Western Union 2009 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2009 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 153

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the consolidated financial statements and
the notes to those statements included elsewhere in this Annual Report on Form 10-K. This Annual Report on
Form 10-K contains certain statements that are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Certain statements contained in the Management’s Discussion and Analysis of
Financial Condition and Results of Operations are forward-looking statements that involve risks and
uncertainties. The forward-looking statements are not historical facts, but rather are based on current
expectations, estimates, assumptions and projections about our industry, business and future financial results.
Our actual results could differ materially from the results contemplated by these forward-looking statements
due to a number of factors, including those discussed in other sections of this Annual Report on Form 10-K.
See “Risk Factors” and “Forward-looking Statements.”
Overview
We are a leading provider of money transfer services, operating in two business segments:
• Consumer-to-consumer money transfer services, provided primarily through a global network of
third-party agents using our multi-currency, real-time money transfer processing systems. This
service is available for international cross-border transfers—that is, the transfer of funds from one
country to another—and, in certain countries, intra-country transfers—that is, money transfers from
one location to another in the same country.
• Global business payments (formerly consumer-to-business), which allows for the processing of
payments from consumers or businesses to other businesses. Our business payments service allow
consumers to make payments to a variety of organizations, including utilities, auto finance
companies, mortgage servicers, financial service providers, government agencies and other
businesses. On September 1, 2009, we acquired Canada-based Custom House, Ltd. (“Custom
House”), a provider of international business-to-business payment services, which is included in this
segment. Custom House facilitates cross-border, cross-currency payment transactions. While we
continue to pursue further international expansion of our offerings in this segment, the segment’s
revenue was primarily generated in the United States during all periods presented.
Businesses not considered part of the segments described above are categorized as “Other” and primarily
includes our money order services, and represented 2% or less of consolidated revenue during the years ended
December 31, 2009, 2008 and 2007. Prior to October 1, 2009, our money orders were issued by Integrated
Payment Systems Inc. (“IPS”), a subsidiary of First Data Corporation (“First Data”), to consumers at retail
locations primarily in the United States and Canada. Effective October 1, 2009, we assumed the responsibility
for issuing money orders.
Also included in “Other” are expenses incurred in connection with the development of certain new
service offerings, including costs to develop mobile money transfer services, new prepaid service offerings and
costs incurred in connection with mergers and acquisitions.
Significant Financial and Other Highlights
Significant financial and other highlights for the year ended December 31, 2009 included:
• We generated $5,083.6 million in total consolidated revenues, representing a year-over-year decline
of 4%. This decline was partially offset by the acquisition of Custom House, which contributed
$30.8 million to revenue for 2009.
• We generated $1,282.7 million in consolidated operating income compared to $1,355.0 million for
the comparable period in the prior year, representing a decrease of 5%. Operating income for the
year ended December 31, 2009 included an accrual of $71.0 million resulting from an anticipated
agreement and settlement which resolves all outstanding legal issues and claims with the State of
38