Western Union Reports Fourth Quarter and Full Year Results.

- Fourth Quarter Revenue Up 10%, EPS of $0.28 - - Reaffirms 2007 Revenue and Earnings Guidance -

ENGLEWOOD, Colo. -- The Western Union Company (NYSE: WU) today reported financial results for the fourth quarter and full year 2006 that were in line with previously announced guidance.

Highlights for the fourth quarter include:

* Revenue of $1.2 billion, up 10%

* Operating income of $335 million

* Net income of $217 million

* Earnings per share of $0.28

* Operating income margin of 28.6%

Highlights for 2006 include:

* Revenue of $4.5 billion, up 12%

* Operating income of $1.3 billion

* Cash provided by operating activities of $1.1 billion

* Agent network totaling more than 295,000 locations at year-end

* Increased global share of the estimated cross-border remittance market to 17.4%

"The fourth quarter was in line with our expectations and capped another strong year for Western Union," said President and CEO Christina Gold. "We further expanded our global presence, and now have an agent network totaling approximately 300,000 locations spanning 200 countries and territories. We continued to deliver outstanding performance in our international consumer-to-consumer business, which comprises more than 60% of total revenue. In 2006, more than 85% of the nearly 150 million consumer-to-consumer transactions we handled involved an agent outside the U.S., continuing a long-standing trend toward increasing the global diversification of the Western Union business."

Fourth Quarter Results

Revenue for the fourth quarter increased 10% to $1.2 billion. Fourth quarter revenue growth was 9% excluding Vigo, which was acquired October 21, 2005, and Servicio Electronico De Pago S.A. (SEPSA), a walk-in bill payment company based in Argentina with more than 3,300 locations, which was acquired December 6, 2006.

Consumer-to-consumer revenue was $990 million, up 11% driven by transaction growth of 16%, or 14% excluding Vigo. In the quarter, the international money transfer business continued to deliver strong results.

Transaction growth in the international business was 23%, or 21% excluding Vigo. International revenue growth remained strong at 17%. Two key markets, India and China, continued their robust growth during the fourth quarter. China posted 31% transaction growth and India nearly doubled its transactions from the fourth quarter 2005.

Transaction and revenue growth within the Mexico and domestic businesses continued to be impacted by decreased demand among Hispanic consumers, partially reflecting the immigration debate in the U.S. Mexico transactions grew 11%, or 1% excluding Vigo. Domestic transactions declined 7% impacted by the immigration debate as well as general softness in the marketplace. For both the Mexico and domestic businesses, revenue and transaction growth rates were stronger in December than the first two months of the quarter.

Western Union continued to strengthen its agent network through key renewals and new signings. Among these were: Rite-Aid in the U.S., La Banque Postale in France, Agricultural Bank of China, Weizmann Forex Limited and Paul Merchant Ltd. in India, United Bank Limited in Pakistan, National Development Bank in Sri Lanka, Lietuvos Pastas in Lithuania, Banque du Sud in Tunisia, Indian Oil Corporation, the Cameroon Post, as well as GE Money Switzerland, and a pilot with GE Money Austria.

The consumer-to-business segment grew revenue 7% to $162 million. The SEPSA acquisition, which added $4 million of revenue in the quarter, marked an important step in the globalization of the consumer-to-business segment.

Fourth quarter operating income of $335 million included incremental expenses related to operating as an independent, stand-alone public company of $9 million. Net income of $217 million benefited from a tax rate in the fourth quarter of 29%, versus the 32% recognized in the first three quarters of the year. The lower tax rate in the quarter was primarily driven by favorable resolution of certain tax matters.

Full Year Results

Revenue for 2006 increased 12% to $4.5 billion and operating income was $1.3 billion. Excluding the Vigo and SEPSA acquisitions, revenue growth was 9%.

The operating margin for the year was 29.3% compared with 31.8% in 2005. Full-year operating margin was primarily impacted by:

* Ongoing mix shift from the higher margin domestic and Mexico businesses to the faster growing, lower margin international business

* Completion of the Vigo acquisition in the fourth quarter of 2005, which contributed $141 million in revenue in 2006 and generated a moderate loss

* $25 million of expenses related to operating as a stand-alone, independent company

Western Union continues to generate strong cash flow. Cash provided by operating activities was $1.1 billion, slightly higher than expected as a result of the timing of a tax payment which was deferred from 2006 until 2007. Capital expenditures were $202 million. Cash at year end was $1.4 billion and total outstanding debt was $3.3 billion.

During 2006, Western Union repurchased 875,000 shares for $19.9 million at an average cost of $22.79 per share. Under Western Union's stock buyback program, $980 million is available to repurchase stock through 2008.

2007 Outlook

The company reaffirmed the existing 2007 guidance of revenue growth of 10% to 12% excluding acquisitions and operating income growth in the range of 6% to 9% excluding the impact of incremental public company expenses. This guidance reflects management's continued expectation that international consumer-to-consumer markets will remain strong, while trends in the U.S. and Mexico money transfer corridors will improve beginning in the second quarter as a result of marketing initiatives and easier comparisons with the prior year.

Incremental revenue from Western Union's acquisition of SEPSA on December 6, 2006 is expected to add approximately 1 percentage point to revenue growth in 2007. As a result, the company expects 2007 GAAP revenue growth to be between 11% and 13%.

Management continues to expect that operating income will grow between 6% to 9% in 2007 excluding incremental public company expenses, or 3% to 6% on a GAAP basis. Western Union expects GAAP EPS for 2007 of between $1.07 and $1.11. The EPS range includes an estimated $60 to $65 million of incremental public company expenses, an approximately $110 million net expense from interest expense, interest income and other income, a tax rate of approximately 32% and weighted average diluted shares outstanding of approximately 780 to 785 million. Profit and EPS growth are expected to accelerate during the year as investments aimed at improving the domestic and Mexico consumer-to-consumer businesses are more heavily weighted toward the first six months of the year, and as revenue growth trends are anticipated to be stronger in the second half of 2007.

The estimated $60 to $65 million in incremental public company expenses is an improvement from the previously stated range of $65 to $75 million. The reduction in this estimate is the result of increased visibility into the actual expenses required to operate as an independent company and refinements to the original plan.

Cash provided by operating activities is expected to be approximately $900 million. The 2007 cash flow will be impacted by a full year of interest expense, the incremental public company expenses and the deferral into 2007 of the previously mentioned tax payment. Capital expenditures are expected in the range of $200 to $250 million.

Gold added, "I am confident in our ability to deliver on the 2007 financial targets we established last year, which anticipate the Mexico and domestic businesses beginning to improve in the second quarter. We are confident in our action plans and remain committed to investing early in the year to deliver the expected results. Equally important, our international business remains very strong based on the continued growth of global migration, the power of our brand, and the continued growth of our agent network. We enter our first full year as an independent public company more excited than ever about our prospects."

Non-GAAP Measures

Western Union's management uses operating income growth excluding the impact from incremental public company expenses and revenue excluding acquisitions which are non-GAAP measures, as they provide a more meaningful year-over-year comparison.

Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the "Investor Relations" section of the company's web site at www.westernunion.com.

Investor and Analyst Conference

Western Union will host a conference call and webcast scheduled for 8:00 a.m. Eastern Time on February 1, 2007. During the conference call, Western Union President and CEO Christina Gold will discuss fourth quarter and full-year results, as well as the outlook for 2007. Joining Christina on the conference call will be David Barnes, Executive Vice President of Strategy and Finance; and Scott Scheirman, Executive Vice President and CFO.

To listen to the conference call on February 1 via telephone, dial 800-510-9691 (U.S.) or [phone] (outside the U.S.) ten minutes prior to the start of the call. The pass code is 18333414.

The conference call will also be available via webcast at www.westernunion.com. Registration for the event is required, so please allow at least five minutes to register prior to the scheduled start time.

A replay of the call will be available one hour after the call ends through February 9, 2007 at 5:00 p.m. Eastern Time at 888-286-8010 (U.S.) or [phone] (outside the U.S.). The pass code is 96422645. A webcast replay will be available at www.westernunion.com for the same time period.

Please note: All statements made by Western Union officers on this call are the property of Western Union and subject to copyright protection. Other than the replay, Western Union has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.

Safe Harbor Compliance Statement for Forward-Looking Statements

This press release contains forward-looking statements regarding projected future results. Forward-looking statements include all statements that do not relate solely to historical or current facts, and generally can be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan," "could," "would," "likely," "intend," or "continue." All forward-looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected. These factors include, but are not limited to: the impact of our spin-off from First Data Corporation; changes in immigration laws, patterns and other factors related to immigrants; the integration of significant businesses and technologies we acquire and realization of anticipated synergies from these acquisitions; technological changes, particularly with respect to e-commerce; our ability to attract and retain qualified key employees; changes in laws, regulations or industry standards affecting our businesses; changes in foreign exchange spreads on money transfer transactions; changes in the political or economic climate in countries in which we operate; continued growth in the consumer money transfer market and other markets in which we operate at rates approximating recent levels; our ability to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, United States and international banks, card associations, card-based payments providers and a number of other types of competitive service providers; our ability to maintain our agent network; implementation of Western Union agent agreements with governmental entities according to schedule and no interruption of relations with countries in which Western Union has or is implementing material agent agreements; successfully managing the potential both for patent protection and patent liability in the context of rapidly developing legal framework for expansive software patent protection; successfully managing credit and fraud risks from our agents and from consumers; unanticipated developments relating to lawsuits, investigations or similar matters; catastrophic events; any material breach of security of any of our systems; and other risk factors described from time to time in Western Union's filings with the SEC .

About Western Union

The Western Union Company (NYSE: WU) is a leader in global money transfer services. Together with its affiliates, Orlandi Valuta and Vigo, Western Union provides consumers with fast, reliable and convenient ways to send and receive money around the world, as well as send payments and purchase money orders. It operates through a network of approximately 300,000 Agent locations in over 200 countries and territories. Famous for its pioneering telegraph services, the original Western Union dates back to 1851. For more information, visit www.westernunion.com.

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