Western Union 2006 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2006 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

WESTERN UNION 2006 Annual Report 86
Cash Dividends Paid
During the fourth quarter of 2006, the Company’s Board
of Directors declared a quarterly cash dividend of $0.01
per common share representing $7.7 million which was
paid in December 2006.
Share Repurchases
In S epte mbe r 2 006 , t he Co mpa n y’s Bo ard o f
Directors authorized the purchase of up to $1 billion of
the Company’s common stock on the open market
through December 31, 2008. During 2006, the Company
repurchased 0.9 million shares of common stock at an
average price of $22.79 per share.
|| 14. Derivative Financial
Instruments
The Company is exposed to foreign currency risk resulting
from fluctuations in exchange rates, primarily the euro and
British pound, related to forecasted revenues and also on
settlement assets and obligations. Additionally, the Company
is exposed to interest rate risk related to changes in market
rates both prior to and subsequent to the issuance of debt.
The Company’s policy is to minimize its exposures related
to adverse changes in foreign currency exchange rates
and interest rates, while prohibiting speculative or market-
making activities. The Company uses longer-term foreign
currency forward contracts, generally with maturities of
one year or less, to mitigate some of the risk related to
forecasted revenues. Short-term foreign currency forward
contracts, generally with maturities from a few days up to
three weeks, are utilized to offset foreign exchange rate
fluctuations on settlement assets and settlement obligations
between transaction initiation and settlement. Forward
starting interest rate swaps were utilized in 2006 to reduce
the risk of interest rate fluctuations on forecasted debt
issuances.
|| 13. Stockholders’ Equity
Accumulated other comprehensive loss
The income tax effects allocated to and the cumulative balance of each component of accumulated other comprehensive
loss are as follows (in millions):
Beginning Pretax Gain Tax Benefit Net of Tax Ending
Balance (Loss) (Expense) Amount Balance
DECEMBER 31, 2006
Unrealized gains (losses) on investment securities $ 1.6 $ (0.7) $ 0.3 $ (0.4) $ 1.2
Unrealized gains (losses) on hedging activities — (31.0) 1.7 (29.3) (29.3)
Foreign currency translation adjustment 10.5 11.7 (4.2) 7.5 18.0
Minimum pension liability (74.2) 12.7 (1.9) 10.8 (63.4)
$(62.1) $ (7.3) $(4.1) $(11.4) $(73.5)
DECEMBER 31, 2005
Unrealized gains (losses) on investment securities $ 3.8 $ (3.4) $ 1.2 $ (2.2) $ 1.6
Foreign currency translation adjustment 15.3 (7.2) 2.4 (4.8) 10.5
Minimum pension liability (79.1) 7.6 (2.7) 4.9 (74.2)
$(60.0) $ (3.0) $ 0.9 $ (2.1) $(62.1)
DECEMBER 31, 2004
Unrealized gains (losses) on investment securities $ 6.8 $ (4.6) $ 1.6 $ (3.0) $ 3.8
Foreign currency translation adjustment 13.6 2.7 (1.0) 1.7 15.3
Minimum pension liability (65.5) (20.8) 7.2 (13.6) (79.1)
$(45.1) $(22.7) $ 7.8 $(14.9) $(60.0)