Western Union 2010 Annual Report Download - page 35

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Even if the Spin-off otherwise qualified as a tax-free distribution under section 355 of the Internal Revenue
Code, the Spin-off may result in significant United States federal income tax liabilities to First Data if 50% or more
of First Data’s stock or our stock (in each case, by vote or value) is treated as having been acquired, directly or
indirectly, by one or more persons as part of a plan (or series of related transactions) that includes the Spin-off. For
purposes of this test, any acquisitions, or any understanding, arrangement or substantial negotiations regarding an
acquisition, within two years before or after the Spin-off are subject to special scrutiny.
With respect to taxes and other liabilities that could be imposed as a result of a final determination that is
inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private letter ruling and relevant
tax opinion) (“Spin-off Related Taxes”), we, one of our affiliates or any person that, after the Spin-off, is an affiliate
thereof, will be liable to First Data for any such Spin-off Related Taxes attributable solely to actions taken by or with
respect to us. In addition, we will also be liable for 50% of any Spin-off Related Taxes (i) that would not have been
imposed but for the existence of both an action by us and an action by First Data or (ii) where we and First Data each
take actions that, standing alone, would have resulted in the imposition of such Spin-off Related Taxes. We may be
similarly liable if we breach certain representations or covenants set forth in the tax allocation agreement. If we are
required to indemnify First Data for taxes incurred as a result of the Spin-off being taxable to First Data, it likely would
have an adverse effect on our business, financial position, results of operations and cash flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Properties and Facilities
As of December 31, 2010, we have offices in approximately 50 countries, which includes three owned facilities
and approximately 20 United States and 340 international leased properties. Our owned facilities include our
corporate headquarters located in Englewood, Colorado.
Our owned and leased facilities are used for operational, sales and administrative purposes in support of both our
consumer-to-consumer and global business payments segments and are all currently being utilized. In certain
locations, our offices include customer service centers, where our employees answer operational questions from
agents and customers. Our office in Dublin, Ireland serves as our international headquarters.
We believe that our facilities are suitable and adequate for our current business; however, we periodically review
our facility requirements and may acquire new facilities to meet the needs of our businesses or consolidate and
dispose of or sublet facilities which are no longer required.
ITEM 3. LEGAL PROCEEDINGS
On July 26, 2010, U.F.C.W. Local 1776 & Participating Employers Pension Fund filed a Verified Shareholder
Double Derivative Complaint and Jury Demand in United States District Court for the District of Colorado, alleging
that the Company’s Board of Directors failed to appropriately oversee the Company’s compliance program,
particularly in regard to the alleged deficiencies which resulted in the Company’s agreement and settlement with the
State of Arizona and other states in early 2010. In addition to naming the Company’s Board members as individual
defendants, the complaint names the Company and its subsidiary Western Union Financial Services, Inc. as nominal
defendants. The complaint seeks damages from the individual defendants for breach of fiduciary duty and waste of
corporate assets and an order requiring various corrective measures. On September 10, 2010, the United States
District Court for the District of Colorado dismissed the complaint for lack of subject matter jurisdiction. On
September 23, 2010, the plaintiff re-filed the complaint in Maricopa County Superior Court in Arizona. The
complaint was removed to the United States District Court for the District of Arizona. The Company has moved to
dismiss the complaint on jurisdictional grounds.
In the second quarter of 2009, the Antitrust Division of the United States Department of Justice (“DOJ”) served
one of the Company’s subsidiaries with a grand jury subpoena requesting documents in connection with an
investigation into money transfers, including related foreign exchange rates, from the United States to the
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