Western Union 2011 Annual Report Download - page 52

(b) Our stock-based compensation expense in 2007 included a charge of $22.3 million related to the vesting of the
remaining converted unvested Western Union stock-based awards upon the completion of the acquisition of
First Data Corporation on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co.
(c) Operating expenses for the years ended December 31, 2011 and 2010 included $46.8 million and
$59.5 million of restructuring and related expenses, respectively, associated with a restructuring plan
designed to reduce overall headcount and migrate positions from various facilities, primarily within the
United States and Europe, to regional operating centers. Operating expenses for the year ended
December 31, 2008 included $82.9 million of restructuring and related expenses associated with the closure
of our facilities in Missouri and Texas and other reorganization plans. No restructuring and related expenses
were incurred during 2009 or 2007.
(d) Operating expenses for the year ended December 31, 2009 included an accrual of $71.0 million resulting
from an agreement and settlement, which resolved all outstanding legal issues and claims with the State of
Arizona and required us to fund a multi-state not-for-profit organization promoting safety and security along
the United States and Mexico border, in which California, Texas and New Mexico have participated with
Arizona. The settlement agreement was signed on February 11, 2010.
(e) Interest income consists of interest earned on cash balances not required to satisfy settlement obligations
and in connection with loans previously made to certain existing agents.
(f) Interest expense primarily relates to our outstanding borrowings.
(g) In 2011, we recognized gains of $20.5 million and $29.4 million, in connection with the remeasurement of
our former equity interests in Finint, S.r.l. and Angelo Costa, S.r.l., respectively, to fair value. These equity
interests were remeasured in conjunction with our purchases of the remaining interests in these entities that
we previously did not hold. Additionally, in 2011, we recognized a $20.8 million net gain on foreign
currency forward contracts with maturities of less than one year entered into in order to reduce the economic
variability related to the cash amounts used to fund acquisitions of businesses with purchase prices
denominated in foreign currencies, primarily for the TGBP acquisition. In 2009, given the increased
uncertainty, at that time, surrounding the numerous third-party legal claims associated with our receivable
from the Reserve International Liquidity Fund, Ltd., we reserved $12.0 million representing the estimated
impact of a pro-rata distribution. In 2010, we recorded a recovery of this reserve of $6.3 million due to the
final settlement of this receivable.
(h) In December 2011, we reached an agreement with the United States Internal Revenue Service (“IRS
Agreement”) resolving substantially all of the issues related to the restructuring of our international
operations in 2003. As a result of the IRS Agreement, we recognized a tax benefit of $204.7 million related
to the adjustment of reserves associated with this matter.
(i) Net cash provided by operating activities decreased during the year ended December 31, 2010, primarily
due to a $250 million tax deposit made relating to United States federal tax liabilities, including those
arising from our 2003 international restructuring, which were previously accrued in our consolidated
financial statements. Also impacting net cash provided by operating activities during the year ended
December 31, 2010 were cash payments of $71.0 million related to the agreement and settlement with the
State of Arizona and other states.
(j) Capital expenditures include capitalization of contract costs, capitalization of purchased and developed
software and purchases of property and equipment.
(k) On February 1, 2011, the Board of Directors authorized $1 billion of common stock repurchases through
December 31, 2012, of which $615.5 million remains available as of December 31, 2011. During the years
ended December 31, 2011, 2010, 2009, 2008 and 2007, we repurchased 40.3 million, 35.6 million,
24.8 million, 58.1 million and 34.7 million shares, respectively.
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