Western Union 2011 Annual Report Download - page 99

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 more than 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. The Company’s existing Western Union Business Solutions
business (“Business Solutions”) and Travelex Global Business Payments (“TGBP”), which was acquired
in November 2011 (see Note 3), are also included in this segment. These businesses facilitate
business-to-business payments, primarily for cross-border, cross-currency transactions. The majority of
the segment’s revenue was generated in the United States during all periods presented. However,
international expansion and other key strategic initiatives, including TGBP, have resulted in international
revenue continuing to increase in this segment.
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 and prepaid 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, 2011, the amount of net assets subject to these
limitations totaled approximately $230 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 businesses 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
92