Western Union - 10-Q (Quarterly Report) SEC Filing

Table of Contents
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, 2016

OR
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.)
12500 EAST BELFORD AVENUE

ENGLEWOOD, CO
(Address of principal executive offices)
80112
(Zip Code)
Registrant's telephone number, including area code: (866) 405-5012

Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934during
thepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthe
past90days.Yes
No
IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobe
submitted and posted 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
registrantwasrequiredtosubmitandpostsuchfiles).Yes
No
Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,orasmallerreportingcompany.Seethe
definitionsof"largeacceleratedfiler,""acceleratedfiler"and"smallerreportingcompany"inRule12b-2oftheExchangeAct.
Largeacceleratedfiler
Acceleratedfiler
Non-acceleratedfiler
(Donotcheckifasmaller
reportingcompany)
Smallerreportingcompany
Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).Yes
No
AsofJuly31,2016,487,733,527sharesoftheregistrant'scommonstockwereoutstanding.
Table of Contents

INDEX
PAGE
NUMBER
PARTIFINANCIALINFORMATION
Item1.
FinancialStatements(Unaudited)
CondensedConsolidatedStatementsofIncomeforthethreeandsixmonthsendedJune30,2016and2015
CondensedConsolidatedStatementsofComprehensiveIncomeforthethreeandsixmonthsendedJune30,2016and2015
CondensedConsolidatedBalanceSheetsasofJune30,2016andDecember31,2015
CondensedConsolidatedStatementsofCashFlowsforthesixmonthsendedJune30,2016and2015
NotestoCondensedConsolidatedFinancialStatements
Item2.
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations
Item3.
QuantitativeandQualitativeDisclosuresAboutMarketRisk
Item4.
ControlsandProcedures
ReviewReportofIndependentRegisteredPublicAccountingFirm
PARTIIOTHERINFORMATION
Item1.
LegalProceedings
Item1A.
RiskFactors
Item2.
UnregisteredSalesofEquitySecuritiesandUseofProceeds
Item3.
DefaultsUponSeniorSecurities
Item4.
MineSafetyDisclosures
Item5.
OtherInformation
Item6.
Exhibits
3
3
4
5
6
7
36
54
54
55
56
61
62
62
62
62
62
Table of Contents
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in millions, except per share amounts)
Three Months Ended June 30,
2016
Revenues:
Transactionfees
2015
2015
961.3 $
988.3 $ 1,880.3 $ 1,936.9
378.8
362.1
Otherrevenues
Totalrevenues
2016
Foreignexchangerevenues
Expenses:
Six Months Ended

June 30,
724.3
700.1
35.6
33.2
68.8
67.5
1,375.7
1,383.6
2,673.4
2,704.5
Costofservices
821.9
799.4
1,601.3
1,571.2
Selling,generalandadministrative
293.5
333.4
553.2
610.2
1,115.4
1,132.8
2,154.5
2,181.4
260.3
250.8
518.9
523.1
Totalexpenses
Operatingincome
Otherincome/(expense):
Interestincome
0.7
2.5
1.6
Interestexpense
(41.0)
(43.1)
(81.5)
5.4
(84.9)
Derivativegains,net
1.4
1.9
1.0
Otherincome/(expense),net
1.1
(3.3)
(0.9)
(5.1)
Totalotherexpense,net
(37.8)
(43.9)
(78.9)
(83.6)
Incomebeforeincometaxes
222.5
206.9
440.0
439.5
Provisionforincometaxes
Netincome
Earningspershare:
16.9
17.6
48.7
46.3
205.6 $
189.3 $
391.3 $
393.2
Basic
0.42 $
0.37 $
0.79 $
0.76
Diluted
0.42 $
0.36 $
0.79 $
0.75
Weighted-averagesharesoutstanding:
Basic
490.3
515.2
495.1
518.1
Diluted
493.0
519.8
498.1
522.5
Cashdividendsdeclaredpercommonshare
SeeNotestoCondensedConsolidatedFinancialStatements.
3
0.16 $
0.155 $
0.32 $
0.31
Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in millions)
2016
2015
Six Months Ended June 30,
2016
2015
Netincome
205.6 $
189.3 $
391.3 $
Othercomprehensiveincome/(loss),netoftax(Note7):
Unrealizedgains/(losses)oninvestmentsecurities
393.2
3.5
(6.8)
6.7
Unrealizedgains/(losses)onhedgingactivities
10.7
(38.2)
(27.1)
2.4
Foreigncurrencytranslationadjustments
(1.8)
(1.7)
(4.1)
(4.3)
Definedbenefitpensionplanadjustments
1.7
1.3
3.4
3.1
Totalothercomprehensiveincome/(loss)
14.1
$
Comprehensiveincome
219.7 $
4
(45.4)
(21.1)
143.9 $
370.2 $
(5.8)
(4.6)
388.6
Table of Contents

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2016
December 31, 2015
Assets
Cashandcashequivalents
1,162.6 $
1,315.9
3,357.1
3,308.7
Settlementassets
Propertyandequipment,netofaccumulateddepreciationof$568.8and$538.2,respectively
221.7
231.8
3,162.4
3,163.8
Otherintangibleassets,netofaccumulatedamortizationof$931.2and$884.4,respectively
701.5
705.0
Otherassets(Note1)
789.6
724.0
Goodwill
Totalassets
9,394.9 $
Liabilities and Stockholders' Equity
Liabilities:
512.4 $
Accountspayableandaccruedliabilities
Settlementobligations
9,449.2
606.6
3,357.1
3,308.7
Incometaxespayable
213.2
211.5
Deferredtaxliability,net
268.1
272.6
3,228.5
3,215.9
501.2
429.0
8,080.5
8,044.3
Borrowings(Note1)
Otherliabilities
Totalliabilities
Commitmentsandcontingencies(Note4)
Stockholders'equity:
Preferredstock,$1.00parvalue;10sharesauthorized;nosharesissued
Commonstock,$0.01parvalue;2,000sharesauthorized;488.0sharesand502.4sharesissuedandoutstandingas
ofJune30,2016andDecember31,2015,respectively
Capitalsurplus
Retainedearnings
Accumulatedothercomprehensiveloss
Totalstockholders'equity
Totalliabilitiesandstockholders'equity
5
4.9
5.0
597.3
566.5
877.2
977.3
(165.0)
(143.9)
1,314.4
1,404.9
9,394.9 $
9,449.2
Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
Six Months Ended

June 30,
2016
Cash flows from operating activities
Netincome
391.3 $
Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:
2015
393.2
Depreciation
36.3
32.6
Amortization
95.2
94.2
42.3
24.9
Othernon-cashitems,net
Increase/(decrease)incashresultingfromchangesin:
Otherassets
Accountspayableandaccruedliabilities
9.2
(57.6)
(99.5)
(23.1)
Incometaxespayable
5.3
10.9
Otherliabilities
5.5
(9.4)
Netcashprovidedbyoperatingactivities
485.6
Cash flows from investing activities
465.7
Capitalizationofcontractcosts
(60.0)
(74.7)
Capitalizationofpurchasedanddevelopedsoftware
(21.3)
(20.8)
Purchasesofpropertyandequipment
(27.4)
(26.9)
Purchasesofnon-settlementrelatedinvestments
(34.9)
(100.0)
Proceedsfrommaturityofnon-settlementrelatedinvestments
Purchasesofheld-to-maturitynon-settlementrelatedinvestments
Proceedsfromheld-to-maturitynon-settlementrelatedinvestments
Netcashusedininvestingactivities
11.0
(26.5)
2.0
(157.1)
Cash flows from financing activities
(222.4)
Cashdividendspaid
(157.4)
(160.0)
Commonstockrepurchased(Note7)
(334.0)
(313.8)
Proceedsfromexerciseofoptionsandother
9.6
77.8
Netcashusedinfinancingactivities
(481.8)
(396.0)
Netchangeincashandcashequivalents
(153.3)
(152.7)
Cashandcashequivalentsatbeginningofperiod
1,315.9
1,783.2
1,162.6 $
1,630.5
Cashandcashequivalentsatendofperiod
Supplemental cash flow information:
Interestpaid
78.4 $
81.7
Incometaxespaid
50.6 $
42.5
6
Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Basis of Presentation
Business
The Western Union Company ("Western Union" or the "Company") is a leader in global money movement and payment services, providing people and
businesseswithfast,reliableandconvenientwaystosendmoneyandmakepaymentsaroundtheworld.TheWesternUnion brandisgloballyrecognized.The
Company'sservicesareprimarilyavailablethroughanetworkofagentlocationsinmorethan200countriesandterritories.EachlocationintheCompany'sagent
networkiscapableofprovidingoneormoreoftheCompany'sservices.
TheWesternUnionbusinessconsistsofthefollowingsegments:
Consumer-to-Consumer
- The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a
networkofthird-partyagents.TheCompany'smulti-currency,real-timemoneytransferserviceisviewedbytheCompanyasoneinterconnectedglobal
network where a money transfer can be sent from one location to another, around the world. This service is available for international cross-border
transfers-thatis,thetransferoffundsfromonecountrytoanother-and,incertaincountries,intra-countrytransfers-thatis,moneytransfersfromone
locationtoanotherinthesamecountry.Thissegmentalsoincludesmoneytransfertransactionsthatcanbeinitiatedthroughwebsitesandmobiledevices.
Consumer-to-Business
-TheConsumer-to-Businessoperatingsegmentfacilitatesbillpaymentsfromconsumerstobusinessesandotherorganizations,
including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. The significant
majorityofthesegment'srevenuewasgeneratedintheUnitedStatesduringallperiodspresented,withtheremainderprimarilygeneratedinArgentina.
Business
Solutions
- The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, crosscurrencytransactions,forsmallandmediumsizeenterprisesandotherorganizationsandindividuals.Themajorityofthesegment'sbusinessrelatesto
exchanges of currency at spot rates, which enable customers to make cross-currency payments. In addition, in certain countries, the Company writes
foreigncurrencyforwardandoptioncontractsforcustomerstofacilitatefuturepayments.
All businesses that have not been classified in the above segments are reported as "Other" and include the Company's money order and other services, in
additiontocostsforthereviewandclosingofacquisitions.
TherearelegalorregulatorylimitationsontransferringcertainassetsoftheCompanyoutsideofthecountrieswheretheseassetsarelocated.However,there
are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some
countries in order to maintain operating licenses. Asof December 31,2015 , the amount of net assets subject to these limitations totaled approximately $ 300
million,andtherehavebeennomaterialchangestotheselimitationssubsequenttothatdate.
Various aspects of the Company's services and businesses are subject to United States federal, state and local regulation, as well as regulation by foreign
jurisdictions,includingcertainbankingandotherfinancialservicesregulations.
Basis
of
Presentation
The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and
Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated
financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or
omitted.
7
Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the
Companyanditsmajority-ownedsubsidiaries.Resultsofoperationsandcashflowsfortheinterimperiodsarenotnecessarilyindicativeoftheresultsthatmaybe
expectedfortheentireyear.AllsignificantintercompanytransactionsandaccountswereeliminatedasofJune30,2016andDecember31,2015andforallperiods
presented.
Intheopinionofmanagement,thesecondensedconsolidatedfinancialstatementsincludeallthenormalrecurringadjustmentsnecessarytofairlypresentthe
Company's condensed consolidated results of operations, financial position and cashflows as of June 30,2016 and for all periods presented. These condensed
consolidated financial statements should be read in conjunction with the Company's consolidated financial statements within the Company's Annual Report on
Form10-KfortheyearendedDecember31,2015.
Consistentwithindustrypractice,theaccompanyingCondensedConsolidatedBalanceSheetsareunclassifiedduetotheshort-termnatureoftheCompany's
settlementobligationscontrastedwiththeCompany'sabilitytoinvestcashawaitingsettlementinlong-terminvestmentsecurities.
Use
of
Estimates
ThepreparationoffinancialstatementsinconformitywithGAAPrequiresmanagementtomakeestimatesandassumptionsthataffecttheamountsreportedin
thefinancialstatementsandaccompanyingnotes.Actualresultscoulddifferfromtheseestimates.
New
Accounting
Pronouncements
OnJanuary1,2016,theCompanyadoptedanaccountingpronouncementthatrequirescapitalizeddebtissuancecoststobepresentedasareductiontothe
carryingvalueofdebt,withadoptionretrospectiveforperiodspreviouslypresented.Theadoptionofthisstandardresultedinareductionof$9.7milliontothe
"Otherassets"and"Borrowings"lineswithintheCondensedConsolidatedBalanceSheetasofDecember31,2015.
InMay2014,theFinancialAccountingStandardsBoardissuedanewaccountingpronouncementregardingrevenuefromcontractswithcustomers.Thisnew
standardprovidesguidanceonrecognizingrevenue,includingafivestepmodeltodeterminewhenrevenuerecognitionisappropriate.Thestandardrequiresthat
an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expectstobeentitledinexchangeforthosegoodsorservices.TheCompanyisrequiredtoadoptthenewstandardonJanuary1,2018.Managementiscurrently
evaluatingthepotentialimpactthattheadoptionofthisstandardwillhaveontheCompany'sfinancialposition,resultsofoperations,andrelateddisclosures.
InJanuary2016,theFinancialAccountingStandardsBoardissuedanewaccountingpronouncementregardingclassificationandmeasurementoffinancial
instruments.Thisnewstandardprovidesguidanceonhowentitiesmeasurecertainequityinvestmentsandpresentchangesinthefairvalue.Thisstandardrequires
thatentitiesmeasurecertainequityinvestmentsthatdonotresultinconsolidationandarenotaccountedforundertheequitymethodatfairvalueandrecognize
anychangesinfairvalueinnetincome.TheCompanyisrequiredtoadoptthenewstandardonJanuary1,2018.Managementiscurrentlyevaluatingthepotential
impactthattheadoptionofthisstandardwillhaveontheCompany'sfinancialposition,resultsofoperations,andrelateddisclosures.
InFebruary2016,theFinancialAccountingStandardsBoardissuedanewaccountingpronouncementregardingthefinancialreportingofleasingtransactions.
Thisnewstandardrequiresalesseetorecordassetsandliabilitiesonthebalancesheetfortherightsandobligationsarisingfromleaseswithtermsofmorethan
12months.TheCompanyisrequiredtoadoptthenewstandardonJanuary1,2019usingamodifiedretrospectiveapproach.Managementiscurrentlyevaluating
thepotentialimpactthattheadoptionofthisstandardwillhaveontheCompanysfinancialposition,resultsofoperations,andrelateddisclosures.
8
Table of Contents

(Unaudited)
InMarch2016,theFinancialAccountingStandardsBoardissuedanewaccountingpronouncementregardingshare-basedpaymentstoemployees.Thisnew
standardrequiresthatallexcesstaxbenefitsandtaxdeficienciesberecognizedasincometaxexpense(benefit)intheincomestatementandthatexcesstaxbenefits
beincludedasanoperatingactivityforthecashflowstatement.Whilethisnewstandardalsoallowsentitiestoeitherestimateshare-basedawardsthatareexpected
to vest or account for forfeitures as they occur, the Company intends to continue its current practice of estimating forfeitures when calculating compensation
expense. Furthermore, the new standard also changes the tax withholding threshold for awards to qualify for accounting in equity. However, as all of the
Company'sawardshavequalifiedforequityaccounting,suchchangeisnotexpectedtoimpacttheCompanyscurrentpracticesrelatedtotheaccountingforsharebasedpayments.TheCompanyisrequiredtoadoptthenewstandardonJanuary1,2017.Managementbelievesthattheadoptionofthisstandardwillnothavea
materialimpactontheCompanysfinancialposition,resultsofoperations,andrelateddisclosures.
InJune2016,theFinancialAccountingStandardsBoardissuedanewaccountingpronouncementregardingcreditlossesforfinancialinstruments.Thenew
standardrequiresentitiestomeasureexpectedcreditlossesforcertainfinancialassetsheldatthereportingdateusingacurrentexpectedcreditlossmodel,whichis
basedonhistoricalexperience,adjustedforcurrentconditionsandreasonableandsupportableforecasts.TheCompanyisrequiredtoadoptthenewstandardon
January1,2020.ManagementiscurrentlyevaluatingthepotentialimpactthattheadoptionofthisstandardwillhaveontheCompany'sfinancialposition,results
ofoperations,andrelateddisclosures.
2. Earnings Per Share
Thecalculationofbasicearningspershareiscomputedbydividingnetincomeavailabletocommonstockholdersbytheweighted-averagenumberofshares
ofcommonstockoutstandingfortheperiod.OutstandingoptionstopurchaseWesternUnionstockandunvestedsharesofrestrictedstockareexcludedfrombasic
sharesoutstanding.Dilutedearningspersharereflectsthepotentialdilutionthatcouldoccurifoutstandingstockoptionsatthepresenteddatesareexercisedand
sharesofrestrictedstockhavevested,usingthetreasurystockmethod.Thetreasurystockmethodassumesproceedsfromtheexercisepriceofstockoptions,the
unamortizedcompensationexpenseandassumedtaxbenefitsofoptionsandrestrictedstockareavailabletoacquiresharesatanaveragemarketpricethroughout
theperiod,andtherefore,reducethedilutiveeffect.
For the three months ended June 30, 2016 and2015, there were 3.3 million and1.5 million , respectively, of outstanding options to purchase shares of
WesternUnionstockexcludedfromthedilutedearningspersharecalculation,astheireffectwasanti-dilutive.ForthesixmonthsendedJune30,2016and2015,
therewere4.6millionand5.2million,respectively, ofoutstandingoptionstopurchase sharesofWesternUnionstockexcludedfromthedilutedearnings per
sharecalculation,astheireffectwasanti-dilutive.
Thefollowingtableprovidesthecalculationofdilutedweighted-averagesharesoutstanding(inmillions):
2016
Basicweighted-averagesharesoutstanding
Commonstockequivalents
Dilutedweighted-averagesharesoutstanding
2015

2016
2015
490.3
515.2
495.1
518.1
2.7
4.6
3.0
4.4
493.0
519.8
498.1
522.5
Table of Contents

(Unaudited)
3. Fair Value Measurements
Fairvalue,asdefinedbytherelevantaccountingstandards,representstheexchangepricethatwouldbereceivedforanassetorpaidtotransferaliability(an
exitprice)intheprincipalormostadvantageousmarketfortheassetorliabilityinanorderlytransactionbetweenmarketparticipantsonthemeasurementdate.
For additional information on how the Company measures fair value, refer to the Company's consolidated financial statements within the Company's Annual
ReportonForm10-KfortheyearendedDecember31,2015.
Thefollowingtablesreflectassetsandliabilitiesthatweremeasuredatfairvalueonarecurringbasis(inmillions):
Fair Value Measurement Using
June 30, 2016
Assets:
Settlementassets:
Stateandmunicipaldebtsecurities
Level 1
Level 2
Level 3
1,015.0 $
Stateandmunicipalvariableratedemandnotes
Corporateandotherdebtsecurities
Otherassets:
237.5
237.5
45.6
45.6
Totalassets
Liabilities:
1,015.0
Derivatives
Assets/
Liabilities at
Fair
Value
428.9
1,727.0 $
428.9
1,727.0
Derivatives
339.2 $
339.2
Totalliabilities
339.2 $
339.2
Fair Value Measurement Using
December 31, 2015
Assets:
Settlementassets:
Stateandmunicipaldebtsecurities
Level 1
Level 2
Level 3
1,052.5 $
Assets/
Liabilities at
Fair
Value
1,052.5
42.9
42.9
67.2
67.2
Otherassets:
Derivatives
396.3
396.3
Totalassets
1,558.9 $
Liabilities:
Derivatives
283.7 $
283.7
Totalliabilities
283.7 $
283.7
10
1,558.9
Table of Contents

(Unaudited)
Nonon-recurringfairvalueadjustmentswererecordedduringthethreeandsixmonthsendedJune30,2016and2015.
Other
Fair
Value
Measurements
The carrying amounts for many of the Company's financial instruments, including cash and cash equivalents, settlement cash and cash equivalents, and
settlementreceivablesandsettlementobligationsapproximatefairvalueduetotheirshortmaturities.TheCompany'sborrowingsareclassifiedasLevel2ofthe
valuationhierarchy,andtheaggregatefairvalueoftheseborrowingswasbasedonquotesfrommultiplebanksandexcludedtheimpactofrelatedinterestrate
swaps.FixedratenotesarecarriedintheCompany'sCondensedConsolidatedBalanceSheetsattheiroriginalissuancevaluesasadjustedovertimetoaccretethat
valuetopar,exceptforportionsofnoteshedgedbytheseinterestrateswaps,asdisclosedinNote8.AsofJune30,2016,thecarryingvalueandfairvalueofthe
Company'sborrowingswas$3,228.5millionand$3,340.3million,respectively(seeNote9).AsofDecember31,2015,thecarryingvalueandfairvalueofthe
Company'sborrowingswas$3,215.9millionand$3,279.6million,respectively.
TheCompany'sinvestmentsinforeigncorporatedebtsecuritiesareclassifiedasheld-to-maturitysecuritieswithinLevel2ofthevaluationhierarchyandare
recordedatamortizedcostin"OtherAssets"intheCompany'sCondensedConsolidatedBalanceSheets.AsofJune30,2016,thecarryingvalueandfairvalueof
theCompany'sforeigncorporatedebtsecuritieswas$35.4millionand$35.5million,respectively.AsofDecember31,2015,thecarryingvalueandfairvalueof
theCompany'sforeigncorporatedebtsecuritieswas$9.3million.
4. Commitments and Contingencies
Letters
of
Credit
and
Bank
Guarantees
The Company had approximately $80 million in outstanding letters of credit and bank guarantees as of June 30, 2016 . The letters of credit and bank
guaranteesareprimarilyheldinconnectionwithleasearrangementsandcertainagentagreements.Thelettersofcreditandbankguaranteeshaveexpirationdates
through2021,withmanyhavingaone-yearrenewaloption.TheCompanyexpectstorenewthelettersofcreditandbankguaranteespriortoexpirationinmost
circumstances.
Litigation
and
Related
Contingencies
TheCompanyissubjecttocertainclaimsandlitigationthatcouldresultinlosses,includingdamages,finesand/orcivilpenalties,whichcouldbesignificant,
andinsomecases,criminalcharges.TheCompanyregularlyevaluatesthestatusoflegalmatterstoassesswhetheralossisprobableandreasonablyestimablein
determiningwhetheranaccrualisappropriate.Furthermore,indeterminingwhetherdisclosureisappropriate,theCompanyevaluateseachlegalmattertoassessif
thereisatleastareasonablepossibilitythatalossoradditionallossmayhavebeenincurredandwhetheranestimateofpossiblelossorrangeoflosscanbemade.
Unlessotherwisespecifiedbelow,theCompanybelievesthatthereisatleastareasonablepossibilitythatalossoradditionallossmayhavebeenincurredforeach
ofthemattersdescribedbelow.Forcertainofthesematters,managementisunabletoprovideameaningfulestimateofthepossiblelossorrangeoflossbecause,
among other reasons: (a) the proceedings are in preliminary stages; (b) specific damages have not been sought; (c) damage claims are unsupported and/or
unreasonable;(d)thereisuncertaintyastotheoutcomeofpendingappealsormotions;(e)therearesignificantfactualissuestoberesolved;or(f)novellegal
issuesorunsettledlegaltheoriesarebeingasserted.
State
of
Arizona
Settlement
Agreement
OnFebruary11,2010,WesternUnionFinancialServices,Inc.("WUFSI"),asubsidiaryoftheCompany,signedasettlementagreement("SouthwestBorder
Agreement"),whichresolvedalloutstandinglegalissuesandclaimswiththeStateofArizona(the"State")andrequiredtheCompanytofundamulti-statenot-forprofitorganizationpromotingsafetyandsecurityalongtheUnitedStatesandMexicoborder,inwhichCalifornia,TexasandNewMexicoareparticipatingwith
the State. As part of the Southwest Border Agreement, the Company has made and expects to make certain investments in its compliance programs along the
UnitedStatesandMexicoborderandamonitor(the"Monitor")hasbeenengagedforthoseprograms.TheCompanyhasincurred,andexpectstocontinuetoincur,
significantcostsinconnectionwiththeSouthwestBorderAgreement.TheMonitorhasmadeanumberofprimaryandsecondaryrecommendationsrelatedtothe
Company's compliance programs, which the Company has implemented or is implementing, including programs related to the Company's Business Solutions
segment.
11
Table of Contents

(Unaudited)
On January 31, 2014, the Southwest Border Agreement was amended to extend its term until December 31, 2017 (the "Amendment"). The Amendment
imposesadditionalobligationsontheCompanyandWUFSIinconnectionwithWUFSIsanti-moneylaundering("AML")complianceprogramsandcooperation
withlawenforcement.Inparticular,theAmendmentrequiresWUFSItocontinueimplementingtheprimaryandsecondaryrecommendationsmadebytheMonitor
appointed pursuant to the Southwest Border Agreement related to WUFSIs AML compliance program, and includes, among other things, timeframes for
implementingsuchprimaryandsecondaryrecommendations.UndertheAmendment,theMonitorcouldmakeadditionalprimaryrecommendationsuntilJanuary
1, 2015 and may make additional secondary recommendations until January 31, 2017. After these dates, the Monitor may only make additional primary or
secondaryrecommendations,asapplicable,thatmeetcertainrequirementsassetforthintheAmendment.Primaryrecommendationsmayalsobere-classifiedas
secondaryrecommendations.
TheAmendmentprovidesthatifWUFSIisunabletoimplementaneffectiveAMLcomplianceprogramalongtheU.S.andMexicoborder,asdeterminedby
theMonitorandsubjecttolimitedjudicialreview,withinthetimeframes forimplementingtheMonitorsprimaryrecommendations,theStatemay,within180
daysaftertheMonitordeliversafinalreportontheprimaryrecommendationsfindingsuchnoncompliance,andsubsequenttoanyjudicialreviewoftheMonitors
findings,electone,andonlyone,ofthefollowingremedies:(i)assertawillfulandmaterialbreachoftheSouthwestBorderAgreementandpursueremediesunder
theSouthwestBorderAgreement, whichcould include initiating civil orcriminal actions; or(ii) require WUFSItopay(a)$50millionplus(b)$1millionper
primaryrecommendationorgroupofprimaryrecommendationsthatWUFSIfailstoimplementsuccessfully(collectively,the"PrimaryPeriodRemedies").There
arecurrentlymorethan70primaryrecommendationsandgroupsofprimaryrecommendations.
TheAmendmentalsoprovidesthatiftheMonitorconcludesthatWUFSIhasimplementedaneffectiveAMLcomplianceprogramalongtheU.S.andMexico
borderwithinthetimeframes forimplementingtheMonitorsprimaryrecommendations,theStatecannotpursueeitherofthePrimaryPeriodRemediesabove,
exceptthattheStatemayrequireWUFSItopay$1millionperprimaryrecommendationorgroupofprimaryrecommendationsthatWUFSIfailstoimplement
successfully.
TheCompanysubmitteditsimplementationofalloftheprimaryrecommendationstotheMonitorforreviewpriortoOctober31,2015.OnJune29,2016,the
Monitor provided notice tothe Companyandthe State that the Monitor haddetermined that (i) the Companyhadsuccessfully implemented all of the primary
recommendations, and (ii) the Company has implemented an effective AML compliance program along the U.S. and Mexico border. On July 27, 2016, the
Monitor delivered its final report for the primary recommendations period and the Superior Court of Arizona in and for Maricopa County accepted the report.
Accordingly,theStatecannotpursueanyofthePrimaryPeriodRemedieslistedabove.
TheAmendmentalsoprovidesuntilJune30,2017forimplementationofthesecondaryrecommendations,andprovidesadeadlineofDecember31,2017for
the Monitor to issue a report evaluating implementation of the secondary recommendations. If the Monitor concludes in that report that WUFSI has not
implemented an effective AML compliance program along the U.S. and Mexico border, the State cannot assert a willful and material breach of the Southwest
Border Agreement but may require WUFSI to pay $25 million (the "Secondary Period Remedy"). There is no monetary penalty associated with secondary
recommendationsthatwereclassifiedassuchonthedateoftheAmendmentoranynewsecondaryrecommendationsthattheMonitormakesafterthedateofthe
Amendment.Therearecurrently15suchsecondaryrecommendationsandgroupsofsecondaryrecommendations.
Additionally, under the Amendment, if the Monitor determined that WUFSI has implemented an effective AML compliance program along the U.S. and
Mexico border but had not implemented some of the Monitors secondary recommendations or groups of secondary recommendations that were originally
classified as primary recommendations or groups of primary recommendations on the date of the Amendment, the State may have required WUFSI to pay
$500,000per such secondary recommendation or group of recommendations. As noted above, however, all primary recommendations have been successfully
implementedbytheCompany.Asaresult,therearenosecondaryrecommendationsorgroupsofsecondaryrecommendationsthatwereoriginallyclassifiedas
primaryrecommendationsorgroupsofprimaryrecommendationsonthedateoftheAmendment.
The Amendment requires WUFSI to continue funding the Monitors reasonable expenses in $500,000 increments as requested by the Monitor. The
AmendmentalsorequiresWUFSItomakeaone-timepaymentof$250,000,whichwaspaidinMarch2014,andthereafter$150,000permonthforfiveyearsto
fundtheactivitiesandexpensesofamoneytransfertransactiondataanalysiscenterformedbyWUFSIandaFinancialCrimesTaskForcecomprisedoffederal,
stateandlocallawenforcement representatives, includingthosefromtheState.Inaddition,California,Texas,andNewMexicoareparticipating inthemoney
transfertransactiondataanalysiscenter.
12
Table of Contents

(Unaudited)
The changes in WUFSIs AML compliance program required by the Southwest Border Agreement, including the Amendment, and the Monitors
recommendationshavehad,andwillcontinuetohave,adverseeffectsontheCompanysbusiness,includingadditionalcosts.TheCompanyisunableatthisstage
topredict whethertheMonitorwillconcludeattheendofthetimeframe forimplementing thesecondaryrecommendations thattheCompanyhassuccessfully
implemented the secondary recommendations and has an effective AML compliance program, and, accordingly, whether the State will pursue the Secondary
PeriodRemedy.
United
States
Department
of
Justice
Investigations
OnMarch 20,2012,the Companywasserved withafederal grandjurysubpoenaissuedbytheUnitedStates Attorney's Office fortheCentral District of
California("USAO-CDCA")seekingdocumentsrelatingtoShenZhouInternational("USShenZhou"),aformerWesternUnionagentlocatedinMontereyPark,
California.TheprincipalofUSShenZhouwasindictedin2010andinDecember2013,pledguiltytoonecountofstructuringinternationalmoneytransfersin
violation of United States federal law in U.S. v. Zhi He Wang (SA CR 10-196, C.D. Cal.). Concurrent with the government's service of the subpoena, the
governmentnotifiedtheCompanythatitisatargetofanongoinginvestigationintostructuringandmoneylaundering.SinceMarch20,2012,theCompanyhas
received additional subpoenas from the USAO-CDCA seeking additional documents relating to US Shen Zhou, materials relating to certain other former and
current agents and other materials relating to the Company's AML compliance policies and procedures. The government has interviewed several current and
former Western Union employees and has served grand jury subpoenas seeking testimony from several current and former employees. The government's
investigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationaspartoftheinvestigation.TheCompanyhasprovidedandcontinuesto
provideinformationanddocumentstothegovernment.Duetotheinvestigativestageofthematterandthefactthatnocriminalchargesorcivilclaimshavebeen
brought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossiblelossorrangeofloss,ifany,which
couldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebroughtagainsttheCompany.Shouldsuchchargesorclaimsbebrought,the
Companycouldfacesignificantfines,damageawardsorregulatoryconsequenceswhichcouldhaveamaterialadverseeffectontheCompany'sbusiness,financial
condition,resultsofoperations,andcashflows.
In March 2012, the Company was served with a federal grand jury subpoena issued by the United States Attorneys Office for the Eastern District of
Pennsylvania("USAO-EDPA")seekingdocumentsrelatingtoHongFaiGeneralContractorCorp.(formerlyknownasYongGeneralConstruction)("HongFai"),
aformerWesternUnionagentlocatedinPhiladelphia,Pennsylvania.SinceMarch2012,theCompanyhasreceivedadditionalsubpoenasfromtheUSAO-EDPA
seekingadditionaldocumentsrelatingtoHongFai.Thegovernment'sinvestigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationas
partoftheinvestigation.TheCompanyhasprovidedandcontinuestoprovideinformationanddocumentstothegovernment.Thegovernmenthasinterviewed
several current and former Western Union employees. In March 2016, the government filed a criminal complaint against the principal of Hong Fai General
ContractorCorp.andinJune2016,hepledguiltytoonecountofmailfraud,twocountsoftransportingillegalaliensandonecountoftaxevasioninviolationof
UnitedStatesfederallawinU.S.v.YongQuanZheng(2:16-cr-00212-ABE.D.Pa.).Duetotheinvestigativestageofthematterandthefactthatnocriminal
chargesorcivilclaimshavebeenbrought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossibleloss
orrangeofloss,ifany,whichcouldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebroughtagainsttheCompany.Shouldsuch
chargesorclaimsbebrought,theCompanycouldfacesignificantfines,damageawardsorregulatoryconsequenceswhichcouldhaveamaterialadverseeffecton
theCompany'sbusiness,financialcondition,resultsofoperations,andcashflows.
13
Table of Contents

(Unaudited)
OnNovember25,2013,theCompanywasservedwithafederalgrandjurysubpoenaissuedbytheUnitedStatesAttorneysOfficefortheMiddleDistrictof
Pennsylvania("USAO-MDPA")seekingdocumentsrelatingtocomplaintsmadetotheCompanybyconsumersanywhereintheworldrelatingtofraud-induced
moneytransferssinceJanuary1,2008.Concurrentwiththegovernment'sserviceofthesubpoena,thegovernmentnotifiedtheCompanythatitisthesubjectofthe
investigation.SinceNovember25,2013,theCompanyhasreceivedadditionalsubpoenasfromtheUSAO-MDPAseekingdocumentsrelatingtocertainWestern
Union agents and Western Unions agent suspension and termination policies. The government has interviewed several current and former employees and has
servedgrandjurysubpoenasseekingtestimonyfromseveralcurrentandformeremployees.ThegovernmenthasindicatedthatitbelievesWesternUnionfailedto
timelyterminateorsuspendcertainWesternUnionagentswhoallegedlypaidorforwardedthousandsoffraud-inducedtransactionssentfromtheUnitedStatesto
variouscountriesfromatleast2008to2012.Thegovernment'sinvestigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationaspart
of the investigation. The Company has provided and continues to provide information and documents to the government. Due to the investigative stage of the
matterandthefactthatnocriminalchargesorcivilclaimshavebeenbrought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,or
reasonablyestimatethepossiblelossorrangeofloss,ifany,whichcouldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebrought
against the Company. Should such charges or claims be brought, the Company could face significant fines, damage awards or regulatory consequences which
couldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsofoperations,andcashflows.
OnMarch6,2014,theCompanywasservedwithafederalgrandjurysubpoenaissuedbytheUnitedStatesAttorneysOfficefortheSouthernDistrictof
Florida ("USAO-SDFL") seeking a variety of AML compliance materials, including documents relating to the Companys AML, Bank Secrecy Act ("BSA"),
Suspicious Activity Report ("SAR") and Currency Transaction Report procedures, transaction monitoring protocols, BSA and AML training programs and
publications,AMLcomplianceinvestigationreports,compliance-relatedagentterminationfiles,SARs,BSAaudits,BSAandAML-relatedmanagementreports
andAMLcompliancestaffinglevels.ThesubpoenaalsocallsforBoardmeetingminutesandorganizationcharts.TheperiodcoveredbythesubpoenaisJanuary
1,2007toNovember27,2013.TheCompanyhasreceivedadditionalsubpoenasfromtheUSAO-SDFLandtheBrowardCounty,FloridaSheriffsOfficerelating
totheinvestigation,includingafederalgrandjurysubpoenaissuedbytheUSAO-SDFLonMarch14,2014,seekinginformationabout33agentlocationsinCosta
Rica such as ownership and operating agreements, SARs and AML compliance and BSA filings for the period January 1, 2008 to November 27, 2013.
Subsequently,theUSAO-SDFLservedtheCompanywithseizurewarrantsrequiringtheCompanytoseizeallmoneytransferssentfromtheUnitedStatestotwo
agentlocationslocatedinCostaRicafora10-dayperiodbeginninginlateMarch2014.OnJuly8,2014,thegovernmentservedagrandjurysubpoenacallingfor
recordsrelatingtotransactionssentfromtheUnitedStatestoNicaraguaandPanamabetweenSeptember1,2013andOctober31,2013.Further,thegovernment
recently served Western Union with a subpoena calling for data relating to transactions sent and received by 43Nicaraguan agents from October 1, 2008 to
October31,2013andtransactionssentfromtheUnitedStatestotheBahamas,Peru,DominicanRepublic,andHaitifromSeptember1,2013toJanuary2,2014
andcertaindocumentsrelatingtothoseagents.ThegovernmentalsoadvisedtheCompanythatitisinvestigatingconcernstheCompanywasawaretherewere
gamingtransactionsbeingsenttoPanama,Nicaragua,Haiti,Philippines,Vietnam,theDominicanRepublic,Peru,Antigua,andtheBahamas(inadditiontoCosta
Rica)andthattheCompanyfailedtotakeproperstepstostoptheactivity.ThegovernmenthasalsonotifiedtheCompanythatitisatargetoftheinvestigation.
ThegovernmenthasinterviewedseveralcurrentandformerWesternUnionemployees.Thegovernment'sinvestigationisongoingandtheCompanymayreceive
additional requests for information or seizure warrants as part of the investigation. The Company has provided and continues to provide information and
documentstothegovernment.Duetotheinvestigativestageofthematterandthefactthatnocriminalchargesorcivilclaimshavebeenbrought,theCompanyis
unabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossiblelossorrangeofloss,ifany,whichcouldbeassociatedwiththe
resolution of any possible charges or claims that may be brought against the Company. Should such charges or claims be brought, the Company could face
significantfines,damageawardsorregulatoryconsequenceswhichcouldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsof
operations,andcashflows.
14
Table of Contents

(Unaudited)
Other
Matters
TheCompanyandoneofitssubsidiariesaredefendantsintwopurportedclassactionlawsuits:JamesP.Tennillev.TheWesternUnionCompanyandRobert
P. Smet v. The Western Union Company, both of which are pending in the United States District Court for the District of Colorado. The original complaints
asserted claims for violation of various consumer protection laws, unjust enrichment, conversion and declaratory relief, based on allegations that the Company
waits too long to inform consumers if their money transfers are not redeemed by the recipients and that the Company uses the unredeemed funds to generate
incomeuntilthefundsareescheatedtostategovernments.TheTennillecomplaintwasservedontheCompanyonApril27,2009.TheSmetcomplaintwasserved
ontheCompanyonApril6,2010.OnSeptember21,2009,theCourtgrantedtheCompany'smotiontodismisstheTennillecomplaintandgavetheplaintiffleave
tofileanamendedcomplaint.OnOctober21,2009,Tennillefiledanamendedcomplaint.TheCompanymovedtodismisstheTennilleamendedcomplaintand
theSmetcomplaint.OnNovember8,2010,theCourtdeniedthemotiontodismissastotheplaintiffs'unjustenrichmentandconversionclaims.OnFebruary4,
2011,theCourtdismissedtheplaintiffs'consumerprotectionclaims.OnMarch11,2011,theplaintiffsfiledanamendedcomplaintthataddsaclaimforbreachof
fiduciaryduty,variouselementstoitsdeclaratoryreliefclaimandWUFSIasadefendant.OnApril25,2011,theCompanyandWUFSIfiledamotiontodismiss
the breach of fiduciary duty and declaratory relief claims. WUFSI also moved to compel arbitration of the plaintiffs' claims and to stay the action pending
arbitration.OnNovember21,2011,theCourtdeniedthemotiontocompelarbitrationandthestayrequest.Bothcompaniesappealedthedecision.OnJanuary24,
2012,theUnitedStatesCourtofAppealsfortheTenthCircuitgrantedthecompanies'requesttostaytheDistrictCourtproceedingspendingtheirappeal.During
thefourthquarterof2012,thepartiesexecutedasettlementagreement,whichtheCourtpreliminarilyapprovedonJanuary3,2013.OnJune25,2013,theCourt
enteredanordercertifyingtheclassandgrantingfinalapprovaltothesettlement.Undertheapprovedsettlement,asubstantialamountofthesettlementproceeds,
aswellasalloftheclasscounselsfees,administrativefeesandotherexpenses,wouldbepaidfromtheclassmembers'unclaimedmoneytransferfunds,whichare
includedwithin"Settlementobligations"intheCompany'sCondensedConsolidatedBalanceSheets.Thesefeesandotherexpensesarecurrentlyestimatedtobe
approximately$50million.Duringthefinalapprovalhearing,theCourtoverruledobjectionstothesettlementthathadbeenfiledbyseveralclassmembers.In
July2013,twoofthoseclassmembersfilednoticesofappeal.OnMay1,2015,theUnitedStatesCourtofAppealsfortheTenthCircuitaffirmedtheDistrict
Courtsdecisiontooverruletheobjectionsfiledbythetwoclassmemberswhoappealed.OnJanuary11,2016,theUnitedStatesSupremeCourtdeniedpetitions
forcertiorarithatwerefiledbythetwoclassmemberswhoappealed.OnFebruary1,2016,pursuanttothesettlementagreementandtheCourt'sJune25,2013
finalapprovalorder,WesternUniondepositedtheclassmembers'unclaimedmoneytransferfundsintoaclasssettlementfund,fromwhichclassmemberclaims,
administrativefeesandclasscounselsfees,aswellasotherexpenseswillbepaid.OnNovember6,2013,theAttorneyGeneralofCalifornianotifiedWestern
UnionoftheCaliforniaControllerspositionthatWesternUnionsdepositoftheunclaimedmoneytransferfundsintotheclasssettlementfundpursuanttothe
settlement will not satisfy Western Unions obligations to report and remit funds under Californias unclaimed property law, and that Western Union will
remain liable to the State of California for the funds that would have escheated to California in the absence of the settlement. The State of Pennsylvania and
District of Columbia have previously expressed similar views. Other states have also recently expressed concerns about the settlement and many have not yet
expressedanopinion.SincesomestatesandjurisdictionsbelievethattheCompanymustescheatitsfullshareofthesettlementfundandthatthedeductionsfor
classcounsel'sfees,administrativecosts,andotherexpensesthatarerequiredunderthesettlementagreementarenotpermitted,thereisareasonablepossibilitya
losscouldresultuptoapproximatelytheamountofthosefeesandotherexpenses.However,giventhenumberofjurisdictionsinvolvedandthefactthatnoactions
havebeenbrought,theCompanyisunabletoprovideamorepreciseestimateoftherangeofpossibleloss.
15
Table of Contents

(Unaudited)
TheCompanyhashaddiscussionswiththeUnitedStatesFederalTradeCommission(the"FTC")regardingtheCompany'sconsumerprotectionandanti-fraud
programs. On December 12, 2012, the Company received a civil investigative demand from the FTC requesting that the Company produce (i) all documents
relatingtocommunicationswiththeMonitorappointedpursuanttotheSouthwestBorderAgreement,includinginformationtheCompanyprovidedtotheMonitor
andanyreportspreparedbytheMonitor;and(ii)alldocumentsrelatingtocomplaintsmadetotheCompanybyconsumersanywhereintheworldrelatingtofraudinducedmoneytransferssinceJanuary1,2011.OnApril15,2013,theFTCfiledapetitionintheUnitedStatesDistrictCourtfortheSouthernDistrictofNew
Yorkrequestinganordertocompelproductionoftherequesteddocuments.OnJune6,2013,theCourtgrantedinpartanddeniedinparttheFTC'srequest.On
August 14, 2013, the FTC filed a notice of appeal. On August 27, 2013, Western Union filed a notice of cross-appeal. On February 21, 2014, the Company
receivedanothercivilinvestigativedemandfromtheFTCrequestingtheproductionofalldocumentsrelatingtocomplaintsmadetotheCompanybyoronbehalf
ofconsumersrelatingtofraud-inducedmoneytransfersthatweresentfromorreceivedintheUnitedStatessinceJanuary1,2004,exceptfordocumentsthatwere
alreadyproducedtotheFTCinresponsetothefirstcivilinvestigativedemand.OnOctober7,2014,theUnitedStatesCourtofAppealsfortheSecondCircuit
enteredasummaryorderreversinginpartandvacatingandremandinginparttheJune6,2013orderenteredbytheUnitedStatesDistrictCourtfortheSouthern
DistrictofNewYork.OnOctober22,2014,theCompanyreceivedanothercivilinvestigativedemandissuedbytheFTCrequestingdocumentsandinformation
since January 1, 2004 relating to the Companys consumer fraud program, its policies and procedures governing agent termination, suspension, probation and
reactivation,itseffortstocomplywithits2005agreementwith47statesandtheDistrictofColumbiaregardingconsumerfraudprevention,andcomplaintsmade
totheCompanybyoronbehalfofconsumersconcerningfraud-inducedmoneytransfersthatweresenttoorfromtheUnitedStates,excludingcomplaint-related
documents that were produced to the FTC in response to the earlier civil investigative demands. The civil investigative demand also seeks various documents
concerning approximately 720 agents, including documents relating to the transactions they sent and paid and the Companys investigations of and
communicationswiththem.OnJuly31,2015,theCompanyreceivedanothercivilinvestigativedemandrequestingdocumentsandinformationrelatingtothetotal
numberofagentandsubagentlocationsin13countriesannuallysince2010,theaverageandmediandollarvaluesformoneytransferssentanywhereintheworld
annuallysince2010,copiesoftheCompanysanti-fraudprograms,knowyouragentpolicy,knowyourcustomerpolicy,representativeagentcontracts,transaction
data,backgroundinvestigationdocumentsandfraudcomplaintsassociatedwithfouragentsinGreece,PeruandMexicoandconsumerfraudreportsnotalready
produced to the FTC. The Company has responded to each of the civil investigative demands it has received from the FTC and may receive additional civil
investigative demands.TheFTCrecentlyadvisedtheCompanyofitsviewthattheCompanyviolatedSection5oftheFederalTradeCommissionActandthe
TelemarketingSalesRulebyfailingtotaketimely,appropriate,andeffectivemeasurestomitigatefraudintheprocessingofmoneytransferssentbyconsumers.
TheCompanyisindiscussions withtheFTCandisseeking toreach anappropriate resolution ofthismatter. TheCompanyhasaccrued $15milliontowarda
proposedresolutionbaseduponfactsandcircumstancesknowntotheCompanyatthistime.Duetothestageofthediscussions,theCompanyisunabletopredict
thepossiblerangeofadditionallossexceedingtheamountalreadyaccruedforthismatter.TherecanbenoassurancethattheCompanywillreachanagreement
withtheFTC.TheFTCstaffhasadvisedtheCompanythatithasbeendirected torequestauthority fromtheFTCtofileacomplaint against theCompanyin
UnitedStatesfederalcourtifitisnotabletoreachanagreementwiththeCompany.ShouldtheCompanyenterintoasettlementagreementwiththeFTC,orifthe
FTC files a complaint against the Company, the Company could be required to make significant restitution and/or disgorgement payments and changes to its
programs,anyofwhichseparatelyorcombinedcouldhaveamaterialadverseeffectontheCompanysbusiness,financialconditionandresultsofoperations.If
theFTCfilesacomplaintagainsttheCompany,theCompanyintendstodefenditselfvigorously.
16
Table of Contents

(Unaudited)
OnMarch12,2014,JasonDouglasfiledapurportedclassactioncomplaintintheUnitedStatesDistrictCourtfortheNorthernDistrictofIllinoisassertinga
claimundertheTelephoneConsumerProtectionAct,47U.S.C.227,etseq.,basedonallegationsthatsince2009,theCompanyhassenttextmessagestoclass
memberswirelesstelephoneswithouttheirconsent.Duringthefirstquarterof2015,theCompany'sinsurancecarrierandtheplaintiffreachedanagreementto
createan$8.5millionsettlement fundthatwillbeusedtopayallclassmemberclaims,classcounselsfeesandthecostsofadministering thesettlement. The
agreementhasbeensignedbythepartiesand,onNovember10,2015,theCourtgrantedpreliminaryapprovaltothesettlement.TheCompanyaccruedanamount
equal to the retention under its insurance policy in previous quarters and believes that any amounts in excess of this accrual will be covered by the insurer.
However,iftheCompany'sinsurerisunabletoorrefusestosatisfyitsobligationsunderthepolicyorthepartiesareunabletoreachadefinitiveagreementor
otherwiseagreeonaresolution,theCompany'sfinancialcondition,resultsofoperations,andcashflowscouldbeadverselyimpacted.Asthepartieshavereached
anagreementinthismatter,theCompanybelievesthatthepotentialforadditionallossinexcessofamountsalreadyaccruedisremote.
On February 10, 2015, Caryn Pincus filed a purported class action lawsuit in the United States District Court for the Southern District of Florida against
Speedpay, Inc. ("Speedpay"), a subsidiary of the Company, asserting claims based on allegations that Speedpay imposed an unlawful surcharge on credit card
transactions and that Speedpay engages in money transmission without a license. The complaint requests certification of a class and twosubclassesgenerally
comprised of consumers in Florida who made a payment through Speedpays bill payment services using a credit card and were charged a surcharge for such
paymentduringthefour-yearandfive-yearperiodspriortothefilingofthecomplaintthroughthedateofclasscertification.OnApril6,2015,Speedpayfileda
motiontodismissthecomplaint.OnApril23,2015,inresponsetothemotiontodismiss,Pincusfiledanamendedcomplaintthataddsclaims(1)undertheFlorida
CivilRemediesforCriminalPracticesAct,whichauthorizescivilremediesforcertaincriminalconduct;and(2)forviolationofthefederalRacketeerInfluenced
andCorruptOrganizationsAct("RICO").OnMay15,2015,Speedpayfiledamotiontodismisstheamendedcomplaint.OnOctober6,2015,theCourtenteredan
orderdenyingSpeedpaysmotiontodismiss.OnOctober20,2015,Speedpayfiledananswertotheamendedcomplaint.OnDecember1,2015,Pincusfileda
secondamendedcomplaintthatrevisedherfactualallegations,butaddednonewclaims.OnDecember18,2015,Speedpayfiledananswertothesecondamended
complaint.OnMay20,2016,SpeedpayfiledamotionforjudgmentonthepleadingsastoPincus'FloridaCivilRemediesforCriminalPracticesActandfederal
RICOclaims.OnJune7,2016,PincusfiledanoppositiontoSpeedpay'smotionforjudgmentonthepleadings.OnJune17,2016,Speedpayfiledareplybriefin
supportofthemotion.Asthisactionisinapreliminarystage,theCompanyisunabletopredicttheoutcome,orthepossiblelossorrangeofloss,ifany,which
couldbeassociatedwiththisaction.Speedpayintendstovigorouslydefenditselfinthismatter.
Inadditiontotheprincipalmattersdescribedabove,theCompanyisapartytoavarietyofotherlegalmattersthatariseinthenormalcourseoftheCompany's
business.Whiletheresultsoftheseotherlegalmatterscannotbepredictedwithcertainty,managementbelievesthatthefinaloutcomeofthesematterswillnot
haveamaterialadverseeffecteitherindividuallyorintheaggregateontheCompany'sfinancialcondition,resultsofoperations,orcashflows.
OnJanuary26,2006,theFirstDataCorporation("FirstData")BoardofDirectorsannounceditsintentiontopursuethedistributionofallofitsmoneytransfer
andconsumerpaymentsbusinessanditsinterestinaWesternUnionmoneytransferagent,aswellasitsrelatedassets,includingrealestate,throughatax-free
distributiontoFirstDatashareholders(the"Spin-off").TheSpin-offresultedintheformationoftheCompanyandtheseassetsandbusinessesnolongerbeingpart
ofFirstData.PursuanttotheseparationanddistributionagreementwithFirstDatainconnectionwiththeSpin-off,FirstDataandtheCompanyareeachliablefor,
and agreed to perform, all liabilities with respect to their respective businesses. In addition, the separation and distribution agreement also provides for crossindemnities principally designed to place financial responsibility for the obligations and liabilities of the Company's business with the Company and financial
responsibilityfortheobligationsandliabilitiesofFirstData'sretainedbusinesseswithFirstData.TheCompanyalsoenteredintoataxallocationagreement("Tax
AllocationAgreement")thatsetsforththerightsandobligationsofFirstDataandtheCompanywithrespecttotaxesimposedontheirrespectivebusinessesboth
priortoandaftertheSpin-offaswellaspotentialtaxobligationsforwhichtheCompanymaybeliableinconjunctionwiththeSpin-off(seeNote10).
17
Table of Contents

(Unaudited)
5. Related Party Transactions
The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents
commissionsformoneytransferandotherservicesprovidedontheCompany'sbehalf.Commissionexpenserecognizedfortheseagentsforthethreemonthsended
June30,2016and2015totaled$17.1millionand$17.2million,respectively,and$32.7millionand$32.9millionforthesixmonthsendedJune30,2016and
2015,respectively.
6. Settlement Assets and Obligations and Non-Settlement Related Investments
Settlementassetsrepresentfundsreceivedortobereceivedfromagentsforunsettledmoneytransfers,moneyordersandconsumerpayments.TheCompany
records corresponding settlement obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements.
Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions
relatedtotheBusinessSolutionssegment.
Settlementassetsandobligationsconsistedofthefollowing(inmillions):
2016
Settlementassets:
Cashandcashequivalents
895.5 $
2015
1,075.7
ReceivablesfromsellingagentsandBusinessSolutionscustomers
1,163.5
1,070.4
Investmentsecurities
1,298.1
1,162.6
3,357.1 $
3,308.7
Settlementobligations:
Moneytransfer,moneyorderandpaymentservicepayables
2,453.7 $
Payablestoagents
903.4
$
3,357.1 $
2,428.5
880.2
3,308.7
Investment securities included in"Settlement assets" inthe Company'sCondensedConsolidated Balance Sheetsconsistprimarily ofhighly-rated state and
municipaldebtsecurities,includingfixedratetermnotesandvariableratedemandnotes.Variableratedemandnotesecuritiescanbeput(soldatpar)typicallyon
a daily basis with settlement periods ranging from the same day to one week, but have varying maturities through 2049.Thesesecurities may beusedbythe
Companyforshort-termliquidityneedsandheldforshortperiodsoftime.TheCompanyisrequiredtoholdhighly-rated,investmentgradesecuritiesandsuch
investmentsarerestrictedtosatisfyoutstandingsettlementobligationsinaccordancewithapplicablestateandforeigncountryrequirements.
The substantial majority of the Company's investment securities are classified as available-for-sale and recorded at fair value. Investment securities are
exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors credit risk and attempts to mitigate its exposure by
investinginhighly-ratedsecuritiesandthroughinvestmentdiversification.
Unrealizedgainsandlossesonavailable-for-salesecuritiesareexcludedfromearningsandpresentedasacomponentofaccumulatedothercomprehensive
loss,netofrelateddeferredtaxes.Gainsandlossesoninvestmentsarecalculatedusingthespecific-identificationmethodandarerecognizedduringtheperiodin
whichtheinvestmentissoldorwhenaninvestmentexperiencesanother-than-temporarydeclineinvalue.Proceedsfromthesaleandmaturityofavailable-for-sale
securitiesduringthesixmonthsendedJune30,2016and2015were$1.2billionand$7.8billion,respectively.Thedeclineinproceedsfromthesaleandmaturity
ofavailable-for-salesecuritiesforthesixmonthsendedJune30,2016comparedtothepriorperiodwasprimarilyduetoreducedsalesofvariableratedemand
notesecurities.
18
Table of Contents

(Unaudited)
Thecomponentsofinvestmentsecuritiesareasfollows(inmillions):
Amortized
Cost
June 30, 2016
Settlementassets:
Available-for-salesecurities:
Stateandmunicipaldebtsecurities(a)
993.2 $
1,015.0 $
22.4 $
(0.6) $
237.5
237.5
44.9
45.6
0.7
1,275.6
1,298.1
23.1
0.1
23.2 $
1,311.0 $
1,333.6 $
Amortized
Cost
December 31, 2015
0.7
22.5
(0.6) $
22.6
Net
Unrealized
Gains/ (Losses)
1,052.5 $
14.2 $
(2.0) $
42.9
42.9
12.2
67.3
67.2
(0.1)
(0.1)
1,150.5
1,162.6
14.2
(2.1)
12.1
Foreigncorporatedebtsecurities
9.3
$
0.1
Gross
Unrealized
Losses
1,040.3 $
Held-to-maturitysecurities:
Fair
Value
(0.6)
Gross
Unrealized
Gains
21.8
35.5
Net
Unrealized
Gains
35.4
$
Otherassets:
Stateandmunicipaldebtsecurities(a)
Gross
Unrealized
Losses
Foreigncorporatedebtsecurities
Available-for-salesecurities:
Settlementassets:
Gross
Unrealized
Gains
Held-to-maturitysecurities:
Fair
Value
Otherassets:
1,159.8 $
____________
(a)Themajorityofthesesecuritiesarefixedrateinstruments.
19
9.3
1,171.9 $

14.2 $
(2.1) $
12.1
Table of Contents

(Unaudited)
Thefollowingsummarizesthecontractualmaturitiesofsettlement-relateddebtsecuritiesasofJune30,2016(inmillions):
Fair
Value
Duewithin1year
157.5
Dueafter1yearthrough5years
578.1
Dueafter5yearsthrough10years
327.8
Dueafter10years
234.7
$
1,298.1
ActualmaturitiesmaydifferfromcontractualmaturitiesbecauseissuersmayhavetherighttocallorprepaytheobligationsortheCompanymayhavethe
righttoputtheobligationpriortoitscontractualmaturity,aswithvariableratedemandnotes.Variableratedemandnotes,havingafairvalueof$2.9million,
$20.0millionand$214.6millionareincludedinthe"Dueafter1yearthrough5years""Dueafter5yearsthrough10years,"and"Dueafter10years"categories,
respectively,inthetableabove.Thesignificantmajorityoftheheld-to-maturityforeigncorporatedebtsecuritiesareduewithin1year.
20
Table of Contents

(Unaudited)
7. Stockholders' Equity
Accumulated
other
comprehensive
loss
Thefollowingtablesummarizesthecomponentsofaccumulatedothercomprehensiveloss,netoftax(inmillions).Allamountsreclassifiedfromaccumulated
othercomprehensivelossaffectthelineitemsasindicatedbelowwithintheCondensedConsolidatedStatementsofIncome.
Three Months Ended

June 30,
2016
Unrealizedgainsoninvestmentsecurities,beginningofperiod
Unrealizedgains/(losses)
11.0 $
6.2
2015
9.9 $
Six Months Ended

June 30,
2016
7.8 $
(9.6)
12.2
2015
8.9
(7.3)
Tax(expense)/benefit
(2.3)
3.6
(4.4)
2.7
Reclassificationofgainsinto"Otherrevenues"
(0.7)
(1.2)
(1.8)
(1.8)
0.3
0.4
0.7
0.6
3.5
(6.8)
6.7
(5.8)
3.1
Taxexpenserelatedtoreclassifications
Netunrealizedgains/(losses)oninvestmentsecurities
Unrealizedgainsoninvestmentsecurities,endofperiod
14.5 $
3.1 $
14.5 $
89.2 $
Unrealizedgainsonhedgingactivities,beginningofperiod
41.4 $
48.6
20.1
(19.8)
(6.2)
38.4
0.2
0.4
2.3
(2.7)
Reclassificationofgainsinto"Transactionfees"
(7.5)
(14.2)
(18.2)
(25.5)
Reclassificationofgainsinto"Foreignexchangerevenues"
(3.4)
(5.9)
(7.8)
(10.3)
0.9
0.9
1.8
1.8
Unrealizedgains/(losses)
Tax(expense)/benefit
Reclassificationoflossesinto"Interestexpense"
Taxexpenserelatedtoreclassifications
Netunrealizedgains/(losses)onhedgingactivities
3.6 $
0.4
0.4
1.0
0.7
10.7
(38.2)
(27.1)
2.4
Unrealizedgainsonhedgingactivities,endofperiod
14.3 $
51.0 $
14.3 $
Foreigncurrencytranslationadjustments,beginningofperiod
51.0
(68.3) $
(51.8) $
(66.0) $
(49.2)
Foreigncurrencytranslationadjustments
(0.6)
(1.7)
(3.9)
(4.3)
Taxexpense
(1.2)
(0.2)
(1.8)
(1.7)
(4.1)
(4.3)
(53.5)
Netforeigncurrencytranslationadjustments
Foreigncurrencytranslationadjustments,endofperiod
(70.1) $
(53.5) $
(70.1) $
Definedbenefitpensionplanadjustments,beginningofperiod
(125.4) $
(125.4) $
(127.1) $
Reclassificationoflossesinto"Costofservices"
2.6
2.8
5.3
5.7
Taxbenefitrelatedtoreclassificationsandother
(0.9)
(1.5)
(1.9)
(2.6)
Netdefinedbenefitpensionplanadjustments
(127.2)
1.7
1.3
3.4
Definedbenefitpensionplanadjustments,endofperiod
(123.7) $
(124.1) $
(123.7) $
(124.1)
Accumulatedothercomprehensiveloss,endofperiod
(165.0) $
(123.5) $
(165.0) $
(123.5)
21
3.1
Table of Contents

(Unaudited)
Cash
Dividends
Paid
TheCompany'sBoardofDirectorsdeclaredquarterlycashdividendsof$0.16percommonshareinboththefirstandsecondquartersof2016,representing
$157.4millionintotaldividends.Ofthisamount,$78.1millionwaspaidonJune30,2016and$79.3millionwaspaidonMarch31,2016.TheCompany'sBoard
of Directors declared quarterly cash dividends of $0.155per common share in both the first and second quarters of 2015, representing $160.0 million intotal
dividends.Ofthisamount,$79.5millionwaspaidonJune30,2015and$80.5millionwaspaidonMarch31,2015.
OnJuly14,2016,theCompany'sBoardofDirectorsdeclaredaquarterlycashdividendof$0.16percommonsharepayableonSeptember30,2016.
Share
Repurchases
During the six months ended June 30, 2016 and 2015 , 16.9 million and 15.0 million shares were repurchased for $317.5 million and $306.3 million ,
respectively,excludingcommissions,atanaveragecostof$18.81and$20.47,respectively.TheseamountsrepresentsharesauthorizedbytheBoardofDirectors
forrepurchaseunderthepublicly announcedauthorizations. AsofJune30,2016,$394.3millionremainedavailableunderthesharerepurchaseauthorization
approvedbytheCompany'sBoardofDirectorsthroughDecember31,2017.Theamountsincludedinthe"Commonstockrepurchased"lineintheCompany's
Condensed Consolidated Statements of Cash Flows represent both shares authorized by the Board of Directors for repurchase under the publicly announced
authorizationaswellasshareswithheldfromemployeestocovertaxwithholdingobligationsonrestrictedstockunitsthathavevested.
8. Derivatives
TheCompanyisexposedtoforeigncurrencyexchangeriskresultingfromfluctuationsinexchangerates,primarilytheeuro,andtoalesserdegreetheBritish
pound,Canadiandollar,Australiandollar,Swissfranc,andothercurrencies,relatedtoforecastedrevenuesandonsettlementassetsandobligationsaswellason
certain foreign currency denominated cash and other asset and liability positions. The Company is also exposed to risk from derivative contracts written to its
customersarisingfromitscross-currencyBusinessSolutionspaymentsoperations.Additionally,theCompanyisexposedtointerestrateriskrelatedtochangesin
market rates both prior to and subsequent to the issuance of debt. The Company uses derivatives to (a) minimize its exposures related to changes in foreign
currencyexchangeratesandinterestratesand(b)facilitatecross-currencyBusinessSolutionspaymentsbywritingderivativestocustomers.
TheCompanyexecutesderivativeswithestablishedfinancialinstitutions,withthesubstantialmajorityofthesefinancialinstitutionshavingcreditratingsof
"A-"orbetterfromamajorcreditratingagency.TheCompanyalsowritesBusinessSolutionsderivativesmostlywithsmallandmediumsizeenterprises.The
primarycreditriskinherentinderivativeagreementsrepresentsthepossibilitythatalossmayoccurfromthenonperformanceofacounterpartytotheagreements.
TheCompanyperformsareviewofthecreditriskofthesecounterpartiesattheinceptionofthecontractandonanongoingbasis.TheCompanyalsomonitorsthe
concentrationofitscontractswithanyindividualcounterparty.TheCompanyanticipatesthatthecounterpartieswillbeabletofullysatisfytheirobligationsunder
theagreements,buttakesactionwhendoubtarisesaboutthecounterparties'abilitytoperform.TheseactionsmayincluderequiringBusinessSolutionscustomers
topostorincreasecollateral,andforallcounterparties,thepossibleterminationoftherelatedcontracts.TheCompany'shedgedforeigncurrencyexposuresarein
liquidcurrencies;consequently,thereisminimalriskthatappropriatederivativestomaintainthehedgingprogramwouldnotbeavailableinthefuture.
22
Table of Contents

(Unaudited)
Foreign
Currency
Derivatives
TheCompany'spolicyistouselonger-term foreign currency forwardcontracts, withmaturities ofupto36monthsatinception andatargeted weightedaveragematurityofapproximatelyoneyear,tohelpmitigatesomeoftheriskthatchangesinforeigncurrencyexchangeratescomparedtotheUnitedStatesdollar
could have on forecasted revenues denominated in other currencies related to its business. As of June 30,2016 , the Company's longer-term foreign currency
forwardcontractshadmaturitiesofamaximumof24monthswithaweighted-averagematurityofapproximatelyoneyear.Thesecontractsareaccountedforas
cashflowhedgesofforecastedrevenue,witheffectivenessassessedbasedonchangesinthespotrateoftheaffectedcurrenciesduringtheperiodofdesignation.
Accordingly,allchangesinthefairvalueofthehedgesnotconsideredeffectiveorportionsofthehedgethatareexcludedfromthemeasureofeffectivenessare
recognizedimmediatelyin"Derivativegains,net"withintheCompany'sCondensedConsolidatedStatementsofIncome.
The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month , to offset foreign
exchangeratefluctuationsonsettlementassetsandobligationsbetweeninitiationandsettlement.Inaddition,forwardcontracts,typicallywithmaturitiesofless
than one year at inception, are utilized to offset foreign exchange rate fluctuations on certain foreign currency denominated cash and other asset and liability
positions.Noneofthesecontractsaredesignatedasaccountinghedges.
TheaggregateequivalentUnitedStatesdollarnotionalamountsofforeigncurrencyforwardcontractsasofJune30,2016wereasfollows(inmillions):
Contractsdesignatedashedges:
Euro
Britishpound
373.6
139.9
Canadiandollar
99.9
Australiandollar
45.8
Swissfranc
42.1
Other
81.8
Contractsnotdesignatedashedges:
Euro
215.6
Britishpound
72.8
Canadiandollar
54.8
Australiandollar
47.7
Singaporedollar
35.6
Indianrupee
28.9
Other(a)
____________________
(a) Comprisedofexposuresto21differentcurrencies.Noneoftheseindividualcurrencyexposuresisgreaterthan$25million.
23
153.9
Table of Contents

(Unaudited)
Business
Solutions
Operations
The Company writes derivatives, primarily foreign currency forward contracts and option contracts, mostly with small and medium size enterprises and
derives a currency spread from this activity as part of its Business Solutions operations. The Company aggregates its Business Solutions foreign currency
exposures arising from customer contracts, including the derivative contracts described above, and hedges the resulting net currency risks by entering into
offsetting contracts with established financial institution counterparties (economic hedge contracts). The derivatives written are part of the broader portfolio of
foreign currency positions arising from the Company's cross-currency payments operations, which primarily include spot exchanges of currency in addition to
forwardsandoptions.TheresultingforeignexchangerevenuesfromthetotalportfolioofpositionscompriseBusinessSolutionsforeignexchangerevenues.None
ofthederivativecontractsusedinBusinessSolutionsoperationsaredesignatedasaccountinghedges.Thedurationofthesederivativecontractsatinceptionis
generallylessthanoneyear.
The aggregate equivalent United States dollar notional amount of foreign currency derivative customer contracts held by the Company in its Business
SolutionsoperationsasofJune30,2016wasapproximately$6.0billion.Thesignificantmajorityofcustomercontractsarewritteninmajorcurrenciessuchasthe
Australiandollar,Britishpound,Canadiandollar,andeuro.
Interest
Rate
Hedging
The Company utilizes interest rate swaps to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term
LIBOR-basedvariableratepaymentsinordertomanageitsoverallexposuretointerestrates.TheCompanydesignatesthesederivativesasfairvaluehedges.The
change in fair value of the interest rate swaps is offset by a change in the carrying value of the debt being hedged within "Borrowings" in the Condensed
Consolidated Balance Sheets and "Interest expense" in the Condensed Consolidated Statements of Income has been adjusted to include the effects of interest
accruedontheswaps.
TheCompany,attimes,utilizesderivativestohedgetheforecastedissuanceoffixed-ratedebt.Thesederivativesaredesignatedascashflowhedgesofthe
variability in the fixed-rate coupon of the debt expected to be issued. The effective portion of the change in fair value of the derivatives is recorded in
"Accumulatedothercomprehensiveloss"intheCondensedConsolidatedBalanceSheets.
TheCompanyheldinterest rate swapsinanaggregate notionalamountof$975.0millionasofJune30,2016andDecember31,2015.Ofthisaggregate
notionalamountheldatJune30,2016,$500.0millionrelatedtonotesduein2017,$300.0millionrelatedtonotesduein2018,and$175.0millionrelatedtonotes
duein2020.
24
Table of Contents

(Unaudited)
Balance Sheet
ThefollowingtablesummarizesthefairvalueofderivativesreportedintheCondensedConsolidatedBalanceSheetsasofJune30,2016andDecember31,
2015(inmillions):
Derivative Assets
Derivativeshedges:
Balance Sheet
Location
Interestratefairvaluehedges
Otherassets
Foreigncurrencycashflowhedges
Total
Derivativesundesignated:
Otherassets
Total
Totalderivatives
Otherassets
Otherassets
19.6 $
BusinessSolutionsoperations
foreigncurrency(a)
Foreigncurrency
Fair Value
June 30,
2016
$
$
Derivative Liabilities
December 31,
2015
Balance Sheet
Location
7.6
36.8
56.4 $
Otherliabilities
59.7
Otherliabilities
67.3
368.2 $
326.1
4.3
372.5 $
428.9 $
2.9
Otherliabilities
329.0
396.3
Otherliabilities
Fair Value
June 30,
2016
December 31,
2015
0.2 $
8.5
8.7 $
2.4
325.8 $
277.1
4.7
330.5 $
339.2 $
281.3
$
$
2.4
4.2
283.7
____________________
(a) Inmanycircumstances,theCompanyallowsitsBusinessSolutionscustomerstosettlepartoralloftheirderivativecontractspriortomaturity.However,the
offsetting positions originally entered into with financial institution counterparties do not allow for similar settlement. To mitigate this, additional foreign
currencycontractsareenteredintowithfinancialinstitutioncounterpartiestooffsettheoriginaleconomichedgecontracts.Thisfrequentlyresultsinincreases
intheCompany'sderivativeassetsandliabilitiesthatmayexceedthegrowthintheunderlyingderivativesbusiness.
ThefairvaluesofderivativeassetsandliabilitiesassociatedwithcontractsthatincludenettinglanguagethattheCompanybelievestobeenforceablehave
beennettedinthefollowingtablestopresenttheCompany'snetexposurewiththesecounterparties.TheCompany'srightsundertheseagreementsgenerallyallow
for transactions to be settled on a net basis, including upon early termination, which could occur upon the counterparty's default, a change in control, or other
conditions.
Inaddition,certainoftheCompany'sotheragreementsincludenettingprovisions,theenforceabilityofwhichmayvaryfromjurisdictiontojurisdictionand
dependingonthecircumstances.Duetotheuncertaintyrelatedtotheenforceabilityoftheseprovisions,thederivativebalancesassociatedwiththeseagreements
are included within "Derivatives that are not or may not be subject to master netting arrangement or similar agreement" in the following tables. In certain
circumstances,theCompanymayrequireitsBusinessSolutionscustomerstomaintaincollateralbalanceswhichmaymitigatetheriskassociatedwithpotential
customerdefaults.
25
Table of Contents

(Unaudited)
ThefollowingtablessummarizethegrossandnetfairvalueofderivativeassetsandliabilitiesasofJune30,2016andDecember31,2015(inmillions):
Offsetting
of
Derivative
Assets
June 30, 2016
Gross Amounts Offset

in the Condensed
Gross Amounts of
Consolidated Balance
Recognized Assets
Sheets
Net Amounts
Presented
in the Condensed
Consolidated
Balance Sheets
Derivatives Not
Offset
in the Condensed
Consolidated
Balance Sheets
Derivativessubjecttoamasternetting
arrangementorsimilaragreement
260.2 $
260.2 $
(158.2) $
Derivativesthatarenotormaynotbe
subjecttomasternettingarrangementor
similaragreement
168.7
Total
428.9
224.3 $
224.3 $
(119.2) $
similaragreement
172.0
Total
396.3
December 31, 2015
Net Amounts
102.0
105.1
Offsetting
of
Derivative
Liabilities
June 30, 2016
Gross Amounts Offset

Gross Amounts of
in the Condensed
Recognized
Consolidated Balance
Liabilities
Sheets
Net Amounts
Presented
in the Condensed
Consolidated
Balance Sheets
Derivatives Not
Offset
in the Condensed
Consolidated
Balance Sheets
186.2 $
186.2 $
(158.2) $
similaragreement
153.0
Total
339.2
169.6 $
169.6 $
(119.2) $
similaragreement
114.1
Total
283.7
December 31, 2015
26
Net Amounts
28.0
50.4
Table of Contents

(Unaudited)
Income Statement
ThefollowingtablessummarizethelocationandamountofgainsandlossesofderivativesintheCondensedConsolidatedStatementsofIncomesegregated
bydesignated,qualifyinghedginginstrumentsandthosethatarenot,forthethreeandsixmonthsendedJune30,2016and2015(inmillions):
FairValueHedges
Thefollowingtablepresentsthelocationandamountofgains/(losses)fromfairvaluehedgesforthethreemonthsendedJune30,2016and2015(inmillions):
Derivatives
Gain/(Loss) Recognized in Income on

Derivatives
Income
Statement
Location
Interest
expense
Interestratecontracts
Totalgain/(loss)
Amount
June 30, 2016
June 30, 2015
Hedged
Item
4.2
(0.3)
4.2
(0.3)

Related Hedged Item (a)
Income
Statement
Location
Fixedratedebt
Interest
expense
Amount
June 30, 2016
Gain/(Loss) Recognized in Income on Derivatives

(Ineffective Portion and Amount Excluded from
Effectiveness Testing)
June 30, 2015
Income
Statement
Location
Interest
expense
(1.6)
3.5
(1.6)
3.5
Amount
June 30, 2016
June 30, 2015
0.1
(0.1)
0.1
(0.1)
Thefollowingtablepresentsthelocationandamountofgains/(losses)fromfairvaluehedgesforthesixmonthsendedJune30,2016and2015(inmillions):
Derivatives

Derivatives
Income
Statement
Location
Interest
expense
Interestratecontracts
Totalgain/(loss)
Amount
June 30, 2016
June 30, 2015
Hedged
Item
15.4
10.6
15.4
10.6

Related Hedged Item (a)
Income
Statement
Location
Fixedratedebt
Interest
expense
Amount
June 30, 2016
Gain/(Loss) Recognized in Income on Derivatives

(Ineffective Portion and Amount Excluded from
Effectiveness Testing)
June 30, 2015
Income
Statement
Location
Interest
expense
(10.1)
(4.0)
(10.1)
(4.0)
Amount
June 30, 2016
June 30, 2015
0.3
0.6
0.3
0.6
CashFlowHedges
Thefollowingtablepresentsthelocationandamountofgains/(losses)fromcashflowhedgesforthethreemonthsendedJune30,2016and2015(inmillions):
Gain/(Loss) Recognized
Gain/(Loss) Reclassified
in OCI on Derivatives
from Accumulated OCI into Income
Derivatives (Ineffective Portion and Amount
(Effective Portion)
(Effective Portion)
Excluded from Effectiveness Testing) (b)
Amount
Derivatives
Foreigncurrency
contracts
Interestrate
contracts(c)
Totalgain/(loss)
June 30, 2016

$
20.1
20.1
June 30, 2015

$
(19.8)
(19.8)
Income
Statement
Location
Amount
Revenue
Interestexpense
June 30, 2016

$
10.9
(0.9)
10.0
27
June 30, 2015

$
Income
Statement Location
20.1
Derivative
gains,net
(0.9)
Interestexpense
19.2
Amount
June 30, 2016

$
1.0
1.0
June 30, 2015

$
0.8
0.8
Table of Contents

(Unaudited)
Thefollowingtablepresentsthelocationandamountofgains/(losses)fromcashflowhedgesforthesixmonthsendedJune30,2016and2015(inmillions):
Gain/(Loss) Recognized
Gain/(Loss) Reclassified
in OCI on Derivatives
from Accumulated OCI into Income
Derivatives (Ineffective Portion and Amount
(Effective Portion)
(Effective Portion)
Excluded from Effectiveness Testing) (b)
Amount
Derivatives
Foreigncurrency
contracts
Interestrate
contracts(c)
Totalgain/(loss)
June 30, 2016

$
(6.2)
(6.2)
June 30, 2015
Income
Statement
Location
38.4
Revenue
Interestexpense
38.4
Amount
June 30, 2016

$
26.0
(1.8)
24.2
June 30, 2015
Income
Statement Location
35.8
Derivative
gains,net
(1.8)
Interestexpense
34.0
Amount
June 30, 2016
2.7
2.7
June 30, 2015

$
UndesignatedHedges
Thefollowingtablepresentsthelocationandamountofnetgains/(losses)fromundesignatedhedgesforthethreeandsixmonthsendedJune30,2016and
2015(inmillions):
Gain/(Loss) Recognized in Income on Derivatives (d)
Income Statement Location
Amount
Three Months Ended
June 30,
Derivatives
Foreigncurrencycontracts(e)
3.1 $
Foreigncurrencycontracts(f)
Derivativegains,net
0.4
Totalgain/(loss)
3.5 $
2016
2015
Six Months Ended

June 30,
2016
2015
(11.2) $
(14.5) $
16.1
(0.8)
(0.8)
1.0
(12.0) $
(15.3) $
17.1
____________________
(a)
Thegain/(loss)of$(1.6)millionand$3.5millioninthethreemonthsendedJune30,2016and2015,respectively,consistedofagain/(loss)invalueon
the debt of $(4.3) million and $0.4 million , respectively, and amortization of hedge accounting adjustments of $2.7 million and $3.1 million ,
respectively.Thelossof$10.1millionand$4.0millioninthesixmonthsendedJune30,2016and2015,respectively,consistedofalossinvalueonthe
debtof$15.7millionand$11.2million,respectively,andamortizationofhedgeaccountingadjustmentsof$5.6millionand$7.2million,respectively.
(b)
Theportionofthechangeinfairvalueofaderivativeexcludedfromtheeffectivenessassessmentforforeigncurrencyforwardcontractsdesignatedas
cashflowhedgesrepresentsthedifferencebetweenchangesinforwardratesandspotrates.
(c)
The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the derivative's fair value in
"Accumulated other comprehensive loss" in the Condensed Consolidated Balance Sheets. These amounts are reclassified to "Interest expense" in the
CondensedConsolidatedStatementsofIncomeoverthelifeoftherelatednotes.
(d)
TheCompanyusesforeigncurrencyforwardandoptioncontractsaspartofitsBusinessSolutionspaymentsoperations.Thesederivativecontractsare
excludedfromthistableastheyaremanagedaspartofabroadercurrencyportfoliothatincludesnon-derivativecurrencyexposures.Thegainsandlosses
onthesederivativesareincludedaspartofthebroaderdisclosureofportfoliorevenueforthisbusinessdiscussedabove.
(e)
TheCompanyusesforeigncurrencyforwardcontractstooffsetforeignexchangeratefluctuationsonsettlementassetsandobligationsaswellascertain
foreign currency denominated positions. Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and
liabilities,notincludingamountsrelatedtoderivativesactivityasdisplayedaboveandincludedin"Selling,generalandadministrative"intheCondensed
Consolidated Statements of Income were $(9.7)millionand$8.0millionfor the three months ended June 30,2016 and2015, respectively, and $6.7
millionand$(21.5)millionforthesixmonthsendedJune30,2016and2015,respectively.
(f)
ThederivativecontractsusedintheCompany'srevenuehedgingprogramarenotdesignatedashedgesinthefinalmonthofthecontract.
28
Table of Contents

(Unaudited)
An accumulated other comprehensive pre-tax gain of $23.9 million related to the foreign currency forward contracts is expected to be reclassified into
revenue within the next 12monthsasof June30,2016.Approximately$3.4millionofnetlossesontheforecasted debtissuance hedgesareexpected tobe
recognizedin"Interestexpense"intheCondensedConsolidatedStatementsofIncomewithinthenext12monthsasof June30,2016.Noamountshavebeen
reclassifiedintoearningsasaresultoftheunderlyingtransactionbeingconsideredprobableofnotoccurringwithinthespecifiedtimeperiod.
29
Table of Contents

(Unaudited)
9. Borrowings
TheCompanysoutstandingborrowingsconsistedofthefollowing(inmillions):
June 30, 2016
Notes:
5.930%notesdue2016(a)
December 31, 2015
1,000.0 $
1,000.0
500.0
500.0
3.650%notes(effectiverateof4.2%)due2018
400.0
400.0
250.0
250.0
324.9
324.9
500.0
500.0
250.0
250.0
5.4
5.5
3,230.3
3,230.4
Otherborrowings
Totalborrowingsatparvalue
Fairvaluehedgeaccountingadjustments,net(b)
17.7
7.6
Unamortizeddiscountanddebtissuancecosts(c)
(19.5)
(22.1)
Totalborrowingsatcarryingvalue(d)
3,228.5 $
3,215.9
____________________
(a)
Thedifferencebetweenthestatedinterestrateandtheeffectiveinterestrateisnotsignificant.
(b)
TheCompanyutilizesinterestrateswapsdesignatedasfairvaluehedgestoeffectivelychangetheinterestratepaymentsonaportionofitsnotesfrom
fixed-ratepaymentstoshort-termLIBOR-basedvariableratepaymentsinordertomanageitsoverallexposuretointerestrates.Thechangesinfairvalue
oftheseinterestrateswapsresultinanoffsettinghedgeaccountingadjustmentrecordedtothecarryingvalueoftherelatednote.Thesehedgeaccounting
adjustmentswillbereclassifiedasreductionstoorincreasesin"Interestexpense"intheCondensedConsolidatedStatementsofIncomeoverthelifeof
therelatednotes,andcausetheeffectiverateofinteresttodifferfromthenotesstatedrate.
(c)
OnJanuary1,2016,theCompanyadoptedanaccountingpronouncementthatrequirescapitalizeddebtissuancecoststobepresentedasareductiontothe
carryingvalueofdebt,withadoptionretrospectiveforperiodspreviouslypresented.Theadoptionofthisstandardresultedinareductionof$9.7million
tothecarryingvalueofborrowingsasofDecember31,2015.
(d)
AsofJune30,2016,theCompanysweighted-averageeffectiverateontotalborrowingswasapproximately4.9%.
ThefollowingsummarizestheCompany'smaturitiesofborrowingsatparvalueasofJune30,2016(inmillions):
Duewithin1year
1,005.4
Dueafter1yearthrough2years
500.0
650.0
324.9
Dueafter5years
750.0
TheCompanysobligationswithrespecttoitsoutstandingNotes,asdescribedabove,rankequally.
30
Table of Contents

(Unaudited)
Term
Loan
Facility
OnApril11,2016,theCompanyenteredintoatermloanagreement,whichmaturesinApril2021,providingforanunsecureddelayeddrawtermloanfacility
inanaggregateamountof$575.0million(the"TermLoanFacility").TheCompanymaydrawtermloansundertheTermLoanFacilityfromtimetotimeuntil
October11,2016(the"CommitmentTerminationDate").Inaddition,theCompanyhastheoptiontoincreasethecommitmentsundertheTermLoanFacility,
either before or after the Commitment Termination Date, in an aggregate amount up to $250.0 million . Any such increases would be subject to obtaining
additional commitments from existing or new lenders under the Term Loan Facility. The Company plans to use the proceeds of the term loans to refinance a
portionoftheCompanysissuedandoutstanding5.930%notesdueOctober2016andforgeneralcorporatepurposes;provided,thatnomorethan$450.0million
inproceeds fromtheloansundertheTerm LoanFacility may beusedforpurposesother thanredeeming, repaying, purchasingorrefinancing theCompanys
notesdueOctober2016andpayinganyfeesandexpensesinconnectionwiththeTermLoanFacilityandotherrelatedloandocuments.
TheTermLoanFacilitycontainscovenants,subjecttocertainexceptions,that,amongotherthings,limitorrestricttheCompany'sabilitytosellortransfer
assets or merge or consolidate with another company, grant certain types of security interests, incur certain types of liens, impose restrictions on subsidiary
dividends, enter into sale and leaseback transactions, incur certain subsidiary level indebtedness, or use proceeds in violation of anti-corruption or anti-money
launderinglaws.TheTermLoanFacilityrequirestheCompanytomaintainaconsolidatedadjustedEBITDAinterestcoverageratioofgreaterthan3:1foreach
periodoffourconsecutivefiscalquarters.TheTermLoanFacilityalsocontainscustomaryrepresentations,warrantiesandeventsofdefault.
Generally,interestundertheTermLoanFacilityiscalculatedusingaselectedLIBORrateplusaninterestratemarginof150basispoints.Acommitmentfee
of15basispointsontheunusedamountofthecommitmentsunderthefacilityisalsopayablequarterlyuntiltheCommitmentTerminationDate.Boththeinterest
ratemarginandcommitmentfeepercentagearebasedoncertainoftheCompany'screditratings,andwillincreaseordecreaseintheeventofcertainupgradesor
downgradesintheCompanyscreditratings.
Inadditiontothepaymentofinterest,theCompanyisrequiredtomakecertainperiodicamortizationpaymentswithrespecttotheoutstandingprincipalofthe
termloanscommencingafterthesecondanniversaryoftheclosingoftheTermLoanFacility.ThefinalmaturitydateoftheTermLoanFacilityisApril11,2021.
AsofJune30,2016,theCompanyhadnooutstandingborrowingsundertheTermLoanFacility.
31
Table of Contents

(Unaudited)
10. Income Taxes
TheCompany'seffectivetaxratesonpre-taxincomeforthethreemonthsendedJune30,2016and2015were7.6%and8.5%,respectively,and11.1%and
10.5%forthesixmonthsendedJune30,2016and2015,respectively.ThedecreaseintheCompany'seffectivetaxrateforthethreemonthsendedJune30,2016
comparedtothepriorperiodwasprimarilyduetovariousdiscreteitems,includingthetax-relatedeffectsofanaccrualfortheFTCmatter,asfurtherdiscussedin
Note4,andchangesintaxcontingencyreserves,partiallyoffsetbysmallertaxplanningbenefitsinthecurrentperiod.TheincreaseintheCompany'seffectivetax
rateforthesixmonthsendedJune30,2016comparedtothepriorperiodwasprimarilyduetosmallertaxplanningbenefitsinthecurrentperiodandchangesinthe
compositionbetweenhigher-taxedandlower-taxedforeignearnings,partiallyoffsetbyvariousdiscreteitems,includingthetax-relatedeffectsoftheFTCmatter
accrual, and changes in tax contingency reserves. For the year ended December 31, 2015, 103%of the Company's pre-tax income was derived from foreign
sources,andtheCompanycurrentlyexpectsthatapproximately99%oftheCompany'spre-taxincomewillbederivedfromforeignsourcesfortheyearending
December31,2016.CertainportionsoftheCompany'sforeignsourceincomearesubjecttoUnitedStatesfederalandstateincometaxasearnedduetothenature
oftheincome,anddividendrepatriationsoftheCompany'sforeignsourceincomearegenerallysubjecttoUnitedStatesfederalandstateincometax.
Uncertain
Tax
Positions
The Company has established contingency reserves for a variety of material, known tax exposures. The Company's tax reserves reflect management's
judgmentastotheresolutionoftheissuesinvolvedifsubjecttojudicialrevieworothersettlement.WhiletheCompanybelievesitsreservesareadequatetocover
reasonablyexpectedtaxrisks,therecanbenoassurancethat,inallinstances,anissueraisedbyataxauthoritywillberesolvedatafinancialcostthatdoesnot
exceeditsrelatedreserve.Withrespecttothesereserves,theCompany'sincometaxexpensewouldinclude(i)anychangesintaxreservesarisingfrommaterial
changesinthefactsandcircumstances(i.e.,newinformation)surroundingataxissueduringtheperiodand(ii)anydifferencefromtheCompany'staxpositionas
recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax
expenseintheCompany'sconsolidatedfinancialstatementsinfutureperiodsandcouldimpactoperatingcashflows.
Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the
Company's consolidated financial statements, and are reflected in "Income taxes payable" in the Condensed Consolidated Balance Sheets. The total amount of
unrecognizedtaxbenefitsasofJune30,2016andDecember31,2015was$107.5millionand$105.6million,respectively,excludinginterestandpenalties.The
total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $95.8millionand$96.8millionasofJune 30, 2016 and
December31,2015,respectively,excludinginterestandpenalties.
The Company recognizes interest and penalties with respect to unrecognized tax benefits in "Provision for income taxes" in its Condensed Consolidated
StatementsofIncome,andrecordstheassociatedliabilityin"Incometaxespayable"initsCondensedConsolidatedBalanceSheets.TheCompanyrecognized$3.2
millionand$1.0millionininterestandpenaltiesduringthethreemonthsendedJune30,2016and2015,respectively,and$2.5millionand$1.0millionduringthe
sixmonthsendedJune30,2016and2015,respectively.TheCompanyhasaccrued$19.0millionand$17.0millionforthepaymentofinterestandpenaltiesasof
June30,2016andDecember31,2015,respectively.
TheCompanyanditssubsidiariesfiletaxreturnsfortheUnitedStates,formultiplestatesandlocalities,andforvariousnon-UnitedStatesjurisdictions,and
theCompanyhasidentifiedtheUnitedStatesasitsmajortaxjurisdiction,astheincometaximposedbyanyoneforeigncountryisnotmaterialtotheCompany.
TheUnitedStatesfederalincometaxreturnsofFirstData,whichincludetheCompany,areeligibletobeexaminedfor2005and2006.TheCompany'sUnited
StatesfederalincometaxreturnssincetheSpin-offarealsoeligibletobeexamined.
32
Table of Contents

(Unaudited)
TheUnitedStatesInternalRevenueService("IRS")completeditsexaminationoftheUnitedStatesfederalconsolidatedincometaxreturnsofFirstDatafor
2003and2004,whichincludedtheCompany,andissuedaNoticeofDeficiencyinDecember2008.InDecember2011,theCompanyreachedanagreementwith
theIRSresolvingsubstantiallyalloftheissuesrelatedtotheCompany'srestructuringofitsinternationaloperationsin2003("IRSAgreement").Asaresultofthe
IRSAgreement,theCompanyexpectstomakecashpaymentsofapproximately$190million,plusadditionalaccruedinterest,ofwhich$94.1millionhasbeen
paidasofJune30,2016.AsubstantialmajorityofthesepaymentsweremadeintheyearendedDecember31,2012.TheCompanyexpectstopaytheremaining
amount in 2016 and beyond. The IRS completed its examination of the United States federal consolidated income tax returns of First Data, which include the
Company's 2005 and pre-Spin-off 2006 taxable periods and issued its report on October 31, 2012 ("FDC 30-Day Letter"). Furthermore, the IRS completed its
examinationoftheCompany'sUnitedStatesfederalconsolidatedincometaxreturnsforthe2006post-Spin-offperiodthrough2009andissueditsreportalsoon
October31,2012("WU30-DayLetter").BoththeFDC30-DayLetterandtheWU30-DayLetterproposetaxadjustmentsaffectingtheCompany,someofwhich
areagreedandsomeofwhichareunagreed.BothFirstDataandtheCompanyfiledtheirrespectiveprotestswiththeIRSAppealsDivisiononNovember28,2012
relatedtotheunagreedproposedadjustments.DiscussionswiththeIRSconcerningtheseadjustmentsareongoing.TheCompanybelievesitsreservesareadequate
withrespecttoboththeagreedandunagreedadjustments.
AsofJune30,2016,noprovisionhasbeenmadeforUnitedStatesfederalandstateincometaxesoncertainoftheCompany'soutsidetaxbasisdifferences,
whichprimarilyrelatetoaccumulatedforeignearningsofapproximately$6.4billion,whichhavebeenreinvestedandareexpectedtocontinuetobereinvested
outsidetheUnitedStatesindefinitely.Overthelastseveralyears,suchearningshavebeenusedtopayfortheCompany'sinternationalacquisitionsandoperations
and provide initial Company funding of global principal payouts for Consumer-to-Consumer and Business Solutions transactions. Upon distribution of those
earnings to the United States in the form of actual or constructive dividends, the Company would be subject to United States income taxes (subject to an
adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign countries. Such taxes could be significant.
DeterminationofthisamountofunrecognizedUnitedStatesdeferredtaxliabilityisnotpracticablebecauseofthecomplexitiesassociatedwithitshypothetical
calculation.
Tax
Allocation
Agreement
with
First
Data
TheCompanyandFirstDataeachareliablefortaxesimposedontheirrespectivebusinessesbothpriortoandaftertheSpin-off.Ifsuchtaxeshavenotbeen
appropriatelyapportionedbetweenFirstDataandtheCompany,subsequentadjustmentsmayoccurthatmayimpacttheCompany'sfinancialconditionorresults
ofoperations.
Also under the Tax Allocation Agreement, with respect to taxes and other liabilities that result from a final determination that is inconsistent with the
anticipatedtaxconsequencesoftheSpin-off(assetforthintheprivateletterrulingandrelevanttaxopinion)("Spin-offRelatedTaxes"),theCompanywillbe
liabletoFirstDataforanysuchSpin-offRelatedTaxesattributablesolelytoactionstakenbyorwithrespecttotheCompany.Inaddition,theCompanywillalso
beliableforhalfofanySpin-offRelatedTaxes(i)thatwouldnothavebeenimposedbutfortheexistenceofbothanactionbytheCompanyandanactionbyFirst
Dataor(ii)wheretheCompanyandFirstDataeachtakeactionsthat,standingalone,wouldhaveresultedintheimpositionofsuchSpin-offRelatedTaxes.The
Company may be similarly liable if it breaches certain representations or covenants set forth in the tax allocation agreement. If the Company is required to
indemnify First Datafor taxes incurred asa result of theSpin-off being taxable toFirst Data,it likely wouldhavea material adverse effect ontheCompany's
business,financialconditionandresultsofoperations.FirstDatagenerallywillbeliableforallSpin-offRelatedTaxes,otherthanthosedescribedabove.
33
Table of Contents

(Unaudited)
11. Stock Compensation Plans
For the three and six months ended June 30, 2016 , the Company recognized stock-based compensation expense of $9.7 million and $22.0 million ,
respectively, resulting from stock options, restricted stock units, performance-based restricted stock units and bonus/deferred stock units in the Condensed
Consolidated Statements of Income. Forthe three and six monthsendedJune 30,2015 , the Company recognized stock-based compensation expense of $10.2
millionand$21.9million,respectively.
During the six months ended June 30, 2016 , the Company granted 0.6 million options at a weighted-average exercise price of $18.19 and 3.3 million
performance-basedrestrictedstockunitsandrestrictedstockunitsataweighted-averagegrantdatefairvalueof$16.82.AsofJune30,2016,theCompanyhad
9.6millionoutstandingoptionsataweighted-averageexercisepriceof$17.62,ofwhich7.6millionoptionswereexercisableataweighted-averageexerciseprice
of$17.82.TheCompanyhad7.5millionperformance-basedrestrictedstockunits(basedontargetperformance)andrestrictedstockunitsataweighted-average
grantdatefairvalueof$16.57asofJune30,2016.Themajorityofstockunitsdonotprovideforthepaymentofdividendequivalents.Forthoseunits,theirvalue
isreducedbythenetpresentvalueoftheforegonedividendequivalentpayments.
12. Segments
AspreviouslydescribedinNote1,theCompanyclassifiesitsbusinessesintothreesegments:Consumer-to-Consumer,Consumer-to-BusinessandBusiness
Solutions.Operatingsegmentsaredefinedascomponentsofanenterprisethatengageinbusinessactivities,aboutwhichseparatefinancialinformationisavailable
thatisevaluatedregularlybytheCompany'schiefoperatingdecisionmakerindecidingwheretoallocateresourcesandinassessingperformance.
TheConsumer-to-Consumeroperatingsegmentfacilitatesmoneytransfersbetweentwoconsumers.TheCompany'smoneytransferserviceisviewedbythe
Companyasoneinterconnectedglobalnetworkwhereamoneytransfercanbesentfromonelocationtoanother,aroundtheworld.Thesegmentincludesfive
geographic regions whose functions are limited to generating, managing and maintaining agent relationships and localized marketing activities. The Company
includesitsonlinemoneytransferservicesinitiatedthroughWesternUnionbrandedwebsites("westernunion.com")initsregions.Bymeansofcommonprocesses
andsystems,theseregions,includingwesternunion.com,createaninterconnectednetworkforconsumertransactions,therebyconstitutingoneglobalConsumer-toConsumermoneytransferbusinessandoneoperatingsegment.
TheConsumer-to-Businessoperatingsegmentfacilitatesbillpaymentsfromconsumerstobusinessesandotherorganizations,includingutilities,autofinance
companies,mortgageservicers,financialserviceproviders,governmentagenciesandotherbusinesses.
TheBusinessSolutionsoperatingsegmentfacilitatespaymentandforeignexchangesolutions,primarilycross-border,cross-currencytransactions,forsmall
andmediumsizeenterprisesandotherorganizationsandindividuals.
Allbusinessesthathavenotbeenclassifiedintheabovesegmentsarereportedas"Other"andincludetheCompany'smoneyorderandotherservices.
Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments'
revenuecomparedtototalrevenue.
34
Table of Contents

(Unaudited)
ThefollowingtablepresentstheCompany'sreportablesegmentresultsforthethreeandsixmonthsendedJune30,2016and2015,respectively(inmillions):
2016
2015
Six Months Ended

June 30,
2016
2015
Revenues:
Consumer-to-Consumer:
795.0 $
816.1 $
1,545.6 $
283.4
268.9
534.9
513.0
17.4
16.5
32.7
34.5
1,095.8
1,101.5
2,113.2
2,139.8
Transactionfees
Otherrevenues
Consumer-to-Business:
Transactionfees
Foreignexchangeandotherrevenues
BusinessSolutions:
Transactionfeesandotherrevenues
Other:
Totalrevenues
1,592.3
147.5
151.6
298.2
303.0
6.7
6.3
12.1
12.7
154.2
157.9
310.3
315.7
89.9
87.5
10.9
10.1
20.7
20.2
100.8
97.6
200.0
195.6
179.3
175.4
24.9
26.6
49.9
53.4
Totalconsolidatedrevenues
1,375.7 $
1,383.6 $
2,673.4 $
Operatingincome/(loss):
235.3 $
256.6 $
466.6 $
496.8
17.7
(6.4)
40.6
23.1
BusinessSolutions
5.1
(0.4)
7.5
1.7
Other
2.2
1.0
4.2
260.3 $
250.8 $
518.9 $
Consumer-to-Business(a)
Totalconsolidatedoperatingincome
2,704.5
1.5
523.1
(a)
For the three and six months ended June 30, 2015, Consumer-to-Business operating income/(loss) included $35.3 million of expenses related to a
settlementagreementbetweentheConsumerFinancialProtectionBureauandoneoftheCompany'ssubsidiaries,Paymap,Inc.
35
Table of Contents

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.
This
report
on
Form
10-Q
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
"may,"
"will,"
"should,"
"would,"
"could,"
and
"might"
are
intended
to
identify
such
forward-looking
statements.
Readers
of
the
Form
10-Q
of
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,
2015
.
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:
(i)
events
related
to
our
business
and
industry,
such
as:
changes
in
general
economic
conditions
and
economic
conditions
in
the
regions
and
industries
in
which
we
operate,
including
global
economic
and
trade
downturns,
or
significantly
slower
growth
or
declines
in
the
money
transfer,
payment
service,
and
other
markets
in
which
we
operate,
including
downturns
or
declines
related
to
interruptions
in
migration
patterns,
or
non-performance
by
our
banks,
lenders,
insurers,
or
other
financial
services
providers;
failure
to
compete
effectively
in
the
money
transfer
and
payment
service
industry,
including
among
other
things,
with
respect
to
price,
with
global
and
niche
or
corridor
money
transfer
providers,
banks
and
other
money
transfer
and
payment
service
providers,
including
electronic,
mobile
and
Internet-based
services,
card
associations,
and
card-based
payment
providers,
and
with
digital
currencies
and
related
protocols,
and
other
innovations
in
technology
and
business
models;
deterioration
in
customer
confidence
in
our
business,
or
in
money
transfer
and
payment
service
providers
generally;
our
ability
to
adopt
new
technology
and
develop
and
gain
market
acceptance
of
new
and
enhanced
services
in
response
to
changing
industry
and
consumer
needs
or
trends;
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;
any
material
breach
of
security,
including
cybersecurity,
or
safeguards
of
or
interruptions
in
any
of
our
systems
or
those
of
our
vendors
or
other
third
parties;
cessation
of
or
defects
in
various
services
provided
to
us
by
third-party
vendors;
mergers,
acquisitions
and
integration
of
acquired
businesses
and
technologies
into
our
Company,
and
the
failure
to
realize
anticipated
financial
benefits
from
these
acquisitions,
and
events
requiring
us
to
write
down
our
goodwill;
political
conditions
and
related
actions
in
the
United
States
and
abroad
which
may
adversely
affect
our
business
and
economic
conditions
as
a
whole,
including
interruptions
of
United
States
or
other
government
relations
with
countries
in
which
we
have
or
are
implementing
significant
business
relationships
with
agents
or
clients;
failure
to
manage
credit
and
fraud
risks
presented
by
our
agents,
clients
and
consumers;
failure
to
maintain
our
agent
network
and
business
relationships
under
terms
consistent
with
or
more
advantageous
to
us
than
those
currently
in
place,
including
due
to
increased
costs
or
loss
of
business
as
a
result
of
increased
compliance
requirements
or
difficulty
for
us,
our
agents
or
their
subagents
in
establishing
or
maintaining
relationships
with
banks
needed
to
conduct
our
services;
decisions
to
change
our
business
mix;
changes
in
tax
laws,
or
their
interpretation,
and
unfavorable
resolution
of
tax
contingencies;
adverse
rating
actions
by
credit
rating
agencies;
our
ability
to
realize
the
anticipated
benefits
from
productivity
and
cost-savings
and
other
related
initiatives,
which
may
include
decisions
to
downsize
or
to
transition
operating
activities
from
one
location
to
another,
and
to
minimize
any
disruptions
in
our
workforce
that
may
result
from
those
initiatives;
our
ability
to
protect
our
brands
and
our
other
intellectual
property
rights
and
to
defend
ourselves
against
potential
intellectual
property
infringement
claims;
our
ability
to
attract
and
retain
qualified
key
employees
and
to
manage
our
workforce
successfully;
material
changes
in
the
market
value
or
liquidity
of
securities
that
we
hold;
restrictions
imposed
by
our
debt
obligations;
(ii)
events
related
to
our
regulatory
and
litigation
environment,
such
as:
liabilities
or
loss
of
business
resulting
from
a
failure
by
us,
our
agents
or
their
subagents
to
comply
with
laws
and
regulations
and
regulatory
or
judicial
interpretations
thereof,
including
laws
and
regulations
designed
to
protect
consumers,
or
detect
and
prevent
money
laundering,
terrorist
financing,
fraud
and
other
illicit
activity;
increased
costs
or
loss
of
business
due
to
regulatory
initiatives
and
changes
in
laws,
regulations
and
industry
practices
and
standards,
including
changes
in
interpretations
in
the
United
States
and
globally,
affecting
us,
our
agents
or
their
subagents,
or
the
banks
with
which
we
or
our
agents
maintain
bank
accounts
needed
to
provide
our
services,
36
Table of Contents
including
related
to
anti-money
laundering
regulations,
anti-fraud
measures,
customer
due
diligence,
agent
and
subagent
due
diligence,
registration
and
monitoring
requirements,
and
consumer
protection
requirements;
liabilities
or
loss
of
business
and
unanticipated
developments
resulting
from
governmental
investigations
and
consent
agreements
with
or
enforcement
actions
by
regulators,
including
those
associated
with
compliance
with
or
failure
to
comply
with
the
settlement
agreement
with
the
State
of
Arizona,
as
amended;
the
potential
impact
on
our
business
from
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
(the
"Dodd-Frank
Act"),
as
well
as
regulations
issued
pursuant
to
it
and
the
actions
of
the
Consumer
Financial
Protection
Bureau
and
similar
legislation
and
regulations
enacted
by
other
governmental
authorities
related
to
consumer
protection;
liabilities
resulting
from
litigation,
including
class-action
lawsuits
and
similar
matters,
including
costs,
expenses,
settlements
and
judgments;
failure
to
comply
with
regulations
and
evolving
industry
standards
regarding
consumer
privacy
and
data
use
and
security;
effects
of
unclaimed
property
laws;
failure
to
maintain
sufficient
amounts
or
types
of
regulatory
capital
or
other
restrictions
on
the
use
of
our
working
capital
to
meet
the
changing
requirements
of
our
regulators
worldwide;
changes
in
accounting
standards,
rules
and
interpretations
or
industry
standards
affecting
our
business;
and
(iii)
other
events,
such
as:
adverse
tax
consequences
from
our
spin-off
from
First
Data
Corporation;
catastrophic
events;
and
management's
ability
to
identify
and
manage
these
and
other
risks.
Overview
Wearealeadingproviderofmoneymovementandpaymentservices,operatinginthreebusinesssegments:
- The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a
networkofthird-partyagents.Ourmulti-currency,real-timemoneytransferserviceisviewedbyusasoneinterconnectedglobalnetworkwhereamoney
transfercanbesentfromonelocationtoanother,aroundtheworld.Ourmoneytransferservicesareavailableforinternationalcross-bordertransfers-that
is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to
anotherinthesamecountry.Thissegmentalsoincludesmoneytransfertransactionsthatcanbeinitiatedthroughwebsitesandmobiledevices.
-TheConsumer-to-Businessoperatingsegmentfacilitatesbillpaymentsfromconsumerstobusinessesandotherorganizations,
including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. The significant
majorityofthesegment'srevenuewasgeneratedintheUnitedStatesduringallperiodspresented,withtheremainderprimarilygeneratedinArgentina.
Business
Solutions
- The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, crosscurrencytransactions,forsmallandmediumsizeenterprisesandotherorganizationsandindividuals.Themajorityofthesegment'sbusinessrelatesto
exchangesofcurrencyatspotrates,whichenablecustomerstomakecross-currencypayments.Inaddition,incertaincountries,wewriteforeigncurrency
forwardandoptioncontractsforcustomerstofacilitatefuturepayments.
Allbusinessesthathavenotbeenclassifiedintheabovesegmentsarereportedas"Other"andincludeourmoneyorderandotherbusinessesandservices,in
additiontocostsforthereviewandclosingofacquisitions.
Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments'
revenuecomparedtototalrevenue.
37
Table of Contents
Results of Operations
ThefollowingdiscussionofourconsolidatedresultsofoperationsandsegmentresultsreferstothethreeandsixmonthsendedJune30,2016comparedtothe
same periods in 2015. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more
detaileddiscussionsconcerningcertaincomponentsoftheCondensedConsolidatedStatementsofIncome.Allsignificantintercompanyaccountsandtransactions
betweenoursegmentswereeliminatedandthebelowinformationhasbeenpreparedinconformitywithgenerallyacceptedaccountingprinciplesintheUnited
States of America ("GAAP"). All amounts provided in this section are rounded to the nearest tenth of a million, except as otherwise noted. As a result, the
percentagechangesandmarginsdisclosedhereinmaynotrecalculatepreciselyusingtheroundedamountsprovided.
OuroperatingincomeforthethreeandsixmonthsendedJune30,2015wasimpactedby$35.3millionofexpensesrelatedtorestitution,penalties,andother
costsasaresultofasettlementagreementbetweentheConsumerFinancialProtectionBureauandoneofoursubsidiaries,Paymap,Inc.,whichoperatessolelyin
the United States (the "Paymap Settlement Agreement"). These charges are reflected within "Selling, general and administrative" expenses in our Condensed
ConsolidatedStatementsofIncomeandhavebeenrecognizedwithinourConsumer-to-Businessoperatingsegment.
ThefollowingtablesetsforthourconsolidatedresultsofoperationsforthethreeandsixmonthsendedJune30,2016and2015.
Revenues:
Transactionfees
2016
2015
961.3 $
378.8
Otherrevenues
Totalrevenues
Expenses:
% Change

2016
2015
% Change
988.3
(3)% $
1,880.3 $
1,936.9
(3)%
362.1
5%
724.3
700.1
3%
35.6
33.2
7%
68.8
67.5
2%
1,375.7
1,383.6
(1)%
2,673.4
2,704.5
(1)%
Costofservices
821.9
799.4
3%
1,601.3
1,571.2
2%
293.5
333.4
(12)%
553.2
610.2
(9)%
1,115.4
1,132.8
(2)%
2,154.5
2,181.4
(1)%
260.3
250.8
4%
518.9
523.1
(1)%
Totalexpenses
Operatingincome
Otherincome/(expense):
Interestincome
0.7
2.5
(70)%
1.6
5.4
(70)%
Interestexpense
(41.0)
(43.1)
(5)%
(81.5)
(84.9)
(4)%
Derivativegains,net
1.4
(a)
1.9
1.0
94%
Otherincome/(expense),net
1.1
(3.3)
(a)
(0.9)
(5.1)
(83)%
Totalotherexpense,net
(37.8)
(43.9)
(14)%
(78.9)
(83.6)
(6)%
222.5
206.9
8%
440.0
439.5
0%
16.9
17.6
(4)%
48.7
46.3
5%
205.6 $
189.3
391.3 $
393.2
0%
Provisionforincometaxes
Netincome
Earningspershare:
Basic
0.42 $
0.37
14% $
0.79 $
0.76
4%
Diluted
0.42 $
0.36
17% $
0.79 $
0.75
5%
Weighted-averagesharesoutstanding:
Basic
Diluted
____________
(a)
9% $
490.3
515.2
495.1
518.1
493.0
519.8
498.1
522.5
Calculationnotmeaningful
38
Table of Contents
Revenues overview
ForboththethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,consolidatedrevenuesdecreased1%.This
wasprimarilyduetothestrengtheningoftheUnitedStatesdollarcomparedtoforeigncurrencies,whichnegativelyimpactedrevenueby4%forboththethreeand
sixmonthsendedJune30,2016,netoftheimpactofforeigncurrencyhedges.Thisdecreasewaspartiallyoffsetbytransactiongrowthof3%inourConsumer-toConsumersegmentforboththethreeandsixmonthsendedJune30,2016.
FluctuationsintheexchangeratebetweentheUnitedStatesdollarandothercurrencies,netoftheimpactofforeigncurrencyhedges,resultedinareductionto
revenuesforthethreeandsixmonthsendedJune30,2016of$48.9millionand$106.3million,respectively,relativetothecorrespondingperiodsintheprior
year. Foreigncurrency hedges benefited revenues by$10.9millionand$26.0millionforthethreeandsixmonthsendedJune30,2016,respectively.Weuse
foreign currency forwards tohedge certain foreign exchange impacts onourforecasted revenues.Totheextent thesederivatives are effective inmanaging our
foreignexchangerisk,wereflectthehedgeimpactinrevenuesintheperiodthehedgedrevenuesarerecorded.
Operating expenses overview
Enhanced
regulatory
compliance
Thefinancialservicesindustry,includingmoneyservicesbusinesses,continuestobesubjecttoincreasinglystrictlegalandregulatoryrequirements,andwe
regularlyreviewourcomplianceprograms.Inconnectionwiththesereviews,andinlightofgrowingandrapidlyevolvingregulatorycomplexityandheightened
attention of, and increased dialogue with, governmental and regulatory authorities related to our compliance activities, we have made, and continue to make
enhancementstoourprocessesandsystemsdesignedtodetectandpreventmoneylaundering,terroristfinancing,andfraudandotherillicitactivity,alongwith
enhancements to improve consumer protection related to the Dodd-Frank Act and similar regulations outside the United States, and other matters. In coming
periods,weexpecttheseenhancementswillcontinuetoresultinchangestocertainofourbusinesspracticesandincreasedcosts.Someofthesechangeshavehad,
andwebelievewillcontinuetohave,anadverseeffectonourbusiness,financialconditionandresultsofoperations.
Cost
of
services
Costofservicesprimarilyconsistsofagentcommissions,whichrepresentedapproximately60%oftotalcostofservicesforboththe threeandsixmonths
endedJune30,2016.CostofservicesincreasedforboththethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryeardue
toincreasedtechnologyexpenses,partiallyoffsetbyadecreaseinagentcommissions,whichgenerallyfluctuatewithrevenues.
Selling,
general
and
administrative
Selling,generalandadministrativeexpensesdecreasedforboththethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsinthe
prioryearduetothePaymapSettlementAgreementof$35.3millionthatwasrecordedinthesecondquarterof2015andreductionsinemployeecompensationand
other costs, partially offset by an accrual related to the United States Federal Trade Commission (the "FTC") matter, as described in Part II, Item I, Legal
Proceedings
.Additionally,forbothperiodspresented,thestrengtheningoftheUnitedStatesdollarcomparedtoforeigncurrenciesresultedinapositiveimpacton
thetranslationofourexpenses.
Operating
income
Consolidated operating income increased 4% and decreased 1% during the three and six months ended June 30, 2016 , respectively, compared to the
correspondingperiodsintheprioryearasaresultofthechangesinrevenueandoperatingexpensesdescribedabove.ThestrengtheningoftheUnitedStatesdollar
comparedtoforeigncurrencies,netoftheimpactofforeigncurrencyhedges,negativelyimpactedoperatingincomebyapproximately9%and8%forthethreeand
sixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,respectively.
39
Table of Contents
Total
other
expense,
net
ForthethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,totalotherexpense,netdecreasedby14%and6%,
respectively,duetolowerinterestexpenseprimarilyrelatedtoloweraveragedebtbalancesoutstanding.Averagedebtbalancesoutstandingwere$3,225.2million
and $3,730.3 million for the three months ended June 30, 2016 and2015, respectively, and $3,225.5 million and $3,729.2 million for the sixmonthsended
June30,2016and2015,respectively.ThedecreaseinaveragedebtbalancesoutstandingduringthethreeandsixmonthsendedJune30,2016comparedtothe
correspondingperiodsintheprioryearwasprimarilyduetotherepaymentof$250millionofournotesinAugust2015and$250millionofournotesinDecember
2015.
Income
taxes
Oureffectivetaxratesonpre-taxincomewere7.6%and8.5%forthethreemonthsendedJune30,2016and2015,respectively,and11.1%and10.5%forthe
sixmonthsendedJune30,2016and2015,respectively.ThedecreaseinoureffectivetaxrateforthethreemonthsendedJune30,2016comparedtotheprior
period was primarily due to various discrete items, including the tax-related effects of an accrual for the FTC matter, as discussed earlier, and changes in tax
contingencyreserves,partiallyoffsetbysmallertaxplanningbenefitsinthecurrentperiod.TheincreaseinoureffectivetaxrateforthesixmonthsendedJune30,
2016comparedtothepriorperiodwasprimarilyduetosmallertaxplanningbenefitsinthecurrentperiodandchangesinthecompositionbetweenhigher-taxed
and lower-taxed foreign earnings, partially offset by various discrete items, including the tax-related effects of the FTC matter accrual, and changes in tax
contingencyreserves.
Wecontinuetobenefitfromasignificantproportionofprofitsbeingforeign-derivedandgenerallytaxedatlowerratesthanourcombinedfederalandstatetax
ratesintheUnitedStates.FortheyearendedDecember31,2015,103%ofourpre-taxincomewasderivedfromforeignsources,andwecurrentlyexpectthat
approximately99%ofourpre-taxincomewillbederivedfromforeignsourcesfortheyearendingDecember31,2016.Ourforeignpre-taxincomeissubjecttotax
inmultipleforeignjurisdictions,virtuallyallofwhichhavestatutoryincometaxrateslowerthantheUnitedStates.Whiletheincometaximposedbyanyone
foreigncountryisnotmaterialtous,ouroveralleffectivetaxratecouldbeadverselyaffectedbychangesintaxlaws,bothforeignanddomestic.Certainportions
ofourforeignsourceincomearesubjecttoUnitedStatesfederalandstateincometaxasearnedduetothenatureoftheincome,anddividendrepatriationsofour
foreignsourceincomearegenerallysubjecttoUnitedStatesfederalandstateincometax.
Wehaveestablishedcontingencyreservesforavarietyofmaterial,knowntaxexposures.AsofJune30,2016,thetotalamountoftaxcontingencyreserves
was$114.1million,includingaccruedinterestandpenalties,netofrelateditems.Ourtaxreservesreflectourjudgmentastotheresolutionoftheissuesinvolved
ifsubjecttojudicialrevieworothersettlement.Whilewebelievethatourreservesareadequatetocoverreasonablyexpectedtaxrisks,therecanbenoassurance
that,inallinstances,anissueraisedbyataxauthoritywillberesolvedatafinancialcostthatdoesnotexceedourrelatedreserve.Withrespecttothesereserves,
ourincometaxexpensewouldinclude(i)anychangesintaxreservesarisingfrommaterialchangesinfactsandcircumstances(i.e.newinformation)surroundinga
taxissueduringtheperiodand(ii)anydifferencefromourtaxpositionasrecordedinthefinancialstatementsandthefinalresolutionofataxissueduringthe
period.Suchresolutioncouldmateriallyincreaseordecreaseincometaxexpenseinourconsolidatedfinancialstatementsinfutureperiodsandcouldimpactour
operatingcashflows.
40
Table of Contents
Earnings
per
share
DuringthethreemonthsendedJune30,2016and2015,basicearningspersharewere$0.42and$0.37,respectively,anddilutedearningspersharewere
$0.42and$0.36,respectively.DuringthesixmonthsendedJune30,2016and2015,basicearningspersharewere$0.79and$0.76,respectively,anddiluted
earningspersharewere$0.79and$0.75,respectively.OutstandingoptionstopurchaseWesternUnionstockandunvestedsharesofrestrictedstockareexcluded
from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are
exercisedandsharesofrestrictedstockhavevested.ForthethreemonthsendedJune30,2016and2015,therewere3.3millionand1.5million,respectively,of
outstandingoptionstopurchasesharesofWesternUnionstockexcludedfromthedilutedearningspersharecalculationunderthetreasurystockmethodastheir
effectwasanti-dilutive.ForthesixmonthsendedJune30,2016and2015,therewere4.6millionand5.2million,respectively,ofoutstandingoptionstopurchase
sharesofWesternUnionstockexcludedfromthedilutedearningspersharecalculationunderthetreasurystockmethodastheireffectwasanti-dilutive.
EarningspershareincreasedforboththethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryearduetolower
weighted-averagesharesoutstanding,andearningspershareforthethreemonthsendedJune30,2016werealsopositivelyimpactedbythepreviouslydescribed
factors impacting netincome. Thelowernumber ofshares outstanding wasduetostock repurchases exceeding stockissuances related totheCompany'sstock
compensationprograms.
Segment Discussion
Wemanageourbusinessaroundtheconsumersandbusinessesweserveandthetypesofservicesweoffer.Eachofourthreesegmentsaddressesadifferent
combination of consumer groups, distribution networks and services offered. Our segments are Consumer-to-Consumer, Consumer-to-Business and Business
Solutions.Businessesandservicesnotconsideredpartofthesesegmentsarecategorizedas"Other."
ThefollowingtablesetsforththecomponentsofsegmentrevenuesasapercentageoftheconsolidatedtotalsforthethreeandsixmonthsendedJune30,2016
and2015.
Three Months Ended

June 30,
Six Months Ended

June 30,
2016
2016
2015
2015
80%
80%
79%
79%
11%
11%
12%
12%
BusinessSolutions
7%
7%
7%
7%
Other
2%
2%
2%
2%
100%
100%
100%
100%
41
Table of Contents
Consumer-to-Consumer Segment
ThetablebelowsetsforthourConsumer-to-ConsumersegmentresultsofoperationsforthethreeandsixmonthsendedJune30,2016and2015.
Three Months Ended
June 30,
(dollars and transactions in millions)
Revenues:
Transactionfees
2016
Otherrevenues
2015
Six Months Ended

June 30,
% Change
2016
2015
1,545.6
% Change
795.0
816.1
(3)% $
1,592.3
283.4
268.9
5%
534.9
513.0
(3)%
4%
17.4
16.5
5%
32.7
34.5
(5)%
Totalrevenues
1,095.8
1,101.5
(1)% $
2,113.2
2,139.8
(1)%
Operatingincome
235.3
256.6
(8)% $
466.6
496.8
(6)%
Operatingincomemargin
Keyindicator:
Consumer-to-Consumertransactions
21%
23%
67.7
65.8
22%
3%
23%
131.4
127.5
3%
WeviewourConsumer-to-Consumermoneytransferserviceasoneinterconnectedglobalnetworkwhereamoneytransfercanbesentfromonelocationto
another,aroundtheworld.Thesegmentincludesfivegeographicregionswhosefunctionsarelimitedtogenerating,managingandmaintainingagentrelationships
andlocalizedmarketingactivities.WeincludeouronlinemoneytransferservicesinitiatedthroughWesternUnionbrandedwebsites("westernunion.com")inour
regions.Bymeansofcommonprocessesandsystems,theseregions,includingwesternunion.com,createaninterconnectednetworkforconsumertransactions,
therebyconstitutingoneglobalConsumer-to-Consumermoneytransferbusinessandoneoperatingsegment.
Significantallocationsaremadeindeterminingthetransactionandrevenuechangesundertheregionalviewinthetablethatfollows.Thegeographicsplitfor
transactionsandrevenue,includingtransactionsinitiatedthroughwesternunion.com,isdeterminedbasedupontheregionwherethemoneytransferisinitiatedand
theregionwherethemoneytransferispaid.Fortransactionsoriginatedandpaidindifferentregions,wesplitthetransactioncountandrevenuebetweenthetwo
regions,witheachregionreceiving50%.Formoneytransfersinitiatedandpaidinthesameregion,100%ofthetransactionsandrevenueareattributedtothat
region.Includedineachregion'stransactionandrevenuepercentagesinthetablesbelowaretransactionsinitiatedthroughwesternunion.comforthethreeandsix
monthsendedJune30,2016.RegionalresultsforthethreeandsixmonthsendedJune30,2015havealsobeenadjustedtoincludetransactionsinitiatedthrough
westernunion.com.PriortoJanuary1,2016,wereportedwesternunion.cominitiatedtransactionsasaseparateregionwith100%ofthecorrespondingtransactions
andrevenueattributedtothatregion.Wherereportedseparatelyinthediscussionbelow,westernunion.comconsistsof100%ofthetransactionsandrevenuethat
areinitiatedthroughwesternunion.com,regardlessofwherethetransactionsarepaidout.
42
Table of Contents
DuetothesignificanceofourConsumer-to-ConsumersegmenttoouroverallresultsandtheeffectthatforeignexchangefluctuationsagainsttheUnitedStates
dollarcanhaveonourreportedrevenues,constantcurrencyresultshavebeenprovidedinthetablebelow.Constantcurrencyresultsassumeforeignrevenuesare
translatedfromforeigncurrenciestotheU.S.dollar,netoftheeffectofforeigncurrencyhedges,atratesconsistentwiththoseintheprioryear.Constantcurrency
isanon-GAAPfinancialmeasureandisprovidedsothatrevenuecanbeviewedwithouttheeffectoffluctuationsinforeigncurrencyexchangerates,whichis
consistent with how management evaluates our revenue results and trends. We believe that this measure provides management and investors with information
about operating results and trends that eliminates currency volatility and provides greater clarity regarding, and increases the comparability of, our underlying
resultsandtrends.Thisconstantcurrencydisclosureisprovidedinadditionto,andnotasasubstitutefor,thepercentagechangeinrevenueonaGAAPbasisfor
thethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear.Othercompaniesmaycalculateanddefinesimilarlylabeled
itemsdifferently,whichmaylimittheusefulnessofthismeasureforcomparativepurposes.
Thetablebelowsetsforthrevenueandtransactionchangesbygeographicregioncomparedtothecorrespondingperiodsintheprioryear:
Three Months Ended June 30, 2016

Revenue
Growth/(Decline), as
Reported - (GAAP)
regionalgrowth/(decline):
Foreign
Exchange
Translation
Impact
Constant Currency
Revenue
Growth/(Decline) (a) (Non-GAAP)
NorthAmerica
6%
(1)%
7%
EuropeandCIS
(3)%
(2)%
(1)%
MiddleEastandAfrica
(4)%
(1)%
(3)%
AsiaPacific("APAC")
(3)%
(2)%
LatinAmericaandthe
Caribbean("LACA")
0%
(6)%
(1)%
(3)%
TotalConsumer-toConsumer
growth/(decline):
Transaction
Growth/(Decline)
Six Months Ended June 30, 2016
Revenue
Growth/(Decline), as
Reported - (GAAP)
Foreign
Exchange
Translation
Impact
Constant Currency
Revenue
Growth/(Decline) (a) (Non-GAAP)
Transaction
Growth/(Decline)
7%
5%
(1)%
6%
3%
(3)%
(2)%
(1)%
3%
(5)%
(4)%
(2)%
(2)%
(4)%
(1)%
(3)%
(4)%
(3)%
(1)%
(3)%
6%
12%
(2)%
(6)%
4%
11%
2%
3%
(1)%
(2)%
1%
3%
7%
westernunion.com(b)
19%
(1)%
20%
25%
17%
(2)%
19%
25%
____________
(a)
ConstantcurrencyrevenuegrowthassumesthatrevenuesdenominatedinforeigncurrenciesaretranslatedtotheU.S.dollar,netoftheeffectofforeign
currencyhedges,atratesconsistentwiththoseinthepriorperiods.
(b)
Westernunion.comrevenueshavealsobeenincludedineachregion,asdescribedearlier.
ThetablebelowsetsforthregionalrevenuesasapercentageofourConsumer-to-ConsumerrevenueforthethreeandsixmonthsendedJune30,2016and
2015.
Three Months Ended

June 30,
2016
Consumer-to-Consumerrevenueasapercentageofsegmentrevenue:
2015
Six Months Ended

June 30,
2016
2015
NorthAmerica
28%
27%
28%
27%
EuropeandCIS
26%
26%
26%
26%
MiddleEastandAfrica
20%
21%
20%
21%
APAC
15%
15%
15%
15%
LACA
11%
11%
11%
11%
Westernunion.com,whichisincludedintheregionalpercentagesabove,representedapproximately8%ofourConsumer-to-Consumerrevenueforboththe
threeandsixmonthsendedJune30,2016.Westernunion.comrepresentedapproximately6%ofourConsumer-to-Consumerrevenueforboththethreeandsix
monthsendedJune30,2015.
43
Table of Contents
Our consumers transferred $20.4 billion and $20.8 billion in Consumer-to-Consumer principal for the three months ended June 30, 2016 and 2015 ,
respectively,ofwhich$18.5billionand$18.8billionrelatedtocross-borderprincipal,forthecorrespondingperiodsdescribedabove.Ourconsumerstransferred
$39.5billionand$40.3billioninConsumer-to-ConsumerprincipalforthesixmonthsendedJune30,2016and2015,respectively,ofwhich$35.8billionand
$36.3billionrelatedtocross-borderprincipal,forthecorrespondingperiodsdescribedabove.
segment
revenues
Consumer-to-Consumermoneytransferrevenuedecreased1%forboththethreeandsixmonthsendedJune30,2016,comparedtothecorrespondingperiods
intheprioryear,ontransactiongrowthof3%forbothperiods.ThestrengtheningoftheUnitedStatesdollarcomparedtoforeigncurrencies,netoftheimpactof
foreigncurrencyhedges,negativelyimpactedrevenueby3%and2%forthethreeandsixmonthsendedJune30,2016,respectively.
FluctuationsintheexchangeratebetweentheUnitedStatesdollarandothercurrencies,netoftheimpactofforeigncurrencyhedges,resultedinareductionto
revenuesof$23.0millionand$53.5millionforthethreeandsixmonthsendedJune30,2016,respectively,relativetothecorrespondingperiodsintheprioryear.
Foreigncurrencyhedgesbenefitedrevenuesby$10.9millionand$26.0millionforthethreeandsixmonthsendedJune30,2016,respectively.
OurNorthAmericaregionexperiencedincreasedrevenueof6%and5%forthethreeandsixmonthsendedJune30,2016,comparedtothecorresponding
periodsintheprioryear,respectively,andtransactiongrowthof7%forboththethreeandsixmonthsendedJune30,2016.Theincreaseinrevenuewasprimarily
duetotransactiongrowthinourUnitedStatesoutboundservices,includingourUnitedStatestoMexicoandLatinAmericacorridors.
OurEuropeandCISregionexperienceddecreasedrevenueof3%forboththethreeandsixmonthsendedJune30,2016,comparedtothecorresponding
periodsintheprioryear,andtransactiongrowthof3%inbothperiods.FluctuationsintheexchangeratebetweentheUnitedStatesdollarandtheeuroandother
currencies,netoftheimpactofforeigncurrencyhedges,negativelyimpactedrevenueby2%forboththethreeandsixmonthsendedJune30,2016.Revenuewas
alsonegativelyimpactedbydeclinesinRussia,partiallyoffsetbygrowthinGermany.
Our Middle East and Africa region experienced decreased revenue of 4% for both the three and six months ended June 30, 2016 , compared to the
correspondingperiodsintheprioryear,andtransactiondeclinesof5%and4%,respectively.FluctuationsintheexchangeratebetweentheUnitedStatesdollar
andothercurrenciesnegativelyimpactedrevenueby1%and2%forthethreeandsixmonthsendedJune30,2016,respectively.DeclinesinNigeriaandLibya
alsocontributedtothedecreaseinrevenue.
Our APAC region experienced decreased revenue of 3% and 4% for the three and six months ended June 30, 2016 , respectively, compared to the
correspondingperiodsintheprioryear,andtransactiondeclinesof3%forboththethreeandsixmonthsendedJune30,2016.Fluctuationsintheexchangerate
betweentheUnitedStatesdollarandothercurrencies,netoftheimpactofforeigncurrencyhedges,negativelyimpactedrevenueby2%and3%forthethreeand
sixmonthsendedJune30,2016,respectively.DeclinesinIndiacontributedtothedecreaseinrevenueforthethreemonthsendedJune30,2016.Additionally,
declinesinthePhilippinesnegativelyimpactedrevenueforthethreeandsixmonthsendedJune30,2016,comparedtothecorrespondingperiodsintheprioryear.
OurLACAregionexperiencedflatrevenueforthethreemonthsendedJune30,2016anddecreasedrevenueof2%forthesixmonthsendedJune30,2016,
comparedtothecorresponding periodsintheprioryear,andtransactiongrowthof12%and11%,respectively. Fluctuations intheexchange ratebetweenthe
UnitedStatesdollarandothercurrencies,primarilytheArgentinepeso,negativelyimpactedrevenueby6%forboththethreeandsixmonthsendedJune30,2016
. Price reductions implemented in Argentina also negatively impacted revenue, partially offset by growth from transactions originated in the United States, as
discussedabove.
ForeignexchangerevenuesinourConsumer-to-Consumersegmentincreased5%and4%,forthethreeandsixmonthsendedJune30,2016,comparedtothe
correspondingperiodsintheprioryear,respectively,primarilyduetoincreasesinforeignexchangespreadswhichwebeganimplementingduringthefirstquarter
of2015thatwerelargelyoffsetbycorrespondingreductionsintransactionfeesincertaincorridors.
44
Table of Contents
Wehavehistoricallyimplementedandwilllikelycontinuetoimplementpricereductionsfromtimetotimeinresponsetocompetitionandotherfactors.Price
reductions generally reduce margins and adversely affect financial results in the short term and may also adversely affect financial results in the long term if
transactionvolumesdonotincreasesufficiently.Consumer-to-Consumernetpricingchangeshadaminimaleffectonsegmentrevenueforthethreemonthsended
June30,2016andnegativelyimpactedsegmentrevenueby1%forthesixmonthsendedJune30,2016.
Operating
income
Consumer-to-Consumer operating income declined 8% and 6% for the three and six months ended June 30, 2016 , respectively, compared to the
correspondingperiodsintheprioryear.ResultsforthethreeandsixmonthsendedJune30,2016wereimpactedbyincreasedtechnologyexpensesandanaccrual
relatedtotheFTCmatter,asdescribedinPartII,ItemI,Legal
Proceedings
,partiallyoffsetbyreductionsinemployeecompensationandothercosts.Revenues
andexpenses werealsoimpacted bythestrengthening oftheUnited Statesdollar compared toforeign currencies. Operatingmargins inthesegment werealso
impactedbythesefactors.
Consumer-to-Business Segment
ThetablebelowsetsforthourConsumer-to-BusinesssegmentresultsofoperationsforthethreeandsixmonthsendedJune30,2016and2015.Toassistinan
understandingofthecomparableperiods'results,weareincludingadditionallineitemsinthetablebelowreflectingConsumer-to-Businessoperatingincomeand
operating income margin excluding the effect of the $35.3 million of expenses related to the Paymap Settlement Agreement that were recorded in the second
quarterof2015.Operatingincome,excludingPaymapSettlementAgreementandoperatingincomemargin,excludingPaymapSettlementAgreement,arenonGAAPfinancialmeasuresandareusedbymanagementinevaluatingtheoperatingincomeresultsandtrendsofourConsumer-to-Businesssegment.Webelieve
that,byadjustingoperatingincomeandoperatingincomemargintoexcludetheeffectsofsignificantchargesassociatedwiththesettlementoflitigationthatcan
impactoperatingtrends,managementandinvestorsareprovidedwithmeasuresthatincreasethecomparabilityofourunderlyingoperatingresults.Thisdisclosure
isprovidedinadditionto,andnotasasubstitutefor,operatingincome/(loss)andoperatingincome/(loss)marginonaGAAPbasis.
(dollars in millions)
Revenues:
Transactionfees
2016
Foreignexchangeandotherrevenues
2015
147.5
6.7
% Change
(3)% $
298.2
6.3
6%
12.1
310.3
40.6
Totalrevenues
(2)% $
Operatingincome/(loss)(GAAP)
17.7
(6.4)
(a)
35.3
28.9
Operatingincome/(loss)margin(GAAP)
Operatingincomemargin,excludingPaymap
SettlementAgreement(Non-GAAP)
____________
(a)Calculationnotmeaningfulornotapplicable
17.7
157.9
2015
151.6
154.2
Operatingincome,excludingPaymapSettlement
Agreement(Non-GAAP)
2016
PaymapSettlementAgreement
40.6
% Change
303.0
(2)%
12.7
(5)%
315.7
(2)%
23.1
(a)
35.3
58.4
12%
(4)%
13%
7%
12%
18%
13%
18%
Revenues
ForboththethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,Consumer-to-Businessrevenuedecreased2%
. This was primarily due to declines related to foreign currency translation in our bill payments in Argentina, partially offset byincreases in our United States
electronicbillpayments.ThestrengtheningoftheUnitedStatesdollaragainsttheArgentinepesonegativelyimpactedourConsumer-to-Businessrevenuegrowth
by14%forboththethreeandsixmonthsendedJune30,2016.
45
Table of Contents
Operating
income/(loss)
ForthethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,operatingincomeincreased,primarilyduetothe
PaymapSettlementAgreementthatwasrecordedinthesecondquarterof2015,partiallyoffsetbyincreasedtechnologyexpensesandchangesincustomermix.
Thechangesinoperatingmarginsinthesegmentwerealsoduetothesefactors.
Business Solutions
ThefollowingtablesetsforthourBusinessSolutionssegmentresultsofoperationsforthethreeandsixmonthsendedJune30,2016and2015.
Revenues:
2016
Transactionfeesandotherrevenues
2015
87.5
3% $
10.9
10.1
8%
3% $
Totalrevenues
97.6
Operatingincome/(loss)
5.1
(0.4)
5%
0%
2016
89.9
100.8
Operatingincome/(loss)margin
____________
% Change
(a)
(a)
2015
179.3
20.7
175.4
2%
20.2
2%
200.0
195.6
7.5
1.7
4%
% Change
2%
(a)
1%
Calculationnotmeaningful.
Revenues
ForthethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,BusinessSolutionsrevenueincreased3%and2%,
respectively.FluctuationsintheexchangeratebetweentheUnitedStatesdollarandothercurrenciesnegativelyimpactedrevenuegrowthby3%and4%forthe
threeandsixmonthsendedJune30,2016,respectively.TheincreaseinrevenueforthethreeandsixmonthsendedJune30,2016comparedtothecorresponding
periodsintheprioryearwasprimarilyduetoincreasesinEurope.ForthesixmonthsendedJune30,2016comparedtotheprioryear,theincreaseinrevenuewas
alsoduetoanincreaseinsalesofourhedgingproducts.
Operating
income/(loss)
ForthethreeandsixmonthsendedJune30,2016,operating income increased compared tothe corresponding periods inthe prior year as aresult ofthe
revenueincreasesdescribedaboveandreductionsinemployeecompensationcosts.
46
Table of Contents
Other
ThefollowingtablesetsforthOtherresultsforthethreeandsixmonthsendedJune30,2016and2015.
Revenues
Operatingincome
____________
(a)

2016
2015
24.9 $
26.6
2.2 $
1.0
% Change
(6)% $
(a)

2016
2015
49.9 $
53.4
4.2 $
1.5
% Change
(7)%
(a)
Calculationnotmeaningful.
Revenues
ForthethreeandsixmonthsendedJune30,2016comparedtothecorrespondingperiodsintheprioryear,Otherrevenuedecreased6%and7%,respectively,
duetodeclinesinourprepaidservices,partiallyoffsetbyincreasesinourmoneyorderbusiness.
Operating
income
For the three and six months ended June 30, 2016 compared to the corresponding periods in the prior year, Other operating income increased due to a
reductionofexpensesinourprepaidservicesandincreasedinvestmentincomeandotherrevenuesinourmoneyorderbusiness.
47
Table of Contents
Capital Resources and Liquidity

Ourprimary source of liquidity has been cash generated from our operating activities, primarily from net income and fluctuations in working capital. Our
working capital is affected by the timing of interest payments on our outstanding borrowings and timing of income tax payments, among other items. The
significantmajorityofourinterestpaymentsaredueinthesecondandfourthquarterswhichresultsinadecreaseintheamountofcashprovidedbyoperating
activitiesinthosequartersandacorrespondingincreasetothefirstandthirdquarters.
Ourfuturecashflowscouldbeimpactedbyavarietyoffactors,someofwhichareoutofourcontrol,includingchangesineconomicconditions,especially
thoseimpactingmigrantpopulationsandchangesinincometaxlawsorthestatusofincometaxaudits,includingtheresolutionofoutstandingtaxmatters.
Substantiallyallofourcashflowsfromoperatingactivitieshavebeengeneratedfromsubsidiaries.Mostofthesecashflowsaregeneratedfromourregulated
subsidiaries.Ourregulatedsubsidiariesmaytransferallexcesscashtotheparentcompanyforgeneralcorporateuse,exceptforassetssubjecttolegalorregulatory
restrictions,including:(1)requirementstomaintaincashandotherqualifyinginvestmentbalances,freeofanyliensorotherencumbrances,relatedtothepayment
of certain of our money transfer and other payment obligations and (2) other legal or regulatory restrictions, including statutory or formalized net worth
requirements.
Webelievewehaveadequateliquiditytomeetourbusinessneeds,serviceourdebtobligations,paydividends,andrepurchasesharesthroughourexisting
cashbalancesandourabilitytogeneratecashflowsthroughoperations.Tohelpensureavailabilityofourworldwidecashwhereneeded,weutilizeavarietyof
planningandfinancialstrategies,includingdecisionsrelatedtotheamounts,timingandmannerbywhichcashisrepatriatedorotherwisemadeavailablefromour
internationalsubsidiaries.Thesedecisionscaninfluenceouroveralltaxrateandimpactourtotalliquidity.
Wealsohavethecapacitytoborrowupto$1.65billionintheaggregateunderourrevolvingcreditfacility("RevolvingCreditFacility"),whichsupports
borrowings under our$1.5billioncommercial paper program andexpiresinSeptember 2020.Inaddition, wehavethe capacity toborrowupto $575million
underthetermloanagreement("TermLoanFacility")weenteredintoonApril11,2016,withtheoptiontoincreasethecommitmentsundertheagreementbyup
to$250million,subjecttocertainprovisions,asfurtherdescribedbelow.AsofJune30,2016,wehadnooutstandingborrowingsunderourRevolvingCredit
Facility,commercialpaperprogram,orTermLoanFacility.
Cash and Investment Securities
AsofJune30,2016andDecember31,2015,wehadcashandcashequivalentsof$1.2billionand$1.3billion,respectively.Approximately$850millionand
$950millionwasheldbyourforeignentitiesasofJune30,2016andDecember31,2015,respectively. Ourongoingcashmanagementstrategies tofundour
businessneedscouldcauseUnitedStatesandforeigncashbalancestofluctuate.
RepatriatingforeignearningstotheUnitedStateswould,inmanycases,resultinsignificanttaxobligationsbecausemostoftheseearningshavebeentaxedat
relativelylowforeigntaxratescomparedtoourcombinedfederalandstatetaxrateintheUnitedStates.Overthelastseveralyears,suchearningshavebeenused
topayforourinternationalacquisitionsandoperationsandprovideinitialCompanyfundingofglobalprincipalpayoutsforConsumer-to-ConsumerandBusiness
Solutions transactions. We regularly evaluate, taking tax consequences and other factors into consideration, our United States cash requirements and also the
potentialusesofcashinternationallytodeterminetheappropriatelevelofdividendrepatriationsofourforeignsourceincome.
Inmanycases,wereceivefundsfrommoneytransfersandcertainotherpaymentservicesbeforewesettlethepaymentofthosetransactions.Thesefunds,
referredtoas"Settlementassets"onourCondensedConsolidatedBalanceSheets,arenotusedtosupportouroperations.However,weearnincomefrominvesting
thesefunds.Wemaintainaportionofthesesettlementassetsinhighlyliquidinvestments,classifiedas"Cashandcashequivalents"within"Settlementassets,"to
fundsettlementobligations.
48
Table of Contents
Investmentsecurities,classifiedwithin"Settlementassets,"were$1.3billionand$1.2billionasofJune30,2016andDecember31,2015,respectively,and
consistprimarilyofhighly-ratedstateandmunicipaldebtsecurities,includingfixedratetermnotesandvariableratedemandnotes.Thesubstantialmajorityofour
investmentsecuritiesareheldinordertocomplywithstatelicensingrequirementsintheUnitedStatesandarerequiredtohavecreditratingsof"A-"orbetterfrom
amajorcreditratingagency.
Investmentsecuritiesareexposedtomarketriskduetochangesininterestratesandcreditrisk.Weregularlymonitorcreditriskandattempttomitigateour
exposure by investing in highly-rated securities and diversifying our investment portfolio. Our investment securities are also actively managed with respect to
concentration.AsofJune30,2016,allinvestmentswithasingleissuerandeachindividualsecuritywerelessthan10%ofourinvestmentsecuritiesportfolio.
Cash Flows from Operating Activities
Cashprovidedbyoperatingactivitiesincreasedto$485.6millionduringthesixmonthsendedJune30,2016,from$465.7millioninthecomparableperiodin
the prior year. Cash provided by operating activities is impacted by changes to our consolidated net income, in addition to fluctuations in our working capital
balances,amongotherfactors.
Financing Resources
OnApril11,2016,weenteredintoatermloanagreement,whichmaturesinApril2021,providingforanunsecureddelayeddrawtermloanfacilityinan
aggregate amount of $575 million . We may draw term loans under the Term Loan Facility from time to time until October 11, 2016 (the "Commitment
Termination Date"). In addition, we have the option to increase the commitments under the Term Loan Facility, either before or after the Commitment
TerminationDate,inanaggregateamountupto$250million.Anysuchincreaseswouldbesubjecttoobtainingadditionalcommitmentsfromexistingornew
lenders under the Term Loan Facility. We plan to use the proceeds of the term loans to refinance a portion of our issued and outstanding 5.930% notes due
October2016andforgeneralcorporatepurposes;provided,thatnomorethan$450millioninproceedsfromtheloansundertheTermLoanFacilitymaybeused
forpurposesotherthanredeeming,repaying,purchasingorrefinancingournotesdueOctober2016andpayinganyfeesandexpensesinconnectionwiththeTerm
LoanFacilityandotherrelatedloandocuments.
TheTermLoanFacilitycontainscovenants,subjecttocertainexceptions,that,amongotherthings,limitorrestrictourabilitytosellortransferassetsor
mergeorconsolidatewithanothercompany,grantcertaintypesofsecurityinterests,incurcertaintypesofliens,imposerestrictionsonsubsidiarydividends,enter
intosaleandleasebacktransactions,incurcertainsubsidiarylevelindebtedness,oruseproceedsinviolationofanti-corruptionoranti-moneylaunderinglaws.The
TermLoanFacilityrequiresustomaintainaconsolidatedadjustedEBITDAinterestcoverageratioofgreaterthan3:1foreachperiodoffourconsecutivefiscal
quarters.TheTermLoanFacilityalsocontainscustomaryrepresentations,warrantiesandeventsofdefault.
Generally,interestundertheTermLoanFacilityiscalculatedusingaselectedLIBORrateplusaninterestratemarginof150basispoints.Acommitmentfee
of15basispointsontheunusedamountofthecommitmentsunderthefacilityisalsopayablequarterlyuntiltheCommitmentTerminationDate.Boththeinterest
ratemarginandcommitmentfeepercentagearebasedoncertainofourcreditratings,andwillincreaseordecreaseintheeventofcertainupgradesordowngrades
inourcreditratings.
Inadditiontothepaymentofinterest,wearerequiredtomakecertainperiodicamortizationpaymentswithrespecttotheoutstandingprincipaloftheterm
loanscommencingafterthesecondanniversaryoftheclosingoftheTermLoanFacility.ThefinalmaturitydateoftheTermLoanFacilityisApril11,2021.Asof
June30,2016,wehadnooutstandingborrowingsunderourTermLoanFacility.
OurRevolvingCreditFacilityexpiresinSeptember2020andprovidesforunsecuredfinancingfacilitiesinanaggregateamountof$1.65billion,includinga
$250millionletterofcreditsub-facility.InterestdueundertheRevolvingCreditFacilityisfixedforthetermofeachborrowingandispayableaccordingtothe
termsofthatborrowing.Generally,interestiscalculatedusingaselectedLIBORrateplusaninterestratemarginof110basispoints.Afacilityfeeof15basis
pointsisalsopayablequarterlyonthetotalfacility,regardlessofusage.Boththeinterestratemarginandfacilityfeepercentagearebasedoncertainofourcredit
ratings.
49
Table of Contents
The purpose of our Revolving Credit Facility, which is diversified through a group of 18 participating institutions, is to provide general liquidity and to
support our commercial paper program, which we believe enhances our short-term credit rating. The largest commitment from any single financial institution
within the total committed balance of $1.65 billion is approximately 11%. As of and during the six months ended June 30, 2016 , we had no outstanding
borrowings under our Revolving Credit Facility. If the amount available to borrow under the Revolving Credit Facility decreased, or if the Revolving Credit
Facilitywereeliminated,thecostandavailabilityofborrowingunderthecommercialpaperprogrammaybeimpacted.
Pursuanttoourcommercialpaperprogram,wemayissueunsecuredcommercialpapernotesinanamountnottoexceed$1.5billionoutstandingatanytime,
reduced to the extent of borrowings outstanding on our Revolving Credit Facility in excess of $150 million . Our commercial paper borrowings may have
maturitiesofupto397daysfromdateofissuance.Interestratesforborrowingsarebasedonmarketratesatthetimeofissuance.Wehadnocommercialpaper
borrowingsoutstandingasofJune30,2016.DuringthethreeandsixmonthsendedJune30,2016,theaveragecommercialpaperbalanceoutstandingwas$15.8
million and $12.4 million, respectively, and the maximum balance outstanding was $232.0 million for both periods. Proceeds from our commercial paper
borrowingswereusedforgeneralcorporatepurposesandworkingcapitalneeds.
AsofJune30,2016,wehaveoutstandingborrowingsatparvalueof$3,230.3million.Thesubstantialmajorityoftheseoutstandingborrowingsconsistof
unsecuredfixed-ratenotesandassociatedswapswithmaturitiesrangingfrom2016to2040.
Cash Priorities
Liquidity
Ourobjectiveistomaintainstrongliquidityandacapitalstructureconsistentwithinvestment-gradecreditratings.Wehaveexistingcashbalances,cashflows
fromoperatingactivities,accesstothecommercialpapermarkets,ourRevolvingCreditFacility,andourTermLoanFacilityavailabletosupporttheneedsofour
business.
Capital
Expenditures
The total aggregate amount paid for contract costs, purchases of property and equipment and purchased and developed software was $108.7 million and
$122.4millionforthesixmonthsendedJune30,2016and2015,respectively.Amountspaidfornewandrenewedagentcontractsvarydependingonthetermsof
existing contracts as well as the timing of new and renewed contract signings. Other capital expenditures during these periods included investments in our
informationtechnologyinfrastructureandpurchasedanddevelopedsoftware.
Share
Repurchases
and
Dividends
During the six months ended June 30, 2016 and 2015 , 16.9 million and 15.0 million shares were repurchased for $317.5 million and $306.3 million,
respectively,excludingcommissions,atanaveragecostof$18.81and$20.47pershare,respectively.AsofJune30,2016,$394.3millionremainedavailable
underasharerepurchaseauthorizationapprovedbyourBoardofDirectorsthroughDecember31,2017.
OurBoardofDirectorsdeclaredquarterlycashdividendsof$0.16percommonshareinboththefirstandsecondquartersof2016,representing$157.4million
intotaldividends.
OnJuly14,2016,ourBoardofDirectorsdeclaredaquarterlycashdividendof$0.16percommonsharepayableonSeptember30,2016.
Debt
Service
Requirements
Our2016andfuturedebtservicerequirementswillincludepaymentsonalloutstandingindebtednessincludinganyborrowingsunderourcommercialpaper
program.InOctober2016,our2016Notesof$1.0billionwillmature.WeplantofundthismaturitybyrefinancingaportionofthisdebtthroughourTermLoan
Facilityandcommercialpaperprogramandrepayingaportionusingcash,includingcashgeneratedfromoperations.
Ourabilitytogrowthebusiness,makeinvestmentsinourbusiness,makeacquisitions,returncapitaltoshareholders,includingthroughdividendsandshare
repurchases,andserviceourdebtwilldependonourabilitytocontinuetogenerateexcessoperatingcashthroughouroperatingsubsidiariesandtocontinueto
receivedividendsfromthoseoperatingsubsidiaries,ourabilitytoobtainadequatefinancingandourabilitytoidentifyacquisitionsthatalignwithourlong-term
strategy.
50
Table of Contents
Off-Balance Sheet Arrangements

Other than facility and equipment leasing arrangements, we have no material off-balance sheet arrangements that have or are reasonably likely to have a
materialcurrentorfutureeffectonourfinancialcondition,revenuesorexpenses,resultsofoperations,liquidity,capitalexpendituresorcapitalresources.
Other Commercial Commitments
Wehadapproximately$80millioninoutstandinglettersofcreditandbankguaranteesasofJune30,2016.Theletters ofcredit andbankguarantees are
primarilyheldinconnectionwithleasearrangementsandcertainagentagreements.Thelettersofcreditandbankguaranteeshaveexpirationdatesthrough2021,
withmanyhavingaone-yearrenewaloption.Weexpecttorenewthelettersofcreditandbankguaranteespriortoexpirationinmostcircumstances.
AsofJune30,2016,ourtotalamountofunrecognizedincometaxbenefitswas$126.5million,includingassociatedinterestandpenalties.Thetimingof
related cash payments for substantially all of these liabilities is inherently uncertain because the ultimate amount and timing of such liabilities are affected by
factorswhicharevariableandoutsideourcontrol.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimatesandassumptionsthataffecttheamountsanddisclosuresinthefinancialstatementsand
accompanyingnotes.Actualresultscoulddifferfromthoseestimates.OurCriticalAccountingPoliciesandEstimatesdisclosed
in"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations-CriticalAccountingPoliciesand
Estimates"inour2015AnnualReportonForm10-K,forwhichtherewerenomaterialchanges,included:
Incometaxes
Derivativefinancialinstruments
Otherintangibleassets
Goodwill
Legalcontingencies
51
Table of Contents
Risk Management
Weareexposedtomarketrisksarisingfromchangesinmarketratesandprices,includingchangesinforeigncurrencyexchangeratesandinterestratesand
creditriskrelatedtoouragentsandcustomers.Ariskmanagementprogramisinplacetomanagetheserisks.
Foreign
Currency
Exchange
Rates
Weprovideourservicesprimarilythroughanetworkofagentlocationsinmorethan200countriesandterritories.Wemanageforeignexchangeriskthrough
thestructureofthebusinessandanactiveriskmanagementprocess.WecurrentlysettlewiththemajorityofouragentsinUnitedStatesdollarsoreuros,requiring
those agents to obtain local currency to pay recipients, and we generally do not rely on international currency markets to obtain and pay illiquid currencies.
However, in certain circumstances, we settle in other currencies. The foreign currency exposure that does exist is limited by the fact that the majority of
transactionsarepaidbythenextdayaftertheyareinitiated.Tomitigatethisriskfurther,weenterintoshortdurationforeigncurrencyforwardcontracts,generally
withmaturitiesfromafewdaysuptoonemonth,tooffsetforeignexchangeratefluctuationsbetweentransactioninitiationandsettlement.Wealsohaveexposure
tocertainforeigncurrencydenominatedcashandotherassetandliabilitypositionsandmayutilizeforeigncurrencyforwardcontracts,typicallywithmaturitiesof
lessthanoneyearat inception, to offset foreign exchange rate fluctuations on these positions. In certain consumer money transfer, bill payment and Business
Solutions transactions involving different send andreceive currencies, wegenerate revenue based onthe difference between the exchange rate set byusto the
consumer or business and the rate at which we or our agents are able to acquire the currency, helping to provide protection against currency fluctuations. We
attempttopromptlybuyandsellforeigncurrenciesasnecessarytocoverournetpayablesandreceivableswhicharedenominatedinforeigncurrencies.
We use longer-term foreign currency forward contracts to help mitigate risks associated with changes in foreign currency exchange rates on revenues
denominatedprimarilyintheeuro,andtoalesserdegreetheBritishpound,Canadiandollar,Australiandollar,Swissfranc,andothercurrencies.Weusecontracts
withmaturitiesofupto36monthsatinceptiontomitigatesomeoftheimpactthatchangesinforeigncurrencyexchangeratescouldhaveonforecastedrevenues,
withatargetedweighted-averagematurityofapproximatelyoneyear.Webelievetheuseoflonger-termforeigncurrencyforwardcontractsprovidespredictability
offuturecashflowsfromourinternationaloperations.
We have additional foreign exchange risk and associated foreign exchange risk management requirements due to the nature of our Business Solutions
business.Themajorityofthisbusiness'revenueisfromexchangesofcurrencyatspotrates,whichenablecustomerstomakecross-currencypayments.Incertain
countries,thisbusinessalsowritesforeigncurrencyforwardandoptioncontractsforourcustomerstofacilitatefuturepayments.Thedurationofthesederivative
contractsatinceptionisgenerallylessthanoneyear.BusinessSolutionsaggregatesitsforeignexchangeexposuresarisingfromcustomercontracts,includingthe
derivative contracts described above, and hedges the resulting net currency risks by entering into offsetting contracts with established financial institution
counterparties.
52
Table of Contents
AsofDecember31,2015,ahypotheticaluniform10%strengtheningorweakeninginthevalueoftheUnitedStatesdollarrelativetoallothercurrenciesin
whichournetincomeisgeneratedwouldhaveresultedinadecrease/increasetopre-taxannualincomeofapproximately$25millionbasedonour2016forecastof
Consumer-to-Consumer unhedged exposure to foreign currency at that date. As of June 30, 2016 , the exposure for the next twelve months is not materially
differentbasedonourforecastofunhedgedexposuretoforeigncurrency.Thereareinherentlimitationsinthissensitivityanalysis,primarilyduetothefollowing
assumptions:(a)thatforeignexchangeratemovementsarelinearandinstantaneous,(b)thatfixedexchangeratesbetweencertaincurrencypairsareretained,(c)
thattheunhedgedexposureisstatic,and(d)thatwewouldnothedgeanyadditionalexposure.Asaresult,theanalysisisunabletoreflectthepotentialeffectsof
morecomplexmarketchangesthatcouldarise,whichmaypositivelyornegativelyaffectincome.
Interest
Rates
Weinvestinseveraltypesofinterestbearingassets,withatotalvalueasofJune30,2016of$2.8billion.Approximately$2.0billionoftheseassetsbear
interestatfloatingratesandarethereforesensitivetochangesininterestrates.Theseassetsprimarilyincludecashinbanks,moneymarketinstruments,andstate
andmunicipalvariableratesecuritiesandareincludedinourCondensedConsolidatedBalanceSheetswithin"Cashandcashequivalents"and"Settlementassets."
Totheextenttheseassetsareheldinconnectionwithmoneytransfersandotherrelatedpaymentservicesawaitingredemption,theyareclassifiedas"Settlement
assets."Earningsontheseinvestmentswillincreaseanddecreasewithchangesintheunderlyingshort-terminterestrates.
The remainder of our interest bearing assets primarily consists of highly-rated state and municipal debt securities which are fixed rate term notes. These
investments may include investments made from cash received from our money order services, money transfer business, and other related payment services
awaitingredemptionclassifiedwithin"Settlementassets"intheCondensedConsolidatedBalanceSheets.Asinterestratesrise,thefairvalueofthesefixed-rate
interest-bearingsecuritieswilldecrease;conversely,adecreasetointerestrateswouldresultinanincreasetothefairvaluesofthesecurities.Wehaveclassified
theseinvestmentsasavailable-for-salewithin"Settlementassets"intheCondensedConsolidatedBalanceSheets,andaccordingly,recordedtheseinstrumentsat
theirfairvaluewiththenetunrealizedgainsandlosses,netoftheapplicabledeferredincometaxeffect,beingaddedtoordeductedfromour"Totalstockholders'
equity"onourCondensedConsolidatedBalanceSheets.
Atotalof$975.0millionofourfixed-rateborrowingsatparvalueareeffectivelyfloatingratedebtthroughinterestrateswapagreements,changingthisfixedratedebttoLIBOR-basedfloatingratedebt,withweighted-averagespreadsofapproximately200basispointsaboveLIBOR.
We review our overall exposure to floating and fixed rates by evaluating our net asset or liability position in each, also considering the duration of the
individual positions. We manage this mix of fixed versus floating exposure in an attempt to minimize risk, reduce costs and improve returns. Our exposure to
interest rates can be modified by changing the mix of our interest bearing assets as well as adjusting the mix of fixed versus floating rate debt. The latter is
accomplished primarily through the use of interest rate swaps and the decision regarding terms of any new debt issuances (i.e., fixed versus floating). We use
interestrateswapsdesignatedashedgestoincreasethepercentageoffloatingratedebt,subjecttomarketconditions.AsofJune30,2016,ourweighted-average
effectiverateontotalborrowingswasapproximately4.9%.
A hypothetical 100 basis point increase/decrease in interest rates would result in a decrease/increase to pre-tax income for the next twelve months of
approximately$10millionbasedonborrowings,netoftheimpactofhedges,onJune30,2016thataresensitivetointerestratefluctuations.Thesame100basis
pointincrease/decreaseininterestrates,ifappliedtoourcashandinvestmentbalancesonJune30,2016thataresensitivetointerestratefluctuations,wouldresult
in an offsetting increase/decrease to pre-tax income for the next twelve months of approximately $20 million. There are inherent limitations in the sensitivity
analysispresented, primarily duetotheassumption thatinterest rate changeswouldbeinstantaneous. Asaresult,theanalysisisunabletoreflect thepotential
effectsofmorecomplexmarketchanges,includingchangesincreditriskregardingourinvestments,whichmaypositivelyornegativelyaffectincome.Inaddition,
thecurrentmixoffixedversusfloatingratedebtandinvestmentsandthelevelofassetsandliabilitieswillchangeovertime.Wewillalsobefurtherimpactedby
changestofutureinterestratesaswerefinanceourdebtorbyreinvestingproceedsfromthesaleormaturityofourinvestments.
53
Table of Contents
Credit
Risk
To manage our exposures to credit risk with respect to investment securities, money market fund investments, derivatives and other credit risk exposures
resulting from our relationships with banks and financial institutions, we regularly review investment concentrations, trading levels, credit spreads and credit
ratings,andweattempttodiversifyourinvestmentsamongglobalfinancialinstitutions.
Wearealsoexposedtocreditriskrelatedtoreceivablebalancesfromagentsinthemoneytransfer,walk-inbillpaymentandmoneyordersettlementprocess.
Weperformacreditreviewbeforeeachagentsigningandconductperiodicanalysesofagentsandcertainotherpartieswetransactwithdirectly.Inaddition,we
areexposedtocreditriskdirectlyfromconsumertransactionsparticularlythroughourelectronicchannels,wheretransactionsareoriginatedthroughmeansother
than cash, and therefore are subject to "chargebacks," insufficient funds or other collection impediments, such as fraud, which are anticipated to increase as
electronicchannelsbecomeagreaterproportionofourmoneytransferbusiness.
WeareexposedtocreditriskinourBusinessSolutionsbusinessrelatingto:(a)derivativeswrittenbyustoourcustomersand(b)theextensionoftradecredit
when transactions are paid to recipients prior to our receiving cleared funds from the sending customers. Forthe derivatives, the duration of these contracts at
inceptionisgenerallylessthanoneyear.Thecreditriskassociatedwithourderivativecontractsincreaseswhenforeigncurrencyexchangeratesmoveagainstour
customers,possiblyimpactingtheirabilitytohonortheirobligationstodelivercurrencytousortomaintainappropriatecollateralwithus.Forthosereceivables
wherewehaveofferedtradecredit,collectionordinarilyoccurswithinafewdays.Tomitigatetheriskassociatedwithpotentialcustomerdefaults,weperform
creditreviewsofthecustomeronanongoingbasis,and,forourderivatives,wemayrequirecertaincustomerstopostorincreasecollateral.
Ourlossesassociatedwithbaddebtshavebeenapproximately1%ofourconsolidatedrevenuesinallperiodspresented.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Theinformationunderthecaption"RiskManagement"in"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations"inItem
2ofPartIofthisreportisincorporatedhereinbyreference.
Item 4. Controls and Procedures
Evaluation
of
Disclosure
Controls
and
Procedures
Our management, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer, has evaluated the
effectivenessofourcontrolsandproceduresrelatedtoourreportinganddisclosureobligationsasofJune30,2016,whichistheendoftheperiodcoveredbythis
QuarterlyReportonForm10-Q.Basedonthatevaluation,thePrincipalExecutiveOfficerandPrincipalFinancialOfficerhaveconcludedthat,asofJune30,2016
,thedisclosurecontrolsandprocedureswereeffectivetoensurethatinformationrequiredtobedisclosedbyus,includingourconsolidatedsubsidiaries,inthe
reportswefileorsubmitundertheExchangeAct,isrecorded,processed,summarizedandreported,asapplicable,withinthetimeperiodsspecifiedintherulesand
formsoftheSecuritiesandExchangeCommission,andaredesignedtoensurethatinformationrequiredtobedisclosedbyusinthereportsthatwefileorsubmitis
accumulatedandcommunicatedtoourmanagement,includingourPrincipalExecutiveOfficerandPrincipalFinancialOfficer,toallowtimelydecisionsregarding
requireddisclosure.
Changes
in
Internal
Control
over
Financial
Reporting
TherewerenochangesthatoccurredduringthefiscalquartercoveredbythisQuarterlyReportonForm10-Qthathavemateriallyaffected,orarereasonably
likelytomateriallyaffect,ourinternalcontrolsoverfinancialreporting.
54
Table of Contents
Review Report of Independent Registered Public Accounting Firm

TheBoardofDirectorsandStockholdersofTheWesternUnionCompany
We have reviewed the condensed consolidated balance sheet of The Western Union Company (the Company) as of June 30, 2016 , the related condensed
consolidatedstatementsofincomeandcomprehensiveincomeforthethree-monthandsix-monthperiodsendedJune30,2016and2015,andtherelatedcondensed
consolidatedstatementsofcashflowsforthesix-monthperiodsendedJune30,2016and2015.ThesefinancialstatementsaretheresponsibilityoftheCompany's
management.
We conductedourreview inaccordance withthestandards ofthePublicCompanyAccounting Oversight Board(UnitedStates). Areview ofinterim financial
information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
objectiveofwhichistheexpressionofanopinionregardingthefinancialstatementstakenasawhole.Accordingly,wedonotexpresssuchanopinion.
Basedonourreview,wearenotawareofanymaterialmodificationsthatshouldbemadetothecondensedconsolidatedfinancialstatementsreferredtoabovefor
themtobeinconformitywithU.S.generallyacceptedaccountingprinciples.
Wehavepreviouslyaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheet
of The Western Union Company as of December 31, 2015 , and the related consolidated statements of income, comprehensive income, cash flows, and
stockholders'equityfortheyearthenended(notpresentedherein)andweexpressedanunqualifiedauditopiniononthoseconsolidatedfinancialstatementsinour
reportdatedFebruary19,2016.Inouropinion,theaccompanyingcondensedconsolidatedbalancesheetofTheWesternUnionCompanyasofDecember31,2015
,isfairlystated,inallmaterialrespects,inrelationtotheconsolidatedbalancesheetfromwhichithasbeenderived.
/s/Ernst&YoungLLP
Denver,Colorado
August3,2016
55
Table of Contents
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
United
States
Department
of
Justice
Investigations
OnMarch 20,2012,the Companywasserved withafederal grandjurysubpoenaissuedbytheUnitedStates Attorney's Office fortheCentral District of
California("USAO-CDCA")seekingdocumentsrelatingtoShenZhouInternational("USShenZhou"),aformerWesternUnionagentlocatedinMontereyPark,
California.TheprincipalofUSShenZhouwasindictedin2010andinDecember2013,pledguiltytoonecountofstructuringinternationalmoneytransfersin
violation of United States federal law in U.S. v. Zhi He Wang (SA CR 10-196, C.D. Cal.). Concurrent with the government's service of the subpoena, the
governmentnotifiedtheCompanythatitisatargetofanongoinginvestigationintostructuringandmoneylaundering.SinceMarch20,2012,theCompanyhas
received additional subpoenas from the USAO-CDCA seeking additional documents relating to US Shen Zhou, materials relating to certain other former and
currentagentsandothermaterialsrelatingtotheCompany'santi-moneylaundering("AML")compliancepoliciesandprocedures.Thegovernmenthasinterviewed
several currentandformerWestern Unionemployeesandhasservedgrandjurysubpoenasseekingtestimonyfromseveral currentandformeremployees. The
government'sinvestigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationaspartoftheinvestigation.TheCompanyhasprovided
andcontinuestoprovideinformationanddocumentstothegovernment.Duetotheinvestigativestageofthematterandthefactthatnocriminalchargesorcivil
claimshavebeenbrought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossiblelossorrangeof
loss,ifany,whichcouldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebroughtagainsttheCompany.Shouldsuchchargesor
claims be brought, the Company could face significant fines, damage awards or regulatory consequences which could have a material adverse effect on the
Company'sbusiness,financialcondition,resultsofoperations,andcashflows.
In March 2012, the Company was served with a federal grand jury subpoena issued by the United States Attorneys Office for the Eastern District of
Pennsylvania("USAO-EDPA")seekingdocumentsrelatingtoHongFaiGeneralContractorCorp.(formerlyknownasYongGeneralConstruction)("HongFai"),
aformerWesternUnionagentlocatedinPhiladelphia,Pennsylvania.SinceMarch2012,theCompanyhasreceivedadditionalsubpoenasfromtheUSAO-EDPA
seekingadditionaldocumentsrelatingtoHongFai.Thegovernment'sinvestigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationas
partoftheinvestigation.TheCompanyhasprovidedandcontinuestoprovideinformationanddocumentstothegovernment.Thegovernmenthasinterviewed
several current and former Western Union employees. In March 2016, the government filed a criminal complaint against the principal of Hong Fai General
ContractorCorp.andinJune2016,hepledguiltytoonecountofmailfraud,twocountsoftransportingillegalaliensandonecountoftaxevasioninviolationof
UnitedStatesfederallawinU.S.v.YongQuanZheng(2:16-cr-00212-ABE.D.Pa.).Duetotheinvestigativestageofthematterandthefactthatnocriminal
chargesorcivilclaimshavebeenbrought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossibleloss
orrangeofloss,ifany,whichcouldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebroughtagainsttheCompany.Shouldsuch
chargesorclaimsbebrought,theCompanycouldfacesignificantfines,damageawardsorregulatoryconsequenceswhichcouldhaveamaterialadverseeffecton
theCompany'sbusiness,financialcondition,resultsofoperations,andcashflows.
OnNovember25,2013,theCompanywasservedwithafederalgrandjurysubpoenaissuedbytheUnitedStatesAttorneysOfficefortheMiddleDistrictof
Pennsylvania("USAO-MDPA")seekingdocumentsrelatingtocomplaintsmadetotheCompanybyconsumersanywhereintheworldrelatingtofraud-induced
moneytransferssinceJanuary1,2008.Concurrentwiththegovernment'sserviceofthesubpoena,thegovernmentnotifiedtheCompanythatitisthesubjectofthe
investigation.SinceNovember25,2013,theCompanyhasreceivedadditionalsubpoenasfromtheUSAO-MDPAseekingdocumentsrelatingtocertainWestern
Union agents and Western Unions agent suspension and termination policies. The government has interviewed several current and former employees and has
servedgrandjurysubpoenasseekingtestimonyfromseveralcurrentandformeremployees.ThegovernmenthasindicatedthatitbelievesWesternUnionfailedto
timelyterminateorsuspendcertainWesternUnionagentswhoallegedlypaidorforwardedthousandsoffraud-inducedtransactionssentfromtheUnitedStatesto
variouscountriesfromatleast2008to2012.Thegovernment'sinvestigationisongoingandtheCompanymayreceiveadditionalrequestsforinformationaspart
of the investigation. The Company has provided and continues to provide information and documents to the government. Due to the investigative stage of the
matterandthefactthatnocriminalchargesorcivilclaimshavebeenbrought,theCompanyisunabletopredicttheoutcomeofthegovernment'sinvestigation,or
reasonablyestimatethepossiblelossorrangeofloss,ifany,whichcouldbeassociatedwiththeresolutionofanypossiblechargesorclaimsthatmaybebrought
against the Company. Should such charges or claims be brought, the Company could face significant fines, damage awards or regulatory consequences which
couldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsofoperations,andcashflows.
56
Table of Contents
OnMarch6,2014,theCompanywasservedwithafederalgrandjurysubpoenaissuedbytheUnitedStatesAttorneysOfficefortheSouthernDistrictof
Florida (USAO-SDFL) seeking a variety of AML compliance materials, including documents relating to the Companys AML, Bank Secrecy Act (BSA),
Suspicious Activity Report (SAR) and Currency Transaction Report procedures, transaction monitoring protocols, BSA and AML training programs and
publications,AMLcomplianceinvestigationreports,compliance-relatedagentterminationfiles,SARs,BSAaudits,BSAandAML-relatedmanagementreports
andAMLcompliancestaffinglevels.ThesubpoenaalsocallsforBoardmeetingminutesandorganizationcharts.TheperiodcoveredbythesubpoenaisJanuary
1,2007toNovember27,2013.TheCompanyhasreceivedadditionalsubpoenasfromtheUSAO-SDFLandtheBrowardCounty,FloridaSheriffsOfficerelating
totheinvestigation,includingafederalgrandjurysubpoenaissuedbytheUSAO-SDFLonMarch14,2014,seekinginformationabout33agentlocationsinCosta
Rica such as ownership and operating agreements, SARs and AML compliance and BSA filings for the period January 1, 2008 to November 27, 2013.
Subsequently,theUSAO-SDFLservedtheCompanywithseizurewarrantsrequiringtheCompanytoseizeallmoneytransferssentfromtheUnitedStatestotwo
agentlocationslocatedinCostaRicafora10-dayperiodbeginninginlateMarch2014.OnJuly8,2014,thegovernmentservedagrandjurysubpoenacallingfor
recordsrelatingtotransactionssentfromtheUnitedStatestoNicaraguaandPanamabetweenSeptember1,2013andOctober31,2013.Further,thegovernment
recently served Western Union with a subpoena calling for data relating to transactions sent and received by 43 Nicaraguan agents from October 1, 2008 to
October31,2013andtransactionssentfromtheUnitedStatestotheBahamas,Peru,DominicanRepublic,andHaitifromSeptember1,2013toJanuary2,2014
andcertaindocumentsrelatingtothoseagents.ThegovernmentalsoadvisedtheCompanythatitisinvestigatingconcernstheCompanywasawaretherewere
gamingtransactionsbeingsenttoPanama,Nicaragua,Haiti,Philippines,Vietnam,theDominicanRepublic,Peru,Antigua,andtheBahamas(inadditiontoCosta
Rica)andthattheCompanyfailedtotakeproperstepstostoptheactivity.ThegovernmenthasalsonotifiedtheCompanythatitisatargetoftheinvestigation.
ThegovernmenthasinterviewedseveralcurrentandformerWesternUnionemployees.Thegovernment'sinvestigationisongoingandtheCompanymayreceive
additional requests for information or seizure warrants as part of the investigation. The Company has provided and continues to provide information and
documentstothegovernment.Duetotheinvestigativestageofthematterandthefactthatnocriminalchargesorcivilclaimshavebeenbrought,theCompanyis
unabletopredicttheoutcomeofthegovernment'sinvestigation,orreasonablyestimatethepossiblelossorrangeofloss,ifany,whichcouldbeassociatedwiththe
resolution of any possible charges or claims that may be brought against the Company. Should such charges or claims be brought, the Company could face
significantfines,damageawardsorregulatoryconsequenceswhichcouldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsof
operations,andcashflows.
Other
Governmental
Investigations
Since2011,WesternUnionhasreceivedcivilinvestigativedemandsfromcertainstateattorneysgeneralwhohaveinitiatedaninvestigationintotheadequacy
of the Company's consumer protection efforts over the last several years. The civil investigative demands seek information and documents relating to money
transferssentfromtheUnitedStatestocertaincountries,consumerfraudcomplaintsthattheCompanyhasreceivedandtheCompany'sprocedurestohelpidentify
andpreventfraudulenttransfers.Duetothestageoftheinvestigation,theCompanyisunabletopredicttheoutcomeoftheinvestigation,orreasonablyestimatethe
possiblelossorrangeofloss,ifany,whichcouldbeassociatedwithanypossiblecivilclaimsthatmightbebroughtbyoneormoreofthestates.Shouldsuch
claimsbebrought,theCompanycouldfacesignificantfines,damageawards,orregulatoryconsequences,orcompulsorychangesinourbusinesspractices,that
couldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperations,andcashflows.
57
Table of Contents
TheCompanyhashaddiscussionswiththeUnitedStatesFederalTradeCommission(the"FTC")regardingtheCompany'sconsumerprotectionandanti-fraud
programs. On December 12, 2012, the Company received a civil investigative demand from the FTC requesting that the Company produce (i) all documents
relatingtocommunicationswiththemonitor(the"Monitor")appointedpursuanttotheagreementandsettlement(the"SouthwestBorderAgreement")Western
Union Financial Services, Inc. entered into with the State of Arizona on February 11, 2010, as amended, including information the Company provided to the
MonitorandanyreportspreparedbytheMonitor;and(ii)alldocumentsrelatingtocomplaintsmadetotheCompanybyconsumersanywhereintheworldrelating
tofraud-inducedmoneytransferssinceJanuary1,2011.OnApril15,2013,theFTCfiledapetitionintheUnitedStatesDistrictCourtfortheSouthernDistrictof
NewYorkrequestinganordertocompelproductionoftherequesteddocuments.OnJune6,2013,theCourtgrantedinpartanddeniedinparttheFTC'srequest.
OnAugust14,2013,theFTCfiledanoticeofappeal.OnAugust27,2013,WesternUnionfiledanoticeofcross-appeal.OnFebruary21,2014,theCompany
receivedanothercivilinvestigativedemandfromtheFTCrequestingtheproductionofalldocumentsrelatingtocomplaintsmadetotheCompanybyoronbehalf
ofconsumersrelatingtofraud-inducedmoneytransfersthatweresentfromorreceivedintheUnitedStatessinceJanuary1,2004,exceptfordocumentsthatwere
alreadyproducedtotheFTCinresponsetothefirstcivilinvestigativedemand.OnOctober7,2014,theUnitedStatesCourtofAppealsfortheSecondCircuit
enteredasummaryorderreversinginpartandvacatingandremandinginparttheJune6,2013orderenteredbytheUnitedStatesDistrictCourtfortheSouthern
DistrictofNewYork.OnOctober22,2014,theCompanyreceivedanothercivilinvestigativedemandissuedbytheFTCrequestingdocumentsandinformation
since January 1, 2004 relating to the Companys consumer fraud program, its policies and procedures governing agent termination, suspension, probation and
reactivation,itseffortstocomplywithits2005agreementwith47statesandtheDistrictofColumbiaregardingconsumerfraudprevention,andcomplaintsmade
totheCompanybyoronbehalfofconsumersconcerningfraud-inducedmoneytransfersthatweresenttoorfromtheUnitedStates,excludingcomplaint-related
documents that were produced to the FTC in response to the earlier civil investigative demands. The civil investigative demand also seeks various documents
concerning approximately 720 agents, including documents relating to the transactions they sent and paid and the Companys investigations of and
communicationswiththem.OnJuly31,2015,theCompanyreceivedanothercivilinvestigativedemandrequestingdocumentsandinformationrelatingtothetotal
numberofagentandsubagentlocationsin13countriesannuallysince2010,theaverageandmediandollarvaluesformoneytransferssentanywhereintheworld
annuallysince2010,copiesoftheCompanysanti-fraudprograms,knowyouragentpolicy,knowyourcustomerpolicy,representativeagentcontracts,transaction
data,backgroundinvestigationdocumentsandfraudcomplaintsassociatedwithfouragentsinGreece,PeruandMexicoandconsumerfraudreportsnotalready
produced to the FTC. The Company has responded to each of the civil investigative demands it has received from the FTC and may receive additional civil
investigative demands.TheFTCrecentlyadvisedtheCompanyofitsviewthattheCompanyviolatedSection5oftheFederalTradeCommissionActandthe
TelemarketingSalesRulebyfailingtotaketimely,appropriate,andeffectivemeasurestomitigatefraudintheprocessingofmoneytransferssentbyconsumers.
TheCompanyisindiscussions withtheFTCandisseeking toreach anappropriate resolution ofthismatter. TheCompanyhasaccrued $15million towarda
proposedresolutionbaseduponfactsandcircumstancesknowntotheCompanyatthistime.Duetothestageofthediscussions,theCompanyisunabletopredict
thepossiblerangeofadditionallossexceedingtheamountalreadyaccruedforthismatter.TherecanbenoassurancethattheCompanywillreachanagreement
withtheFTC.TheFTCstaffhasadvisedtheCompanythatithasbeendirected torequestauthority fromtheFTCtofileacomplaint against theCompanyin
UnitedStatesfederalcourtifitisnotabletoreachanagreementwiththeCompany.ShouldtheCompanyenterintoasettlementagreementwiththeFTC,orifthe
FTC files a complaint against the Company, the Company could be required to make significant restitution and/or disgorgement payments and changes to its
programs,anyofwhichseparatelyorcombinedcouldhaveamaterialadverseeffectontheCompanysbusiness,financialconditionandresultsofoperations.If
theFTCfilesacomplaintagainsttheCompany,theCompanyintendstodefenditselfvigorously.
58
Table of Contents
Shareholder
Actions
On January 13, 2014, Natalie Gordon served the Company with a Verified Shareholder Derivative Complaint and Jury Demand that was filed in District
Court,DouglasCounty,ColoradonamingtheCompanysPresidentandChiefExecutiveOfficer,oneofitsformerexecutiveofficers,oneofitsformerdirectors,
andallbutoneofitscurrentdirectorsasindividualdefendants,andtheCompanyasanominaldefendant.Thecomplaintassertsclaimsforbreachoffiduciaryduty
and gross mismanagement against all of the individual defendants and unjust enrichment against the President and Chief Executive Officer and the former
executiveofficerbasedonallegationsthatbetweenFebruary12,2012toOctober30,2012,theindividualdefendantsmadeorcausedtheCompanytoissuefalse
andmisleadingstatementsorfailedtomakeadequatedisclosuresregardingtheeffectsoftheSouthwestBorderAgreement,includingregardingtheanticipated
costs of compliance with the Southwest Border Agreement, potential effects on business operations, and Company projections. Plaintiff also alleges that the
individualdefendantscausedorallowedtheCompanytolackrequisiteinternalcontrols,causedorallowedfinancialstatementstobemisstated,andcausedthe
Companytobesubjecttothecosts,expensesandliabilitiesassociatedwithCityofTaylorPoliceandFireRetirementSystemv.TheWesternUnionCompany,et
al.,a lawsuit that was subsequently renamed and dismissed. Plaintiff further alleges that the Companys President and Chief Executive Officer and the former
executiveofficerreceivedexcessivecompensationbasedontheallegedlyinaccuratefinancialstatements.OnMarch12,2014,theCourtenteredanordergranting
theparties'jointmotiontostayproceedingsinthecaseduringthependencyofcertainoftheshareholderderivativeactionsdescribedbelow.
59
Table of Contents
In 2014, Stanley Lieblein, R. Andre Klein, City of Cambridge Retirement System, Mayar Fund Ltd, Louisiana Municipal Police Employees' Retirement
System, MARTA/ATU Local 732 Employees Retirement Plan, and The Police Retirement System of St. Louis filed shareholder derivative complaints in the
UnitedStatesDistrictCourtfortheDistrictofColorado(orwereremovedtotheUnitedStatesDistrictCourtfortheDistrictofColorado)namingtheCompanys
President and Chief Executive Officer and certain current and former directors and a former executive officer as individual defendants, and the Company as a
nominal defendant. On January 5, 2015, the court entered an order consolidating the actions and appointing City of Cambridge Retirement System and
MARTA/ATU Local 732 Employees Retirement Plan as co-lead plaintiffs. On February 4, 2015, co-lead plaintiffs filed a verified consolidated shareholder
derivativecomplaintnamingtheCompanysPresidentandChiefExecutiveOfficer,twoofitsformerexecutiveofficersandallbuttwoofitscurrentdirectorsas
individual defendants, and the Company as a nominal defendant. The consolidated complaint asserts separate claims for breach of fiduciary duty against the
directordefendantsandtheofficerdefendants,claimsagainstalloftheindividualdefendantsforviolationsofsection14(a)oftheSecuritiesExchangeActof1934
("ExchangeAct"),corporatewasteandunjustenrichment,andaclaimagainsttheformerexecutiveofficerforbreachoffiduciarydutiesforinsidersellingand
misappropriation of information. The breach of fiduciary duty claim against the director defendants includes allegations that they declined to implement an
effective anti-money laundering compliance system after receiving numerous red flags indicating prolonged willful illegality, obstructed the Southwest Border
Monitor's efforts to impose effective compliance systems on the Company, failed to take action in response to alleged Western Union management efforts to
underminetheMonitor,reappointedthesamedirectorstotheAuditCommitteeandCorporateGovernanceandPublicPolicyCommitteesconstitutingamajorityof
thosecommitteesbetween2006and2014,appointedamajorityofdirectorstotheComplianceCommitteewhoweredirectlyinvolvedinoverseeingthealleged
misconduct as members of the Audit Committee and the Corporate Governance and Public Policy Committee, caused the Company to materially breach the
Southwest Border Agreement, caused the Company to repurchase its stock at artificially inflated prices, awarded the Companys senior executives excessive
compensation despite their responsibility for the Companys alleged willful non-compliance with state and federal anti-money laundering laws, and failed to
preventtheformerexecutiveofficerfrommisappropriatingandprofitingfromnonpublicinformationwhenmakingallegedlyunlawfulstocksales.Thebreachof
fiduciarydutyclaimagainsttheofficerdefendantsincludesallegationsthattheycausedtheCompanyandalloweditsagentstoignoretherecordingandreporting
requirementsoftheBankSecrecyActandparallelanti-moneylaunderinglawsandregulationsforaprolongedperiodoftime,authorizedandimplementedantimoneylaunderingpoliciesandpracticesthattheykneworshouldhaveknowntobeinadequate,causedtheCompanytofailtocomplywiththeSouthwestBorder
Agreementandrefusedtoimplementandmaintainadequateinternalcontrols.Theclaimforviolationsofsection14(a)oftheExchangeActincludesallegations
thattheindividualdefendantscausedtheCompanytoissueproxystatementsin2012,2013and2014containingmateriallyincompleteandinaccuratedisclosuresin particular, by failing to disclose the extent to which the Companys financial results depended on the non-compliance with AML requirements, the Boards
awarenessoftheregulatoryandcriminalenforcementactionsinrealtimepursuanttothe2003ConsentAgreementwiththeCaliforniaDepartmentofFinancial
Institutionsandthatthedirectorswerenotcuringviolationsandpreventingmisconduct,theextenttowhichtheBoardconsideredthefloodofincreasinglysevere
redflagsintheirdetermination tore-nominate certaindirectorstotheAuditCommitteebetween2006and2010,andtheextenttowhichtheBoardconsidered
ongoingregulatoryandcriminalinvestigationsinawardingmulti-milliondollarcompensationpackagestoseniorexecutives.Thecorporatewasteclaimincludes
allegationsthattheindividualdefendantspaidorapprovedthepaymentofundeservedexecutiveanddirectorcompensationbasedontheillegalconductallegedin
the consolidated complaint, which exposed the Company to civil liabilities and fines. The corporate waste claim also includes allegations that the individual
defendants made improper statements and omissions, which forced the Company to expend resources in defending itself in City of Taylor Police and Fire
Retirement System v. The Western Union Company, et al. ,alawsuit that wassubsequently renamed anddismissed, authorized the repurchase ofover $1.565
billion of the Companys stock at prices they knew or recklessly were aware, were artificially inflated, failed to maintain sufficient internal controls over the
Companysmarketingandsalesprocess,failedtoconsidertheinterestsoftheCompanyanditsshareholders,andfailedtoconductthepropersupervision.The
claim for unjust enrichment includes allegations that the individual defendants derived compensation, fees and other benefits from the Company and were
otherwise unjustly enriched by their wrongful acts and omissions in managing the Company. The claim for breach of fiduciary duties for insider selling and
misappropriation of information includes allegations that the former executive sold Company stock while knowing material, nonpublic information that would
havesignificantlyreducedthemarketpriceofthestock.OnMarch16,2015,thedefendantsfiledamotiontodismisstheconsolidatedcomplaint.OnMarch31,
2016,theCourtenteredanordergrantingthedefendantscollectivemotiontodismisswithoutprejudice,denyingasmootaseparatemotiontodismissthatwas
filedbytheformerexecutiveofficer,andstayingtheorderfor30days,withinwhichplaintiffsmayfileanamendedcomplaintthatcuresthedefectsnotedinthe
order. On May 2, 2016, co-lead plaintiffs filed a verified amended consolidated shareholder derivative complaint naming the Companys President and Chief
Executive Officer, eight of its current directors (including the Companys President and Chief Executive Officer, who also serves as a director) and one of its
formerdirectorsasindividualdefendants,andtheCompanyasanominaldefendant.Theamendedcomplaint,amongotherthings,dropstheclaimsagainstthe
formerexecutiveofficernamedinthepriorcomplaint,reallegesandnarrowsthebreachoffiduciarydutyclaims,anddropstheremainingclaims.OnJune15,
2016,defendantsfiledamotiontodismisstheamendedconsolidatedshareholderderivativecomplaint.OnAugust1,2016,plaintiffsfiledanoppositiontothe
motiontodismiss.
60
Table of Contents
Alloftheactionsdescribedaboveunder"ShareholderActions"areinapreliminarystageandtheCompanyisunabletopredicttheoutcome,orreasonably
estimate thepossible lossorrange ofloss,if any,whichcould beassociated withthese actions. TheCompanyandthenamed individuals intend tovigorously
defendthemselvesinallofthesematters.
Other
Matters
OnMarch12,2014,JasonDouglasfiledapurportedclassactioncomplaintintheUnitedStatesDistrictCourtfortheNorthernDistrictofIllinoisassertinga
claimundertheTelephoneConsumerProtectionAct,47U.S.C.227,etseq.,basedonallegationsthatsince2009,theCompanyhassenttextmessagestoclass
memberswirelesstelephoneswithouttheirconsent.Duringthefirstquarterof2015,theCompany'sinsurancecarrierandtheplaintiffreachedanagreementto
createan$8.5millionsettlement fundthatwillbeusedtopayallclassmemberclaims,classcounselsfeesandthecostsofadministering thesettlement. The
agreementhasbeensignedbythepartiesand,onNovember10,2015,theCourtgrantedpreliminaryapprovaltothesettlement.TheCompanyaccruedanamount
equal to the retention under its insurance policy in previous quarters and believes that any amounts in excess of this accrual will be covered by the insurer.
However,iftheCompany'sinsurerisunabletoorrefusestosatisfyitsobligationsunderthepolicyorthepartiesareunabletoreachadefinitiveagreementor
otherwiseagreeonaresolution,theCompany'sfinancialcondition,resultsofoperations,andcashflowscouldbeadverselyimpacted.Asthepartieshavereached
anagreementinthismatter,theCompanybelievesthatthepotentialforadditionallossinexcessofamountsalreadyaccruedisremote.
On February 10, 2015, Caryn Pincus filed a purported class action lawsuit in the United States District Court for the Southern District of Florida against
Speedpay, Inc. (Speedpay), a subsidiary of the Company, asserting claims based on allegations that Speedpay imposed an unlawful surcharge on credit card
transactions and that Speedpay engages in money transmission without a license. The complaint requests certification of a class and two subclasses generally
comprised of consumers in Florida who made a payment through Speedpays bill payment services using a credit card and were charged a surcharge for such
paymentduringthefour-yearandfive-yearperiodspriortothefilingofthecomplaintthroughthedateofclasscertification.OnApril6,2015,Speedpayfileda
motiontodismissthecomplaint.OnApril23,2015,inresponsetothemotiontodismiss,Pincusfiledanamendedcomplaintthataddsclaims(1)undertheFlorida
CivilRemediesforCriminalPracticesAct,whichauthorizescivilremediesforcertaincriminalconduct;and(2)forviolationofthefederalRacketeerInfluenced
andCorruptOrganizationsAct("RICO").OnMay15,2015,Speedpayfiledamotiontodismisstheamendedcomplaint.OnOctober6,2015,theCourtenteredan
orderdenyingSpeedpaysmotiontodismiss.OnOctober20,2015,Speedpayfiledananswertotheamendedcomplaint.OnDecember1,2015,Pincusfileda
secondamendedcomplaintthatrevisedherfactualallegations,butaddednonewclaims.OnDecember18,2015,Speedpayfiledananswertothesecondamended
complaint.OnMay20,2016,SpeedpayfiledamotionforjudgmentonthepleadingsastoPincus'FloridaCivilRemediesforCriminalPracticesActandfederal
RICOclaims.OnJune7,2016,PincusfiledanoppositiontoSpeedpay'smotionforjudgmentonthepleadings.OnJune17,2016,Speedpayfiledareplybriefin
supportofthemotion.Asthisactionisinapreliminarystage,theCompanyisunabletopredicttheoutcome,orthepossiblelossorrangeofloss,ifany,which
couldbeassociatedwiththisaction.Speedpayintendstovigorouslydefenditselfinthismatter.
In addition to the principal matters described above and the matters described in Part I, Item 1, Financial
Statements
, Note 4, "Commitments and
Contingencies,"theCompanyisapartytoavarietyofotherlegalmattersthatariseinthenormalcourseoftheCompany'sbusiness.Whiletheresultsofthese
otherlegalmatterscannotbepredictedwithcertainty,managementbelievesthatthefinaloutcomeofthesematterswillnothaveamaterialadverseeffecteither
individuallyorintheaggregateontheCompany'sfinancialcondition,resultsofoperations,orcashflows.
Item 1A. Risk Factors
Therehavebeennomaterialchangestotheriskfactorsdescribedinour2015AnnualReportonForm10-K.
61
Table of Contents
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ThefollowingtablesetsforthstockrepurchasesforeachofthethreemonthsofthequarterendedJune30,2016:
Total Number of
Shares Purchased*
Average Price
Paid per Share
Remaining Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs (In millions)
Period
April1-30
847,336 $
19.86
824,400 $
455.5
May1-31
2,294,053 $
19.19
2,291,100 $
411.5
June1-30
901,724 $
19.12
898,000 $
394.3
Total
____________
4,043,113 $
19.32
4,013,500
Total Number of Shares

Purchased as Part of
Publicly Announced
Plans or Programs**
TheseamountsrepresentbothsharesauthorizedbytheBoardofDirectorsforrepurchaseunderapubliclyannouncedauthorization,asdescribedbelow,as
wellasshareswithheldfromemployeestocovertaxwithholdingobligationsonrestrictedstockunitsthathavevested.
** OnFebruary10,2015,theBoardofDirectorsauthorized$1.2billionofcommonstockrepurchasesthroughDecember31,2017,ofwhich$394.3million
remainedavailableasofJune30,2016.Incertaininstances,managementhashistoricallyandmaycontinuetoestablishprearrangedwrittenplanspursuantto
Rule10b5-1.ARule10b5-1planpermitsustorepurchasesharesattimeswhenwemayotherwisebeunabletodoso,providedtheplanisadoptedwhenwe
arenotawareofmaterialnon-publicinformation.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Notapplicable.
Item 5. Other Information
None.
Item 6. Exhibits
See"ExhibitIndex"fordocumentsfiledherewithandincorporatedhereinbyreference.
62
Table of Contents
SIGNATURES
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,theRegistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,
thereuntodulyauthorized.
The Western Union Company (Registrant)
Date:
August3,2016
By:
Hikmet Ersek
President and Chief Executive Officer
(Principal Executive Officer)
/s/HikmetErsek
Date:
August3,2016
By:
Rajesh K. Agrawal
Executive Vice President and Chief Financial Officer

(Principal Financial Officer)
Date:
August3,2016
By:
Amintore T.X. Schenkel
Senior Vice President, Chief Accounting Officer and Controller (Principal

Accounting Officer)
/s/RajeshK.Agrawal
/s/AmintoreT.X.Schenkel
63
Table of Contents
EXHIBIT INDEX
Exhibit
Number
12
ComputationofRatioofEarningstoFixedCharges
15

LetterfromErnst&YoungLLPRegardingUnauditedInterimFinancialInformation
31.1

CertificationofChiefExecutiveOfficerofTheWesternUnionCompanyPursuanttoRule13a-14(a)undertheSecuritiesExchangeActof1934
31.2

CertificationofChiefFinancialOfficerofTheWesternUnionCompanyPursuanttoRule13a-14(a)undertheSecuritiesExchangeActof1934
32

CertificationofChiefExecutiveOfficerandChiefFinancialOfficerPursuanttoSection1350ofChapter63ofTitle18oftheUnitedStatesCode
101.INS

XBRLInstanceDocument
101.SCH

XBRLTaxonomyExtensionSchemaDocument
101.CAL

XBRLTaxonomyExtensionCalculationLinkbaseDocument
101.DEF

XBRLTaxonomyExtensionDefinitionLinkbaseDocument
101.LAB

XBRLTaxonomyExtensionLabelLinkbaseDocument
101.PRE

XBRLTaxonomyExtensionPresentationLinkbaseDocument
Description
64
Exhibit 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(unaudited)
(in millions)
Three Months
Ended June 30,
2016
Earnings:
Six Months
Ended June 30,
2016
Years Ended December 31,

2015
2014
2013
2012
222.5 $
440.0 $
941.8 $
968.2 $
926.9 $
1,168.8 $
45.6
86.5
175.6
182.7
198.8
Fixedcharges
Otheradjustments
(3.8)
(0.3)
(6.9)
(3.2)
(0.7)
264.3 $
526.2 $
1,110.5 $
1,147.7 $
1,125.0 $
177.8
5.3
Totalearnings(a)
Fixedcharges:
41.0 $
81.5 $
167.9 $
176.6 $
195.6 $
179.6 $
4.6
5.0
7.7
6.1
3.2
(1.8)
45.6 $
86.5 $
175.6 $
182.7 $
198.8 $
177.8 $
5.8
6.1
6.3
6.3
5.7
7.6
Interestexpense
Otheradjustments
Totalfixedcharges(b)
Ratioofearningstofixedcharges(a/b)
1,351.9 $
2011
1,274.6
182.9
2.6
1,460.1
181.9
1.0
182.9
8.0
Forpurposesofcalculatingtheratioofearningstofixedcharges,earningshavebeencalculatedbyaddingincomebeforeincometaxes,fixedchargesincluded
in the determination of income before income taxes and distributions from equity method investments, and then subtracting income from equity method
investments.Fixedchargesconsistofinterestexpense,andanestimatedinterestportionofrentalexpensesandincometaxcontingencies,whichareincludedasa
componentofincometaxexpense.
Exhibit 15
Letter from Ernst & Young LLP Regarding Unaudited Interim Financial Information
TheBoardofDirectorsandStockholdersofTheWesternUnionCompany
WeareawareoftheincorporationbyreferenceinthefollowingRegistrationStatements:
(1) RegistrationStatements(FormS-3Nos.333-191606and333-191608)ofTheWesternUnionCompany,and
(2) Registration Statement (Form S-8 Nos. 333-137665 and 333-204183) pertaining to The Western Union Company 2006 Long-Term Incentive Plan, The
WesternUnionCompany2006Non-EmployeeDirectorEquityCompensationPlan,TheWesternUnionCompanySupplementalIncentiveSavingsPlan,and
TheWesternUnionCompany2015Long-TermIncentivePlan;
ofourreportdatedAugust3,2016relatingtotheunauditedcondensedconsolidatedinterimfinancialstatementsofTheWesternUnionCompanythatareincluded
initsForm10-QforthequarterendedJune30,2016.
/s/Ernst&YoungLLP
Denver,Colorado
August3,2016
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
I,HikmetErsek,certifythat:
1.IhavereviewedthisQuarterlyReportonForm10-QofTheWesternUnionCompany;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethe
statementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthe
financialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedin
ExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))for
theregistrantandhave:
(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,to
ensurethatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,
particularlyduringtheperiodinwhichthisreportisbeingprepared;
(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderour
supervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternal
purposesinaccordancewithgenerallyacceptedaccountingprinciples;
(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsaboutthe
effectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecent
fiscalquarter(theregistrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomaterially
affect,theregistrant'sinternalcontroloverfinancialreporting;and
5.Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,tothe
registrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonably
likelytoadverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontrol
overfinancialreporting.
Date: August3,2016
/S/HIKMETERSEK
Hikmet Ersek
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
I,RajeshK.Agrawal,certifythat:
1.IhavereviewedthisQuarterlyReportonForm10-QofTheWesternUnionCompany;
2.Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethe
statementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;
3.Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthe
financialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;
4.Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedin
ExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))for
theregistrantandhave:
(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,to
ensurethatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,
particularlyduringtheperiodinwhichthisreportisbeingprepared;
(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderour
supervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternal
purposesinaccordancewithgenerallyacceptedaccountingprinciples;
(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsaboutthe
effectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecent
fiscalquarter(theregistrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomaterially
affect,theregistrant'sinternalcontroloverfinancialreporting;and
5.Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,tothe
registrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonably
likelytoadverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontrol
overfinancialreporting.
Date: August3,2016
/S/RAJESHK.AGRAWAL
Rajesh K. Agrawal
Exhibit 32
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
ThecertificationsetforthbelowisbeingsubmittedinconnectionwiththeQuarterlyReportofTheWesternUnionCompanyonForm10-Qfortheperiod
endedJune30,2016(the"Report")forthepurposeofcomplyingwithRule13a-14(b)orRule15d-14(b)oftheSecuritiesExchangeActof1934(the"Exchange
Act")andSection1350ofChapter63ofTitle18oftheUnitedStatesCode.
HikmetErsekandRajeshK.Agrawalcertifythat,tothebestofeachoftheirknowledge:
1.
TheReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheExchangeAct;and
2.
TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsofTheWestern
UnionCompany.
Date: August3,2016
/s/HIKMETERSEK
Hikmet Ersek
Date: August3,2016
/s/RAJESHK.AGRAWAL
Rajesh K. Agrawal

Western Union - 10-Q (Quarterly Report) SEC Filing

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Western Union - 10-Q (Quarterly Report) SEC Filing

Uploaded by

Copyright:

Available Formats

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

For the quarterly period ended June 30, 2016

For the transition period from

THE WESTERN UNION COMPANY

12500 EAST BELFORD AVENUE

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

THE WESTERN UNION COMPANY

Three Months Ended June 30,

988.3 $ 1,880.3 $ 1,936.9

Six Months Ended

THE WESTERN UNION COMPANY

Three Months Ended June 30,

Six Months Ended June 30,

THE WESTERN UNION COMPANY

June 30, 2016

December 31, 2015

Liabilities and Stockholders' Equity

THE WESTERN UNION COMPANY

Six Months Ended

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Supplemental cash flow information:

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

Six Months Ended June 30,

THE WESTERN UNION COMPANY

Fair Value Measurement Using

June 30, 2016

Fair Value Measurement Using

December 31, 2015

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

June 30, 2016

December 31, 2015

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

Three Months Ended

Six Months Ended

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

THE WESTERN UNION COMPANY

June 30, 2016

Gross Amounts Offset

December 31, 2015

June 30, 2016

Gross Amounts Offset

December 31, 2015

THE WESTERN UNION COMPANY

Gain/(Loss) Recognized in Income on

June 30, 2016

June 30, 2015

Gain/(Loss) Recognized in Income on