Western Union 2009 Annual Report Download - page 75

During the fourth quarter of 2009, our Board of Directors declared a quarterly cash dividend of $0.06 per
common share representing $41.2 million in total dividends. During the fourth quarter of 2008 and 2007, our
Board of Directors declared an annual cash dividend of $0.04 per common share representing $28.4 million
and $30.0 million, respectively, in total dividends. These amounts were paid to shareholders of record in
December of each respective year.
Equity Investments In and Loans to Certain Key Agents
In October 2007, we entered into agreements totaling $18.3 million to convert our non-participating
interest in a joint venture with our Singapore agent, Hersing Corporation Ltd., into a fully participating 49%
equity interest and extended the agent relationship at more favorable commission rates to Western Union. As a
result, we earn a pro-rata share of profits and have enhanced voting rights. We also have the right to add
additional agent relationships in Singapore under this agreement. In October 2007, we completed an
agreement to acquire a 25% ownership interest in GraceKennedy Money Services Caribbean SRL
(“GraceKennedy”), an agent in Jamaica (which also acts as our agent in several other Caribbean countries),
and to extend the term of the agent relationship for $29.0 million. The aggregate consideration paid resulted in
$20.2 million of identifiable intangible assets, including capitalized contract costs, which are being amortized
over seven to 10 years.
From time to time, we also make advances and loans to agents. Most significantly, in the first quarter
2006, we signed a six year agreement with one of our existing agents which included a four year loan of
$140.0 million to the agent, of which $33.1 million, $40.0 million and $30.0 million were repaid in the years
ended December 31, 2009, 2008 and 2007, respectively. The remaining loan receivable balance relating to this
agent as of December 31, 2009 was $16.9 million and was fully repaid in January 2010.
As opportunities arise, we expect we will continue to strategically invest in agents to further strengthen
our business.
Debt Service Requirements
Our 2010 debt service requirements will include interest payments on all outstanding indebtedness and
may include payments on any future borrowings under our commercial paper program. We have the ability to
use existing financing sources, such as our Revolving Credit Facility and commercial paper program, to meet
obligations as they arise.
Our ability to continue to grow the business, make acquisitions, return capital to shareholders, including
share repurchases and dividends, and service our debt will depend on our ability to continue to generate excess
operating cash through our operating subsidiaries and to continue to receive dividends from those operating
subsidiaries, our ability to obtain adequate financing and our ability to identify the appropriate acquisitions
that will align with our long-term strategy.
Off-Balance Sheet Arrangements
Other than facility and equipment leasing arrangements disclosed in Note 12 to our consolidated financial
statements, we have no material off-balance sheet arrangements that have or are reasonably likely to have a
material current or future effect on our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Pension Plans
We have two frozen defined benefit pension plans (“Plans”) for which we have a recorded unfunded
pension obligation of $124.2 million as of December 31, 2009. Due to the closure of one of our facilities in
Missouri and a recent agreement with the Pension Benefit Guaranty Corporation, we funded $4.1 million into
one of our subsidiary’s pension plans during 2009. No contributions were made to these plans by Western
Union during the years ended December 31, 2008 and 2007. Pursuant to final guidance issued by the IRS in
September 2009, we made certain interest rate elections under the Pension Protection Act which will require
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