What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-04 · 362 added, 247 removed, 1013 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of services

5 unchanged sentences

Interest expense

Other expense, net

Total other expense, net

Other income/(expense), net

Total other income/(expense), net

Income before income taxes

7 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income, net of reclassifications and tax (Note 10):

Unrealized gains/(losses) on investment securities

Unrealized gains on hedging activities

Unrealized gains/(losses) on hedging activities

Defined benefit pension plan adjustments

23 unchanged sentences

2,000 shares authorized;

409.8 shares and 411.2 shares issued and outstanding as of March 31, 2021 and December 31, 2020 , respectively

407.0 shares and 411.2 shares issued and outstanding as of June 30, 2021 and December 31, 2020 , respectively

Capital surplus

7 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on the sale of shares held as a minority investor (Note 4)

Other non-cash items, net

9 unchanged sentences

Proceeds from the sale of former corporate headquarters

Purchases of non-settlement related investments

Proceeds from maturity of non-settlement related investments

Proceeds from the sale of shares held as a minority investor (Note 4)

Regulatory deposit made to purchase the ownership interest in stc pay (Note 4)

Other investing activities

Net cash (used in)/provided by investing activities

Net cash used in investing activities

Cash flows from financing activities

1 unchanged sentence

Common stock repurchased (Note 10)

Net repayments of commercial paper

Net proceeds from/(repayments of) commercial paper

Net proceeds from issuance of borrowings

Principal payments on borrowings

Make-whole premium on early extinguishment of debt (Note 12)

Proceeds from exercise of options

22 unchanged sentences

Balance, March 31, 2021

Stock-based compensation

Common stock dividends and dividend equivalents declared ($ 0.235 per share)

Repurchase and retirement of common shares

Shares issued under stock-based compensation plans

Other comprehensive income (Note 10)

Balance, June 30, 2021

Comprehensive

8 unchanged sentences

Balance, March 31, 2020

Stock-based compensation

Common stock dividends and dividend equivalents declared ($ 0.225 per share)

Repurchase and retirement of common shares

Shares issued under stock-based compensation plans

Other comprehensive income (Note 10)

Balance, June 30, 2020

See Notes to Condensed Consolidated Financial Statements.

14 unchanged sentences

In addition, in certain countries, the Company writes foreign currency forward and option contracts for customers to facilitate future payments.

On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group.

See Note 16 for further information regarding this transaction.

All businesses and other services that have not been classified in the above segments are reported as Other, which primarily includes the Company’s bill payment services which facilitate payments from consumers to businesses and other organizations and the Company’s money order services.

9 unchanged sentences

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.

The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries.

Results of operations and cash flows

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

for the interim periods are not necessarily indicative of the results that may be expected for the entire year.

All significant intercompany transactions and accounts were eliminated as of March 31, 2021 and December 31, 2020 and for all periods presented.

In the opinion of management, these condensed consolidated financial statements include all the normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of March 31, 2021 and for all periods presented.

The unaudited condensed consolidated financial statements in this quarterly report are presented on a consolidated basis and include the accounts of the Company and its majority-owned subsidiaries.

Results of operations and cash flows for the interim periods are not necessarily indicative of the results that may be expected for the entire year.

All significant intercompany transactions and accounts were eliminated as of June 30, 2021 and December 31, 2020 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 Form 10-K for the year ended December 31, 2020.

16 unchanged sentences

Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

The Company recognized $ 1,166.3 million and $ 1,122.6 million in revenues from contracts with customers for the three months ended March 31, 2021 and 2020, respectively.

There were no material upfront costs incurred to obtain contracts with customers during these same periods.

Under the Company’s loyalty programs, which are primarily offered

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in its money transfer services, the Company must fulfill loyalty program rewards earned by customers.

The Company recognized $ 1,239.1 million and $ 1,055.6 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2,405.4 million and $ 2,178.2 million for the six months ended June 30, 2021 and 2020, respectively, in revenues from contracts with customers.

There were no material upfront costs incurred to obtain contracts with customers during these same periods.

Under the Company’s loyalty programs, which are primarily offered in its money transfer services, the Company must fulfill loyalty program rewards earned by customers.

The loyalty program redemption activity has been and continues to be insignificant to the Company’s results of operations, and the Company has immaterial contract liability balances, which primarily relate to its customer loyalty programs and other services.

4 unchanged sentences

See Note 15 for further information on the Company’s segments.

On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group.

See Note 16 for further information regarding this transaction.

Consumer Money Transfers

11 unchanged sentences

The identification of the contract with the customer for revenue recognition purposes is consistent with these features for each of the Company’s bill payment and other services.

As with consumer money transfers, customers engage the Company to perform one integrated service — collect money from the consumer and process the transaction, thereby providing billers with real-time or near real-time information regarding consumer payments and simplifying the billers’ collection efforts.

As with consumer money transfers, customers engage the Company to perform one integrated service —

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

collect money from the consumer and process the transaction, thereby providing billers with real-time or near real-time information regarding consumer payments and simplifying the billers’ collection efforts.

Management has determined that the substantial majority of the Company’s revenue is recognized at a point in time.

The following tables represent the disaggregation of revenue earned from contracts with customers by product type and region for the three months ended March 31, 2021 and 2020 (in millions).

The following tables represent the disaggregation of revenue earned from contracts with customers by product type and region for the three and six months ended June 30, 2021 and 2020 (in millions).

The regional split of revenue shown in the tables below is based upon where transactions are initiated.

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Bill Payments

7 unchanged sentences

Total revenues

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Bill Payments

7 unchanged sentences

Total revenues

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended June 30, 2020

Bill Payments

North America

Europe and Russia/CIS

Middle East, Africa, and South Asia

Latin America and the Caribbean

East Asia and Oceania

Revenues from contracts with customers

Other revenues (a)

Total revenues

Six Months Ended June 30, 2020

Bill Payments

North America

Europe and Russia/CIS

Middle East, Africa, and South Asia

Latin America and the Caribbean

East Asia and Oceania

Revenues from contracts with customers

Other revenues (a)

Total revenues

(a) Includes revenue from the sale of derivative financial instruments, investment income generated on settlement assets primarily related to money transfer and money order services, and other sources.

4 unchanged sentences

The treasury stock method assumes proceeds from the exercise price of stock options and the unamortized compensation expense of options and restricted stock are available to acquire shares at an average market price throughout the period, and therefore, reduce the dilutive effect.

Shares excluded from the diluted earnings per share calculation under the treasury stock method, primarily due to outstanding restricted stock units and options to purchase shares of Western Union stock, as the assumed proceeds of the restricted stock and options per unit were above the Company’s average share price during the periods and their effect was anti-dilutive, were 1.4 million and 2.6 million for the three months ended June 30, 2021 and 2020, respectively, and 1.4 million and 1.8 million for the six months ended June 30, 2021 and 2020, respectively.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

restricted stock and options per unit were above the Company’s average share price during the periods and their effect was anti-dilutive, were 1.4 million and 1.1 million for the three months ended March 31, 2021 and 2020, respectively.

The following table provides the calculation of diluted weighted-average shares outstanding (in millions):

Three Months Ended

Six Months Ended

Basic weighted-average shares outstanding

2 unchanged sentences

Investment Activities

On November 21, 2020, the Company entered into an agreement to acquire an ownership interest in Saudi Digital Payments Company (“stc pay”), a subsidiary of Saudi Telecom Company and one of the Company’s Consumer-to- Consumer digital white label partners.

Under the terms of the agreement, the Company has agreed to invest up to approximately $ 200 million for up to a 15 % investment in stc pay, and this transaction is expected to close in the second quarter of 2021.

In conjunction with the transaction, the Company and stc pay have also agreed to extend and expand the terms of their commercial agreement.

On May 25, 2021, the Company amended its agreement dated November 21, 2020 to acquire an ownership interest in Saudi Digital Payments Company (“stc pay”), a subsidiary of Saudi Telecom Company and one of the Company’s Consumer-to-Consumer digital white label partners.

Under the terms of the amended agreement, the Company has agreed to invest up to $ 200.0 million (“Purchase Price”) for up to a 15 % investment in stc pay (“Investment”), and this transaction is expected to close in the second half of 2021.

For regulatory purposes, the Purchase Price was deposited into an external, restricted account during the second quarter of 2021 in expectation of completing the Investment.

In conjunction with the transaction, the Company and stc pay extended and expanded the terms of their commercial agreement.

The Company expects to measure this Investment at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments in stc pay.

On April 12, 2021, the Company sold a substantial majority of the shares it held as a minority investor in a private company for cash proceeds of $ 50.9 million.

The Company recorded a gain of approximately $ 48 million within Other income/(expense), net in the second quarter of 2021.

The Company will continue to measure the retained portion of this investment at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments.

The Company recorded a gain of $ 47.9 million within Other income/(expense), net, during the three months ended June 30, 2021.

The Company retains an immaterial equity interest in this private company.

Restructuring-Related Expenses

During the three months ended March 31, 2020, the Company incurred $ 10.5 million of expenses related to a restructuring initiative approved by the Company’s Board of Directors on August 1, 2019.

During the three and six months ended June 30, 2020, the Company incurred $ 5.2 million and $ 15.7 million, respectively, of expenses related to a restructuring initiative approved by the Company’s Board of Directors on August 1, 2019.

All expenses for this initiative had been incurred as of December 31, 2020, and substantially all have been and will continue to be paid in cash.

For the three months ended March 31, 2020, $ 0.9 million and $ 9.6 million of these expenses were included in Cost of services and Selling, general, and administrative, respectively, in the Condensed Consolidated Statements of Income.

For the three and six months ended June 30, 2020, $ 0.8 million and $ 1.7 million, respectively, of these expenses were included in Cost of services, and $ 4.4 million and $ 14.0 million, respectively, of these expenses were included in Selling, general, and administrative in the Condensed Consolidated Statements of Income.

While certain of the expenses may be identifiable to the Company’s segments, primarily to the Company’s Consumer-to-Consumer segment, the expenses are excluded from the Company’s segment operating income results as they are not included in the measurement of segment operating income provided to the Chief Operating Decision Maker (“CODM”) for purposes of performance assessment and resource allocation.

1 unchanged sentence

however, the types of expenses related to this initiative are similar to expenses that the Company has previously incurred and can reasonably be expected to incur in the future.

As of March 31, 2021 and December 31, 2020, the total restructuring-related accrual was $ 14.5 million and $ 26.2 million, respectively.

As of June 30, 2021 and December 31, 2020, the total restructuring-related accrual was $ 8.5 million and $ 26.2 million, respectively, substantially all of which is expected to be paid by September 30, 2021.

These amounts are included in Accounts payable and accrued liabilities in the Company’s Condensed Consolidated Balance Sheets.

6 unchanged sentences

Fair Value Measurement Using

March 31, 2021

June 30, 2021

Settlement assets:

24 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There were no material, non-recurring fair value adjustments or transfers between Level 1 and Level 2 measurements during the three months ended March 31, 2021 and 2020.

There were no material, non-recurring fair value adjustments or transfers between Level 1 and Level 2 measurements during the three and six months ended June 30, 2021 and 2020.

Other Fair Value Measurements

2 unchanged sentences

Fixed-rate notes are carried in the Company’s Condensed Consolidated Balance Sheets at their original issuance values as adjusted over time to accrete that value to par.

As of March 31, 2021, the carrying value and fair value of the Company’s borrowings were $ 3,230.5 million and $ 3,450.6 million, respectively (see Note 12).

As of June 30, 2021, the carrying value and fair value of the Company’s borrowings were $ 2,996.8 million and $ 3,258.4 million, respectively (see Note 12).

As of December 31, 2020, the carrying value and fair value of the Company’s borrowings were $ 3,067.2 million and $ 3,348.0 million, respectively.

1 unchanged sentence

Letters of Credit and Bank Guarantees

The Company had approximately $ 430 million in outstanding letters of credit and bank guarantees as of March 31, 2021 primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements.

The Company expects to renew its letters of credit and bank guarantees prior to expiration in most circumstances.

The Company had approximately $ 460 million in outstanding letters of credit and bank guarantees as of June 30, 2021 primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements.

The Company expects to renew most of its letters of credit and bank guarantees prior to expiration.

Litigation and Related Contingencies

3 unchanged sentences

Unless otherwise specified below, the Company believes that there is at least a reasonable possibility that a loss or additional loss may have been incurred for each of the matters described below.

For those matters that the Company believes there is at least a reasonable possibility that a loss or additional loss may have been incurred and can reasonably estimate the loss or potential loss, the reasonably possible potential litigation losses in excess of the Company’s recorded liability for probable and estimable losses was approximately $ 30 million as of March 31, 2021.

For the remaining matters, management is unable to provide a meaningful estimate of the possible loss or range of loss because, among other reasons:

18 unchanged sentences

The Company’s Board of Directors formed a special committee to evaluate Mr.

Lieblein’s demand together with a related shareholder demand (the “Demand Letters”), and the special committee’s investigation was still ongoing at the time Mr.

Lieblein’s demand together with a related demand sent by another shareholder (collectively, the “Demand Letters”), and the special committee’s investigation was still ongoing at the time Mr.

Lieblein filed the Delaware Complaint.

11 unchanged sentences

The Company thereafter informed Mr.

Lieblein and the other shareholders who sent the Demand Letters that their demands have been rejected.

On February 12, 2021, one of the shareholders who sent a Demand Letter sent the Company a request to inspect books and records related to the consideration of the Demand Letters pursuant to Section 220 of the Delaware General Corporation Law.

Lieblein and the other shareholder that sent the related written demand that their demands have been rejected.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 12, 2021, the shareholder who sent the related written demand sent the Company a request to inspect books and records related to the consideration of the Demand Letters pursuant to Section 220 of the Delaware General Corporation Law.

On February 25, 2021, Mr.

4 unchanged sentences

Lieblein, the named plaintiff, only.

The Company will oppose any future action by the other shareholders who sent the Demand Letters.

The Company will oppose any future action by the shareholder who sent the related written demand.

Other Matters

17 unchanged sentences

The Company pays these agents commissions for money transfer and other services provided on the Company’s behalf.

Commission expense recognized for these agents for the three months ended March 31, 2021 and 2020 totaled $ 13.2 million and $ 12.6 million, respectively.

Commission expense recognized for these agents for the three months ended June 30, 2021 and 2020 totaled $ 14.0 million and $ 12.9 million, respectively, and $ 27.2 million and $ 25.5 million for the six months ended June 30, 2021 and 2020, respectively.

THE WESTERN UNION COMPANY

5 unchanged sentences

Settlement assets and obligations consisted of the following (in millions):

March 31, 2021

June 30, 2021

Settlement assets:

26 unchanged sentences

However, due to the short-term nature of the Company’s receivables and the Company’s historical and expected collections practice, the adoption did not have a material impact on the Company’s financial position or results of operations.

Receivables from agents and others primarily represent funds collected by such agents, but in transit to the Company, and were $ 1,184.0 million and $ 1,081.2 million as of March 31, 2021 and December 31, 2020, respectively.

Receivables from agents and others primarily represent funds collected by such agents, but in transit to the Company, and were $ 1,009.6 million and $ 1,081.2 million as of June 30, 2021 and December 31, 2020, respectively.

Cash received by Western Union agents generally becomes available to the Company within one week after initial receipt by the agent.

2 unchanged sentences

Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment.

Business Solutions receivables totaled $ 85.3 million and $ 53.9 million as of March 31, 2021 and December 31, 2020, respectively.

Business Solutions receivables totaled $ 67.2 million and $ 53.9 million as of June 30, 2021 and December 31, 2020, respectively.

Receivables occur when funds have been paid out to a beneficiary but not yet received from the customer.

4 unchanged sentences

Given the short-term nature of these receivables, the Company does not expect the impact of forecasted economic conditions on its allowance for credit losses to be significant.

The Company has estimated credit losses based on information known as of March 31, 2021.

The following tables summarize the activity in the allowance for credit losses on receivables from agents and others, and Business Solutions customers for the three months ended March 31, 2021 and 2020 (in millions):

The Company has estimated credit losses based on information known as of June 30, 2021.

The following tables summarize the activity in the allowance for credit losses on receivables from agents and others, and Business Solutions customers (in millions):

Business Solutions

5 unchanged sentences

Allowance for credit losses as of March 31, 2021

Current period provision for expected credit losses (a)

Write-offs charged against the allowance

Recoveries of amounts previously written off

Impacts of foreign currency exchange rates and other

Allowance for credit losses as of June 30, 2021

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Business Solutions

5 unchanged sentences

Allowance for credit losses as of March 31, 2020

Current period provision for expected credit losses (a)

Write-offs charged against the allowance

Recoveries of amounts previously written off

Impacts of foreign currency exchange rates and other

Allowance for credit losses as of June 30, 2020

(a) Provision does not include losses from chargebacks or fraud associated with transactions initiated through the Company’s digital channels, as these losses are not credit related.

For the three months ended March 31, 2021 and 2020, the Company recognized $ 13.7 million and $ 9.2 million, respectively, of losses that were not credit related.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognized losses that were not credit related of $ 13.7 million and $ 14.5 million for the three months ended March 31, 2021 and June 30, 2021, respectively, and $ 9.2 million and $ 11.5 million for the three months ended March 31, 2020 and June 30, 2020, respectively.

In addition, from time to time, the Company has made advances to its agents.

1 unchanged sentence

These amounts advanced to agents are included within Other assets in the accompanying Condensed Consolidated Balance Sheets.

As of March 31, 2021 and December 31, 2020, amounts advanced to agents were $ 140.0 million and $ 135.9 million, respectively, and the related allowances for credit losses were immaterial.

As of June 30, 2021 and December 31, 2020, amounts advanced to agents were $ 154.8 million and $ 135.9 million, respectively, and the related allowances for credit losses were immaterial.

Investment Securities

12 unchanged sentences

Credit-related impairments are recognized immediately as an adjustment to earnings, regardless of whether the Company has the ability or intent to hold the security to maturity, and are limited to the difference between fair value and the amortized cost basis.

The Company’s provision for credit losses on its available-for-sale securities during the three months ended March 31, 2021 and 2020 and the related allowance for credit losses as of March 31, 2021 and December 31, 2020 were immaterial.

The Company’s provision for credit losses on its available-for-sale securities during the three and

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

six months ended June 30, 2021 and 2020 and the related allowance for credit losses as of June 30, 2021 and December 31, 2020 were immaterial.

The components of investment securities are as follows (in millions):

March 31, 2021

June 30, 2021

Gains/(Losses)

22 unchanged sentences

(a) The majority of these securities are fixed-rate instruments.

The following summarizes the contractual maturities of available-for-sale securities within Settlement assets as of March 31, 2021 (in millions):

The following summarizes the contractual maturities of available-for-sale securities within Settlement assets as of June 30, 2021 (in millions):

Due within 1 year

3 unchanged sentences

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligations or the Company may have the right to put the obligation prior to its contractual maturity, as with variable-rate demand notes.

Variable-rate demand notes, having a fair value of $ 15.0 million, $ 0.9 million, and $ 215.6 million are included in the "Due after 1 year through 5 years,"

"Due after 5 years through 10 years,"

Variable-rate demand notes, having a fair value of $ 15.0 million and $ 135.2 million are included in the "Due within 1 year"

and "Due after 10 years,"

8 unchanged sentences

Three Months Ended

Six Months Ended

Income Statement

11 unchanged sentences

Interest rate contracts

Other expense, net

Other income/(expense), net

Income tax expense

3 unchanged sentences

Actuarial loss

Other expense, net

Other income/(expense), net

Income tax benefit

12 unchanged sentences

As of March 31, 2021

Unrealized gains/(losses)

Tax benefit/(expense)

Amounts reclassified from AOCL into earnings, net of tax

As of June 30, 2021

Foreign Currency

4 unchanged sentences

As of March 31, 2020

Unrealized gains/(losses)

Tax benefit/(expense)

Amounts reclassified from AOCL into earnings, net of tax

As of June 30, 2020

On July 22, 2021, the Company’s Board of Directors approved a plan to terminate and settle the Company’s frozen defined benefit pension plan, which was in an overfunded position as of June 30, 2021 and December 31, 2020.

Upon termination and settlement, which is expected in the fourth quarter of 2021 and subject to required notices, filings, and reviews, the pre-tax balance in AOCL will be reclassified as a component of Total other income/(expense), net, with the related income tax effects recorded in Provision for income taxes, in the Condensed Consolidated Statements of Income.

Cash Dividends Paid

During the three months ended March 31, 2021 and 2020, the Company’s Board of Directors declared quarterly cash dividends of $ 0.235 and $ 0.225 per common share, respectively, representing $ 96.6 million and $ 92.4 million in total dividends, which were paid on March 31, 2021 and March 31, 2020, respectively.

The Company’s Board of Directors declared quarterly cash dividends of $ 0.235 per common share in the first and second quarters of 2021, representing $ 192.5 million in total dividends.

Of this amount $ 95.9 million was paid on June 30, 2021 and $ 96.6 million was paid on March 31, 2021.

The Company’s Board of Directors declared quarterly cash dividends of $ 0.225 per common share in the first and second quarters of 2020, representing $ 184.9 million in total dividends.

Of this amount, $ 92.5 million was paid on June 30, 2020 and $ 92.4 million was paid on March 31, 2020.

On July 22, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.235 per common share, payable on September 30, 2021.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Share Repurchases

During the three months ended March 31, 2021 and 2020, 3.1 million and 8.5 million shares were repurchased for $ 75.0 million and $ 217.4 million, respectively, excluding commissions, at an average cost of $ 24.24 and $ 25.45 , respectively.

During the six months ended June 30, 2021 and 2020, 6.1 million and 8.5 million shares were repurchased for $ 150.0 million and $ 217.4 million, respectively, excluding commissions, at an average cost of $ 24.42 and $ 25.45 , respectively.

These amounts represent shares authorized by the Board of Directors for repurchase under publicly announced authorizations.

As of March 31, 2021, $ 707.6 million remained available under the share repurchase authorization approved by the Company’s Board of Directors through December 31, 2021.

As of June 30, 2021, $ 632.6 million remained available under the share repurchase authorization approved by the Company’s Board of Directors through December 31, 2021.

The amounts included in the Common stock repurchased line in the Company’s Condensed Consolidated Statements of Cash Flows represent both shares authorized by the Board of Directors for repurchase under publicly announced authorizations and shares withheld from employees to cover tax withholding obligations on restricted stock units that have vested.

4 unchanged sentences

(i) minimize its exposures related to changes in foreign currency exchange rates and interest rates and (ii) facilitate cross-currency Business Solutions payments by writing derivatives to customers.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company executes derivatives with established financial institutions;

10 unchanged sentences

The Company’s policy is to use longer duration foreign currency forward contracts, with maturities of up to 36 months at inception and a targeted weighted-average maturity of approximately one year , to help mitigate some of the risk that changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business.

As of March 31, 2021, these foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year .

As of June 30, 2021, these foreign currency forward contracts had maturities of a maximum of 24 months with a weighted-average maturity of approximately one year .

These contracts are accounted for as cash flow hedges of forecasted revenue with effectiveness assessed based on changes in the spot rate of the affected currencies during the period of designation and thus time value is excluded from the assessment of effectiveness.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of March 31, 2021 and December 31, 2020 were as follows (in millions):

March 31, 2021

The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of June 30, 2021 and December 31, 2020 were as follows (in millions):

June 30, 2021

Contracts designated as hedges:

2 unchanged sentences

Australian dollar

Swedish krona

Contracts not designated as hedges:

British pound

Canadian dollar

Philippine peso

Australian dollar

Russian ruble

Australian dollar

Canadian dollar

December 31, 2020

19 unchanged sentences

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 forwards and options.

Foreign exchange revenues from the total portfolio of positions were $ 84.5 million and $ 87.5 million for the three months ended March 31, 2021 and 2020, respectively, and were included in Revenues in the Company’s Condensed Consolidated Statements of Income.

None of the derivative contracts used in Business Solutions operations are designated as accounting hedges and the significant majority of these derivative contracts have a duration at inception of less than one year .

The aggregate equivalent United States dollar notional amount of derivative customer contracts held by the Company in its Business Solutions operations was approximately $ 8.0 billion as of March 31, 2021 and December 31, 2020.

Foreign exchange revenues from the total portfolio of positions included in Revenues in the Company’s Condensed Consolidated Statements of Income were $ 87.4 million and $ 70.0 million for the three months ended June 30, 2021 and 2020, respectively, and $ 171.9 million and $ 157.5 million for the six months ended June 30, 2021 and 2020, respectively.

None of the derivative contracts used in Business Solutions operations are designated as accounting hedges and the majority of these derivative contracts have a duration at inception of less than one year .

The significant majority of customer contracts are written in the following currencies:

7 unchanged sentences

The notional amounts of these treasury locks were $ 100.0 million and $ 150.0 million and were designated as cash flow hedges at the time the agreements were executed.

These treasury locks were terminated in the first quarter of 2021 in conjunction with the issuance of $ 600.0 million of aggregate principal amount of 1.350 % unsecured notes due in 2026 (“2026 Notes”).

These treasury locks were terminated in the first quarter of 2021 in conjunction with the issuance of $ 600.0 million of aggregate principal amount of 1.350 % unsecured notes due March 15, 2026 (“2026 Notes”).

The Company received a total of $ 3.3 million upon termination, of which $ 2.6 million was deferred as a component of AOCL and will be amortized to Interest expense in the Condensed Consolidated Statements of Income over the term of the 2026 Notes.

As a portion of the forecasted interest payments on the 2026 Notes will occur outside the time period originally specified at designation of the treasury locks as cash flow hedges, $ 0.7 million was recognized in Other expense, net in the Condensed Consolidated Statements of Income, upon termination.

As a portion of the forecasted interest payments on the 2026 Notes will occur outside the time period originally specified at designation of the treasury locks as cash flow hedges, $ 0.7 million was recognized in Other income/(expense), net in the Condensed Consolidated Statements of Income, upon termination.

THE WESTERN UNION COMPANY

1 unchanged sentence

Balance Sheet

The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (in millions):

The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 (in millions):

Derivative Assets

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables summarize the gross and net fair value of derivative assets and liabilities as of March 31, 2021 and December 31, 2020 (in millions):

The following tables summarize the gross and net fair value of derivative assets and liabilities as of June 30, 2021 and December 31, 2020 (in millions):

Offsetting of Derivative Assets

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in the Condensed

March 31, 2021

June 30, 2021

Balance Sheets

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in the Condensed

March 31, 2021

June 30, 2021

Balance Sheets

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Generally, amounts are recognized in income when the related forecasted transaction affects earnings.

The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and six months ended June 30, 2021 and 2020 (in millions):

Three Months Ended June 30,

Six Months Ended June 30,

Foreign currency derivatives (a)

Interest rate derivatives

(a) For the three months ended March 31, 2021 and 2020, gains/(losses) of $( 0.7 ) million and $ 3.5 million, respectively, represent amounts excluded from the assessment of effectiveness and recognized in other comprehensive income, for which an amortization approach is applied.

The following table presents the location and amounts of pre-tax net gains/(losses) from fair value and cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

Total amounts presented in the Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded

The effects of fair value and cash flow hedging:

(a) Gains/(losses) of $( 0.3 ) million and $( 0.7 ) million for the three months ended June 30, 2021 and 2020, respectively, and $( 1.0 ) million and $ 2.8 million for the six months ended June 30, 2021 and 2020, respectively, represent amounts excluded from the assessment of effectiveness and recognized in other comprehensive income, for which an amortization approach is applied.

The following table presents the location and amounts of pre-tax net gains/(losses) from cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three months ended June 30, 2021 and 2020 (in millions):

Three Months Ended June 30,

Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow hedges are recorded

Gain/(loss) on cash flow hedges:

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Gains/(losses) reclassified from AOCL into earnings

The following table presents the location and amounts of pre-tax net gains/(losses) from cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the six months ended June 30, 2021 and 2020 (in millions):

Six Months Ended June 30,

Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded

Gain/(loss) on cash flow hedges:

Foreign currency derivatives:

Gains/(losses) reclassified from AOCL into earnings

Amount excluded from effectiveness testing recognized in earnings based on an amortization approach

Interest rate derivatives:

Gains/(losses) reclassified from AOCL into earnings

THE WESTERN UNION COMPANY

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Undesignated Hedges

The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three months ended March 31, 2021 and 2020 (in millions):

The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and six months ended June 30, 2021 and 2020 (in millions):

Three Months Ended

Six Months Ended

Derivatives (a)

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(b) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions.

Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $( 21.8 ) million and $( 51.0 ) million for the three months ended March 31, 2021 and 2020, respectively.

Foreign exchange gains/(losses) on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $( 3.2 ) million and $ 3.0 million for the three months ended June 30, 2021 and 2020, respectively, and $( 25.0 ) million and $( 48.0 ) million for the six months ended June 30, 2021 and 2020, respectively.

All cash flows associated with derivatives are included in Cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

Based on March 31, 2021 foreign exchange rates, an accumulated other comprehensive pre-tax loss of $ 3.0 million related to the foreign currency forward contracts is expected to be reclassified into Revenues within the next 12 months.

Based on June 30, 2021 foreign exchange rates, an accumulated other comprehensive pre-tax loss of $ 3.7 million related to the foreign currency forward contracts is expected to be reclassified into Revenues within the next 12 months.

THE WESTERN UNION COMPANY

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The Company’s outstanding borrowings consisted of the following (in millions):

March 31, 2021

June 30, 2021

December 31, 2020

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3.600 % notes due 2022 (b)

4.250 % notes due 2023 (b)

2.850 % notes due 2025 (b)

1.350 % notes due 2026 (effective rate of 1.5 %) (c)

2.750 % notes due 2031 (effective rate of 2.9 %) (d)

6.200 % notes due 2036 (b)

6.200 % notes due 2040 (b)

Term loan facility borrowing (effective rate of 1.5 %) (e)

4.250 % notes due 2023 (c)

2.850 % notes due 2025 (c)

1.350 % notes due 2026 (effective rate of 1.5 %) (b)

2.750 % notes due 2031 (effective rate of 2.9 %) (b)

6.200 % notes due 2036 (c)

6.200 % notes due 2040 (c)

Term loan facility borrowing (effective rate of 1.4 %) (b)

Total borrowings at par value

Debt issuance costs and unamortized discount, net

Total borrowings at carrying value (f)

Total borrowings at carrying value (d)

(a) Pursuant to the Company’s commercial paper program, the Company may issue unsecured commercial paper notes in an amount not to exceed $ 1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on the Company’s revolving credit facility.

The commercial paper notes may have maturities of up to 397 days from date of issuance.

As of March 31, 2021, the Company had no commercial paper borrowings.

(b) The difference between the stated interest rate and the effective interest rate is not significant.

(d) On March 9, 2021, the Company issued $ 300.0 million of aggregate principal amount of 2.750 % unsecured notes due in 2031 (“2031 Notes”).

(e) Proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations, were used to repay $ 650.0 million of the term loan facility in the first quarter of 2021.

(f) As of March 31, 2021, the Company’s weighted-average effective rate on total borrowings was approximately 3.6 % .

The following summarizes the Company’s maturities of notes and term loan at par value as of March 31, 2021 (in millions):

The Company’s commercial paper borrowings as of June 30, 2021 had a weighted-average annual interest rate of approximately 0.2 % and a weighted-average term of approximately 1 day .

(b) See the Issuance of 2026 and 2031 Unsecured Notes section below for details of borrowings and repayments in 2021.

(d) As of June 30, 2021, the Company’s weighted-average effective rate on total borrowings was approximately 3.3 % .

Issuance of 2026 and 2031 Unsecured Notes

On March 9, 2021, the Company issued $ 600.0 million of the 2026 Notes and $ 300.0 million of aggregate principal amount of 2.750 % unsecured notes due March 15, 2031 (“2031 Notes”).

Interest with respect to these notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021.

If a change of control triggering event occurs, holders of the 2026 Notes and 2031 Notes may require the Company to repurchase some or all of their notes at a price equal to 101 % of the principal amount of their notes, plus any accrued and unpaid interest.

The Company may redeem the 2026 Notes and the 2031 Notes, in whole or in part, at any time prior to February 15, 2026 and December 15, 2030, respectively, at the greater of par or a price based on the applicable treasury rate plus 15 and 25 basis points, respectively.

The Company may redeem the 2026 Notes and the 2031 Notes at any time after February 15, 2026 and December 15, 2030, respectively, at a price equal to par, plus accrued interest.

Proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations, were used to repay $ 650.0 million of the term loan facility in the first quarter of 2021 and $ 500.0 million of the aggregate principal amount of 3.600 % unsecured notes due in March 2022 (“2022 Notes”) in the second quarter of 2021.

The cost associated with the early termination of the 2022 Notes, including the make-whole premium of $ 14.3 million, was recorded to Other income/(expense), net, during the three months ended June 30, 2021.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following summarizes the Company’s maturities of notes and term loan at par value as of June 30, 2021 (in millions):

Due within 1 year

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The Company’s obligations with respect to its outstanding borrowings, as described above, rank equally.

On April 1, 2021, the Company repaid the 3.6 % unsecured notes due in 2022 for total consideration of $ 514.3 million, excluding accrued interest, using proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations.

The cost associated with the repayment was recorded to Other income/(expense), net, in the second quarter of 2021.

On March 9, 2021, the Company issued $ 600.0 million and $ 300.0 million of aggregate principal amounts of 1.350 % and 2.750 % unsecured notes due March 15, 2026 and March 15, 2031, respectively.

Interest with respect to these notes is

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021.

The Company may redeem the 2026 Notes and the 2031 Notes at any time after February 15, 2026 and December 15, 2030, respectively, at a price equal to par, plus accrued interest.

The Company’s provision for income taxes for the three months ended March 31, 2021 and 2020 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company’s effective tax rates on pre-tax income were 10.4 % and 12.5 % for the three months ended March 31, 2021 and 2020, respectively.

The decrease in the Company’s effective tax rate for the three months ended March 31, 2021 compared to the prior period was primarily due to changes in the composition between higher-taxed and lower-taxed foreign earnings and an increase in discrete tax benefits.

The Company’s provision for income taxes for the three and six months ended June 30, 2021 and 2020 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company’s effective tax rates on pre-tax income were 14.5 % and 16.2 % for the three months ended June 30, 2021 and 2020, respectively, and 12.7 % and 14.3 % for the six months ended June 30, 2021 and 2020, respectively.

The decrease in the Company’s effective tax rate for the three and six months ended June 30, 2021 compared to the prior periods was primarily due to changes in pre-tax earnings, including differences in the composition between high-tax and low-tax jurisdictions.

The decrease in the effective tax rate for the six months ended June 30, 2021 compared to the prior period was also impacted by increased discrete tax benefits in the current period.

The Company derives its pre-tax income from both foreign and domestic sources.

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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 unrecognized tax benefits as of March 31, 2021 and December 31, 2020 was $ 338.2 million and $ 340.7 million, respectively, excluding interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ 327.3 million and $ 329.2 million as of March 31, 2021 and December 31, 2020, respectively, excluding interest and penalties.

The total amount of unrecognized tax benefits as of June 30, 2021 and December 31, 2020 was $ 340.2 million and $ 340.7 million, respectively, excluding interest and penalties.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ 329.1 million and $ 329.2 million as of June 30, 2021 and December 31, 2020, respectively, excluding interest and penalties.

The Company recognizes interest and penalties with respect to unrecognized tax benefits in Provision for income taxes in its Condensed Consolidated Statements of Income and records the associated liability in Income taxes payable in its Condensed Consolidated Balance Sheets.

The Company recognized immaterial amounts of interest and penalties during both the three months ended March 31, 2021 and 2020.

The Company has accrued $ 27.6 million and $ 28.6 million for the payment of interest and penalties as of March 31, 2021 and December 31, 2020, respectively.

The Company recognized $ 2.3 million and $ 1.9 million of interest and

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

penalties during the three months ended June 30, 2021 and 2020, respectively, and $ 1.1 million and $ 0.7 million during the six months ended June 30, 2021 and 2020, respectively.

The Company has accrued $ 29.7 million and $ 28.6 million for the payment of interest and penalties as of June 30, 2021 and December 31, 2020, respectively.

The Company and its subsidiaries file tax returns for the United States, for multiple states and localities, and for various non-United States jurisdictions, and the Company has identified the United States as its major tax jurisdiction, as the income tax imposed by any one foreign country is not material to the Company.

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The IRS anticipates completion of the examination phase in 2022.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation Plans

For the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expense of $ 10.8 million and $ 12.5 million, respectively, resulting from stock options, restricted stock units, performance-based restricted stock units and deferred stock units in the Condensed Consolidated Statements of Income.

During the three months ended March 31, 2021, the Company granted 0.5 million options at a weighted-average exercise price of $ 23.91 and 2.7 million performance-based restricted stock units and restricted stock units at a weighted-average grant date fair value of $ 23.63 .

As of March 31, 2021, the Company had 5.0 million outstanding options at a weighted-average exercise price of $ 19.46 , of which 3.8 million options were exercisable at a weighted-average exercise price of $ 18.42 .

The Company had 7.3 million outstanding performance-based restricted stock units (based on target performance) and restricted stock units at a weighted-average grant date fair value of $ 22.26 as of March 31, 2021.

For the three months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense of $ 12.0 million and $ 5.3 million, respectively, resulting from stock options, restricted stock units, performance-based restricted stock units and deferred stock units in the Condensed Consolidated Statements of Income.

For the six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense of $ 22.8 million and $ 17.8 million, respectively.

During the six months ended June 30, 2021, the Company granted 0.5 million options at a weighted-average exercise price of $ 23.91 and 2.7 million performance-based restricted stock units and restricted stock units at a weighted-average grant date fair value of $ 23.65 .

As of June 30, 2021, the Company had 4.7 million outstanding options at a weighted-average exercise price of $ 19.55 , of which 3.6 million options were exercisable at a weighted-average exercise price of $ 18.48 .

The Company had 7.1 million outstanding performance-based restricted stock units (based on target performance) and restricted stock units at a weighted-average grant date fair value of $ 22.27 as of June 30, 2021.

As further described in Note 1, the Company classifies its business into two segments:

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The Business Solutions operating segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises, and other organizations and individuals.

On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group.

See Note 16 for further information regarding this transaction.

Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue.

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the Company’s segment results for the three months ended March 31, 2021 and 2020 (in millions):

Corporate costs, including stock-based compensation and other overhead, are allocated to the segments primarily based on a percentage of the segments’ revenue compared to total revenue.

The following table presents the Company’s segment results for the three and six months ended June 30, 2021 and 2020 (in millions):

Three Months Ended

Six Months Ended

Consumer-to-Consumer

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Total consolidated operating income

Sale of Business Solutions Operations

On August 4, 2021, the Company entered into an agreement to sell its Business Solutions business, as described in Notes 1 and 15, to Goldfinch Partners LLC and The Baupost Group for $ 910 million in cash, subject to regulatory and working capital adjustments.

The divestiture is expected to result in a gain on the sale and is subject to regulatory approval and other closing conditions.

The divestiture is expected to be completed in two closings, with cash proceeds due on first closing.

The first closing is expected to be completed during the first quarter of 2022 and to exclude the operations in the European Union and the United Kingdom.

The second closing, comprised of the operations in the European Union and the United Kingdom, is currently expected by late 2022.

THE WESTERN UNION COMPANY

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In addition, in certain countries, we write foreign currency forward and option contracts for customers to facilitate future payments.

On August 4, 2021, we entered into an agreement to sell our Business Solutions business to Goldfinch Partners LLC and The Baupost Group, as further described below.

All businesses and other services that have not been classified in the above segments are reported as Other, which primarily includes our bill payment services which facilitate payments from consumers to businesses and other organizations and our money order services.

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Results of Operations

The following discussion of our consolidated results of operations and segment results refers to the three months ended March 31, 2021 compared to the same period in 2020.

The following discussion of our consolidated results of operations and segment results refers to the three and six months ended June 30, 2021 compared to the same periods in 2020.

The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the Condensed Consolidated Statements of Income.

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In March 2020, the World Health Organization declared the outbreak associated with a novel coronavirus a pandemic (“COVID-19”), and governments throughout the world instituted various actions such as lockdowns, stay-at-home orders, travel restrictions, and closures of non-essential businesses in an effort to reduce the spread of COVID-19.

These actions have negatively impacted both the demand for and our ability to offer our retail services, at least temporarily, through a portion of our locations and our agent locations.

These actions negatively impacted both the demand for and our ability to offer our retail services, primarily in 2020, through a portion of our locations and our agent locations.

However, since March 2020, we have also experienced significant revenue growth from westernunion.com and other digital transactions, as further described below.

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We expect that our consolidated and segment results will continue to be impacted as long as such factors persist.

Our revenues and operating income for the three months ended March 31, 2021 were impacted by fluctuations in the United States dollar compared to foreign currencies.

Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, resulted in an increase to revenues of $0.9 million for the three months ended March 31, 2021, relative to the corresponding period in the prior year.

Included within this amount are impacts related to the strengthening of the dollar against the Argentine peso, which resulted in a reduction to revenues of $19.3 million for the three months ended March 31, 2021, relative to the corresponding period in the prior year.

Fluctuations in the United States dollar compared to foreign currencies positively impacted operating income by $11.8 million for the three months ended March 31, 2021, relative to the corresponding period in the prior year.

Included within this amount are impacts related to the strengthening of the dollar against the Argentine peso, which resulted in a reduction to operating income of $3.2 million for the three months ended March 31, 2021, relative to the corresponding period in the prior year.

The following table sets forth our consolidated results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

Our revenues and operating income for the three and six months ended June 30, 2021 were impacted by fluctuations in the United States dollar compared to foreign currencies.

Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, resulted in an increase to revenues of $29.4 million and $30.3 million for the three and six months ended June 30, 2021, respectively, relative to the corresponding periods in the prior year.

Fluctuations in the United States dollar compared to foreign currencies positively impacted operating income by $7.8 million and $19.6 million for the three and six months ended June 30, 2021, respectively, relative to the corresponding periods in the prior year.

On August 4, 2021, we entered into an agreement to sell our Business Solutions business, as described above, to Goldfinch Partners LLC and The Baupost Group for $910 million in cash, subject to regulatory and working capital adjustments.

The divestiture is expected to result in a gain on the sale and is subject to regulatory approval and other closing conditions.

The divestiture is expected to be completed in two closings, with cash proceeds due on first closing.

The first closing is expected to be completed during the first quarter of 2022 and to exclude the operations in the European Union and the United Kingdom.

The second closing, comprised of the operations in the European Union and the United Kingdom, is currently expected by late 2022.

The following table sets forth our consolidated results of operations for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except per share amounts)

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Interest expense

Other expense, net

Total other expense, net

Other income/(expense), net

Total other income/(expense), net

Income before income taxes

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We also offer several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors.

Due to the significance of the effect that foreign exchange fluctuations against the United Sates dollar can have on our reported revenues and the significance of our Consumer-to-Consumer segment to our overall results, constant currency results have been provided in the table below for consolidated revenues and for our Consumer-to-Consumer segment revenues.

Due to the significance of the effect that foreign exchange fluctuations against the United States dollar can have on our reported revenues and the significance of our Consumer-to-Consumer segment to our overall results, constant currency results have been provided in the table below for consolidated revenues and for our Consumer-to-Consumer segment revenues.

Constant currency results assume foreign revenues are translated from foreign currencies to the United States dollar, net of the effect of foreign currency hedges, at rates consistent with those in the same period of the prior year.

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We believe that these measures provide management and investors with information about revenue results and trends that eliminates currency volatility, thereby providing greater clarity regarding, and increasing the comparability of, our underlying results and trends.

These disclosures are provided in addition to, and not as a substitute for, the percentage change in revenue on a GAAP basis for the three months ended March 31, 2021 compared to the corresponding period in the prior year.

These disclosures are provided in addition to, and not as a substitute for, the percentage change in revenue on a GAAP basis for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year.

Other companies may calculate and define similarly labeled items differently, which may limit the usefulness of this measure for comparative purposes.

The following table sets forth our consolidated revenue results for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table sets forth our consolidated revenue results for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in millions)

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Revenue change, constant currency adjusted - (Non-GAAP)

(a) Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, resulted in an increase to revenues of $0.9 million for the three months ended March 31, 2021 when compared to foreign currency rates in the corresponding period in the prior year.

Included within this amount is an impact related to the strengthening of the dollar against the Argentine peso, which resulted in a reduction to revenues of $19.3 million for the three months ended March 31, 2021 when compared to foreign currency rates in the corresponding period in the prior year.

For the three months ended March 31, 2021 GAAP revenues increased when compared to the corresponding period in the prior year due to transaction growth from Digital Money Transfer, including from white label partnerships, partially offset by a decrease in transactions from retail locations in our Consumer-to-Consumer segment.

Fluctuations in the exchange rates between the United States dollar and foreign currencies did not significantly impact revenue for the three months ended March 31, 2021, compared to the corresponding period in the prior year.

(a) Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, resulted in an increase to revenues of $29.4 million and $30.3 million for the three and six months ended June 30, 2021, respectively, when compared to foreign currency rates in the corresponding periods in the prior year.

For the three and six months ended June 30, 2021, revenues increased when compared to corresponding periods in the prior year, primarily due to continued recovery from the negative impacts of COVID-19 on our prior year results as previously discussed above.

For the three months ended June 30, 2021, we experienced transaction and revenue growth from our retail locations, and for the three and six months ended June 30, 2021, transactions and revenues from our Digital Money Transfer services, including from white label partnerships, continued to grow.

We believe that our growth in Digital Money Transfer transactions for the six months ended June 30, 2021 was due, in part, to shifts in consumer behavior to send money through digital channels, including as a result of COVID-19.

However, this growth rate decelerated during the second quarter of 2021 as a result of the strong growth in Digital Money Transfer transactions we experienced in the corresponding period in the prior year.

Fluctuations in the exchange rates between the United States dollar and foreign currencies positively impacted revenue by 3% and 1% for the three and six months ended June 30, 2021, compared to the corresponding periods in the prior year.

Operating Expenses Overview

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As of December 31, 2020, all expenses associated with this plan have been incurred and substantially all have been and will continue to be paid in cash.

We expect the plan to generate expense savings of approximately $100 million in 2021, which is our estimate and subject to change.

For the three months ended March 31, 2020, we incurred $10.5 million of expenses related to this plan, of which $0.9 million and $9.6 million were included within Cost of services and Selling, general, and administrative, respectively, in the Condensed Consolidated Statements of Income.

In 2020, the plan generated expense savings of more than $50 million.

For 2021, we continue to expect the plan to generate expense savings of approximately $100 million, compared to our operating model in effect prior to this plan, which is our estimate and subject to change.

For the three and six months ended June 30, 2020, we incurred $5.2 million and $15.7 million of expenses, respectively, related to this plan.

For the three and six months ended June 30, 2020, $0.8 million and $1.7 million,

respectively, of these expenses were included in Cost of services, and $4.4 million and $14.0 million, respectively, of these expenses were included in Selling, general, and administrative in the Condensed Consolidated Statements of Income.

These expenses are specific to this initiative;

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Cost of Services

Cost of services primarily consists of agent commissions, which represented approximately 60% of total cost of services for the three months ended March 31, 2021.

Cost of services increased for the three months ended

March 31, 2021 compared to the corresponding period in the prior year due to an increase in information technology costs and bank fees associated with digital transactions.

Cost of services primarily consists of agent commissions, which represented approximately 60% of total cost of services for both the three and six months ended June 30, 2021.

Cost of services increased for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year due to increases in agent commissions in our Consumer-to-Consumer money transfer business, which generally vary with revenues, information technology costs, and bank fees associated with digital transactions.

Selling, General, and Administrative

Selling, general, and administrative expenses decreased for the three months ended March 31, 2021 compared to the corresponding period in the prior year due to fluctuations between the United States dollar and foreign currencies and a reduction in restructuring-related expenses, partially offset by increases in employee-related expenses, including incentive compensation, and marketing costs.

Total Other Expense, Net

Total other expense, net during the three months ended March 31, 2021 when compared to the prior period benefited from a reduction in interest expense driven by a lower weighted-average interest rate on our outstanding debt.

In the second quarter of 2021, we recorded a gain from the sale of an investment and the costs associated with the repayment of our 2022 Notes in Other income/(expense), net, as discussed in Capital Resources and Liquidity below.

Our provision for income taxes for the three months ended March 31, 2021 and 2020 is based on the estimated annual effective tax rate, in addition to discrete items.

Our effective tax rates on pre-tax income were 10.4% and 12.5% for the three months ended March 31, 2021 and 2020, respectively.

The decrease in our effective tax rate for the three months ended March 31, 2021 compared to the prior period was primarily due to changes in the composition between higher-taxed and lower-taxed foreign earnings and an increase in discrete tax benefits.

Selling, general, and administrative expenses increased for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year due to increases in employee-related expenses, including incentive compensation, marketing costs, and costs related to strategic initiatives, including for the review of mergers, acquisitions, and divestitures, partially offset by a reduction in restructuring-related expenses.

The increase in employee-related expenses was also a result of reduced hiring that we implemented in response to COVID-19 in the prior year periods.

For the six months ended June 30, 2021 compared to the corresponding period in the prior year, these increases were partially offset by fluctuations between the United States dollar and foreign currencies.

Total Other Income/(Expense), Net

Total other income/(expense), net during the three and six months ended June 30, 2021 when compared to the corresponding periods in the prior year benefited from a $47.9 million gain recorded from the sale of a substantial majority of the shares we held as a minority investor in a private company for cash proceeds of $50.9 million and a reduction in interest expense driven by lower average debt balances outstanding and a lower weighted-average interest rate on our outstanding debt.

These benefits were partially offset by costs associated with the repayment of our 3.6% unsecured notes due in 2022.

On July 22, 2021, our Board of Directors approved a plan to terminate and settle our frozen defined benefit pension plan.

Our defined benefit pension plan was in an overfunded position as of June 30, 2021 and December 31, 2020, which prompted us to explore other options with this retirement plan.

Upon termination and settlement, which is expected in the fourth quarter of 2021 and subject to required notices, filings, and reviews, the pre-tax balance in Accumulated other comprehensive loss associated with the defined benefit pension plan, along with any related costs of the settlement, will be recorded as a component of Total other income/(expense), net, with the related income tax effects recorded in Provision for income taxes, in the Condensed Consolidated Statements of Income.

Our provision for income taxes for the three and six months ended June 30, 2021 and 2020 is based on the estimated annual effective tax rate, in addition to discrete items.

Our effective tax rates on pre-tax income were 14.5% and 16.2% for the three months ended June 30, 2021 and 2020, respectively and 12.7% and 14.3% for the six months ended June 30, 2021 and 2020, respectively.

The decrease in our effective tax rate for the three and six months ended June 30, 2021 compared to the prior periods was primarily due to changes in pre-tax earnings, including differences in the composition between high-tax and low-tax jurisdictions.

The decrease in our effective tax rate for the six months ended June 30, 2021 compared to the corresponding period in the prior year was also impacted by increased discrete tax benefits in the current period.

We have established contingency reserves for a variety of material, known tax exposures.

As of March 31, 2021, the total amount of tax contingency reserves was $307.7 million, including accrued interest and penalties, net of related items.

As of June 30, 2021, the total amount of tax contingency reserves was $311.9 million, including accrued interest and penalties, net of related items.

Our tax reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review or other settlement.

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Earnings Per Share

During the three months ended March 31, 2021 and 2020 basic earnings per share were $0.44 and $0.43, respectively, and diluted earnings per share were $0.44 and $0.42, respectively.

During the three months ended June 30, 2021 and 2020, both basic and diluted earnings per share were $0.54 and $0.39, respectively.

During the six months ended June 30, 2021 and 2020, basic earnings per share were $0.98 and $0.82, respectively, and diluted earnings per share were $0.98 and $0.81, respectively.

Outstanding options to purchase Western Union stock and unvested shares of restricted stock are excluded from basic shares outstanding.

Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options at the presented dates are exercised and shares of restricted stock have vested.

For the three months ended March 31, 2021 and 2020, there were 1.4 million and 1.1 million, respectively, of shares excluded from the diluted earnings per share calculation under the treasury stock method, primarily due to outstanding restricted stock units and options to purchase shares of Western Union stock, as the assumed proceeds of the restricted stock and options per unit were above our weighted-average share price during the periods and their effect was anti-dilutive.

Earnings per share for the three months ended March 31, 2021 compared to the corresponding period in the prior year were impacted by the previously described factors impacting net income and a lower number of shares outstanding.

For the three months ended June 30, 2021 and 2020, there were 1.4 million and 2.6 million, respectively, and for the six months ended June 30, 2021 and 2020, there were 1.4 million and 1.8 million, respectively, of shares excluded from the diluted earnings per share calculation under the treasury stock method, primarily due to outstanding restricted stock units and options to purchase shares of Western Union stock, as the assumed proceeds of the restricted stock and options per unit were above our weighted-average share price during the periods and their effect was anti-dilutive.

Earnings per share for both the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year were impacted by the previously described factors impacting net income and a lower number of shares outstanding.

The lower number of shares outstanding is due to stock repurchases exceeding stock issuances related to our stock compensation programs.

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Our segments are Consumer-to-Consumer and Business Solutions.

During the three months ended March 31, 2020 we incurred $10.5 million of restructuring-related expenses, as further discussed above.

On August 4, 2021, we entered into an agreement to sell our Business Solutions business to Goldfinch Partners LLC and The Baupost Group, as further described above.

During the three and six months ended June 30, 2020 we incurred $5.2 million and $15.7 million, respectively, of restructuring-related expenses, as further discussed above.

While certain of these expenses may be identifiable to our segments, primarily to our Consumer-to-Consumer segment, they have been excluded from the measurement of segment operating income provided to the Chief Operating Decision Maker for purposes of assessing segment performance and decision making with respect to resource allocation.

The following table sets forth the components of segment revenues as a percentage of the consolidated totals for the three months ended March 31, 2021 and 2020:

The following table sets forth the components of segment revenues as a percentage of the consolidated totals for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Consumer-to-Consumer

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Consumer-to-Consumer Segment

The following table sets forth our Consumer-to-Consumer segment results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table sets forth our Consumer-to-Consumer segment results of operations for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(dollars and transactions in millions)

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The geographic split for transactions and revenue in the table that follows, including Digital Money Transfer transactions, is determined based upon the region where the money transfer is initiated.

Included in each region’s transaction and revenue percentages in the tables below are Digital Money Transfer transactions for the three months ended March 31, 2021 and 2020.

Included in each region’s transaction and revenue percentages in the tables below are Digital Money Transfer transactions for the three and six months ended June 30, 2021 and 2020.

Where reported separately in the discussion below, Digital Money Transfer, and its subset westernunion.com, consist of 100% of the transactions conducted and funded through those respective channels.

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Consumer-to-Consumer segment constant currency revenue growth/(decline) is a non-GAAP financial measure, as further discussed in Revenues Overview above.

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

as Reported -

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Middle East, Africa, and South Asia ("MEASA")

Latin America and the Caribbean ("LACA") (b)

Latin America and the Caribbean ("LACA")

East Asia and Oceania ("APAC")

Total Consumer-to-Consumer growth:

Digital Money Transfer (c)

westernunion.com (c)

Digital Money Transfer (b)

westernunion.com (b)

(a) Constant currency revenue growth assumes that revenues denominated in foreign currencies are translated to the United States dollar, net of the effect of foreign currency hedges, at rates consistent with those in the corresponding prior period.

(b) Our LACA region results were impacted by the strengthening of the United States dollar against the Argentine peso, in addition to an increase in local currency revenue per transaction, primarily due to inflation.

(b) Digital Money Transfer revenues have been included in the regions above.

As noted above, westernunion.com is a subset of Digital Money Transfer and is included in the regions and Digital Money Transfer revenues.

The table below sets forth regional revenues as a percentage of our Consumer-to-Consumer revenue for the three months ended March 31, 2021 and 2020:

The table below sets forth regional revenues as a percentage of our Consumer-to-Consumer revenue for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Consumer-to-Consumer revenue as a percentage of segment revenue:

Digital Money Transfer, which is included in the regional percentages above, represented approximately 23% and 16% of our Consumer-to-Consumer revenues for the three months ended March 31, 2021 and 2020, respectively.

Our consumers transferred $25.7 billion and $20.6 billion in Consumer-to-Consumer principal for the three months ended March 31, 2021 and 2020 of which $24.5 billion and $19.1 billion related to cross-border principal for the same corresponding periods described above, respectively.

The increase in principal and cross-border principal transferred during the three months ended March 31, 2021 compared to the corresponding period in the prior year was primarily attributable to growth in Digital Money Transfer.

Consumer-to-Consumer principal is the amount of consumer funds transferred to the designated recipient.

Digital Money Transfer, which is included in the regional percentages above, represented approximately 24% and 22% of our Consumer-to-Consumer revenues for the three months ended June 30, 2021 and 2020, respectively, and 23%, and 19% for the six months ended June 30, 2021 and 2020, respectively.

Our consumers transferred $27.9 billion and $21.9 billion in Consumer-to-Consumer principal for the three months ended June 30, 2021 and 2020, of which $26.6 billion and $20.7 billion related to cross-border principal for the same corresponding periods described above, respectively.

Our consumers transferred $53.6 billion and $42.5 billion in Consumer-to-Consumer principal for the six months ended June 30, 2021 and 2020, of which $51.1 billion and $39.8 billion related to cross-border principal for the same corresponding periods described above, respectively.

The increase in principal and cross-border principal transferred during the three and six months ended June 30, 2021 compared to the corresponding period in the prior year was primarily attributable to growth in Digital Money Transfer and continued recovery in our retail services.

Consumer-to-Consumer principal is the amount of consumer funds transferred to the

designated recipient.

Cross-border principal is the amount of consumer funds transferred to a designated recipient in a country or territory that differs from the country or territory from which the transaction was initiated.

Consumer-to-Consumer principal and cross-border principal are metrics used by management to monitor and better understand the growth in our underlying business relative to competitors, as well as changes in our market share of global remittances.

Consumer-to-Consumer money transfer revenue increased 4% and transactions increased 9% for the three months ended March 31, 2021 compared to the corresponding period in the prior year.

Revenues increased due to transaction growth from Digital Money Transfer, including from white label partnerships, partially offset by a decrease in transactions from retail locations in our Consumer-to-Consumer segment.

We believe that our growth in Digital Money Transfer transactions was due, in part, to shifts in consumer behavior to send money through digital channels, including as a result of COVID-19.

Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, positively impacted revenue by 2% for the three months ended March 31, 2021 compared to the corresponding period in the prior year.

The spread between transaction and revenue growth was primarily attributable to growth in Digital Money Transfer, including in our digital white label partnerships, which have a lower revenue per transaction than Western Union branded transactions.

In our Consumer-to-Consumer regions, NA revenue was flat for the three months ended March 31, 2021 compared to the corresponding period in the prior year, as transaction growth in our United States outbound services was offset by declines in transactions sent within the United States and in transactions sent from the United States to Cuba, as these money transfer services were suspended in October 2020.

For the three months ended March 31, 2021 compared to the corresponding period in the prior year, the EU & CIS region experienced strong revenue growth in France and Russia, and transaction volumes for both the EU & CIS and MEASA regions continued to benefit from growth in Digital Money Transfer, including white label partnerships.

The revenue growth in the LACA region was primarily due to an increase in principal transferred during the three months ended March 31, 2021 compared to the corresponding period in the prior year.

Digital Money Transfer revenue, including westernunion.com, increased during the three months ended March 31, 2021 compared to the corresponding period in the prior year due to an increase in digital transaction volumes, partially offset by price reductions.

Consumer-to-Consumer money transfer revenue and transactions both increased 15% for the three months ended June 30, 2021, and revenue increased 9% and transactions increased 12% for the six months ended June 30, 2021 compared to the corresponding periods in the prior year.

Fluctuations in the United States dollar compared to foreign currencies, net of the impact of foreign currency hedges, positively impacted revenue by 3% and 2% for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year.

The spread between transaction and revenue growth for the six months ended June 30, 2021 compared to the corresponding period in the prior year was primarily due to growth in Digital Money Transfer, including in our digital white label partnerships, which have a lower revenue per transaction than Western Union branded transactions.

In our Consumer-to-Consumer regions, NA revenue increased for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year, primarily due to cross-border transaction growth, partially offset by declines in transactions sent and received within the United States and in transactions sent from the United States to Cuba, as these money transfer services were suspended in the fourth quarter of 2020.

For the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year, the EU & CIS region experienced strong revenue growth in France, the United Kingdom, and Russia, and transaction volumes for both the EU & CIS and MEASA regions continued to benefit from growth in Digital Money Transfer, including white label partnerships.

The revenue growth in both the APAC and LACA regions was primarily due to an increase in principal transferred during the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year.

Digital Money Transfer revenue, including westernunion.com, increased during the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year due to an increase in digital transaction volumes, partially offset by price reductions.

We have historically implemented price reductions or price increases throughout many of our global corridors.

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Operating Income

Consumer-to-Consumer operating income decreased 2% for the three months ended March 31, 2021 compared to the corresponding period in the prior year primarily due to increases in information technology costs, marketing costs, and employee-related expenses, including incentive compensation, partially offset by fluctuations in the United States dollar compared to foreign currencies.

Consumer-to-Consumer operating income increased 10% and 4% for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year primarily due to the increase in revenues, as discussed above, partially offset by increases in information technology costs, employee-related expenses, including incentive compensation, and marketing costs.

The increase in employee-related expenses was also a result of reduced hiring that we implemented in response to COVID-19 in the prior year periods.

For the six months ended June 30, 2021 compared to the corresponding period in the prior year, operating income also increased due to fluctuations in the United States dollar compared to foreign currencies.

Business Solutions

The following table sets forth our Business Solutions segment results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table sets forth our Business Solutions segment results of operations for the three and six months ended June 30, 2021:

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in millions)

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Operating income margin

Business Solutions revenue decreased 2% for the three months ended March 31, 2021 compared to the corresponding period in the prior year primarily due to a decline in hedging activity.

Fluctuations in the exchange rates between the United States dollar and foreign currencies positively impacted revenue by 6% for the three months ended March 31, 2021.

(a) Calculation not meaningful.

Business Solutions revenue increased 25% and 10% for the three and six months ended June 30, 2021 and 2020, respectively, compared to the corresponding periods in the prior year primarily due to an increase in payment services activity.

We believe this increase resulted from the continued recovery from the downturn in economic activity and trade caused by the negative impacts of COVID-19 on our prior year results.

Fluctuations in the exchange rates between the United States dollar and foreign currencies positively impacted revenue by 9% and 7% for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year.

Operating Income

For the three months ended March 31, 2021 operating income and operating income margin decreased when compared to the corresponding period in the prior year due to an increase in employee-related expenses.

For the three and six months ended June 30, 2021, the increase in operating income and operating income margin when compared to the corresponding period in the prior year was primarily due to the increase in revenues, as discussed above, partially offset by an increase in employee-related expenses, including as a result of reduced hiring that we implemented in response to COVID-19 in the prior year periods.

Other primarily consists of our cash-based bill payments businesses in Argentina and the United States, in addition to our money order services.

The following table sets forth Other results for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

The following table sets forth Other results for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in millions)

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Operating income margin

Other revenue decreased 18% for the three months ended March 31, 2021 compared to the corresponding period in the prior year due to declines in our cash-based bill payments services offered at retail locations and the strengthening of the United States dollar against the Argentine peso.

Other revenue increased 8% for the three months ended June 30, 2021 compared to the corresponding period in the prior year due to an increase in transaction volumes in our cash-based bill payments services offered at retail locations, in part due to continued recovery from the negative impacts of COVID-19 on our prior year results as previously discussed above, partially offset by the strengthening of the United States dollar against the Argentine peso.

Other revenue decreased 7% for the six months ended June 30, 2021 compared to the corresponding periods in the prior year, primarily due to the strengthening of the United States dollar against the Argentine peso.

Operating Income

Other operating income decreased for the three months ended March 31, 2021 compared to the corresponding period in the prior year due to a decrease in revenues, as discussed above.

Other operating income decreased for the three and six months ended June 30, 2021 compared to the corresponding periods in the prior year primarily due to an increase in costs associated with strategic initiatives , including for the review of mergers, acquisitions, and divestitures .

For the six months ended June 30, 2021, Other operating income also decreased compared to the corresponding period in the prior year due to a decrease in revenues, as discussed above.

Capital Resources and Liquidity

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Our commercial paper program enables us to issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of any borrowings outstanding on our Revolving Credit Facility.

As of March 31, 2021, we had no outstanding borrowings on our Revolving Credit Facility and no outstanding borrowings on the commercial paper program.

As of June 30, 2021, we had no outstanding borrowings on our Revolving Credit Facility and $265.0 million of outstanding borrowings on the commercial paper program.

To help ensure availability of our worldwide cash where needed, we utilize a variety of planning and financial strategies, including decisions related to the amounts, timing, and manner by which cash is made available from our international subsidiaries.

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Cash and Investment Securities

As of March 31, 2021 and December 31, 2020, we had cash and cash equivalents of $1,502.6 million and $1,428.2 million, respectively.

As of June 30, 2021 and December 31, 2020, we had cash and cash equivalents of $1,061.4 million and $1,428.2 million, respectively.

In many cases, we receive funds from money transfers and certain other payment services before we settle the payment of those transactions.

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We maintain a portion of these settlement assets in highly liquid investments, classified as Cash and cash equivalents within Settlement assets, to fund settlement obligations.

Investment securities, classified within Settlement assets on the Condensed Consolidated Balance Sheets, were $1,604.9 million and $1,990.6 million as of March 31, 2021 and December 31, 2020, respectively, and consist primarily of highly-rated state and municipal debt securities, including fixed-rate term notes and variable-rate demand notes.

Investment securities, classified within Settlement assets on the Condensed Consolidated Balance Sheets, were $1,557.4 million and $1,990.6 million as of June 30, 2021 and December 31, 2020, respectively, and consist primarily of highly-rated state and municipal debt securities, including fixed-rate term notes and variable-rate demand notes.

The substantial majority of our investment securities are held in order to comply with state licensing requirements in the United States and are required to have credit ratings of "A-"

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Our investment securities are also actively managed with respect to concentration.

As of March 31, 2021, all investments with a single issuer and each individual security represented less than 10% of our investment securities portfolio.

Subsequent to March 31, 2021, we repaid our 3.6% unsecured notes due in 2022, as further described below.

As of June 30, 2021, all investments with a single issuer and each individual security represented less than 10% of our investment securities portfolio.

Cash Flows from Operating Activities

Cash provided by operating activities increased to $175.8 million during the three months ended March 31, 2021, from $112.4 million in the corresponding period in the prior year, primarily as a result of decreased employee incentive and restructuring payments.

Cash provided by operating activities slightly increased to $349.5 million during the six months ended June 30, 2021, from $347.8 million in the corresponding period in the prior year.

Cash provided by operating activities can be impacted by changes to our consolidated net income, in addition to fluctuations in our working capital balances, among other factors.

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If a change of control triggering event occurs, holders of the 2026 Notes and 2031 Notes may require us to repurchase some or all of their notes at a price equal to 101% of the principal amount of their notes, plus any accrued and unpaid interest.

We may redeem the 2026 Notes and the 2031 Notes, in whole or in part, at any time prior to February 15, 2026 and December 15, 2030, respectively, at the greater of par or a price based on the applicable treasury rate plus 15

and 25 basis points, respectively.

We may redeem the 2026 Notes and the 2031 Notes at any time after February 15, 2026 and December 15, 2030, respectively, at a price equal to par, plus accrued interest.

Proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations, were used to repay $650.0 million of the term loan facility in the first quarter of 2021.

As of March 31, 2021, we have outstanding borrowings at par value of $3,250.0 million.

The substantial majority of these outstanding borrowings consist of unsecured fixed-rate notes with maturities ranging from 2022 to 2040.

Proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations, were used to repay $650.0 million of the term loan facility in the first quarter of 2021 and $500.0 million of the aggregate principal amount of 3.600% unsecured notes due in March 2022 (“2022 Notes”) in the second quarter of 2021.

As of June 30, 2021, we have outstanding borrowings at par value of $3,015.0 million.

The significant majority of these outstanding borrowings consist of unsecured fixed-rate notes with maturities ranging from 2023 to 2040.

Our borrowings also include our floating rate term loan.

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The largest commitment from any single financial institution within the total committed balance of $1.5 billion is approximately 11%.

As of March 31, 2021, we had no outstanding borrowings under our Revolving Credit Facility.

As of June 30, 2021, 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 Facility were eliminated, the cost and availability of borrowing under the commercial paper program may be impacted.

Pursuant to our commercial paper program, we may issue unsecured commercial paper notes in an amount not to exceed $1.5 billion outstanding at any time, reduced to the extent of borrowings outstanding on our Revolving Credit Facility.

Our commercial paper borrowings may have maturities of up to 397 days from date of issuance.

Interest rates for borrowings are based on market rates at the time of issuance.

We had no commercial paper borrowings outstanding as of March 31, 2021.

During the three months ended March 31, 2021, the average commercial paper balance outstanding was $25.7 million, and the maximum balance outstanding was $220.0 million.

We had $265.0 million of commercial paper borrowings outstanding as of June 30, 2021.

Our commercial paper borrowings as of June 30, 2021 had a weighted-average annual interest rate of approximately 0.2% and a weighted-average term of approximately 1 day.

During the six months ended June 30, 2021, the average commercial paper balance outstanding was $107.3 million, and the maximum balance outstanding was $510.0 million.

Proceeds from our commercial paper borrowings were used for general corporate purposes and working capital needs.

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Investment in Saudi Digital Payments Company

On November 21, 2020, we entered into an agreement to acquire an ownership interest in Saudi Digital Payments Company (“stc pay”), a subsidiary of Saudi Telecom Company and one of our Consumer-to-Consumer digital white label partners.

Under the terms of the agreement, we have agreed to invest up to approximately $200 million for up to a 15% investment in stc pay, and this transaction is expected to close in the second quarter of 2021.

Sale of Investment

On April 12, 2021, we sold a substantial majority of the shares we held as a minority investor in a private company for cash proceeds of $50.9 million.

We recorded a gain of approximately $48 million within Other income/(expense), net in the second quarter of 2021.

We will continue to measure the retained portion of this investment at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments.

On May 25, 2021, we amended our agreement dated November 21, 2020 to acquire an ownership interest in Saudi Digital Payments Company (“stc pay”), a subsidiary of Saudi Telecom Company and one of our Consumer-to-Consumer digital white label partners.

Under the terms of the amended agreement, we have agreed to invest up to $200.0 million (“Purchase Price”) for up to a 15% investment in stc pay (“Investment”), and this transaction is expected to close in the second half of 2021.

For regulatory purposes, the Purchase Price was deposited into an external, restricted account during the second quarter of 2021 in expectation of completing the Investment.

Capital Expenditures

The total aggregate amount paid for contract costs, purchases of property and equipment, and purchased and developed software was $96.9 million and $35.7 million for the three months ended March 31, 2021 and 2020, respectively.

The total aggregate amount paid for contract costs, purchases of property and equipment, and purchased and developed software was $145.3 million and $84.2 million for the six months ended June 30, 2021 and 2020, respectively.

Amounts paid for new and renewed agent contracts vary depending on the terms of existing contracts as well as the timing of new and renewed contract signings.

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Share Repurchases and Dividends

During the three months ended March 31, 2021 and 2020, 3.1 million and 8.5 million shares were repurchased for $75.0 million and $217.4 million, respectively, excluding commissions, at an average cost of $24.24 and $25.45, respectively.

As of March 31, 2021, $707.6 million remained available under the share repurchase authorization approved by our Board of Directors through December 31, 2021.

Our Board of Directors declared a quarterly cash dividend of $0.235 per common share in the first quarter of 2021, representing $96.6 million in total dividends.

During the six months ended June 30, 2021 and 2020, 6.1 million and 8.5 million shares were repurchased for $150.0 million and $217.4 million, respectively, excluding commissions, at an average cost of $24.42 and $25.45, respectively.

As of June 30, 2021, $632.6 million remained available under the share repurchase authorization approved by our Board of Directors through December 31, 2021.

Our Board of Directors declared quarterly cash dividends of $0.235 per common share in the first and second quarters of 2021, representing $192.5 million in total dividends.

On July 22, 2021, our Board of Directors declared a quarterly cash dividend of $0.235 per common share, payable on September 30, 2021.

Material Cash Requirements

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Our 2021 and future debt service requirements will include payments on all outstanding indebtedness, including any borrowings under our commercial paper program.

On April 1, 2021, we repaid the 3.6% unsecured notes due in 2022 for total consideration of $514.3 million, excluding accrued interest, using proceeds from the 2026 Notes and 2031 Notes and cash, including cash generated from operations.

The cost associated with the repayment was recorded to Other income/(expense), net, in the second quarter of 2021.

Our next scheduled principal payment on our outstanding notes and term loan is in 2023.

2017 United States Federal Tax Liability

The Tax Act imposed a tax on certain of our previously undistributed foreign earnings.

This tax charge, combined with our other 2017 United States taxable income and tax attributes, resulted in a 2017 United States federal tax liability of approximately $800 million, of which approximately $604 million remained as of March 31, 2021.

We have elected to pay this liability in periodic installments through 2025.

Under the terms of the law, we are required to pay the remaining installment payments as summarized in the Capital Resources and Liquidity discussion located in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on

Form 10-K for the year ended December 31, 2020.

We have elected to pay this liability in periodic installments through 2025 and paid $63.4 million during the second quarter of 2021.

These payments have affected and will continue to adversely affect our cash flows and liquidity and may adversely affect future share repurchases.

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Other Commercial Commitments

We had approximately $430 million in outstanding letters of credit and bank guarantees as of March 31, 2021 primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements.

We expect to renew our letters of credit and bank guarantees prior to expiration in most circumstances.

As of March 31, 2021, our total amount of unrecognized income tax benefits was $364.6 million, including associated interest and penalties.

We had approximately $460 million in outstanding letters of credit and bank guarantees as of June 30, 2021 primarily held in connection with safeguarding consumer funds, lease arrangements, and certain agent agreements.

We expect to renew most of our letters of credit and bank guarantees prior to expiration.

As of June 30, 2021, our total amount of unrecognized income tax benefits was $368.7 million, including associated interest and penalties.

The timing of related cash payments for substantially all of these liabilities is inherently uncertain because the ultimate amount and timing of such liabilities are affected by factors which are variable and outside our control.

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The reporting unit's fair value continues to be sensitive to changes in projected revenue growth rates and EBITDA margins, which are impacted by these same factors.

As of March 31, 2021, the Business Solutions reporting unit had goodwill of $532.0 million.

As of June 30, 2021, the Business Solutions reporting unit had goodwill of $532.0 million.

Recent Accounting Pronouncements

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We also have exposure to certain foreign currency denominated cash and other asset and liability positions and may utilize foreign currency forward contracts, typically with maturities of less than one year at inception, to offset foreign exchange rate fluctuations on these positions.

In certain consumer money transfer, bill payment, and Business Solutions transactions involving different send and receive currencies, we generate revenue based on the difference between the exchange rate set by us to the consumer or business and the rate available in the wholesale foreign exchange market, helping to provide protection against currency fluctuations.

fluctuations.

We attempt to promptly buy and sell foreign currencies as necessary to cover our net payables and receivables which are denominated in foreign currencies.

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In certain countries, this business also writes foreign currency forward and option contracts for our customers to facilitate future payments.

The significant majority of these derivative contracts have a duration at inception of less than one year.

The majority of these derivative contracts have a duration at inception of less than one year.

Business Solutions aggregates its foreign exchange 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.

As of March 31, 2021, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to pre-tax annual income of approximately $35 million, based on our forecast of unhedged exposure to foreign currency at that date.

As of June 30, 2021, a hypothetical uniform 10% strengthening or weakening in the value of the United States dollar relative to all other currencies in which our net income is generated would have resulted in a decrease/increase to pre-tax annual income of approximately $40 million, based on our forecast of unhedged exposure to foreign currency at that date.

There are inherent limitations in this sensitivity analysis, primarily due to the following assumptions:

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Interest Rates

We invest in several types of interest-bearing assets, with a total value as of March 31, 2021 of approximately $3.3 billion.

We invest in several types of interest-bearing assets, with a total value as of June 30, 2021 of approximately $3.1 billion.

Approximately $1.7 billion of these assets bear interest at floating rates.

These assets primarily include cash in banks, money market instruments, and state and municipal variable rate securities and are included in our Condensed

Consolidated Balance Sheets within Cash and cash equivalents and Settlement assets.

These assets primarily include cash in banks, money market instruments, and state and municipal variable rate securities and are included in our Condensed Consolidated Balance Sheets within Cash and cash equivalents and Settlement assets.

To the extent these assets are held in connection with money transfers and other related payment services awaiting redemption, they are classified as Settlement assets.

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We have classified these investments as available-for-sale within Settlement assets in the Condensed Consolidated Balance Sheets, and accordingly, recorded these instruments at their fair value with the net unrealized gains and losses, net of the applicable deferred income tax effect, being added to or deducted from our Total stockholders’ equity in our Condensed Consolidated Balance Sheets.

As of March 31, 2021, we had a total of $300.0 million of borrowings under our term loan that are subject to floating interest rates.

As of June 30, 2021, we had a total of $300.0 million of borrowings under our term loan that are subject to floating interest rates.

The interest on these borrowings is calculated using a selected LIBOR rate plus an interest rate margin of 125 basis points.

Borrowings under our commercial paper program mature in such a short period that the financing is also effectively floating rate.

As of March 31, 2021, there were no outstanding borrowings under our commercial paper program.

As of June 30, 2021, there were $265.0 million in outstanding borrowings under our commercial paper program.

We review our overall exposure to floating and fixed rates by evaluating our net asset or liability position and the duration of each individual position.

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From time to time, we use interest rate swaps designated as hedges to vary the percentage of fixed to floating rate debt, subject to market conditions.

As of March 31, 2021, our weighted-average effective rate on total borrowings was approximately 3.6%.

As of June 30, 2021, our weighted-average effective rate on total borrowings was approximately 3.3%.

For further detail on our variable rate borrowings, see risk factor “ We have substantial debt and other obligations that could restrict our operations ” in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020.

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 $3 million based on borrowings that are sensitive to interest rate fluctuations, net of the impact of hedges, on March 31, 2021.

The same 100 basis point increase/decrease in interest rates, if applied to our cash and investment balances on March 31, 2021 that bear interest at floating rates, would result in an offsetting increase/decrease to pre-tax income for the next twelve months of approximately $20 million.

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 $6 million based on borrowings that are sensitive to interest rate fluctuations, net of the impact of hedges, on June 30, 2021.

The same 100 basis point increase/decrease in interest rates, if applied to our cash and investment balances on June 30, 2021 that bear interest at floating rates, would result in an offsetting increase/decrease to pre-tax income for the next twelve months of approximately $17 million.

There are inherent limitations in the sensitivity analysis presented, primarily due to the assumptions that interest rate changes would be instantaneous and consistent across all geographies in which our interest-bearing assets are held and our liabilities are payable.

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We perform a credit review before each agent signing and conduct periodic analyses of agents and certain other parties we transact with directly.

In addition, we are exposed to losses directly from

consumer transactions, particularly through our digital channels, where transactions are originated through means other than cash and are therefore subject to "chargebacks,"

In addition, we are exposed to losses directly from consumer transactions, particularly through our digital channels, where transactions are originated through means other than cash and are therefore subject to "chargebacks,"

insufficient funds or other collection impediments, such as fraud, which are anticipated to increase as digital channels become a greater proportion of our money transfer business.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements