Western Union CO - FORM 8-K - EX-99.2 - PRESENTATION

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EX-99.1 - PRESS RELEASE - Western Union CO	dex991.htm

Western Union

Third Quarter 2010

Earnings Webcast & Conference Call

October 26, 2010

Exhibit 99.2

Mike Salop

Senior Vice President, Investor Relations

Safe Harbor

This presentation 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,” “provides outlook” 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 presentation 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 in the Risk Factors section and throughout the Annual Report on Form 10-K for the year ended December 31, 2009. 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 immigration laws, patterns and other factors related to migrants; our ability to adapt technology in response to changing industry and

consumer needs or trends; our failure to develop and introduce new products, services and enhancements, and gain market acceptance of such products;

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, and/or changing regulatory or enforcement interpretations of

those laws; failure to comply with the settlement agreement with the State of Arizona; the impact on our business of the Dodd-Frank Wall Street Reform

and Consumer Protection Act and the rules promulgated there-under; changes in United States or foreign laws, rules and regulations including the Internal

Revenue Code of 1986, as amended, and governmental or judicial interpretations thereof; changes in general economic conditions and economic

conditions in the regions and industries in which we operate; adverse movements and volatility in capital markets and other events which affect our

liquidity, the liquidity of our agents or clients, or the value of, or our ability to recover our investments or amounts payable to us; political conditions and

related actions in the United States and abroad which may adversely affect our businesses and economic conditions as a whole; interruptions of United

States government relations with countries in which we have or are implementing material agent contracts; our ability to resolve tax matters with the

Internal Revenue Service and other tax authorities consistent with our reserves; mergers, acquisitions and integration of acquired businesses and

technologies into our company, and the realization of anticipated financial benefits from these acquisitions; changes in, and failure to manage effectively

exposure to, foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions;

failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our regulators worldwide; our ability to maintain

our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place; failure to implement

agent contracts according to schedule; deterioration in consumers’ and clients’ confidence in our business, or in money transfer providers generally;

failure to manage credit and fraud risks presented by our agents, clients and consumers or non-performance by our banks, lenders, other financial

services providers or insurers; any material breach of security of or interruptions in any of our systems; 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; failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks

and other money transfer services providers, including telecommunications providers, card associations, card-based payment providers and electronic

and internet providers; our ability to protect our brands and our other intellectual property rights; our failure to manage the potential both for patent

protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection; cessation of various services

provided to us by third-party vendors; changes in industry standards affecting our business; changes in accounting standards, rules and interpretations;

our ability to attract and retain qualified key employees and to manage our workforce successfully; significantly slower growth or declines in the money

transfer market and other markets in which we operate; adverse consequences from our spin-off from First Data Corporation; 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 our business mix; catastrophic events; and management’s ability to identify and manage these and other risks.

Hikmet

Ersek

President

& Chief Executive Officer

Overview

Continued progress

10% C2C transaction growth in Q3

Steady to improved trends across all regions

Strong margins, cash flow, and shareholder payout

Raising full year 2010 EPS outlook

Electronic Channels Highlights

Westernunion.com

60% transaction growth in international markets

20% transaction growth overall

Account-based money transfer

50% transaction growth

27 banks globally

Mobile

70,000 locations enabled for cash-to-mobile in 27 countries

6 country websites enabled

Prepaid

650,000 prepaid cards

9,000 locations offering cards

$240MM principal loaded YTD through 1.1MM loads

Strategic Priorities

Strategy in place

Focused on execution

Executive Vice President

& Chief Financial Officer

Scott Scheirman

Revenue

($ in millions)

$1,314

Consolidated revenue up 1%,

or up 3% constant currency

adjusted

Transaction fees flat

Foreign exchange revenue

increased 11%, primarily due

to Custom House

$1,330

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

C2C Remittance Trends

Total Q3 Western Union cross-

border principal of $18 billion

Increased 4% on reported basis

Increased 6% constant currency

Principal per transaction

Declined 4% on reported basis

Declined 3% constant currency

+10%

C2C Transactions

(millions)

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

Consumer-to-Consumer

Revenue

Transactions

Q3 2010

(2)%

Europe, Middle East, Africa, S. Asia

44% of Western Union revenue

EMEASA constant currency revenue increased

Good performance in major markets including U.K., Germany, and Russia

Transaction declines in Gulf, in-line with Q2 trends

Revenue

Transactions

Americas

13%

32% of Western Union revenue

Momentum continued in the region

35% domestic money transfer transaction growth

Strong U.S Outbound results

2% Mexico transaction growth, 1% revenue decline

Q3 2010

Consumer-to-Consumer

Revenue

Transactions

Asia Pacific

12%

15%

9% of Western Union revenue

China grew revenue and transactions 6%

Philippines intra business strong

Good growth in Australia

Q3 2010

Consumer-to-Consumer

C2C Transaction and Revenue Growth

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

Q3 2010

Global Business Payments

Revenue

Transactions

Global Business Payments

(2)%

13% of Western Union revenue

$27 million Business Solutions (Custom House) revenue

Challenges in U.S. bill payments

Solid Pago Facil performance

Q3 2010

Operating Margin

Operating margin excluding

restructuring and settlement

accrual

•

+70 basis points vs. Q3 09

•

+40 basis points vs. Q2 10

YoY

operating margin

improvement excluding

restructuring

•

Lower marketing

•

Operating efficiencies

•

Higher Business Solutions

investment and

amortization

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

GAAP

Excluding

Items

(1)

Q3 2009 consolidated operating margin excludes settlement accrual.

(2)

Q2 2010 and Q3 2010 consolidated operating margins exclude restructuring charges.

C2C Operating Margin

C2C operating margin

increased 230 basis points YoY

Lower marketing

Operating efficiencies

Currency

C2C operating margin

improved 80 basis points from

Q2 10

Global Business Payments

Operating Margin

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

Segment margin declined YoY

Business Solutions

investments and amortization

Reduced U.S. bill payment

revenues

GAAP

Excluding

Business

Solutions

Financial Strength

YTD

Cash Flow from Operations Excluding Tax Deposit

$960 million

Refundable IRS Tax Deposit

($250) million

GAAP Cash Flow from Operations

$710 million

Capital Expenditures

$88 million

Stock Repurchases

$514 million

Dividends Paid

$80 million

Cash Balance, September 30, 2010

$2.0 billion

Debt Outstanding, September 30, 2010

$3.3 billion

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

2010 Outlook

GAAP revenue in a range of +1% to +2%

Constant currency revenue growth 1% higher than GAAP (+2% to +3%)

GAAP EPS of $1.29 to $1.32, including $0.07 of restructuring charges

EPS excluding restructuring charges of $1.36 to $1.39

Constant currency EPS $0.01 higher

GAAP cash flow from operating activities of $900 million to $1 billion,

including a $250 million reduction due to the first quarter refundable tax

deposit

Raising 2010 EPS range

Note: See appendix for reconciliation of Non-GAAP to GAAP measures.

Questions & Answers

Appendix

Third Quarter 2010 Earnings

Webcast & Conference Call

October 26, 2010

Western Union's management believes the non-GAAP measures presented 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. These non-GAAP measurements include revenue change constant currency

adjusted, revenue change constant currency adjusted excluding Custom House, operating

income margin and earnings per share excluding restructuring expenses, 2009 operating

income margin and earnings per share excluding the settlement accrual, earnings per share

constant currency adjusted excluding restructuring expenses, 2010 year-to-date cash flow

from operations excluding the refundable tax deposit, tax rate excluding restructuring

expenses, consumer-to-consumer segment revenue change constant currency adjusted,

international consumer-to-consumer revenue change constant currency adjusted, Global

Business Payments revenue change excluding Custom House, Global Business Payments

operating income margin excluding Custom House, 2010 revenue outlook constant currency

adjusted, 2010 earnings per share outlook excluding restructuring expenses, 2010 full year

tax rate outlook excluding restructuring expenses, and 2010 operating income margin outlook

excluding restructuring expenses.

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.

Non-GAAP Measures

Reconciliation of Non-GAAP Measures

3Q09

4Q09

FY2009

1Q10

2Q10

3Q10

YTD 3Q10

Consolidated Metrics

Revenues, as reported (GAAP)

1,314.1

1,314.0

5,083.6

1,232.7

1,273.4

1,329.6

3,835.7

Foreign currency translation impact (a)

31.1

(32.4)

119.5

(20.0)

16.1

22.2

18.3

Revenues, constant currency adjusted

1,345.2

1,281.6

5,203.1

1,212.7

1,289.5

1,351.8

3,854.0

Reversal of Custom House revenues (b)

(7.9)

(22.9)

(30.8)

(25.6)

(28.5)

(26.8)

(80.9)

Revenues, constant currency adjusted, excluding Custom House

1,337.3

1,258.7

5,172.3

1,187.1

1,261.0

1,325.0

3,773.1

Prior year revenues, as reported (GAAP)

1,377.4

1,291.6

5,282.0

1,201.2

1,254.3

1,314.1

3,769.6

Prior year revenues, excluding Custom House

N/A

1,306.2

3,761.7

Revenue change, as reported (GAAP)

(5)%

(4)%

Revenue change, constant currency adjusted

(2)%

(1)%

Revenue change, constant currency adjusted, excluding Custom House

(3)%

(2)%

(1)%

Operating income, as reported (GAAP)

281.5

318.6

1,282.7

315.8

311.0

351.2

978.0

Reversal of settlement accrual (c)

71.0

N/A

71.0

N/A

Reversal of restructuring and related expenses (d)

N/A

34.5

14.0

48.5

Operating income, excluding settlement accrual and restructuring

352.5

318.6

1,353.7

315.8

345.5

365.2

1,026.5

Operating income margin, as reported (GAAP)

21.4

24.2

25.2

25.6

24.4

26.4

25.5

Operating income margin, excluding settlement accrual and restructuring

26.8

N/A

26.6

N/A

27.1

27.5

26.8

Net income, as reported (GAAP)

181.0

223.7

848.8

207.9

221.0

238.4

667.3

Foreign currency translation impact, net of income tax (a)

(12.0)

(0.5)

(7.4)

(0.7)

5.5

2.4

7.2

Reversal of settlement accrual, net of income tax benefit (c)

53.9

N/A

53.9

N/A

Reversal of restructuring and related expenses, net of income tax benefit (d)

N/A

22.4

9.5

31.9

Net income, constant currency, settlement accrual, and restructuring adjusted

222.9

223.2

895.3

207.2

248.9

250.3

706.4

Diluted earnings per share ("EPS"), as reported (GAAP) ($ - dollars)

0.26

0.32

1.21

0.30

0.33

0.36

0.99

Impact from restructuring and related expenses, net of income tax benefit (d) ($ - dollars)

N/A

0.03

0.01

0.05

Diluted EPS, restructuring adjusted ($ - dollars)

0.26

0.32

1.21

0.30

0.36

0.37

1.04

Impact from settlement accrual, net of tax benefit (c) ($ - dollars)

0.07

N/A

0.08

N/A

Diluted EPS, settlement accrual adjusted ($ - dollars)

0.33

0.32

1.29

0.30

0.36

0.37

1.04

Foreign currency translation impact, net of income tax (a) ($ - dollars)

(0.01)

0.01

Diluted EPS, constant currency, settlement accrual, and restructuring adjusted ($ - dollars)

0.32

1.28

0.30

0.37

0.38

1.05

Diluted weighted-average shares outstanding

701.6

693.2

701.0

684.2

671.6

661.3

672.4

Cash flow from operations, as reported

351.7

260.1

1,218.1

74.4

251.7

383.8

709.9

Reversal of refundable IRS tax deposit (f)

N/A

250.0

N/A

250.0

Cash flow from operations, tax deposit adjusted

351.7

260.1

1,218.1

324.4

251.7

383.8

959.9

Year-to-date effective tax rate (GAAP)

N/A

22%

Impact from restructuring expenses, net of income tax benefit (d)

N/A

Year-to-date effective tax rate, restructuring adjusted

N/A

23%

Reconciliation of Non-GAAP Measures

3Q09

4Q09

FY2009

1Q10

2Q10

3Q10

YTD 3Q10

Consumer-to-Consumer Segment

Revenues, as reported (GAAP)

1,117.8

1,113.7

4,300.7

1,030.2

1,073.1

1,128.3

3,231.6

Foreign currency translation impact (a)

24.4

(36.2)

101.3

(21.9)

15.0

21.2

14.3

Revenues, constant currency adjusted

1,142.2

1,077.5

4,402.0

1,008.3

1,088.1

1,149.5

3,245.9

Prior year revenues, as reported (GAAP)

1,178.1

1,094.3

4,471.6

1,003.7

1,065.5

1,117.8

3,187.0

Revenue change, as reported (GAAP)

(5)%

(4)%

Revenue change, constant currency adjusted

(3)%

(2)%

Principal per transaction, as reported ($ - dollars)

371

365

363

357

351

355

354

Foreign currency translation impact (a) ($ - dollars)

(14)

(11)

Principal per transaction, constant currency adjusted ($ - dollars)

383

351

375

346

353

362

354

Prior year principal per transaction, as reported ($ - dollars)

401

372

392

358

371

363

Principal per transaction change, as reported

(7)%

(2)%

(7)%

(2)%

(4)%

(2)%

Principal per transaction change, constant currency adjusted

(4)%

(6)%

(5)%

(3)%

(2)%

(3)%

(2)%

Cross-border principal, as reported ($ - billions)

17.0

17.1

65.0

16.1

16.8

17.6

50.5

Foreign currency translation impact (a) ($ - billions)

0.5

(0.7)

2.0

(0.5)

0.1

0.4

Cross-border principal, constant currency adjusted ($ - billions)

17.5

16.4

67.0

15.6

16.9

18.0

50.5

Prior year cross-border principal, as reported ($ - billions)

17.8

16.6

67.1

15.0

15.9

17.0

47.9

Cross-border principal change, as reported

(5)%

(3)%

Cross-border principal change, constant currency adjusted

(1)%

0 %

International revenues, as reported (GAAP)

926.5

943.4

3,559.7

862.0

890.8

944.0

2,696.8

Foreign currency translation impact (a)

22.6

(35.8)

96.0

(20.8)

15.7

21.7

16.6

International revenues, constant currency adjusted

949.1

907.6

3,655.7

841.2

906.5

965.7

2,713.4

Prior year international revenues, as reported (GAAP)

950.6

891.2

3,605.1

814.8

875.0

926.5

2,616.3

International revenue change, as reported (GAAP)

(3)%

(1)%

International revenue change, constant currency adjusted

Reconciliation of Non-GAAP Measures

3Q09

4Q09

FY2009

1Q10

2Q10

3Q10

YTD 3Q10

Global Business Payments Segment

Revenues, as reported (GAAP)

171.3

181.8

691.7

181.8

179.3

179.2

540.3

Reversal of Custom House revenues (b)

(7.9)

(22.9)

(30.8)

(25.6)

(28.5)

(26.8)

(80.9)

Revenues, excluding Custom House

163.4

158.9

660.9

156.2

150.8

152.4

459.4

Prior year revenues, as reported (GAAP)

176.4

174.2

719.8

174.2

164.4

171.3

509.9

Prior year revenues, excluding Custom House

N/A

163.4

502.0

Revenue change, as reported (GAAP)

(3)%

(4)%

Revenue change, excluding Custom House

(7)%

(9)%

(8)%

(10)%

(8)%

(7)%

(8)%

Operating income, as reported (GAAP)

41.6

35.7

171.9

37.6

33.8

27.0

98.4

Reversal of Custom House operating loss (b)

1.3

4.9

6.2

3.1

4.6

8.3

16.0

Operating income, excluding Custom House

42.9

40.6

178.1

40.7

38.4

35.3

114.4

Operating income margin, as reported (GAAP)

24.3

19.6

24.9

20.7

18.9

15.1%

18.2

Operating income margin, excluding Custom House

26.3

25.5

26.9

26.1

25.5

23.2%

24.9

Reconciliation of Non-GAAP Measures

2010 Revenue Outlook

Revenue change (GAAP)

Foreign currency translation impact (e)

Revenue change, constant currency adjusted

2010 EPS Outlook

EPS guidance (GAAP) ($ - dollars)

1.29

1.32

Impact from restructuring and related expenses, net of income tax benefit (d) ($ - dollars)

0.07

EPS guidance, restructuring adjusted ($ - dollars)

1.36

1.39

2010 Full Year Effective Tax Rate Outlook

Full year effective tax rate (GAAP)

21.5

22.5

Impact from restructuring and related expenses, net of income tax benefit (d)

0.5

Full year effective tax rate, restructuring adjusted

22.0

23.0

2010 Operating Income Margin Outlook

Operating income margin (GAAP)

24.5

25.0

Impact from restructuring and related expenses (d)

1.5

Operating income margin, restructuring adjusted

26.0

26.5

Range

Footnote explanations

(a)

Represents the impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the United States

dollar. Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the

United States dollar, net of foreign currency hedges, which would not have occurred if there had been a constant exchange rate. In

addition, to compute constant currency earnings per share, the Company assumes the impact of fluctuations in foreign currency

derivatives not designated as hedges and the portion of fair value that is excluded from the measure of effectiveness for those contracts

designated as hedges was consistent with the prior year.

Represents the incremental impact from the acquisition of Custom House on consolidated revenue, Global Business Payments segment

revenue and Global Business Payments segment operating income.

Accrual for an agreement to resolve the Company's disputes with the State of Arizona and certain other states and to fund a multi-state

not-for-profit organization focused on border safety and security ("settlement accrual"). This item has been included in the selling, general

and administrative expense line of the consolidated statements of income, and was not allocated to the segments.

Restructuring and related expenses consist of direct and incremental costs associated with restructuring and related activities, including

severance, outplacement and other employee related benefits; facility closure and migration of our IT infrastructure; and other expenses

related to relocation of various operations to new or existing Company facilities and third-party providers, including hiring, training,

relocation, travel, and professional fees. Also included in the facility closure expenses are non-cash expenses related to fixed asset and

leasehold improvement write-offs and acceleration of depreciation. Restructuring and related expenses were not allocated to the

segments.

Represents the estimated impact from the fluctuation in exchange rates between all foreign currency denominated amounts and the

United States dollar. Constant currency results exclude any estimated benefit or loss caused by foreign exchange fluctuations between

foreign currencies and the United States dollar, net of foreign currency hedges, which would not have occurred if there had been a

constant exchange rate. In addition, to compute constant currency earnings per share, the Company assumes the estimated impact of

fluctuations in foreign currency derivatives not designated as hedges and the portion of fair value that is excluded from the measure of

effectiveness for those contracts designated as hedges is consistent with the prior year.

The Company made a $250 million refundable tax deposit with the IRS in first quarter 2010.

(b)

(c)

(d)

(e)

(f)

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