(Loss) Reclassified from Accumulated OCI into
(Ineffective Portion and Amount
Derivatives
Income (Effective Portion)
Excluded from Effectiveness Testing) (b)
(Effective Portion)
Income Statement
Amount
Income Statement
Amount
Derivatives
2010
2009
2008
Location
2010
2009
2008
Location
2010
2009
2008
$
20.0
$
(43.6
)
$
82.6
Revenue
$
24.5
$
34.6
$
(23.4
)
Derivative losses, net
$
(1.5
)
$
(1.2
)
$
(9.9
)
(4.2
)
Interest expense
(1.5
)
(1.7
)
(1.7
)
Interest expense
(0.1
)
$
15.8
$
(43.6
)
$
82.6
$
23.0
$
32.9
$
(25.1
)
$
(1.6
)
$
(1.2
)
$
(9.9
)
Gain/(Loss) Recognized in Income on Derivatives
Income Statement Location
Amount
Derivatives
2010
2009
2008
Foreign exchange revenues
$
25.8
$
4.5
$
Selling, general and administrative
(1.0
)
(7.4
)
13.0
Derivative losses, net
0.6
(2.8
)
3.9
$
25.4
$
(5.7
)
$
16.9
(a)
The 2010 gain of $10.5 million is comprised of a loss in
value on the debt of $13.3 million and amortization of
hedge accounting adjustments of $23.8 million. The 2009
gain of $11.1 million is comprised of a loss in value on
the debt of $12.9 million and amortization of hedge
accounting adjustments of $24.0 million. The 2008 loss of
$54.6 million is comprised of a loss in value on the debt
of $58.5 million and amortization of hedge accounting
adjustments of $3.9 million.
(b)
The portion of the change in fair value of a derivative excluded
from the effectiveness assessment for foreign currency forward
contracts designated as cash flow hedges represents the
difference between changes in forward rates and spot rates.
(c)
The Company uses derivatives to hedge the forecasted issuance of
fixed rate debt and records the effective portion of the
derivatives fair value in Accumulated other
comprehensive loss in the Consolidated Balance Sheets.
These amounts are reclassified to Interest expense
over the life of the related notes.
(d)
The Company uses foreign currency forward and option contracts
as part of its international
business-to-business
payments operation. The derivative contracts are managed as part
of a broader currency portfolio that includes non-derivative
currency exposures.
(e)
The Company uses foreign currency forward contracts to offset
foreign exchange rate fluctuations on settlement assets and
obligations as well as certain foreign currency denominated
positions. Foreign exchange gain/(loss) on settlement assets and
obligations and cash balances were ($2.5) million,
$2.8 million and ($24.9) million in 2010, 2009 and
2008, respectively.
(f)
The derivative contracts used in the Companys revenue
hedging program are not designated as hedges in the final month
of the contract.
114
Table of Contents
15.
Borrowings
December 31, 2010
December 31, 2009
$
696.3
$
1,000.0
500.0
500.0
1,000.0
1,000.0
324.9
500.0
500.0
250.0
5.9
6.0
3,277.1
3,006.0
36.6
47.1
(23.8
)
(4.6
)
$
3,289.9
$
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 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 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 difference between
the carrying value and the par value 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 December 31, 2010, the Companys weighted average
effective rate on total borrowings was approximately 5.2%.
115
Table of Contents
116
Table of Contents
16.
Stock
Compensation Plans
117
Table of Contents
118
Table of Contents
Year Ended December 31, 2010
Weighted-Average
Remaining
Aggregate
Weighted-Average
Contractual Term
Intrinsic
Options
Exercise Price
(Years)
Value
42.8
$
18.77
4.3
16.15
(2.9
)
14.97
(6.7
)
18.81
37.5
$
18.76
4.7
$
42.9
30.7
$
19.34
3.9
$
21.8
(a)
Mainly due to restructuring activities.
Year Ended
December 31, 2010
Number
Weighted-Average
Outstanding
Grant-Date Fair Value
2.2
$
14.63
1.5
15.74
(0.3
)
16.11
(0.7
)
14.42
2.7
$
15.34
(a)
Mainly due to restructuring activities.
119
Table of Contents
Year Ended December 31,
2010
2009
2008
$
(35.9
)
$
(31.9
)
$
(26.3
)
11.6
9.9
7.7
$
(24.3
)
$
(22.0
)
$
(18.6
)
$
(0.04
)
$
(0.03
)
$
(0.03
)
Year Ended December 31,
2010
2009
2008
2.7
%
2.0
%
3.0
%
1.3
%
0.2
%
0.2
%
33.9
%
46.3
%
31.8
%
5.8
5.6
5.9
$
5.12
$
5.41
$
7.57
120
Table of Contents
17.
Segments
The accounting policies of the reportable segments are the same
as those described in the summary of significant accounting
policies.
Corporate and other overhead is allocated to the segments
primarily based on a percentage of the segments revenue
compared to total revenue.
Expenses incurred in connection with mergers and acquisitions
are included in Other.
Restructuring and related expenses of $59.5 million and
$82.9 million for the years ended December 31, 2010
and 2008, respectively, were not allocated to the segments. The
Company did not incur any material restructuring and related
expenses in the year ended December 31, 2009. While these
items were identifiable to the Companys segments, they
were not included in the measurement of segment operating
121
Table of Contents
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.
During the year ended December 31, 2009, the Company
recorded an accrual of $71.0 million for an agreement and
settlement with the State of Arizona and other states. The
agreement and settlement includes resolution of all outstanding
legal issues and claims with the State and a multi-state
agreement to fund a
not-for-profit
organization promoting safety and security along the United
States and Mexico border. While this item was identifiable to
the Companys
consumer-to-consumer
segment, it was not included in the measurement of segment
operating profit provided to the CODM for purposes of assessing
segment performance and decision making with respect to resource
allocation. For additional information on the settlement
accrual, refer to Note 6.
All items not included in operating income are excluded.
122
Table of Contents
Years Ended December 31,
2010
2009
2008
$
3,434.3
$
3,373.5
$
3,532.9
905.8
877.1
893.1
43.3
50.1
45.6
4,383.4
4,300.7
4,471.6
578.0
621.9
668.1
113.0
33.2
3.2
30.7
36.6
48.5
721.7
691.7
719.8
43.0
40.8
39.8
44.6
50.4
50.8
87.6
91.2
90.6
$
5,192.7
$
5,083.6
$
5,282.0
$
1,243.3
$
1,175.5
$
1,222.7
122.5
171.9
199.4
(6.2
)
6.3
15.8
$
1,359.6
$
1,353.7
$
1,437.9
(71.0
)
(59.5
)
(82.9
)
$
1,300.1
$
1,282.7
$
1,355.0
$
5,014.3
$
4,602.5
$
4,305.0
1,452.7
1,419.0
819.5
1,462.2
1,331.9
453.8
$
7,929.2
$
7,353.4
$
5,578.3
$
130.5
$
124.2
$
111.0
36.0
24.3
21.1
8.5
5.7
4.0
$
175.0
$
154.2
$
136.1
0.9
7.9
$
175.9
$
154.2
$
144.0
$
85.3
$
71.6
$
114.8
21.5
16.7
30.5
6.9
10.6
8.4
$
113.7
$
98.9
$
153.7
123
Table of Contents
Years Ended December 31,
2010
2009
2008
$
1,516.0
$
1,584.9
$
1,760.0
3,676.7
3,498.7
3,522.0
$
5,192.7
$
5,083.6
$
5,282.0
$
159.4
$
161.1
$
162.3
37.1
43.2
30.0
$
196.5
$
204.3
$
192.3
18.
Quarterly
Financial Information
(Unaudited)
Year Ended
December 31,
2010 by Quarter:
Q1
Q2
Q3
Q4
2010
$
1,232.7
$
1,273.4
$
1,329.6
$
1,357.0
$
5,192.7
916.9
962.4
978.4
1,034.9
3,892.6
39.8
38.7
42.6
33.8
154.9
276.0
272.3
308.6
288.3
1,145.2
68.1
51.3
70.2
45.7
235.3
$
207.9
$
221.0
$
238.4
$
242.6
$
909.9
$
0.30
$
0.33
$
0.36
$
0.37
$
1.37
$
0.30
$
0.33
$
0.36
$
0.37
$
1.36
681.9
669.3
659.1
655.4
666.5
684.2
671.6
661.3
658.4
668.9
(a)
Includes $34.5 million in the second quarter,
$14.0 million in the third quarter and $11.0 in the fourth
quarter of restructuring and related expenses. For more
information, see Note 3.
124
Table of Contents
Year Ended
December 31,
2009 by Quarter:
Q1
Q2
Q3
Q4
2009
$
1,201.2
$
1,254.3
$
1,314.1
$
1,314.0
$
5,083.6
860.3
912.6
1,032.6
995.4
3,800.9
35.7
46.0
35.0
34.5
151.2
305.2
295.7
246.5
284.1
1,131.5
81.3
75.5
65.5
60.4
282.7
$
223.9
$
220.2
$
181.0
$
223.7
$
848.8
$
0.32
$
0.31
$
0.26
$
0.32
$
1.21
$
0.32
$
0.31
$
0.26
$
0.32
$
1.21
707.1
700.6
698.4
689.8
698.9
708.0
702.7
701.6
693.2
701.0
(b)
Includes $71.0 million in the third quarter for an
agreement and settlement with the State of Arizona and other
states. See Note 6 for more information.
Table of Contents
SCHEDULE I
CONDENSED FINANCIAL
INFORMATION OF THE REGISTRANT
CONDENSED BALANCE SHEETS
(PARENT COMPANY ONLY)
(in millions, except per share amounts)
December 31,
2010
2009
$
89.2
$
27.9
30.9
31.8
250.0
60.2
82.1
3,805.3
3,722.4
$
4,235.6
$
3,864.2
80.9
69.3
285.1
397.4
3,283.9
3,042.5
3.0
1.5
3,652.9
3,510.7
6.5
6.9
117.4
40.7
591.6
433.2
(132.8
)
(127.3
)
582.7
353.5
$
4,235.6
$
3,864.2
126
Table of Contents
CONDENSED STATEMENTS OF OPERATIONS
(PARENT COMPANY ONLY)
(in millions)
For the Years Ended December 31,
2010
2009
2008
$
$
$
0.2
1.8
2.8
(168.7
)
(157.3
)
(171.0
)
(3.3
)
(171.8
)
(155.5
)
(168.2
)
1,012.5
941.7
1,022.3
69.2
62.6
64.9
$
909.9
$
848.8
$
919.0
127
Table of Contents
CONDENSED STATEMENTS OF CASH FLOWS
(PARENT COMPANY ONLY)
(in millions)
For the Years Ended December 31,
2010
2009
2008
$
631.6
$
505.0
$
1,145.2
(0.1
)
(29.0
)
(0.2
)
(29.0
)
(0.3
)
(112.7
)
(224.7
)
397.7
247.0
496.6
500.0
(500.0
)
(500.0
)
(82.8
)
(255.3
)
42.1
23.2
300.5
(165.3
)
(41.2
)
(28.4
)
(581.4
)
(400.2
)
(1,314.5
)
(570.3
)
(729.1
)
(900.0
)
61.3
(253.1
)
244.9
27.9
281.0
36.1
$
89.2
$
27.9
$
281.0
128
Table of Contents
1.
Basis of
Presentation
2.
Restricted
Net Assets
3.
Related
Party Transactions
4.
Commitments
and Contingencies
129
Table of Contents
ITEM 9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9A.
CONTROLS
AND PROCEDURES
ITEM 9B.
OTHER
INFORMATION
ITEM 10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
130
Table of Contents
ITEM 11.
EXECUTIVE
COMPENSATION
ITEM 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
ITEM 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
ITEM 15.
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
1.
Financial Statements (See Index to Consolidated Financial
Statements on page 74 of this Annual Report on
Form 10-K);
2.
Financial Statement Schedule (See Index to Consolidated
Financial Statements on page 74 of this Annual Report on
Form 10-K);
3.
The exhibits listed in the Exhibit Index
attached to this Annual Report on
Form 10-K.
131
Table of Contents
THE WESTERN UNION COMPANY (Registrant)
By:
Hikmet Ersek, President and
Chief Executive Officer
Signature
Title
Date
President, Chief Executive Officer and Director (Principal
Executive Officer)
February 25, 2011
Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
February 25, 2011
Senior Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
February 25, 2011
Non-Executive Chairman of the Board of Directors
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
Director
February 25, 2011
132
Table of Contents
Exhibit
Number
Description
2
.1
Separation and Distribution Agreement, dated as of
September 29, 2006, between First Data Corporation and The
Western Union Company (filed as Exhibit 2.1 to the
Companys Current Report on
Form 8-K
filed on October 3, 2006 and incorporated herein by
reference thereto).
3
.1
Amended and Restated Certificate of Incorporation of The Western
Union Company (filed as Exhibit 4.1 to the Companys
Registration Statement on
Form S-8
(registration
no. 333-137665)
and incorporated herein by reference thereto).
3
.2
The Western Union Company By-laws, as amended on
December 11, 2008 (filed as Exhibit 3.1(ii) to the
Companys Current Report on
Form 8-K
filed on December 17, 2008 and incorporated herein by
reference thereto).
4
.1
Indenture, dated as of September 29, 2006, between The
Western Union Company and Wells Fargo Bank, National
Association, as trustee (filed as Exhibit 4.1 to the
Companys Current Report on
Form 8-K
filed on October 2, 2006 and incorporated herein by
reference thereto).
4
.2
Form of 5.930% Note due 2016 (filed as Exhibit 4.2 to
the Companys Current Report on
Form 8-K
filed on October 2, 2006 and incorporated herein by
reference thereto).
4
.3
Form of 5.930% Note due 2016 (filed as Exhibit 4.11 to
the Companys Registration Statement on
Form S-4
filed on December 22, 2006 and incorporated herein by
reference thereto).
4
.4
Supplemental Indenture, dated as of September 29, 2006,
among The Western Union Company, First Financial Management
Corporation and Wells Fargo Bank, National Association, as
trustee (filed as Exhibit 4.3 to the Companys Current
Report on
Form 8-K
filed on October 2, 2006 and incorporated herein by
reference thereto).
4
.5
Second Supplemental Indenture, dated as of November 17,
2006, among The Western Union Company, First Financial
Management Corporation and Wells Fargo Bank, National
Association, as trustee (filed as Exhibit 4.6 to the
Companys Current Report on
Form 8-K
filed on November 20, 2006 and incorporated herein by
reference thereto).
4
.6
Third Supplemental Indenture, dated as of September 6,
2007, among The Western Union Company and Wells Fargo Bank,
National Association, as trustee (filed as Exhibit 4.6 to
the Companys Annual Report on
Form 10-K
filed on February 26, 2008 and incorporated herein by
reference thereto).
4
.7
Indenture, dated as of November 17, 2006, between The
Western Union Company and Wells Fargo Bank, National
Association, as trustee (filed as Exhibit 4.1 to the
Companys Current Report on
Form 8-K
filed on November 20, 2006 and incorporated herein by
reference thereto).
4
.8
Form of 5.400% Note due 2011 (filed as Exhibit 4.13 to
the Companys Registration Statement on
Form S-4
filed on December 22, 2006 and incorporated herein by
reference thereto).
4
.9
Form of 6.200% Note due 2036 (filed as Exhibit 4.14 to
the Companys Registration Statement on
Form S-4
filed on December 22, 2006 and incorporated herein by
reference thereto).
4
.10
Form of 6.50% Note due 2014 (filed as Exhibit 4.1 to
the Companys Current Report on
Form 8-K
filed on February 26, 2009 and incorporated herein by
reference thereto).
4
.11
Form of 6.200% Note due 2040 (filed as Exhibit 4.1 to
the Companys Current Report on
Form 8-K
filed on June 21, 2010 and incorporated herein by reference
thereto).
4
.12
Form of 5.253% 144A Note due 2020 (filed as Exhibit 4.1 to
the Companys Current Report on
Form 8-K
filed on April 2, 2010 and incorporated herein by reference
thereto).
4
.13
Form of 5.253% Note due 2020 (filed as Exhibit 4.3 to
the Companys Registration Statement on
Form S-4
filed on August 5, 2010 and incorporated herein by
reference thereto).
133
Table of Contents
Exhibit
Number
Description
4
.14
Supplemental Indenture, dated as of September 6, 2007,
among The Western Union Company and Wells Fargo Bank, National
Association, as trustee (filed as Exhibit 4.13 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2008 and incorporated herein by
reference thereto).
10
.1
Tax Allocation Agreement, dated as of September 29, 2006,
between First Data Corporation and The Western Union Company
(filed as Exhibit 10.1 to the Companys Current Report
on
Form 8-K
filed on October 3, 2006 and incorporated herein by
reference thereto).
10
.2
Employee Matters Agreement, dated as of September 29, 2006,
between First Data Corporation and The Western Union Company
(filed as Exhibit 10.2 to the Companys Current Report
on
Form 8-K
filed on October 3, 2006 and incorporated herein by
reference thereto).
10
.3
Transition Services Agreement, dated as of September 29,
2006, between First Data Corporation and The Western Union
Company (filed as Exhibit 10.3 to the Companys
Current Report on
Form 8-K
filed on October 3, 2006 and incorporated herein by
reference thereto).
10
.4
Patent Ownership Agreement and Covenant Not to Sue, dated as of
September 29, 2006, between First Data Corporation and The
Western Union Company (filed as Exhibit 10.4 to the
Companys Current Report on
Form 8-K
filed on October 3, 2006 and incorporated herein by
reference thereto).
10
.5
Amended and Restated Credit Agreement, dated as of
September 28, 2007, among The Western Union Company, the
banks named therein, as lenders, Wells Fargo Bank, National
Association, as syndication agent, Citibank, N.A., as
administrative agent, and Citigroup Global Markets Inc. and
Wells Fargo Bank, National Association, as joint lead arrangers
and joint book runners (filed as Exhibit 10 to the
Companys Current Report on
Form 8-K
filed on October 3, 2007 and incorporated herein by
reference thereto).
10
.6
Settlement Agreement, dated as of February 11, 2010, by and
between Western Union Financial Services, Inc. and the State of
Arizona (filed as Exhibit 10.1 to the Companys
Current Report on
Form 8-K
filed on February 16, 2010 and incorporated herein by
reference thereto).
10
.7
Form of Director Indemnification Agreement (filed as
Exhibit 10.11 to the Companys Registration Statement
on Form 10 (file
no. 001-32903)
and incorporated herein by reference thereto).*
10
.8
The Western Union Company 2006 Long-Term Incentive Plan, as
Amended and Restated Effective January 31, 2011.*
10
.9
The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan, as Amended and Restated Effective
December 31, 2008 (filed as Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
filed on November 3, 2008 and incorporated herein by
reference thereto).*
10
.10
The Western Union Company Non-Employee Director Deferred
Compensation Plan, as Amended and Restated Effective
December 31, 2008 (filed as Exhibit 10.12 to the
Companys Annual Report on
Form 10-K
filed on February 19, 2009 and incorporated herein by
reference thereto).*
10
.11
The Western Union Company Severance/Change in Control Policy
(Executive Committee Level), as Amended and Restated Effective
February 24, 2011.*
10
.12
The Western Union Company Senior Executive Annual Incentive Plan
(filed as Exhibit 10.2 to the Companys Quarterly
Report on
Form 10-Q
filed on August 7, 2007 and incorporated herein by
reference thereto).*
10
.13
The Western Union Company Supplemental Incentive Savings Plan,
as Amended and Restated Effective January 1, 2010 (filed as
Exhibit 10.13 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.14
The Western Union Company Grandfathered Supplemental Incentive
Savings Plan, as Amended and Restated Effective January 1,
2010 (filed as Exhibit 10.14 to the Companys Annual
Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
134
Table of Contents
Exhibit
Number
Description
10
.15
Form of Unrestricted Stock Unit Award Agreement Under The
Western Union Company 2006 Non-Employee Director Equity
Compensation Plan, as Amended and Restated Effective
February 17, 2009 (filed as Exhibit 10.15 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.16
Form of Nonqualified Stock Option Award Agreement Under The
Western Union Company 2006 Non-Employee Director Equity
Compensation Plan, as Amended and Restated Effective
February 17, 2010 (filed as Exhibit 10.16 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.17
Form of Unrestricted Stock Unit Award Agreement for Non-Employee
Directors Residing Outside the United States Under The Western
Union Company 2006 Non-Employee Director Equity Compensation
Plan (filed as Exhibit 10.2 to the Companys Quarterly
Report on
Form 10-Q
filed on May 6, 2010 and incorporated herein by reference
thereto).*
10
.18
Form of Nonqualified Stock Option Award Agreement for
Non-Employee Directors Residing Outside the United States Under
The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
filed on May 6, 2010 and incorporated herein by reference
thereto).*
10
.19
Form of Unrestricted Stock Unit Award Agreement for Non-Employee
Directors Residing in the United States Under The Western Union
Company 2006 Non-Employee Director Equity Compensation Plan
(filed as Exhibit 10.4 to the Companys Quarterly
Report on
Form 10-Q
filed on May 6, 2010 and incorporated herein by reference
thereto).*
10
.20
Form of Nonqualified Stock Option Award Agreement for
Non-Employee Directors Residing in the United States Under The
Western Union Company 2006 Non-Employee Director Equity
Compensation Plan (filed as Exhibit 10.5 to the
Companys Quarterly Report on
Form 10-Q
filed on May 6, 2010 and incorporated herein by reference
thereto).*
10
.21
Form of Restricted Stock Award Agreement for Executive Committee
Members Residing in the United States Under The Western Union
Company 2006 Long-Term Incentive Plan (filed as
Exhibit 10.20 to the Companys Quarterly Report on
Form 10-Q
filed on November 8, 2006 and incorporated herein by
reference thereto).*
10
.22
Form of Restricted Stock Unit Award Agreement for Executive
Committee Members Residing Outside the United States Under The
Western Union Company 2006 Long-Term Incentive Plan (filed as
Exhibit 10.21 to the Companys Quarterly Report on
Form 10-Q
filed on November 8, 2006 and incorporated herein by
reference thereto).*
10
.23
Form of Nonqualified Stock Option Award Agreement for Executive
Committee Members Under The Western Union Company 2006 Long-Term
Incentive Plan (filed as Exhibit 10.22 to the
Companys Quarterly Report on
Form 10-Q
filed on November 8, 2006 and incorporated herein by
reference thereto).*
10
.24
Amendment to Form of Nonqualified Stock Option Award Agreement
for Executive Committee Members Under The Western Union Company
2006 Long-Term Incentive Plan (filed as Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
filed on August 5, 2008 and incorporated herein by
reference thereto).*
10
.25
Amendment to Form of Nonqualified Stock Option Award Agreement
for Executive Committee Members under the 2002 First Data
Corporation Long-Term Incentive Plan (filed as Exhibit 10.2
to the Companys Quarterly Report on
Form 10-Q
filed on August 5, 2008 and incorporated herein by
reference thereto).*
10
.26
Amendment to Form of Nonqualified Stock Option Award Agreement
for Executive Committee Members under the First Data Corporation
1992 Long-Term Incentive Plan (filed as Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
filed on August 5, 2008 and incorporated herein by
reference thereto).*
135
Table of Contents
Exhibit
Number
Description
10
.27
Form of Nonqualified Stock Option Award Agreement for Scott T.
Scheirman Under The Western Union Company 2006 Long-Term
Incentive Plan (filed as Exhibit 10.23 to the
Companys Quarterly Report on
Form 10-Q
filed on November 8, 2006 and incorporated herein by
reference thereto).*
10
.28
Form of Restricted Stock Award Agreement for Scott T. Scheirman
Under The Western Union Company 2006 Long-Term Incentive Plan
(filed as Exhibit 10.24 to the Companys Quarterly
Report on
Form 10-Q
filed on November 8, 2006 and incorporated herein by
reference thereto).*
10
.29
Form of Nonqualified Stock Option Award Agreement for
Section 16 Officers (U.S.) Under The Western Union Company
2006 Long-Term Incentive Plan.*
10
.30
Form of Nonqualified Stock Option Award Agreement for
Section 16 Officers (Non - U.S.) Under The
Western Union Company 2006 Long-Term Incentive Plan.*
10
.31
Form of Restricted Stock Unit Award Agreement for Executive
Committee Members Residing in the United States Under The
Western Union Company 2006 Long-Term Incentive Plan, as Amended
and Restated Effective December 8, 2009 (filed as
Exhibit 10.27 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.32
Form of Restricted Stock Unit Award Agreement for Executive
Committee Member Residing in Austria Under The Western Union
Company 2006 Long-Term Incentive Plan, as Amended and Restated
Effective December 8, 2009 (filed as Exhibit 10.28 to
the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.33
Form of Restricted Stock Unit Award Agreement (Career Shares)
for Executive Committee Members Residing in the United States
Under The Western Union Company 2006 Long-Term Incentive Plan,
as Amended and Restated Effective December 8, 2009 (filed
as Exhibit 10.29 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.34
Form of Restricted Stock Unit Award Agreement (Career Shares)
for Executive Committee Member Residing in Austria Under The
Western Union Company 2006 Long-Term Incentive Plan, as Amended
and Restated Effective December 8, 2009 (filed as
Exhibit 10.30 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.35
Form of Restricted Stock Unit Award Agreement (Career Shares)
for Stewart A. Stockdale Under The Western Union Company 2006
Long-Term Incentive Plan (filed as Exhibit 10.31 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.36
Form of Cash Performance Grant Award Agreement for Executive
Committee Members (filed as Exhibit 10.33 to the
Companys Annual Report on
Form 10-K
filed on February 19, 2009 and incorporated herein by
reference thereto).*
10
.37
Form of 2010 Cash Performance Grant Award Agreement for
Executive Committee Members (filed as Exhibit 10.33 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.38
Form of Award Agreement under The Western Union Company Senior
Executive Annual Incentive Plan for 2010 (filed as
Exhibit 10.34 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.39
Form of Performance-Based Restricted Stock Unit Award Notice for
Executive Committee Members Under The Western Union Company 2006
Long-Term Incentive Plan.*
10
.40
Employment Contract, dated as of November 9, 2009, between
Western Union Financial Services GmbH and Hikmet Ersek (filed as
Exhibit 10.35 to the Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
136
Table of Contents
Exhibit
Number
Description
10
.41
Expatriate Letter Agreement, dated as of November 9, 2009,
between Western Union Financial Services GmbH, The Western Union
Company and Hikmet Ersek (filed as Exhibit 10.36 to the
Companys Annual Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).*
10
.42
First Amendment to Employment Contract and Expatriate Letter
Agreement, dated as of October 7, 2010, between Western
Union Financial Services GmbH, The Western Union Company and
Hikmet Ersek (filed as Exhibit 10 to the Companys
Quarterly Report on
Form 10-Q
filed on November 5, 2010 and incorporated herein by
reference thereto).*
10
.43
Letter Agreement, dated May 22, 2008, between The Western
Union Company and Stewart A. Stockdale (filed as
Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q
filed on August 5, 2008 and incorporated herein by
reference thereto).*
10
.44
Letter Agreement, dated May 6, 2010, between The Western
Union Company, Western Union LLC and Christina Gold (filed as
Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q
filed on May 6, 2010 and incorporated herein by reference
thereto).*
12
Computation of Ratio of Earnings to Fixed Charges
14
The Western Union Company Code of Ethics for Senior Financial
Officers, as Amended and Restated Effective December 9,
2009 (filed as Exhibit 14 to the Companys Annual
Report on
Form 10-K
filed on February 26, 2010 and incorporated herein by
reference thereto).
21
Subsidiaries of The Western Union Company
23
Consent of Independent Registered Public Accounting Firm
31
.1
Certification of Chief Executive Officer of The Western Union
Company Pursuant to
Rule 13a-14(a)
under the Securities Exchange Act of 1934
31
.2
Certification of Chief Financial Officer of The Western Union
Company Pursuant to
Rule 13a-14(a)
under the Securities Exchange Act of 1934
32
Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code
101
.INS
XBRL Instance Document
101
.SCH
XBRL Taxonomy Extension Schema Document
101
.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101
.LAB
XBRL Taxonomy Extension Label Linkbase Document
101
.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101
.DEF
XBRL Taxonomy Extension Definition Linkbase Document
*
Management contracts and compensatory plans and arrangements
required to be filed as exhibits pursuant to Item 15(b) of
this report.
137
-2-
-3-
-4-
-5-
-6-
-7-
-8-
-9-
-10-
-11-
-12-
-13-
-14-
-15-
-16-
-17-
-18-
-19-
-20-
-21-
-22-
-23-
1. | Purpose | |
This severance/change in control policy (the Policy) is maintained by The Western Union Company, a Delaware corporation (Western Union), to enable Western Union to offer a form of income protection to its Eligible Executives in the event their employment with the Company is involuntarily terminated other than for Cause or, in the event of a Change in Control, if their employment terminates involuntarily other than for Cause or for Good Reason during the twenty-four months following the Change in Control. | ||
This Policy shall constitute a welfare plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and shall be construed in a manner consistent with such intent. | ||
2. | Effective Date | |
This Policy was originally adopted as of September 29, 2006 (the Effective Date). The Policy is hereby amended and restated effective February 24, 2011. | ||
3. | Definitions | |
Base Salary means the Eligible Executives current annualized rate of base cash compensation as paid on each regularly scheduled payday for the Eligible Executives regular work schedule as of his or her Termination Date, including any before-tax contributions that are deducted for Company benefit plan purposes. Base Salary shall not include taxable or nontaxable fringe benefits or awards, vacation, performance awards, bonus, commission or other incentive pay, or any payments which are not made on each regular payday, regardless of how such payments may be characterized. | ||
Board means the Board of Directors of Western Union. | ||
Cause means the willful and continued failure by an Eligible Executive to substantially perform the duties assigned by the Company (other than a failure resulting from Disability), the willful engagement by an Eligible Executive in conduct which is demonstrably injurious to the Company (monetarily or otherwise), any act of dishonesty, the commission of a felony, the continued failure by an Eligible Executive to meet performance standards, an Eligible Executives excessive absenteeism or a significant violation by an Eligible Executive of any statutory or common law duty of loyalty to the Company. | ||
Change in Control means |
(a) | the acquisition by any individual, entity or group (a Person), including any person within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 35% or more of either (i) the then outstanding shares of common stock of Western Union (the Outstanding Common Stock) or (ii) the combined voting power of the then outstanding securities of Western Union entitled to vote generally in the election of directors (the Outstanding Voting Securities); excluding, however, the following: (A) any acquisition directly from Western Union (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from Western Union), (B) any acquisition by Western Union, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by Western Union or any |
corporation controlled by Western Union or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii), and (iii) of subsection (c) of this definition; provided further, that for purposes of clause (B), if any Person (other than Western Union or any employee benefit plan (or related trust) sponsored or maintained by Western Union or any corporation controlled by Western Union) shall become the beneficial owner of 35% or more of the Outstanding Common Stock or 35% or more of the Outstanding Voting Securities by reason of an acquisition by Western Union, and such Person shall, after such acquisition by Western Union, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control; | |||
(b) | the cessation of individuals who constitute the Board (the Incumbent Board) as of the date this Policy is adopted by the Committee, to constitute at least a majority of such Incumbent Board; provided that any individual who becomes a director of Western Union subsequent to the date this Policy is adopted by the Committee whose election, or nomination for election by Western Unions stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of Western Union as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; | ||
(c) | the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Western Union (a Corporate Transaction); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns Western Union or all or substantially all of Western Unions assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than Western Union; any employee benefit plan (or related trust) sponsored or maintained by Western Union or any corporation controlled by Western Union; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 35% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 35% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or |
-2-
(d) | the consummation of a plan of complete liquidation or dissolution of Western Union. |
-3-
4. | Eligibility | |
All Eligible Executives hired prior to February 24, 2011 who have been on the Companys payroll for at least three months are eligible to receive benefits according to the terms of this Policy. Eligible Executives hired prior to February 24, 2011 are not eligible for any benefits under this Policy during the first three months of their employment. All Eligible Executives hired on or after February 24, 2011 are eligible to receive benefits according to the terms of this Policy upon the commencement of their employment. | ||
5. | Eligible Termination Reasons |
(a) | Prior to the occurrence of a Change in Control, action by the Company to involuntarily terminate the employment of an Eligible Executive with the Company, but not including a separation from service on account of death, Disability or for Cause. | ||
(b) | After the occurrence of a Change in Control, (i) action by the Company to involuntarily terminate the employment of an Eligible Executive with the Company, but not including a separation from service on account of death, Disability or for Cause, or (ii) voluntary separation from service from the Company by an Eligible Executive for Good Reason during the twenty-four (24) month period commencing on the date of the Change in Control. |
An Eligible Executive shall not be entitled to any benefits under this Policy upon a separation from service for an eligible termination reason under this Section 5 if the Eligible Executive becomes employed by any subsidiary or affiliate of Western Union (as determined under Internal Revenue Code (Code) Section 414(b) or (c), but substituting a 50 percent ownership level for the 80 percent ownership level therein) immediately following his or her termination of employment from the Company by which the Eligible Executive is employed. | ||
6. | Non-Eligible Termination Reasons | |
A non-eligible termination reason is any reason for an Eligible Executives separation from service by or from the Company that is not an eligible termination reason described in Section 5. | ||
7. | Severance and Change in Control Benefits . The provisions of this Section 7 are subject, without limitation, to the provisions of Section 9 hereof. |
(a) | Post-Termination Payments . If an Eligible Executives employment with the Company is terminated after the Effective Date for any reason set forth in Section 5, the Company shall pay to the Eligible Executive the following amounts in accordance with Section 10: |
-4-
(i) | Severance Pay . An amount equal to 2 multiplied by the sum of (1) 100% of the Eligible Executives Base Salary and (2) the percentage of the Eligible Executives Base Salary established as the target bonus for the Eligible Executive under the Companys Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive), for the year in which the Termination Date occurs. If an Eligible Executives target bonus for the year in which the Termination Date occurs has not been established at the time an amount is payable under this subsection 7(a)(i), then such amount shall be calculated using the Eligible Executives annual target bonus for the immediately preceding year, or, if no such prior year target bonus exists with respect to the Eligible Executive, the prior year target bonus established for a similarly situated Eligible Executive, as determined by the Committee. (The reference to the Eligible Executives target bonus for the year in which the Termination Date occurs in this subsection 7(a)(i) is solely for purposes of calculating the Eligible Executives severance pay, and shall not give the Executive any right to be paid an amount for the year in which the Termination Date occurs under the Companys Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive)). | ||
Notwithstanding the foregoing, in the case of an Eligible Executive hired on or after February 24, 2011 who, as of the Termination Date, has been employed by the Company for less than 24 months, the amount of severance pay otherwise payable under the foregoing provisions of this subsection shall be reduced. Such reduced severance pay shall be determined by dividing the amount calculated under the first sentence of this subsection 7(a)(i) by 24 (or by 36, if the Eligible Executive is Western Unions Chief Executive Officer) to determine the Eligible Executives monthly severance pay. If the Eligible Executive has been employed by the Company for 12 months or less as of the Termination Date, the Eligible Executive shall be eligible to receive 12 months of severance pay. If the Eligible Executive has been employed by the Company for more than 12 months but less than 24 months as of the Termination Date, the Eligible Executive shall be eligible to receive one month of severance pay for each completed month of employment with the Company. | |||
(ii) | Bonus for Year of Termination . Subject to the Committees certification that the applicable performance goals for the year in which the Termination Date occurs have been achieved, an amount equal to the lesser of (1) the maximum bonus which could have been paid to the Eligible Executive under the Companys Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive) for the year in which the Termination Date occurs based on actual performance for such year and (2) a prorated amount (equal to the product of (A) the Eligible Executives target bonus for the year in which the Termination Date occurs and (B) the ratio of the number of days the Eligible Executive was employed by the Company during such year up to and including the Termination Date to 365) of the Eligible Executives target bonus under the Companys Senior Executive Annual Incentive Plan (or the bonus plan then applicable to the Eligible Executive) for the year in which the Termination Date occurs. |
-5-
(b) | Continued Benefits Coverage . If an Eligible Executives employment with the Company terminates after the Effective Date for any reason set forth in Section 5, the Eligible Executive and his or her eligible dependents shall be given the opportunity to elect continued group health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (COBRA) with respect to all group health plans that are subject to COBRA in which the Eligible Executive and his or her dependents were participating immediately prior to such termination. Provided that the Eligible Executive (and/or his or her dependents) timely elects such coverage, the Company shall pay to the Eligible Executive, as an additional Severance Benefit, a lump sum approximately equal to the difference in cost between COBRA premiums and active employee premiums for 18 months of COBRA coverage as calculated by the Company in its discretion as of the Termination Date, which payment shall constitute taxable income to the Eligible Executive and which shall be paid in a lump sum in accordance with Section 10. | ||
An Eligible Executive shall not be entitled to receive any perquisites after the Termination Date. The Eligible Executives continued group health coverage under this subsection shall cease as of the date the Eligible Executive becomes eligible to receive such benefits under a subsequent employers benefit program, to the extent permitted under COBRA. Eligible Executives receiving Severance Benefits under this Policy are not eligible to continue contributions to the Companys qualified retirement plans or nonqualified deferred compensation program. | |||
(c) | Long-Term Incentive Awards |
(i) | Non-Change in Control . |
a. | Long-Term Incentive Awards Granted On and After February 17, 2009 . Effective for awards granted on and after February 17, 2009 under The Western Union Company 2006 Long-Term Incentive Plan (or a successor plan) (the LTIP) to an individual who is an Eligible Executive on the date the award is granted, if the Eligible Executives employment with the Company is terminated for an eligible termination reason described in Section 5(a), then the unvested portion of awards held by the Eligible Executive that are eligible to become fully vested and exercisable or payable contingent upon the Eligible Executives continued employment and the passage of time (whether or not the Company or the Eligible Executive have attained any specified performance goals) (Time Vested Awards), other than awards classified by the Committee at the time of grant as Career Shares (if applicable to the Eligible Executive) and awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall vest on a prorated basis effective on the Eligible Executives Termination Date. Such prorated vesting shall be calculated on a grant-by-grant basis by multiplying the unvested portion of each such award by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the Eligible Executives Termination Date and the denominator of which is the number of days between the grant date and the date the award would have become fully vested had the Eligible Executive not terminated his or her employment. Solely for awards granted prior to February 24, 2011which are subject to a graduated vesting schedule, the foregoing calculation shall be performed as if each vesting tranche of the award |
-6-
was a separate grant. Fractions of a share resulting from the calculations shall be rounded to the nearest whole share. The vested portion of any nonqualified stock option and stock appreciation right awards held by an Eligible Executive on his or her Termination Date (and which were granted while an Eligible Executive), including any portion that had previously become vested and the prorated portion that vests effective on the Eligible Executives Termination Date in accordance with this subsection, shall be exercisable until the end of the Eligible Executives Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. Notwithstanding the foregoing, if, at the time of an Eligible Executives termination of employment, the Eligible Executive has satisfied the applicable age or age and service requirement for Retirement under the LTIP, the following rules shall apply: (i) all outstanding nonqualified stock options held by the Eligible Executive which were granted prior to February 24, 2011 shall continue to vest in accordance with the terms of the applicable award agreement, and to the extent vested, shall be exercisable in accordance with their terms until the date which is four years after the Eligible Executives Termination Date (or, if earlier, the expiration of the original term of the award) but not thereafter, and (ii) all outstanding nonqualified stock options or stock appreciation rights held by the Eligible Executive which were granted on or after February 24, 2011 shall vest, to the extent not already vested, on a prorated basis (calculated in the manner described above in this subsection for awards granted on or after February 24, 2011) effective on the Eligible Executives Termination Date, and all such vested nonqualified stock options and stock appreciation rights shall be exercisable in accordance with their terms until the earlier of (A) the date which is two years after the Eligible Executives Termination Date or the end of the Eligible Executives Severance Period (if the award was granted while an Eligible Executive), whichever is later, or (B) the expiration of the original term of the award. | |||
If an Eligible Executives employment with the Company is terminated during a performance period for an eligible termination reason described in Section 5(a), any cash Performance Grants (as defined in the LTIP) awarded to the Eligible Executive under the LTIP (if applicable) with respect to such performance period shall be payable on a prorated basis based upon actual performance results at the end of the applicable performance period as determined by the Committee in its sole discretion, and shall be paid at the time specified in the applicable award (and if applicable, deferral) agreement. Such prorated payment shall be calculated on a grant-by-grant basis by multiplying the Performance Grant award the Eligible Executive would have received had the Eligible Executive remained employed (based upon actual performance results at the end of the applicable performance period as determined by the Committee) by a fraction, the numerator of which shall equal the number of days such Participant was employed with the Company during the Performance Period and the denominator of which is the number of days in the performance period. All other outstanding awards granted to the Eligible Executive under the LTIP on and after February 17, 2009, and any Time Vested Awards that provide for a deferral of compensation within the meaning of Code Section 409A, |
-7-
shall be payable, if at all, in accordance with the terms of the LTIP and the applicable award (and, if applicable, deferral) agreements. |
b. | Long-Term Incentive Awards Granted Prior to February 17, 2009 . Effective for awards granted prior to February 17, 2009 under the LTIP to an individual who is an Eligible Executive on the date the award is granted, if the Eligible Executives employment with the Company is terminated for an eligible termination reason described in Section 5(a), all outstanding nonqualified stock options held by the Eligible Executive shall (1) if, at the time of an Eligible Executives termination of employment, the Eligible Executive has satisfied the applicable age or age and service requirement for Retirement under the LTIP, continue to vest in accordance with the terms of the applicable award agreement, and to the extent vested, shall be exercisable in accordance with their terms until the date which is four years after the effective date of the Eligible Executives termination of employment (or, if earlier, the expiration of the original term of the award) but not thereafter or (2) in all other cases, continue to vest solely on account of the passage of time during the Eligible Executives Severance Period and, to the extent vested, shall be exercisable in accordance with their terms until the end of the Eligible Executives Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. All Stock Awards (as defined in the LTIP) held by an Eligible Executive (and which were granted while an Eligible Executive) whose employment with the Company is terminated for an eligible termination reason described in Section 5(a) shall vest on a prorated basis effective on the Eligible Executives Termination Date. Such prorated vesting shall be calculated on a grant-by-grant basis by multiplying the number of unvested shares subject to each Stock Award by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the Eligible Executives Termination Date and the denominator of which is the number of days between the grant date and the date the shares would have become fully vested had the Eligible Executive not terminated his or her employment. Fractions of a share resulting from the calculations shall be rounded to the nearest whole share. |
(ii) | Change in Control . |
a. | Long-Term Incentive Awards Granted On and After February 17, 2009 . Effective for awards granted on and after February 17, 2009 under the LTIP to an individual who is an Eligible Executive on the date the award is granted, if the Eligible Executives employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period commencing on the effective date of a Change in Control, then Time Vested Awards held by the Eligible Executive (including but not limited to grants of nonqualified stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards), other than awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall become fully vested and exercisable or payable effective on the Eligible Executives Termination Date. In the event this subsection applies, nonqualified stock options and stock appreciation rights granted |
-8-
to an Eligible Executive (while an Eligible Executive) shall be exercisable until the later of (1) the date specified in the applicable award agreement or (2) the end of the Eligible Executives Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. If an Eligible Executives employment with the Company terminates for an eligible termination reason described in Section 5(b) after the 24-month period commencing on the effective date of a Change in Control, then the unvested portion of Time Vested Awards held by the Eligible Executive (which were granted while an Eligible Executive), other than awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall vest on a prorated basis effective on the Eligible Executives Termination Date, and such prorated vesting shall be calculated in the manner described in Section 7(c)(i)a above. The vested portion of any nonqualified stock option and stock appreciation right awards held by such an Eligible Executive on his or her Termination Date (and which were granted while an Eligible Executive), including any portion that had previously become vested and the prorated portion that vests effective on the Eligible Executives Termination Date in accordance with this subsection, shall be exercisable until the later of (1) the date specified in the applicable award agreement or (2) the end of the Eligible Executives Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. |
In the event of a Change in Control, any cash Performance Grants awarded to an Eligible Executive under the LTIP (if applicable) shall be converted into restricted cash (representing only a contingent, unfunded and unsecured obligation of the Company) as of the effective date of the Change in Control, such conversion to be based upon target performance if less than 50% of the performance period has elapsed as of the effective date of the Change in Control, or based upon actual performance results as determined by the Committee in its sole discretion if 50% or more of the performance period has elapsed as of the effective date of the Change in Control. If the Eligible Executives employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period commencing on the effective date of a Change in Control, then such restricted cash shall be paid to the Eligible Executive in a lump sum within 30 days following the six month anniversary of the Eligible Executives separation from service (or, if different, on the date specified in the applicable award and, if applicable, deferral agreement). In the event of a Change in Control, all other outstanding awards granted to the Eligible Executive under the LTIP, and any awards that provide for a deferral of compensation within the meaning of Code Section 409A, shall be payable, if at all, in accordance with the terms of the LTIP and the applicable award (and, if applicable, deferral) agreements. | |||
b. | Long-Term Incentive Awards Granted Prior to February 17, 2009 . In the event of a Change in Control, all outstanding awards granted prior to February 17, 2009 under the LTIP to an individual who is an Eligible Executive on the date the award is granted shall become fully vested and exercisable or payable as of the effective date of the Change in Control. In the event this subsection applies, if the Eligible Executives employment with the Company terminates for an eligible termination reason described in Section 5(b) during the 24-month period beginning on the effective date of the Change in Control, then nonqualified stock options granted to |
-9-
the Eligible Executive (while an Eligible Executive) shall remain exercisable until the later of (1) the date specified in the applicable award agreement or (2) the end of the Eligible Executives Severance Period (or, if earlier, the expiration of the original term of the award) but not thereafter. |
(d) | Legal Fees . Effective for Termination Dates occurring on or after the date of a Change in Control, if after exhausting the administrative remedies provided for in Section 20 herein, an Eligible Executive commences litigation regarding a bona fide claim for damages or other relief arising as a result of a claim for benefits under the Policy, and as a result thereof, whether by judgment or settlement, becomes entitled to receive benefits in an amount greater than prior to such litigation, the Company shall reimburse the reasonable legal fees and related expenses that are incurred by the Eligible Executive in connection with such litigation. Any such reimbursement shall be paid as soon as practicable following the resolution of the litigation, and in no event later than March 15 of the calendar year following the calendar year in which the resolution of such litigation occurs. |
8. | Certain Additional Payments |
(a) | In the event it is determined that any payments or benefits provided by the Company to or on behalf of an Eligible Executive who first became an Eligible Executive before April 30, 2009 (whether pursuant to the terms of this Policy or otherwise) (any such payments or benefits being referred to in this Section as Payments), but determined without taking into account any additional payments required under this Section, would be subject to the excise tax imposed by Code Section 4999, or any interest or penalties are incurred by the Eligible Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, collectively referred to herein as the Excise Tax), then the Eligible Executive shall be entitled to receive an additional payment (a Gross-Up Payment) in an amount so that after payment by the Eligible Executive of all federal, state and local taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any federal, state or local income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the Eligible Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing, if it is determined that the Eligible Executive otherwise would be entitled to a Gross-Up Payment, but that the Payments to the Eligible Executive do not exceed 110% of the amount which is one dollar less than the smallest amount that would give rise to any Excise Tax (the Reduced Amount), then no Gross-Up Payment shall be made to the Eligible Executive and the Payments shall be reduced to the Reduced Amount. In such event, the reduction will occur in the following order: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards; and (iii) reduction of other employee benefits. If acceleration of vesting of compensation from an Eligible Executives equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant unless the Eligible Executive elects in writing a different order for cancellation. Any Gross-Up Payment made pursuant to this Section 8(a) shall be made to the Eligible Executive no later than December 31 of the year following the year in which any Excise Tax is remitted to the taxing authority. No Gross-Up Payment shall be made pursuant to this Section 8(a) to any Eligible Executive who first becomes an Eligible Executive on or after April 30, 2009, and, in addition, Payments to such an Eligible Executive shall be reduced to the Reduced Amount (in the order described above), if such reduction would provide the Eligible Executive a greater net after-tax amount (after taking into account federal, state, local and social security taxes). |
-10-
(b) | Subject to the provisions of Section 8(c), all determinations required to be made under this Section, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by the independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control (the Accounting Firm). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized independent registered public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide its calculations, together with detailed supporting documentation, to the Company and the Eligible Executive within fifteen (15) calendar days after the date on which the Eligible Employees right to Payment is triggered (if requested at that time by the Company or the Eligible Executive) or such other time as agreed between the Company and the Eligible Executive. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Eligible Executive within five business days of the receipt of the Accounting Firms determination. If the Accounting Firm determines that no Excise Tax is payable by the Eligible Executive, it shall furnish the Eligible Executive with a written opinion that no Excise Tax will be imposed. Any good faith determination by the Accounting Firm shall be binding upon the Company and the Eligible Executive. As a result of the uncertainty in the application of Code Section 4999 at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (Underpayment), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8(c) and the Eligible Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Eligible Executive. If the related Excise Taxes have been remitted to the taxing authority by the Eligible Executive, the Company shall reimburse the Eligible Executive for the Underpayment no later than December 31 of the year following the year in which the Excise Taxes were remitted to the taxing authority. | ||
(c) | The Eligible Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Eligible Executive is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Eligible Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Eligible Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Eligible Executive in writing prior to the expiration of such period that it desires to contest such claim, the Eligible Executive shall: |
(i) | give the Company any information reasonably requested by the Company relating to such claim; | ||
(ii) | take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting |
-11-
legal representation with respect to such claim by an attorney reasonably selected by the Company; |
(iii) | cooperate with the Company in good faith in order effectively to contest such claim; and | ||
(iv) | permit the Company to participate in any proceedings relating to such claim; |
(d) | If, after the receipt by the Eligible Executive of an amount advanced by the Company pursuant to Section 8(c), the Eligible Executive becomes entitled to receive, and receives, any refund with respect to such claim, the Eligible Executive shall (subject to the Companys complying with the requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Eligible Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Eligible Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Eligible Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and |
-12-
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. |
9. | Requirement of Release and Restrictive Covenant | |
The provision of Severance Benefits under this Policy is conditioned upon the Eligible Executive timely signing an Agreement and Release (in a form satisfactory to the Company) which will include restrictive covenants and a comprehensive release of all claims. In this Agreement and Release, the Eligible Executive will be asked to release the Company and its directors, officers, employees and agents from any and all claims the Eligible Executive may have against them, including but not limited to any contract, tort, or wage and hour claims, and any claims under Title VII, the ADEA, the ADA, ERISA, and other federal, state, local or foreign laws. Under the Agreement and Release, the Eligible Executive must also agree not to solicit business similar to any business offered by the Company from any Company customer, not to advise any entity to cancel or limit its business with the Company, not to recruit, solicit, or encourage any employee to leave their employment with the Company, not to perform the same or substantially the same functions or job duties that the Eligible Executive performed for the Company for any business enterprise engaging in activities that compete with the business activities of the Company, not to disclose any of Companys trade secrets or confidential information, and not to disparage the Company or its employees in any way. These obligations are in addition to any other non-solicitation, noncompete, nondisclosure, or confidentiality agreements the Eligible Executive may have executed while employed by Company. No Severance Benefits will commence under this Policy prior to the eighth day following the date on which the Company has received the Eligible Executives fully executed Agreement and Release. | ||
10. | Method of Payment of Severance Benefits Under Sections 7(a) and 7(b) |
(a) | Severance Benefits payable hereunder to an Eligible Executive pursuant to Section 7(a)(i) of this Policy on account of a separation from service for an eligible termination reason under Section 5(a) shall be paid in substantially equal installments consistent with the Companys payroll practice during the Eligible Executives Severance Period and shall be paid in full no later than the end of such period. The bonus for the year in which the Termination Date occurs payable hereunder to an Eligible Executive pursuant to Section 7(a)(ii) of this Policy on account of a separation from service for an eligible termination reason under Section 5(a) shall be paid to the Eligible Executive in a lump sum cash payment at the same time as bonus payments for such year are paid to other executives under the Companys Senior Executive Annual Incentive Plan (or other bonus plan applicable to the Eligible Executive for such year). The cash payment referenced in Section 7(b) of this Policy shall be made in a lump sum on or as soon as practicable after the first date on which the Eligible Executive begins to receive severance payments in accordance with the first sentence of this Section 10(a), and in no event later than March 15 of the calendar year following the calendar year in which the Eligible Executives separation from service occurs. | ||
(b) | Severance Benefits payable hereunder to an Eligible Executive pursuant to Sections 7(a) and 7(b) of this Policy on account of a separation from service for an eligible termination reason under Section 5(b) shall be paid, if the Change in Control which makes Section 5(b) applicable constitutes a change in control event under Treasury Regulation §1.409A-3(i)(5 ) , in a lump sum within 30 days following the Eligible Executives separation from service, and, if such |
-13-
Change in Control does not constitute a change in control event under Treasury Regulation §1.409A-3(i)(5 ) , in the manner set forth in Section 10(a). In determining the amount of the lump sum, Section 7(a)(ii) shall be applied without regard to clause (1) and without regard to the requirement in Section 7(a)(ii) that the Committee certify that the applicable performance goals for the year in which the Termination Date occurs have been achieved. |
(c) | If an Eligible Executive dies after becoming eligible for Severance Benefits and executing an Agreement and Release but before full receipt of Severance Benefits, the remaining Severance Benefits, if any, will be paid to the Eligible Executives estate in one lump sum upon the Eligible Executives death. If an Eligible Executive dies after becoming eligible for Severance Benefits but prior to executing an Agreement and Release, his or her estate or representative may not execute an Agreement and Release and no Severance Benefits will be paid under this Policy. All payments will be net of amounts withheld with respect to taxes, offsets, or other obligations. |
11. | Offsets |
(a) | Non-duplication of Benefits . The Company may, in its discretion and to the extent permitted under applicable law, offset against the Eligible Executives Severance Benefits under this Policy any other severance, termination, or similar benefits payable to the Eligible Executive by the Company, including, but not limited to any amounts paid under any employment agreement or other individual contractual arrangement, amounts paid pursuant to federal, state, or local workers notification or office closing requirements, or statutory severance benefits or payments made on account of notice periods during which the Eligible Executive is released from further duties as provided pursuant to the law of any country or political subdivision thereof. | ||
(b) | Debts and Property . The Company also may, in its discretion and to the extent permitted under applicable law, offset against the Eligible Executives Severance Benefits under this Policy the value of unreturned property and any outstanding loan, debt or other amount the Eligible Executive owes to the Company. The entire amount of any offset taken pursuant to this Section 11(b) shall not exceed $5,000 in any taxable year, and the offset shall be taken at the same time and in the same amount as such amount would have been otherwise due from the Eligible Executive. | ||
(c) | Overpayment . The Company may recover any overpayment of Severance Benefits made to an Eligible Executive or an Eligible Executives estate under this Policy or, to the extent permitted by applicable law, offset any other overpayment made to the Eligible Executive against any Severance Benefits or other amount the Company owes the Eligible Executive or the Eligible Executives estate. |
12. | Outplacement | |
In the Committees sole and absolute discretion, Eligible Executives who are eligible for Severance Benefits under the Policy also may be eligible for outplacement services selected by the Company. Eligibility for and the scope of any outplacement services will be determined in the sole discretion of the Committee. Under no circumstances shall any Eligible Executive be eligible to receive a cash payment or any other benefit in lieu of outplacement services. | ||
Any outplacement services provided under this Section 12 must be provided to the Eligible Employee no later than December 31 of the second calendar year following the calendar year in which the Termination Date occurs. |
-14-
13. | Re-employment and Other Employment | |
In the event an Eligible Executive is re-employed by the Company prior to the commencement of or within the Severance Period, the payment of any Severance Benefits payable with respect to the prior termination immediately will cease and such Severance Benefits shall no longer be payable under this Policy. | ||
Subject to Section 9 of this Policy, if an Eligible Executive obtains employment (other than with the Company) while receiving Severance Benefits, the Eligible Executive shall continue to receive any remaining cash Severance Benefits in accordance with the payment schedule then in effect, but, except as otherwise required under applicable law, he or she will no longer be eligible to receive continued benefits under Section 7(b) of this Policy as of the date the Eligible Executive becomes eligible to receive such benefits under a subsequent employers benefit programs. | ||
14. | Funding | |
This Policy is not funded, and payment of benefits hereunder shall be made solely from the general assets of the Company. An Eligible Executive entitled to benefits hereunder shall have only the rights of a general creditor of the Company. | ||
15. | Administration | |
This Policy shall be administered by the Committee, which as the Named Fiduciary shall have the absolute discretion and exclusive right to interpret, construe and administer the Policy and to make final determinations on all questions arising under the Policy, including but not limited to questions concerning eligibility for, the amount of and receipt of Policy benefits. All decisions of the Committee will be conclusive, final and binding upon the parties. Notwithstanding the foregoing, upon the occurrence of a Change in Control, determinations of the Committee hereunder shall be subject to de novo judicial review. | ||
16. | Amendment or Termination of the Policy | |
Western Union reserves the right to amend or terminate this Policy at any time in its sole discretion, provided, however , that during the period commencing upon the earliest of (a) the signing of a definitive agreement that, if consummated, would result in a Change in Control, (b) the filing of a tender offer with the Securities and Exchange Commission that, if accepted, would result in a Change in Control, or (c) the election of a director to the Board who is not a member of the Incumbent Board (each, a Triggering Event) and ending upon the earlier of (x) the date on which the Committee in its sole discretion determines that the Triggering Event will not actually result in a Change in Control, or (y) the 36-month anniversary of the Change in Control, the Company shall not amend or terminate this Policy as it applies to an Eligible Executive without the consent of such affected Eligible Executive. Notwithstanding the foregoing, this Policy may be amended at any time, without the consent of any Eligible Executive, as necessary or desirable to comply with the requirements, or avoid the application, of Code Section 409A. | ||
17. | Limitation on Individually Negotiated Severance Arrangements |
-15-
As of the Effective Date, this Policy is intended to be the sole source of severance and change in control benefits for Eligible Executives. Absent prior Board approval, no individual agreement shall be entered into with any Eligible Executive or any person being considered for promotion or hire as an Eligible Executive which would provide severance or change in control-type benefits. |
18. | Section 409A | |
Notwithstanding any provision of this Policy, the Policy will be construed, administered or deemed amended as necessary to comply with the requirements of Code Section 409A to avoid taxation under Code Section 409A(a)(1) to the extent subject to Code Section 409A. The Committee, in its sole discretion shall determine the requirements of Code Section 409A applicable to the Policy and shall interpret the terms of the Policy consistently therewith. Under no circumstances, however, shall the Company or any affiliate or any of its or their employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Policy, including any taxes, penalties or interest imposed under Code Section 409A. The payments to Eligible Executives pursuant to this Policy are also intended to be exempt from Code Section 409A to the maximum extent possible, first, to the extent such payments are scheduled to be paid and are in fact paid during the short-term deferral period, as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), and then under the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii), and for this purpose each payment shall be considered a separate payment such that the determination of whether a payment qualifies as a short-term deferral shall be made without regard to whether other payments so qualify and the determination of whether a payment qualifies under the separation pay exemption shall be made without regard to any payments which qualify as short-term deferrals. To the extent any amounts under this Policy are payable by reference to an Eligible Executives termination of employment, such term shall be deemed to refer to the Eligible Executives separation from service, within the meaning of Code Section 409A. Notwithstanding any other provision in this Policy, if an Eligible Executive is a specified employee, as defined in Section 409A of the Code, as of the date of the Eligible Executives separation from service, then to the extent any amount payable under this Policy (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Code Section 409A, (ii) is payable upon the Eligible Executives separation from service and (iii) under the terms of this Policy would be payable prior to the six-month anniversary of the Eligible Executives separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of the Eligible Executives death. | ||
19. | Miscellaneous | |
No Eligible Executive shall vest in any entitlement to or eligibility for benefits under this Policy until he or she has satisfied all requirements for eligibility and the conditions required to receive the benefits specified in this Policy have been satisfied. No interest shall accrue on any benefit to which an Eligible Executive may be entitled under this Policy. No benefits hereunder, whether or not in pay status, shall be subject to any pledge or assignment, and no creditor may attach or garnish any Eligible Executives Policy benefits. This Policy does not create any contract of employment or right to employment for any period of time. Employment with the Company is at-will, and may be terminated by either the Company or the Eligible Executive at any time for any reason. | ||
20. | Review Procedure |
-16-
Executives eligible to receive benefits under this Policy will be notified of such eligibility as soon as administratively practicable after the event occurs which gives rise to the provision of Policy benefits. If an executive who believes he or she is eligible to receive Policy benefits does not receive such notice or disagrees with the amount of benefits set forth in such notice, or if an executive is informed that he or she is not eligible for benefits under this Policy, the executive (or his or her legal representative) may file a written claim for benefits with the Companys senior human resources executive or such other officer or body designated by the Committee for this purpose. The written claim must include the facts supporting the claim, the amount claimed, and the executives name and mailing address. | ||
If the claim is denied in part or in full, the Companys senior human resources executive (or other designated officer or body) will notify the executive by mail no later than 90 days after receipt of the written claim. If special circumstances require an extension of time for processing the claim, the executive will be notified in writing before the end of the initial 90-day period. If the claim is denied, the notice of denial will state the specific reasons for the denial, the provisions of the Policy on which the denial is based, a description of any additional information or material required by the Committee to consider the claim (if applicable), as well as an explanation as to why such information or material is necessary, an explanation of the Policys review procedures and the time limits applicable to such procedures, as well as a statement of the executives right to bring a civil action under ERISA Section 502(a) in the event of an adverse determination upon review. | ||
An executive (or his or her legal representative) may appeal a denial by filing a written appeal with the Committee. The written appeal must be received no later than 60 days after the executive or legal representative received the notice of denial. During the same 60-day period, the executive or legal representative may have reasonable access to relevant documents, records, or other information and may submit written comments and supporting documents, records and other materials to the Committee. A document, record, or other information shall be considered relevant to the claim if such document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, or (iii) demonstrates compliance with the administrative processes and safeguards designed to ensure and verify that benefit claim determinations are made in accordance with the Policy and that, where appropriate, the Policy provisions have been applied consistently with respect to similarly situated executives or designated beneficiaries. | ||
The Committee will review the appeal and notify the executive or legal representative by mail of its final decision within 60 days. If special circumstances require and extension of time for processing the claim, the executive will be notified in writing before the end of the initial 60-day period. If the claim is denied, the notice of denial will state the reason for the denial, references to the specific Sections of the Policy on which the denial is based, a statement that the executive may receive, upon request and free of charge, copies of all documents and information relevant to the appeal, a description of the Policys claims and appeals procedures, and a statement of the executives right to bring an action under Section 502 of ERISA. |
-17-
-18-
Name of Policy | Type of Policy | Policy Year: | ||||
|
The Western Union Company Severance/ | |||||
|
Change in Control Policy | Welfare | 1/1 12/31 | |||
|
(Executive Committee Level) |
-19-
-20-
1. | These Terms and Conditions form part of your Stock Option Agreement (the Agreement) pursuant to which you have been granted a Nonqualified Stock Option (Stock Option) under The Western Union Company 2006 Long-Term Incentive Plan (the Plan). A copy of the Plan is enclosed for your convenience. The terms of the Plan are hereby incorporated in this Agreement by reference and made a part hereof. Any capitalized terms used in this Agreement that are not defined herein shall have the meaning set forth in the Plan. | |
2. | The number of common shares of The Western Union Company (the Company) subject to the Stock Option, the grant date of the Stock Option and the option exercise price are all specified in the attached Award Notice (which forms part of the Agreement). | |
3. | Subject to the other provisions of this Agreement and the terms of the Plan, you will vest in, or have the right to exercise, this Stock Option as follows: |
(a) | On or after the first anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-fourth (25%) of the total number of shares covered hereby; | ||
(b) | On or after the second anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-half (50%) of the total number of shares covered hereby; | ||
(c) | On or after the third anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to three-fourths (75%) of the total number of shares covered hereby; | ||
(d) | On or after the fourth anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option with respect to the total number of shares covered hereby; | ||
(e) | No part of this Stock Option may be exercised after the tenth anniversary of the grant date listed in the attached Award Notice. |
4. | This Stock Option may not be exercised, in whole or in part, unless the following conditions are met: |
(a) | You have accepted these Terms and Conditions either through on-line electronic acceptance (if permitted by the Company) or by signing and returning to the Company a copy of these Terms and Conditions. Signed copies of these Terms and Conditions should be sent to the attention of: Western Union Stock Plan Administration, 12500 E. Belford Avenue, M21B2, Englewood, Colorado 80112. | ||
(b) | Legal counsel for the Company must be satisfied at the time of exercise that the issuance of shares upon exercise will comply with applicable U.S. federal, state, local and foreign laws. | ||
(c) | You pay the exercise price as follows: (i) by giving notice to the Company or its designee of the number of whole shares of Common Stock to be purchased and by making payment therefor in full (or arranging for such payment to the Companys satisfaction) either (A) in cash, (B) by delivery (either actual delivery or by attestation procedures established by the Company) of Mature Shares having an aggregate Fair Market Value, determined as of the |
Section 16 Officers (U.S.)
date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company and to whom you have submitted an irrevocable notice of exercise (i.e., also known as cashless exercise) or (D) by a combination of (A) and (B) and (ii) by executing such documents as the Company may reasonably request. | |||
(d) | You must, at all times during the period beginning with the grant date of this Stock Option and ending on the date of such exercise, have been employed by the Company, a Subsidiary or an Affiliate or have been engaged in a period of Related Employment, with certain exceptions noted below. Service on the Board after receipt of a Stock Option shall not be considered a termination of employment. | ||
(e) | You have executed and returned to the Company or accepted electronically an updated restrictive covenant agreement (and exhibits) if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. While a court may sever any provision in the restrictive covenant agreement, you agree by executing or electronically accepting the restrictive covenant agreement that you will forfeit this Stock Option, whether vested or not, if you do not abide by the restrictive covenant agreement as written. | ||
(f) | You pay all applicable taxes, withholding obligations, securities fees, or other costs, charges, or fees associated with the exercise. You may elect to satisfy your obligation to pay all applicable taxes, withholding obligations, securities fees, or other costs, charges, or fees by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to you, equal to the amount necessary to satisfy any such obligations, (D) except as may be prohibited by applicable law, a cash payment by a broker-dealer acceptable to the Company to whom you have submitted an irrevocable notice of exercise, or (E) any combination of (A) and (B). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. You (or any beneficiary or person entitled to act on your behalf) shall provide the Company with any forms, documents or other information reasonably required by the Company. |
5. | Absent a period of Related Employment or service on the Board subsequent to the grant date, if you terminate employment or cease providing services to the Company, a Subsidiary or an Affiliate while holding this Stock Option, your right to exercise the Stock Option and the time during which you may exercise the Stock Option depends on the reason for your termination. |
(a) | Disability . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Disability, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by you (or your legal representative or similar person) until the date which is one year after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. | ||
(b) | Retirement . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Retirement, this Stock Option, to the extent not already vested, shall |
Section 16 Officers (U.S.)
vest on a prorated basis on the effective date of your termination of employment or service. Such prorated vesting shall be calculated by multiplying the number of shares covered by the unvested portion of this Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the effective date of your termination of employment or service and the denominator of which is the number of days between the grant date and the fourth anniversary of the grant date. The unvested portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The vested portion of this Stock Option, including any portion that had previously become vested and the prorated portion that vests effective on your termination date in accordance with the above calculation may be exercised by you (or your legal representative or similar person) until the date which is two years after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. | |||
(c) | Death . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of death, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of this Stock Option. | ||
(d) | Involuntary Termination Without Cause . Except to the extent paragraph 7 applies, if your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee, subject to the terms of such policy, the unvested portion of this Stock Option shall vest on a prorated basis effective on your termination date. Such prorated vesting shall be calculated by multiplying the number of shares covered by the unvested portion of this Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the effective date of your termination of employment or service and the denominator of which is the number of days between the grant date and the fourth anniversary of the grant date. The unvested portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The vested portion of this Stock Option, including any portion that had previously become vested and the prorated portion that vests effective on your termination date in accordance with the above calculation, may be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option. If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are not an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee on the date of such termination, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of this Stock Option. Notwithstanding the foregoing, if, at the time of your termination of employment, you have satisfied the applicable age or age and service requirement for Retirement under the Plan, the provisions of paragraph 5(b) above, rather than this paragraph 5(d), shall be applicable to this Stock Option. | ||
(e) | Termination for Cause . If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated for Cause, this Stock Option shall cease to vest, and to the extent |
Section 16 Officers (U.S.)
already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of your termination of employment or service. If the New York Stock Exchange is closed at the time of your termination of employment, this Stock Option shall be forfeited at the time your employment is terminated and shall be canceled by the Company. | |||
(f) | Other Termination . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause or termination for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. If the New York Stock Exchange is closed on the thirtieth (30 th ) day following your termination of employment or service, then your unexpired Stock Option may be exercised until the close of the New York Stock Exchange on the next following day on which the New York Stock Exchange is open, after which time this Stock Option shall be forfeited and canceled by the Company. | ||
(g) | Death Following Termination of Employment or Service . If you die during the applicable Post-Termination Exercise Period, this Stock Option will be exercisable only to the extent that the Stock Option is exercisable on the date of your death and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of your death, or if earlier, the expiration date of the term of this Stock Option. |
6. | So long as you continue to be a member of the Executive Committee of the Company, you may transfer this Stock Option to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of this Stock Option to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an entity interest in the limited liability company or partnership to which the transfer is made. Any transfer of this Stock Option shall be in a form acceptable to the Committee, shall be signed by you and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If this Stock Option is transferred to a Family Member or Family Entity, the Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution. The Committee has delegated its responsibilities under this paragraph 6 to the Companys General Counsel. | |
7. | If you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee at the time of a Change in Control and your employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then this Stock Option shall immediately become fully vested and exercisable effective on the date of your termination and may thereafter be exercised by you (or your legal representative or similar person) until the end of your severance period under such policy or, if earlier, the expiration date of the term of this Stock Option. | |
8. | The Board or Committee may amend or terminate the Plan and the Committee may amend (or its delegate may amend) these Terms and Conditions. No amendment may impair your rights as an option holder without your consent. The determination of such impairment shall be made by the Committee in its sole discretion. |
Section 16 Officers (U.S.)
9. | The Committee (or its delegate) administers the Plan and has discretion to interpret the Plan and this Agreement. Any decision or interpretation rendered by the Committee or its delegate shall be final, conclusive and binding on you and all persons claiming under or through you. By accepting this grant or other benefit under the Plan, you and each person claiming under or through you shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Committee or its delegate. | |
10. | The validity, construction, interpretation, administration and effect of the Plan and this Agreement shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware. | |
11. | You acknowledge that you have read the Companys Clawback Policy. In consideration of the grant of this Stock Option, you agree to abide by the Companys Clawback Policy and any determinations of the Board pursuant to the Clawback Policy. Without limiting the foregoing, and notwithstanding any provision of this Agreement to the contrary, if the Board determines that any Incentive Compensation (as defined in the Companys Clawback Policy) received by or paid to you resulted from any financial result or performance metric that was impacted by your misconduct or fraud and that compensation should be recovered from you (such amount being recovered, the Clawbacked Compensation), then upon such determination, the Board may recover such Clawbacked Compensation by (a) cancelling all or any portion of this Stock Option (the Clawbacked Portion) and, in such case, you shall cease to be entitled to exercise the Clawbacked Portion of this Stock Option and the Clawbacked Portion of this Stock Option shall automatically and without further action of the Company be cancelled, (b) requiring you to deliver to the Company shares of Common Stock acquired upon the exercise of this Stock Option (to the extent held by you), (c) requiring you to repay to the Company any profit resulting from the sale of shares of Common Stock acquired upon the exercise of this Stock Option or (d) any combination of the remedies set forth in clauses (a), (b) or (c). The foregoing remedies are in addition to and separate from any other relief available to the Company due to your misconduct or fraud. Any determination by the Board with respect to the foregoing shall be final, conclusive and binding upon you and all persons claiming through you. |
I hereby confirm that the foregoing and the documents attached hereto are hereby in all respects accepted and agreed to by the undersigned as of the date of this Agreement: | ||||||||||
|
||||||||||
Signature:
|
Printed Name: | |||||||||
|
|
|
||||||||
|
||||||||||
Date:
|
||||||||||
|
|
Section 16 Officers (U.S.)
1. | These Terms and Conditions form part of your Stock Option Agreement (the Agreement) pursuant to which you have been granted a Nonqualified Stock Option (Stock Option) under The Western Union Company 2006 Long-Term Incentive Plan (the Plan). A copy of the Plan is enclosed for your convenience. The terms of the Plan are hereby incorporated in this Agreement by reference and made a part hereof. Any capitalized terms used in this Agreement that are not defined herein shall have the meaning set forth in the Plan. | |
2. | The number of common shares of The Western Union Company (the Company) subject to the Stock Option, the grant date of the Stock Option and the option exercise price are all specified in the attached Award Notice (which forms part of the Agreement). | |
3. | Subject to the other provisions of this Agreement and the terms of the Plan, you will vest in, or have the right to exercise, this Stock Option as follows: |
(a) | On or after the first anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-fourth (25%) of the total number of shares covered hereby; | ||
(b) | On or after the second anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to one-half (50%) of the total number of shares covered hereby; | ||
(c) | On or after the third anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option for up to three-fourths (75%) of the total number of shares covered hereby; | ||
(d) | On or after the fourth anniversary and until the tenth anniversary of the grant date, you may exercise this Stock Option with respect to the total number of shares covered hereby; | ||
(e) | No part of this Stock Option may be exercised after the tenth anniversary of the grant date listed in the Award Notice; | ||
(f) | If you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee at the time of a Change in Control and your employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date of the Change in Control, then this Stock Option shall immediately become fully vested and exercisable effective on the date of your termination and may thereafter be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option. |
This option may not be exercised for a fraction of a common share of the Company. | ||
4. | This Stock Option may not be exercised, in whole or in part, unless the following conditions are met: |
(a) | You have accepted these Terms and Conditions either through on-line electronic acceptance (if permitted by the Company) or by signing and returning to the Company a copy of these Terms and Conditions. Signed copies of these Terms and Conditions should be sent to the attention of: Western Union Stock Plan Administration, 12500 E. Belford Avenue, M21B2, Englewood, Colorado 80112. | ||
(b) | Legal counsel for the Company must be satisfied at the time of exercise that the issuance of shares upon exercise will comply with applicable U.S. federal, state, local and foreign laws. | ||
(c) | You pay the exercise price as follows: (i) by giving notice to the Company or its designee of the number of whole shares of Common Stock to be purchased and by making payment therefor in full (or arranging for such payment to the Companys satisfaction) either (A) in cash, (B) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Company and to whom you have submitted an irrevocable notice of exercise (i.e., also known as cashless exercise) or (C) by a combination of (A) and (B), and (ii) by executing such documents as the Company may reasonably request. |
Section 16 Officers (Non-U.S.)
(d) | You must, at all times during the period beginning with the grant date of this Stock Option and ending on the date of such exercise, have been employed by the Company, a Subsidiary or an Affiliate or have been engaged in a period of Related Employment, with certain exceptions noted below. Service on the Board after receipt of a Stock Option shall not be considered a termination of employment. | ||
(e) | You have executed and returned to the Company or accepted electronically an updated restrictive covenant agreement (and exhibits) if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. While a court may sever any provision in the restrictive covenant agreement, you agree by executing or electronically accepting the restrictive covenant agreement that you will forfeit this Stock Option, whether vested or not, if you do not abide by the restrictive covenant agreement as written. |
5. | Absent a period of Related Employment or service on the Board subsequent to the grant date, if you terminate employment or cease providing services to the Company, a Subsidiary or an Affiliate while holding this Stock Option, your right to exercise the Stock Option and the time during which you may exercise the Stock Option depends on the reason for your termination. |
(a) | Disability . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Disability, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by you (or your legal representative or similar person) until the date which is one year after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. | ||
(b) | Retirement . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of Retirement, this Stock Option, to the extent not already vested, shall vest on a prorated basis on the effective date of your termination of employment or service. Such prorated vesting shall be calculated by multiplying the number of shares covered by the unvested portion of this Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the effective date of your termination of employment or service and the denominator of which is the number of days between the grant date and the fourth anniversary of the grant date. The unvested portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The vested portion of this Stock Option, including any portion that had previously become vested and the prorated portion that vests effective on your termination date in accordance with the above calculation may be exercised by you (or your legal representative or similar person) until the date which is two years after the effective date of your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. In administering the Plan, the Committee reserves the right to treat your termination of employment due to Retirement the same as Other Termination (as defined in this Agreement) in the event that application of the immediately preceding sentence would be deemed to be impermissible age discrimination under local law, as determined in the sole discretion of the Committee. | ||
(c) | Death . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates by reason of death, this Stock Option shall become fully vested and exercisable and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of death, or if earlier, the expiration date of the term of this Stock Option. | ||
(d) | Involuntary Termination Without Cause . Except to the extent paragraph 3(f) applies, if your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee, subject to the terms of such policy, the unvested portion of this Stock Option shall vest on a prorated basis effective on your termination date. Such prorated vesting shall be calculated by multiplying the number of shares covered by the unvested portion of this Stock Option by a fraction, the numerator of which is the number of days that have elapsed between the grant date and the effective date of your termination of employment or service and the denominator of which is the number of days between the grant date and the fourth anniversary of the grant date. The unvested portion of this Stock Option that does not become vested under such calculation shall be forfeited effective on your termination date and shall be canceled by the Company. The vested portion of this Stock Option, including any portion that had previously become vested and the |
Section 16 Officers (Non-U.S.)
prorated portion that vests effective on your termination date in accordance with the above calculation may be exercised by you (or your legal representative or similar person) until the end of your severance period under such Policy or, if earlier, the expiration date of the term of this Stock Option. If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated involuntarily and without Cause and you are not an eligible participant in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee on the date of such termination, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the date which is three months after such involuntary termination, or if earlier, the expiration date of the term of this Stock Option. Notwithstanding the foregoing, if, at the time of your termination of employment, you have satisfied the applicable age or age and service requirement for Retirement under the Plan, the provisions of paragraph 5(b) above, rather than this paragraph 5(d), shall be applicable to this Stock Option if at such time the provisions of paragraph 5(b) are more advantageous to you. | |||
(e) | Termination for Cause . If your employment with or service to the Company, a Subsidiary or an Affiliate is terminated for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date of your termination of employment or service. If the New York Stock Exchange is closed at the time of your termination of employment, this Stock Option shall be forfeited at the time your employment is terminated and shall be canceled by the Company. | ||
(f) | Other Termination . If your employment with or service to the Company, a Subsidiary or an Affiliate terminates for any reason other than Disability, Retirement, death, involuntary termination without Cause, or termination for Cause, this Stock Option shall cease to vest, and to the extent already vested, may thereafter be exercised by you (or your legal representative or similar person) until the close of the New York Stock Exchange (if open) on the date which is the thirtieth (30 th ) day following your termination of employment or service, or if earlier, the expiration date of the term of this Stock Option. If the New York Stock Exchange is closed on the thirtieth (30 th ) day following your termination of employment or service, then your unexpired Stock Option may be exercised until the close of the New York Stock Exchange on the next following day on which the New York Stock Exchange is open, after which time this Stock Option shall be forfeited and canceled by the Company. | ||
(g) | Death Following Termination of Employment or Service . If you die during the applicable Post-Termination Exercise Period, this Stock Option will be exercisable only to the extent that the Stock Option is exercisable on the date of your death and may thereafter be exercised by your executor, administrator, legal representative, beneficiary or similar person until the date which is one year after the date of your death, or if earlier, the expiration date of the term of this Stock Option. |
6. | Subject to any restrictions imposed by local law, so long as you continue to be a member of the Executive Committee of the Company, you may transfer this Stock Option to a Family Member or Family Entity without consideration; provided, however, in the case of a transfer of this Stock Option to a limited liability company or a partnership which is a Family Entity, such transfer may be for consideration consisting solely of an entity interest in the limited liability company or partnership to which the transfer is made. Any transfer of this Stock Option shall be in a form acceptable to the Committee, shall be signed by you and shall be effective only upon written acknowledgement by the Committee of its receipt and acceptance of such notice. If this Stock Option is transferred to a Family Member or Family Entity, the Stock Option may not thereafter be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by such Family Member or Family Entity except by will or the laws of descent and distribution. The Committee has delegated its responsibilities under this paragraph 6 to the Companys General Counsel. | |
7. | The Company shall have the right to require, as of the grant, vesting or exercise of an option and the sale of any shares of stock received upon exercise of an option, that you (or any person acting under Paragraph 5 above): |
(a) | Pay to the Company or its designee, upon its demand, such amount as may be requested for the purpose of satisfying its obligation or the obligation of any of its Subsidiaries or Affiliates or other person to withhold U.S. federal, state, local or foreign income, employment or other taxes incurred by reason of the shares. You may satisfy your obligation to pay such amounts by authorizing the Company to withhold from your wages or other cash compensation, from proceeds from the sale of shares or from the shares purchased by you pursuant to the exercise shares having a fair market value on the date of exercise equal |
Section 16 Officers (Non-U.S.)
to the withholding amount. If the amount requested for the purpose of satisfying the withholding obligation is not paid, the Company may refuse to allow you to exercise the option; and | |||
(b) | Provide the Company with any forms, documents or other information reasonably required by the Company in connection with the grant. | ||
(c) | Regardless of any action the Company takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax, payment on account or other tax-related withholding (Tax Related Items), you acknowledge that the ultimate liability for all Tax Related Items legally due remains your responsibility and that the Company (i) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the Stock Options, including the grant of the Stock Options, the exercise of the Stock Options, the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired at exercise and the receipt of any dividends; and (ii) does not commit to structure the terms of the grant or any aspect of the Stock Options to reduce or eliminate your liability for Tax Related Items. | ||
(d) | Prior to the issuance of Shares upon exercise of the Stock Options, you shall pay, or make adequate arrangements satisfactory to the Company (in its sole discretion) to satisfy all withholding and payment on account obligations of the Company. In this regard, you authorize the Company to withhold all applicable Tax Related Items legally payable by you from your wages or other cash compensation payable to you by the Company upon exercise of any Stock Options. Alternatively, or in addition, if permissible under local law, the Company may, in its sole discretion, (i) sell or arrange for the sale of Shares to be issued on the exercise of the Stock Options to satisfy the withholding or payment on account obligation, and/or (ii) withhold in Shares, provided that the Company shall withhold only the amount of Shares necessary to satisfy the minimum withholding amount. You shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of your receipt of the Stock Options, or the exercise of the Stock Options, that cannot be satisfied by the means previously described. The Company may refuse to deliver Shares if you fail to comply with your obligations in connection with the Tax Related Items as described herein. |
8. | The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of yours under this Agreement without your written consent. | |
9. | Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on you and all persons claiming under or through you. By accepting this grant or other benefit under the Plan, you and each person claiming under or through you shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates. | |
10. | The validity, construction, interpretation, administration and effect of the Plan, and of its rules and regulations, and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware. If you have received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control. | |
11. | In accepting the grant, you acknowledge that: (i) the Plan is discretionary in nature and it may be modified, suspended or terminated by the Company or the Committee at any time; (ii) the grant of the Stock Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Stock Options, or benefits in lieu of options, even if options have been granted repeatedly in the past; (iii) all decisions with respect to any such future grants will be at the sole discretion of the Committee; (iv) your participation in the Plan shall not create a right to further employment with your Employer (Employer) and shall not interfere with the ability of your Employer to terminate your employment relationship at any time with or without cause; (v) your participation in the Plan is voluntary; (vi) the value of the option is an extraordinary item of compensation which is outside the scope of your employment contract, if any; (vii) the options are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (viii) in the event of involuntary |
Section 16 Officers (Non-U.S.)
termination of your employment, your right to receive options under the Plan, if any, will terminate effective as of the date that you are no longer actively employed regardless of any reasonable notice period mandated under local law (including but not limited to statutory law, regulatory law and/or common law) and the right to receive grants of options will not continue during any required notice period; (ix) the options have not been granted to you in consideration of your employment with your Employer, but is purely a gratuity extended by the Company at its sole discretion, and the option grant can in no event be understood or interpreted to mean that the Company is your employer or that you have an employment relationship with the Company; (x) the future value of the underlying shares is unknown and cannot be predicted with certainty; (xi) if the underlying shares do not increase in value, the options will have no value; and (xii) no claim or entitlement to compensation or damages arises from termination of the options or diminution in value of the options or shares purchased through exercise of the options and you irrevocably release the Company and your Employer from any such claim that may arise. | ||
12. | You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this document by and among, as applicable, your Employer, the Company and the Companys Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan. You understand that your Employer and/or the Company hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the purpose of implementing, administering and managing the Plan (Data). You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in your country, or elsewhere, and that the recipients country may have different data privacy laws and protections than your country. You authorize the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of stock acquired upon exercise of the option. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting in writing your local human resources representative. You understand that withdrawal of consent may affect your ability to exercise or realize benefits from the option. | |
13. | If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity and enforceability of the remaining provisions of this Agreement. | |
14. | You should be aware that you may be entitled to revoke this Agreement and your acceptance of the grant of the Stock Option pursuant to the Austrian Consumer Protection Act under the following conditions: (a) if you sign this Agreement outside of the business premises of your employer, you may be entitled to revoke the Agreement provided the revocation is made within one week of your acceptance; or (b) if circumstances relevant to your decision to enter into the Agreement, as presented by the Company, either do not materialize or materialize to a significantly reduced extent, though no fault of your own, you may be entitled to revoke the Agreement. This revocation must be made within one week of the time that it is foreseeable that the circumstances mentioned above do not materialize or materialize at a significantly reduced extent. If you revoke under sections (a) or (b) listed above, the revocation must be in written form to be valid. It is sufficient if you return this Agreement to the Company or the Companys representative with language which can be understood as your refusal to conclude or honor this Agreement. | |
15. | You acknowledge that you have read the Companys Clawback Policy. In consideration of the grant of this Stock Option, you agree to abide by the Companys Clawback Policy as it may be amended from time to time, and any determinations of the Board pursuant to the Clawback Policy. Without limiting the foregoing, and notwithstanding any provision of this Agreement to the contrary, if the Board determines that any Incentive Compensation (as defined in the Companys Clawback Policy) received by or paid to you resulted from any financial result or performance metric that was impacted by your misconduct or fraud and that compensation should be recovered from you (such amount being recovered, the Clawbacked Compensation), then upon such determination, the Board may recover such Clawbacked Compensation by (a) cancelling all or any portion of this Stock Option (the Clawbacked Portion) and, in such case, you shall cease to be entitled to exercise the Clawbacked Portion of this Stock Option and the Clawbacked Portion of this Stock Option shall automatically and |
Section 16 Officers (Non-U.S.)
without further action of the Company be cancelled, (b) requiring you to deliver to the Company shares of Common Stock acquired upon the exercise of this Stock Option (to the extent held by you), (c) requiring you to repay to the Company any profit resulting from the sale of shares of Common Stock acquired upon the exercise of this Stock Option or (d) any combination of the remedies set forth in clauses (a), (b) or (c). The foregoing remedies are in addition to and separate from any other relief available to the Company due to your misconduct or fraud. Any determination by the Board with respect to the foregoing shall be final, conclusive and binding upon you and all persons claiming through you. |
I hereby confirm that the foregoing and the documents attached hereto are hereby in all respects accepted and agreed to by the undersigned as of the date of this Agreement: | ||||||||||
|
||||||||||
Signature:
|
Printed Name: | |||||||||
|
|
|
||||||||
|
||||||||||
Date:
|
||||||||||
|
|
Section 16 Officers (Non-U.S.)
Grant Date:
|
[Insert Date] | |
|
||
Target Award:
|
___ shares of Common Stock | |
|
||
Maximum Award:
|
___ shares of Common Stock | |
|
||
Performance Period:
|
January 1, 2011 December 31, 2012 | |
|
||
Performance Measure:
|
$1,000,000,000 Combined Consolidated Operating Income | |
|
||
Vesting Date:
|
Third anniversary of Grant Date |
THE WESTERN UNION COMPANY, | ||||||||
a Delaware corporation | ||||||||
|
||||||||
|
By: | |||||||
|
Name: | |||||||
|
Title: |
|
||||||
|
|
1. | Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the Plan), The Western Union Company (the Company) hereby grants to you (Executive) an award of Restricted Stock Units (the Units), in the amount specified in your Award Notice (which forms part of this Agreement) as of the Grant Date specified in your Award Notice, related to shares of the Companys common stock (Shares), subject to the terms and conditions set forth in this Agreement and the Plan. The terms of the Plan are hereby incorporated in this Agreement by this reference and made a part hereof. Capitalized terms not defined herein shall have the same definitions as set forth in the Plan. | |
2. | Each Unit shall provide for the issuance and transfer to Executive of one Share upon lapse of the restrictions set forth in paragraph 3 below and subject to the satisfaction of the Performance Measure during the Performance Period set forth in the Award Notice and the Committees determination of the amount of the Award payable to Executive in accordance with Exhibit A. Upon issuance and transfer of Shares to Executive following the Restricted Period (as defined herein), Executive shall have all rights incident to ownership of such Shares, including but not limited to voting rights and the right to receive dividends. | |
3. | Subject to other provisions of this Agreement and the terms of the Plan, on the third anniversary of the Grant Date, subject to the satisfaction of the Performance Measure during the Performance Period set forth in the Award Notice and the Committees determination of the amount of the Award payable to Executive in accordance with Exhibit A, all restrictions on the Units shall lapse and the number of Shares subject to the Units determined by the Committee to be transferred to Executive in accordance with Exhibit A shall be issued and transferred to Executive. Effective on and after such date, subject to applicable laws and Company policies, Executive may hold, assign, pledge, sell, or transfer the Shares transferred to Executive in Executives discretion. The three year period in which the Units may be forfeited by Executive is defined as the Restricted Period. | |
Notwithstanding the foregoing provisions in this paragraph 3, you will forfeit all rights to the Units unless you accept these Terms and Conditions either through on-line electronic acceptance (if permitted by the Company) or by signing and returning to the Company a copy of these Terms and Conditions prior to the third anniversary of the Grant Date. Signed copies of these Terms and Conditions should be sent to the attention of: Western Union Stock Plan Administration, 12500 E. Belford Avenue, M21B2, Englewood, Colorado 80112. In addition, notwithstanding any other provision of the Plan or this Agreement, in order for the restrictions on the Units to lapse, you must execute and return to the Company or accept electronically an updated restrictive covenant agreement (and exhibits) |
if requested by the Company which may contain certain noncompete, nonsolicitation and/or nondisclosure provisions. Failure to execute or electronically accept such an agreement prior to the third anniversary of the Grant Date will cause the Units to be forfeited. | ||
Prior to the issuance and transfer of Shares, the Units will represent only an unfunded and unsecured obligation of the Company. Any Shares determined by the Committee to be transferred to Executive in accordance with Exhibit A shall be issued and transferred to Executive as soon as administratively practicable after the end of the Restricted Period, and in no event later than March 15 of the calendar year immediately following the year in which the Restricted Period ends. If at any time the Company determines, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental authority is necessary or desirable as a condition to the issuance and transfer of Shares to the Executive (or his or her estate), such issuance and transfer will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained. | ||
4. | Executive may elect to satisfy his or her obligation to advance the amount of any required income or other withholding taxes (the Required Tax Payments) incurred in connection with the issuance and transfer of the Shares by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (3) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered to Executive having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to Executive, equal to the amount necessary to satisfy any such obligation, (4) a cash payment to the Company by a broker-dealer acceptable to the Company to whom Executive has submitted an irrevocable notice of sale, or (5) any combination of (1) and (2). Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate. | |
5. | The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, while subject to restrictions. If Executive or anyone claiming under or through Executive attempts to make any such sale, transfer, assignment, pledge or other disposition of Units in violation of this paragraph 5, such attempted violation shall be null, void, and without effect. | |
6. | Executive shall forfeit Executives right to any unvested Units if Executives continuous employment with the Company or a Subsidiary or Affiliate terminates for any reason during the Restricted Period (except solely by reason of a period of Related Employment or as set forth in paragraphs 7 and 9). |
7. | If Executives employment with the Company terminates for any reason, other than voluntary termination by Executive, death, Disability, Retirement or for Cause, and paragraph 9 does not apply, Executive shall be entitled to a prorated Award. Such prorated Award shall be equal to the amount of the Award which is actually earned, based upon satisfaction of the Performance Measure during the Performance Period (as certified by the Committee in writing) and the Committees determination of the amount of the Award payable to Executive in accordance with Exhibit A, multiplied by a fraction, the numerator of which shall equal the number of days Executive was employed with the Company during the Restricted Period and the denominator of which shall equal the number of days in the Restricted Period. | |
If Executives employment with the Company terminates by reason of death or Disability, the Award shall be paid, to the extent earned, based upon satisfaction of the Performance Measure during the applicable Performance Period (as certified by the Committee in writing) and the Committees determination of the amount of the Award payable to Executive in accordance with Exhibit A, to Executive or Executives executor, administrator, legal representative, beneficiary or similar person (together, the Beneficiary), as the case may be, as if Executive had remained employed with the Company through the end of the Restricted Period. | ||
If Executives employment with the Company terminates by reason of Retirement, Executive shall be entitled to a prorated Award. Such prorated Award shall be equal to the amount of the Award which is actually earned, based upon satisfaction of the Performance Measure during the Performance Period (as certified by the Committee in writing) and the Committees determination of the amount of the Award payable to Executive in accordance with Exhibit A, multiplied by a fraction, the numerator of which shall equal the number of days Executive was employed with the Company during the Restricted Period and the denominator of which shall equal the number of days in the Restricted Period. | ||
If Executives employment with the Company is terminated voluntarily by Executive (except for an Eligible Termination Reason described in Section 5(b) of the Severance/Change in Control Policy applicable to members of the Companys Executive Committee at the time of a Change in Control) or is terminated by the Company for Cause, Executives Award shall, except to the extent vested as of the date of termination, be immediately forfeited. | ||
8. | During the Restricted Period, Executive (and any person succeeding to Executives rights pursuant to the Plan) will have no ownership interest or rights in Shares underlying the Units, including no rights to receive dividends or other distributions made or paid with respect to such Shares or to exercise voting or other shareholder rights with respect to such Shares. Executive shall not be entitled to receive dividend equivalents in connection with this Award. | |
9. | If Executive is eligible to participate in the Severance/Change in Control Policy applicable to members of the Companys Executive Committee at the time of a Change in Control and Executives employment with the Company, a Subsidiary or an Affiliate terminates for an eligible reason under such policy during the 24-month period commencing on the effective date |
of the Change in Control, then, subject to the terms of such policy, any remaining restrictions applicable to the Units shall lapse effective on the date of Executives termination; provided, however, that the Award will vest and be payable only if the Performance Measure is attained (as certified by the Committee in writing). | ||
10. | The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, however, that no such amendment shall adversely affect in a material manner any right of Executive under this Agreement without Executives written consent. | |
11. | Any action taken or decision made by the Company, the Board, or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole and absolute discretion, as the case may be, and shall be final, conclusive and binding on Executive and all persons claiming under or through Executive. By accepting this grant of Units or other benefit under the Plan, Executive and each person claiming under or through Executive shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates. | |
12. | This grant of Units is discretionary, non-binding for future years and there is no promise or guarantee that such grants will be offered to Executive in future years. | |
13. | The validity, construction, interpretation, administration and effect of these Terms and Conditions and the Plan and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware. | |
14. | If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed as to foster the intent of this Agreement and the Plan. | |
15. | Executive acknowledges that Executive has read the Companys Clawback Policy. In consideration of the grant of the Units, Executive agrees to abide by the Companys Clawback Policy and any determinations of the Board pursuant to the Clawback Policy. Without limiting the foregoing, and notwithstanding any provision of this Agreement to the contrary, if the Board determines that any Incentive Compensation (as defined in the Companys Clawback Policy) received by or paid to Executive resulted from any financial result or performance metric that was impacted by Executives misconduct or fraud and that compensation should be recovered from Executive (such amount being recovered, the Clawbacked Compensation), then upon such determination, the Board may recover such Clawbacked Compensation by (a) cancelling all or any portion of the unvested Units (the Clawbacked Portion) and, in such case, the |
Clawbacked Portion of the unvested Units shall automatically and without further action of the Company be cancelled, (b) requiring Executive to deliver to the Company shares of Common Stock acquired upon the vesting of the Units (to the extent held by Executive), (c) requiring Executive to repay to the Company any net proceeds resulting from the sale of shares of Common Stock acquired upon the vesting of the Units or (d) any combination of the remedies set forth in clauses (a), (b) or (c). The foregoing remedies are in addition to and separate from any other relief available to the Company due to Executives misconduct or fraud. Any determination by the Board with respect to the foregoing shall be final, conclusive and binding upon Executive and all persons claiming through Executive. | ||
16. | To the extent any amounts under this Agreement are payable by reference to Executives termination of employment, such term shall be deemed to refer to Executives separation from service, within the meaning of Section 409A of the Code. Notwithstanding any other provision in this Agreement, if Executive is a specified employee, as defined in Section 409A of the Code, as of the date of Executives separation from service, then to the extent any amount payable under this Agreement (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon Executives separation from service and (iii) under the terms of this Agreement would be payable prior to the six-month anniversary of Executives separation from service, such payment shall be delayed until the earlier to occur of (a) the six-month anniversary of the separation from service or (b) the date of Executives death. |
I hereby confirm that the foregoing and the documents attached hereto are hereby in all respects accepted and agreed to by the undersigned as of the date of this Agreement: | ||||||||||
|
||||||||||
|
Signature: | Printed Name: | ||||||||
|
|
|
||||||||
|
||||||||||
|
Date: | |||||||||
|
||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Earnings:
|
||||||||||||||||||||
Income before income taxes
|
$ | 1,145.2 | $ | 1,131.5 | $ | 1,238.7 | $ | 1,222.4 | $ | 1,335.1 | ||||||||||
Fixed charges
|
178.0 | 172.8 | 184.8 | 204.1 | 56.9 | |||||||||||||||
Other adjustments
|
(3.1 | ) | (0.9 | ) | (4.6 | ) | 1.2 | (7.2 | ) | |||||||||||
|
||||||||||||||||||||
Total earnings (a)
|
$ | 1,320.1 | $ | 1,303.4 | $ | 1,418.9 | $ | 1,427.7 | $ | 1,384.8 | ||||||||||
|
||||||||||||||||||||
Fixed charges:
|
||||||||||||||||||||
Interest expense
|
$ | 169.9 | $ | 157.9 | $ | 171.2 | $ | 189.0 | $ | 55.2 | ||||||||||
Other adjustments
|
8.1 | 14.9 | 13.6 | 15.1 | 1.7 | |||||||||||||||
|
||||||||||||||||||||
Total fixed charges (b)
|
$ | 178.0 | $ | 172.8 | $ | 184.8 | $ | 204.1 | $ | 56.9 | ||||||||||
|
||||||||||||||||||||
Ratio of earnings to fixed charges (a/b)
|
7.4 | 7.5 | 7.7 | 7.0 | 24.3 |
Jurisdiction of | ||
Name of Subsidiary | Incorporation | |
A. Serviban S.A.
|
Peru | |
American Rapid Corporation
|
Delaware, USA | |
CHL Management Services Limited Partnership
|
Canada | |
Custom House (Retail) Ltd.
|
Canada | |
Custom House (NZ) Ltd.
|
New Zealand | |
Custom House (Online) Ltd.
|
Canada | |
Custom House (USA) Ltd.
|
Washington, USA | |
Custom House Currency Exchange (Australia) Pty. Limited
|
Australia | |
Custom House Currency Exchange (Singapore) Pte. Limited
|
Singapore | |
Custom House Holdings (USA) Ltd.
|
Washington, USA | |
Custom House Financial (UK) Limited
|
United Kingdom | |
Custom House S.p.A.
|
Italy | |
Custom House ULC
|
Canada | |
Custom House Ventures ULC
|
Canada | |
Custom House Financial Ltd.
|
Canada | |
Custom House (Delaware) LLC
|
Delaware, USA | |
Custom House (USA I.B.) Ltd.
|
Washington, USA | |
Custom House Vantage Partnership
|
Delaware, USA | |
E Commerce Group Products Inc.
|
New York, USA | |
E Commerce Group, Inc.
|
New York, USA | |
Western Union Holding (Bermuda) Ltd.
|
Bermuda | |
Western Union (Bermuda) Holding Finance Ltd.
|
Bermuda | |
Western Union Management (Bermuda) Limited
|
Bermuda | |
First Financial Management Corporation
|
Georgia, USA | |
Global Collection Services, S.A.
|
Argentina | |
Grant Financial Group, Inc.
|
California, USA | |
Grupo Dinámico Empresarial, S.A. de C.V.
|
Mexico | |
LawNet, Inc.
|
New York, USA | |
LegalTech, Inc.
|
New York, USA | |
Montvale Mortgage Associates, LLC
|
Delaware, USA | |
MT Caribbean Holdings SRL
|
Barbados | |
MT Global Holdings Ltd.
|
Bermuda | |
MT Group Ltd.
|
Bermuda | |
MT Holdings (Bermuda) Ltd.
|
Bermuda | |
MT International Holdings, Ltd.
|
Bermuda | |
MT International Operations Ltd.
|
Bermuda | |
MT International Operations Partnership
|
Bermuda | |
MT Network Holdings Ltd.
|
Bermuda | |
MT Payment Services Operations EU/EEA Limited
|
Ireland | |
MT Processing Holdings Ltd.
|
Bermuda | |
MT Worldwide Holdings Ltd.
|
Bermuda | |
OOO Western Union MT East
|
Russian Federation | |
Operaciones Internationales OV, S. de R.L. de C.V.
|
Mexico |
Mexico
Argentina
New York, USA
Delaware, USA
Argentina
Mexico
Mexico
France
New York, USA
Delaware, USA
Panama
Costa Rica
Nova Scotia, Canada
Delaware, USA
Spain
United Kingdom
Australia
Ireland
Chile
Delaware, USA
Germany
Brazil
Brazil
Greece
Austria
New York, USA
Argentina
Australia
Belgium
Ontario, Canada
Delaware, USA
France
Germany
Austria
Hong Kong
Italy
Korea
Luxembourg
Delaware, USA
Colorado, USA
United Kingdom
Georgia, USA
Austria
Ireland
Ireland
Italy
Colorado, USA
Morocco
Bermuda
Nova Scotia, Canada
France
Ireland
Germany
Ireland
United Kingdom
Ireland
Peru
Ireland
Ireland
United Kingdom
Ireland
Lithuania
Greece
Panama
Norway
Ireland
United Kingdom
Spain
Sweden
Netherlands
Luxembourg
Luxembourg
Maryland, USA
India
Philippines
Singapore
Spain
Spain
Ireland
Bermuda
Nigeria
China
Peru
(1) | Registration Statements (Form S-3 Nos. 333-150722, 333-170410 and 333-170967) of The Western Union Company, and | ||
(2) |
Registration Statement (Form S-8 No. 333-137665) pertaining to The Western Union Company
2006 Long-Term Incentive Plan, The Western Union Company 2006 Non-Employee Director Equity
Compensation Plan, and The Western Union Company Supplemental Incentive Savings Plan;
|
1. | I have reviewed this Annual Report on Form 10-K of The Western Union Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
|
4. |
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
|
||
(b) |
Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
|
||
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
|
||
(d) |
Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and
|
5. |
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and
|
||
(b) |
Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.
|
Date: February 25, 2011 | /s/ Hikmet Ersek | |||
Hikmet Ersek | ||||
Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of The Western Union Company; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
|
4. |
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
|
||
(b) |
Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
|
||
(c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and
|
||
(d) |
Disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrants internal control over financial
reporting; and
|
5. |
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and
|
||
(b) |
Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrants internal control over financial reporting.
|
Date: February 25, 2011 | /s/ Scott T. Scheirman | |||
Scott T. Scheirman | ||||
Executive Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d), of the Exchange Act; and | ||
2. |
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of The Western Union Company.
|
Date: February 25, 2011 | /s/ Hikmet Ersek | |||
Hikmet Ersek | ||||
Chief Executive Officer | ||||
Date: February 25, 2011 | /s/ Scott T. Scheirman | |||
Scott T. Scheirman | ||||
Executive Vice President and Chief Financial Officer | ||||