MoneyGram 2005 Annual Report Download - page 77

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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
fails to meet the contractual terms of the derivative contract, the Company's risk is limited to the fair value of the instrument. The Company actively monitors
its exposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions as
counterparties. The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of
non-performance.
Note 6. Sale of Receivables
The Company has an agreement which expires in June 2006 to sell undivided percentage ownership interests in certain receivables, primarily from our money
order agents. The Company sells its receivables under this agreement to accelerate the cash flow available for investments. The receivables are sold to two
commercial paper conduit trusts and represent a small percentage of the total assets in each trust. The Company's rights and obligations are limited to the
receivables transferred, and the transactions are accounted for as sales. The assets and liabilities associated with the trusts, including the sold receivables, are
not recorded or consolidated in our financial statements. Under the agreement, the aggregate amount of receivables sold at any time cannot exceed
$450.0 million. The balance of sold receivables as of December 31, 2005 and 2004 was $299.9 million and $345.5 million, respectively. The average
receivables sold approximated $389.8 million and $404.6 million during 2005 and 2004, respectively. The agreement includes a 5% holdback provision of the
purchase price of the receivables. This expense of selling the agent receivables is included in the Consolidated Statement of Income in "Investment
commissions expense" and totaled $16.9 million, $9.9 million and $9.5 million during 2005, 2004 and 2003, respectively.
Note 7. Property and Equipment
Property and equipment consists of the following at December 31:
2005 2004
(Dollars in thousands)
Office furniture and equipment $ 23,167 $ 15,094
Leasehold improvements 8,952 5,072
Agent equipment 77,979 102,679
Computer hardware and software 104,811 81,712
214,909 204,557
Accumulated depreciation (109,364) (116,403)
$ 105,545 $ 88,154
Depreciation expense for the year ended December 31 is as follows:
2005 2004 2003
(Dollars in thousands)
Depreciation of office furniture, equipment, $ 2,043 $ 1,790 $ 1,928
Depreciation of leasehold improvements 1,714 482 391
Depreciation on agent equipment 12,732 12,776 12,561
Amortization expense of capitalized software 13,854 12,453 10,514
Total depreciation expense $ 30,343 $ 27,501 $ 25,394
F-23