Western Union 2009 Annual Report Download - page 24

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The most significant competitive factors in this segment relate to brand recognition, customer service,
trust and reliability, convenience, speed, variety of payment methods, service offerings and price.
For additional details regarding our global business payments segment, see Item 7 of Part II and our
historical financial statements and the notes to those statements included elsewhere in this Annual Report on
Form 10-K.
Other
Our remaining businesses are grouped in the “Other” category, which primarily includes our money order
services.
Effective October 1, 2009 (the “Transition Date”), in accordance with the agreement signed on July 18,
2008, Integrated Payment Systems Inc. (“IPS”), a subsidiary of First Data Corporation (“First Data”), assigned
and transferred to us certain operating assets used by IPS to issue Western Union branded money orders and
approximately $860 million of cash sufficient to satisfy all outstanding money order liabilities. On the
Transition Date, we assumed IPS’s role as issuer of the money orders, including its obligation to pay
outstanding money orders, and terminated the existing agreement whereby IPS paid Western Union a fixed
return of 5.5% on the outstanding money order balances. Following the Transition Date, we invested the cash
received from IPS in high-quality, investment grade securities, primarily tax exempt United States state and
municipal securities, in accordance with applicable regulations, which are the same as those currently
governing the investment of our United States originated money transfer principal. Prior to the Transition
Date, we had entered into interest rate swaps on certain of our fixed rate notes to reduce our exposure to
fluctuations in interest rates. Through a combination of the revenue generated from these investment securities
and the anticipated interest expense savings resulting from the interest rate swaps, we estimate that we should
be able to retain, subsequent to the Transition Date, a materially comparable after-tax rate of return through
2011 as we were receiving under the agreement with IPS. However, the results of interest expense savings
related to the swaps will be reflected in interest expense and will not impact operating income. Subsequent to
the Transition Date, all revenue generated from the investment portfolio is being retained by us.
Intellectual Property
The Western Union brand, consisting of trademark registrations in many countries, is material to our
Company. The international expansion of our agent network over the past decade has taken the Western Union
brand nearly everywhere consumers send and receive money. The loss of the Western Union trademark or a
diminution in the perceived quality associated with the name would harm our growth. We offer money transfer
services under the Western Union, Orlandi Valuta»or Vigo
SM
brands in over 200 countries and territories, and
various global business payment services under several brands like Speedpay, Equity Accelerator, Just in Time
EFT, Paymap», Quick Collect, Convenience Pay, Quick Pay, Quick Cash, Pago Fácil (registered in Argentina),
Custom House and other trademarks and service marks also important to our Company.
Our operating results over the past several years have allowed us to invest significantly each year to
support our brands. In 2009, we invested approximately $240 million to market, advertise and promote our
brand and services, including costs related to our global “yes!” marketing campaign, which helped drive
uniformity of brand image and marketing. Many of our agents have also contributed significant financial
resources to assist with marketing our services.
We own patents and patent applications covering various aspects of our processes and services. We have
been, are and in the future may be, subject to claims and suits alleging that our technology or business
methods infringe patents owned by others, both in and out of the United States. Unfavorable resolution of
these claims could require us to change how we deliver services, result in significant financial consequences,
or both, which could adversely affect our business, financial position and results of operations.
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