MoneyGram 2005 Annual Report Download - page 4

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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 formerly known as Travelers Express Company, Inc. ("Travelers"), which has been in
operation since 1940. In June 1998, we acquired MoneyGram Payment Systems, Inc. ("MPSI"), adding the 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 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."
In April 2005, we acquired substantially all of the assets of ACH Commerce, LLC ("ACH Commerce"), an automated clearing house ("ACH") payment
processor. The acquisition provides the Company with the technology to expand its bill payment services.
In 2005, we consolidated the operations of Travelers with MPSI to eliminate duplication and overlapping costs of operating the two businesses under separate
corporate entities, and to continue the transition of our business from the Travelers Express brand to the MoneyGram brand. Effective December 31, 2005, the
entity that was formerly Travelers merged with and into MPSI, with MPSI remaining as the surviving corporation.
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 2005 and 2004, our ten largest agents accounted for
31 percent and 27 percent, respectively, of our total revenue and 46 percent and 41 percent, respectively, of the revenue of our Global Funds Transfer
segment. Our largest agent, Wal-Mart Stores, Inc., accounted for 13 percent and 9 percent of our total revenue and
1