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Schedule I - Condensed Financial Information of the Registrant

12 Months Ended

Dec. 31, 2021

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

Schedule I - Condensed Financial Information of the Registrant

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

The following lists the condensed financial information for the parent company as of December 31, 2021 and 2020 and Condensed Statements of Income and Comprehensive Income and Condensed Statements of Cash Flows for each of the three years in the period ended December 31, 2021.

THE WESTERN UNION COMPANY

CONDENSED BALANCE SHEETS

(PARENT COMPANY ONLY)

(in millions, except per share amounts)


		December 31,
		2021				2020
Assets
Cash and cash equivalents		$	2.1			$	2.1
Property and equipment, net of accumulated depreciation of $50.1 and $37.0, respectively			41.4				54.0
Other assets			90.0				96.2
Investment in subsidiaries			5,450.0				5,661.3
Total assets		$	5,583.5			$	5,813.6

Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities		$	58.0			$	53.0
Income taxes payable			477.4				551.5
Payable to subsidiaries, net			1,590.3				1,852.6
Borrowings			3,008.4				3,067.2
Other liabilities			93.8				102.7
Total liabilities			5,227.9				5,627.0
Stockholders' equity:
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued			—				—
Common stock, $0.01 par value; 2,000 shares authorized; 393.8 shares and 411.2 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively			3.9				4.1
Capital surplus			941.0				885.1
Accumulated deficit			(537.2	)			(543.1	)
Accumulated other comprehensive loss			(52.1	)			(159.5	)
Total stockholders' equity			355.6				186.6
Total liabilities and stockholders' equity		$	5,583.5			$	5,813.6

See Notes to Condensed Financial Statements.

THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(PARENT COMPANY ONLY)

(in millions)


		Year Ended December 31,
		2021				2020				2019
Revenues		$	—			$	—			$	—
Expenses			—				—				—
Operating income			—				—				—
Gain on divestitures of businesses (Note 4)			—				—				524.6
Gain on sale of noncontrolling interest in a private company (Note 4)			47.9				—				—
Interest income			—				—				—
Interest expense			(115.9	)			(158.5	)			(181.5	)
Other income/(expense), net			(14.7	)			3.6				2.7
Income/(loss) before equity earnings of affiliates and income taxes			(82.7	)			(154.9	)			345.8
Equity in earnings of affiliates, net of tax			869.1				861.7				827.3
Income tax (expense)/benefit			19.4				37.5				(114.8	)
Net income			805.8				744.3				1,058.3
Other comprehensive income, net of tax			2.5				0.4				0.2
Other comprehensive income of affiliates, net of tax			104.9				49.1				21.8
Comprehensive income		$	913.2			$	793.8			$	1,080.3

See Notes to Condensed Financial Statements.

THE WESTERN UNION COMPANY

CONDENSED STATEMENTS OF CASH FLOWS

(PARENT COMPANY ONLY)

(in millions)


		Year Ended December 31,
		2021				2020				2019
Cash flows from operating activities
Net cash provided by/(used in) operating activities		$	510.4			$	(79.0	)		$	103.1
Cash flows from investing activities
Purchases of property and equipment and other			(0.5	)			(1.0	)			(9.9	)
Proceeds from the sale of former corporate headquarters (Note 4)			—				43.6				—
Proceeds from the sale of noncontrolling interest in a private company (Note 4)			50.9				—				—
Proceeds from divestitures of businesses, net of cash divested (Note 4)			—				—				711.7
Distributions received from/(capital contributed to) subsidiaries, net			6.5				(329.4	)			74.0
Other investing activities			0.5				(2.1	)			—
Net cash provided by/(used in) investing activities			57.4				(288.9	)			775.8
Cash flows from financing activities
Advances from subsidiaries, net			289.5				1,139.5				194.0
Net proceeds from/(repayments of) commercial paper			195.0				(165.0	)			120.0
Net proceeds from issuance of borrowings			891.7				—				495.9
Principal payments on borrowings			(1,150.0	)			—				(824.9	)
Proceeds from exercise of options and other			11.6				2.2				33.3
Cash dividends and dividend equivalents paid			(381.6	)			(370.3	)			(340.8	)
Common stock repurchased			(409.9	)			(239.7	)			(552.6	)
Make-whole premium on early extinguishment of debt			(14.3	)			—				—
Other financing activities			0.2				(0.7	)			—
Net cash provided by/(used in) financing activities			(567.8	)			366.0				(875.1	)
Net change in cash and cash equivalents			—				(1.9	)			3.8
Cash and cash equivalents at beginning of year			2.1				4.0				0.2
Cash and cash equivalents at end of year		$	2.1			$	2.1			$	4.0
Supplemental cash flow information:
Non-cash financing activity, distribution of note from subsidiary (Note 3)		$	556.1			$	1,364.4			$	—
Cash paid for lease liabilities		$	14.6			$	20.7			$	17.0
Non-cash lease liabilities arising from obtaining right-of-use assets (Note 6)		$	0.9			$	1.5			$	124.8

See Notes to Condensed Financial Statements.

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

The Western Union Company (the “Parent”) is a holding company that conducts substantially all of its business operations through its subsidiaries. Under a parent company only presentation, the Parent’s investments in its consolidated subsidiaries are presented under the equity method of accounting, and the condensed financial statements do not present the financial statements of the Parent and its subsidiaries on a consolidated basis. These financial statements should be read in conjunction with The Western Union Company’s consolidated financial statements.

2. Restricted Net Assets

Certain assets of the Parent’s subsidiaries totaling approximately $460 million as of December 31, 2021 constitute restricted net assets, as there are legal or regulatory limitations on transferring such assets outside of the countries where the respective assets are located. Additionally, certain of the Parent’s subsidiaries must meet minimum capital requirements in some countries in order to maintain operating licenses.

3. Related Party Transactions

The Parent enters into contracts with third-party vendors on behalf of its subsidiaries. Because the Parent is a holding company, as noted above, these corporate costs are incurred by the Parent, and the expenses are then allocated to its subsidiaries based primarily on the subsidiaries’ percentage of revenues compared to total revenues.

All transactions described below are with subsidiaries of the Parent. The Parent has issued multiple promissory notes payable to its 100% owned subsidiary, First Financial Management Corporation, in exchange for funds distributed to the Parent. All notes pay interest at a fixed rate, may be repaid at any time without penalty, and are included within Payable to subsidiaries, net in the Condensed Balance Sheets. These promissory notes are as follows:


		Amount						Interest Rate
Date Issued		(in millions)				Due Date		(per annum)
October 1, 2019 (a)		$	162.8			June 30, 2022			1.69	%
December 1, 2019 (a)		$	67.4			August 31, 2022			1.61	%
December 1, 2020 (a)		$	93.3			August 31, 2023			0.15	%
January 1, 2021 (a)		$	289.0			September 30, 2023			0.14	%
March 1, 2021 (a)		$	244.3			November 30, 2023			0.12	%

(a)

This note refinanced a note originally issued on a prior date.

On November 8, 2015, the Parent entered into a Revolving Credit Facility agreement (the “Revolver”) with its 100% owned subsidiary, RII Holdings, Inc., which expires on November 8, 2035, providing for unsecured financing facilities in an aggregate amount of $3.0 billion. As of December 31, 2021 and 2020, borrowings outstanding under the Revolver were $370.0 million and $620.3 million, respectively. The interest rate applicable for outstanding borrowings under the Revolver is the six-month LIBOR rate set on the first day of the calendar year, which was 0.34% and 0.26% as of December 31, 2021 and 2020, respectively. Outstanding borrowings under the Revolver are included within Payable to subsidiaries, net in the Condensed Balance Sheets as of December 31, 2021 and 2020. During the years ended December 31, 2021 and 2020, portions of the outstanding balance were repaid by means of non-cash distributions by the Parent’s subsidiaries. The Parent expects to terminate this agreement in connection with the sale of the Business Solutions business, as further discussed in The Western Union Company's consolidated financial statements, Note 5, Divestitures, Investment Activities, and Goodwill.

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

The Parent files its United States federal consolidated income tax return on its and certain of its affiliates’ behalf. Accordingly, the Parent has recorded income taxes payable on behalf of its subsidiaries, and these income taxes payable are significant due to the enactment of the Tax Act into United States law.

Excess cash generated from operations of the Parent’s subsidiaries that is not required to meet certain regulatory requirements may be periodically distributed to the Parent in the form of a distribution, although the amounts of such distributions may vary from year to year.

The Parent files a consolidated United States federal income tax return and also a number of consolidated state income tax returns on behalf of its subsidiaries. In these circumstances, the Parent is responsible for remitting income tax payments on behalf of the consolidated group. The Parent’s provision for income taxes has been computed as if it were a separate tax-paying entity.

4. Divestitures and Investment Activities

Divestitures

On February 28, 2019, the Parent entered into an agreement with ACI to sell its United States electronic bill payments business known as Speedpay. The Parent received approximately $750 million and recorded a pre-tax gain on the sale of approximately $523 million, which is included in Gain on divestitures of businesses in the Condensed Statements of Income and Comprehensive Income, in the all-cash transaction that closed on May 9, 2019.

On May 6, 2019, the Parent completed the sale of Paymap, which provides electronic mortgage bill payment services, for contingent consideration and immaterial cash proceeds received at closing. The Parent recorded an immaterial pre-tax gain related to this sale during 2019.

In 2020, the Parent sold its former corporate headquarters and recorded an immaterial pre-tax gain on the sale. The proceeds from this sale have been included in Cash flows from investing activities within the Parent’s Condensed Statements of Cash Flows for the year ended December 31, 2020.

Investment Activities

In April 2021, the Parent sold a substantial majority of the noncontrolling interest it held in a private company for cash proceeds of $50.9 million. The Parent recorded a gain of $47.9 million within Income/(loss) before equity earnings of affiliates and income taxes, during the year ended December 31, 2021. The Parent retains an immaterial equity interest in this private company.

5. Commitments and Contingencies

The Parent had approximately $250 million in outstanding letters of credit and bank guarantees as of December 31, 2021 primarily held in connection with safeguarding consumer funds and certain agent agreements. The Parent expects to renew many of its letters of credit and bank guarantees prior to expiration, while certain letters of credit will be terminated, released, or transferred as a result of the sale of the Business Solutions business.

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

THE WESTERN UNION COMPANY

NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)

6. Leases

The Parent leases real properties primarily for use as administrative and sales offices, in addition to transportation and other equipment. The Parent determines if a contract contains a lease arrangement at the inception of the contract. For leases in which the Parent is the lessee, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition. Operating lease ROU assets are initially measured at the present value of lease payments over the lease term plus initial direct costs, if any. If a lease does not provide a discount rate and the rate cannot be readily determined, an incremental borrowing rate is used to determine the present value of future lease payments. Lease and variable non-lease components within the Parent’s lease agreements are accounted for separately. The Parent has no material leases in which the Parent is the lessor.

The Parent’s leasing arrangements are classified as operating leases, for which expense is recognized on a straight-line basis. As of December 31, 2021 and 2020, the total ROU assets were $56.9 million and $63.1 million, respectively, and lease liabilities were $91.3 million and $100.1 million, respectively. The ROU assets and operating lease liabilities were included in Other assets and Other liabilities, respectively, in the Parent’s Condensed Balance Sheets. Cash paid for operating lease liabilities is recorded as Cash flows from operating activities in the Parent’s Condensed Statements of Cash Flows. Short-term and variable lease costs were not material for the years ended December 31, 2021 and 2020.

The Parent’s leases have remaining terms from less than 2 years to nearly 10 years. Certain of these leases contain escalation provisions and/or renewal options, giving the Parent the right to extend the lease by up to 10 years. However, these options are not reflected in the calculation of the ROU asset and lease liability due to uncertainty surrounding the likelihood of renewal.

The following table summarizes the weighted-average lease term and discount rate for operating lease liabilities as of December 31, 2021 and 2020:


		December 31, 2021				December 31, 2020
Weighted-average remaining lease term (in years)			8.6				9.5
Weighted-average discount rate			5.3	%			5.5	%

The following table represents maturities of operating lease liabilities as of December 31, 2021 (in millions):


		December 31, 2021
Due within 1 year		$	14.9
Due after 1 year through 2 years			14.2
Due after 2 years through 3 years			13.0
Due after 3 years through 4 years			12.5
Due after 4 years through 5 years			10.9
Due after 5 years			50.2
Total lease payments			115.7
Less imputed interest			(24.4	)
Total operating lease liabilities		$	91.3