Financial highlights for the quarter included:

* Revenue of $1.3 billion, an increase of 2% compared to last year's second quarter
* Constant currency adjusted revenue increase of 3%
* Restructuring expenses of $35 million, or $22 million after-tax, related to organizational changes and other actions described in the Company's May 27, 2010 press release
* Operating income margin of 24% (GAAP), or 27% excluding restructuring expenses, compared to 27% in last year's second quarter
* EPS of $0.33 (GAAP), or $0.36 excluding restructuring expenses
* EPS of $0.37 on a constant currency basis, excluding restructuring expenses
* Year-to-date cash provided by operating activities of $326 million, including a $250 million reduction due to a first quarter refundable tax deposit

Operational highlights for the quarter included:

* Grew global consumer-to-consumer (C2C) transactions by 9%, led by accelerating trends in the Americas region
* The European Union delivered overall transaction growth despite economic challenges in certain countries
* Transactions in the Gulf States declined modestly
* Realized further progress in the U.S. domestic money transfer business, with 28% domestic transaction growth in the quarter
* Initiated organizational changes to improve efficiency and drive long-term growth
* Further advanced strategic initiatives in electronic channels, including increased distribution of prepaid cards to over 500,000 cards-in-force
* Signed agreement with Family Dollar to offer the Western Union® goCASH℠ prepaid in-lane money transfer service at more than 6,500 stores in the U.S.
* Received authorization to offer global money transfer services in Japan and launched with Travelex in July
* Added to European retail location opportunity through an agreement with OMV to offer money transfer services at more than 1,800 gas stations across eight European Union countries
* Expanded banking distribution in the Philippines by entering an alliance with the Philippine National Bank, which has the country's largest offshore bank network. Other key agent additions included Bandhan Financial Services, a major microfinance services company in India with over 800 locations across the country, and Yapi Kredi, one of the largest banks in Turkey with over 800 locations.
* Grew agent locations to approximately 430,000
* Completed $217 million in share repurchases and paid $40 million in quarterly dividends

Western Union President and Chief Executive Officer Christina A. Gold said, "The increased momentum we experienced in the first quarter has continued into the second, as each of our regions contributed to solid transaction growth. As I enter my last few weeks with Western Union I believe the foundation is solid, with a strong brand, an unmatched global network, and an energized management team. We are confident the strategies of profitable growth in money transfer, rapid development of electronic channels, and expansion of business payments are the right ones to achieve success."

Chief Operating Officer and CEO-Elect Hikmet Ersek added, "The second quarter results demonstrate the benefits of our diversified geographic portfolio. Although the global economy remains challenging in many parts of the world, our overall business continues to improve. Transaction trends increased, and we delivered solid margins. As a result of our first half performance, we are raising our earnings per share outlook for the year, excluding restructuring charges."

Ersek added, "We plan to build on our momentum by leveraging our many competitive advantages to enhance our speed and execution, add new services and channels, and improve our productivity. The organizational changes we initiated in the quarter are one step towards improving our efficiencies and driving growth over the long-term."

As previously announced, Ersek will become CEO upon Gold's retirement on September 1, 2010.

Consolidated Results

Second quarter consolidated revenue of $1.3 billion increased 2% from the prior year. Constant currency revenue growth was 3%, or 1% excluding Custom House. The constant currency growth rate improved approximately 200 basis points compared to the first quarter, supported by stronger consumer-to-consumer trends in the Americas region.

Operating income margin was 24%, or 27% excluding $35 million of pre-tax restructuring expenses, compared to 27% in last year's second quarter. The Company expects to record a total of approximately $80 million of restructuring charges through 2011, a majority of which is expected to occur during 2010. The restructuring charges relate primarily to organizational changes designed to simplify business processes, move decision-making closer to the marketplace, and leverage the cost structure. The Company expects pre-tax savings from the initiatives of approximately $10 million in 2010, $30 million to $40 million in 2011, and $50 million annualized beginning in 2012. Restructuring expenses are not reflected in segment operating results.

GAAP earnings per share were $0.33, or $0.36 excluding restructuring expenses. On a constant currency basis, earnings per share were $0.37 excluding restructuring expenses. Resolution of certain tax matters with the U.S. Internal Revenue Service relating to the 2002-2004 tax years benefited GAAP EPS by approximately $0.01 in the quarter. EPS in the same period last year was $0.31.

Consumer-to-Consumer Segment Results

The consumer-to-consumer segment represented 84% of Western Union's revenue at $1.1 billion in the quarter, an increase of 1%, or 2% on a constant currency basis, compared to the prior year. Operating income margin was 29%, which compared to 28% in the second quarter of 2009.

Western Union handled 53 million C2C transactions, a 9% increase over last year's second quarter. This represents the third consecutive quarter of accelerating transaction growth.

For the international portion of C2C, revenue increased 2%, or 4% constant currency adjusted, on transaction growth of 7%. Revenue from the subset of the international business, those transactions that originate outside the U.S., increased 1%, or 3% constant currency adjusted, on transaction growth of 7%.

The Europe, Middle East, Africa and South Asia (EMEASA) region's revenue declined 1% while transactions increased 5% compared to last year's second quarter. EMEASA revenue was negatively impacted by currency translation, primarily due to the decline in value of the Euro. On a constant currency basis, EMEASA revenues increased in the quarter. Despite economic challenges in certain European countries, the European Union overall delivered transaction growth. India recorded increases in revenue of 4% and transactions of 3% in the quarter, while the Gulf States had moderate transaction declines.

The Americas region increased revenue 1% on transaction growth of 12%. The region's transaction improvement was driven by strong growth in U.S. domestic money transfer, positive trends in Mexico, and continued strength in U.S.-originated transactions to the rest of the world. Domestic transactions increased 28%, while revenue declined 10%. The repositioning of the U.S. domestic business has contributed to significant increases in transactions, and the Company expects domestic revenue growth to follow later in the year. In Mexico, revenue increased 4% and transactions grew 5%.

The Asia Pacific (APAC) region increased revenues by 11% on transaction growth of 14%. China revenue grew 11% as transactions were up 6% in the quarter.

Global Business Payments Segment Results

The Global Business Payments segment represented 14% of Western Union's revenue in the quarter. Revenue was $179 million, an increase of 9% compared to the same period in 2009. Custom House, which was acquired in September of 2009, contributed $28 million of revenue in the quarter, an increase from $26 million in the first quarter. Excluding Custom House, segment revenue decreased 8% due to declines in the U.S. bill payment business. Operating income margin was 19%, or 25% excluding Custom House, compared to 27% in the second quarter of the prior year. The Company continues to invest in Custom House to drive future business-to-business expansion.

Electronic Channel Initiatives

The development of electronic channel initiatives continued in the second quarter. The Company increased its prepaid cards-in-force to over 500,000 and retail distribution expanded to over 8,000 locations. Westernunion.com transactions in international markets increased more than 60% in the quarter. Account based money transfer, which includes account-to-cash and cash-to-account service with banks, experienced transaction increases of over 70% in the quarter. Banks that have agreed to join the Company's electronic channel initiative by offering account based money transfer now total 20.

In mobile money transfer, over 60,000 agent locations in 17 countries have now been enabled to provide cash-to-mobile service. In addition, a pilot mobile-to-cash service has been initiated in Malaysia, and Western Union money transfer is now available through mobile banking in South Africa with Absa, a subsidiary of Barclays Bank.

Electronic channels, which are included in the C2C and Other reporting segments, represented 2% of total company revenue in the quarter.

Capital Deployment & Liquidity

Western Union's year-to-date cash flow from operations was $326 million, including a reduction due to a $250 million refundable tax deposit with the IRS in the first quarter. Capital expenditures in the second quarter totaled $29 million. In the quarter the Company repurchased 13.3 million of its shares for $217 million, at an average price of $16.32 per share, and paid $40 million in dividends. Year-to-date the Company has repurchased 25.7 million shares for $417 million, at an average price of $16.25 per share. As of June 30, 2010 the Company had $583 million remaining under its current stock repurchase authorization. On June 21, the Company issued $250 million principal amount of 6.20% notes due 2040.

Outlook

The Company now expects the following full year 2010 results:

* GAAP revenue in a range of -2% to +1%
* Constant currency revenue growth 2% higher than GAAP (0% to +3%)
* GAAP EPS of $1.24 to $1.29, including $0.07 of restructuring charges
* EPS excluding restructuring charges of $1.31 to $1.36
* Constant currency EPS $0.02 higher
* GAAP cash flows from operating activities of $800 million to $900 million, including a $250 million reduction due to the first quarter refundable tax deposit

Based on first half performance and current business trends, the Company has increased its constant currency EPS outlook, excluding restructuring charges, by $0.04. The outlook for reported EPS, excluding restructuring charges, has been increased by $0.02 due to offsets from the negative impact of foreign currency translation. The restructuring charge is expected to impact GAAP EPS by approximately $0.07.

The EPS outlook before restructuring charges is benefiting from higher constant currency revenues, a lower tax rate, and restructuring savings, partially offset by negative foreign currency translation and higher interest expense related to the issuance of $250 million of long-term debt.

The constant currency revenue outlook has increased by 1% compared to the prior outlook, primarily due to improved results in the Americas. The GAAP revenue outlook has decreased by 1% due to an expected negative impact from foreign currency translation, partially offset by the increase in constant currency revenues. The outlook assumes no significant changes in the global economy.