WESTERN UNION CO, 10-Q filed on 8/4/2021
Quarterly Report
v3.21.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2021
Jul. 30, 2021
Document and Entity Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2021  
Entity File Number 001-32903  
Entity Registrant Name Western Union CO  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 20-4531180  
Entity Address, Address Line One 7001 EAST BELLEVIEW AVENUE  
Entity Address, City or Town Denver  
Entity Address, State or Province CO  
Entity Address, Postal Zip Code 80237  
City Area Code 866  
Local Phone Number 405-5012  
Title of 12(b) Security Common Stock, $0.01 Par Value  
Trading Symbol WU  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   406,348,202
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001365135  
Amendment Flag false  
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
CONDENSED CONSOLIDATED STATEMENTS OF INCOME        
Revenues $ 1,289.7 $ 1,114.7 $ 2,499.7 $ 2,304.7
Type of Revenue us-gaap:ServiceMember us-gaap:ServiceMember us-gaap:ServiceMember us-gaap:ServiceMember
Expenses:        
Cost of services $ 755.0 $ 662.2 $ 1,461.0 $ 1,345.6
Type of Cost of Service us-gaap:ServiceMember us-gaap:ServiceMember us-gaap:ServiceMember us-gaap:ServiceMember
Selling, general, and administrative $ 279.8 $ 230.7 $ 551.0 $ 504.1
Total expenses 1,034.8 892.9 2,012.0 1,849.7
Operating income 254.9 221.8 487.7 455.0
Other income/(expense):        
Interest income 0.3 0.8 0.7 2.4
Interest expense (25.6) (29.3) (54.0) (62.2)
Other income/(expense), net 30.5 (0.1) 28.6 (0.1)
Total other income/(expense), net 5.2 (28.6) (24.7) (59.9)
Income before income taxes 260.1 193.2 463.0 395.1
Provision for income taxes 37.6 31.3 58.7 56.5
Net income $ 222.5 $ 161.9 $ 404.3 $ 338.6
Earnings per share:        
Basic (USD per share) $ 0.54 $ 0.39 $ 0.98 $ 0.82
Diluted (USD per share) $ 0.54 $ 0.39 $ 0.98 $ 0.81
Weighted-average shares outstanding:        
Basic (shares) 409.3 411.5 410.5 412.9
Diluted (shares) 411.5 413.6 412.9 415.9
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME        
Net income $ 222.5 $ 161.9 $ 404.3 $ 338.6
Other comprehensive income, net of reclassifications and tax (Note 10):        
Unrealized gains/(losses) on investment securities 2.2 19.5 (10.8) 25.2
Unrealized gains/(losses) on hedging activities (2.7) (19.1) 26.2 1.6
Defined benefit pension plan adjustments 2.3 2.1 4.8 4.4
Total other comprehensive income 1.8 2.5 20.2 31.2
Comprehensive income $ 224.3 $ 164.4 $ 424.5 $ 369.8
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2021
Dec. 31, 2020
Assets    
Cash and cash equivalents $ 1,061.4 $ 1,428.2
Settlement assets 3,636.8 3,821.4
Property and equipment, net of accumulated depreciation of $672.8 and $659.9, respectively 141.4 150.4
Goodwill 2,566.6 2,566.6
Other intangible assets, net of accumulated amortization of $1,089.6 and $1,044.6, respectively 499.7 505.0
Other assets 1,072.2 1,024.7
Total assets 8,978.1 9,496.3
Liabilities:    
Accounts payable and accrued liabilities 499.9 500.9
Settlement obligations 3,636.8 3,821.4
Income taxes payable 861.2 928.9
Deferred tax liability, net 187.7 188.9
Borrowings 2,996.8 3,067.2
Other liabilities 509.4 802.4
Total liabilities 8,691.8 9,309.7
Commitments and contingencies (Note 7)
Stockholders' equity/(deficit):    
Preferred stock, $1.00 par value; 10 shares authorized; no shares issued
Common stock, $0.01 par value; 2,000 shares authorized; 407.0 shares and 411.2 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively 4.1 4.1
Capital surplus 919.5 885.1
Accumulated deficit (498.0) (543.1)
Accumulated other comprehensive loss (139.3) (159.5)
Total stockholders' equity 286.3 186.6
Total liabilities and stockholders' equity $ 8,978.1 $ 9,496.3
v3.21.2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)
shares in Millions, $ in Millions
Jun. 30, 2021
Dec. 31, 2020
Assets    
Accumulated Depreciation on Property Plant and Equipment $ 672.8 $ 659.9
Accumulated Amortization on Other Intangible Assets $ 1,089.6 $ 1,044.6
Stockholders' Equity:    
Preferred stock, par value (USD per share) $ 1.00 $ 1.00
Preferred stock, shares authorized 10.0 10.0
Preferred stock, shares issued 0.0 0.0
Common stock, par value (USD per share) $ 0.01 $ 0.01
Common stock, shares authorized 2,000.0 2,000.0
Common stock, shares issued 407.0 411.2
Common stock, shares outstanding 407.0 411.2
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Cash flows from operating activities    
Net income $ 404.3 $ 338.6
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation 26.0 32.0
Amortization 83.0 83.3
Gain on the sale of shares held as a minority investor (Note 4) (47.9)  
Other non-cash items, net 80.1 63.9
Increase/(decrease) in cash resulting from changes in:    
Other assets (84.5) (16.6)
Accounts payable and accrued liabilities (29.8) (130.9)
Income taxes payable (66.5) (19.2)
Other liabilities (15.2) (3.3)
Net cash provided by operating activities 349.5 347.8
Cash flows from investing activities    
Payments for capitalized contract costs (82.2) (46.0)
Payments for internal use software (45.2) (22.3)
Purchases of property and equipment (17.9) (15.9)
Proceeds from the sale of former corporate headquarters   44.2
Proceeds from the sale of shares held as a minority investor (Note 4) 50.9  
Regulatory deposit made to purchase the ownership interest in stc pay (Note 4) (200.0)  
Other investing activities (2.9) (4.2)
Net cash used in investing activities (297.3) (44.2)
Cash flows from financing activities    
Cash dividends and dividend equivalents paid (193.5) (184.9)
Common stock repurchased (Note 10) (160.5) (237.7)
Net proceeds from/(repayments of) commercial paper 185.0 (145.0)
Net proceeds from issuance of borrowings 891.7  
Principal payments on borrowings (1,150.0)  
Make-whole premium on early extinguishment of debt (Note 12) (14.3)  
Proceeds from exercise of options 11.6 1.5
Other financing activities 4.0 (0.7)
Net cash used in financing activities (426.0) (566.8)
Net change in cash, cash equivalents, and restricted cash (373.8) (263.2)
Cash, cash equivalents, and restricted cash at beginning of period 1,447.4 1,456.8
Cash, cash equivalents, and restricted cash at end of period 1,073.6 1,193.6
Supplemental cash flow information:    
Interest paid 52.0 53.5
Income taxes paid 123.9 59.7
Restricted cash at end of period (included in Other assets) 12.2 12.0
Internal use software capitalized but not yet paid $ 23.0 $ 1.5
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) - USD ($)
shares in Millions, $ in Millions
Adoption of new accounting pronouncements
Accumulated Deficit
Adoption of new accounting pronouncements
Common Stock
Capital Surplus
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Beginning balance at Dec. 31, 2019 $ (0.6) $ (0.6) $ 4.2 $ 841.2 $ (675.9) $ (209.0) $ (39.5)
Beginning balance (shares) at Dec. 31, 2019     418.0        
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income         176.7   176.7
Stock-based compensation       12.5     12.5
Common stock dividends and dividend equivalents declared         (93.3)   (93.3)
Repurchase and retirement of common shares     $ (0.1)   (235.1)   (235.2)
Repurchase and retirement of common shares (shares)     (9.2)        
Shares issued under stock-based compensation plans       1.0     1.0
Shares issued under stock-based compensation plans (shares)     2.1        
Other comprehensive income (Note 10)           28.7 28.7
Ending balance at Mar. 31, 2020     $ 4.1 854.7 (828.2) (180.3) (149.7)
Ending balance (shares) at Mar. 31, 2020     410.9        
Beginning balance at Dec. 31, 2019 $ (0.6) $ (0.6) $ 4.2 841.2 (675.9) (209.0) (39.5)
Beginning balance (shares) at Dec. 31, 2019     418.0        
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income             338.6
Other comprehensive income (Note 10)             31.2
Ending balance at Jun. 30, 2020     $ 4.1 860.5 (760.2) (177.8) (73.4)
Ending balance (shares) at Jun. 30, 2020     411.0        
Beginning balance at Mar. 31, 2020     $ 4.1 854.7 (828.2) (180.3) (149.7)
Beginning balance (shares) at Mar. 31, 2020     410.9        
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income         161.9   161.9
Stock-based compensation       5.3     5.3
Common stock dividends and dividend equivalents declared         (93.3)   (93.3)
Repurchase and retirement of common shares         (0.6)   (0.6)
Repurchase and retirement of common shares (shares)     (0.1)        
Shares issued under stock-based compensation plans       0.5     0.5
Shares issued under stock-based compensation plans (shares)     0.2        
Other comprehensive income (Note 10)           2.5 2.5
Ending balance at Jun. 30, 2020     $ 4.1 860.5 (760.2) (177.8) (73.4)
Ending balance (shares) at Jun. 30, 2020     411.0        
Beginning balance at Dec. 31, 2020     $ 4.1 885.1 (543.1) (159.5) $ 186.6
Beginning balance (shares) at Dec. 31, 2020     411.2       411.2
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income         181.8   $ 181.8
Stock-based compensation       10.8     10.8
Common stock dividends and dividend equivalents declared         (97.9)   (97.9)
Repurchase and retirement of common shares         (89.0)   (89.0)
Repurchase and retirement of common shares (shares)     (3.7)        
Shares issued under stock-based compensation plans       8.1     8.1
Shares issued under stock-based compensation plans (shares)     2.3        
Other comprehensive income (Note 10)           18.4 18.4
Ending balance at Mar. 31, 2021     $ 4.1 904.0 (548.2) (141.1) 218.8
Ending balance (shares) at Mar. 31, 2021     409.8        
Beginning balance at Dec. 31, 2020     $ 4.1 885.1 (543.1) (159.5) $ 186.6
Beginning balance (shares) at Dec. 31, 2020     411.2       411.2
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income             $ 404.3
Other comprehensive income (Note 10)             20.2
Ending balance at Jun. 30, 2021     $ 4.1 919.5 (498.0) (139.3) $ 286.3
Ending balance (shares) at Jun. 30, 2021     407.0       407.0
Beginning balance at Mar. 31, 2021     $ 4.1 904.0 (548.2) (141.1) $ 218.8
Beginning balance (shares) at Mar. 31, 2021     409.8        
Increase/(Decrease) in Stockholders' Equity [Roll Forward]              
Net income         222.5   222.5
Stock-based compensation       12.0     12.0
Common stock dividends and dividend equivalents declared         (97.0)   (97.0)
Repurchase and retirement of common shares         (75.3)   (75.3)
Repurchase and retirement of common shares (shares)     (3.0)        
Shares issued under stock-based compensation plans       3.5     3.5
Shares issued under stock-based compensation plans (shares)     0.2        
Other comprehensive income (Note 10)           1.8 1.8
Ending balance at Jun. 30, 2021     $ 4.1 $ 919.5 $ (498.0) $ (139.3) $ 286.3
Ending balance (shares) at Jun. 30, 2021     407.0       407.0
v3.21.2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT) (Parentheticals) - $ / shares
3 Months Ended
Jun. 30, 2021
Mar. 31, 2021
Jun. 30, 2020
Mar. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)        
Common stock dividends (USD per share) $ 0.235 $ 0.235 $ 0.225 $ 0.225
v3.21.2
Business and Basis of Presentation
6 Months Ended
Jun. 30, 2021
Business and Basis of Presentation  
Business and Basis of Presentation

THE WESTERN UNION COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Business and Basis of Presentation

Business

The Western Union Company ("Western Union" or the "Company") is a leader in global money movement and payment services, providing people and businesses with fast, reliable, and convenient ways to send money and make payments around the world. The Western Union® brand is globally recognized. The Company’s services are available through a network of agent locations in more than 200 countries and territories and also through money transfer transactions conducted and funded through websites and mobile applications marketed under the Company’s brands (“westernunion.com”) and transactions initiated on internet and mobile applications hosted by the Company’s third-party white label or co-branded digital partners (together with westernunion.com, “Digital Money Transfer”). Each location in the Company’s agent network is capable of providing one or more of the Company’s services.

The Western Union business consists of the following segments:

Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers which are sent from retail agent locations worldwide or through websites and mobile devices, including Digital Money Transfer services. The Company’s money transfer service is provided through one interconnected global network. This service is available for international cross-border transfers and, in certain countries, intra-country transfers.
Business Solutions - 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. The majority of the segment’s business relates to exchanges of currency at spot rates, which enable customers to make cross-currency payments. 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. The Company’s other services, in addition to certain corporate costs such as costs related to strategic initiatives, including costs for the review and closing of mergers, acquisitions, and divestitures, are also included in Other. See Note 15 for further information regarding the Company’s segments.

There are legal or regulatory limitations on transferring certain assets of the Company outside of the countries where these assets are located. However, there are generally no limitations on the use of these assets within those countries. Additionally, the Company must meet minimum capital requirements in some countries in order to maintain operating licenses. As of December 31, 2020, the amount of these net asset limitations totaled approximately $680 million.

Various aspects of the Company’s services and businesses are subject to United States federal, state, and local regulation, as well as regulation by foreign jurisdictions, including certain banking and other financial services regulations.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X. In compliance with those instructions, certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted.

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.

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 June 30, 2021 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.

Consistent with industry practice, the accompanying Condensed Consolidated Balance Sheets are unclassified due to the short-term nature of the Company’s settlement obligations contrasted with the Company’s ability to invest cash awaiting settlement in long-term investment securities.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Recently Adopted Accounting Pronouncements

On January 1, 2020, the Company adopted a new accounting standard that requires entities to measure expected credit losses for certain financial assets held at the reporting date using a current expected credit loss model, which is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. Additionally, the standard requires certain credit losses relating to investment securities classified as available-for-sale to be recorded through an allowance for credit losses. The Company recognized the cumulative effect of the new accounting standard as an adjustment to the January 1, 2020 balance of Accumulated deficit in the Condensed Consolidated Balance Sheets, and the adoption of the new accounting standard did not have a material impact on the Company’s January 1, 2020 accumulated deficit. Refer to Note 9 for additional information and the related disclosures.

v3.21.2
Revenue
6 Months Ended
Jun. 30, 2021
Revenue  
Revenue

2. Revenue

The Company’s revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon factors such as channel, send and receive locations, the principal amount sent, whether the money transfer involves different send and receive currencies, the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, and speed of service, as applicable. The Company also offers several other services, including foreign exchange and payment services and other bill payment services, for which revenue is impacted by similar factors. For the substantial majority of the Company’s revenues, the Company acts as the principal in transactions and reports revenue on a gross basis, as the Company controls the service at all times prior to transfer to the customer, is primarily responsible for fulfilling the customer contracts, has the risk of loss, and has the ability to establish transaction prices. The Company also provides services to financial institutions and other third parties to enable such entities to offer money transfer services to their own customers under their brands. Generally, in these arrangements, consumers agree to terms and conditions specified by the financial institution or other third party that, among other things, establish pricing paid by the consumer for the service. The Company recognizes revenue on a net basis under these arrangements. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

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. Contract asset balances related to customers were also immaterial as of the periods presented, as the Company typically receives payment of consideration from its customers prior to satisfying performance obligations under the customer contracts. In addition to revenue generated from contracts with customers, the Company recognizes revenue from other sources, including the sale of derivative financial instruments and investment income generated on settlement assets primarily related to money transfer and money order services.

The Company analyzes its different services individually to determine the appropriate basis for revenue recognition, as further described below. Revenues from consumer money transfers are included in the Company’s Consumer-to- Consumer segment, revenues from foreign exchange and payment services are included in the Company’s Business Solutions segment, and revenues from consumer bill payments and other services are not included in the Company’s segments and are reported as Other. 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

For the Company’s money transfer services, customers agree to the Company’s terms and conditions at the time of initiating a transaction. In a money transfer, the Company has one performance obligation as the customer engages the Company to perform one integrated service which typically occurs within minutes — collect the customer’s money and make funds available for payment to a designated person in the currency requested. Therefore, the Company recognizes revenue upon completion of the following: (i) the customer’s acknowledgment of the Company’s terms and conditions and payment information has been received by the Company, (ii) the Company has agreed to process the money transfer, (iii) the Company has provided the customer a unique transaction identification number, and (iv) funds are available to be picked up by the customer’s designated receiving party. The transaction price is comprised of a transaction fee and the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market, as applicable, both of which are readily determinable at the time the transaction is initiated.

Foreign Exchange and Payment Services

For the Company’s foreign exchange and payment services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction or signing a contract with the Company to provide payment services on the customer’s behalf. In the majority of the Company’s foreign exchange and payment services, the Company makes payments to the recipient to satisfy its performance obligation to the customer, and therefore, the Company recognizes revenue on foreign exchange and payment services when this performance obligation has been fulfilled. Revenues from foreign exchange and payment services are primarily comprised of the difference between the exchange rate set by the Company to the customer and the rate available in the wholesale foreign exchange market.

Consumer Bill Payments and Other

The Company offers bill payments and other services that vary by contractual features, including the types and amounts of fixed charges and with respect to how fees are billed and collected. 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.

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 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 June 30, 2021

    

    

Foreign 

    

    

    

Consumer 

Exchange 

Money 

and Payment 

Consumer 

Other 

Transfers

Services

Bill Payments

Services

Total

Regions:

 

  

 

  

 

  

 

  

 

  

North America

$

417.7

$

23.5

$

18.0

$

14.3

$

473.5

Europe and Russia/CIS

 

364.1

 

33.7

 

1.1

 

0.2

 

399.1

Middle East, Africa, and South Asia

 

166.7

 

0.5

 

0.1

 

 

167.3

Latin America and the Caribbean

 

92.5

 

0.8

 

18.9

 

2.1

 

114.3

East Asia and Oceania

 

68.1

 

16.6

 

0.2

 

 

84.9

Revenues from contracts with customers

$

1,109.1

$

75.1

$

38.3

$

16.6

$

1,239.1

Other revenues (a)

 

18.0

 

24.2

 

3.4

 

5.0

 

50.6

Total revenues

$

1,127.1

$

99.3

$

41.7

$

21.6

$

1,289.7

Six Months Ended June 30, 2021

    

    

Foreign 

    

    

    

Consumer 

Exchange 

Money 

and Payment 

Consumer 

Other 

Transfers

Services

Bill Payments

Services

Total

Regions:

 

  

 

  

 

  

 

  

 

  

North America

$

804.3

$

44.7

$

36.6

$

28.8

$

914.4

Europe and Russia/CIS

 

702.8

 

68.0

 

2.2

 

0.6

 

773.6

Middle East, Africa, and South Asia

 

326.4

 

1.0

 

0.2

 

 

327.6

Latin America and the Caribbean

 

179.2

 

1.6

 

36.6

 

3.9

 

221.3

East Asia and Oceania

 

134.8

 

33.2

 

0.5

 

 

168.5

Revenues from contracts with customers

$

2,147.5

$

148.5

$

76.1

$

33.3

$

2,405.4

Other revenues (a)

 

30.5

 

47.3

 

6.4

 

10.1

 

94.3

Total revenues

$

2,178.0

$

195.8

$

82.5

$

43.4

$

2,499.7

Three Months Ended June 30, 2020

    

    

Foreign 

    

    

    

Consumer 

Exchange 

Money 

and Payment 

Consumer 

Other 

Transfers

Services

Bill Payments

Services

Total

Regions:

 

  

 

  

 

  

 

  

 

  

North America

$

399.6

$

17.0

$

17.1

$

14.3

$

448.0

Europe and Russia/CIS

 

301.2

 

26.2

 

0.5

 

0.2

 

328.1

Middle East, Africa, and South Asia

 

137.7

 

0.3

 

 

 

138.0

Latin America and the Caribbean

 

54.3

 

0.6

 

15.8

 

2.0

 

72.7

East Asia and Oceania

 

55.5

 

12.9

 

0.4

 

 

68.8

Revenues from contracts with customers

$

948.3

$

57.0

$

33.8

$

16.5

$

1,055.6

Other revenues (a)

 

28.3

 

22.4

 

2.6

 

5.8

 

59.1

Total revenues

$

976.6

$

79.4

$

36.4

$

22.3

$

1,114.7

Six Months Ended June 30, 2020

    

    

Foreign 

    

    

    

Consumer 

Exchange 

Money 

and Payment 

Consumer 

Other 

Transfers

Services

Bill Payments

Services

Total

Regions:

 

  

 

  

 

  

 

  

 

  

North America

$

784.4

$

39.2

$

39.8

$

28.7

$

892.1

Europe and Russia/CIS

 

602.1

 

57.7

 

1.3

 

0.9

 

662.0

Middle East, Africa, and South Asia

 

294.6

 

0.8

 

0.1

 

 

295.5

Latin America and the Caribbean

 

138.7

 

1.2

 

39.6

 

4.1

 

183.6

East Asia and Oceania

 

114.6

 

29.7

 

0.7

 

 

145.0

Revenues from contracts with customers

$

1,934.4

$

128.6

$

81.5

$

33.7

$

2,178.2

Other revenues (a)

 

57.6

 

49.2

 

7.9

 

11.8

 

126.5

Total revenues

$

1,992.0

$

177.8

$

89.4

$

45.5

$

2,304.7

(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.
v3.21.2
Earnings Per Share
6 Months Ended
Jun. 30, 2021
Earnings Per Share  
Earnings Per Share

3. Earnings Per Share

The calculation of basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. 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, using the treasury stock method. 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 following table provides the calculation of diluted weighted-average shares outstanding (in millions):

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2021

    

2020

    

2021

    

2020

Basic weighted-average shares outstanding

 

409.3

 

411.5

 

410.5

 

412.9

Common stock equivalents

 

2.2

 

2.1

 

2.4

 

3.0

Diluted weighted-average shares outstanding

 

411.5

 

413.6

 

412.9

 

415.9

v3.21.2
Investment Activities
6 Months Ended
Jun. 30, 2021
Investment Activities  
Investment Activities

4. Investment Activities

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 $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.  

v3.21.2
Restructuring-Related Expenses
6 Months Ended
Jun. 30, 2021
Restructuring-Related Expenses  
Restructuring-Related Expenses

5. Restructuring-Related Expenses

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 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. These expenses are specific to this initiative; 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 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.

v3.21.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2021
Fair Value Measurements  
Fair Value Measurements

6. Fair Value Measurements

Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how the Company measures fair value, refer to the Company’s consolidated financial statements within the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The following tables present the Company’s assets and liabilities which are measured at fair value on a recurring basis, by balance sheet line item (in millions):

Fair Value Measurement Using

Total

June 30, 2021

    

Level 1

    

Level 2

    

Fair Value

Assets:

 

  

 

  

 

  

Settlement assets:

 

  

 

  

 

  

Measured at fair value through net income:

 

  

 

  

 

  

Money market funds

$

11.0

$

$

11.0

Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income):

 

  

  

  

State and municipal debt securities

1,296.0

1,296.0

State and municipal variable-rate demand notes

 

 

150.2

 

150.2

Corporate debt securities

66.2

66.2

United States government agency mortgage-backed securities

 

 

45.0

 

45.0

Other assets:

 

  

 

 

  

Derivatives

 

 

274.8

 

274.8

Total assets

$

11.0

$

1,832.2

$

1,843.2

Liabilities:

 

  

 

  

 

  

Other liabilities:

Derivatives

$

$

222.7

$

222.7

Total liabilities

$

$

222.7

$

222.7

Fair Value Measurement Using

Total

December 31, 2020

    

Level 1

    

Level 2

    

Fair Value

Assets:

 

  

 

  

 

  

Settlement assets:

 

  

 

  

 

  

Measured at fair value through net income:

 

  

 

  

 

  

Money market funds

$

13.1

$

$

13.1

Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income):

 

  

  

  

State and municipal debt securities

1,303.9

1,303.9

State and municipal variable-rate demand notes

 

 

562.1

 

562.1

Corporate and other debt securities

 

 

72.8

 

72.8

United States government agency mortgage-backed securities

51.8

51.8

Other assets:

 

  

 

  

 

  

Derivatives

 

 

453.3

 

453.3

Total assets

$

13.1

$

2,443.9

$

2,457.0

Liabilities:

 

  

 

  

 

  

Other liabilities:

Derivatives

$

$

430.3

$

430.3

Total liabilities

$

$

430.3

$

430.3

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

The carrying amounts for many of the Company’s financial instruments, including certain cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and obligations approximate fair value due to their short maturities. The Company’s borrowings are classified as Level 2 within the valuation hierarchy, and the aggregate fair value of these borrowings was based on quotes from multiple banks. 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 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.

v3.21.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2021
Commitments and Contingencies  
Commitments and Contingencies

7. Commitments and Contingencies

Letters of Credit and Bank Guarantees

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

The Company is subject to certain claims and litigation that could result in losses, including damages, fines, and/or civil penalties, which could be significant, and in some cases, criminal charges. The Company regularly evaluates the status of legal matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each legal matter to assess if there is at least a reasonable possibility that a loss or additional losses may have been incurred and whether an estimate of possible loss or range of loss can be made. 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 June 30, 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: (i) the proceedings are in preliminary stages; (ii) specific damages have not been sought; (iii) damage claims are unsupported and/or unreasonable; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; or (vi) novel legal issues or unsettled legal theories are being asserted.

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established liability or the range of reasonably possible loss.

Shareholder Derivative Action

On January 16, 2020, Stanley Lieblein filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware naming the Company’s President and Chief Executive Officer, certain current and former directors, and a former executive officer as individual defendants and the Company as a nominal defendant (the “Delaware Complaint”). Mr. Lieblein had previously filed a shareholder derivative action asserting related claims in the United States District Court for the District of Colorado, which was subsequently consolidated with multiple pending related derivative actions. Following the filing of multiple amended complaints, the United States Court of Appeals for the Tenth Circuit affirmed dismissal of the consolidated derivative action on April 16, 2019 on the ground that the plaintiffs did not have standing to proceed on behalf of the Company without making a demand on the Company’s Board of Directors. The consolidated derivative action is described in further detail in the Company’s prior disclosures.

On August 1, 2019, Mr. Lieblein made a written demand on the Company’s Board of Directors to investigate and address alleged misconduct related to the Company’s anti-fraud and anti-money laundering (“AML”) compliance programs, including certain alleged misconduct at issue in the consolidated derivative action. The Company’s Board of Directors formed a special committee to evaluate 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. Mr. Lieblein alleges that he filed the Delaware Complaint prior to the completion of the special committee’s investigation because of concerns regarding the statute of limitations on some of the claims asserted. Mr. Lieblein agreed to stay the action until December 31, 2020, pending completion of the special committee’s investigation. Within 60 days after December 31, 2020, Mr. Lieblein was required either to specify whether the Delaware Complaint will serve as the operative complaint in the action or file an amended complaint.

The Delaware Complaint filed by Mr. Lieblein on January 16, 2020 includes allegations that the director and officer defendants declined to implement effective anti-fraud and AML compliance systems after receiving numerous red flags indicating prolonged willful illegality, condoned executive officers’ obstruction of efforts by various regulators to impose an effective compliance system on the Company, approved executive compensation packages for management that were not aligned with development of effective anti-fraud and AML compliance programs, allowed management to fail to timely report known or likely impropriety by Company employees or agents to regulatory authorities, failed to require management to adopt a risk assessment for all very high risk areas, refused to remedy the board’s oversight of executive officers, and, in effect, refused Mr. Lieblein’s shareholder demand and related request for tolling agreements.

It also includes allegations that the officer defendants declined to ensure that the Company implemented effective anti-fraud and AML compliance programs after receiving red flags that those programs were inadequate, allowed Company agents to willfully ignore anti-fraud and AML recording and reporting requirements for a prolonged period, opposed efforts by various regulators to implement effective anti-fraud and AML complaint programs, caused the Company to fail to comply with its obligations under settlements with regulators, and knowingly exposed the Company to criminal and civil sanctions.

The special committee completed its investigation in early December 2020 and, on the basis of its findings, recommended that the Company’s Board of Directors reject the Demand Letters and direct the Company to oppose any effort to assert claims based on or related to the Demand Letters on behalf of the Company, that no action on behalf of the Company should be brought or pursued against any of the current or former officers or directors of the Company based on the Demand Letters, and that none of the corporate governance reforms raised in the Demand Letters is necessary or appropriate. On December 16, 2020, the Board of Directors resolved to adopt the recommendations of the special committee. The Board of Directors further resolved, among other things, that none of the asserted claims has factual or legal merit. The Company thereafter informed Mr. Lieblein and the other shareholder that sent the related written demand that their demands have been rejected.

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. Lieblein filed a Stipulation and Proposed Order Regarding Voluntary Dismissal of the Delaware Complaint. The Delaware Court of Chancery reviewed and entered the Proposed Order on the same day. The Delaware Complaint and the associated action therefore has been dismissed and is now over. The dismissal is with prejudice as to Mr. Lieblein, the named plaintiff, only. The Company will oppose any future action by the shareholder who sent the related written demand.

Other Matters

In October 2015, Consumidores Financieros Asociación Civil para su Defensa, an Argentinian consumer association, filed a purported class action lawsuit in Argentina’s National Commercial Court No. 19 against the Company’s subsidiary Western Union Financial Services Argentina S.R.L. (“WUFSA”). The lawsuit alleges, among other things, that WUFSA’s fees for money transfers sent from Argentina are excessive and that WUFSA does not provide consumers with adequate information about foreign exchange rates. The plaintiff is seeking, among other things, an order requiring WUFSA to reimburse consumers for the fees they paid and the foreign exchange revenue associated with money transfers sent from Argentina, plus punitive damages. The complaint does not specify a monetary value of the claim or a time period. In November 2015, the Court declared the complaint formally admissible as a class action. The notice of claim was served on WUFSA in May 2016, and in June 2016 WUFSA filed a response to the claim and moved to dismiss it on statute of limitations and standing grounds. In April 2017, the Court deferred ruling on the motion until later in the proceedings. The process for notifying potential class members has been completed and the case proceeded to the evidentiary stage. The case will be stayed until (i) the Attorney-General instructs the Prosecutor to continue to litigate the claims on behalf of the plaintiff (during the time the registration of Consumidores Financieros before the Secretary of Commerce remains suspended); or (ii) the parties report to the Court that the plaintiff recovered its legal capacity. Due to the stage of this matter, the Company is unable to predict the outcome or the possible loss or range of loss, if any, associated with this matter. WUFSA intends to defend itself vigorously.

In addition to the principal matters described above, the Company is a party to a variety of other legal matters that arise in the normal course of the Company’s business. While the results of these other legal matters cannot be predicted with certainty, management believes that the final outcome of these matters will not have a material adverse effect either individually or in the aggregate on the Company’s financial condition, results of operations, or cash flows.

v3.21.2
Related Party Transactions
6 Months Ended
Jun. 30, 2021
Related Party Transactions  
Related Party Transactions

8. Related Party Transactions

The Company has ownership interests in certain of its agents accounted for under the equity method of accounting. The Company pays these agents commissions for money transfer and other services provided on the Company’s behalf. 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.

v3.21.2
Settlement Assets and Obligations
6 Months Ended
Jun. 30, 2021
Settlement Assets and Obligations  
Settlement Assets and Obligations

9. Settlement Assets and Obligations

Settlement assets represent funds received or to be received from agents and others for unsettled money transfers, money orders, and consumer payments. The Company records corresponding settlement obligations relating to amounts payable under money transfers, money orders, and consumer payment service arrangements. Settlement assets and obligations also include amounts receivable from, and payable to, customers for the value of their cross-currency payment transactions related to the Business Solutions segment.

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

    

June 30, 2021

Settlement assets:

 

  

Cash and cash equivalents

$

1,002.6

Receivables from agents, Business Solutions customers, and others

 

1,101.6

Less: Allowance for credit losses

(24.8)

Receivables from agents, Business Solutions customers, and others, net

1,076.8

Investment securities

 

1,557.4

Total settlement assets

$

3,636.8

Settlement obligations:

 

  

Money transfer, money order, and payment service payables

$

2,884.3

Payables to agents

 

752.5

Total settlement obligations

$

3,636.8

    

December 31, 2020

Settlement assets:

 

  

Cash and cash equivalents

$

695.7

Receivables from agents, Business Solutions customers, and others

 

1,188.3

Less: Allowance for credit losses

(53.2)

Receivables from agents, Business Solutions customers, and others, net

1,135.1

Investment securities

 

1,990.6

Total settlement assets

$

3,821.4

Settlement obligations:

 

  

Money transfer, money order, and payment service payables

$

2,902.9

Payables to agents

 

918.5

Total settlement obligations

$

3,821.4

Allowance for Credit Losses

On January 1, 2020, the Company adopted a new accounting standard related to the estimation of the allowance for credit losses, as discussed in Note 1. 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 $1,009.6 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. Western Union has a large and diverse agent base, thereby reducing the credit risk of the Company from any one agent. The Company performs ongoing credit evaluations of its agents’ financial condition and credit worthiness.

Receivables from Business Solutions customers arise from cross-currency payment transactions in the Business Solutions segment. 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. Collection of these receivables ordinarily occurs within a few days. To mitigate risk associated with potential Business Solutions customer defaults, the Company performs credit reviews on an ongoing basis.

The Company establishes and monitors an allowance for credit losses related to receivables from agents and others, and Business Solutions customers. The Company estimates the allowance based on its historical collections experience, adjusted for current conditions and forecasts of future economic conditions. 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 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):

Agents and

Business Solutions

Others

Customers

Allowance for credit losses as of January 1, 2021

$

49.3

$

3.9

Current period provision for expected credit losses (a)

2.3

1.5

Write-offs charged against the allowance

(3.3)

(0.4)

Recoveries of amounts previously written off

1.9

Impacts of foreign currency exchange rates and other

(0.5)

(0.1)

Allowance for credit losses as of March 31, 2021

49.7

4.9

Current period provision for expected credit losses (a)

3.2

1.9

Write-offs charged against the allowance

(34.4)

(0.4)

Recoveries of amounts previously written off

0.6

Impacts of foreign currency exchange rates and other

(0.6)

(0.1)

Allowance for credit losses as of June 30, 2021

$

18.5

$

6.3

Agents and

Business Solutions

Others

Customers

Allowance for credit losses as of January 1, 2020

$

20.4

$

4.5

Current period provision for expected credit losses (a)

8.1

0.2

Write-offs charged against the allowance

(1.7)

(1.0)

Recoveries of amounts previously written off

0.3

Impacts of foreign currency exchange rates and other

(1.2)

Allowance for credit losses as of March 31, 2020

25.9

3.7

Current period provision for expected credit losses (a)

11.8

1.2

Write-offs charged against the allowance

(3.0)

(0.7)

Recoveries of amounts previously written off

0.9

Impacts of foreign currency exchange rates and other

0.3

0.6

Allowance for credit losses as of June 30, 2020

$

35.9

$

4.8

(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. 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. The Company generally owes settlement funds payable to these agents that offset these advances. These amounts advanced to agents are included within Other assets in the accompanying Condensed Consolidated Balance Sheets. 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

Investment securities included in Settlement assets in the Company’s Condensed Consolidated Balance Sheets consist primarily of highly-rated state and municipal debt securities, including fixed-rate term notes and variable-rate demand notes. Variable-rate demand note securities can be put (sold at par) typically on a daily basis with settlement periods ranging from the same day to one week but have varying maturities through 2057. These securities may be used by the Company for short-term liquidity needs and held for short periods of time. Investment securities are exposed to market risk due to changes in interest rates and credit risk. The Company is required to hold highly-rated, investment grade securities and such investments are restricted to satisfy outstanding settlement obligations in accordance with applicable regulatory requirements.

The Company’s investment securities are classified as available-for-sale and recorded at fair value. Western Union regularly monitors credit risk and attempts to mitigate its exposure by investing in highly-rated securities and through investment diversification.

Unrealized gains on available-for-sale securities are excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes. Available-for-sale securities with a fair value below the amortized cost basis are evaluated on an individual basis to determine whether the impairment is due to credit-related factors or noncredit-related factors. Factors that could indicate a credit loss exists include but are not limited to: (i) negative earnings performance, (ii) credit rating downgrades, or (iii) adverse changes in the regulatory or economic environment of the asset. Any impairment that is not credit-related is excluded from earnings and presented as a component of accumulated other comprehensive loss, net of related deferred taxes, unless the Company intends to sell the impaired security or it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. 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 and

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):

    

    

    

Gross

    

Gross

    

Net

 

Amortized

 

Fair

 

Unrealized

 

Unrealized

 

Unrealized

June 30, 2021

Cost

Value

 

Gains

 

Losses

Gains/(Losses)

Settlement assets:

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents:

 

  

 

  

 

  

 

  

 

  

Money market funds

$

11.0

$

11.0

$

$

$

Available-for-sale securities:

 

 

 

 

 

  

State and municipal debt securities (a)

 

1,239.2

 

1,296.0

 

57.1

 

(0.3)

 

56.8

State and municipal variable-rate demand notes

 

150.2

 

150.2

 

 

 

Corporate debt securities

65.6

66.2

0.8

(0.2)

0.6

United States government agency mortgage-backed securities

 

43.4

 

45.0

 

1.6

 

 

1.6

Total available-for-sale securities

 

1,498.4

 

1,557.4

 

59.5

 

(0.5)

 

59.0

Total investment securities

$

1,509.4

$

1,568.4

$

59.5

$

(0.5)

$

59.0

    

    

    

Gross

    

Gross

    

Net

 

Amortized

 

Fair

 

Unrealized

 

Unrealized

 

Unrealized

December 31, 2020

Cost

Value

 

Gains

 

Losses

 

Gains/(Losses)

Settlement assets:

 

  

 

  

 

  

 

  

 

  

Cash and cash equivalents:

 

  

 

  

 

  

 

  

 

  

Money market funds

$

13.1

$

13.1

$

$

$

Available-for-sale securities:

 

 

 

 

 

  

State and municipal debt securities (a)

1,234.1

1,303.9

69.8

69.8

State and municipal variable-rate demand notes

 

562.1

 

562.1

 

 

 

Corporate and other debt securities

 

71.6

 

72.8

 

1.2

 

 

1.2

United States government agency mortgage-backed securities

50.3

51.8

1.5

1.5

Total available-for-sale securities

 

1,918.1

 

1,990.6