Western Union 2010 Annual Report Download - page 84

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Formation of the Entity and Basis of Presentation
The Western Union Company (“Western Union” or the “Company”) is a leader in global money movement and
payment services, providing people and businesses with fast, reliable and convenient ways to send money and make
payments around the world. The Western Union»brand is globally recognized. The Company’s services are
available through a network of agent locations in 200 countries and territories. Each location in the Company’s agent
network is capable of providing one or more of the Company’s services.
The Western Union business consists of the following segments:
• Consumer-to-consumer—money transfer services between consumers, primarily through a global network of
third-party agents using the Company’s multi-currency, real-time money transfer processing systems. This
service is available for international cross-border transfers—that is, the transfer of funds from one country to
another—and, in certain countries, intra-country transfers—that is, money transfers from one location to
another in the same country.
• Global business payments—the processing of payments from consumers or businesses to other businesses.
The Company’s business payments services allow consumers to make payments to a variety of organizations
including utilities, auto finance companies, mortgage servicers, financial service providers, government
agencies and other businesses. As described further in Note 4, in September 2009, the Company acquired
Canada-based Custom House, Ltd. (“Custom House”), which has been rebranded “Western Union Business
Solutions” (“Business Solutions”) and is included in this segment. This business facilitates cross-border,
cross-currency business-to-business payment transactions. The international expansion and other key
strategic initiatives have resulted in international revenue continuing to increase in this segment.
However, the majority of the segment’s revenue was generated in the United States during all periods
presented.
All businesses that have not been classified into the consumer-to-consumer or global business payments
segments are reported as “Other” and primarily include the Company’s money order services business. Prior to
October 1, 2009, the Company’s money orders were issued by Integrated Payment Systems Inc. (“IPS”), a
subsidiary of First Data Corporation (“First Data”), to consumers at retail locations primarily in the United States
and Canada. Effective October 1, 2009, the Company assumed the responsibility for issuing money orders.
There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries
where these assets are located, or which constitute undistributed earnings of affiliates of the Company accounted for
under the equity method of accounting. However, there are generally no limitations on the use of these assets within
those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to
maintain operating licenses. As of December 31, 2010, the amount of net assets subject to these limitations totaled
approximately $210 million.
Various aspects of the Company’s services and businesses are subject to United States federal, state and local
regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services
regulations.
Spin-off from First Data
On January 26, 2006, the First Data Board of Directors announced its intention to pursue the distribution of all of
its money transfer and consumer payments business and its interest in a Western Union money transfer agent, as
well as its related assets, including real estate, through a tax-free distribution to First Data shareholders (the “Spin-
off ”). Effective on September 29, 2006, First Data completed the separation and the distribution of these businesses
by distributing The Western Union Company common stock to First Data shareholders (the “Distribution”). Prior to
the Distribution, the Company had been a segment of First Data.
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