Western Union 2014 Annual Report Download - page 290

2014 FORM 10-K
152
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
THE WESTERN UNION COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The Western Union Company (the "Parent") is a holding company that conducts substantially all of its business operations
through its subsidiaries. Under a parent company only presentation, the Parent's investments in its consolidated subsidiaries are
presented under the equity method of accounting, and the condensed financial statements do not present the financial statements
of the Parent and its subsidiaries on a consolidated basis. These financial statements should be read in conjunction with The Western
Union Company's consolidated financial statements.
2. Restricted Net Assets
Certain assets of the Parent's subsidiaries totaling approximately $300 million constitute restricted net assets, as there are
legal or regulatory limitations on transferring such assets outside of the countries where the respective assets are located.
Additionally, certain of the Parent's subsidiaries must meet minimum capital requirements in some countries in order to maintain
operating licenses.
3. Related Party Transactions
On October 1, 2012, the Parent issued a promissory note payable to its 100% owned subsidiary First Financial Management
Corporation in the amount of $268.2 million in exchange for funds distributed to the Parent. The promissory note is due on June 30,
2015, bears interest at the fixed rate of 0.23% per annum, and may be repaid at any time without penalty. The promissory note is
included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2014 and 2013.
On June 1, 2014, the Parent issued a promissory note payable to its 100% owned subsidiary First Financial Management
Corporation in the amount of $65.0 million in exchange for funds distributed to the Parent. The promissory note is due on
February 28, 2017, bears interest at the fixed rate of 0.33% per annum, and may be repaid at any time without penalty. The
promissory note is included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2014.
On August 2, 2014, the Parent entered into a credit agreement (the "Facility") with its 100% owned subsidiary Custom House
Holdings (USA), Ltd., which expires August 2, 2034, providing for unsecured financing facilities in an aggregate amount of $700.0
million. As of December 31, 2014, $506.3 million of borrowings were outstanding under the Facility. The interest rate applicable
for outstanding borrowings under the Facility is the six-month LIBOR rate set on the first day of the calendar year, which was
0.35% for the year ended December 31, 2014. Outstanding borrowings under the Facility are included within "Payable to
subsidiaries, net" in the Condensed Balance Sheets as of December 31, 2014.
Excess cash generated from operations of the Parent's subsidiaries that is not required to meet certain regulatory requirements
is paid periodically to the Parent and is also included within "Payable to subsidiaries, net" in the Condensed Balance Sheets as of
December 31, 2014 and 2013. The Parent's subsidiaries also periodically distribute excess cash balances to the Parent in the form
of a dividend, although the amounts of such dividends may vary from year to year.
The Parent files a consolidated United States federal income tax return, and also a number of consolidated state income tax
returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax payments on behalf
of the consolidated group. The Parent's provision for income taxes has been computed as if it were a separate tax-paying entity.
4. Commitments and Contingencies
The Parent had $3.5 million in outstanding letters of credit and bank guarantees as of December 31, 2014 with expiration
dates through 2015. The letters of credit and bank guarantees are primarily held in connection with certain agent agreements. The
Company expects to renew the letters of credit and bank guarantees prior to expiration in most circumstances.