Western Union 2012 Annual Report Download - page 73

68
Our Revolving Credit Facility contains certain covenants that, among other things, limit or restrict our ability to sell or transfer
assets or merge 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. Our 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, 2012.
For the year ended December 31, 2012, 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 investment-grade 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 $268.2 million, $162.5 million and $113.7 million in 2012, 2011 and 2010, 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 2012, 2011 and 2010 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 £596 million ($956.5
million), net of a final working capital adjustment which resulted in a return of £15 million ($24.1 million) of purchase consideration
in the third quarter of 2012. In connection with the July 5, 2011 purchase agreement, on May 4, 2012, we also acquired the French
assets of TGBP for cash consideration of £3 million ($4.8 million) after receiving regulatory approval.
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.
On April 20, 2011, we acquired the remaining 70% interest in Costa, one of our largest money transfer agents in Europe, for
cash consideration of €95 million ($135.7 million). We previously held a 30% equity interest in Costa.
Share Repurchases and Dividends
During the years ended December 31, 2012, 2011 and 2010, 51.0 million, 40.3 million and 35.6 million, respectively, of shares
were repurchased for $771.9 million, $800.0 million and $584.5 million, respectively, excluding commissions, at an average cost
of $15.12, $19.83 and $16.44 per share, respectively. As of December 31, 2012, $393.6 million remains available under share
repurchase authorizations approved by our Board of Directors through December 31, 2013.