Western Union Reports Fourth Quarter and Full Year 2007 Results
The Western Union Company (NYSE: WU) today reported financial
results for the fourth quarter and full year 2007.
Highlights for the fourth quarter include:
-- Revenue of $1.3 billion, up 12%
-- EPS of $0.32, up 14%
-- Operating income margin of 28%
-- Consumer-to-consumer revenue increased 12%, transactions up
14%
-- Consumer-to-business revenue grew 13%, transactions up 49%
Highlights for the full year include:
-- Revenue of $4.9 billion, up 10%
-- EPS of $1.11, or $1.13 excluding the previously announced
$0.02 per share non-cash charge
-- Operating income margin of 27%
-- Cash provided by operating activities of $1.1 billion
-- More than 335,000 agent locations
-- 572 million total C2C and C2B transactions
"Western Union´s revenue and earnings growth accelerated
throughout the year, which enabled us to deliver our expectations for
the fourth quarter, and we are pleased with these results," said
President and Chief Executive Officer Christina Gold. "2007
demonstrated Western Union´s strengths as a geographically diverse
global company, with 65% of total annual revenue generated by our
international consumer-to-consumer money transfer business.
Additionally, our consumer-to-business segment continues to grow with
Pago Facil, our bill payment company in Argentina, continuing to
exceed expectations."
Fourth Quarter Results
Revenue was $1.3 billion, up 12%, or 10% excluding the December 6,
2006 acquisition of Pago Facil. Revenue also included $28 million from
currency translation of the euro.
Total consumer-to-consumer revenue in the fourth quarter grew 12%
to $1.1 billion on transaction growth of 14%. A significant portion of
the growth was attributable to the continued strong performance within
the international consumer-to-consumer business, which increased
revenue 17% while growing transactions 19%. The
international-to-international subset, those transactions that
originate outside of the U.S., grew faster still, posting 25% revenue
growth and 28% transaction growth. This international-to-international
subset contributed 54% of Western Union´s fourth quarter total
revenue.
The Mexico business had flat revenue from transaction growth of
3%. As expected, the difference between revenue and transaction growth
rates continued to tighten as a result of a steady Mexico pricing
environment. The company´s Mexico transaction growth rate continued to
outpace the market, based on data released by Banco de Mexico.
The domestic business posted revenue and transaction declines of
9% and 3%, respectively.
Revenue in the consumer-to-business segment was $183 million in
the quarter, growing 13%, or 4% excluding the December 2006
acquisition of Pago Facil.
In the fourth quarter, consolidated operating income was up 9%.
Operating income margin was 28% compared to 29% in last year´s fourth
quarter. The decrease in operating income margin was caused by the
ongoing shift in business mix, reflecting stronger growth in the
international business, which carries lower profit margins than in the
U.S.-originated businesses, and $17 million of incremental independent
public company expenses compared to $9 million in the fourth quarter
of 2006.
Fourth quarter consumer-to-consumer operating income increased
11%, and operating income margin remained strong at 27.5% compared to
27.6% a year ago. Operating income growth and margin were impacted by
the international and U.S. mix shift and incremental independent
public company expenses, which were offset to a lesser extent by
expense leverage.
Fourth quarter consumer-to-business operating income declined 3%,
and operating income margin decreased to 30% from 35% a year ago. The
decline was primarily due to the segment´s lower-margin
electronic-based services growing faster than the segment´s
higher-margin cash-based services and Pago Facil, which has an
operating income margin lower than the segment´s average. In addition,
the segment´s operating income growth and margin were impacted by
incremental independent public company expenses.
The tax rate was 27.4% in the fourth quarter versus 30.8%
recognized in the first three quarters of 2007. The lower tax rate in
the quarter was primarily due to the favorable resolution of certain
tax matters.
The agent network had more than 335,000 locations at year end,
which was ahead of expectations. During the quarter, Western Union
took significant steps in strengthening this network by entering into
new agreements and re-signing existing agreements around the world.
In November, Western Union entered into a multi-year extension
with Kroger, an agent for 22 years, covering 2,400 locations. In
January, the company extended its agreement with supermarket operator
Delhaize America, which offers Western Union services at 1,120 U.S.
locations. The re-signing of these two supermarkets maintains Western
Union´s strong position of having long-term agreements with eight of
the 10 largest supermarkets in the United States.
To solidify its position in a key region, Western Union made a 25%
equity investment in Grace Kennedy, a key agent in Jamaica and other
Caribbean islands. The company also signed a 10-year renewal with
Grupo Vimenca, with over 200 locations in the Dominican Republic.
In a significant new development, Western Union has received the
required approvals to resume service in South Africa and expects to be
offering services later in 2008 after a six-year absence.
In January, the company signed an agreement with Penn Traffic, a
leading U.S. food retailer with over 100 locations. Penn Traffic
previously offered money transfer services through a competitor.
Additional notable new relationships include an agreement to offer
money transfer services at over 300 China Everbright Bank branches in
more than 30 cities in China, and a new relationship with the
Bangladesh Post.
Significant renewal agreements included: Correo Argentino,
representing 1,300 postal locations, Deutsche Postbank, covering 3,200
locations in Germany and the Kenya Post Office Savings Bank. In the
United States, TCF Bank renewed its agreement to offer Western Union
services at 360 locations across seven states.
Full Year Results
Revenue for 2007 was $4.9 billion, a 10% increase, or 8% excluding
the acquisition of Pago Facil. Full-year revenue included $79 million
from currency translation of the euro.
Total consumer-to-consumer revenue for 2007 grew 9% to $4.1
billion on transaction growth of 14% over 2006 with a significant
portion of this growth attributable to the international
consumer-to-consumer business. Operating income margin declined from
29% to 26% in 2007, primarily as a result of the shift in business mix
reflecting stronger growth in the international business, which
carries a lower profit margin than the U.S. originated businesses,
incremental independent public company expenses and the third quarter
non-cash stock compensation charge.
Consumer-to-business segment revenue increased 13% from $636
million in 2006 to $720 million in 2007. Excluding the impact of the
acquisition of Pago Facil, revenue increased 4%. Operating income
margin decreased from 35% to 31% as the segment´s electronic-based
services and Pago Facil, both of which have margins lower than the
segment´s cash-based services, became more significant to the
segment´s overall results. In addition, operating income growth and
margin were impacted by incremental public company expenses and the
non-cash stock compensation charge.
Consolidated operating income was $1.3 billion and the operating
margin for the year was 27% compared with 29% in 2006. Full-year
operating income and operating income margin were impacted by the mix
shift described above, the $22 million non-cash stock compensation
charge, as well as $59 million in incremental independent public
company expenses compared to $25 million in 2006.
The tax rate was 29.9% compared to 31.5% in 2006, primarily due to
increased foreign-derived profits compared to U.S.-derived profits, as
well as the favorable resolution of certain tax matters.
Western Union continues to generate strong cash flow. Cash
provided by operating activities was $1.1 billion. Capital
expenditures were $192 million. Cash at year end was $1.8 billion and
total outstanding borrowings were $3.3 billion.
During the fourth quarter, Western Union repurchased 6.4 million
shares for $146 million at an average price of $22.73. For the full
year 2007, Western Union repurchased 34.7 million shares for $727
million at an average cost of $20.94 per share. The company has $1.25
billion remaining under its board-authorized repurchase plans.
Western Union continues to make progress with new products and
offerings. On the mobile money transfer front, Bharti Airtel and
Western Union will jointly develop and pilot a mobile money transfer
service in India. In the second quarter of 2008, Western Union expects
to launch two separate mobile money transfer offerings in the
Philippines, one with Smart Communications and the other with Globe
Teleco, the two major mobile operators in the Philippines. In Canada,
Western Union launched a new service with Scotiabank connecting
customers to Western Union´s 335,000 physical locations. Customers
needing to send money can initiate a transaction at bank branches or
via Scotiabank´s online service for payout in any Western Union
location worldwide.
Western Union has partnered with PrimeCredit Limited, a wholly
owned subsidiary of Standard Chartered Bank PLC, to begin offering
micro loans on a test basis in Hong Kong. Western Union will not take
the credit risk on the loans.
Outlook
Gold concluded, "As we move into 2008, I am excited about our
strong position in the growing worldwide remittance marketplace. We
have a talented team, a world-class brand, outstanding agent partners
and the corresponding network, and we are in a strong financial
position that will allow us to focus our investments on growth. I am
confident in our 2008 financial plan, which anticipates the
international consumer-to-consumer business to remain strong, the
Mexico business to have modest growth, and the U.S. domestic and U.S.
outbound businesses to be challenged in light of the current economic
circumstances in the United States.
"In 2008, we will continue to grow the core consumer-to-consumer
business, expand our consumer-to-business service globally, further
develop innovations such as mobile phone money transfer, microlending
and new business-to-business offerings, and leverage our cost
structure to maintain strong operating margins."
For the full year 2008, management provides the following
guidance:
-- Revenue growth in the range of 9% to 11%
-- Earnings per share of $1.24 to $1.28
-- Strong margins consistent with 2007
-- Cash flow from operations of approximately $1.2 billion
Investor and Analyst Conference
Western Union President and Chief Executive Officer Christina Gold
will host a conference call and webcast at 8:30 a.m. Eastern Time
today. Joining Christina on the conference call will be Scott
Scheirman, Executive Vice President and Chief Financial Officer. To
listen to the conference call live via telephone, dial 888-680-0878
(U.S.) or +1-617-213-4855 (outside the U.S.) ten minutes prior to the
start of the call. The pass code is 88068792.
The conference call will also be available via webcast at
www.westernunion.com. Registration for the event is required, so
please allow at least five minutes to register prior to the scheduled
start time.
A replay of the call will be available one hour after the call
ends through Feb. 7, 2008 at 5:00 p.m. Eastern Time at 888-286-8010
(U.S.) or +1-617-801-6888 (outside the U.S.). The pass code is
36994086. A webcast replay will be available at www.westernunion.com
for the same time period. Please note: All statements made by Western
Union officers on this call are the property of Western Union and
subject to copyright protection. Other than the replay, Western Union
has not authorized, and disclaims responsibility for, any recording,
replay or distribution of any transcription of this call.
Non-Cash Charge for Accelerated Stock Compensation Expense
In the third quarter 2007, the company recognized a $22 million,
or a $0.02 per share, non-cash charge in accordance with FAS 123R
accounting for stock-based compensation resulting from the previously
announced acceleration of vesting in Western Union stock options and
awards granted to current Western Union employees prior to the
spin-off from First Data. Under the terms of the plan, vesting was
accelerated for these options and awards as a result of the change of
control that occurred when an affiliate of Kohlberg, Kravis, Roberts &
Co. ("KKR") acquired First Data Corporation, Western Union´s former
parent company, on September 24, 2007.
Definition of Incremental Independent Public Company Expenses
Incremental independent public company expenses include the costs
of staffing additions and related costs to replace support previously
provided by First Data Corporation, Western Union´s corporate parent
until September 29, 2006, as well as additional costs for corporate
governance, information technology, corporate branding and global
public affairs, benefits and payroll administration, procurement,
workforce reorganization, stock compensation, and other expenses
related to being a stand-alone public company. These costs also
include recruiting and relocation expenses associated with hiring
management positions new to Western Union, other employee compensation
expenses, and temporary labor used to develop ongoing processes. These
expenses are those in excess of amounts allocated to the company by
First Data prior to September 29, 2006 or beyond amounts that the
company presumes First Data would have allocated subsequently thereto.
The company expects most of these expenses will continue to be
incurred in future periods.
Non-GAAP Measures
Western Union´s management presents revenue growth excluding the
acquisition of Pago Facil and EPS excluding the non-cash charge
associated with the acceleration of vesting of certain stock options
and awards as a result of the acquisition of First Data Corporation by
KKR, each of which are non-GAAP measures, as they provide more
meaningful information.
Reconciliations of non-GAAP to comparable GAAP measures are
available in the accompanying schedules and in the "Investor
Relations" section of the company´s web site at www.westernunion.com.
Safe Harbor Compliance Statement for Forward-Looking Statements
This press release contains forward-looking statements regarding
projected future results within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Actual outcomes and results
may differ materially from those expressed in, or implied by,
forward-looking statements. Words such as "expects," "intends,"
"anticipates," "believes," "estimates" and other similar expressions
or future or conditional verbs such as "will," "should," "would" and
"could" are intended to identify such forward-looking statements. The
statements are only as of the date they are made, and Western Union
undertakes no obligation to update any forward-looking statement.
Possible events or factors that could cause results or performance
to differ materially from those expressed in our forward-looking
statements include but are not limited to: changes in general economic
conditions and economic conditions in the geographic regions and
industries in which we operate; changes in immigration laws, patterns
and other factors related to immigrants; technological changes,
particularly with respect to e-commerce; our ability to attract and
retain qualified key employees and to successfully manage our
workforce; changes in foreign exchange rates, including the impact of
the regulation of foreign exchange spreads on money transfers; adverse
movements and volatility in debt and equity capital markets; political
conditions and related actions by the United States and abroad which
may adversely affect our businesses and economic conditions as a
whole; changes in the economic climate in the countries in which we
operate; continued growth in the money transfer market and other
markets in which we operate at rates approximating recent levels;
implementation of agent contracts according to schedule; our ability
to maintain our agent network under terms consistent with those
currently in place; interruptions of United States government
relations with countries in which we have or are implementing material
agent contracts; deterioration in consumers´ and clients´ confidence
in our business, or in money transfer providers generally;
successfully managing credit and fraud risks presented by our agents
and consumers; liabilities and unanticipated developments resulting
from litigation and regulatory investigations and similar matters,
including costs, expenses, settlements and judgments; changes in
United States or foreign laws, rules and regulations including the
Internal Revenue Code, and governmental or judicial interpretations
thereof; changes in industry standards affecting our business; changes
in accounting standards, rules and interpretations; competing
effectively in the money transfer industry with respect to global and
niche or corridor money transfer providers, banks and other nonbank
money transfer services providers, including telecommunications
providers, card associations and card-based payments providers; our
ability to grow our core businesses; our ability to develop and
introduce new products, services and enhancements, and gain market
acceptance of such products; our ability to protect our brands and our
other intellectual property rights; successfully managing the
potential both for patent protection and patent liability in the
context of a rapidly developing legal framework for intellectual
property protection; any material breach of security of or
interruptions in any of our systems; mergers, acquisitions and
integration of acquired businesses and technologies into our company
and the realization of anticipated synergies from these acquisitions;
adverse consequences from our spin-off from First Data Corporation
including resolution of certain ongoing matters; decisions to
downsize, sell or close units or otherwise change the business mix;
catastrophic events; and management´s ability to identify and manage
these and other risks.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global money
transfer services. Together with its affiliates, Orlandi Valuta, Vigo
and Pago Facil, Western Union provides consumers with fast, reliable
and convenient ways to send and receive money around the world, as
well as send payments and purchase money orders. It operates through a
network of more than 335,000 Agent locations in over 200 countries and
territories. Famous for its pioneering telegraph services, the
original Western Union dates back to 1851. For more information, visit
www.westernunion.com.
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------- --------------------------
2007 2006 Change 2007 2006 Change
--------- -------- ------ --------- --------- ------
Revenues:
Transaction fees $1,058.6 $964.9 10% $3,989.8 $3,696.6 8%
Foreign exchange
revenue 215.7 175.3 23% 771.3 653.9 18%
Commission and
other revenues 34.8 33.0 5% 139.1 119.7 16%
--------- -------- --------- ---------
Total revenues 1,309.1 1,173.2 12% 4,900.2 4,470.2 10%
Expenses:
Cost of services 752.7 651.1 16% 2,808.4 2,430.5 16%
Selling, general
and
administrative 191.8 186.9 3% 769.8 728.3 6%
--------- -------- --------- ---------
Total expenses (b) 944.5 838.0 13% 3,578.2 3,158.8 13%
Operating income 364.6 335.2 9% 1,322.0 1,311.4 1%
Other
(expense)/income:
Interest income 20.5 19.3 6% 79.4 40.1 98%
Interest expense
(b) (47.1) (51.5) 9% (189.0) (53.4) (a)
Derivative
gains/(losses),
net 3.2 0.6 (a) 8.3 (21.2) (a)
Foreign exchange
effect on notes
receivable from
First Data, net - - (a) - 10.1 (a)
Interest income
from First Data,
net - - (a) - 35.7 (a)
Other
(expense)/income,
net (6.0) 2.9 (a) 1.7 12.4 (a)
--------- -------- --------- ---------
Total other
(expense) /
income, net (29.4) (28.7) -2% (99.6) 23.7 (a)
--------- -------- --------- ---------
Income before
income taxes 335.2 306.5 9% 1,222.4 1,335.1 -8%
Provision for
income taxes 91.9 89.3 3% 365.1 421.1 -13%
--------- -------- --------- ---------
Net income $243.3 $217.2 12% $857.3 $914.0 -6%
========= ======== ========= =========
Earnings per
share:
Basic $0.32 $0.28 14% $1.13 $1.20 -6%
Diluted $0.32 $0.28 14% $1.11 $1.19 -7%
Weighted-average shares
outstanding: (c)
Basic 749.5 766.2 760.2 764.5
Diluted 761.7 782.3 772.9 768.6
(a) Calculation not meaningful
(b) Beginning third quarter of 2006, Western Union incurred higher
corporate overhead and interest costs, many of which are recurring,
as a result of its separation from First Data. Prior to September 29,
2006, the businesses that comprise Western Union were wholly-owned
subsidiaries of First Data.
(c) For all periods prior to September 29, 2006 (date of spin-off from
First Data), basic and diluted earnings per share are computed
utilizing the shares outstanding at September 29, 2006.
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THE WESTERN UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
December 31, December 31,
2007 2006
------------ ------------
Assets
Cash and cash equivalents $1,793.1 $1,421.7
Settlement assets 1,319.2 1,284.2
Property and equipment, net of accumulated
depreciation of $251.5 and $213.1,
respectively 200.3 176.1
Goodwill 1,639.5 1,648.0
Other intangible assets, net of accumulated
amortization of $236.8 and $211.4,
respectively 334.1 287.7
Other assets 498.0 503.4
------------ ------------
Total assets $5,784.2 $5,321.1
============ ============
Liabilities and Stockholders´
Equity/(Deficiency)
Liabilities:
Accounts payable and accrued liabilities $350.1 $312.4
Settlement obligations 1,319.2 1,282.5
Income tax payable 279.7 242.4
Deferred tax liability, net 263.6 274.8
Borrowings 3,338.0 3,323.5
Other liabilities 182.9 200.3
------------ ------------
Total liabilities 5,733.5 5,635.9
Stockholders´ Equity/(Deficiency):
Preferred stock, $1.00 par value; 10 shares
authorized; no shares issued - -
Common stock, $0.01 par value; 2,000 shares
authorized; 749.8 shares and 772.0 shares
issued, respectively 7.5 7.7
Capital deficiency (341.1) (437.1)
Retained earnings 453.1 208.0
Accumulated other comprehensive loss (68.8) (73.5)
Less: Treasury Stock at cost, 0.9 shares at
December 31, 2006 - (19.9)
------------ ------------
Total Stockholders´ Equity/(Deficiency) 50.7 (314.8)
------------ ------------
Total Liabilities and Stockholders´
Equity/(Deficiency) $5,784.2 $5,321.1
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Year Ended December 31,
-----------------------
2007 2006
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $857.3 $914.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 49.1 34.8
Amortization 74.8 68.7
Deferred income tax provision 4.2 12.9
Realized gain on derivative instruments - (4.1)
Stock compensation expense 50.2 23.3
Other non-cash items, net 14.6 24.3
Increase (decrease) in cash, excluding the
effects of acquisitions and dispositions,
resulting from changes in:
Other assets 16.2 (60.7)
Accounts payable and accrued liabilities 43.4 59.8
Income tax payable 15.3 63.4
Other liabilities (21.6) (27.5)
----------- ----------
Net cash provided by operating activities 1,103.5 1,108.9
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalization of contract costs (80.9) (124.1)
Capitalization of purchased and developed
software (27.7) (14.4)
Purchases of property and equipment (83.5) (63.8)
Notes receivable issued to agents (6.1) (140.0)
Repayments of notes receivable issued to agents 32.0 20.0
Acquisition of businesses, net of cash acquired
and contingent purchase consideration paid - (66.5)
Cash received on maturity of foreign currency
forwards - 4.1
Purchase of equity method investments (35.8) -
----------- ----------
Net cash used in investing activities (202.0) (384.7)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from commercial paper 13.6 324.6
Net (repayments of)/proceeds from net
borrowings under credit facilities (3.0) 3.0
Proceeds from exercise of options 216.1 80.8
Cash dividends to public stockholders (30.0) (7.7)
Common stock repurchased (726.8) (19.9)
Advances from affiliates of First Data - 160.2
Repayments of notes payable to First Data - (154.5)
Additions to notes receivable from First Data - (7.5)
Proceeds from repayments of notes receivable
from First Data - 776.2
Dividends to First Data - (2,953.9)
Proceeds from issuance of debt - 4,386.0
Principal payments on borrowings - (2,400.0)
----------- ----------
Net cash (used in)/provided by financing
activities (530.1) 187.3
Net change in cash and cash equivalents 371.4 911.5
Cash and cash equivalents at beginning of year 1,421.7 510.2
----------- ----------
Cash and cash equivalents at end of year $1,793.1 $1,421.7
=========== ==========
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THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA
(in millions)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2007 2006 Change 2007 2006 Change
-------- -------- ------ -------- -------- ------
Revenues:
Consumer-to-
Consumer:
Transaction fees $879.4 $806.0 9% $3,286.6 $3,059.0 7%
Foreign exchange
revenue 215.1 174.9 23% 769.3 652.4 18%
Other revenues 9.7 9.0 8% 37.2 33.5 11%
-------- -------- -------- --------
Total Consumer-to-
Consumer: 1,104.2 989.9 12% 4,093.1 3,744.9 9%
Consumer-to-
Business:
Transaction fees 169.9 149.2 14% 665.5 593.7 12%
Other revenues 13.4 12.9 4% 54.4 42.5 28%
-------- -------- -------- --------
Total Consumer-to-
Business: 183.3 162.1 13% 719.9 636.2 13%
Other:
Revenue 21.6 21.2 2% 87.2 89.1 -2%
-------- -------- -------- --------
Total Other: 21.6 21.2 2% 87.2 89.1 -2%
-------- -------- -------- --------
Total revenues $1,309.1 $1,173.2 12% $4,900.2 $4,470.2 10%
======== ======== ======== ========
Operating income:
Consumer-to-Consumer $303.5 $272.9 11% $1,078.3 $1,069.7 1%
Consumer-to-Business 55.7 57.3 -3% 223.7 223.3 0%
Other 5.4 5.0 8% 20.0 18.4 9%
-------- -------- -------- --------
Total operating
income $364.6 $335.2 9% $1,322.0 $1,311.4 1%
======== ======== ======== ========
Operating profit
margin:
Consumer-to-Consumer -2
27.5% 27.6% 0 pts 26.3% 28.6% pts
Consumer-to-Business -5 -4
30.4% 35.3% pts 31.1% 35.1% pts
Other 25.0% 23.6% 1 pt 22.9% 20.7% 2 pts
Total operating -2
profit margin 27.9% 28.6% -1 pt 27.0% 29.3% pts
Depreciation and
Amortization:
Consumer-to-Consumer $25.6 $22.7 13% $98.5 $80.6 22%
Consumer-to-Business 5.1 4.4 16% 21.8 18.1 20%
Other 1.0 1.2 -17% 3.6 4.8 -25%
-------- -------- -------- --------
Total depreciation
and amortization $31.7 $28.3 12% $123.9 $103.5 20%
======== ======== ======== ========
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KEY INDICATORS
(in millions)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -------------------------
2007 2006 Change 2007 2006 Change
--------- ------ ------ --------- -------- ------
Transactions
Consumer-to-Consumer 45.1 39.6 14% 167.7 147.1 14%
Consumer-to-Business 103.4 69.3 49% 404.5 249.4 62%
Revenue
Consumer-to-Consumer $1,104.2 $989.9 12% $4,093.1 $3,744.9 9%
Consumer-to-Business $183.3 $162.1 13% $719.9 $636.2 13%
Three Months Ended Year Ended
December 31, 2007 December 31, 2007
----------------------- -------------------------
Consumer-to-Consumer
Transaction Growth
International (a) 19% 20%
Domestic (b) -3% -4%
Mexico (c) 3% 4%
Consumer-to-
Consumer 14% 14%
Consumer-to-Consumer
Revenue Growth
International
(a) 17% 15%
Domestic (b) -9% -10%
Mexico (c) 0% -4%
Consumer-to-
Consumer 12% 9%
Three Months Ended Year Ended
December 31, 2007 December 31, 2007
----------------------- -------------------------
Including Including
Pago Excluding Pago Excluding
Facil Pago Facil Facil Pago Facil
----------------------- -------------------------
Consumer-to-Business
Transaction Growth 49% 1% 62% 1%
Consumer-to-Business
Revenue Growth 13% 4% 13% 4%
(a) Represents transactions between and within foreign countries
(excluding Canada and Mexico), transactions originated in the United
States or Canada and paid elsewhere, and transactions originated
outside the United States or Canada and paid in the United States or
Canada. Excludes all transactions between or within the United States
and Canada and all transactions to and from Mexico as reflected in
(b) and (c) below.
(b) Represents all transactions between and within the United States
and Canada.
(c) Represents all transactions to and from Mexico.
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THE WESTERN UNION COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Western Union´s management has presented earnings per share, excluding
the accelerated non-cash FAS 123R accounting for stock-based
compensation charge, resulting from the acquisition of First Data by
an affiliate of KKR. Western Union´s management has also presented
consolidated revenue growth and revenue growth for our consumer-to-
business segment, excluding revenue attributed to our acquisition of
Pago Facil. Western Union´s management believes these non-GAAP
measures provide meaningful supplemental information regarding our
operating results to assist management, investors, analysts, and
others in understanding our financial results and to better analyze
trends in our underlying business, because they provide consistency
and comparability.
A non-GAAP financial measure should not be considered in isolation or
as a substitute for the most comparable GAAP financial measure. A
non-GAAP financial measure reflects an additional way of viewing
aspects of our operations that, when viewed with our GAAP results and
the reconciliation to the corresponding GAAP financial measure,
provide a more complete understanding of our business. Users of the
financial statements are encouraged to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure. A reconciliation of non-GAAP
measures to the most directly comparable GAAP financial measures is
included below.
Year Ended
December 31, 2007
-----------------
Net income as reported (GAAP) $857.3
Adjustments:
Accelerated non-cash vesting charge, net of income
tax benefit of $7.1 million (a) 15.2
-----------------
Net income adjusted $872.5
=================
Earnings per share:
As reported (GAAP) $1.11
Accelerated non-cash vesting charge (a) 0.02
-----------------
Adjusted $1.13
=================
(a) In the third quarter 2007, the company recognized a $22 million or
a $0.02 per share non-cash charge in accordance with FAS 123R
accounting for stock-based compensation resulting from the previously
announced acceleration of vesting in Western Union stock options and
awards granted to current Western Union employees prior to the spin-
off from First Data. Under the terms of the plan, vesting was
accelerated for these options and awards as a result of the change of
control that occurred when an affiliate of KKR acquired First Data,
Western Union´s former parent company, on September 24, 2007.
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-0-
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THE WESTERN UNION COMPANY
RECONCILIATION OF NON-GAAP MEASURES (CONTINUED)
(in millions)
(unaudited)
Consolidated Revenue
Three months ended Year ended
December 31, December 31,
-------------------- -----------------
2007 2006 2007 2006
----------- -------- -------- --------
Revenue as reported (GAAP) $1,309.1 $1,173.2 $4,900.2 $4,470.2
Less:
Total Pago Facil revenue 18.9 3.6 67.7 3.6
----------- -------- -------- --------
Revenue adjusted $1,290.2 $1,169.6 $4,832.5 $4,466.6
=========== ======== ======== ========
Growth Rates:
As reported (GAAP) 12% 10%
Adjusted 10% 8%
C2B Revenue
Three months ended Year ended
December 31, December 31,
-------------------- -----------------
2007 2006 2007 2006
----------- -------- -------- --------
C2B revenue as reported (GAAP) $183.3 $162.1 $719.9 $636.2
Less:
Pago Facil C2B revenue 17.8 3.6 64.4 3.6
----------- -------- -------- --------
C2B revenue adjusted $165.5 $158.5 $655.5 $632.6
=========== ======== ======== ========
Growth Rates:
As reported (GAAP) 13% 13%
Adjusted 4% 4%
*T
WU-G, WU-F