Western Union 2010 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2010 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

Derivative losses, net—Represents the portion of the change in fair value of foreign currency accounting hedges
that is excluded from the measurement of effectiveness, which includes (a) differences between changes in forward
rates and spot rates and (b) gains or losses on the contract and any offsetting positions during periods in which the
instrument is not designated as a hedge. Although the majority of changes in the value of our hedges are deferred in
accumulated other comprehensive income or loss until settlement (i.e., spot rate changes), the remaining portion of
changes in value are recognized in income as they occur. Derivative gains and losses do not include fluctuations in
foreign currency forward contracts intended to mitigate exposures on settlement activities of our
consumer-to-consumer money transfer business or on certain foreign currency denominated cash positions.
Gains and losses associated with those foreign currency forward contracts are included in selling, general and
administrative expenses. Derivative gains and losses also do not include fluctuations in foreign currency forward
and option contracts used in our international business-to-business payments operations. The impact of these
contracts is classified within foreign exchange revenues in the consolidated statements of income.
Other income, net—Other income, net is comprised primarily of equity earnings from equity method
investments and other income and expenses.
Results of Operations
The following discussion of our consolidated results of operations and segment results refers to the year ended
December 31, 2010 compared to the same period in 2009 and the year ended December 31, 2009 compared to the
same period in 2008. The results of operations should be read in conjunction with the discussion of our segment
results of operations, which provide more detailed discussions concerning certain components of the consolidated
statements of income. All significant intercompany accounts and transactions between our Company’s segments
have been eliminated.
We incurred expenses of $59.5 million for the year ended December 31, 2010 for restructuring and related
activities, which have not been allocated to segments. No restructuring and related expenses were recognized in the
corresponding period in 2009 and we incurred expenses of $82.9 million for the year ended December 31, 2008.
While these items are identifiable to our segments, they are not included in the measurement of segment operating
profit provided to the chief operating decision maker (“CODM”) for purposes of assessing segment performance
and decision making with respect to resource allocation. For additional information on restructuring and related
activities refer to “Operating expenses overview.”
During the year ended December 31, 2009, we recorded a $71.0 million settlement accrual, which was not
allocated to the segments. While this item was identifiable to our consumer-to-consumer segment, it was not
included in the measurement of segment operating profit provided to the CODM for purposes of assessing segment
performance and decision making with respect to resource allocation. For additional information on the settlement
accrual, refer to “Selling, general and administrative” expenses.
43