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Western Union Reports Fourth Quarter And Full Year Results

About Western Union

The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of December 31, 2012, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of approximately 510,000 agent locations in 200 countries and territories. In 2012, The Western Union Company completed 231 million consumer-to-consumer transactions worldwide, moving $79 billion of principal between consumers, and 432 million business payments. For more information, visit www.westernunion.com.

THE WESTERN UNION COMPANY
KEY STATISTICS
(Unaudited)
               
Notes* 4Q11 FY2011 1Q12 2Q12 3Q12 4Q12 FY2012
 
Consolidated Metrics
Consolidated revenues (GAAP) - YoY % change 5 % 6 % 9 % 4 % 1 % 0 % 3 %
Consolidated revenues (constant currency) - YoY % change a 6 % 5 % 9 % 7 % 3 % 0 % 5 %
Agent locations 485,000 485,000 495,000 510,000 510,000 510,000 510,000
 
Consumer-to-Consumer (C2C) Segment
Revenues (GAAP) - YoY % change 3 % 5 % 4 % 0 % (4 )% (2 )% (1 )%
Revenues (constant currency) - YoY % change e 3 % 4 % 5 % 3 % (1 )% (2 )% 1 %
Operating margin 28.0 % 28.6 % 27.7 % 28.5 % 29.4 % 25.0 % 27.6 %
 
Transactions (in millions) 59.00 225.79 56.37 58.49 57.47 58.65 230.98
Transactions - YoY% change 5 % 6 % 7 % 4 % 0 % (1 )% 2 %
 
Total principal ($ - billions) 20.6 81.3 19.5 20.1 19.7 20.0 79.3
Principal per transaction ($ - dollars) 349 360 346 344 342 341 343
Principal per transaction - YoY % change (2 )% 1 % (4 )% (6 )% (6 )% (2 )% (5 )%
Principal per transaction (constant currency) - YoY % change f (1 )% 0 % (3 )% (3 )% (3 )% (2 )% (3 )%
 
Cross-border principal ($ - billions) 18.5 73.2 17.5 18.2 17.6 18.0 71.3
Cross-border principal - YoY % change 2 % 7 % 2 % (2

)%

(7 )% (3 )% (3 )%
Cross-border principal (constant currency) - YoY % change g 3 % 5 % 3 % 1 % (4 )% (2 )% 0 %
 
Europe and CIS region revenues - YoY % change s, t (1 )% 3 % 0 % (8 )% (9 )% (5 )% (6 )%
Europe and CIS region transactions - YoY % change s, t (1 )% 1 % 1 % (2 )% (3 )% 0 % (1 )%
 
North America region revenues - YoY % change s, u 2 % 3 % 5 % 0 % (8 )% (9 )% (3 )%
North America region transactions - YoY % change s, u 5 % 7 % 6 % 2 % (5 )% (6 )% (1 )%
 
Middle East and Africa region revenues - YoY % change s, v 2 % 4 % 6 % 3 % 0 % 3 % 3 %
Middle East and Africa region transactions - YoY % change s, v 4 % 3 % 9 % 9 % 4 % 6 % 7 %
 
APAC region revenues - YoY % change s, w 6 % 10 % 7 % 4 % 1 % 0 % 3 %
APAC region transactions - YoY % change s, w 9 % 9 % 6 % 5 % 2 % 0 % 3 %
 
LACA region revenues - YoY % change s, x 3 % 7 % 2 % 5 % 4 % 2 % 3 %
LACA region transactions - YoY % change s, x 5 % 5 % 8 % 5 % (2 )% (5 )% 1 %
 
westernunion.com region revenues - YoY % change s, y 39 % 37 % 39 % 23 % 22 % 16 % 24 %
westernunion.com region transactions - YoY % change s, y 35 % 29 % 41 % 35 % 40 % 46 % 41 %
 
International revenues (GAAP) - YoY % change z 2 % 5 % 4 % 0 % (2 )% (1 )% 0 %
International revenues (constant currency) - YoY % change h, z 3 % 4 % 4 % 3 % 1 % 0 % 2 %
International transactions - YoY % change z 5 % 5 % 6 % 4 % 0 % 0 % 3 %
International principal per transaction ($ - dollars) z 381 393 378 378 378 376 377
International principal per transaction - YoY % change z (1 )% 3 % (3 )% (5 )% (6 )% (1 )% (4 )%
International principal per transaction (constant currency) - YoY % change i, z (1 )% 1 % (2 )% (2 )% (2 )% (1 )% (2 )%
 
International revenues excl. US origination (GAAP) - YoY % change aa 2 % 6 % 4 % (1 )% (2 )% 1 % 0 %
International revenues excl. US origination (constant currency) - YoY % change j, aa 3 % 4 % 4 % 3 % 2 % 2 % 3 %
International transactions excl. US origination - YoY % change aa 5 % 6 % 7 % 5 % 2 % 3 % 4 %
 
Electronic channels revenues - YoY % change bb 36 % 35 % 38 % 26 % 25 % 22 % 27 %
 
Consumer-to-Business (C2B) Segment
Revenues (GAAP) - YoY % change 2 % 1 % 1 % (3 )% (5 )% (1 )% (2 )%
Revenues (constant currency) - YoY % change k 3 % 2 % 3 % 0 % (2 )% 2 % 1 %
Operating margin 27.3 % 23.9 % 26.5 % 22.4 % 25.3 % 17.0 % 22.8 %
 
Business Solutions (B2B) Segment
Revenues (GAAP) - YoY % change ** ** ** ** ** ** **
Revenues (constant currency) - YoY % change l ** ** ** ** ** ** **
Operating margin (2.8 )% (6.0 )% (17.0 )% (15.7 )% (7.9 )% (19.4 )% (14.9 )%
 
% of Total Company Revenue
Consumer-to-Consumer segment revenues 83 % 84 % 81 % 81 % 81 % 81 % 81 %
Consumer-to-Business segment revenues 11 % 11 % 11 % 11 % 10 % 11 % 11 %
Business Solutions segment revenues 5 % 3 % 6 % 6 % 7 % 6 % 6 %
Consumer-to-Consumer region revenues:
Europe and CIS revenues s, t 23 % 24 % 22 % 22 % 22 % 22 % 22 %
North America revenues s, u 21 % 22 % 21 % 21 % 20 % 19 % 20 %
Middle East and Africa revenues s, v 16 % 15 % 15 % 15 % 15 % 16 % 15 %
APAC revenues s, w 12 % 12 % 12 % 12 % 12 % 12 % 12 %
LACA revenues s, x 9 % 9 % 9 % 9 % 9 % 9 % 9 %
westernunion.com revenues s, y 2 % 2 % 2 % 2 % 3 % 3 % 3 %
Electronic channels revenues bb 3 % 3 % 3 % 3 % 4 % 4 % 4 %
Prepaid revenues cc 1 % 1 % 1 % 1 % 1 % 1 % 1 %
Marketing expense dd 4.4 % 4.1 % 3.8 % 3.7 % 4.2 % 5.1 % 4.2 %
 
* See page 16 of the press release for the applicable Note references and the reconciliation of non-GAAP financial measures.
 
** Calculation of growth percentage is not meaningful due to the impact of the TGBP acquisition in November 2011.
 
 
THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
           

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,

2012 2011 Change 2012 2011 Change
Revenues:
Transaction fees $ 1,057.2 $ 1,082.0 (2 )% $ 4,210.0 $ 4,220.2 0 %
Foreign exchange revenues 337.0 321.7 5 % 1,332.7 1,151.2 16 %
Other revenues   30.5     27.6   11 %   122.1     120.0   2 %
Total revenues 1,424.7 1,431.3 0 % 5,664.8 5,491.4 3 %
 
Expenses:
Cost of services (a) 817.4 792.4 3 % 3,194.2 3,102.0 3 %
Selling, general and administrative (b)   321.3     280.5   15 %   1,140.6     1,004.4   14 %
Total expenses   1,138.7     1,072.9   6 %   4,334.8     4,106.4   6 %
 
Operating income 286.0 358.4 (20 )% 1,330.0 1,385.0 (4 )%
 
Other income/(expense):
Interest income 1.4 1.6 (13 )% 5.5 5.2 6 %
Interest expense (45.5 ) (47.6 ) (4 )% (179.6 ) (181.9 ) (1 )%
Derivative gains/(losses), net (0.5 ) 18.7 (c) 0.5 14.0 (96 )%
Other income, net   3.4     21.5   (84 )%   12.4     52.3   (76 )%
Total other expense, net   (41.2 )   (5.8 ) (c)   (161.2 )   (110.4 ) 46 %
 
Income before income taxes 244.8 352.6 (31 )% 1,168.8 1,274.6 (8 )%
Provision for/(benefit from) income taxes   6.9     (99.7 ) (c)   142.9     109.2   31 %
 
Net income $ 237.9   $ 452.3   (47 )% $ 1,025.9   $ 1,165.4   (12 )%
 
Earnings per share:
Basic $ 0.40 $ 0.73 (45 )% $ 1.70 $ 1.85 (8 )%
Diluted $ 0.40 $ 0.73 (45 )% $ 1.69 $ 1.84 (8 )%
 
Weighted-average shares outstanding:
Basic 588.0 619.4 604.9 630.6
Diluted 590.2 621.7 607.4 634.2
 
Cash dividends declared per common share $ 0.125 $ 0.08 56 % $ 0.425 $ 0.31 37 %
 
__________
(a)   Cost of services includes productivity and cost-savings initiatives of $5.5 million for the three and twelve months ended December 31, 2012. Additionally, cost of services includes TGBP integration expense of $2.9 million and $8.9 million for the three and twelve months ended December 31, 2012, respectively, and restructuring and related expenses of $10.6 million for the twelve months ended December 31, 2011.
 
(b) Selling, general and administrative includes productivity and cost-savings initiatives of $25.4 million for the three and twelve months ended December 31, 2012. Additionally, selling, general and administrative includes TGBP integration expense of $8.7 million and $33.9 million for the three and twelve months ended December 31, 2012, respectively, and restructuring and related expenses of $36.2 million for the twelve months ended December 31, 2011.
 
(c) Calculation not meaningful.
 
   
THE WESTERN UNION COMPANY
CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except per share amounts)
 
 
December 31,
2012 2011
Assets
Cash and cash equivalents (a) $ 1,776.5 $ 1,370.9
Settlement assets 3,114.6 3,091.2

Property and equipment, net of accumulated depreciation of $384.5 and $429.7, respectively

196.1 198.1
Goodwill 3,179.7 3,198.9

Other intangible assets, net of accumulated amortization of $519.7 and $462.5, respectively

878.9 847.4
Other assets   319.9     363.4  
Total assets $ 9,465.7   $ 9,069.9  
 
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities $ 556.2 $ 535.0
Settlement obligations 3,114.6 3,091.2
Income taxes payable 218.3 302.4
Deferred tax liability, net 352.1 389.7
Borrowings 4,029.2 3,583.2
Other liabilities   254.7     273.6  
Total liabilities 8,525.1 8,175.1
 
Stockholders' equity:

Preferred stock, $1.00 par value; 10 shares authorized; no shares issued

Common stock, $0.01 par value; 2,000 shares authorized; 572.1 shares and 619.4 shares issued and outstanding as of December 31, 2012 and 2011, respectively

5.7 6.2
Capital surplus 332.8 247.1
Retained earnings 754.7 760.0
Accumulated other comprehensive loss   (152.6 )   (118.5 )
Total stockholders' equity   940.6     894.8  
Total liabilities and stockholders' equity $ 9,465.7   $ 9,069.9  
 
__________
(a)   Approximately $930 million was held by entities outside of the United States as of December 31, 2012.
 
 
THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
   

Twelve Months EndedDecember 31,

2012 2011
 
Cash Flows From Operating Activities
Net income $ 1,025.9 $ 1,165.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 61.7 61.0
Amortization 184.4 131.6
Deferred income tax (benefit)/provision (35.2 ) 21.2
Gain on revaluation of equity interests (49.9 )
Other non-cash items, net 77.2 29.8

Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:

Other assets (27.8 ) (27.7 )
Accounts payable and accrued liabilities 9.3 (43.0 )
Income taxes payable (a) (79.9 ) (62.3 )
Other liabilities   (30.3 )   (51.2 )
Net cash provided by operating activities 1,185.3 1,174.9
 
Cash Flows From Investing Activities
Capitalization of contract costs (174.9 ) (96.7 )
Capitalization of purchased and developed software (32.4 ) (13.0 )
Purchases of property and equipment (60.9 ) (52.8 )
Acquisition of businesses, net of cash acquired 10.0 (1,218.6 )
Net proceeds from settlement of foreign currency forward contracts related to acquisitions       20.8  
Net cash used in investing activities (258.2 ) (1,360.3 )
 
Cash Flows From Financing Activities
Proceeds from exercise of options 53.4 100.0
Cash dividends paid (254.2 ) (194.2 )
Common stock repurchased (766.5 ) (803.9 )
Net (repayments of)/proceeds from commercial paper (297.0 ) 297.0
Net proceeds from issuance of borrowings 742.8 696.3
Principal payments on borrowings       (696.3 )
Net cash used in financing activities   (521.5 )   (601.1 )
 
Net change in cash and cash equivalents 405.6 (786.5 )
Cash and cash equivalents at beginning of year   1,370.9     2,157.4  
Cash and cash equivalents at end of year $ 1,776.5   $ 1,370.9  
 
__________
(a)   The Company made tax payments of $92.4 million through the fourth quarter of 2012 due to the December 2011 agreement with the United States Internal Revenue Services ("IRS") resolving substantially all of the issues related to the restructuring of our international operations in 2003 ("IRS Agreement").
 
           
THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA
(Unaudited)
(in millions)
 

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,

2012 2011 Change 2012 2011 Change
Revenues:
Consumer-to-Consumer (C2C):
Transaction fees $ 890.4 $ 920.2 (3 )% $ 3,545.6 $ 3,580.2 (1 )%
Foreign exchange revenues 250.6 253.1 (1 )% 988.5 983.1 1 %
Other revenues   12.2     8.6   42 %   50.2     45.1   11 %
Total Consumer-to-Consumer: 1,153.2 1,181.9 (2 )% 4,584.3 4,608.4 (1 )%
 
Consumer-to-Business (C2B):
Transaction fees 144.1 146.3 (2 )% 573.6 581.8 (1 )%
Foreign exchange revenues 0.9 1.0 (10 )% 3.4 5.7 (40 )%
Other revenues   7.1     6.6   8 %   26.9     28.4   (5 )%
Total Consumer-to-Business: 152.1 153.9 (1 )% 603.9 615.9 (2 )%
 
Business Solutions (B2B) (a):
Transaction fees 8.9 2.8 (d) 34.9 5.9 (d)
Foreign exchange revenues 83.5 65.2 (d) 332.0 154.6 (d)
Other revenues   0.2     0.2   (d)   0.5     0.6   (d)
Total Business Solutions: 92.6 68.2 (d) 367.4 161.1 (d)
 
Other:
Total revenues 26.8 27.3 (2 )% 109.2 106.0 3 %
       
Total consolidated revenues $ 1,424.7   $ 1,431.3   0 % $ 5,664.8   $ 5,491.4   3 %
 
Operating income/(loss):
Consumer-to-Consumer $ 287.9 $ 331.3 (13 )% $ 1,266.9 $ 1,316.0 (4 )%
Consumer-to-Business 25.8 42.0 (39 )% 137.6 146.9 (6 )%
Business Solutions (b) (18.0 ) (1.9 ) (d) (54.8 ) (9.6 ) (d)
Other   (9.7 )   (13.0 ) (d)   (19.7 )   (21.5 ) (d)
Total segment operating income 286.0 358.4 (20 )% 1,330.0 1,431.8 (7 )%
Restructuring and related expenses (c)         (d)       (46.8 ) (d)
Total consolidated operating income $ 286.0   $ 358.4   (20 )% $ 1,330.0   $ 1,385.0   (4 )%
 
 
Operating income/(loss) margin:
Consumer-to-Consumer 25.0 % 28.0 % (3.0 )% 27.6 % 28.6 % (1.0 )%
Consumer-to-Business 17.0 % 27.3 % (10.3 )% 22.8 % 23.9 % (1.1 )%
Business Solutions (19.4 )% (2.8 )% (16.6 )% (14.9 )% (6.0 )% (8.9 )%
Total consolidated operating income margin 20.1 % 25.0 % (4.9 )% 23.5 % 25.2 % (1.7 )%
 
Depreciation and amortization:
Consumer-to-Consumer $ 39.0 $ 36.6 7 % $ 158.2 $ 141.0 12 %
Consumer-to-Business 3.4 4.5 (24 )% 14.7 18.8 (22 )%
Business Solutions 17.7 13.1 (d) 65.7 26.8 (d)
Other   1.9     1.2   58 %   7.5     4.7   60 %
Total segment depreciation and amortization 62.0 55.4 12 % 246.1 191.3 29 %
Restructuring and related expenses (c)         (d)       1.3   (d)
Total consolidated depreciation and amortization $ 62.0   $ 55.4   12 % $ 246.1   $ 192.6   28 %
 
__________
(a)   The significant change in Business Solutions revenues for the three and twelve months ended December 31, 2012 was primarily the result of the acquisition of Travelex Global Business Payments on November 7, 2011.
 
(b) Business Solutions operating loss includes TGBP integration expense of $11.6 million and $42.8 million for the three and twelve months ended December 31, 2012, respectively, and $4.8 million for the three and twelve months ended December 31, 2011.
 
(c) Restructuring and related expenses are excluded from the measurement of segment operating profit provided to the Chief Operating Decision Maker for purposes of assessing segment performance and decision making with respect to resource allocation.
 
(d) Calculation not meaningful.
 
 
THE WESTERN UNION COMPANY
NOTES TO KEY STATISTICS
(in millions, unless indicated otherwise)
(Unaudited)
             
 
Western Union's management believes the non-GAAP financial measures presented provide meaningful supplemental information regarding our operating results to assist management, investors, analysts, and others in understanding our financial results and to better analyze trends in our underlying business, because they provide consistency and comparability to prior periods.
 
A non-GAAP financial measure should not be considered in isolation or as a substitute for the most comparable GAAP financial measure. A non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliation to the corresponding GAAP financial measure, provide a more complete understanding of our business. Users of the financial statements are encouraged to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included below.
 
All adjusted year-over-year changes were calculated using prior year reported amounts, unless indicated otherwise.
 
 
 
4Q11 FY2011 1Q12 2Q12 3Q12 4Q12 FY2012
Consolidated Metrics
(a) Revenues, as reported (GAAP) $ 1,431.3 $ 5,491.4 $ 1,393.4 $ 1,425.1 $ 1,421.6 $ 1,424.7 $ 5,664.8
Foreign currency translation impact (m)   10.4     (38.0 )   8.1     34.6     37.7     13.4     93.8  
Revenues, constant currency adjusted $ 1,441.7   $ 5,453.4   $ 1,401.5   $ 1,459.7   $ 1,459.3   $ 1,438.1   $ 5,758.6  
Prior year revenues, as reported (GAAP) $ 1,357.0 $ 5,192.7 $ 1,283.0 $ 1,366.3 $ 1,410.8 $ 1,431.3 $ 5,491.4
Pro forma prior year revenues, TGBP adjusted (n) N/A N/A $ 1,338.0 $ 1,426.0 $ 1,474.8 $ 1,456.2 $ 5,695.0
Revenue change, as reported (GAAP) 5 % 6 % 9 % 4 % 1 % 0 % 3 %
Revenue change, constant currency adjusted 6 % 5 % 9 % 7 % 3 % 0 % 5 %
Pro forma revenue change, TGBP adjusted N/A N/A 4 % 0 % (4 )% (2 )% (1 )%
Pro forma revenue change, TGBP and constant currency adjusted (m) N/A N/A 5 % 2 % (1 )% (1 )% 1 %
 
(b) Operating income, as reported (GAAP) $ 358.4 $ 1,385.0 $ 332.5 $ 345.9 $ 365.6 $ 286.0 $ 1,330.0
Reversal of restructuring and related expenses (o) 46.8 N/A N/A N/A N/A N/A
Reversal of TGBP integration expense (p)   4.8     4.8     6.4     14.5     10.3     11.6     42.8  

Operating income, excl. restructuring and TGBP integration expense

$ 363.2   $ 1,436.6   $ 338.9   $ 360.4   $ 375.9   $ 297.6   $ 1,372.8  
Operating income margin, as reported (GAAP) 25.0 % 25.2 % 23.9 % 24.3 % 25.7 % 20.1 % 23.5 %
Operating income margin, excl. restructuring 25.0 % 26.1 % 23.9 % 24.3 % 25.7 % 20.1 % 23.5 %

Operating income margin, excl. restructuring and TGBP integration expense

25.4 % 26.2 % 24.3 % 25.3 % 26.4 % 20.9 % 24.2 %
 
(c) Operating income, as reported (GAAP) $ 358.4 $ 1,385.0 $ 332.5 $ 345.9 $ 365.6 $ 286.0 $ 1,330.0
Reversal of depreciation and amortization (q)   55.4     192.6     63.9     59.0     61.2     62.0     246.1  
EBITDA (q) $ 413.8 $ 1,577.6 $ 396.4 $ 404.9 $ 426.8 $ 348.0 $ 1,576.1
Reversal of restructuring and related expenses (o) 45.5 N/A N/A N/A N/A N/A

Reversal of TGBP integration expense excluding trademark amortization (p)

  4.8     4.8     6.4     13.0     9.5     11.4     40.3  
EBITDA, excl. restructuring and TGBP integration expense $ 418.6   $ 1,627.9   $ 402.8   $ 417.9   $ 436.3   $ 359.4   $ 1,616.4  
EBITDA margin 28.9 % 28.7 % 28.4 % 28.4 % 30.0 % 24.4 % 27.8 %
EBITDA margin, excl. restructuring and TGBP integration expense 29.2 % 29.6 % 28.9 % 29.3 % 30.7 % 25.2 % 28.5 %
 
(d) Net income, as reported (GAAP) $ 452.3 $ 1,165.4 $ 247.3 $ 271.2 $ 269.5 $ 237.9 $ 1,025.9

Reversal of restructuring and related expenses, net of income tax benefit (o)

      32.0     N/A     N/A     N/A     N/A     N/A  
Net income, restructuring adjusted $ 452.3 $ 1,197.4 $ 247.3 $ 271.2 $ 269.5 $ 237.9 $ 1,025.9
Reversal of IRS Agreement tax provision benefit (r)   (204.7 )   (204.7 )   N/A     N/A     N/A     N/A     N/A  
Net income, restructuring and IRS Agreement adjusted $ 247.6 $ 992.7 $ 247.3 $ 271.2 $ 269.5 $ 237.9 $ 1,025.9

Reversal of TGBP integration expense, net of income tax benefit (p)

  3.1     3.1     4.3     10.2     6.9     9.3     30.7  

Net income, restructuring, IRS Agreement and TGBP integration expense adjusted

$ 250.7   $ 995.8   $ 251.6   $ 281.4   $ 276.4   $ 247.2   $ 1,056.6  

Diluted earnings per share ("EPS"), as reported (GAAP) ($ - dollars)

$ 0.73 $ 1.84 $ 0.40 $ 0.44 $ 0.45 $ 0.40 $ 1.69

Impact from restructuring and related expenses, net of income tax benefit (o) ($ - dollars)

      0.05     N/A     N/A     N/A     N/A     N/A  
Diluted EPS, restructuring adjusted ($ - dollars) $ 0.73 $ 1.89 $ 0.40 $ 0.44 $ 0.45 $ 0.40 $ 1.69
Impact from IRS Agreement tax provision benefit (r) ($ - dollars)   (0.33 )   (0.32 )   N/A     N/A     N/A     N/A     N/A  
Diluted EPS, restructuring and IRS Agreement adjusted ($ - dollars) $ 0.40 $ 1.57 $ 0.40 $ 0.44 $ 0.45 $ 0.40 $ 1.69

Impact from TGBP integration expense, net of income tax benefit (p) ($ - dollars)

              0.02     0.01     0.02     0.05  

Diluted EPS, restructuring, IRS Agreement and TGBP integration expense adjusted ($ - dollars)

$ 0.40   $ 1.57   $ 0.40   $ 0.46   $ 0.46   $ 0.42   $ 1.74  
Diluted weighted-average shares outstanding 621.7 634.2 621.9 613.1 604.2 590.2 607.4

 

 

 

 

 

 

 

Consumer-to-Consumer Segment
(e) Revenues, as reported (GAAP) $ 1,181.9 $ 4,608.4 $ 1,124.6 $ 1,155.0 $ 1,151.5 $ 1,153.2 $ 4,584.3
Foreign currency translation impact (m)   8.0     (39.1 )   5.2     30.1     32.8     9.5     77.6  
Revenues, constant currency adjusted $ 1,189.9   $ 4,569.3   $ 1,129.8   $ 1,185.1   $ 1,184.3   $ 1,162.7   $ 4,661.9  
Prior year revenues, as reported (GAAP) $ 1,151.8 $ 4,383.4 $ 1,078.1 $ 1,155.1 $ 1,193.3 $ 1,181.9 $ 4,608.4
Revenue change, as reported (GAAP) 3 % 5 % 4 % 0 % (4 )% (2 )% (1 )%
Revenue change, constant currency adjusted 3 % 4 % 5 % 3 % (1 )% (2 )% 1 %
 
(f) Principal per transaction, as reported ($ - dollars) $ 349 $ 360 $ 346 $ 344 $ 342 $ 341 $ 343
Foreign currency translation impact (m) ($ - dollars)   2     (6 )   3     11     12     2     8  
Principal per transaction, constant currency adjusted ($ - dollars) $ 351   $ 354   $ 349   $ 355   $ 354   $ 343   $ 351  
Prior year principal per transaction, as reported ($ - dollars) $ 356 $ 355 $ 360 $ 365 $ 366 $ 349 $ 360
Principal per transaction change, as reported (2 )% 1 % (4 )% (6 )% (6 )% (2 )% (5 )%
Principal per transaction change, constant currency adjusted (1 )% 0 % (3 )% (3 )% (3 )% (2 )% (3 )%
 
(g) Cross-border principal, as reported ($ - billions) $ 18.5 $ 73.2 $ 17.5 $ 18.2 $ 17.6 $ 18.0 $ 71.3
Foreign currency translation impact (m) ($ - billions)   0.2     (1.2 )   0.2     0.6     0.7     0.1     1.6  
Cross-border principal, constant currency adjusted ($ - billions) $ 18.7   $ 72.0   $ 17.7   $ 18.8   $ 18.3   $ 18.1   $ 72.9  
Prior year cross-border principal, as reported ($ - billions) $ 18.1 $ 68.6 $ 17.1 $ 18.6 $ 19.0 $ 18.5 $ 73.2
Cross-border principal change, as reported 2 % 7 % 2 % (2 )% (7 )% (3 )% (3 )%
Cross-border principal change, constant currency adjusted 3 % 5 % 3 % 1 % (4 )% (2 )% 0 %
 
(h) International revenues, as reported (GAAP) $ 995.5 $ 3,855.8 $ 936.9 $ 964.3 $ 971.6 $ 985.0 $ 3,857.8
Foreign currency translation impact (m)   7.5     (38.0 )   4.9     29.2     32.4     10.2     76.7  
International revenues, constant currency adjusted $ 1,003.0   $ 3,817.8   $ 941.8   $ 993.5   $ 1,004.0   $ 995.2   $ 3,934.5  
Prior year international revenues, as reported (GAAP) $ 972.4 $ 3,669.2 $ 901.7 $ 962.9 $ 995.7 $ 995.5 $ 3,855.8
International revenue change, as reported (GAAP) 2 % 5 % 4 % 0 % (2 )% (1 )% 0 %
International revenue change, constant currency adjusted 3 % 4 % 4 % 3 % 1 % 0 % 2 %
 
(i) International principal per transaction, as reported ($ - dollars) $ 381 $ 393 $ 378 $ 378 $ 378 $ 376 $ 377
Foreign currency translation impact (m) ($ - dollars)   3     (8 )   4     14     15     2     9  

International principal per transaction, constant currency adjusted ($ - dollars)

$ 384   $ 385   $ 382   $ 392   $ 393   $ 378   $ 386  

Prior year international principal per transaction, as reported ($ - dollars)

$ 386 $ 382 $ 390 $ 399 $ 401 $ 381 $ 393
International principal per transaction change, as reported (1 )% 3 % (3 )% (5 )% (6 )% (1 )% (4 )%

International principal per transaction change, constant currency adjusted

(1 )% 1 % (2 )% (2 )% (2 )% (1 )% (2 )%
 
(j) International excl. US origination revenues, as reported (GAAP) $ 815.5 $ 3,158.5 $ 759.6 $ 784.1 $ 802.6 $ 824.7 $ 3,171.0
Foreign currency translation impact (m)   7.5     (38.0 )   4.9     29.2     32.4     10.2     76.7  

International excl. US origination revenues, constant currency adjusted

$ 823.0   $ 3,120.5   $ 764.5   $ 813.3   $ 835.0   $ 834.9   $ 3,247.7  

Prior year international excl. US origination revenues, as reported (GAAP)

$ 797.6 $ 2,990.9 $ 732.2 $ 788.6 $ 822.2 $ 815.5 $ 3,158.5

International excl. US origination revenues change, as reported (GAAP)

2 % 6 % 4 % (1 )% (2 )% 1 % 0 %

International excl. US origination revenues change, constant currency adjusted

3 % 4 % 4 % 3 % 2 % 2 % 3 %
 

Consumer-to-Business Segment

(k) Revenues, as reported (GAAP) $ 153.9 $ 615.9 $ 155.1 $ 149.4 $ 147.3 $ 152.1 $ 603.9
Foreign currency translation impact (m)   2.5     6.4     2.9     3.5     4.2     4.9     15.5  
Revenues, constant currency adjusted $ 156.4   $ 622.3   $ 158.0   $ 152.9   $ 151.5   $ 157.0   $ 619.4  
Prior year revenues, as reported (GAAP) N/A $ 610.7 $ 153.2 $ 153.5 $ 155.3 $ 153.9 $ 615.9
Revenue change, as reported (GAAP) 2 % 1 % 1 % (3 )% (5 )% (1 )% (2 )%
Revenue change, constant currency adjusted 3 % 2 % 3 % 0 % (2 )% 2 % 1 %
 
Business Solutions Segment
(l) Revenues, as reported (GAAP) $ 68.2 $ 161.1 $ 86.9 $ 92.5 $ 95.4 $ 92.6 $ 367.4
Foreign currency translation impact (m)   (0.1 )   (5.7 )   (0.1 )   0.9     0.6     (1.0 )   0.4  
Revenues, constant currency adjusted $ 68.1   $ 155.4   $ 86.8   $ 93.4   $ 96.0   $ 91.6   $ 367.8  
Prior year revenues, as reported (GAAP) N/A $ 106.7 $ 27.9 $ 31.4 $ 33.6 $ 68.2 $ 161.1
Pro forma prior year revenues, TGBP adjusted (n) N/A N/A $ 82.9 $ 91.1 $ 97.6 $ 93.1 $ 364.7
Revenue change, as reported (GAAP) ** ** ** ** ** ** **
Revenue change, constant currency adjusted ** ** ** ** ** ** **
Pro forma revenue change, TGBP adjusted N/A N/A 5 % 2 % (2 )% (1 )% 1 %
Pro forma revenue change, TGBP and constant currency adjusted (m) N/A N/A 4 % 4 % 0 % (2 )% 2 %
 
2013 Outlook Metrics
 
Operating income margin (GAAP) 20.0 %
Depreciation and amortization impact   4.5 %
EBITDA margin (q)   24.5 %
 
 
Operating cash flow (GAAP) $ 900
Payments on IRS Agreement (r)   100  
Operating cash flow, IRS Agreement adjusted $ 1,000  
 

Non-GAAP related notes:

(m)   Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar, net of foreign currency hedges, which would not have occurred if there had been a constant exchange rate. In pro forma calculations, also includes the currency impact of $0.3 million and $(2.6) million for the three and twelve months ended December 31, 2012, respectively, associated with the acquisition of Travelex Global Business Payments ("TGBP").
 
(n) Represents the pro forma incremental impact of TGBP on Consolidated and Business Solutions segment revenues. Pro forma revenues presents the results of operations of the Company and its Business Solutions segment as they may have appeared had the acquisition of TGBP occurred as of January 1, 2011. The pro forma information is provided for illustrative purposes only and does not purport to present what the actual results of operations would have been had the acquisition actually occurred on the date indicated. The results of operations for TGBP have been included in Consolidated and Business Solutions segment revenues from November 7, 2011, the date of acquisition.
 
(o) Restructuring and related expenses consist of direct and incremental expenses including the impact from fluctuations in exchange rates associated with restructuring and related activities, consisting of severance, outplacement and other related benefits; facility closure and migration of the Company's IT infrastructure; and other expenses related to the relocation of various operations to new or existing Company facilities and third-party providers, including hiring, training, relocation, travel, and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and leasehold improvement write-offs and the acceleration of depreciation and amortization. Restructuring and related expenses were not allocated to the segments.
 
(p) TGBP integration expense consists primarily of severance and other benefits, retention, direct and incremental expense consisting of facility relocation, consolidation and closures; IT systems integration; amortization of a transitional trademark license; and other expenses such as training, travel and professional fees. Integration expense does not include costs related to the completion of the TGBP acquisition.
 
(q) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) results from taking operating income and adjusting for depreciation and amortization expenses.
 
(r) Represents the impact from the tax benefit in December 2011 due to the agreement with the IRS resolving substantially all issues related to the restructuring of our international operations in 2003 of $204.7 million. The Company made tax payments of $92.4 million through the fourth quarter of 2012 and expects to make the majority of the remaining tax payments of approximately $100 million in 2013.
 

Other notes:

(s) 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, the Company splits 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 the Company’s websites (“westernunion.com”), 100% of the revenue and transactions are attributed to that business.
 
(t) Represents the Europe and the Commonwealth of Independent States ("CIS") region of our Consumer-to-Consumer segment.
 
(u) Represents the North America region of our Consumer-to-Consumer segment, including the United States, Mexico, and Canada.
 
(v) Represents the Middle East and Africa region of our Consumer-to-Consumer segment.
 
(w) Represents the Asia Pacific ("APAC") region of our Consumer-to-Consumer segment, including India, China, and South Asia.
 
(x) Represents the Latin America and the Caribbean ("LACA") region of our Consumer-to-Consumer segment.
 
(y) Represents transactions initiated on westernunion.com which are primarily paid out at Western Union agent locations in the respective regions.
 
(z) Represents transactions between and within foreign countries (excluding Canada and Mexico), transactions originated in the United States or Canada and paid elsewhere, and transactions originated outside the United States or Canada and paid in the United States or Canada. Excludes all transactions between or within the United States and Canada and all transactions to and from Mexico.
 
(aa) Represents transactions between and within foreign countries (excluding Canada and Mexico). Excludes all transactions originated in the United States and all transactions to and from Mexico.
 
(bb) Represents revenue generated from electronic channels, which include westernunion.com, account based money transfer and mobile money transfer (included in the various segments).
 
(cc) Represents revenue from prepaid services. This revenue is included within Other.
 
(dd) Marketing expense includes advertising, events, costs to administer loyalty programs, and the cost of employees dedicated to marketing activities.
 

WU-F, WU-G

8 of 9

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