Western Union 2013 Annual Report Download - page 181

2013 FORM 10-K
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Capital Resources and Liquidity
Our primary source of liquidity has been cash generated from our operating activities, primarily from net income and
fluctuations in working capital. Our working capital is affected by the timing of interest payments on our outstanding borrowings
and timing of income tax payments, among other items. The majority of our interest payments are due in the second and fourth
quarters which results in a decrease in the amount of cash provided by operating activities in those quarters and a corresponding
increase to the first and third quarters.
Our future cash flows could be impacted by a variety of factors, some of which are out of our control, including changes in
economic conditions, especially those impacting migrant populations and changes in income tax laws or the status of income tax
audits, including the resolution of outstanding tax matters.
A significant portion of our cash flows from operating activities has been generated from subsidiaries, some of which are
regulated entities. Our regulated subsidiaries may transfer all excess cash to the parent company for general corporate use, except
for assets subject to legal or regulatory restrictions, including: 1) requirements to maintain cash and other qualifying investment
balances, free of any liens or other encumbrances, related to the payment of certain of our money transfer and other payment
obligations; and 2) other legal or regulatory restrictions, including statutory or formalized net worth requirements. Assets subject
to these other legal or regulatory restrictions totaled approximately $335 million as of December 31, 2013, and include assets
outside of the United States subject to restrictions from being transferred outside of the countries where these assets are located.
We believe we have adequate liquidity to meet our business needs through our existing cash balances and our ability to generate
cash flows through operations. These business needs include approximately $100 million of remaining tax payments, plus additional
accrued interest, we expect to make as a result of the IRS Agreement, which we expect to pay in 2014 and beyond, in addition to
dividends and share repurchases. In addition, we have capacity to borrow up to $1.65 billion in the aggregate under our revolving
credit facility ("Revolving Credit Facility"), which supports borrowings under our $1.5 billion commercial paper program and
expires in January 2017. As of December 31, 2013, we had no outstanding borrowings under our Revolving Credit Facility or
commercial paper program.
Cash and Investment Securities
As of December 31, 2013, we had cash and cash equivalents of $2.1 billion, of which approximately $1.1 billion was held by
our foreign entities. We plan to use our existing cash to fund the repayment of $500.0 million of our 6.500% notes ("2014 Notes")
in February 2014. Our ongoing cash management strategies to fund our business needs could cause United States and foreign cash
balances to fluctuate.
Repatriating foreign funds to the United States would, in many cases, result in significant tax obligations because most of
these funds have been taxed at relatively low foreign tax rates compared to our combined federal and state tax rate in the United
States. We have used and expect to continue to use foreign funds to expand and fund our international operations and to acquire
businesses internationally. We regularly evaluate, taking tax consequences and other factors into consideration, our United States
cash requirements and also the potential uses of cash internationally to determine the appropriate level of dividend repatriations
of our foreign source income.
In many cases, we receive funds from money transfers and certain other payment services before we settle the payment of
those transactions. These funds, referred to as "Settlement assets" on our Consolidated Balance Sheets, are not used to support our
operations. However, we earn income from investing these funds. We maintain a portion of these settlement assets in highly liquid
investments, classified as "Cash and cash equivalents" within "Settlement assets," to fund settlement obligations.