Western Union 2006 Annual Report Download - page 49

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Management’s Discussion and Analysis of Financial Condition and Results of Operations 47
|| Segment Discussion
We manage our business around the consumers we serve
and the types of services we offer. Each of our two
segments addresses a different combination of consumer
groups, distribution networks and services offered. Our
segments are:
||
CONSUMER-TO-CONSUMER
—
provides money transfer
services between consumers, primarily through
a global network of third-party agents using our
multi-currency, real-time money transfer processing
systems. This service is available for both
international cross-border transfers
—
that is, the
transfer of funds from one country to another
—
and
intra-country transfers
—
that is, money transfers
from one location to another in the same country.
|| CONSUMER-TO-BUSINESS
—
focuses on payments from
consumers to billers through our networks of third-
party agents and various electronic channels. While
we continue to pursue international expansion of
our offerings in select markets, as demonstrated
by our December 2006 acquisition of SEPSA,
substantially all of the segment’s 2006 revenue was
generated in the United States.
Businesses not considered part of the segments
described above are categorized as “Other.” Also included
in “Other” are recruiting and relocation expenses associated
with hiring senior management positions new to our
company and consulting costs used to develop ongoing
processes in connection with completing the spin-off.
The business segment measurements provided to,
and evaluated by, our chief operating decision maker are
computed in accordance with the following principles:
|| The accounting policies of the reporting
segments are the same as those described in the
summary of significant accounting policies.
|| Segment revenue includes intersegment revenue.
|| Corporate and other overhead is allocated to
the segments primarily based on a percentage
of the segments’ revenue.
|| Exclude all items not included in operating
income.
The following table sets forth the different components of segment revenues as a percentage of the consolidated
totals for the years ended December 31, 2006, 2005 and 2004.
Years Ended December 31, 2006 2005 2004
Consumer-to-consumer 84% 82% 81%
Consumer-to-business 14% 15% 16%
Other 2% 3% 3%
Total 100% 100% 100%
Consumer-to-Consumer Segment
The following table sets forth our consumer-to-consumer segment results of operations for the years ended December
31, 2006, 2005 and 2004.
Years Ended December 31, % Change
2006 2005
(in millions) 2006 2005 2004 vs. 2005 vs. 2004
REVENUES:
Transaction fees $3,059.0 $2,724.0 $2,390.9 12% 14%
Foreign exchange revenue 652.4 529.6 448.3 23% 18%
Other revenues 33.5 25.6 22.5 31% 14%
Total revenues $3,744.9 $3,279.2 $2,861.7 14% 15%
Operating income $1,069.7 $1,047.9 $ 886.5 2% 18%
Operating margin 29% 32% 31%
KEY INDICATORS:
Consumer-to-consumer transactions 147.1 118.5 96.7 24% 23%