Western Union 2007 Annual Report Download - page 75

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Notes to Consolidated Financial Statements
Notes
On September 29, 2006, the Company issued to First Data $1.0
billion aggregate principal amount of unsecured notes maturing
on October 1, 2016 (the “2016 Notes”) in partial consideration
for the contribution by First Data to the Company of its money
transfer and consumer payments businesses in connection with
the Spin-off.
Interest on the 2016 Notes is payable semiannually on April 1
and October 1 each year based on a fi xed per annum interest
rate of 5.930%. The indenture governing the 2016 Notes contains
covenants that, among other things, limit or restrict the ability of
the Company and other signifi cant subsidiaries to grant certain
types of security interests, incur debt (in the case of signifi cant
subsidiaries) or enter into sale and leaseback transactions. The
Company may redeem the 2016 Notes at any time prior to maturity
at the applicable treasury rate plus 20 basis points.
On November 17, 2006, the Company issued $2 billion aggre-
gate principal amount of the Company’s unsecured fi xed and
fl oating rate notes, comprised of $500 million aggregate principal
amount of the Company’s Floating Rate Notes due 2008 (the
“Floating Rate Notes”), $1 billion aggregate principal amount of
5.400% Notes due 2011 (the “2011 Notes”) and $500 million
aggregate principal amount of 6.200% Notes due 2036 (the
“2036 Notes”).
Interest with respect to the 2011 Notes and 2036 Notes is
payable semiannually on May 17 and November 17 each year
based on fi xed per annum interest rates of 5.400% and 6.200%,
respectively. Interest with respect to the Floating Rate Notes is
payable quarterly in arrears on February 17, May 17, August 17,
and November 17 each year at a per annum rate equal to the
three month LIBOR plus 15 basis points, reset quarterly (5.06%
and 5.52% at December 31, 2007 and 2006, respectively). The
indenture governing the 2011 Notes, 2036 Notes and Floating
Rate Notes contains covenants that, among other things, limit
or restrict the ability of the Company and other significant
subsidiaries to grant certain types of security interests, incur
debt (in the case of signifi cant subsidiaries), or enter into sale
and leaseback transactions. The Company may redeem the
2011 Notes and the 2036 Notes at any time prior to maturity at
the applicable treasury rate plus 15 basis points and 25 basis
points, respectively. The Company may redeem the Floating
Rate Notes at any time on or after May 17, 2007 at a redemption
price equal to 100% of the principal amount of the Floating Rate
Notes to be redeemed plus accrued interest thereon to the date
of redemption.
The 2011 Notes, 2016 Notes, 2036 Notes and the Floating
Rate Notes were all originally issued in reliance on exemptions
from the registration requirements of the Securities Act of 1933,
as amended. The Company exchanged all such notes for identical
notes registered with the Securities and Exchange Commission
pursuant to the terms of the original issuance.
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14. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company
2006 Long-Term Incentive Plan
The Western Union Company 2006 Long-Term Incentive Plan
(“2006 LTIP”) provides for the granting of stock options, restricted
stock awards and units, unrestricted stock awards, and other
equity-based awards, to employees and other key individuals
who perform services for the Company. A maximum of 120.0
million shares of common stock may be awarded under the 2006
LTIP. As of December 31, 2007, the Company has issued 80.2
million options and 3.1 million restricted stock awards and units
(of which 73.1 million options and 1.9 million restricted stock
awards and units were issued in connection with the spin-off from
First Data as further described below) to certain employees of
the Company under the 2006 LTIP.
Options granted under the 2006 LTIP are issued with exercise
prices equal to the fair market value of Western Union common
stock on the grant date, have 10-year terms, and vest over four
equal annual increments beginning 12 months after the date of
grant. Compensation expense related to stock options is recog-
nized over the requisite service period. The requisite service
period for stock options is the same as the vesting period, with
the exception of retirement eligible employees, who have shorter
requisite service periods ending when the employees become
retirement eligible.
Restricted stock awards and units granted under the 2006 LTIP
typically become 100% vested on the three year anniversary of
the grant date. The fair value of the awards granted is measured
based on the fair market value of the shares on the date of grant,
and the related compensation expense is recognized over the
requisite service period which is the same as the vesting period.
On September 29, 2006, the Company awarded a founders’
grant of either restricted stock awards or units to certain employees
who are not otherwise eligible to receive stock-based awards
under the 2006 LTIP. These awards vest in two equal annual
increments on the fi rst and second anniversary of the grant date.
The fair value of the awards granted was measured based on the
when-issued closing price of the Company’s common stock of
$19.13 on the grant date and is being recognized ratably over
the vesting period. Included in the 3.1 million restricted stock
awards and units issued under the 2006 LTIP described in the
preceding paragraph, were 0.3 million restricted stock awards
or units issued in connection with the founders’ grant.