Western Union 2010 Annual Report Download - page 59

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Financing Resources
As of December 31, 2010, we had the following outstanding borrowings (in millions):
December 31, 2010
Due in less than one year (a):
5.400% notes (effective rate of 2.7%) due November 2011 (b) (c).................................... $ 696.3
Due in greater than one year (a):
6.500% notes (effective rate of 5.5%) due 2014 .............................................................. 500.0
5.930% notes due 2016 (d) ............................................................................................ 1,000.0
5.253% notes due 2020 (b) ............................................................................................ 324.9
6.200% notes due 2036 (d) ............................................................................................ 500.0
6.200% notes due 2040 (e) ............................................................................................ 250.0
Other borrowings ............................................................................................................ 5.9
Total borrowings at par value ............................................................................................ 3,277.1
Fair value hedge accounting adjustments, net (a) ............................................................. 36.6
Unamortized discount, net (b) ........................................................................................ (23.8)
Total borrowings at carrying value (f) ................................................................................ $ 3,289.9
(a) We utilize interest rate swaps designated as fair value hedges to effectively change the interest rate payments
on a portion of our notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order
to manage our overall exposure to interest rates. The changes in fair value of these interest rate swaps result in
an offsetting hedge accounting adjustment recorded to the carrying value of the related note. These hedge
accounting adjustments will be reclassified as reductions to or increases in “interest expense” over the life of
the related notes, and cause the effective rate of interest to differ from the notes’ stated rate.
(b) On March 30, 2010, we exchanged $303.7 million of aggregate principal amount of the 5.400% notes due
2011 (“2011 Notes”) for 5.253% unsecured notes due 2020 (“2020 Notes”). The 5.7% effective interest rate of
the 2020 Notes differs from the stated rate as the notes have a par value of $324.9 million. The $21.2 million
difference between the carrying value and the par value is being accreted over the life of the 2020 Notes. See
below for additional detail relating to the note exchange.
(c) The effective interest rate related to the 2011 Notes includes the impact of the interest rate swaps entered into
in conjunction with the assumption of the money order investments from IPS.
(d) The difference between the stated interest rate and the effective interest rate is not significant.
(e) On June 21, 2010, we issued $250.0 million of aggregate principal amount of 6.200% unsecured notes due
2040 (the “2040 Notes”). In anticipation of this issuance, we entered into interest rate swaps to fix the interest
rate of the debt issuance, and recorded a loss on the swaps of $7.5 million, which increased the effective rate to
6.3%, in “accumulated other comprehensive loss,” which will be amortized into interest expense over the life
of the 2040 Notes. See below for additional detail relating to the debt issuance.
(f) At December 31, 2010, our weighted average effective rate on total borrowings was approximately 5.2%.
Commercial Paper
Pursuant to our commercial paper program, we may issue unsecured commercial paper notes in an amount not to
exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on our revolving credit
facility. Our commercial paper borrowings may have maturities of up to 397 days from date of issuance. Interest
rates for borrowings are based on market rates at the time of issuance. We had no commercial paper borrowings as
of and during the year ended December 31, 2010.
Revolving Credit Facility
Our revolving credit facility expires in September 2012 and includes a $1.5 billion revolving credit facility, a
$250.0 million letter of credit sub-facility and a $150.0 million swing line sub-facility (the “Revolving Credit
Facility”).
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