PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for Q3 2021 and 2020, covering income, balance sheets, cash flows, and notes [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2021 revenues increased to $1.29 billion, net income to $232.7 million, and diluted EPS to $0.57 Condensed Consolidated Statements of Income (in millions, except per share amounts) | Indicator | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,286.3 | $1,258.5 | $3,786.0 | $3,563.2 | | **Operating Income** | $318.6 | $285.2 | $806.3 | $740.2 | | **Net Income** | $232.7 | $228.6 | $637.0 | $567.2 | | **Diluted EPS** | $0.57 | $0.55 | $1.55 | $1.37 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $8.87 billion due to assets held for sale, while liabilities decreased and equity increased Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,003.4 | $1,428.2 | | Assets held for sale | $1,492.2 | $— | | **Total Assets** | **$8,871.0** | **$9,496.3** | | Borrowings | $2,852.6 | $3,067.2 | | Liabilities associated with assets held for sale | $855.4 | $— | | **Total Liabilities** | **$8,502.4** | **$9,309.7** | | **Total Stockholders' Equity** | **$368.6** | **$186.6** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $686 million, with significant cash used in investing and financing activities Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $686.0 | $585.6 | | Net cash used in investing activities | ($332.9) | ($68.7) | | Net cash used in financing activities | ($745.5) | ($709.8) | | **Net change in cash, cash equivalents, and restricted cash** | **($392.4)** | **($192.9)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the $910 million Business Solutions sale, stc Bank investment, and segment performance - On August 4, 2021, the Company agreed to sell its Business Solutions business for **$910 million in cash** The assets and liabilities of this business are now classified as held for sale The first closing is expected in Q1 2022[49](index=49&type=chunk) - The Company agreed to invest **$200.0 million** for a **15% ownership interest** in stc Bank (formerly Saudi Digital Payments Company), a digital white label partner The transaction closed in October 2021[54](index=54&type=chunk) Segment Revenues (in millions) | Segment | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Consumer-to-Consumer | $1,104.5 | $3,282.5 | | Business Solutions | $116.8 | $312.6 | | Other | $65.0 | $190.9 | | **Total** | **$1,286.3** | **$3,786.0** | Shareholder Returns (Nine Months Ended Sep 30, 2021) | Activity | Amount | | :--- | :--- | | Share Repurchases | $225.0 million (9.6 million shares) | | Dividends Declared | $287.6 million ($0.235 per share quarterly) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 2021 financial results, highlighting revenue growth, Business Solutions sale, and liquidity [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Q3 2021 consolidated revenue increased **2%** to **$1.3 billion**, with operating income up **12%** Consolidated Results Summary | Metric | Three Months 2021 vs 2020 | Nine Months 2021 vs 2020 | | :--- | :--- | :--- | | Revenue Change (GAAP) | +2% | +6% | | Revenue Change (Constant Currency) | +2% | +5% | | Operating Income Change | +12% | +9% | | Diluted EPS Change | +4% | +13% | - The company entered into an agreement to sell its Business Solutions business for **$910 million** This segment's revenues were **$116.8 million** in Q3 2021, up from **$89.1 million** in Q3 2020[177](index=177&type=chunk) - The increase in the effective tax rate for Q3 and the nine-month period was primarily due to increased deferred tax expense arising from changes in permanent reinvestment assertions related to the decision to classify the Business Solutions business as held for sale[192](index=192&type=chunk) [Segment Discussion](index=45&type=section&id=Segment%20Discussion) C2C segment revenue was flat in Q3 but grew 6% YTD, while Business Solutions revenue surged **31%** Consumer-to-Consumer (C2C) Segment Performance (Q3 2021 vs Q3 2020) | Metric | Change | | :--- | :--- | | Revenue | 0% | | Transactions | -1% | | Operating Income | -2% | | Digital Money Transfer Revenue | +15% | - The LACA (Latin America and the Caribbean) region was a standout in C2C, with **25% reported revenue growth** in Q3, driven by increased principal transferred and recovery from prior-period COVID-19 impacts[204](index=204&type=chunk)[210](index=210&type=chunk) Business Solutions Segment Performance (Q3 2021 vs Q3 2020) | Metric | Change | | :--- | :--- | | Revenue | +31% | | Operating Income | +308.5% (from $9.4M to $38.4M) | | Operating Margin | 33% (up from 11%) | [Capital Resources and Liquidity](index=50&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains strong liquidity through operating cash flow and a **$1.5 billion** credit facility, prioritizing debt service and shareholder returns - The company maintains a **$1.5 billion** revolving credit facility expiring in January 2025, which supports its commercial paper program As of September 30, 2021, there were no borrowings on the facility and **$120.0 million** outstanding under the commercial paper program[224](index=224&type=chunk) - In March 2021, the company issued **$900 million** in new unsecured notes (due 2026 and 2031) and used the proceeds to repay **$650 million** of a term loan and **$500 million** of notes due in 2022[231](index=231&type=chunk)[232](index=232&type=chunk) - A significant future cash requirement is the remaining federal tax liability of approximately **$541 million** from the 2017 Tax Act, which is being paid in installments through 2025[242](index=242&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to foreign currency, interest rate, and credit risks, managed through a risk management program - The company is exposed to foreign currency risk, interest rate risk, and credit risk These risks are managed through an active risk management program[262](index=262&type=chunk)[247](index=247&type=chunk) - A hypothetical uniform **10% strengthening** of the U.S dollar against all other currencies would result in an estimated decrease to pre-tax annual income of approximately **$40 million**[251](index=251&type=chunk) - A hypothetical **100 basis point change** in interest rates would have a net positive impact on pre-tax income of approximately **$13 million** over the next twelve months, as the benefit to floating-rate assets ($17M) outweighs the cost on floating-rate liabilities ($4M)[257](index=257&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with a change due to a new global platform - The Principal Executive Officer and Principal Financial Officer concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective[263](index=263&type=chunk) - A change to internal controls over financial reporting occurred in Q1 2021 due to the transition of money transfer settlement processes to a new global platform This is expected to strengthen controls by standardizing processes[264](index=264&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, with estimated reasonably possible losses of approximately **$30 million** - Information on legal proceedings is incorporated by reference from Note 7 of the financial statements[271](index=271&type=chunk) - As of September 30, 2021, the company estimated that reasonably possible potential litigation losses in excess of its recorded liability were approximately **$30 million**[67](index=67&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for 2020 - There were no material changes to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2020[272](index=272&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the company repurchased **3.47 million shares** at **$21.72** per share, with **$557.6 million** remaining for repurchase Share Repurchases for Quarter Ended September 30, 2021 | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July | 717,462 | $23.21 | | August | 781,419 | $22.14 | | September | 1,970,349 | $21.01 | | **Total** | **3,469,230** | **$21.72** | - As of September 30, 2021, approximately **$557.6 million** remained available for repurchase under the publicly announced plan authorized through December 31, 2021[274](index=274&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[275](index=275&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[275](index=275&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - The company reports no other information for this item[275](index=275&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including CEO and CFO certifications and XBRL data files - The report includes an Exhibit Index listing documents filed or furnished, such as officer certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL documents (Exhibits 101, 104)[276](index=276&type=chunk)[277](index=277&type=chunk)

The Western Union Company (NYSE:WU) Q2 2021 Earnings Conference Call August 4, 2021 4:30 PM ET Company Participants Brad Windbigler – Head of Treasury and Investor Relations Hikmet Ersek – Chief Executive Officer Raj Agrawal – Chief Financial Officer Conference Call Participants Darrin Peller – Wolfe Research Tien-Tsin Huang – JPMorgan Jason Kupferberg – Bank of America James Faucette – Morgan Stanley Benjamin Budish – Barclays Andrew Jeffrey – Truist Securities Vasu Govil – KBW Jeff Cantwell – Guggenheim S ...

The Western Union Company (NYSE:WU) Q1 2021 Earnings Conference Call May 4, 2021 4:30 PM ET Company Participants Brendan Metrano - Vice President-Investor Relations Hikmet Ersek - Chief Executive Officer Raj Agrawal - Chief Financial Officer Conference Call Participants Jason Kupferberg - Bank of America Merrill Lynch Darrin Peller - Wolfe Research Tien-tsin Huang - JP Morgan Rayna Kumar - Evercore James Faucette - Morgan Stanley Ashwin Shirvaikar - Citi Investment Research Jeff Cantwell - Guggenheim Securi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32903 WesternUnion WU THE WESTERN UNION COMPANY (Exact name of registrant as specified in its charter) Delaware (State o ...

The Western Union Company (NYSE:WU) Q4 2020 Earnings Conference Call February 10, 2021 4:30 PM ET Company Participants Brendan Metrano – Vice President-Investor Relations Hikmet Ersek – Chief Executive Officer Rajesh Agrawal – Chief Financial Officer Conference Call Participants Tien-tsin Huang – JP Morgan Jason Kupferberg – Bank of America Darrin Peller – Wolfe Research Rayna Kumar – Evercore Jeff Cantwell – Guggenheim Securities James Faucette – Morgan Stanley Bryan Keane – Deutsche Bank Andrew Jeffrey – ...

Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $1.3 billion, a decline of 4% compared to the prior year, with a constant currency revenue decline of 1% [20][21] - GAAP operating margin was 22.7%, compared to 15.1% in the prior year, primarily due to restructuring costs in the previous year and current productivity savings [31] - Adjusted earnings per share increased to $0.57 from $0.49 in the prior year [33] Business Line Data and Key Metrics Changes - Consumer-to-Consumer (C2C) segment revenue was flat on a constant currency basis, with transaction growth of 6% driven by a 96% increase in digital money transfer [21][22] - Digital money transfer revenues grew 45%, accounting for 21% of total C2C revenue and 31% of total C2C transactions [24][26] - Business Solutions segment revenue decreased 11% on a reported basis, representing 7% of total company revenues [30] Market Data and Key Metrics Changes - North America revenue trends improved to flat year-over-year, driven by U.S. outbound business [27] - Revenue in Europe and CIS increased 3% on a reported basis, led by Germany, France, and Russia [28] - Latin America and Caribbean region revenue decreased 21% on a reported basis due to COVID-19 impacts [29] Company Strategy and Development Direction - The company is focused on enhancing digital offerings and investing in customer acquisition, data analytics, and technology infrastructure [16][17] - The digital business is seen as a significant source of incremental profit, with over 80% of westernunion.com customers being new to the company [13][14] - The company aims to expand its omnichannel capabilities and improve its network coverage and quality [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery from COVID-19, noting strong performance in digital channels and retail trends [7][19] - The company anticipates continued growth in digital transactions and is preparing for a new normal post-pandemic [66] - Management expects GAAP revenues for the full year to decline in the high-single digits due to COVID-19 impacts [34] Other Important Information - The company has a strong financial position with $1.3 billion in cash and an undrawn $1.5 billion revolving credit facility [34] - The company is on track to achieve $50 million in annual productivity savings this year [18] Q&A Session Summary Question: Trends in principal per transaction and customer stickiness - Management noted that higher principal per transaction is driven by customers transacting at higher levels and new customers exhibiting similar behavior [38][39] Question: C2C business trajectory and October performance - Management indicated that the business is improving month-to-month, with retail contributions and digital growth driving overall performance [44][45] Question: Capital deployment and stock buyback considerations - Management stated that they are considering stock buybacks as confidence in the business grows, while maintaining a strong dividend policy [48][49] Question: Guidance for fourth quarter and pricing strategies - Management clarified that the guidance reflects ongoing trends and that dynamic pricing strategies are in place to drive customer acquisition [51][54] Question: Opportunities in white label partnerships - Management highlighted the potential for growth in white label partnerships, particularly with financial institutions transitioning from correspondent banking [67][68]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements for Q3 and 9M 2020 reflect revenue and net income declines for the nine-month period, influenced by COVID-19 and a 2019 divestiture, while Q3 operating and net income increased due to lower restructuring expenses [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2020 revenues decreased 4% to $1,258.5 million, but net income increased 69% to $228.6 million due to lower operating expenses, while 9M revenues fell 11% to $3,563.2 million and net income decreased 39% to $567.2 million Consolidated Statements of Income Highlights (in millions, except per share data) | Metric | Q3 2020 | Q3 2019 | YoY Change | 9M 2020 | 9M 2019 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,258.5 | $1,306.9 | -3.7% | $3,563.2 | $3,984.4 | -10.6% | | **Operating Income** | $285.2 | $197.4 | +44.5% | $740.2 | $707.5 | +4.6% | | **Net Income** | $228.6 | $135.0 | +69.3% | $567.2 | $922.9 | -38.5% | | **Diluted EPS** | $0.55 | $0.32 | +71.9% | $1.37 | $2.13 | -35.7% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2020, total assets slightly increased to $8,827.2 million, liabilities marginally decreased, and stockholders' equity shifted from a $39.5 million deficit to a $67.1 million surplus Balance Sheet Summary (in millions) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,251.4 | $1,450.5 | | Total assets | $8,827.2 | $8,758.5 | | Borrowings | $3,036.5 | $3,229.3 | | Total liabilities | $8,760.1 | $8,798.0 | | Total stockholders' equity/(deficit) | $67.1 | ($39.5) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations for 9M 2020 decreased to $585.6 million, with $709.8 million used in financing for dividends and repurchases, while prior year investing included significant divestiture proceeds Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $585.6 | $665.3 | | Net cash (used in)/provided by investing activities | ($68.7) | $657.0 | | Net cash used in financing activities | ($709.8) | ($903.8) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, revenue recognition, COVID-19 impact on retail volumes offset by digital growth, ongoing restructuring, the 2019 Speedpay divestiture, and dividend/share repurchase activities - The company's business consists of two main segments: Consumer-to-Consumer (C2C) money transfers and Business Solutions for enterprise payments, with other services including bill payments and money orders[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk) - The COVID-19 pandemic negatively impacted retail transaction volumes starting in March 2020, which was partially offset by revenue growth from westernunion.com and other digital channels[26](index=26&type=chunk) - In May 2019, the company sold its Speedpay business, which resulted in a pre-tax gain of approximately **$523 million** and affects year-over-year comparability in the 'Other' segment[45](index=45&type=chunk) - A restructuring plan approved in August 2019 is expected to incur total expenses of approximately **$150 million** through 2020, with **$24.8 million** incurred for the nine months ended Sep 30, 2020, compared to **$98.9 million** in the same period of 2019[48](index=48&type=chunk)[52](index=52&type=chunk) - The company declared quarterly cash dividends of **$0.225 per share** in each of the first three quarters of 2020[95](index=95&type=chunk) - During the nine months ended Sep 30, 2020, the company repurchased **8.5 million shares** for **$217.4 million**, with share repurchases temporarily paused during the first quarter of 2020[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q3 revenue decline to COVID-19 and FX, offset by digital growth, with operating income up due to lower restructuring; C2C saw transaction growth but revenue decline from mix shift, while Business Solutions declined - The COVID-19 pandemic negatively impacted retail transaction volumes, which was partially offset by strong growth in digital channels (westernunion.com and other digital transactions)[148](index=148&type=chunk) - Fluctuations in the USD, particularly its strengthening against the Argentine peso, negatively impacted revenues by **$41.1 million** in Q3 2020 and **$134.8 million** in the first nine months of 2020[149](index=149&type=chunk) - The 2019 restructuring plan is expected to generate expense savings of at least **$50 million** in 2020 and approximately **$100 million** in 2021[161](index=161&type=chunk) - The company temporarily paused share repurchases in Q1 2020, and as of September 30, 2020, **$782.6 million** remained available under the share repurchase authorization[216](index=216&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Consolidated revenue decreased 4% in Q3 and 11% in 9M 2020 due to COVID-19, FX, and divestitures, while Q3 operating expenses declined 12%, leading to a 44% increase in operating income to $285.2 million Consolidated Revenue Change Analysis | Period | GAAP Revenue Change | Foreign Currency Impact | Divestitures Impact | Adjusted Revenue Change (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | **Q3 2020** | (4)% | 3% | 0% | (1)% | | **9M 2020** | (11)% | 4% | 3% | (4)% | - Cost of Services decreased in Q3 and 9M 2020 due to lower agent commissions (tied to revenue), reduced restructuring expenses, and lower employee-related costs[164](index=164&type=chunk) - Selling, General, and Administrative expenses decreased due to lower employee-related expenses (including incentive pay and restructuring savings) and reduced restructuring costs[165](index=165&type=chunk) - The effective tax rate decreased to **12.4%** for Q3 2020 (vs. **16.8%** in Q3 2019) and **13.5%** for 9M 2020 (vs. **17.9%** in 9M 2019), primarily due to higher domestic pre-tax income in the prior year from the Speedpay sale[167](index=167&type=chunk)[168](index=168&type=chunk) [Segment Discussion](index=59&type=section&id=Segment%20Discussion) C2C segment transactions grew 6% but revenue fell 1% due to a digital mix shift, with Digital Money Transfer revenue up 45%; Business Solutions and 'Other' segments declined due to COVID-19 and the Speedpay divestiture Consumer-to-Consumer Segment Performance | Metric | Q3 2020 | Q3 2019 | % Change | 9M 2020 | 9M 2019 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,106.5M | $1,113.0M | (1)% | $3,098.5M | $3,282.8M | (6)% | | **Transactions** | 77.3M | 73.0M | 6% | 212.1M | 215.6M | (2)% | | **Operating Income** | $272.4M | $263.8M | 3% | $695.1M | $747.3M | (7)% | - Digital Money Transfer revenue grew **45%** in Q3 2020 (**46%** constant currency) and accounted for **21%** of total C2C revenue, up from **14%** in Q3 2019[179](index=179&type=chunk)[180](index=180&type=chunk) - The spread between C2C transaction growth (up **6%**) and revenue decline (down **1%**) in Q3 was attributed to a business mix shift, primarily growth in digital white label partnerships which have a lower revenue per transaction[182](index=182&type=chunk) Business Solutions Segment Performance | Metric | Q3 2020 | Q3 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $89.1M | $100.6M | (11)% | | **Operating Income** | $9.4M | $16.7M | (44)% | [Capital Resources and Liquidity](index=67&type=section&id=Capital%20Resources%20and%20Liquidity) Operating cash flow decreased to $585.6 million for 9M 2020, but the company maintains adequate liquidity via cash, operations, and a $1.5 billion credit facility, with a remaining $604 million tax liability payable through 2025 - The company believes it has adequate liquidity from existing cash, operating cash flows, and its **$1.5 billion** revolving credit facility, which had no outstanding borrowings as of September 30, 2020[201](index=201&type=chunk) - Cash provided by operating activities decreased to **$585.6 million** in 9M 2020 from **$665.3 million** in 9M 2019, due to timing of restructuring payments, incentive payments, and vendor payments[206](index=206&type=chunk) - A 2017 US federal tax liability of approximately **$800 million** is being paid in installments through 2025, with about **$604 million** remaining as of September 30, 2020[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency, interest rates, and credit, mitigated by derivatives; a 10% USD strengthening could reduce pre-tax income by $45 million, and credit losses remain below 2% of revenues - The company uses longer-term foreign currency forward contracts (up to 36 months) to mitigate risk on revenues denominated in foreign currencies like the euro, British pound, and Canadian dollar[228](index=228&type=chunk) - A hypothetical **10%** uniform strengthening of the U.S. dollar would result in an estimated decrease to pre-tax annual income of approximately **$45 million**, based on the company's unhedged exposure forecast[231](index=231&type=chunk) - The company is exposed to credit risk from agent receivables and consumer transactions, particularly chargebacks from electronic channels, with total losses remaining approximately **2%** or less of consolidated revenues[239](index=239&type=chunk)[243](index=243&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of September 30, 2020, despite significant employee turnover in technology and accounting due to restructuring, which is being actively managed to maintain internal controls - The Principal Executive Officer and Principal Financial Officer concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective[245](index=245&type=chunk) - The company's 2019 restructuring plan has caused significant employee turnover in technology and accounting functions, which management is actively monitoring to maintain internal controls[246](index=246&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=83&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings, detailed in Note 8, include shareholder and class actions, with reasonably possible potential losses exceeding recorded liabilities estimated at **$30 million** as of September 30, 2020 - Information on legal proceedings is incorporated by reference from Note 8, Commitments and Contingencies[252](index=252&type=chunk) - As of September 30, 2020, the company estimated reasonably possible potential litigation losses in excess of its recorded liability to be approximately **$30 million**[66](index=66&type=chunk) [Item 1A. Risk Factors](index=83&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 pandemic is a significant risk, negatively impacting retail transactions and agent access, with its future extent highly uncertain and dependent on duration, government actions, and economic conditions - The primary updated risk factor relates to the COVID-19 pandemic, which has negatively impacted the business and its future impact is highly uncertain[254](index=254&type=chunk) - The pandemic has resulted in lower consumer and commercial activity and the closure of some agent locations, leading to declines in retail C2C transactions[255](index=255&type=chunk) - Future impacts depend on uncertain developments, including the duration of the outbreak, the availability of a vaccine, government actions, and its effects on the global economy and migration patterns[257](index=257&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q3 2020, **21,912 shares** were repurchased at an average of **$22.12** for tax withholding, not under the public program, with **$782.6 million** remaining for future repurchases Share Repurchases for Q3 2020 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | July 2020 | 11,949 | $21.19 | 0 | | August 2020 | 4,170 | $23.00 | 0 | | September 2020 | 5,793 | $23.41 | 0 | | **Total** | **21,912** | **$22.12** | **0** | - As of September 30, 2020, **$782.6 million** remained available for repurchase under the board's authorization, which runs through December 31, 2021[259](index=259&type=chunk) [Item 6. Exhibits](index=86&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - The filing includes required certifications from the Chief Executive Officer and Chief Financial Officer[262](index=262&type=chunk) - Interactive Data Files (Inline XBRL) are included as exhibits to the filing[262](index=262&type=chunk)

Financial Data and Key Metrics Changes - The company reported second quarter revenue of approximately $1.1 billion, a decline of 17% compared to the prior year period, while adjusted constant currency revenue declined 11% [19] - GAAP earnings per share for the quarter was $0.39, down from $1.42 in the prior year period, primarily due to the gain on sale from divestitures in 2019 [29] - Adjusted operating margin for the second quarter was 20.4%, compared to 20.3% in the prior year period, driven by productivity savings and cost management measures [27] Business Line Data and Key Metrics Changes - The consumer-to-consumer (C2C) segment revenue declined 12% or 11% on a constant currency basis, with transaction volume down 8% for the quarter [19] - Digital money transfer revenues, including westernunion.com and digital partnerships, increased 48% or 50% on a constant currency basis, accounting for 22% of total C2C revenue [21] - Digital-initiated transactions accounted for 31% of C2C segment transactions, up from 15% in the second quarter of 2019 [11] Market Data and Key Metrics Changes - North America revenue declined 6% on a reported basis, while transactions declined 7%, with improvements noted each month throughout the quarter [22] - Revenue in the Europe and CIS region decreased 10% on a reported basis, but transactions grew 4% due to strength in Russia [23] - Latin America and Caribbean region revenue decreased 45% on a reported basis, attributed to restrictive government policies [24] Company Strategy and Development Direction - The company is focused on three key objectives: driving digital growth, enhancing the global network, and optimizing the organization [14] - The current environment has benefited the broader digital money transfer market, with a focus on acquiring new customers and enhancing services like real-time payments [15] - The company continues to enhance its global distribution network, renegotiating agreements with agents and increasing real-time account payout capabilities [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macro environment has improved since the significant drop-off in March and April, uncertainty remains due to COVID-19 [13] - The company is not reissuing 2020 financial targets at this time, citing continued caution in the operating environment [13] - Management expressed confidence in the company's ability to deliver solid margins despite softer revenue trends, with a flexible cost structure allowing for adjustments [33] Other Important Information - The company generated healthy cash flow, returning nearly $93 million in dividends to shareholders in the second quarter [30] - The company has an undrawn $1.5 billion revolving credit facility and no significant debt maturities until 2022, maintaining a strong financial position [30] Q&A Session Summary Question: Transaction growth and principal growth expectations - Management indicated that while the World Bank forecasts a 20% decline in the remittance market, they believe their growth trajectory is different, with low single-digit growth in cross-border principal and over 20% growth in June and July [37] Question: Performance of the white label business - Management highlighted strong performance in the white label business, primarily with financial institutions, and noted that the sales cycle is longer but the opportunity is significant [40] Question: Digital versus retail customer mix - Management confirmed that 80% of new customers on the digital platform are new to Western Union, indicating a strong customer acquisition trend [44] Question: Impact of stimulus on transaction trends - Management noted that while government stimulus has helped the economy, it does not have a direct impact on sending principals, as customers are primarily looking for trusted brands [49] Question: Growth in specific corridors or geographies - Management reported broad-based improvement across key geographies, with Europe showing strong recovery and Latin America lagging due to later onset of COVID-19 [55]