Western Union 2007 Annual Report Download - page 71

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Notes to Consolidated Financial Statements
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11. 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, 2007
Unrealized gains (losses) on investment securities $ 1.2 $ (2.3) $ 0.8 $ (1.5) $ (0.3)
Unrealized gains (losses) on hedging activities (29.3) (24.6) 10.2 (14.4) (43.7)
Foreign currency translation adjustment 18.0 8.1 (2.8) 5.3 23.3
Minimum pension liability (63.4) 24.5 (9.2) 15.3 (48.1)
$(73.5) $ 5.7 $(1.0) $ 4.7 $(68.8)
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)
Cash Dividends Paid
During the fourth quarter of 2007, the Company’s Board of
Directors declared a quarterly cash dividend of $0.04 per common
share, representing $30.0 million which was paid on December
28, 2007 to shareholders of record on December 14, 2007.
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
Decem ber 2006.
Share Repurchases
During December 2007, the Company’s Board of Directors
adopted resolutions to retire all of its existing treasury stock,
thereby restoring the status of the Company’s common stock
held in treasury as “authorized but unissued”. The resulting impact
to the Company’s Consolidated Balance Sheet was a decrease
in “Treasury stock” of $462.0 million, “Common stock” of $0.2
million and “Retained earnings” of $461.8 million. There is no
change to the Company’s overall equity position as a result of
this retirement. All shares repurchased by the Company subse-
quent to this resolution will also be retired at the time such shares
are reacquired.
In September 2006, the Company’s Board of Directors autho-
rized the purchase of up to $1.0 billion of the Company’s common
stock through December 31, 2008. In December, 2007, the
Company’s Board of Directors authorized the purchase of up to
an additional $1.0 billion of the Company’s common stock through
December 31, 2009.
During the years ended December 31, 2007 and 2006, 34.7
million and 0.9 million shares, respectively, have been repurchased
for $726.8 million and $19.9 million, respectively. As of December
31, 2007, $1.25 billion remains available for purchases under
the Company’s two authorized share repurchase programs.
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12. Derivative Financial Instruments
The Company is exposed to foreign currency risk resulting from
fl uctuations in exchange rates, primarily the euro, British pound
and Canadian dollar related to forecasted revenues and also
on settlement assets and obligations denominated in these
and other currencies. 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 derivative activities. The Company uses longer-term
foreign currency forward contracts, generally with maturities of
three years or less, to mitigate some of the risk related to changes
in the exchange rate between forecasted revenues denominated
in other currencies and the United States dollar. Short-term foreign
currency forward contracts, generally with maturities from a few
days up to three weeks, are utilized to offset foreign exchange
rate fl uctuations 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 fl uctuations on forecasted debt issuances. Interest
rate swaps are also used to swap a portion of certain fi xed rate
debt instruments to a fl oating rate.