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Western Union Reports Second Quarter 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 June 30, 2013, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of approximately 520,000 agent locations in 200 countries and territories and approximately 115,000 ATMs. 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.

WU-F, WU-G

 
THE WESTERN UNION COMPANY KEY STATISTICS (Unaudited)
               
Notes* 2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 YTD 2Q13
 
Consolidated Metrics
Consolidated revenues (GAAP) - YoY % change 4 % 1 % 0 % 3 %

(5)

%

(3)

%

(4)

%

Consolidated revenues (constant currency) - YoY % change a 7 % 3 % 0 % 5 %

(4)

%

(2)

%

(3)

%

Agent locations 510,000 510,000 510,000 510,000 515,000 520,000 520,000
 
Consumer-to-Consumer (C2C) Segment
Revenues (GAAP) - YoY % change 0 %

(4)

%

(2)

%

(1)

%

(7)

%

(4)

%

(5)

%

Revenues (constant currency) - YoY % change c 3 %

(1)

%

(2)

%

1 %

(6)

%

(3)

%

(5)

%

Operating margin 28.5 % 29.4 % 25.0 % 27.6 % 25.4 % 23.2 % 24.3 %
 

Transactions (in millions)

58.49 57.47 58.65 230.98 55.44 60.26 115.70

Transactions - YoY% change

4 % 0 %

(1)

%

2 %

(2)

%

3 % 1 %
 
Total principal ($ - billions) 20.1 19.7 20.0 79.3 18.9 20.5 39.4
Principal per transaction ($ - dollars) 344 342 341 343 341 340 340
Principal per transaction - YoY % change

(6)

%

(6)

%

(2)

%

(5)

%

(1)

%

(1)

%

(1)

%

Principal per transaction (constant currency) - YoY % change d

(3)

%

(3)

%

(2)

%

(3)

%

(1)

%

(1)

%

(1)

%

 
Cross-border principal ($ - billions) 18.2 17.6 18.0 71.3 16.9 18.5 35.4
Cross-border principal - YoY % change

(2)

%

(7)

%

(3)

%

(3)

%

(3)

%

2 %

(1)

%

Cross-border principal (constant currency) - YoY % change e 1 %

(4)

%

(2)

%

0 %

(3)

%

2 %

0

%

 
Europe and CIS region revenues - YoY % change l, m

(8)

%

(9)

%

(5)

%

(6)

%

(6)

%

(4)

%

(5)

%

Europe and CIS region transactions - YoY % change l, m

(2)

%

(3)

%

0 %

(1)

%

(1)

%

3 % 1 %
 
North America region revenues - YoY % change l, n 0 %

(8)

%

(9)

%

(3)

%

(15)

%

(12)

%

(13)

%

North America region transactions - YoY % change l, n 2 %

(5)

%

(6)

%

(1)

%

(7)

%

(2)

%

(4)

%

 
Middle East and Africa region revenues - YoY % change l, o 3 % 0 % 3 % 3 % 0 % 0 % 0 %
Middle East and Africa region transactions - YoY % change l, o 9 % 4 % 6 % 7 % 4 % 6 % 5 %
 
APAC region revenues - YoY % change l, p 4 % 1 % 0 % 3 %

(5)

%

(4)

%

(4)

%

APAC region transactions - YoY % change l, p 5 % 2 % 0 % 3 % 0 % 5 % 2 %
 
LACA region revenues - YoY % change l, q 5 % 4 % 2 % 3 %

(7)

%

0 %

(3)

%

LACA region transactions - YoY % change l, q 5 %

(2)

%

(5)

%

1 %

(10)

%

(3)

%

(6)

%

 
westernunion.com region revenues - YoY % change l, r 23 % 22 % 16 % 24 % 13 % 25 % 19 %
westernunion.com region transactions - YoY % change l, r 35 % 40 % 46 % 41 % 60 % 68 % 64 %
 
International revenues - YoY % change s

(1)

%

(2)

%

1 % 0 %

(2)

%

0 %

(1)

%

International transactions - YoY % change s 5 % 2 % 3 % 4 % 1 % 6 % 3 %
International revenues - % of C2C segment revenues s 69 % 71 % 73 % 71 % 72 % 72 % 72 %
 
United States originated revenues - YoY % change t 1 %

(6)

%

(11)

%

(3)

%

(17)

%

(13)

%

(15)

%

United States originated transactions - YoY % change t 2 %

(4)

%

(5)

%

0 %

(5)

%

(1)

%

(3)

%

United States originated revenues - % of C2C segment revenues t 31 % 29 % 27 % 29 % 28 % 28 % 28 %
 
Electronic channels revenues - YoY % change u 26 % 25 % 22 % 27 % 18 % 26 % 22 %
 
Consumer-to-Business (C2B) Segment
Revenues (GAAP) - YoY % change

(3)

%

(5)

%

(1)

%

(2)

%

(1)

%

2 % 1 %
Revenues (constant currency) - YoY % change f 0 %

(2)

%

2 % 1 % 3 % 7 % 5 %
Operating margin 22.4 % 25.3 % 17.0 % 22.8 % 24.7 % 20.5 % 22.6 %
 
Business Solutions (B2B) Segment
Revenues (GAAP) - YoY % change ** ** ** ** 7 % 6 % 7 %
Revenues (constant currency) - YoY % change g ** ** ** ** 7 % 8 % 7 %
Operating margin

(15.7)

%

(7.9)

%

(19.4)

%

(14.9)

%

(6.7)

%

(7.4)

%

(7.1)

%

Depreciation and amortization ($ - millions) 15.4 17.4 17.7 65.7 15.3 15.0 30.3
TGBP integration expense ($ - millions) v 14.5 10.3 11.6 42.8 3.9 6.2 10.1
 
% of Total Company Revenue
Consumer-to-Consumer segment revenues 81 % 81 % 81 % 81 % 79 % 80 % 80 %
Consumer-to-Business segment revenues 11 % 10 % 11 % 11 % 12 % 11 % 11 %
Business Solutions segment revenues 6 % 7 % 6 % 6 % 7 % 7 % 7 %
Consumer-to-Consumer region revenues:
Europe and CIS revenues l, m 22 % 22 % 22 % 22 % 21 % 21 % 21 %
North America revenues l, n 21 % 20 % 19 % 20 % 19 % 19 % 19 %
Middle East and Africa revenues l, o 15 % 15 % 16 % 15 % 16 % 16 % 16 %
APAC revenues l, p 12 % 12 % 12 % 12 % 12 % 12 % 12 %
LACA revenues l, q 9 % 9 % 9 % 9 % 8 % 9 % 9 %
westernunion.com revenues l, r 2 % 3 % 3 % 3 % 3 % 3 % 3 %
Electronic channels revenues u 3 % 4 % 4 % 4 % 4 % 4 % 4 %
Prepaid revenues w 1 % 1 % 1 % 1 % 1 % 1 % 1 %
 
* See page 13 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (in millions, except per share amounts)
             

Three Months EndedJune 30,

Six Months EndedJune 30,

2013 2012 % Change 2013 2012 % Change
Revenues:
Transaction fees $ 1,016.3 $ 1,059.4

(4)

%

$ 1,994.3 $ 2,100.3

(5)

%

Foreign exchange revenues 338.0 334.6 1 % 650.4 657.2

(1)

%

Other revenues   31.6     31.1   2 %   66.6     61.0   9 %
Total revenues 1,385.9 1,425.1

(3)

%

2,711.3 2,818.5

(4)

%

 
Expenses:
Cost of services 811.7 797.5 2 % 1,571.1 1,580.5

(1)

%

Selling, general and administrative   297.4     281.7   6 %   566.5     559.6   1 %
Total expenses   1,109.1     1,079.2   3 %   2,137.6     2,140.1   0 %
 
Operating income 276.8 345.9

(20)

%

573.7 678.4

(15)

%

 
Other income/(expense):
Interest income 0.7 1.2

(42)

%

1.1 2.7

(59)

%

Interest expense (48.0 ) (45.1 ) 6 % (96.9 ) (89.5 ) 8 %
Derivative gains/(losses), net (0.2 ) (0.7 )

(71)

%

0.3 0.9

(67)

%

Other income, net   2.9     8.8  

(67)

%

  4.2     7.7  

(45)

%

Total other expense, net   (44.6 )   (35.8 ) 25 %   (91.3 )   (78.2 ) 17 %
 
Income before income taxes 232.2 310.1

(25)

%

482.4 600.2

(20)

%

Provision for income taxes   33.6     38.9  

(14)

%

  71.8     81.7  

(12)

%

 
Net income $ 198.6   $ 271.2  

(27)

%

$ 410.6   $ 518.5  

(21)

%

 
Earnings per share:
Basic $ 0.36 $ 0.44

(18)

%

$ 0.73 $ 0.84

(13)

%

Diluted $ 0.36 $ 0.44

(18)

%

$ 0.73 $ 0.84

(13)

%

 
Weighted-average shares outstanding:
Basic 555.7 610.9 561.7 615.0
Diluted 558.3 613.1 564.0 617.5
 
Cash dividends declared per common share $ 0.125 $ 0.10 25 % $ 0.25 $ 0.20 25 %
 
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions, except per share amounts)
   

  June 30,  2013

December 31,2012

Assets
Cash and cash equivalents (a) $ 1,395.4 $ 1,776.5
Settlement assets 3,462.8 3,114.6
Property and equipment, net of accumulated depreciation of
$407.2 and $384.5, respectively 203.6 196.1
Goodwill 3,176.3 3,179.7
Other intangible assets, net of accumulated amortization of
$577.1 and $519.7, respectively 897.6 878.9
Other assets   453.7     319.9  
Total assets $ 9,589.4   $ 9,465.7  
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities $ 541.5 $ 556.2
Settlement obligations 3,462.8 3,114.6
Income taxes payable 210.7 218.3
Deferred tax liability, net 350.5 352.1
Borrowings 3,717.3 4,029.2
Other liabilities   378.0     254.7  
Total liabilities 8,660.8 8,525.1
Stockholders' equity:
Preferred stock, $1.00 par value; 10 shares authorized;
no shares issued
Common stock, $0.01 par value; 2,000 shares authorized;

551.8 shares and 572.1 shares issued and outstanding as of

June 30, 2013 and December 31, 2012, respectively 5.5 5.7
Capital surplus 354.0 332.8
Retained earnings 707.4 754.7
Accumulated other comprehensive loss   (138.3 )   (152.6 )
Total stockholders' equity   928.6     940.6  
Total liabilities and stockholders' equity $ 9,589.4   $ 9,465.7  
__________
(a)   Approximately $750 million was held by entities outside of the United States as of June 30, 2013.
 
THE WESTERN UNION COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)
   

Six Months EndedJune 30,

2013   2012  
 
Cash Flows From Operating Activities
Net income $ 410.6 $ 518.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 31.6 31.3
Amortization 97.7 91.6
Other non-cash items, net 7.6 1.2
Increase/(decrease) in cash, excluding the effects of acquisitions, resulting from changes in:
Other assets (26.8 ) (19.8 )
Accounts payable and accrued liabilities (16.3 ) (45.3 )
Income taxes payable (a) (13.2 ) (111.1 )
Other liabilities   (13.7 )   (20.7 )
Net cash provided by operating activities 477.5 445.7
 
Cash Flows From Investing Activities
Capitalization of contract costs (42.1 ) (78.3 )
Capitalization of purchased and developed software (28.8 ) (15.6 )
Purchases of property and equipment and other (35.8 ) (27.4 )
Acquisition of business, net       (4.8 )
Net cash used in investing activities (106.7 ) (126.1 )
Cash Flows From Financing Activities
Proceeds from exercise of options 3.9 45.0
Cash dividends paid (139.6 ) (122.3 )
Common stock repurchased (316.2 ) (302.4 )
Net proceeds from commercial paper 93.0
Principal payments on borrowings   (300.0 )    
Net cash used in financing activities   (751.9 )   (286.7 )
Net change in cash and cash equivalents (381.1 ) 32.9
Cash and cash equivalents at beginning of period   1,776.5     1,370.9  
Cash and cash equivalents at end of period $ 1,395.4   $ 1,403.8  
__________
(a)   The Company made tax payments of approximately $100 million through the second quarter of 2012 due to the December 2011 agreement with the United States Internal Revenue Service ("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 EndedJune 30,

 

Six Months EndedJune 30,

2013   2012   % Change 2013   2012   % Change
Revenues:
Consumer-to-Consumer (C2C):
Transaction fees $ 848.4 $ 893.6

(5)

%

$ 1,658.0 $ 1,765.6

(6)

%

Foreign exchange revenues 246.0 248.9

(1)

%

471.6 488.3

(3)

%

Other revenues   14.4     12.5   15 %   29.4     25.7   14 %
Total Consumer-to-Consumer: 1,108.8 1,155.0

(4)

%

2,159.0 2,279.6

(5)

%

Consumer-to-Business (C2B):
Transaction fees 145.1 142.1 2 % 290.9 289.8 0 %
Foreign exchange and other revenues   7.9     7.3   8 %   15.8     14.7   7 %
Total Consumer-to-Business: 153.0 149.4 2 % 306.7 304.5 1 %
Business Solutions (B2B):
Foreign exchange revenues 88.7 82.5 8 % 172.7 162.6 6 %
Transaction fees and other revenues   9.6     10.0  

(4)

%

  18.4     16.8   10 %
Total Business Solutions: 98.3 92.5 6 % 191.1 179.4 7 %
Other:
Total revenues   25.8     28.2  

(9)

%

  54.5     55.0  

(1)

%

 
Total consolidated revenues $ 1,385.9   $ 1,425.1  

(3)

%

$ 2,711.3   $ 2,818.5  

(4)

%

Operating income/(loss):
Consumer-to-Consumer $ 257.3 $ 328.9

(22)

%

$ 524.4 $ 640.2

(18)

%

Consumer-to-Business 31.4 33.5

(6)

%

69.3 74.6

(7)

%

Business Solutions (a) (7.3 ) (14.5 ) (b) (13.5 ) (29.3 ) (b)
Other   (4.6 )   (2.0 ) (b)   (6.5 )   (7.1 ) (b)
Total consolidated operating income $ 276.8   $ 345.9  

(20)

%

$ 573.7   $ 678.4  

(15)

%

Operating income/(loss) margin:
Consumer-to-Consumer 23.2 % 28.5 %

(5.3)

%

24.3 % 28.1 %

(3.8)

%

Consumer-to-Business 20.5 % 22.4 %

(1.9)

%

22.6 % 24.5 %

(1.9)

%

Business Solutions

(7.4)

%

(15.7)

%

8.3 %

(7.1)

%

(16.3)

%

9.2 %
Total consolidated operating income margin 20.0 % 24.3 %

(4.3)

%

21.2 % 24.1 %

(2.9)

%

Depreciation and amortization:
Consumer-to-Consumer $ 45.0 $ 37.9 19 % $ 86.9 $ 80.7 8 %
Consumer-to-Business 4.1 3.8 8 % 7.9 7.7 3 %
Business Solutions 15.0 15.4

(3)

%

30.3 30.6

(1)

%

Other   2.3     1.9   21 %   4.2     3.9   8 %
Total consolidated depreciation and amortization $ 66.4   $ 59.0   13 % $ 129.3   $ 122.9   5 %
__________
(a)   Business Solutions operating loss includes TGBP integration expense of $6.2 million and $10.1 million for the three and six months ended June 30, 2013, respectively and $14.5 million and $20.9 million for the three and six months ended June 30, 2012, respectively.
 
(b) 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.
 
2Q12 3Q12 4Q12 FY2012 1Q13 2Q13 YTD 2Q13
Consolidated Metrics

(a)

Revenues, as reported (GAAP)

$ 1,425.1 $ 1,421.6 $ 1,424.7 $ 5,664.8 $ 1,325.4 $ 1,385.9 $ 2,711.3
Foreign currency translation impact (h)   34.6     37.7     13.4     93.8     12.3     14.9     27.2  
Revenues, constant currency adjusted $ 1,459.7   $ 1,459.3   $ 1,438.1   $ 5,758.6   $ 1,337.7   $ 1,400.8   $ 2,738.5  
Prior year revenues, as reported (GAAP) $ 1,366.3 $ 1,410.8 $ 1,431.3 $ 5,491.4 $ 1,393.4 $ 1,425.1 $ 2,818.5
Pro forma prior year revenues, TGBP adjusted (i) $ 1,426.0 $ 1,474.8 $ 1,456.2 $ 5,695.0 N/A N/A N/A
Revenue change, as reported (GAAP) 4 % 1 % 0 % 3 %

(5)

%

(3)

%

(4)

%

Revenue change, constant currency adjusted 7 % 3 % 0 % 5 %

(4)

%

(2)

%

(3)

%

Pro forma revenue change, TGBP adjusted 0 %

(4)

%

(2)

%

(1)

%

N/A N/A N/A
Pro forma revenue change, TGBP and constant currency adjusted 2 %

(1)

%

(1)

%

1 % N/A N/A N/A
 

(b)

Operating income, as reported (GAAP)

$ 345.9 $ 365.6 $ 286.0 $ 1,330.0 $ 296.9 $ 276.8 $ 573.7
Reversal of depreciation and amortization (j)   59.0     61.2     62.0     246.1     62.9     66.4     129.3  
EBITDA (j) $ 404.9   $ 426.8   $ 348.0   $ 1,576.1   $ 359.8   $ 343.2   $ 703.0  
Operating income margin, as reported (GAAP) 24.3 % 25.7 % 20.1 % 23.5 % 22.4 % 20.0 % 21.2 %
EBITDA margin 28.4 % 30.0 % 24.4 % 27.8 % 27.1 % 24.8 % 25.9 %
 
Consumer-to-Consumer Segment

(c)

Revenues, as reported (GAAP)

$ 1,155.0 $ 1,151.5 $ 1,153.2 $ 4,584.3 $ 1,050.2 $ 1,108.8 $ 2,159.0
Foreign currency translation impact (h)   30.1     32.8     9.5     77.6     6.1     6.1     12.2  
Revenues, constant currency adjusted $ 1,185.1   $ 1,184.3   $ 1,162.7   $ 4,661.9   $ 1,056.3   $ 1,114.9   $ 2,171.2  
Prior year revenues, as reported (GAAP) $ 1,155.1 $ 1,193.3 $ 1,181.9 $ 4,608.4 $ 1,124.6 $ 1,155.0 $ 2,279.6
Revenue change, as reported (GAAP) 0 %

(4)

%

(2)

%

(1)

%

(7)

%

(4)

%

(5)

%

Revenue change, constant currency adjusted 3 %

(1)

%

(2)

%

1 %

(6)

%

(3)

%

(5)

%

 

(d)

Principal per transaction, as reported ($ - dollars)

$ 344 $ 342 $ 341 $ 343 $ 341 $ 340 $ 340
Foreign currency translation impact (h) ($ - dollars)   11     12     2     8    

    1     1  
Principal per transaction, constant currency adjusted ($ - dollars) $ 355   $ 354   $ 343   $ 351   $ 341   $ 341   $ 341  
Prior year principal per transaction, as reported ($ - dollars) $ 365 $ 366 $ 349 $ 360 $ 346 $ 344 $ 345
Principal per transaction change, as reported

(6)

%

(6)

%

(2)

%

(5)

%

(1)

%

(1)

%

(1)

%

Principal per transaction change, constant currency adjusted

(3)

%

(3)

%

(2)

%

(3)

%

(1)

%

(1)

%

(1)

%

 

(e)

Cross-border principal, as reported ($ - billions)

$ 18.2 $ 17.6 $ 18.0 $ 71.3 $ 16.9 $ 18.5 $ 35.4
Foreign currency translation impact (h) ($ - billions)   0.6     0.7     0.1     1.6     0.1    

    0.1  
Cross-border principal, constant currency adjusted ($ - billions) $ 18.8   $ 18.3   $ 18.1   $ 72.9   $ 17.0   $ 18.5   $ 35.5  
Prior year cross-border principal, as reported ($ - billions) $ 18.6 $ 19.0 $ 18.5 $ 73.2 $ 17.5 $ 18.2 $ 35.7
Cross-border principal change, as reported

(2)

%

(7)

%

(3)

%

(3)

%

(3)

%

2 %

(1)

%

Cross-border principal change, constant currency adjusted 1 %

(4)

%

(2)

%

0 %

(3)

%

2 % 0 %
 
Consumer-to-Business Segment

(f)

Revenues, as reported (GAAP)

$ 149.4 $ 147.3 $ 152.1 $ 603.9 $ 153.7 $ 153.0 $ 306.7
Foreign currency translation impact (h)   3.5     4.2     4.9     15.5     5.9     7.2     13.1  
Revenues, constant currency adjusted $ 152.9   $ 151.5   $ 157.0   $ 619.4   $ 159.6   $ 160.2   $ 319.8  
Prior year revenues, as reported (GAAP) $ 153.5 $ 155.3 $ 153.9 $ 615.9 $ 155.1 $ 149.4 $ 304.5
Revenue change, as reported (GAAP)

(3)

%

(5)

%

(1)

%

(2)

%

(1)

%

2 % 1 %
Revenue change, constant currency adjusted 0 %

(2)

%

2 % 1 % 3 % 7 % 5 %
 
Business Solutions Segment

(g)

Revenues, as reported (GAAP)

$ 92.5 $ 95.4 $ 92.6 $ 367.4 $ 92.8 $ 98.3 $ 191.1
Foreign currency translation impact (h)   0.9     0.6     (1.0 )   0.4     0.2     1.2     1.4  
Revenues, constant currency adjusted $ 93.4   $ 96.0   $ 91.6   $ 367.8   $ 93.0   $ 99.5   $ 192.5  
Prior year revenues, as reported (GAAP) $ 31.4 $ 33.6 $ 68.2 $ 161.1 $ 86.9 $ 92.5 $ 179.4
Pro forma prior year revenues, TGBP adjusted (i) $ 91.1 $ 97.6 $ 93.1 $ 364.7 N/A N/A N/A
Revenue change, as reported (GAAP) ** ** ** ** 7 % 6 % 7 %
Revenue change, constant currency adjusted ** ** ** ** 7 % 8 % 7 %
Pro forma revenue change, TGBP adjusted 2 %

(2)

%

(1)

%

1 % N/A N/A N/A
Pro forma revenue change, TGBP and constant currency adjusted 4 % 0 %

(2)

%

2 % N/A N/A N/A
 
2013 Outlook Metrics
Operating income margin (GAAP) 20.0 %
Depreciation and amortization impact   4.5 %
EBITDA margin (j)   24.5 %
 
Operating cash flow (GAAP) $ 900
Payments on IRS Agreement (k)   100  
Operating cash flow, IRS Agreement adjusted $ 1,000  
 

Non-GAAP related notes:

(h)       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.
 
(i) Represents the pro forma incremental impact of Travelex Global Business Payments ("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.
 
(j) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) results from taking operating income and adjusting for depreciation and amortization expenses.
 
(k) Represents the remaining tax payments of approximately $100 million the Company expects to make due to the December 2011 agreement with the IRS resolving substantially all of the issues related to the restructuring of our international operations in 2003.
 

Other notes:

(l) 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.
 
(m) Represents the Europe and the Commonwealth of Independent States ("CIS") region of our Consumer-to-Consumer segment.
 
(n) Represents the North America region of our Consumer-to-Consumer segment, including the United States, Mexico, and Canada.
 
(o) Represents the Middle East and Africa region of our Consumer-to-Consumer segment.
 
(p) Represents the Asia Pacific ("APAC") region of our Consumer-to-Consumer segment, including India, China, and South Asia.
 
(q) Represents the Latin America and the Caribbean ("LACA") region of our Consumer-to-Consumer segment.
 
(r) Represents transactions initiated on westernunion.com which are primarily paid out at Western Union agent locations in the respective regions.
 
(s) Represents transactions between and within foreign countries (including Canada and Mexico). Excludes all transactions originated in the United States.
 
(t) Represents transactions originated in the United States, including intra-country transactions.
 
(u) Represents revenue generated from electronic channels, which include westernunion.com, account based money transfer and mobile money transfer (included in the various segments).
 
(v) TGBP integration expense consists 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.
 
(w) Represents revenue from prepaid services. This revenue is included within Other.
 




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