þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2012
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¨
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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DELAWARE
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20-4531180
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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12500 EAST BELFORD AVENUE
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80112
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ENGLEWOOD, CO
(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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PAGE
NUMBER
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Three Months Ended
March 31, |
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2012
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2011
|
||||
Revenues:
|
|
|
|
||||
Transaction fees
|
$
|
1,040.9
|
|
|
$
|
998.0
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|
Foreign exchange revenues
|
322.6
|
|
|
256.1
|
|
||
Other revenues
|
29.9
|
|
|
28.9
|
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Total revenues
|
1,393.4
|
|
|
1,283.0
|
|
||
Expenses:
|
|
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|
||||
Cost of services
|
783.0
|
|
|
745.4
|
|
||
Selling, general and administrative
|
277.9
|
|
|
224.7
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|
||
Total expenses
|
1,060.9
|
|
|
970.1
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|
||
Operating income
|
332.5
|
|
|
312.9
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|
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Other income/(expense):
|
|
|
|
||||
Interest income
|
1.5
|
|
|
1.2
|
|
||
Interest expense
|
(44.4
|
)
|
|
(43.4
|
)
|
||
Derivative gains, net
|
1.6
|
|
|
1.9
|
|
||
Other income/(expense), net
|
(1.1
|
)
|
|
2.1
|
|
||
Total other expense, net
|
(42.4
|
)
|
|
(38.2
|
)
|
||
Income before income taxes
|
290.1
|
|
|
274.7
|
|
||
Provision for income taxes
|
42.8
|
|
|
64.5
|
|
||
Net income
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$
|
247.3
|
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|
$
|
210.2
|
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Earnings per share:
|
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||||
Basic
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$
|
0.40
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$
|
0.32
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Diluted
|
$
|
0.40
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$
|
0.32
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Weighted-average shares outstanding:
|
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|
||||
Basic
|
619.1
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|
|
646.9
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||
Diluted
|
621.9
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|
652.1
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Three Months Ended
March 31, |
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2012
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|
2011
|
||||
Net income
|
$
|
247.3
|
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$
|
210.2
|
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Other comprehensive income/(loss):
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|
||||
Unrealized gains on investment securities:
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||||
Unrealized gains
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5.9
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|
0.4
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Tax expense
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(2.2
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)
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(0.1
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)
|
||
Reclassification of gains into earnings
|
(1.4
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)
|
|
(0.2
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)
|
||
Tax expense
|
0.5
|
|
|
0.1
|
|
||
Net unrealized gains on investment securities
|
2.8
|
|
|
0.2
|
|
||
Unrealized losses on hedging activities:
|
|
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|
||||
Unrealized losses
|
(23.0
|
)
|
|
(35.6
|
)
|
||
Tax benefit
|
3.4
|
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|
5.2
|
|
||
Reclassification of (gains)/losses into earnings
|
(1.6
|
)
|
|
6.2
|
|
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Tax benefit
|
—
|
|
|
(1.4
|
)
|
||
Net unrealized losses on hedging activities
|
(21.2
|
)
|
|
(25.6
|
)
|
||
Foreign currency translation adjustments:
|
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|
||||
Foreign currency translation adjustments
|
3.3
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|
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4.5
|
|
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Tax expense
|
(0.5
|
)
|
|
(1.0
|
)
|
||
Net foreign currency translation adjustments
|
2.8
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|
|
3.5
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Defined benefit pension plan:
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|
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Reclassification of losses into earnings
|
2.6
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2.0
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Tax benefit
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(1.0
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)
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(0.7
|
)
|
||
Net defined benefit pension plan adjustments
|
1.6
|
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|
1.3
|
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Total other comprehensive loss
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(14.0
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)
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(20.6
|
)
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Comprehensive income
|
$
|
233.3
|
|
|
$
|
189.6
|
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|
March 31,
2012 |
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December 31,
2011 |
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Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,395.9
|
|
|
$
|
1,370.9
|
|
Settlement assets
|
3,185.1
|
|
|
3,091.2
|
|
||
Property and equipment, net of accumulated depreciation of $445.2 and $429.7, respectively
|
196.3
|
|
|
198.1
|
|
||
Goodwill
|
3,166.3
|
|
|
3,198.9
|
|
||
Other intangible assets, net of accumulated amortization of $433.6 and $462.5, respectively
|
878.3
|
|
|
847.4
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Other assets
|
375.9
|
|
|
363.4
|
|
||
Total assets
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$
|
9,197.8
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$
|
9,069.9
|
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Liabilities and Stockholders’ Equity
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|
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Liabilities:
|
|
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|
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Accounts payable and accrued liabilities
|
$
|
498.3
|
|
|
$
|
535.0
|
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Settlement obligations
|
3,185.1
|
|
|
3,091.2
|
|
||
Income taxes payable
|
259.6
|
|
|
302.4
|
|
||
Deferred tax liability, net
|
392.0
|
|
|
389.7
|
|
||
Borrowings
|
3,633.7
|
|
|
3,583.2
|
|
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Other liabilities
|
261.7
|
|
|
273.6
|
|
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Total liabilities
|
8,230.4
|
|
|
8,175.1
|
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|
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|
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Commitments and contingencies (Note 6)
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|
||||
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|
||||
Stockholders’ equity:
|
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|
||||
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
|
—
|
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|
—
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|
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Common stock, $0.01 par value; 2,000 shares authorized; 613.9 shares and 619.4 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively
|
6.1
|
|
|
6.2
|
|
||
Capital surplus
|
298.9
|
|
|
247.1
|
|
||
Retained earnings
|
794.9
|
|
|
760.0
|
|
||
Accumulated other comprehensive loss
|
(132.5
|
)
|
|
(118.5
|
)
|
||
Total stockholders’ equity
|
967.4
|
|
|
894.8
|
|
||
Total liabilities and stockholders’ equity
|
$
|
9,197.8
|
|
|
$
|
9,069.9
|
|
|
Three Months Ended
March 31, |
||||||
|
2012
|
|
2011
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
247.3
|
|
|
$
|
210.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
15.3
|
|
|
15.0
|
|
||
Amortization
|
48.6
|
|
|
29.7
|
|
||
Other non-cash items, net
|
1.6
|
|
|
(7.2
|
)
|
||
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:
|
|
|
|
||||
Other assets
|
(10.1
|
)
|
|
(11.5
|
)
|
||
Accounts payable and accrued liabilities
|
(35.7
|
)
|
|
(20.2
|
)
|
||
Income taxes payable (Note 12)
|
(40.1
|
)
|
|
41.0
|
|
||
Other liabilities
|
(11.9
|
)
|
|
(5.4
|
)
|
||
Net cash provided by operating activities
|
215.0
|
|
|
251.6
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Capitalization of contract costs
|
(55.8
|
)
|
|
(7.1
|
)
|
||
Capitalization of purchased and developed software
|
(5.8
|
)
|
|
(2.5
|
)
|
||
Purchases of property and equipment
|
(14.2
|
)
|
|
(12.3
|
)
|
||
Net cash used in investing activities
|
(75.8
|
)
|
|
(21.9
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from exercise of options
|
41.2
|
|
|
72.3
|
|
||
Cash dividends paid
|
(61.6
|
)
|
|
(44.7
|
)
|
||
Common stock repurchased
|
(146.8
|
)
|
|
(498.4
|
)
|
||
Net proceeds from commercial paper
|
53.0
|
|
|
—
|
|
||
Net proceeds from issuance of borrowings
|
—
|
|
|
299.5
|
|
||
Net cash used in financing activities
|
(114.2
|
)
|
|
(171.3
|
)
|
||
Net change in cash and cash equivalents
|
25.0
|
|
|
58.4
|
|
||
Cash and cash equivalents at beginning of period
|
1,370.9
|
|
|
2,157.4
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,395.9
|
|
|
$
|
2,215.8
|
|
Supplemental cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
23.1
|
|
|
$
|
23.6
|
|
Income taxes paid (Note 12)
|
$
|
89.5
|
|
|
$
|
24.6
|
|
Unsettled repurchases of common stock
|
$
|
—
|
|
|
$
|
26.8
|
|
•
|
Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company's multi-currency, real-time money transfer service is viewed by the Company as one interconnected global network where a money transfer can be sent from one location to another, around the world. This service is available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through the Company's websites and account based money transfers.
|
•
|
Consumer-to-Business - The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. This segment primarily consists of U.S. bill payments, Pago Fácil (bill payments in Argentina), and international bill payments. The significant majority of the segment's revenue was generated in the United States during all periods presented.
|
•
|
Business Solutions - The Business Solutions operating segment facilitates business-to-business payment solutions, primarily cross-border, cross-currency transactions, mainly for small and medium size enterprises, and other organizations. The majority of the segment's business relates to exchanges of currency at the spot rate which enables customers to make cross-currency payments. In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments. Travelex Global Business Payments (“TGBP”), which was acquired in November 2011 (see Note 3), is also included in this segment.
|
|
Three Months Ended
March 31, |
||||
|
2012
|
|
2011
|
||
Basic weighted-average shares outstanding
|
619.1
|
|
|
646.9
|
|
Common stock equivalents
|
2.8
|
|
|
5.2
|
|
Diluted weighted-average shares outstanding
|
621.9
|
|
|
652.1
|
|
|
Travelex Global Business
Payments
|
|
Finint S.r.l
|
|
Angelo Costa
S.r.l
|
||||||
Assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
25.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Settlement assets
|
171.6
|
|
|
52.2
|
|
|
46.3
|
|
|||
Property and equipment
|
4.9
|
|
|
0.5
|
|
|
3.0
|
|
|||
Goodwill
|
688.3
|
|
|
153.6
|
|
|
174.2
|
|
|||
Other intangible assets
|
321.3
|
|
|
64.8
|
|
|
51.4
|
|
|||
Other assets
|
66.5
|
|
|
2.0
|
|
|
1.5
|
|
|||
Total assets
|
$
|
1,277.9
|
|
|
$
|
273.1
|
|
|
$
|
276.4
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
$
|
39.6
|
|
|
$
|
6.1
|
|
|
$
|
10.8
|
|
Settlement obligations
|
171.6
|
|
|
57.5
|
|
|
55.7
|
|
|||
Income taxes payable
|
1.1
|
|
|
3.1
|
|
|
10.3
|
|
|||
Deferred tax liability, net
|
76.0
|
|
|
15.8
|
|
|
15.5
|
|
|||
Other liabilities
|
21.8
|
|
|
3.5
|
|
|
2.2
|
|
|||
Total liabilities
|
310.1
|
|
|
86.0
|
|
|
94.5
|
|
|||
Total purchase price (a)
|
$
|
967.8
|
|
|
$
|
187.1
|
|
|
$
|
181.9
|
|
(a)
|
Total purchase price includes cash consideration transferred and the revaluation of the Company's previous equity interest, if any, to fair value on the acquisition date.
|
|
Travelex Global Business
Payments
|
|
Finint S.r.l
|
|
Angelo Costa
S.r.l
|
||||||
Customer and other contractual relationships
|
$
|
270.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Network of subagents
|
—
|
|
|
53.9
|
|
|
44.6
|
|
|||
Other
|
51.0
|
|
|
10.9
|
|
|
6.8
|
|
|||
Total identifiable intangible assets
|
$
|
321.3
|
|
|
$
|
64.8
|
|
|
$
|
51.4
|
|
|
Severance,
Outplacement
and Related
Benefits
|
|
Other(a)
|
|
Total
|
||||||
Balance, December 31, 2011
|
$
|
13.7
|
|
|
$
|
0.2
|
|
|
$
|
13.9
|
|
Cash payments
|
(4.9
|
)
|
|
(0.2
|
)
|
|
(5.1
|
)
|
|||
Balance, March 31, 2012
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
8.8
|
|
(a)
|
Other expenses related to the relocation of various operations to new and existing Company facilities including expenses for hiring, training, relocation, travel and professional fees. All such expenses were recorded when incurred.
|
|
Three Months Ended
March 31, |
||
|
2011
|
||
Cost of services
|
$
|
6.9
|
|
Selling, general and administrative
|
17.1
|
|
|
Total restructuring and related expenses, pre-tax
|
$
|
24.0
|
|
Total restructuring and related expenses, net of tax
|
$
|
16.4
|
|
|
Fair Value Measurement Using
|
|
Assets/
Liabilities at
Fair
Value
|
||||||||||||
March 31, 2012
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
State and municipal debt securities
|
$
|
—
|
|
|
$
|
931.1
|
|
|
$
|
—
|
|
|
$
|
931.1
|
|
State and municipal variable rate demand notes
|
—
|
|
|
553.6
|
|
|
—
|
|
|
553.6
|
|
||||
Corporate debt and other
|
0.1
|
|
|
88.0
|
|
|
—
|
|
|
88.1
|
|
||||
Derivatives
|
—
|
|
|
110.9
|
|
|
—
|
|
|
110.9
|
|
||||
Total assets
|
$
|
0.1
|
|
|
$
|
1,683.6
|
|
|
$
|
—
|
|
|
$
|
1,683.7
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
350.0
|
|
|
$
|
—
|
|
|
$
|
350.0
|
|
Notes and other borrowings
|
—
|
|
|
3,579.4
|
|
|
—
|
|
|
3,579.4
|
|
||||
Total borrowings
|
—
|
|
|
3,929.4
|
|
|
—
|
|
|
3,929.4
|
|
||||
Derivatives
|
—
|
|
|
90.6
|
|
|
—
|
|
|
90.6
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
4,020.0
|
|
|
$
|
—
|
|
|
$
|
4,020.0
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Value Measurement Using
|
|
Assets/
Liabilities at
Fair
Value
|
||||||||||||
December 31, 2011
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
State and municipal debt securities
|
$
|
—
|
|
|
$
|
866.5
|
|
|
$
|
—
|
|
|
$
|
866.5
|
|
State and municipal variable rate demand notes
|
—
|
|
|
376.9
|
|
|
—
|
|
|
376.9
|
|
||||
Corporate debt and other
|
0.1
|
|
|
88.5
|
|
|
—
|
|
|
88.6
|
|
||||
Derivatives
|
—
|
|
|
124.8
|
|
|
—
|
|
|
124.8
|
|
||||
Total assets
|
$
|
0.1
|
|
|
$
|
1,456.7
|
|
|
$
|
—
|
|
|
$
|
1,456.8
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
297.0
|
|
|
$
|
—
|
|
|
$
|
297.0
|
|
Notes and other borrowings
|
—
|
|
|
3,563.5
|
|
|
—
|
|
|
3,563.5
|
|
||||
Total borrowings
|
—
|
|
|
3,860.5
|
|
|
—
|
|
|
3,860.5
|
|
||||
Derivatives
|
—
|
|
|
86.6
|
|
|
—
|
|
|
86.6
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
3,947.1
|
|
|
$
|
—
|
|
|
$
|
3,947.1
|
|
|
March 31,
2012 |
|
December 31,
2011 |
||||
Settlement assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
483.2
|
|
|
$
|
712.5
|
|
Receivables from selling agents and Business Solutions customers
|
1,129.1
|
|
|
1,046.7
|
|
||
Investment securities
|
1,572.8
|
|
|
1,332.0
|
|
||
|
$
|
3,185.1
|
|
|
$
|
3,091.2
|
|
Settlement obligations:
|
|
|
|
||||
Money transfer, money order and payment service payables
|
$
|
2,283.6
|
|
|
$
|
2,242.3
|
|
Payables to agents
|
901.5
|
|
|
848.9
|
|
||
|
$
|
3,185.1
|
|
|
$
|
3,091.2
|
|
March 31, 2012
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net
Unrealized
Gains/
(Losses)
|
||||||||||
State and municipal debt securities (a)
|
$
|
919.1
|
|
|
$
|
931.1
|
|
|
$
|
13.3
|
|
|
$
|
(1.3
|
)
|
|
$
|
12.0
|
|
State and municipal variable rate demand notes
|
553.6
|
|
|
553.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Corporate debt and other
|
87.7
|
|
|
88.1
|
|
|
0.8
|
|
|
(0.4
|
)
|
|
0.4
|
|
|||||
|
$
|
1,560.4
|
|
|
$
|
1,572.8
|
|
|
$
|
14.1
|
|
|
$
|
(1.7
|
)
|
|
$
|
12.4
|
|
December 31, 2011
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net
Unrealized
Gains/
(Losses)
|
||||||||||
State and municipal debt securities (a)
|
$
|
858.5
|
|
|
$
|
866.5
|
|
|
$
|
10.4
|
|
|
$
|
(2.4
|
)
|
|
$
|
8.0
|
|
State and municipal variable rate demand notes
|
376.9
|
|
|
376.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Corporate debt and other
|
88.7
|
|
|
88.6
|
|
|
0.6
|
|
|
(0.7
|
)
|
|
(0.1
|
)
|
|||||
|
$
|
1,324.1
|
|
|
$
|
1,332.0
|
|
|
$
|
11.0
|
|
|
$
|
(3.1
|
)
|
|
$
|
7.9
|
|
(a)
|
The majority of these securities are fixed-rate instruments.
|
|
Fair
Value
|
||
Due within 1 year
|
$
|
210.9
|
|
Due after 1 year through 5 years
|
750.8
|
|
|
Due after 5 years through 10 years
|
124.1
|
|
|
Due after 10 years
|
487.0
|
|
|
|
$
|
1,572.8
|
|
|
Three Months Ended
March 31, |
||||||
|
2012
|
|
2011
|
||||
Interest cost
|
$
|
3.7
|
|
|
$
|
4.5
|
|
Expected return on plan assets
|
(5.2
|
)
|
|
(5.3
|
)
|
||
Amortization of actuarial loss
|
2.6
|
|
|
2.0
|
|
||
Net periodic benefit cost
|
$
|
1.1
|
|
|
$
|
1.2
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
|
|
|
Fair Value
|
|
|
|
Fair Value
|
||||||||||||
|
Balance Sheet
Location
|
|
March 31,
2012 |
|
December 31,
2011 |
|
Balance Sheet
Location
|
|
March 31,
2012 |
|
December 31,
2011 |
||||||||
Derivatives — hedges:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate fair value hedges — Corporate
|
Other assets
|
|
$
|
3.9
|
|
|
$
|
4.4
|
|
|
Other liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency cash flow hedges — Consumer-to-Consumer
|
Other assets
|
|
18.3
|
|
|
37.0
|
|
|
Other liabilities
|
|
13.4
|
|
|
6.6
|
|
||||
Total
|
|
|
$
|
22.2
|
|
|
$
|
41.4
|
|
|
|
|
$
|
13.4
|
|
|
$
|
6.6
|
|
Derivatives — undesignated:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency — Business Solutions
|
Other assets
|
|
$
|
87.2
|
|
|
$
|
79.8
|
|
|
Other liabilities
|
|
$
|
69.4
|
|
|
$
|
67.6
|
|
Foreign currency —Consumer-to-Consumer
|
Other assets
|
|
1.5
|
|
|
3.6
|
|
|
Other liabilities
|
|
7.8
|
|
|
12.4
|
|
||||
Total
|
|
|
$
|
88.7
|
|
|
$
|
83.4
|
|
|
|
|
$
|
77.2
|
|
|
$
|
80.0
|
|
Total derivatives
|
|
|
$
|
110.9
|
|
|
$
|
124.8
|
|
|
|
|
$
|
90.6
|
|
|
$
|
86.6
|
|
|
Gain/(Loss) Recognized in Income on
Derivatives
|
|
|
|
Gain/(Loss) Recognized in Income on
Related Hedged Item (a)
|
||||||||||||||||
|
Income
Statement
Location
|
|
Amount
|
|
|
|
Income
Statement
Location
|
|
Amount
|
||||||||||||
Derivatives
|
|
March 31,
2012 |
|
March 31,
2011 |
|
Hedged Items
|
|
|
March 31,
2012 |
|
March 31,
2011 |
||||||||||
Interest rate contracts
|
Interest expense
|
|
$
|
1.7
|
|
|
$
|
(0.2
|
)
|
|
Fixed-rate debt
|
|
Interest expense
|
|
$
|
0.2
|
|
|
$
|
7.3
|
|
Total gain/(loss)
|
|
|
$
|
1.7
|
|
|
$
|
(0.2
|
)
|
|
|
|
|
|
$
|
0.2
|
|
|
$
|
7.3
|
|
|
Amount of Gain/(Loss)
Recognized in OCI on
Derivatives (Effective
Portion)
|
|
Gain/(Loss) Reclassified from
Accumulated OCI
into Income
(Effective Portion)
|
|
Gain/(Loss) Recognized in Income on
Derivatives (Ineffective Portion and Amount
Excluded from Effectiveness Testing) (b)
|
||||||||||||||||||||||
|
|
Income
Statement
|
|
Amount
|
|
Income
Statement
|
|
Amount
|
|||||||||||||||||||
|
March 31,
|
|
March 31,
|
|
|
March 31,
|
|
March 31,
|
|
|
March 31,
|
|
March 31,
|
||||||||||||||
Derivatives
|
2012
|
|
2011
|
|
Location
|
|
2012
|
|
2011
|
|
Location
|
|
2012
|
|
2011
|
||||||||||||
Foreign currency contracts
|
$
|
(23.0
|
)
|
|
$
|
(35.6
|
)
|
|
Revenue
|
|
$
|
2.5
|
|
|
$
|
(5.8
|
)
|
|
Derivative
gains, net
|
|
$
|
1.4
|
|
|
$
|
2.3
|
|
Interest rate contracts (c)
|
—
|
|
|
—
|
|
|
Interest expense
|
|
(0.9
|
)
|
|
(0.4
|
)
|
|
Interest expense
|
|
—
|
|
|
—
|
|
||||||
Total gain/(loss)
|
$
|
(23.0
|
)
|
|
$
|
(35.6
|
)
|
|
|
|
$
|
1.6
|
|
|
$
|
(6.2
|
)
|
|
|
|
$
|
1.4
|
|
|
$
|
2.3
|
|
|
Gain/(Loss) Recognized in Income on Derivatives (d)
|
||||||||
|
Income Statement Location
|
|
Amount
|
||||||
|
|
|
Three Months Ended
March 31, |
||||||
Derivatives
|
|
|
2012
|
|
2011
|
||||
Foreign currency contracts (e)
|
Selling, general and administrative
|
|
$
|
(14.8
|
)
|
|
$
|
(22.7
|
)
|
Foreign currency contracts (f)
|
Derivative gains, net
|
|
0.2
|
|
|
(2.0
|
)
|
||
Total loss
|
|
|
$
|
(14.6
|
)
|
|
$
|
(24.7
|
)
|
(a)
|
The gain of
$0.2 million
and
$7.3 million
in the three months ended
March 31, 2012
and
2011
, respectively, was comprised of a (loss)/gain in value on the debt of
$(1.7) million
and
$0.2 million
, respectively, and amortization of hedge accounting adjustments of
$1.9 million
and
$7.1 million
, respectively.
|
(b)
|
The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot rates.
|
(c)
|
The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative’s fair value in “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets. These amounts are reclassified to “Interest expense” in the Condensed Consolidated Statements of Income over the life of the related notes.
|
(d)
|
The Company uses foreign currency forward and option contracts as part of its business-to-business payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above.
|
(e)
|
The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gain on settlement assets and obligations and cash balances for the three months ended
March 31, 2012
and
2011
, were
$16.1 million
and
$20.2 million
, respectively.
|
(f)
|
The derivative contracts used in the Company’s revenue hedging program are not designated as hedges in the final month of the contract.
|
|
March 31, 2012
|
|
December 31, 2011
|
||||
Due in less than one year:
|
|
|
|
||||
Commercial paper
|
$
|
350.0
|
|
|
$
|
297.0
|
|
Floating rate notes (effective rate of 1.1%) due 2013
|
300.0
|
|
|
300.0
|
|
||
Due in greater than one year (a):
|
|
|
|
||||
6.500% notes (effective rate of 5.6%) due 2014
|
500.0
|
|
|
500.0
|
|
||
5.930% notes due 2016 (b)
|
1,000.0
|
|
|
1,000.0
|
|
||
3.650% notes (effective rate of 4.4%) due 2018
|
400.0
|
|
|
400.0
|
|
||
5.253% notes due 2020 (b)
|
324.9
|
|
|
324.9
|
|
||
6.200% notes due 2036 (b)
|
500.0
|
|
|
500.0
|
|
||
6.200% notes due 2040 (b)
|
250.0
|
|
|
250.0
|
|
||
Other borrowings
|
5.8
|
|
|
8.8
|
|
||
Total borrowings at par value
|
3,630.7
|
|
|
3,580.7
|
|
||
Fair value hedge accounting adjustments, net (a)
|
23.8
|
|
|
23.9
|
|
||
Unamortized discount, net
|
(20.8
|
)
|
|
(21.4
|
)
|
||
Total borrowings at carrying value (c)
|
$
|
3,633.7
|
|
|
$
|
3,583.2
|
|
(a)
|
The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall exposure to interest rates. The changes in fair value of these interest rate swaps result in an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge accounting adjustments will be reclassified as reductions to or increases in “Interest expense” in the Condensed Consolidated Statements of Income over the life of the related notes, and cause the effective rate of interest to differ from the notes’ stated rate.
|
(b)
|
The difference between the stated interest rate and the effective interest rate is not significant.
|
(c)
|
As of
March 31, 2012
, the Company's weighted-average effective rate on total borrowings was approximately
4.8%
.
|
Stock options granted:
|
|
||
Weighted-average risk-free interest rate
|
1.2
|
%
|
|
Weighted-average dividend yield
|
1.7
|
%
|
|
Volatility
|
33.3
|
%
|
|
Expected term (in years)
|
6.09
|
|
|
Weighted-average grant date fair value
|
$
|
4.94
|
|
|
Three Months Ended
March 31, |
||||||
|
2012
|
|
2011
|
||||
Revenues:
|
|
|
|
||||
Consumer-to-Consumer:
|
|
|
|
||||
Transaction fees
|
$
|
872.0
|
|
|
$
|
839.8
|
|
Foreign exchange revenues
|
239.4
|
|
|
227.4
|
|
||
Other revenues
|
13.2
|
|
|
10.9
|
|
||
|
1,124.6
|
|
|
1,078.1
|
|
||
Consumer-to-Business:
|
|
|
|
||||
Transaction fees
|
147.7
|
|
|
144.7
|
|
||
Foreign exchange revenues
|
0.8
|
|
|
0.9
|
|
||
Other revenues
|
6.6
|
|
|
7.6
|
|
||
|
155.1
|
|
|
153.2
|
|
||
Business Solutions:
|
|
|
|
||||
Transaction fees
|
6.5
|
|
|
0.9
|
|
||
Foreign exchange revenues
|
80.1
|
|
|
26.8
|
|
||
Other revenues
|
0.3
|
|
|
0.2
|
|
||
|
86.9
|
|
|
27.9
|
|
||
Other:
|
|
|
|
||||
Total revenues
|
26.8
|
|
|
23.8
|
|
||
|
26.8
|
|
|
23.8
|
|
||
Total consolidated revenues
|
$
|
1,393.4
|
|
|
$
|
1,283.0
|
|
Operating income/(loss):
|
|
|
|
||||
Consumer-to-Consumer
|
$
|
311.3
|
|
|
$
|
308.6
|
|
Consumer-to-Business
|
41.1
|
|
|
34.6
|
|
||
Business Solutions
|
(14.8
|
)
|
|
(4.3
|
)
|
||
Other
|
(5.1
|
)
|
|
(2.0
|
)
|
||
Total segment operating income
|
332.5
|
|
|
336.9
|
|
||
Restructuring and related expenses (Note 4)
|
—
|
|
|
(24.0
|
)
|
||
Total consolidated operating income
|
$
|
332.5
|
|
|
$
|
312.9
|
|
•
|
Consumer-to-Consumer
- The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. Our multi-currency, real-time money transfer service is viewed by us as one interconnected global network where a money transfer can be sent from one location to another, around the world. Our money transfer services are available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through our websites and account based money transfers.
|
•
|
Consumer-to-Business
- The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. This segment primarily consists of U.S. bill payments, Pago Fácil (bill payments in Argentina), and international bill payments. The significant majority of the segment's revenue was generated in the United States during all periods presented.
|
•
|
Business Solutions
- The Business Solutions operating segment facilitates business-to-business payment solutions, primarily cross-border, cross-currency transactions, mainly for small and medium size enterprises, and other organizations. The majority of the segment's business relates to exchanges of currency at the spot rate which enables customers to make cross-currency payments. In addition, in certain countries, we write foreign currency forward and option contracts for customers to facilitate future payments. Travelex Global Business Payments (“TGBP”), which was acquired in November 2011, is also included in this segment.
|
•
|
We generated
$1,393.4 million
in total consolidated revenues compared to
$1,283.0 million
for the comparable period in the prior year, representing an increase of 9%. The acquisition of TGBP contributed approximately 5% of consolidated revenue growth for the three months ended March 31, 2012.
|
•
|
We generated
$332.5 million
in consolidated operating income compared to
$312.9 million
for the comparable period in the prior year, representing an increase of 6%. The current year results include $6.4 million of integration expenses resulting from the acquisition of TGBP. The prior year results include restructuring and related expenses of
$24.0 million
, as described within “Operating expenses overview.”
|
•
|
Our operating income margin was 24% for both of the three month periods ended March 31, 2012 and 2011.
|
•
|
Our effective tax rate was
14.8%
compared to
23.5%
for the comparable period in the prior year, primarily due to an agreement with the United States Internal Revenue Service (“IRS Agreement”) resolving substantially all of the issues related to our restructuring of our international operations in 2003. We also continue to benefit from an increasing proportion of our profits being foreign-derived, and therefore taxed at lower rates than our combined federal and state tax rates in the United States. For the three months ended March 31, 2012, 85.0% of our pre-tax income was from foreign sources. While the income tax imposed by any one foreign country is not material to us, our overall effective tax rate could be adversely affected by changes in tax laws, both foreign and domestic. Certain portions of our foreign source income are subject to U.S. federal and state income tax as earned due to the nature of the income, and dividend repatriations of our foreign source income are generally subject to U.S. federal and state income tax.
|
•
|
Consolidated net income was
$247.3 million
, representing an increase of 18% over the comparable period in the prior year. The current year results include $4.3 million of TGBP integration expenses, net of tax. The prior year results include
$16.4 million
in restructuring and related expenses, net of tax.
|
•
|
Our consumers transferred $19.5 billion in Consumer-to-Consumer principal, of which $17.5 billion related to cross-border principal, which represented increases of 2% in both Consumer-to-Consumer principal and cross-border principal over the comparable period in the prior year.
|
•
|
Consolidated cash flows provided by operating activities for the three months ended March 31, 2012 and 2011 were
$215.0 million
and
$251.6 million
, respectively. Cash flows provided by operating activities for the three months ended March 31, 2012 were impacted by tax payments of approximately $65 million made as a result of the IRS Agreement.
|
|
Three Months Ended March 31,
|
|||||||||
(in millions, except per share amounts)
|
2012
|
|
2011
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Transaction fees
|
$
|
1,040.9
|
|
|
$
|
998.0
|
|
|
4
|
%
|
Foreign exchange revenues
|
322.6
|
|
|
256.1
|
|
|
26
|
%
|
||
Other revenues
|
29.9
|
|
|
28.9
|
|
|
3
|
%
|
||
Total revenues
|
1,393.4
|
|
|
1,283.0
|
|
|
9
|
%
|
||
Expenses:
|
|
|
|
|
|
|||||
Cost of services
|
783.0
|
|
|
745.4
|
|
|
5
|
%
|
||
Selling, general and administrative
|
277.9
|
|
|
224.7
|
|
|
24
|
%
|
||
Total expenses
|
1,060.9
|
|
|
970.1
|
|
|
9
|
%
|
||
Operating income
|
332.5
|
|
|
312.9
|
|
|
6
|
%
|
||
Other income/(expense):
|
|
|
|
|
|
|||||
Interest income
|
1.5
|
|
|
1.2
|
|
|
25
|
%
|
||
Interest expense
|
(44.4
|
)
|
|
(43.4
|
)
|
|
2
|
%
|
||
Derivative gains, net
|
1.6
|
|
|
1.9
|
|
|
(16
|
)%
|
||
Other income/(expense), net
|
(1.1
|
)
|
|
2.1
|
|
|
*
|
|
||
Total other expense, net
|
(42.4
|
)
|
|
(38.2
|
)
|
|
11
|
%
|
||
Income before income taxes
|
290.1
|
|
|
274.7
|
|
|
6
|
%
|
||
Provision for income taxes
|
42.8
|
|
|
64.5
|
|
|
(34
|
)%
|
||
Net income
|
$
|
247.3
|
|
|
$
|
210.2
|
|
|
18
|
%
|
Earnings per share:
|
|
|
|
|
|
|||||
Basic
|
$
|
0.40
|
|
|
$
|
0.32
|
|
|
25
|
%
|
Diluted
|
$
|
0.40
|
|
|
$
|
0.32
|
|
|
25
|
%
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|||||
Basic
|
619.1
|
|
|
646.9
|
|
|
|
|||
Diluted
|
621.9
|
|
|
652.1
|
|
|
|
*
|
Calculation not meaningful
|
|
Three Months Ended March 31,
|
|||||||||
(dollars and transactions in millions)
|
2012
|
|
2011
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Transaction fees
|
$
|
872.0
|
|
|
$
|
839.8
|
|
|
4
|
%
|
Foreign exchange revenues
|
239.4
|
|
|
227.4
|
|
|
5
|
%
|
||
Other revenues
|
13.2
|
|
|
10.9
|
|
|
21
|
%
|
||
Total revenues
|
$
|
1,124.6
|
|
|
$
|
1,078.1
|
|
|
4
|
%
|
Operating income
|
$
|
311.3
|
|
|
$
|
308.6
|
|
|
1
|
%
|
Operating income margin
|
28
|
%
|
|
29
|
%
|
|
|
|||
Key indicator:
|
|
|
|
|
|
|||||
Consumer-to-Consumer transactions
|
56.4
|
|
|
52.8
|
|
|
7
|
%
|
|
Three Months Ended
March 31, 2012
|
|
Consumer-to-Consumer transaction growth (a)
|
|
|
Europe and CIS
|
1
|
%
|
North America
|
6
|
%
|
Middle East and Africa
|
9
|
%
|
APAC
|
6
|
%
|
LACA
|
8
|
%
|
westernunion.com
|
41
|
%
|
Consumer-to-Consumer revenue growth (a)
|
|
|
Europe and CIS
|
0
|
%
|
North America
|
5
|
%
|
Middle East and Africa
|
6
|
%
|
APAC
|
7
|
%
|
LACA
|
2
|
%
|
westernunion.com
|
39
|
%
|
(a)
|
Significant allocations are made in determining the revenue and transaction growth rates under the regional view in the above table. The geographic split for transactions and revenue is determined based upon the region where the money transfer is initiated and the region where the money transfer is paid. For transactions originated and paid in different regions, we split the transaction count and revenue between the two regions, with each region receiving 50%. For money transfers initiated and paid in the same region, 100% of the revenue and transactions are attributed to that region. For money transfers initiated through our websites (“westernunion.com”), 100% of the revenue and transactions are attributed to westernunion.com.
|
|
Three Months Ended March 31,
|
|||||||||
(dollars and transactions in millions)
|
2012
|
|
2011
|
|
% Change
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Transaction fees
|
$
|
147.7
|
|
|
$
|
144.7
|
|
|
2
|
%
|
Foreign exchange revenues
|
0.8
|
|
|
0.9
|
|
|
(11
|
)%
|
||
Other revenues
|
6.6
|
|
|
7.6
|
|
|
(13
|
)%
|
||
Total revenues
|
$
|
155.1
|
|
|
$
|
153.2
|
|
|
1
|
%
|
Operating income
|
$
|
41.1
|
|
|
$
|
34.6
|
|
|
19
|
%
|
Operating income margin
|
26
|
%
|
|
23
|
%
|
|
|
|
Three Months Ended March 31,
|
||||||||
(dollars in millions; principal in billions)
|
2012
|
|
2011
|
|
% Change
|
||||
Revenues:
|
|
|
|
|
|
||||
Transaction fees
|
$
|
6.5
|
|
|
$
|
0.9
|
|
|
*
|
Foreign exchange revenues
|
80.1
|
|
|
26.8
|
|
|
*
|
||
Other revenues
|
0.3
|
|
|
0.2
|
|
|
*
|
||
Total revenues
|
$
|
86.9
|
|
|
$
|
27.9
|
|
|
*
|
Operating loss
|
$
|
(14.8
|
)
|
|
$
|
(4.3
|
)
|
|
*
|
Operating loss margin
|
(17
|
)%
|
|
(15
|
)%
|
|
|
*
|
Calculation not meaningful
|
|
Three Months Ended March 31,
|
|||||||||
(dollars in millions)
|
2012
|
|
2011
|
|
% Change
|
|||||
Revenues
|
$
|
26.8
|
|
|
$
|
23.8
|
|
|
13
|
%
|
Operating loss
|
$
|
(5.1
|
)
|
|
$
|
(2.0
|
)
|
|
*
|
|
•
|
Income taxes
|
•
|
Derivative financial instruments
|
•
|
Other intangible assets
|
•
|
Goodwill impairment testing
|
•
|
Acquisitions — purchase price allocation
|
•
|
Restructuring and related expenses
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
•
|
revisions to agent agreements to increase our ability to oversee the compliance of our agents and subagents;
|
•
|
reduced thresholds at which our consumers are required to provide identification for transactions from certain states along the United States southwest border; and
|
•
|
enhancement of our information systems including migrating customer information for our Western Union, Orlandi Valuta and Vigo brands onto a common database and migrating to a standard point of sale system.
|
|
Total Number of
Shares Repurchased*
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Repurchased as Part of
Publicly Announced
Plans or Programs**
|
|
Remaining Dollar
Value of Shares that
May Yet Be Repurchased
Under the Plans or
Programs (in millions)
|
||||||
January 1 - 31
|
222
|
|
|
$
|
18.26
|
|
|
—
|
|
|
$
|
615.5
|
|
February 1 - 29
|
2,703,206
|
|
|
$
|
17.79
|
|
|
2,477,800
|
|
|
$
|
571.5
|
|
March 1 - 31
|
5,813,100
|
|
|
$
|
17.66
|
|
|
5,813,100
|
|
|
$
|
468.8
|
|
Total
|
8,516,528
|
|
|
$
|
17.70
|
|
|
8,290,900
|
|
|
|
*
|
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.
|
**
|
On February 1, 2011, the Board of Directors authorized $1 billion of common stock repurchases through December 31, 2012, of which $468.8 million remains available as of March 31, 2012. Management has historically and may continue to establish prearranged written plans pursuant to Rule 10b5-1. A Rule 10b5-1 plan permits the Company to repurchase shares at times when the Company may otherwise be prevented from doing so, provided the plan is adopted when the Company is not aware of material non-public information.
|
|
|
The Western Union Company
(Registrant)
|
||
|
|
|
||
Date:
|
May 1, 2012
|
By:
|
|
/
S
/ H
IKMET
E
RSEK
|
|
|
|
|
Hikmet Ersek
|
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
||
Date:
|
May 1, 2012
|
By:
|
|
/
S
/ S
COTT
T. S
CHEIRMAN
|
|
|
|
|
Scott T. Scheirman
|
|
|
|
|
Executive Vice President, Chief
Financial Officer and Global Operations
(Principal Financial Officer)
|
|
|
|
||
Date:
|
May 1, 2012
|
By:
|
|
/
S
/ A
MINTORE
T.X. S
CHENKEL
|
|
|
|
|
Amintore T.X. Schenkel
|
|
|
|
|
Senior Vice President, Chief Accounting Officer,
and Controller (Principal Accounting Officer)
|
Exhibit
Number
|
|
Description
|
|
|
|
10.1
|
|
The Western Union Company Senior Executive Annual Incentive Plan, as Amended and Restated Effective February 23, 2012*
|
|
|
|
10.2
|
|
Form of Performance-Based Restricted Stock Unit Award Notice for Executive Committee Members Under The Western Union Company 2006 Long-Term Incentive Plan*
|
|
|
|
10.3
|
|
Form of Bonus Stock Unit Award Agreement for Non-Employee Directors Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan*
|
|
|
|
10.4
|
|
Form of Bonus Stock Unit Award Agreement for Non-Employee Directors Residing Outside of the United States Under The Western Union Company 2006 Long-Term Incentive Plan*
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges
|
|
|
|
15
|
|
Letter from Ernst & Young LLP Regarding Unaudited Interim Financial Information
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer of The Western Union Company Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer of The Western Union Company Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
|
|
|
|
32
|
|
Certification of Principal Executive Officer and Principal 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
|
Grant Date:
|
_______________________
|
Target Award:
Maximum Award:
|
___ shares of Common Stock
___ shares of Common Stock
|
Performance Period:
|
________________________
|
Performance Measure:
|
________________________
|
Vesting Date:
|
Third anniversary of Grant Date
|
1.
|
Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to the non-employee director of the Company identified in the attached Stock Unit Award Notice (which forms part of this Agreement) (“Director”) as of the grant date specified in the Stock Unit Award Notice (the “Grant Date”), the number of Bonus Stock Units (the “Units”) relating to shares of the Company's common stock specified in the Stock Unit Award Notice, subject to the conditions and restrictions set forth in this Agreement and the Plan. Each Unit shall provide for the issuance and transfer to Director of one share of the Company's common stock on the distribution date specified in the most recent Election Agreement (which may be an Election Agreement under The Western Union Company Non-Employee Director Deferred Compensation Plan) between the Company and Director on file with the Company. Upon issuance and transfer of the shares of common stock subject to the Units, Director shall have all rights incident to ownership, including but not limited to voting rights and the right to receive dividends.
|
2.
|
The terms of the Plan are hereby incorporated in this instrument 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.
|
3.
|
The Company, in its sole discretion, may require, prior to the issuance or delivery of any shares of common stock pursuant to the Units, payment by Director of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with the Award.
|
4.
|
Regardless of any action the Company takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to Director's participation in the Plan and legally applicable to him or her (“Tax-Related Items”), Director acknowledges that the ultimate liability for all Tax-Related Items is and remains Director's responsibility and may exceed the amount actually withheld by the Company. Director further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant of the Units, the vesting of the Units, the conversion of the Units into Shares or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired and the receipt of any dividends or dividend equivalents; and (ii) does not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate Director's liability for the Tax-Related Items or achieve any particular tax result. Further, if Director has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event (“Tax Date”), as applicable, Director acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
|
5.
|
Prior to the settlement of the Units, Director will be paid amounts equal to the regular cash dividends that would have been payable to Director if Director had received and held the shares of common stock underlying the Units, which payment shall be made as soon as practicable after the payment of dividends with respect to the Company's common stock but in no event later than March 15 of the calendar year immediately following the calendar year in which such dividends are paid with respect to the Company's common stock. No amounts will be paid with respect to record dates for dividends occurring prior the Grant Date. Prior to the issuance and transfer of the shares of common stock underlying the Units, Director shall not be a shareholder of record with respect to such shares and shall have no voting rights with respect to such shares.
|
6.
|
The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, or otherwise as provided by the Plan. If Director or anyone claiming under or through Director attempts to make any such sale, transfer, assignment, pledge or other disposition of the Units in violation of this Paragraph 6, such attempted violation shall be null, void, and without effect.
|
7.
|
Notwithstanding anything in this Agreement to the contrary, all Units subject to this Agreement shall be immediately forfeited in the event that Director's service on the Company's Board of Directors is terminated on account of gross misconduct.
|
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 Director under this Agreement without Director's written consent. The Committee may, in its sole discretion, permit Director to surrender the Units in order to exercise or realize the rights under other Awards under the Plan, or in exchange for the grant of new Awards under the Plan, or require Director to surrender the Units as a condition precedent of new Awards under the Plan.
|
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 Director and all persons claiming under or through Director. By accepting this grant of Units or other benefit under the Plan, Director and each person claiming under or through Director 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 Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Director's participation in the Plan, or Director's acquisition or sale of the Shares underlying the Units. Director is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
|
11.
|
This Award is discretionary, non-binding for future years and there is no promise or guarantee that such grants will be offered to Director in future years.
|
12.
|
The validity, construction, interpretation, administration and effect of the Plan and this Agreement 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 in the United States of America, as provided in the Plan. For purposes of litigating any dispute that arises directly or indirectly under the Units or the Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Colorado in the United States of America, and agree that such litigation shall be conducted only in the courts of Arapahoe County in the State of Colorado in the United States of America, or the federal courts for the United States of America for the District of Colorado, and no other courts, where this grant is made and/or to be performed.
|
13.
|
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.
|
14.
|
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Director hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.
|
15.
|
The Company reserves the right to impose other requirements on Director's participation in the Plan, on the Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan, and to require Director to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
|
1.
|
Pursuant to The Western Union Company 2006 Long-Term Incentive Plan (the “Plan”), The Western Union Company (the “Company”) hereby grants to the non-employee director of the Company identified in the attached Stock Unit Award Notice (which forms part of this Agreement) (“Director”) as of the grant date specified in the Stock Unit Award Notice (the “Grant Date”), the number of Bonus Stock Units (the “Units”) relating to shares of the Company's common stock specified in the Stock Unit Award Notice, subject to the conditions and restrictions set forth in this Agreement and the Plan. Each Unit shall provide for the issuance and transfer to Director of one share of the Company's common stock on the first business day of January in the calendar year immediately following the calendar year in which the Director separates from service on the Company's Board of Directors. Upon issuance and transfer of the shares of common stock subject to the Units, Director shall have all rights incident to ownership, including but not limited to voting rights and the right to receive dividends.
|
2.
|
The terms of the Plan are hereby incorporated in this instrument 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.
|
3.
|
The Company, in its sole discretion, may require, prior to the issuance or delivery of any shares of common stock pursuant to the Units, payment by Director of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with the Award.
|
4.
|
Regardless of any action the Company takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to Director's participation in the Plan and legally applicable to him or her (“Tax-Related Items”), Director acknowledges that the ultimate liability for all Tax-Related Items is and remains Director's responsibility and may exceed the amount actually withheld by the Company. Director further acknowledges that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant of the Units, the vesting of the Units, the conversion of the Units into Shares or the receipt of an equivalent cash payment, the subsequent sale of any Shares acquired and the receipt of any dividends or dividend equivalents; and (ii) does not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate Director's liability for the Tax-Related Items or achieve any particular tax result. Further, if Director has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event (“Tax Date”), as applicable, Director acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
|
5.
|
Prior to the settlement of the Units, Director will be paid amounts equal to the regular cash dividends that would have been payable to Director if Director had received and held the shares of common stock underlying the Units, which payment shall be made as soon as practicable after the payment of dividends with respect to the Company's common stock but in no event later than March 15 of the calendar year immediately following the calendar year in which such dividends are paid with respect to the Company's common stock. No amounts will be paid with respect to record dates for dividends occurring prior the Grant Date. Prior to the issuance and transfer of the shares of common stock underlying the Units, Director shall not be a shareholder of record with respect to such shares and shall have no voting rights with respect to such shares.
|
6.
|
The Units may not be sold, assigned, transferred, pledged, or otherwise disposed of, except by will or the laws of descent and distribution, or otherwise as provided by the Plan. If Director or anyone claiming under or through Director attempts to make any such sale, transfer, assignment, pledge or other disposition of the Units in violation of this Paragraph 6, such attempted violation shall be null, void, and without effect.
|
7.
|
Notwithstanding anything in this Agreement to the contrary, all Units subject to this Agreement shall be immediately forfeited in the event that Director's service on the Company's Board of Directors is terminated on account of gross misconduct.
|
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 Director under this Agreement without Director's written consent. The Committee may, in its sole discretion, permit Director to surrender the Units in order to exercise or realize the rights under other Awards under the Plan, or in exchange for the grant of new Awards under the Plan, or require Director to surrender the Units as a condition precedent of new Awards under the Plan.
|
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 Director and all persons claiming under or through Director. By accepting this grant of Units or other benefit under the Plan, Director and each person claiming under or through Director 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 Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Director's participation in the Plan, or Director's acquisition or sale of the Shares underlying the Units. Director is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
|
11.
|
Director hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Director's personal data as described in this Agreement and any other grant materials by and among, as applicable, the Company and its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing Director's participation in the Plan.
|
12.
|
This Award is discretionary, non-binding for future years and there is no promise or guarantee that such grants will be offered to Director in future years.
|
13.
|
The validity, construction, interpretation, administration and effect of the Plan and this Agreement 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 in the United States of America, as provided in the Plan. For purposes of litigating any dispute that arises directly or indirectly under the Units or the Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Colorado in the United States of America, and agree that such litigation shall be conducted only in the courts of Arapahoe County in the State of Colorado in the United States of America, or the federal courts for the United States of America for the District of Colorado, and no other courts, where this grant is made and/or to be performed.
|
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.
|
The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Director hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.
|
16.
|
The Company reserves the right to impose other requirements on Director's participation in the Plan, on the Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan, and to require Director to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
|
|
Three Months Ended
March 31,
|
||||||
|
2012
|
|
2011
|
||||
Earnings:
|
|
|
|
||||
Income before income taxes
|
$
|
290.1
|
|
|
$
|
274.7
|
|
Fixed charges
|
45.5
|
|
|
46.5
|
|
||
Other adjustments
|
(4.1
|
)
|
|
(4.0
|
)
|
||
Total earnings (a)
|
$
|
331.5
|
|
|
$
|
317.2
|
|
Fixed charges:
|
|
|
|
||||
Interest expense
|
$
|
40.0
|
|
|
$
|
43.4
|
|
Other adjustments
|
5.5
|
|
|
3.1
|
|
||
Total fixed charges (b)
|
$
|
45.5
|
|
|
$
|
46.5
|
|
Ratio of earnings to fixed charges (a/b)
|
7.3
|
|
|
6.8
|
|
(1)
|
Registration Statements (Form S-3 Nos. 333-170967 and 333-170410) 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;
|
Date:
|
May 1, 2012
|
|
/
S
/ H
IKMET
E
RSEK
|
|
|
|
Hikmet Ersek
|
|
|
|
President and Chief Executive Officer
|
Date:
|
May 1, 2012
|
|
/
S
/ S
COTT
T. S
CHEIRMAN
|
|
|
|
Scott T. Scheirman
|
|
|
|
Executive Vice President, Chief Financial Officer and Global Operations
|
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:
|
May 1, 2012
|
|
/
S
/ H
IKMET
E
RSEK
|
|
|
|
Hikmet Ersek
|
|
|
|
President and Chief Executive Officer
|
Date:
|
May 1, 2012
|
|
/
S
/ S
COTT
T. S
CHEIRMAN
|
|
|
|
Scott T. Scheirman
|
|
|
|
Executive Vice President, Chief Financial Officer and Global Operations
|