Western Union 2011 Annual Report Download - page 76

• We may be required to pay a higher interest rate in future financings;
• Our potential pool of investors and funding sources may decrease;
• Regulators may impose additional capital and other requirements on us, including imposing restrictions on
the ability of our regulated subsidiaries to pay dividends; and
• Our business relationships may be adversely impacted.
Consistent with the prior facility, the Revolving Credit Facility contains certain covenants that, among other
things, limit or restrict our ability to sell or transfer assets or enter into a merger or consolidate with another
company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary
dividends, enter into sale and leaseback transactions or incur certain subsidiary level indebtedness, subject to
certain exceptions. Our notes are subject to similar covenants except that only the 2016 Notes, 2020 Notes and
the 2036 Notes contain covenants limiting or restricting subsidiary indebtedness and none of our notes are
subject to a covenant that limits our ability to impose restrictions on subsidiary dividends. Also consistent with
the prior facility, the Revolving Credit Facility requires us to maintain a consolidated adjusted EBITDA interest
coverage ratio of greater than 2:1 (ratio of consolidated adjusted EBITDA, defined as net income plus the sum of
(a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) any other
non-cash deductions, losses or changes made in determining net income for such period and (f) extraordinary
losses or charges, minus extraordinary gains, in each case determined in accordance with accounting principles
generally accepted in the United States of America for such period, to interest expense) for each period
comprising the four most recent consecutive fiscal quarters. Our consolidated interest coverage ratio was 9:1 for
the year ended December 31, 2011.
For the year ended December 31, 2011, we were in compliance with our debt covenants. A violation of our
debt covenants could impair our ability to borrow and outstanding amounts borrowed could become due, thereby
restricting our ability to use our excess cash for other purposes.
Cash Priorities
Liquidity
Our objective is to maintain strong liquidity and a capital structure consistent with our current credit ratings.
We have existing cash balances, cash flows from operating activities, access to the commercial paper markets
and our Revolving Credit Facility available to support the needs of our business.
Capital Expenditures
The total aggregate amount paid for contract costs, purchases of property and equipment and purchased and
developed software was $162.5 million, $113.7 million and $98.9 million in 2011, 2010 and 2009, respectively.
Amounts paid for new and renewed agent contracts vary depending on the terms of existing contracts as well as
the timing of new and renewed contract signings. Other capital expenditures during 2011, 2010 and 2009
included investments in our information technology infrastructure and purchased and developed software.
Acquisition of Businesses
On November 7, 2011, we acquired TGBP from Travelex Holdings Limited for cash consideration of
£603 million ($967.8 million), which included acquired cash of $40.0 million and an initial working capital
adjustment. The final consideration is subject to an additional working capital adjustment.
On October 31, 2011, we acquired the remaining 70% interest in Finint, one of our largest money transfer
agents in Europe, for cash consideration of €99.6 million ($139.4 million). We previously held a 30% equity
interest in Finint.
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