The Western Union Company (NYSE: WU) today reported financial
results for the first quarter.
Highlights for the quarter include:
-- Revenue of $1.3 billion, up 12%
-- First quarter 2008 marks the fourth consecutive quarter of
organic revenue growth acceleration
-- EPS of $0.27, up 8%; or $0.29, up 16% excluding restructuring
expenses
-- Operating income margin of 24%, or 26% excluding restructuring
expenses
-- Cash provided by operating activities of $318 million
-- Consumer-to-consumer (C2C) revenue and transactions increased
14%
-- International C2C, which was 67% of total revenue, grew
revenue and transactions 19%
-- Consumer-to-business (C2B) revenue grew 4%, transactions up 3%
-- Quarter closed with 345,000 agent locations
"Our strong first quarter results, which were driven by another
strong quarter from our international C2C business, have put us on
track to meet our business objectives for the year," said Western
Union President and Chief Executive Officer Christina Gold. "These
results reflect our ability to leverage our distribution network and
world-class brand in serving the increasing consumer demand for
Western Union services throughout the world."
First Quarter Results
Revenue was $1.3 billion, up 12%. Revenue included $33 million of
benefit from currency translation of the euro.
Operating income, which included $24 million of restructuring
expenses, was $309 million up 2% (up 9% excluding the restructuring
expenses) and operating income margin was 24.4% (26.3% excluding
restructuring expenses) compared to 26.9% in last year´s first
quarter. Net income was $207 million up 7%, and included a non-cash
pre-tax $7 million derivative gain, which is expected to reverse later
in the year. Net income excluding restructuring expenses grew 15%.
Earnings per share were $0.27, an 8% increase over last year´s
first quarter, or $0.29 up 16% excluding the restructuring expenses.
The tax rate for the quarter was 29.2% compared to 31.5% in last
year´s first quarter. The effective tax rate decreased primarily as a
result of a higher proportion of foreign-derived profits, which are
taxed at a lower rate compared to U.S.-derived profits.
Consumer-to-Consumer
Consumer-to-consumer revenue in the first quarter grew 14% to $1.1
billion on transaction growth of 14%. Operating income grew 15% and
operating income margin was strong at 25.9% compared to 25.8% in last
year´s first quarter.
In line with expectations, the domestic business had revenue and
transaction declines of 8% and 3%, respectively. Pricing in the
domestic business was stable in the first quarter.
The growth in the C2C segment was driven by the international
business where revenue and transactions each increased 19%. A subset
of the international business, those transactions that originate
outside of the United States, which total more than one-half of
Western Union´s annual revenue, grew even faster, posting 28% revenue
growth and 29% transaction growth.
Fueling the continued strong international performance was
significant first quarter revenue and transaction growth in India and
China. In India, the world´s largest remittance receive market
revenue growth was 52% with transaction growth of 65%. In China, the
second largest receive market, revenue grew 35% from transaction
growth of 22%. These two countries combined represent 6% of total
Western Union revenue.
The Mexico business continued to improve, and the company´s Mexico
transaction growth rate continued to outpace the market, based on data
released by Banco de Mexico. Revenue was up 1% and transactions were
up 2%. Pricing within Mexico remained stable as evidenced by the
tightening of the difference between revenue and transaction growth
rates compared to prior quarters.
Consumer-to-Business
Consumer-to-business revenue represents 15% of Western Union´s
revenue and increased 4% to $190 million. The revenue growth continues
to be driven by strong demand for electronic bill payment services in
the U.S. and by growth in the company´s Pago Facil business in
Argentina.
In the first quarter operating income was down 8% and operating
margin was 29.6% compared to 33.4% in the first quarter of 2007.
Impacting the year-over-year operating income growth and margin
comparison are the faster-growing U.S. electronic bill payment
services and the Pago Facil businesses, which have lower margins than
the traditional U.S. cash bill payment business. The first quarter
2008 operating income margin was consistent with the previous two
quarters.
New Services
On the innovation front, Western Union, together with two
partners, Smart Communications and Globe Telecom, will enter the
market this quarter with its mobile money transfer service to the
Philippines.
Additionally, Western Union began its micro lending pilot in Hong
Kong in the first quarter. Initial results from the pilot have
affirmed the consumer demand for micro loans. The pilot has also
demonstrated that Western Union customers will choose Western Union
for the additional financial services they require.
Agent Signings
Western Union´s extensive network, well-known brand, financial
strength and rigorous compliance efforts continue to attract
outstanding agent partners. In the first quarter, Western Union added
10,000 agent locations and renewed key agents to bring the agent
location total to 345,000.
In South Africa, Western Union will begin offering inbound and
outbound money transfer services in the third quarter through its new
agreement with ABSA, one of the country´s largest financial services
organizations and a subsidiary of Barclays Bank PLC.
A leading bank in Poland and a member of UniCredit Group, Bank
Pekao has joined the Western Union agent network. Previously, Bank
Pekao offered money transfer from different providers which will be
replaced during 2008 by the Western Union Money Transfer service. Bank
Pekao operates 900 branches in Poland.
Buyback
During the first quarter, Western Union repurchased 14 million
shares for $297 million at an average cost of $21.41 per share. The
company is committed to returning capital to shareholders and has
repurchased more than $1 billion of its stock since becoming a public
company. As of March 31, 2008 there was $956 million remaining under
its board-authorized repurchase plan.
Restructuring Expenses
During the quarter, Western Union incurred a total of $24 million
in restructuring expenses. Of this total, $17 million is related to
the company´s decision to close substantially all of its union
operating facilities in Missouri and Texas and transition these
operations to existing facilities outside the U.S. and to third-party
providers as disclosed on March 20. The restructuring expenses related
to this decision are expected to total approximately $60 million in
2008.
In separate actions taken in the first quarter, the company
incurred $7 million in restructuring expenses related to the
elimination or relocation of other positions. Of this total, $5
million was previously disclosed and incurred in January, and an
additional $2 million was incurred in February when additional
cost-saving initiatives were identified. An additional $2 million of
restructuring expenses will be recognized in the second quarter
related to these initiatives.
The company estimates that all first quarter restructuring
initiatives will result in full-year restructuring expenses of $69
million, and will deliver cost savings in 2008 of $10 million and more
than $30 million in 2009 and beyond. Of the $24 million in
restructuring expenses, $22 million was included in cost of services
and $2 million was included in selling, general and administrative
expense. The restructuring expenses were not included in the segments.
Restructuring expenses include expenses related to severance
outplacement and other employee related benefits; facility closure and
migration of IT infrastructure; other expenses related to relocation
of various operations to existing company facilities and third party
providers, including hiring, training, relocation, travel, and
professional fees; and increased security costs at the facilities
being closed. Also, included in the facility closure expenses are
non-cash expenses related to fixed asset and leasehold improvement
write-offs and acceleration of depreciation and amortization.
Outlook
"The overall trajectory of our business, particularly that of our
international C2C business, gives us the confidence that we will
deliver on our 2008 financial objectives," said Gold.
In 2008, the company continues to expect revenue growth of 9% to
11%, cash flow from operations of $1.2 billion and strong operating
margins consistent with 2007 excluding the 2008 restructuring
expenses. Management expects that operating income margin excluding
restructuring expenses will be stronger in the second half of 2008
compared to the first half.
Western Union expects non-GAAP earnings per share in the range of
$1.25 to $1.29, which excludes the estimated $69 million ($0.06 per
share) of full-year restructuring expenses and includes the $10
million ($0.01 per share) in estimated savings. This represents growth
of 11% to 14% over last year´s $1.13 in non-GAAP earnings per share.
As a result of the 2008 restructuring expenses, the company now
expects 2008 GAAP earnings per share to be in the range of $1.19 to
$1.23 or 7% to 11% growth over last year´s GAAP earnings per share of
$1.11. This range includes the impact from the estimated $69 million
($0.06 per share) of full-year restructuring expenses and the benefit
from the estimated $10 million ($0.01 per share) in cost savings. The
original GAAP earnings per share range included $5 million of
restructuring expenses.
Gold concluded, "We remain focused on growing profitably and have
implemented important initiatives including the restructuring
activities. These initiatives together with our ability to leverage
our cost structure make us confident that we will deliver on our
objective of margin expansion. Our goal is to achieve up to 50 basis
points of margin improvement in 2009."
Non-GAAP Measures
Western Union´s management presents earnings per share excluding
restructuring expenses, operating income growth and margin excluding
restructuring expenses, net income growth excluding restructuring
expenses, and 2008 earnings per share growth guidance excluding 2008
restructuring expenses, and 2008 earnings per share guidance excluding
2008 restructuring expenses compared to 2007 earnings per share
excluding the accelerated non-cash stock compensation vesting charge
which are non-GAAP measures, because management believes 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.
Investor and Analyst Conference Call and Slide Presentation
Western Union President and Chief Executive Officer Christina Gold
will host a conference call and webcast including slides, 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 888-680-0860
(U.S.) or +1-617-213-4852 (outside the U.S.) ten minutes prior to the
start of the call. The pass code is 16584385.
The conference call and accompanying slides will be available via
webcast at http://ir.westernunion.com/investor . 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 April 29, 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
36216887. A webcast replay will be available at
http://ir.westernunion.com/investor 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.
Safe Harbor Compliance Statement for Forward-Looking Statements
This press release contains certain statements that are
forward-looking 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, our
forward-looking statements. Words such as "expects," "intends,"
"anticipates," "believes," "estimates," "guides," "provides guidance"
and other similar expressions or future or conditional verbs such as
"will," "should," "would" and "could" are intended to identify such
forward-looking statements. Readers of this press release by The
Western Union Company (the "Company," "Western Union," "we," "our" or
"us") should not rely solely on the forward-looking statements and
should consider all uncertainties and risks discussed under "Risk
Factors" included within the Annual Report on Form 10-K for the year
ended December 31, 2007. The statements are only as of the date they
are made, and the Company 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 the following: 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; the failure by us, our agents
or subagents to comply with our business and technology standards and
contract requirements or applicable laws and regulations, especially
laws designed to prevent money laundering and terrorist financing; 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; failure to maintain sufficient amount
or types of regulatory capital to meet the changing requirements of
our various regulators worldwide; 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 and
biller relationships 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;
adverse rating actions by credit rating agencies; 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; our ability to
favorably resolve tax matters with the Internal Revenue Service and
other tax jurisdictions; 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 to transition operating
activities from one location to another or to third parties
particularly transitions from the United States to other countries;
decisions to change the business mix; cessation of various services
provided to us by third-party vendors; 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 and
Vigo, 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 345,000 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
March 31
-------------------------
2008
2007
Change
--------- -------- ------
Revenues:
Transaction fees
$1,020.8
$930.1
10%
Foreign exchange revenue
210.0
166.6
26%
Commission and other revenues
35.1
34.3
2%
--------- --------
Total revenues
1,265.9 1,131.0
12%
Expenses:
Cost of services (a)
758.6
645.6
17%
Selling, general and administrative (a)
198.0
180.8
10%
--------- --------
Total expenses
956.6
826.4
16%
Operating income
309.3
304.6
2%
Other income/(expense):
Interest income
17.7
19.5
-9%
Interest expense
(45.0)
(48.0)
-6%
Derivative gains, net
6.8
1.7
(b)
Other income, net
3.7
4.3
-14%
--------- --------
Total other expense, net
(16.8)
(22.5)
-25%
--------- --------
Income before income taxes
292.5
282.1
4%
Provision for income taxes
85.4
88.9
-4%
--------- --------
Net income
$207.1
$193.2
7%
========= ========
Earnings per share:
Basic
$0.28
$0.25
12%
Diluted
$0.27
$0.25
8%
Weighted-average shares outstanding:
Basic
746.7
768.2
Diluted
756.8
783.3
_______
(a) Cost of services and selling, general and administrative expenses
include $22.4 million and $1.8 million in estimated restructuring and
related expenses, respectively. Such restructuring and related
expenses impacted earnings per share by $0.02.
(b) Calculation not meaningful
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THE WESTERN UNION COMPANY
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
March 31
December 31
2008
2007
---------- ------------
Assets
Cash and cash equivalents
$1,895.4
$1,793.1
Settlement assets
1,382.4
1,319.2
Property and equipment, net of accumulated
depreciation of $265.7 and $251.5
respectively
197.8
200.3
Goodwill
1,639.2
1,639.5
Other intangible assets, net of accumulated
amortization of $236.0 and $236.8
respectively
327.8
334.1
Other assets
530.2
498.0
---------- ------------
Total assets
$5,972.8
$5,784.2
========== ============
Liabilities and Stockholders´ Equity
Liabilities:
Accounts payable and accrued liabilities
$387.5
$350.1
Settlement obligations
1,382.4
1,319.2
Income tax payable
337.6
279.7
Deferred tax liability, net
266.0
263.6
Borrowings
3,379.3
3,338.0
Other liabilities
212.6
182.9
---------- ------------
Total liabilities
5,965.4
5,733.5
Stockholders´ Equity:
Preferred stock, $1.00 par value; 10 shares
authorized; no shares issued
-
-
Common stock, $0.01 par value; 2,000 shares
authorized; 740.0 shares and 749.8 shares
issued, respectively
7.4
7.5
Capital deficiency
(271.9)
(341.1)
Retained earnings
363.0
453.1
Accumulated other comprehensive loss
(91.1)
(68.8)
---------- ------------
Total Stockholders´ Equity
7.4
50.7
---------- ------------
Total Liabilities and Stockholders´ Equity
$5,972.8
$5,784.2
========== ============
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THE WESTERN UNION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
March 31
-------------------
2008
2007
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$207.1
$193.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
32.8
30.4
Stock compensation expense
7.7
8.8
Other non-cash items, net
4.2
3.7
Increase (decrease) in cash, resulting from
changes in:
Other assets
(28.1)
27.9
Accounts payable and accrued liabilities
36.4
21.4
Income tax payable
58.1
8.2
Other liabilities
(0.2)
(6.5)
--------- ---------
Net cash provided by operating activities
318.0
287.1
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalization of contract costs
(7.1)
(4.4)
Capitalization of purchased and developed software
(5.6)
(7.6)
Purchases of property and equipment
(10.8)
(25.9)
Notes receivable issued to agents
(0.3)
(5.6)
Repayments of notes receivable issued to agents
5.5
4.8
--------- ---------
Net cash used in investing activities
(18.3)
(38.7)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments of commercial paper
(11.3)
(42.7)
Net proceeds from/(repayments of) borrowings under
credit facilities
49.8
(2.0)
Proceeds from exercise of options
61.5
48.2
Common stock repurchased
(297.4)
(112.6)
--------- ---------
Net cash used in financing activities
(197.4)
(109.1)
Net change in cash and cash equivalents
102.3
139.3
Cash and cash equivalents at beginning of period
1,793.1
1,421.7
--------- ---------
Cash and cash equivalents at end of period
$1,895.4 $1,561.0
========= =========
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THE WESTERN UNION COMPANY
SUMMARY SEGMENT DATA
(in millions)
(unaudited)
Three Months Ended
March 31
----------------------------
2008
2007
Change
--------- --------- --------
Revenues:
Consumer-to-Consumer:
Transaction fees
$834.6
$751.2
11%
Foreign exchange revenue
209.3
166.3
26%
Other revenues
9.9
8.8
12%
--------- ---------
Total Consumer-to-Consumer:
1,053.8
926.3
14%
Consumer-to-Business:
Transaction fees
176.6
168.8
5%
Other revenues
13.2
13.4
-1%
--------- ---------
Total Consumer-to-Business:
189.8
182.2
4%
Other:
Revenue
22.3
22.5
-1%
--------- ---------
Total Other:
22.3
22.5
-1%
--------- ---------
Total consolidated revenues
$1,265.9 $1,131.0
12%
========= =========
Operating income:
Consumer-to-Consumer
$273.3
$238.7
15%
Consumer-to-Business
56.2
60.9
-8%
Other
4.0
5.0
-20%
--------- ---------
Total segment operating income
$333.5
$304.6
9%
Restructuring and related expenses
(24.2)
-
(a)
--------- ---------
Total consolidated operating income
$309.3
$304.6
2%
========= =========
Operating income margin:
Consumer-to-Consumer
25.9%
25.8%
10 bp
Consumer-to-Business
29.6%
33.4% (380) bp
Other
17.9%
22.2% (430) bp
Total consolidated operating income
margin
24.4%
26.9% (250) bp
Depreciation and Amortization:
Consumer-to-Consumer
$26.1
$23.4
12%
Consumer-to-Business
5.1
6.2
-18%
Other
1.1
0.8
38%
--------- ---------
Total segment depreciation and
amortization
$32.3
$30.4
6%
Restructuring and related expenses
0.5
-
(a)
--------- ---------
Total consolidated depreciation and
amortization
$32.8
$30.4
8%
========= =========
_______
(a) Calculation not meaningful
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THE WESTERN UNION COMPANY
KEY INDICATORS
(in millions)
(Unaudited)
Three Months Ended
March 31
----------------------
2008
2007 Change
-------- ------ ------
Transactions
Consumer-to-Consumer
43.1
37.8
14%
Consumer-to-Business
103.5 100.4
3%
Revenue
Consumer-to-Consumer
$1,053.8 $926.3
14%
Consumer-to-Business
$189.8 $182.2
4%
Three Months Ended
March 31, 2008
----------------------
Consumer-to-Consumer Transaction Growth
International (a)
19%
Domestic (b)
-3%
Mexico (c)
2%
Consumer-to-Consumer
14%
Consumer-to-Consumer Revenue Growth
International (a)
19%
Domestic (b)
-8%
Mexico (c)
1%
Consumer-to-Consumer
14%
(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, net
income and earnings per share growth, and Western Union´s 2008
earnings per share guidance, excluding restructuring and related
expenses. In addition, Western Union´s management has presented
operating income margin and operating income growth, excluding
restructuring and related expenses. In presenting Western Union´s
2008 earnings per share growth guidance excluding restructuring and
related expenses, Western Union´s management has excluded from the
Company´s 2007 earnings per share, the accelerated non-cash SFAS No.
123R accounting for stock-based compensation charge, resulting from
the acquisition of First Data by an affiliate of Kohlberg, Kravis
Roberts & Co. ("KKR") in the third quarter of 2007. 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 to prior
periods.
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.
Three Months Ended
March 31
--------------------
2008
2007
---------- ---------
Net income as reported (GAAP)
$207.1
$193.2
Adjustment:
Restructuring and related expenses, net of
income tax benefit of $9.1 million (a)
15.1
-
---------- ---------
Net income adjusted
$222.2
$193.2
========== =========
Earnings per share ("EPS"):
As reported (GAAP)
$0.27
$0.25
Restructuring and related expenses (a)
0.02
-
---------- ---------
Adjusted
$0.29
$0.25
========== =========
Growth:
Net income, as reported (GAAP)
7%
Net income, adjusted
15%
EPS, as reported (GAAP)
8%
EPS, adjusted
16%
_______
Refer to footnote explanations at the end of this "Reconciliation of
Non-GAAP Measures" section.
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THE WESTERN UNION COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
Three Months Ended
March 31
------------------
2008
2007
--------- --------
Revenues
$1,265.9 $1,131.0
========= ========
Operating income as reported (GAAP)
$309.3
$304.6
Adjustment:
Restructuring and related expenses (a)
24.2
-
--------- --------
Operating income adjusted
$333.5
$304.6
========= ========
Operating income growth, as reported (GAAP)
2%
Operating income growth, adjusted
9%
Operating income margin, as reported (GAAP)
24.4%
Operating income margin, adjusted
26.3%
-----------
Refer to footnote explanations at the end of this "Reconciliation of
Non-GAAP Measures" section.
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THE WESTERN UNION COMPANY
RECONCILIATION OF NON-GAAP MEASURES
(in millions)
(unaudited)
EPS Guidance
Range
-------------
2008 EPS Guidance GAAP basis
$1.19 $1.23
Adjustment:
Estimated restructuring and related expenses, net of
income tax benefit (a), (b)
0.06
0.06
------ ------
Adjusted 2008 EPS Guidance, excluding estimated
restructuring and related expenses
$1.25 $1.29
====== ======
2007 EPS as reported (GAAP)
$1.11 $1.11
Adjustment:
Accelerated non-cash stock compensation vesting charge
net of income tax benefit (c)
0.02
0.02
------ ------
Adjusted 2007 EPS
$1.13 $1.13
====== ======
Earnings per share growth:
2008 EPS guidance (GAAP) compared to 2007 EPS as
reported (GAAP)
7%
11%
Non-GAAP EPS guidance, excluding estimated 2008
restructuring and related expenses, compared to
adjusted 2007 EPS, excluding accelerated non-cash stock
compensation vesting charge
11%
14%
(a) Restructuring and related expenses incurred in the three months
ended March 31, 2008 include $24.2 million of expenses and an
estimated $69 million of expenses for 2008. These expenses relate to
severance, outplacement and other employee related benefits; facility
closure and migration of our IT infrastructure; other expenses
related to relocation of various operations to existing Company
facilities and third party providers, including hiring, training
relocation, travel, and professional fees; and increased security
costs at the facilities being closed. Also, included in the facility
closure expenses are non-cash expenses related to fixed asset and
leasehold improvement write-offs and acceleration of depreciation and
amortization. The restructuring and related expenses are included in
cost of services and selling, general and administrative expense
lines of the income statement, and are not allocated to the segments.
(b) Represents estimated 2008 restructuring and related expenses of
$69 million. For purposes of calculating the "Adjusted 2008 EPS
guidance, excluding estimated restructuring and related expenses,"
the EPS impact of $0.06 is net of an estimated income tax benefit of
$26 million.
(c) In the third quarter of 2007, the Company recognized a $22 million
or a $0.02 per share non-cash charge in accordance with SFAS No. 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.
*T
WU-G, WU-F
