Western Union 2007 Annual Report Download - page 30

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WESTERN UNION 2007 Annual Report
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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:
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Consumer-to-consumer — 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 inter-
national cross-border transfers — that is, the transfer of funds
from one country to another — and intra-country trans-
fers — that is, money transfers from one location to another
in the same country.
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Consumer-to-business — the processing of payments from
consumers to billers through our networks of third-party
agents and various electronic channels. The segment’s rev-
enue was primarily generated in the United States for all
periods presented.
Businesses not considered part of the segments described
above are categorized as “Other.” In 2007 and 2006, “Other”
also included recruiting and relocation expenses associated with
hiring senior management positions new to our company, and
consulting costs used to develop ongoing processes in connec-
tion with completing the spin-off; and expenses incurred in
connection with the development of certain new service offerings,
including costs to develop mobile money transfer and micro-
lending services.
The business segment measurements provided to, and evalu-
ated by, our chief operating decision maker are computed in
accordance with the following principles:
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The accounting policies of the reporting segments are the
same as those described in the summary of significant
accounting policies.
|| Corporate and other overhead is allocated to the segments
primarily based on a percentage of the segments’ revenue.
|| All items not included in operating income are excluded.
The following table sets forth the different components of seg-
ment revenues as a percentage of the consolidated totals for the
years ended December 31, 2007, 2006 and 2005.
Year Ended December 31, 2007 2006 2005
Consumer-to-consumer 83% 84% 82%
Consumer-to-business 15% 14% 15%
Other 2% 2% 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, 2007,
2006 and 2005.
Year Ended December 31, % Change
2007 2006
(in millions) 2007 2006 2005 vs. 2006 vs. 2005
REVENUES:
Transaction fees $3,286.6 $3,059.0 $2,724.0 7% 12%
Foreign exchange revenue 769.3 652.4 529.6 18% 23%
Other revenues 37.2 33.5 25.6 11% 31%
Total revenues $4,093.1 $3,744.9 $3,279.2 9% 14%
Operating income $1,078.3 $1,069.7 $1,047.9 1% 2%
Operating margin 26% 29% 32%
KEY INDICATORS:
Consumer-to-consumer transactions 167.7 147.1 118.5 14% 24%
During the year ended December 31, 2007 international, domestic and Mexico revenue represented approximately 65%, 11% and
7% of total consolidated revenue, respectively (or approximately 78%, 13% and 9% of our consumer-to-consumer revenue, respec-
tively). The table below sets forth performance indicators for the consumer-to-consumer segment for the years ended December
31, 2007, 2006 and 2005.