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Table of Contents
PART I
Item 1. BUSINESS
MoneyGram International, Inc. ("MoneyGram," the "Company," "we," "us" and "our") is a leading global payment services company. Our mission is to
provide consumers with affordable, reliable and convenient payment services. We offer our products and services to consumers and businesses through our
network of agents and our financial institution customers. The diverse array of products and services we offer enables consumers, most of whom are not fully
served by traditional financial institutions, to make payments and to transfer money around the world, helping them meet the financial demands of their daily
lives.
Our business is conducted through our wholly owned subsidiary, Travelers Express Company, Inc. ("Travelers"), which has been in operation since 1940. We
acquired MoneyGram Payment Systems, Inc. in June 1998, adding MoneyGram® branded international money transfer services to our group of Global Funds
Transfer services. We were incorporated in Delaware on December 18, 2003 in connection with the June 30, 2004 spin-off from our parent company, Viad
Corp ("Viad") (referred to hereafter as the "spin-off"). In the spin-off, Travelers was merged with a wholly owned subsidiary of MoneyGram, and then Viad
distributed all the issued and outstanding shares of MoneyGram common stock to Viad stockholders in a tax-free distribution. Stockholders of Viad received
one share of MoneyGram common stock for every one share of Viad common stock owned. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations — Our Separation from Viad Corp."
In March 2004, we completed the sale of our subsidiary, Game Financial Corporation, for approximately $43.0 million in cash to continue our focus on our
core businesses. Game Financial Corporation provides cash access services to casinos and gaming establishments throughout the United States. See
"Management's Discussion and Analysis of Financial Condition and Results of Operations — Basis of Presentation."
For additional information regarding our business, including our financial results, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
We operate our business in two segments: Global Funds Transfer and Payment Systems. Following is a description of each segment. For financial information
regarding our segments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Segment
Performance" and Note 17 of the Notes to Consolidated Financial Statements.
Global Funds Transfer Segment
Our Global Funds Transfer segment provides money transfer services, money orders and bill payment services to consumers. Our primary consumers are
"unbanked," "underbanked" and "convenience users." "Unbanked consumers" are those consumers who do not have a traditional relationship with a financial
institution. "Underbanked consumers" are consumers who, while they may have a savings account with a financial institution, do not have a checking account.
"Convenience users" are consumers who, while they may have a checking account, prefer to use our products and services on the basis of convenience or
value.
We conduct our Global Funds Transfer operations through a worldwide network of agents. During 2004 and 2003, our ten largest agents accounted for
27 percent and 21 percent, respectively, of our total revenues and 41 percent and 35 percent of the revenues of our Global Funds Transfer segment. Our
largest agent accounted for nine percent and five percent of our total revenues and 14 percent and eight percent of the revenues of our Global Funds Transfer
segment in 2004 and 2003, respectively. In 2004, Global Funds Transfer segment revenue was $532.1 million and operating income was $102.6 million.
We provide Global Funds Transfer products and services utilizing a variety of proprietary point-of-sale platforms. We also operate two customer service call
centers in the United States and contract for additional call center services in Bulgaria. These call centers provide multi-lingual customer service for both
agents and consumers 24 hours per day, 365 days per year.
MoneyGram Money Transfers: Money transfers are transfers of funds between consumers from one location to another. Money transfers are used by
consumers who want to transfer funds quickly, safely and 1