Western Union 2008 Annual Report Download - page 70

WESTERN UNION
2008 Annual Report
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Pension plan asset allocation at December 31, 2008 and September 30, 2007, and target allocations based on
investment policies, are as follows:
Percentage of Plan Assets
at Measurement Date
Asset Category 2008 2007
Equity securities 24% 41%
Debt securities 75% 58%
Other 1% 1%
100% 100%
TargetAllocation
Equity securities 25–35%
Debt securities 65–75%
In consideration of the frozen status of the Plans, the Company decided to implement a risk reduction strategy in 2008.
As a result, the Company increased its allocation to debt securities from equity securities.
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 December 31, 2008 and September 30, 2007:
2008
Fair
Principal Market Value %ofTotal
Plan Corporate Bond Holdings (inmillions) (in millions) PlanAssets
Allstate Corporation corporate bond $0.8 $0.7 0.23%
Hasbro Inc. corporate bond $0.2 $0.2 0.06%
Bristol-Myers Squibb corporate bond $0.7 $0.7 0.24%
HBOS PLC corporate bond $0.3 $0.2 0.08%
New York Life Insurance Company corporate bond $0.5 $0.4 0.14%
2007
Fair
Principal Market Value %ofTotal
Plan Corporate Bond Holdings (inmillions) (in millions) PlanAssets
Allstate Corporation corporate bond $0.8 $0.8 0.20%
Hasbro Inc. corporate bond $0.2 $0.2 0.05%
Mellon FDG corporate bond $0.3 $0.3 0.08%
New York Life Insurance Company corporate bond $0.4 $0.4 0.10%
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The maturities of debt securities at December 31, 2008
range from less than one year to approximately 60 years
with a weighted-average maturity of 20 years.
The assets of the Company’s defined benefit plans
are managed in a third-party master trust. The investment
policy and allocation of the assets in the master trust are
overseen by the Company’s Investment Council. 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 United States
and non-United States 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 invest-
ment portfolio reviews, annual liability measurements, and
periodic asset and liability studies.
The estimated future benefit payments are expected
to be $43.7 million in 2009, $42.4 million in 2010,
$41.1 million in 2011, $39.9 million in 2012, $38.5 million
in 2013 and $169.1 million in 2014 through 2018.
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. Total rent expense under operating leases
was $39.7 million, $31.6 million and $29.2 million during
the years ended December 31, 2008, 2007 and 2006,
respectively.
As of December 31, 2008, the minimum aggregate
rental commitments under all noncancelable operating
leases, net of sublease income commitments aggregating
$8.2 million through 2014, are as follows (in millions):
Year Ending December 31,
2009 $ 23.5
2010 17.5
2011 12.9
2012 10.2
2013 9.2
Thereafter 29.3
Total future minimum lease payments $102.6