MoneyGram 2006 Annual Report Download - page 38

Table of Contents
Sources of cash in 2004 were the $150.0 million in borrowings made under the Company's credit facility entered into in connection with
the spin-off and stock option exercises.
Other Funding Sources and Requirements
In connection with the spin-off, MoneyGram entered into a bank credit facility providing availability of up to $350.0 million in the form
of a $250.0 million four-year revolving credit facility and a $100.0 million term loan. On June 30, 2004, the Company borrowed
$150.0 million (consisting of the $100.0 million term loan and $50.0 million under the revolving credit facility) and used all of the
proceeds to pay merger consideration to Viad in connection with the spin-off. On June 29, 2005, the Company amended its bank credit
facility. The amended agreement extends the maturity date of the facility from June 2008 to June 2010, and the scheduled repayment of
the $100.0 million term loan to June 2010. Under the amended agreement, the credit facility may be increased to $500.0 million under
certain circumstances. In addition, the amended agreement reduced the interest rate applicable to both the term loan and the credit facility
to LIBOR plus 50 basis points, subject to adjustment in the event of a change in the credit rating of our senior unsecured debt. The
amendment also reduced usage fees on the facility to a range of 0.080 percent to 0.250 percent, depending on the credit rating of our
senior unsecured debt. Restrictive covenants relating to dividends and share buybacks were eliminated, and the dollar value of
permissible acquisitions without lender consent was increased. In connection with the amendment, the Company expensed $0.9 million
of unamortized deferred financing costs relating to the original bank credit facility during the quarter ended June 30, 2005. The Company
also incurred $0.5 million of financing costs to complete the amendment. These costs have been capitalized and will be amortized over
the life of the debt.
The remaining availability under the bank credit facility is available for general corporate purposes and to support letters of credit. Loans
under the bank credit facility are guaranteed on an unsecured basis by MoneyGram's material domestic subsidiaries. Borrowings under
the bank credit facilities are subject to various covenants, including interest coverage ratio, leverage ratio and consolidated total
indebtedness ratio. The interest coverage ratio of earnings before interest and taxes to interest expense must not be less than 3.5 to 1.0.
The leverage ratio of total debt to total capitalization must be less than 0.5 to 1.0. The consolidated total indebtedness ratio of total debt to
earnings before interest, taxes, depreciation and amortization must be less than 3.0 to 1.0. At December 31, 2006, we were in compliance
with these covenants. On December 31, 2006, the interest rate under the bank credit facility was 5.86 percent, exclusive of the effect of
commitment fees and other costs, and the facility fee was 0.125 percent.
In September 2005, the Company entered into two interest rate swap agreements with a total notional amount of $150.0 million to hedge
our variable rate debt. These swap agreements are designated as cash flow hedges. At December 31, 2006, the two debt swaps had an
average fixed pay rate of 4.3 percent and an average variable receive rate of 4.6 percent.
At December 31, 2006, we had reverse repurchase agreements, letters of credit and various overdraft facilities totaling $2.3 billion
available to assist in the management of our investments and the clearing of payment service obligations. There was $11.1 million
outstanding under various letters of credit at December 31, 2006.
Table 12 — Contractual Obligations
Payments due by period
Less than More than
(Amounts in thousands) Total 1 year 1-3 years 3-5 years 5 years
Debt, including interest payments $ 180,765 $ 8,790 $ 17,580 $ 154,395 $ —
Operating leases 52,859 8,528 15,132 14,143 15,056
Derivative financial instruments 20,701 13,495 7,137 69 —
Other obligations 2,066 2,066 — — —
Capital lease obligations 104 104 — — —
Total contractual cash obligations $ 256,495 $ 32,983 $ 39,849 $ 168,607 $ 15,056
Debt consists of amounts outstanding under the term loan and revolving credit facility at December 31, 2006, as described in "Other
Funding Sources," as well as related interest payments. As described above, interest payments on our outstanding debt is based on a
floating interest rate indexed to LIBOR. For disclosure purposes, the interest
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