Western Union 2006 Annual Report Download - page 87

Notes to Consolidated Financial Statements 85
The maturities of debt securities at September 30, 2006
range from less than one year to 60 years with a weighted-
average maturity of 15 years.
Western Union employs a total return investment
approach whereby a mix of equities and fixed income
investments are used in an effort to maximize the long-term
return of plan assets for a prudent level of risk. Risk
tolerance is established through careful consideration of
plan liabilities and plan funded status. The investment
portfolio contains a diversified blend of equity and fixed-
income investments. Furthermore, equity investments are
diversified across U.S. and non-U.S. stocks, as well as
securities deemed to be growth, value, and small and large
capitalizations. Other assets, primarily private equity, are
used judiciously in an effort to enhance long-term returns
while improving portfolio diversification. Investment risk
is measured and monitored on an ongoing basis through
quarterly investment portfolio reviews, annual liability
measurements, and periodic asset and liability studies.
The estimated future benefit payments are expected
to be $45.2 million in 2007, $44.1 million in 2008,
$42.9 million in 2009, $41.8 million in 2010, $40.6 million
in 2011 and $183.0 million in 2012 through 2016.
Western Union administers a post-retirement health
care plan to union employees that was in effect when First
Data acquired FFMC. Generally, retired employees bear
the entire cost of the premiums. Western Union also offers
a short-term disability plan for union employees. The
Company’s obligations pursuant to these plans are
immaterial.
|| 12. Operating Lease
Commitments
Western Union leases certain real properties for use as
customer service centers and administrative and sales
offices. Western Union also leases data communications
terminals, computers and office equipment. Certain of
these leases contain renewal options and escalation
provisions. These leases include certain sublease
agreements with First Data, as discussed in Note 4. Total
rent expense under operating leases was $29.2 million,
$28.6 million, and $26.3 million during the years ended
December 31, 2006, 2005 and 2004, respectively.
As of December 31, 2006, the minimum aggregate
rental commitments under all noncancelable operating
leases, net of sublease income commitments aggregating
$9.1 million through 2011, are as follows (in millions):
Year Ending December 31,
2007 $20.5
2008 16.8
2009 9.2
2010 7.2
2011 5.9
Thereafter 19.7
Total future minimum lease payments $79.3
Certain members of the Company’s Board of Directors and management are affiliated with companies whose
securities are held in Western Union’s pension trust, which is managed by independent asset managers. Therefore,
these affiliated companies are considered related parties. The following table details plan assets invested in these related
party securities as of September 30, 2006 and 2005:
2006
Fair Market
Shares Value % of Total
Plan Common Stock Holdings (in thousands) (in millions) Plan Assets
Altria Group, Inc. common stock 11.4 $0.9 0.21%
First Data Corporation common stock 14.9 $0.3 0.08%
The Western Union Company common stock 14.9 $0.3 0.07%
Bank of New York Company Inc. common stock 23.6 $0.8 0.20%
Fair Market
Principal Value % of Total
Plan Corporate Bond Holdings (in millions) (in millions) Plan Assets
Allstate Corporation corporate bond $0.5 $0.6 0.14%
Kraft Foods corporate bond $0.6 $0.7 0.16%
New York Life Insurance Company corporate bond $0.8 $0.8 0.19%
2005
Fair Market
Shares Value % of Total
Plan Asset Holdings (in thousands) (in millions) Plan Assets
First Data Corporation common stock 18.1 $0.7 0.16%
Bank of New York Company Inc. common stock 23.8 $0.7 0.16%
Hewitt Associates, Inc. common stock 5.5 $0.1 0.02%