MoneyGram 2006 Annual Report Download - page 25

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Table of Contents
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.
The continuing business of Viad consists of the businesses of the convention show services, exhibit design and construction, and travel
and recreation services operations, including Viad's centralized corporate functions located in Phoenix, Arizona ("New Viad").
Notwithstanding the legal form of the spin-off, due to the relative significance of MoneyGram to Viad, MoneyGram is considered the
divesting entity and treated as the accounting successor to Viad for financial reporting purposes in accordance with the Emerging Issues
Task Force ("EITF") Issue No. 02-11 Accounting for Reverse Spin-offs. The spin-off of New Viad has been accounted for pursuant to
Accounting Principles Board ("APB") Opinion No. 29, Accounting for Non-Monetary Transactions. MoneyGram charged $426.6 million
directly to equity as a dividend, which is the historical cost carrying amount of the net assets of New Viad.
As part of the separation from Viad, we entered into a variety of agreements with Viad to govern each of our responsibilities related to
the distribution. These agreements include a Separation and Distribution Agreement, a Tax Sharing Agreement, an Employee Benefits
Agreement and an Interim Services Agreement. Subsequently, in 2006 the Interim Services Agreement was terminated. See Note 3 to the
Consolidated Financial Statements.
In connection with the spin-off, we entered into a bank credit agreement providing availability of up to $350.0 million in the form of a
$250.0 million revolving credit facility and a $100.0 million term loan. On June 30, 2004, we borrowed $150.0 million under this facility,
which was paid to and used by Viad to repay $188.0 million of its commercial paper. Viad also retired a substantial majority of its
outstanding subordinated debentures and medium term notes for an aggregate amount of $52.6 million (including a tender premium),
retired industrial revenue bonds of $9.0 million and redeemed outstanding preferred stock at an aggregate call price of $23.9 million.
Basis of Presentation
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of
America ("GAAP"). The consolidated financial statements include the historical results of operations of Viad in discontinued operations
in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. There are certain amounts related to other investment income, debt and costs associated with Viad's
centralized corporate functions that are related to Viad, but in accordance with GAAP are not allowed to be reflected in discontinued
operations as these costs were not specifically allocated to Viad subsidiaries. The consolidated financial statements may not necessarily
be indicative of our results of operations, financial position and cash flows in the future or what our results of operations, financial
position and cash flows would have been had we operated as a stand-alone company during the 2004 period presented.
In March 2004, we completed the sale of Game Financial Corporation for approximately $43.0 million in cash. Game Financial
Corporation provides cash access services to casinos and gaming establishments throughout the United States. As a result of the sale, we
recorded an after-tax gain of $11.4 million in the first quarter of 2004. In addition, in June 2004, we recorded an after-tax gain of
$1.1 million from the settlement of a lawsuit brought by Game Financial Corporation. During 2005, we recorded a $0.7 million gain in
connection with the partial resolution of contingencies relating to the sale of Game Financial Corporation. These amounts are reflected in
the Consolidated Statements of Income in "Income and gain from discontinued operations, net of tax," along with the operating results of
Viad, including spin-off related costs of $14.6 million for the year ended December 31, 2004. The following discussion of our results of
operations is focused on our continuing businesses.
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