MoneyGram 2005 Annual Report Download - page 95

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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 17. Segment Information
Our business is conducted through two reportable segments: Global Funds Transfer and Payment Systems. The Global Funds Transfer segment primarily
provides money transfer services through a network of global retail agents and domestic money orders. In addition, Global Funds Transfer provides a full line
of bill payment services. The Payment Systems segment primarily provides official check services for financial institutions in the United States, and processes
controlled disbursements. In addition, Payment Systems sells money orders through financial institutions in the United States. One agent in the Global Funds
Transfer segment accounted for over 10 percent of total revenue in 2005; no customer or agent in either segment accounted for more than 10 percent of total
revenue in 2004 or 2003.
The business segments are determined based upon factors such as the type of customers, the nature of products and services provided and the distribution
channels used to provide those services. Segment pre-tax operating income and segment operating margin are used to evaluate performance and allocate
resources. "Other unallocated expenses" includes corporate overhead and interest expense that is not allocated to the segments.
The Company manages its investment portfolio on a consolidated level and the specific investment securities are not identifiable to a particular segment.
However, revenues are allocated to the segments based upon allocated average investable balances and an allocated yield. Average investable balances are
allocated to the segments based on the average balances generated by that segment's sale of payment instruments. The investment yield is generally allocated
based on the total average total investment yield. Gains and losses are allocated based upon the allocation of average investable balances. The derivatives
portfolio is also managed on a consolidated level and the derivative instruments are not specifically identifiable to a particular segment. The total costs
associated with the swap portfolio are allocated to each segment based upon the percentage of that segment's average investable balances to the total average
investable balances. F-41