Western Union 2009 Annual Report Download - page 94

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Formation of the Entity and Basis of Presentation
The Western Union Company (“Western Union” or the “Company”) is a leader in global money transfer
and payment services, providing people and businesses with fast, reliable and convenient ways to send money
and make payments around the world. The Western Union»brand is globally recognized. The Company’s
services are available through a network of agent locations in more than 200 countries and territories. Each
location in the Company’s agent network is capable of providing one or more of the Company’s services.
The Western Union business consists of the following segments:
• Consumer-to-consumer—money transfer services between consumers, primarily through a global
network of third-party agents using the Company’s 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)— the processing of payments from
consumers or businesses to other businesses. The Company’s business payments services 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. As
described further in Note 3, “Acquisitions,” the Company 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 the Company continues to pursue further international expansion of its offerings in this
segment, the segment’s revenue was primarily generated in the United States during all periods
presented.
All businesses that have not been classified into the consumer-to-consumer or global business payments
segments are reported as “Other” and primarily include the Company’s money order services business. Prior to
October 1, 2009, the Company’s 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, the Company assumed the responsibility for issuing money
orders.
There are legal or regulatory limitations on transferring certain assets of the Company outside of the
countries where these assets are located, or which constitute undistributed earnings of affiliates of the
Company accounted for under the equity method of accounting. However, there are generally no limitations on
the use of these assets within those countries. As of December 31, 2009, the amount of net assets subject to
these limitations totaled approximately $190 million.
Various aspects of the Company’s services and businesses are subject to United States federal, state and
local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial
services regulations.
Spin-off from First Data
On January 26, 2006, the First Data Board of Directors announced its intention to pursue the distribution
of 100% of its money transfer and consumer payments business and its interest in a Western Union money
transfer agent, as well as its related assets, including real estate, through a tax-free distribution to First Data
shareholders (the “Separation” or “Spin-off ”). Effective on September 29, 2006, First Data completed the
separation and the distribution of these businesses by distributing The Western Union Company common stock
to First Data shareholders (the “Distribution”). Prior to the Distribution, the Company had been a segment of
First Data.
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