This report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could" are intended to identify such forward-looking statements. Readers of the Form 10-Q of The Western Union Company (the "Company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed in the "Risk Factors" section and throughout the Annual Report on Form 10-K for the year ended December 31, 2011. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.

Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: (i) events related to our business and industry, such as:
deterioration in consumers' and clients' confidence in our business, or in money transfer and payment service providers generally; changes in general economic conditions and economic conditions in the regions and industries in which we operate, including global economic downturns and financial market disruptions; political conditions and related actions in the United States and abroad which may adversely affect our business and economic conditions as a whole; interruptions of United States government relations with countries in which we have or are implementing material agent contracts; changes in, and failure to manage effectively exposure to, foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; changes in immigration laws, interruptions in immigration patterns and other factors related to migrants; our ability to adapt technology in response to changing industry and consumer needs or trends; our failure to develop and introduce new services and enhancements, and gain market acceptance of such services; mergers, acquisitions and integration of acquired businesses and technologies into our Company, and the realization of anticipated financial benefits from these acquisitions; decisions to downsize, sell or close units, or to transition operating activities from one location to another or to third parties, particularly transitions from the United States to other countries; decisions to change our business mix; failure to manage credit and fraud risks presented by our agents, clients and consumers or non-performance by our banks, lenders, other financial services providers or insurers; adverse movements and volatility in capital markets and other events which affect our liquidity, the liquidity of our agents or clients, or the value of, or our ability to recover our investments or amounts payable to us; any material breach of security or safeguards of or interruptions in any of our systems; our ability to attract and retain qualified key employees and to manage our workforce successfully; our ability to maintain our agent network and business relationships under terms consistent with or more advantageous to us than those currently in place; adverse rating actions by credit rating agencies; failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other money transfer services providers, including telecommunications providers, card associations, card-based payment providers and electronic and Internet providers; our ability to protect our brands and our other intellectual property rights; our failure to manage the potential both for patent protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection; changes in tax laws and unfavorable resolution of tax contingencies; cessation of various services provided to us by third-party vendors; material changes in the market value or liquidity of securities that we hold; restrictions imposed by our debt obligations; significantly slower growth or declines in the money transfer market and other markets in which we operate; and changes in industry standards affecting our business;(ii) events related to our regulatory and litigation environment, such as: the failure by us, our agents or their subagents to comply with laws and regulations designed to detect and prevent money laundering, terrorist financing, fraud and other illicit activity; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, governmental or judicial interpretations thereof and industry practices and standards; liabilities resulting from a failure of our agents or subagents to comply with laws and regulations; increased costs due to regulatory initiatives and changes in laws, regulations and industry practices and standards affecting our agents; liabilities and unanticipated developments resulting from governmental investigations and consent agreements with, or enforcement actions by, regulators, including those

associated with compliance with, or a failure to comply with, the settlement agreement with the State of Arizona; the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the rules promulgated there-under and the creation of the Consumer Financial Protection Bureau; liabilities resulting from litigation, including class-action lawsuits and similar matters, including costs, expenses, settlements and judgments; failure to comply with regulations regarding consumer privacy and data use and security; effects of unclaimed property laws; failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our regulators worldwide; and changes in accounting standards, rules and interpretations; and (iii) other events, such as: adverse consequences from our spin-off from First Data Corporation; catastrophic events; and management's ability to identify and manage these and other risks. Overview
We are a leading provider of money movement services, operating in three business segments:
• Consumer-to-Consumer - The Consumer-to-Consumer operating segment facilitates money transfers between two consumers, primarily through a network of third-party agents. Our multi-currency, real-time money transfer service is viewed by us as one interconnected global network where a money transfer can be sent from one location to another, around the world. Our money transfer services are available for international cross-border transfers - that is, the transfer of funds from one country to another - and, in certain countries, intra-country transfers - that is, money transfers from one location to another in the same country. This segment also includes money transfer transactions that can be initiated through our websites and account based money transfers.

• Consumer-to-Business - The Consumer-to-Business operating segment facilitates bill payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. This segment primarily consists of United States bill payments, Pago Fácil (bill payments in Argentina), and international bill payments. The significant majority of the segment's revenue was generated in the United States during all periods presented.

• Business Solutions - The Business Solutions operating segment facilitates business-to-business payment solutions, primarily cross-border, cross-currency transactions, mainly for small and medium size enterprises and other organizations. The majority of the segment's business relates to exchanges of currency at the spot rate which enables customers to make cross-currency payments. In addition, in certain countries, we write foreign currency forward and option contracts for customers to facilitate future payments. Travelex Global Business Payments ("TGBP"), which was acquired in November 2011, is also included in this segment.

All businesses that have not been classified in the above segments are reported as "Other" and include our money order, prepaid services, mobile money transfer, and other businesses and services, in addition to costs for the investigation and closing of acquisitions.
Our previously reported segments were Consumer-to-Consumer, Global Business Payments, and Other. The changes in our segment structure primarily relate to the separation of the Global Business Payments segment into two new reportable segments, Consumer-to-Business and Business Solutions. All prior segment information has been reclassified to reflect these new segments. Significant Financial and Other Highlights Significant financial and other highlights for the three and six months ended June 30, 2012 included:

• We generated $1,425.1 million and $2,818.5 million in total consolidated revenues, respectively, compared to $1,366.3 million and $2,649.3 million, respectively, for the comparable periods in the prior year, representing an increase of 4% and 6%, respectively. The acquisition of TGBP contributed approximately 4% of consolidated revenue growth for both the three and six months ended June 30, 2012.

• We generated $345.9 million and $678.4 million in consolidated operating income, respectively, compared to $350.7 million and $663.6 million, respectively, for the comparable periods in the prior year, representing a decrease of 1% and an increase of 2%, respectively. The current year results include $14.5 million and $20.9 million, respectively, of integration expenses resulting from the acquisition of TGBP. The prior year results include $8.9 million and $32.9 million, respectively, of restructuring and related expenses. For additional information on TGBP integration and restructuring and related expenses, refer to "Operating expenses overview."

• Our operating income margin was 24% for both the three and six month periods ended June 30, 2012, compared to 26% and 25%, respectively, for the comparable periods in the prior year.

• Our effective tax rate was 12.5% and 13.6%, respectively, compared to 21.1% and 22.2%, respectively, for the comparable periods in the prior year, primarily due to an agreement with the United States Internal Revenue Service ("IRS Agreement") resolving substantially all of the issues related to our restructuring of our international operations in 2003. We continue to benefit from a significant proportion of our profits being foreign-derived, and therefore taxed at lower rates than our combined federal and state tax rates in the United States. For the three and six months ended June 30, 2012, 83% and 84%, respectively, of our pre-tax income was from foreign sources. While the income tax imposed by any one foreign country is not material to us, our overall effective tax rate could be adversely affected by changes in tax laws, both foreign and domestic. Certain portions of our foreign source income are subject to United States federal and state income tax as earned due to the nature of the income, and dividend repatriations of our foreign source income are generally subject to United States federal and state income tax.

• Consolidated net income was $271.2 million and $518.5 million, respectively, representing an increase of 3% and 10%, respectively, over the comparable periods in the prior year. The current year results include $10.2 million and $14.5 million of TGBP integration expenses, net of tax, respectively. The prior year results include $5.9 million and $22.3 million in restructuring and related expenses, net of tax, respectively, and an $18.3 million gain, net of tax, related to our acquisition of Angelo Costa S.r.l. ("Costa").

• Our consumers transferred $20.1 billion and $39.6 billion in Consumer-to-Consumer principal, respectively, of which $18.2 billion and $35.7 billion related to cross-border principal, respectively, which represented decreases of 2% in both Consumer-to-Consumer principal and cross-border principal over the three months ended in the prior year, and flat Consumer-to-Consumer principal and cross-border principal over the six months ended in the prior year.

• Consolidated cash flows provided by operating activities for the six months ended June 30, 2012 and 2011 were $445.7 million and $506.3 million, respectively. Cash flows provided by operating activities for the six months ended June 30, 2012 were impacted by tax payments of approximately $100 million made as a result of the IRS Agreement.

Results of Operations
The following discussion of our consolidated results of operations and segment results refers to the three and six months ended June 30, 2012 compared to the same periods in 2011. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the Condensed Consolidated Statements of Income. All significant intercompany accounts and transactions between our segments have been eliminated.

There were no restructuring and related expenses incurred during the three and six months ended June 30, 2012, but we incurred expenses of $8.9 million and $32.9 million for the three and six months ended June 30, 2011, respectively, which were not allocated to the segments. While these items were identifiable to our segments, they were not included in the measurement of segment operating profit provided to the Chief Operating Decision Maker ("CODM") for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on restructuring and related activities refer to "Operating Expenses Overview."

Overview
The following table sets forth our results of operations for the three and six
months ended June 30, 2012 and 2011.
                                           Three Months Ended                         Six Months Ended
                                                June 30,                                  June 30,
(in millions, except per share
amounts)                            2012          2011        % Change        2012          2011        % Change
Revenues:
Transaction fees                 $ 1,059.4     $ 1,057.0          0  %     $ 2,100.3     $ 2,055.0          2  %
Foreign exchange revenues            334.6         279.2         20  %         657.2         535.3         23  %
Other revenues                        31.1          30.1          3  %          61.0          59.0          3  %
Total revenues                     1,425.1       1,366.3          4  %       2,818.5       2,649.3          6  %
Expenses:
Cost of services                     797.5         764.2          4  %       1,580.5       1,509.6          5  %
Selling, general and
administrative                       281.7         251.4         12  %         559.6         476.1         18  %
Total expenses                     1,079.2       1,015.6          6  %       2,140.1       1,985.7          8  %
Operating income                     345.9         350.7         (1 )%         678.4         663.6          2  %
Other income/(expense):
Interest income                        1.2           1.3         (8 )%           2.7           2.5          8  %
Interest expense                     (45.1 )       (44.2 )        2  %         (89.5 )       (87.6 )        2  %
Derivative gains/(losses), net        (0.7 )        (1.3 )      (46 )%           0.9           0.6         50  %
Other income, net                      8.8          26.9        (67 )%           7.7          29.0        (73 )%
Total other expense, net             (35.8 )       (17.3 )        *            (78.2 )       (55.5 )       41  %
Income before income taxes           310.1         333.4         (7 )%         600.2         608.1         (1 )%
Provision for income taxes            38.9          70.2        (45 )%          81.7         134.7        (39 )%
Net income                       $   271.2     $   263.2          3  %     $   518.5     $   473.4         10  %
Earnings per share:
Basic                            $    0.44     $    0.42          5  %     $    0.84     $    0.74         14  %
Diluted                          $    0.44     $    0.41          7  %     $    0.84     $    0.74         14  %
Weighted-average shares
outstanding:
Basic                                610.9         631.1                       615.0         639.0
Diluted                              613.1         635.8                       617.5         644.0


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Revenues Overview

The majority of transaction fees and foreign exchange revenues were contributed by our Consumer-to-Consumer segment, which is discussed in greater detail in "Segment Discussion."

For the three and six months ended June 30, 2012 compared to the corresponding periods in the prior year, consolidated revenue increased 4% and 6%, respectively, due to Consumer-to-Consumer transaction growth and the acquisition of TGBP, which contributed approximately 4% to consolidated revenue growth for both periods, partially offset by the strengthening of the United States dollar compared to most other foreign currencies and slight price reductions. The strengthening of the United States dollar compared to most other foreign currencies negatively impacted revenue growth by approximately 3% and 2% for the three and six months ended June 30, 2012, respectively. Revenue for the six months ended June 30, 2012 was also negatively impacted by geographic and product mix.

The majority of the revenues in our Consumer-to-Consumer segment are recognized in the Europe and the Commonwealth of Independent States ("CIS") and North America regions. These two regions represented 22% and 21% of our total consolidated revenue for both the three and six months ended June 30, 2012, respectively. For the three and six months ended June 30, 2012 compared to the same periods in 2011, the Europe and CIS region experienced revenue declines of 8% and 4%, respectively, on transaction declines of 2% and 1%, respectively. The strengthening of the United States dollar compared to most other foreign currencies and price reductions negatively impacted revenues in the region for the three and six months ended June 30, 2012. The region has been impacted by continued economic softness in Southern Europe and increased competition in Russia. For the three and six months ended June 30, 2012, the North America region experienced flat revenue and revenue growth of 2%, respectively, on transaction growth of 2% and 4%, respectively, partially offset by geographic and product mix. For the three and six months ended June 30, 2012, we experienced revenue growth in our domestic business (transactions between and within the United States and Canada) due to transaction growth. Additionally, our United States outbound business experienced transaction and revenue growth in the three and six months ended June 30, 2012; however, transaction and revenue growth moderated in the three months ended June 30, 2012 compared to the first quarter of 2012 in both our domestic and United States outbound businesses. Our Mexico business declined for the three and six months ended June 30, 2012, partially due to changes to our compliance related practices and business model.

Foreign exchange revenues increased for the three and six months ended June 30, 2012 over the corresponding previous periods due to the acquisition of TGBP and increasing foreign exchange revenues in our Consumer-to-Consumer segment, driven primarily by revenue from our international business.

Fluctuations in the exchange rate between the United States dollar and currencies other than the United States dollar have resulted in a reduction to transaction fees and foreign exchange revenues for the three and six months ended June 30, 2012 of $34.6 million and $42.7 million, respectively, over the same periods in the previous year, net of foreign currency hedges, that would not have occurred had there been constant currency rates.

No individual country, other than the United States, represented more than approximately 7% of our consolidated revenues during both of the three and six month periods ended June 30, 2012 and 2011. Operating Expenses Overview
TGBP integration expenses

During the three and six months ended June 30, 2012, we incurred $14.5 million and $20.9 million, respectively, of integration expenses related to the acquisition of TGBP. TGBP was acquired on November 7, 2011. TGBP integration expense consists primarily of severance and other benefits, retention, direct and incremental expense consisting of facility relocation, consolidation and closures; IT systems integration; amortization of a transitional trademark license; and other expenses such as training, travel and professional fees. Integration expense does not include costs related to the completion of the TGBP acquisition. We expect to incur integration expenses resulting from the acquisition of TGBP throughout the remainder of 2012 and in 2013.

Restructuring and related activities

On May 25, 2010 and as subsequently revised, our Board of Directors approved a restructuring plan (the "Restructuring Plan") designed to reduce our overall headcount and migrate positions from various facilities, primarily within North America and Europe, to regional operating centers. As of September 30, 2011, we had incurred all of the expenses related to this Restructuring Plan. Total expense incurred under the Restructuring Plan from the period from May 25, 2010 through September 30, 2011 was $106 million, of which $8.9 million and $32.9 million was recognized in the three and six months ended June 30, 2011, respectively. Total cost savings of approximately $70 million are expected to be generated in 2012 and annually thereafter. We recognized $55 million of cost savings related to the Restructuring Plan in 2011.

There were no restructuring and related expenses incurred during the three and six months ended June 30, 2012, but for the three and six months ended June 30, 2011, expenses of $0.5 million and $7.4 million, respectively, are classified within "Cost of services" and $8.4 million and $25.5 million, respectively, are classified within "Selling, general and administrative" in the Condensed Consolidated Statements of Income.

Cost of services

Cost of services primarily consists of agent commissions, which represent approximately 70% of total cost of services for both the three and six months ended June 30, 2012. Also included in cost of services are expenses for call centers, settlement operations and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation, amortization and other expenses incurred in connection with providing money transfer and other payment services. Cost of services increased for the three and six months ended June 30, 2012 compared to the same periods in the prior year primarily due to incremental costs associated with the TGBP acquisition, including depreciation and amortization. Cost of services also increased due to investments in our strategic initiatives and compliance program costs (see "Enhanced Regulatory Compliance" discussion below), partially offset by the strengthening of the United States dollar compared to most other foreign currencies, which resulted in a positive impact on the translation of our expenses, net commission savings, including the impact from the acquisitions of Finint S.r.l ("Finint") and Costa, and a net decrease in debit card bank fees due to the Durbin Amendment of the Dodd-Frank Act ("Durbin legislation"), which was effective beginning in the fourth quarter of 2011. The six months ended June 30, 2012 was also impacted by agent commissions, which increase in relation to revenue increases. Cost of services as a percentage of revenue was 56% for both the three and six months ended June 30, 2012, and 56% and 57% for the three and six months ended June 30, 2011, respectively. The change in cost of services as a percentage of revenue compared to the same periods in 2011 was primarily due to net commission savings, including the impact from the acquisitions of Finint and Costa and decreased debit card bank fees due to the Durbin legislation, partially offset by investments in our strategic initiatives and increased compliance program costs.

Selling, general and administrative

Selling, general and administrative expenses ("SG&A") increased for the three months ended June 30, 2012 compared to the same period in the prior year primarily due to increased expenses resulting from the acquisitions of TGBP, Finint and Costa, including integration costs, and investments in strategic initiatives and compliance program costs, partially offset by the strengthening of the United States dollar compared to most other foreign currencies, which resulted in a positive impact on the translation of our expenses, restructuring costs incurred in 2011, which did not recur in 2012, and lower marketing expense. SG&A increased for the six months ended June 30, 2012 compared to the same period in the prior year primarily due to increased expenses resulting from the acquisitions of TGBP, Finint and Costa, including integration costs, higher employee compensation and related expenses, investments in strategic initiatives and compliance program costs, partially offset by the restructuring costs incurred in 2011, which did not recur in 2012, and the strengthening of the United States dollar compared to most other foreign currencies, which resulted in a positive impact on the translation of our expenses.

Marketing-related expenditures, principally classified within SG&A, were 3.7% of revenue for both the three and six months ended June 30, 2012, and 4.1% and 3.7% for the three and six months ended June 30, 2011, respectively.
Marketing-related expenditures include advertising, events, costs related to administering our loyalty programs, and the cost of employees dedicated to marketing activities. When making decisions with respect to marketing investments, we review opportunities for advertising and other marketing-related expenditures together with opportunities for fee adjustments, as discussed in "Segment Discussion," for Consumer-to-Consumer revenues and other initiatives in order to best maximize the return on these investments.

Enhanced Regulatory Compliance

We regularly review our compliance programs. In connection with that review and growing global regulatory complexity, and as we dialogue with governmental and regulatory authorities, we have made, and continue to make, enhancements to our processes and systems designed to detect and prevent money laundering, terrorist financing, fraud and other illicit activity. These enhancements, along with other enhancements to improve consumer protection related to the Dodd-Frank Act . . .