Western Union 2013 Annual Report Download - page 207

2013 FORM 10-K
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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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Spin-off from First Data
On January 26, 2006, the First Data Corporation ("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 (the "Spin-off").
Effective on September 29, 2006, First Data completed the separation and the distribution of these businesses by distributing The
Western Union Company common stock to First Data shareholders (the "Distribution"). Prior to the Distribution, the Company
had been a segment of First Data.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts
of the Company and its majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.
Consistent with industry practice, the accompanying Consolidated Balance Sheets are unclassified due to the short-term nature
of the Company's settlement obligations contrasted with the Company's ability to invest cash awaiting settlement in long-term
investment securities.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of
America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these estimates.
Principles of Consolidation
The Company consolidates financial results when it has both the power to direct the activities of an entity that most significantly
impact the entity's economic performance and the ability to absorb losses or the right to receive benefits of the entity that could
potentially be significant to the entity. The Company utilizes the equity method of accounting when it is able to exercise significant
influence over the entity's operations, which generally occurs when the Company has an ownership interest of between 20% and
50% in an entity.
Earnings Per Share
The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the
weighted-average number of shares of common stock outstanding for the period. Unvested shares of restricted stock are excluded
from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options
at the presented dates are exercised and shares of restricted stock have vested, using the treasury stock method. The treasury stock
method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits
of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore,
reduce the dilutive effect.
As of December 31, 2013, 2012 and 2011 there were 21.2 million, 23.3 million and 17.1 million, respectively, of outstanding
options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation, as their effect was
anti-dilutive.