Western Union 2010 Annual Report Download - page 131

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CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The Western Union Company (the “Parent”) is a holding company that conducts substantially all of its business
operations through its subsidiaries. Under a parent company only presentation, the Parent’s investments in its
consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial
statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. These
financial statements should be read in conjunction with The Western Union Company’s consolidated financial
statements.
2. Restricted Net Assets
Certain assets of the Parent’s subsidiaries totaling approximately $210 million constitute restricted net assets, as
there are legal or regulatory limitations on transferring such assets outside of the countries where the respective
assets are located, or because they constitute undistributed earnings of affiliates of the Parent accounted for under
the equity method of accounting. As of December 31, 2010, the Parent is in a stockholders’ equity position of
$582.7 million, and as such, the restricted net assets of the Parent’s subsidiaries currently exceeds 25% of the
consolidated net assets of the Parent and its subsidiaries, thus requiring this Schedule I, “Condensed Financial
Information of the Registrant.”
3. Related Party Transactions
Excess cash generated from operations of the Parent’s subsidiaries that is not required to meet certain regulatory
requirements is paid periodically to the Parent and is reflected as “Payable to subsidiaries, net” in the Condensed
Balance Sheet as of December 31, 2010. The Parent’s subsidiaries periodically distribute excess cash balances to the
Parent in the form of a dividend, although the amounts of such dividends may vary from year to year.
The Parent files a consolidated U.S. federal income tax return, and also a number of consolidated state income
tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax
payments on behalf of the consolidated group. The Parent’s provision for income taxes has been computed as if it
were a separate tax-paying entity.
4. Commitments and Contingencies
The Parent had $3.4 million in outstanding letters of credit and bank guarantees, including parental guarantees
for subsidiaries, at December 31, 2010 with expiration dates through 2012, the majority of which contain a one-year
renewal option. The letters of credit and bank guarantees are primarily held in connection with lease arrangements
and certain agent agreements. The Company expects to renew the letters of credit and bank guarantees prior to
expiration in most circumstances.
129