Western Union 2010 Annual Report Download - page 113

Cash Dividends Paid
During 2010, the Company’s Board of Directors declared quarterly cash dividends of $0.07 per common share in
the fourth quarter and $0.06 per common share in each of the first three quarters representing $165.3 million in total
dividends. Of this amount, $40.5 million was paid on March 31, 2010, $39.6 million was paid on June 30, 2010,
$39.4 million was paid on October 14, 2010 and $45.8 million was paid on December 31, 2010. During the fourth
quarter of 2009, the Company’s Board of Directors declared an annual cash dividend of $0.06 per common share
representing $41.2 million in total dividends, paid on December 30, 2009. During the fourth quarter of 2008, the
Company’s Board of Directors declared an annual dividend of $0.04 per common share representing $28.4 million
in total dividends, paid on December 31, 2008.
On February 25, 2011, the Company’s Board of Directors declared a quarterly cash dividend of $0.07 per share
payable on March 31, 2011.
Share Repurchases
During the years ended December 31, 2010, 2009 and 2008, 35.6 million, 24.8 million and 58.1 million shares,
respectively, have been repurchased for $584.5 million, $400.0 million and $1,313.9 million, respectively,
excluding commissions, at an average cost of $16.44, $16.10 and $22.60 per share, respectively. At
December 31, 2010, $415.5 million remains available under share repurchase authorizations approved by the
Board of Directors through December 31, 2012. On February 1, 2011, the Board of Directors authorized an
additional $1 billion of common stock repurchases through December 31, 2012.
14. Derivatives
The Company is exposed to foreign currency exchange risk resulting from fluctuations in exchange rates,
primarily the euro, and to a lesser degree the British pound, Canadian dollar and other currencies, related to
forecasted money transfer revenues and on money transfer settlement assets and obligations. Subsequent to the
acquisition of Custom House, the Company is also exposed to risk from derivative contracts written to its customers
arising from its cross-currency business-to-business payments operations. Additionally, the Company is exposed to
interest rate risk related to changes in market rates both prior to and subsequent to the issuance of debt. The
Company uses derivatives to (a) minimize its exposures related to changes in foreign currency exchange rates and
interest rates and (b) facilitate cross-currency business-to-business payments by writing derivatives to customers.
The Company executes derivatives related to its consumer-to-consumer business with established financial
institutions, with the substantial majority of these financial institutions having credit ratings of “A⫺” or better from
a major credit rating agency. The Company executes global business payments derivatives, as a result of its
acquisition of Custom House, mostly with small and medium size enterprises. The credit risk inherent in both the
consumer-to-consumer and global business payments agreements represents the possibility that a loss may occur
from the nonperformance of a counterparty to the agreements. The Company performs a review of the credit risk of
these counterparties at the inception of the contract and on an ongoing basis. The Company also monitors the
concentration of its contracts with any individual counterparty. The Company anticipates that the counterparties
will be able to fully satisfy their obligations under the agreements, but takes action (including termination of
contracts) when doubt arises about the counterparties’ ability to perform. The Company’s hedged foreign currency
exposures are in liquid currencies, consequently there is minimal risk that appropriate derivatives to maintain the
hedging program would not be available in the future.
Foreign Currency—Consumer-to-Consumer
The Company’s policy is to use longer-term foreign currency forward contracts, with maturities of up to
36 months at inception and a targeted weighted-average maturity of approximately one year, to mitigate some of the
risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted
revenues denominated in other currencies related to its business. At December 31, 2010, the Company’s longer-term
foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of
approximately one year. These contracts are accounted for as cash flow hedges of forecasted revenue, with
effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation.
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