Western Union CO [WU] Filings

10-Q 1 wu-20220630.htm 10-Q 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2022



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number: 001-32903

THE WESTERN UNION COMPANY

(Exact name of registrant as specified in its charter)



Delaware (State or Other Jurisdiction of Incorporation or Organization)		20-4531180 (I.R.S. Employer Identification No.)
	7001 EAST BELLEVIEW AVENUE Denver, Colorado 80237 (Address of principal executive offices)

Registrant’s telephone number, including area code: (866) 405-5012

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 Par Value	WU	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2022, 385,754,381 shares of the registrant’s common stock were outstanding.

Table of Contents

THE WESTERN UNION COMPANY

INDEX


		PAGE NUMBER
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021	3

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021	4

	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	5

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	6

	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

	Review Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)	53

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	54

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenues	$	1,138.3		$	1,289.7		$	2,294.0		$	2,499.7
Expenses:
Cost of services		653.0			755.0			1,308.1			1,461.0
Selling, general, and administrative		221.3			279.8			484.4			551.0
Total expenses		874.3			1,034.8			1,792.5			2,012.0
Operating income		264.0			254.9			501.5			487.7
Other income/(expense):
Gain on divestiture of business (Note 4)		—			—			151.4			—
Interest income		1.8			0.3			2.4			0.7
Interest expense		(24.8	)		(25.6	)		(49.6	)		(54.0	)
Other income/(expense), net		(4.8	)		30.5			(7.3	)		28.6
Total other income/(expense), net		(27.8	)		5.2			96.9			(24.7	)
Income before income taxes		236.2			260.1			598.4			463.0
Provision for income taxes		42.2			37.6			111.1			58.7
Net income	$	194.0		$	222.5		$	487.3		$	404.3
Earnings per share:
Basic	$	0.50		$	0.54		$	1.25		$	0.98
Diluted	$	0.50		$	0.54		$	1.25		$	0.98
Weighted-average shares outstanding:
Basic		386.7			409.3			389.9			410.5
Diluted		387.6			411.5			391.0			412.9

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in millions)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net income	$	194.0		$	222.5		$	487.3		$	404.3
Other comprehensive income, net of reclassifications and tax (Note 9):
Unrealized gains/(losses) on investment securities		(23.7	)		2.2			(75.3	)		(10.8	)
Unrealized gains/(losses) on hedging activities		23.1			(2.7	)		28.4			26.2
Foreign currency translation adjustments		—			—			(17.8	)		—
Defined benefit pension plan adjustments		—			2.3			—			4.8
Total other comprehensive income/(loss)		(0.6	)		1.8			(64.7	)		20.2
Comprehensive income	$	193.4		$	224.3		$	422.6		$	424.5

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions, except per share amounts)


	June 30,			December 31,
	2022			2021
Assets
Cash and cash equivalents	$	1,201.9		$	1,208.3
Settlement assets		3,106.6			2,843.5
Property and equipment, net of accumulated depreciation of $649.1 and $650.4, respectively		115.6			129.4
Goodwill		2,034.6			2,034.6
Other intangible assets, net of accumulated amortization of $727.9 and $731.8, respectively		446.1			417.1
Other assets (Note 5)		1,193.6			737.7
Assets held for sale (Note 4)		688.9			1,452.9
Total assets	$	8,787.3		$	8,823.5
Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities	$	411.5		$	450.2
Settlement obligations		3,106.6			2,843.5
Income taxes payable		851.6			870.7
Deferred tax liability, net		169.6			203.8
Borrowings		2,695.3			3,008.4
Other liabilities (Note 4)		679.5			269.4
Liabilities associated with assets held for sale (Note 4)		424.9			821.9
Total liabilities		8,339.0			8,467.9

Commitments and contingencies (Note 6)

Stockholders' equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued		—			—
Common stock, $0.01 par value; 2,000 shares authorized; 386.1 shares and 393.8 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		3.9			3.9
Capital surplus		973.3			941.0
Accumulated deficit		(412.1	)		(537.2	)
Accumulated other comprehensive loss		(116.8	)		(52.1	)
Total stockholders' equity		448.3			355.6
Total liabilities and stockholders' equity	$	8,787.3		$	8,823.5

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)


	Six Months Ended
	June 30,
	2022			2021
Cash flows from operating activities
Net income	$	487.3		$	404.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		22.6			26.0
Amortization		70.1			83.0
Gain on divestiture of business, excluding transaction costs (Note 4)		(155.8	)		—
Gain on the sale of noncontrolling interest in a private company (Note 4)		—			(47.9	)
Other non-cash items, net		32.8			80.1
Increase/(decrease) in cash, excluding the effects of divestitures, resulting from changes in:
Other assets		(131.2	)		(84.5	)
Accounts payable and accrued liabilities		19.6			(29.8	)
Income taxes payable		(20.5	)		(66.5	)
Other liabilities		(18.1	)		(15.2	)
Net cash provided by operating activities		306.8			349.5
Cash flows from investing activities
Payments for capitalized contract costs		(26.3	)		(82.2	)
Payments for internal use software		(42.7	)		(45.2	)
Purchases of property and equipment		(15.3	)		(17.9	)
Purchases of settlement investments		(495.3	)		(270.5	)
Proceeds from the sale of settlement investments		290.2			539.6
Maturities of settlement investments		84.4			130.9
Proceeds from the sale of noncontrolling interest in a private company (Note 4)		—			50.9
Purchase of noncontrolling interest in stc Bank (Note 4)		—			(200.0	)
Purchases of non-settlement investments		(400.0	)		—
Proceeds from divestiture, net of cash divested (Note 4)		896.4			—
Other investing activities		0.9			(2.9	)
Net cash provided by investing activities		292.3			102.7
Cash flows from financing activities
Cash dividends and dividend equivalents paid		(184.8	)		(193.5	)
Common stock repurchased (Note 9)		(185.5	)		(160.5	)
Net proceeds from/(repayments of) commercial paper		(15.0	)		185.0
Net proceeds from issuance of borrowings		—			891.7
Principal payments on borrowings		(300.0	)		(1,150.0	)
Make-whole premium on early extinguishment of debt		—			(14.3	)
Proceeds from exercise of options		9.4			11.6
Net change in settlement obligations		(112.1	)		(93.1	)
Other financing activities		—			4.0
Net cash used in financing activities		(788.0	)		(519.1	)
Net change in cash and cash equivalents, including settlement, and restricted cash		(188.9	)		(66.9	)
Cash and cash equivalents, including settlement, and restricted cash at beginning of period		2,110.9			2,143.1
Cash and cash equivalents, including settlement, and restricted cash at end of period	$	1,922.0		$	2,076.2

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

SUPPLEMENTAL CASH FLOW INFORMATION

(Unaudited)

(in millions)


	June 30,
	2022		2021
Reconciliation of balance sheet cash and cash equivalents to cash flows:
Cash and cash equivalents on balance sheet	$	1,201.9	$	1,061.4
Settlement cash and cash equivalents (Note 8)		602.7		1,002.6
Restricted cash in Other assets		40.4		12.2
Cash and cash equivalents included in Assets held for sale (Note 4)		77.0		—
Cash and cash equivalents, including settlement, and restricted cash	$	1,922.0	$	2,076.2
	Six Months Ended
	June 30,
	2022		2021
Supplemental cash flow information:
Interest paid	$	47.6	$	52.0
Income taxes paid	$	148.9	$	123.9
Internal use software capitalized but not yet paid	$	—	$	23.0
Accrued and unpaid capitalized contract costs	$	39.8	$	—

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

THE WESTERN UNION COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in millions)

Accumulated

Other

Total

Common Stock

Capital

Accumulated

Comprehensive

Stockholders'

Shares

Amount

Surplus

Deficit

Loss

Equity

Balance, December 31, 2021

393.8

3.9

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