Western Union 2011 Annual Report Download - page 103

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Settlement assets consist of cash and cash equivalents, receivables from selling agents and
business-to-business customers, and investment securities. Cash received by Western Union agents generally
becomes available to the Company within one week after initial receipt by the agent. Cash equivalents consist of
short-term time deposits, commercial paper and other highly liquid investments. Receivables from selling agents
represent funds collected by such agents, but in transit to the Company. Western Union has a large and diverse
agent base, thereby reducing the credit risk of the Company from any one agent. In addition, the Company
performs ongoing credit evaluations of its agents’ financial condition and credit worthiness. See Note 7 for
information concerning the Company’s investment securities.
Receivables from business-to-business customers arise from cross-currency payment transactions in the global
business payments segment. Receivables occur when funds have been paid out to a beneficiary but not yet
received from the customer. The credit risk associated with the receivables from these spot foreign currency
exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from
customers before releasing the associated cross-currency payment.
Settlement obligations consist of money transfer, money order and payment service payables and payables to
agents. Money transfer payables represent amounts to be paid to transferees when they request their funds.
Money order payables represent amounts not yet presented for payment. Most agents typically settle with
transferees first and then obtain reimbursement from the Company. Payment service payables represent amounts
to be paid to utility companies, auto finance companies, mortgage servicers, financial service providers,
government agencies and others. Due to the agent funding and settlement process, payables to agents represent
amounts due to agents for money transfers that have been settled with transferees.
Settlement assets and obligations consisted of the following (in millions):
December 31,
2011 2010
Settlement assets:
Cash and cash equivalents ............................................ $ 712.5 $ 133.8
Receivables from selling agents and business-to-business customers .......... 1,046.7 1,132.3
Investment securities ................................................ 1,332.0 1,369.1
$ 3,091.2 $ 2,635.2
Settlement obligations:
Money transfer, money order and payment service payables ................. $ 2,242.3 $ 2,170.0
Payables to agents .................................................. 848.9 465.2
$ 3,091.2 $ 2,635.2
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the
lesser of the estimated life of the related assets (generally three to 10 years for equipment, furniture and fixtures,
and 30 years for buildings) or the lease term. Maintenance and repairs, which do not extend the useful life of the
respective assets, are charged to expense as incurred.
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