MoneyGram 2006 Annual Report Download - page 5

Table of Contents
review financial results and continues to evaluate the performance of the Company based on these two segments. 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.
In 2006, Global Funds Transfer segment revenue was $821.7 million and operating income was $152.6 million, accounting for 71 percent
and 86 percent of the total revenue and operating income, respectively, of the Company. During 2006, 2005 and 2004, our international
operations generated 21 percent, 19 percent and 18 percent, respectively, of our total revenue and 29 percent, 28 percent and 28 percent,
respectively of our Global Funds Transfer segment revenue.
We conduct our Global Funds Transfer operations primarily through a worldwide network of agents. In 2006, we renewed multi-year
contracts with our largest agent in each of our four largest markets: United States, Spain, Italy, and United Kingdom. During 2006, 2005
and 2004, our ten largest agents accounted for 31 percent, 31 percent, and 27 percent, respectively, of our total revenue and 44 percent,
46 percent and 41 percent, respectively, of the revenue of our Global Funds Transfer segment. Our largest agent, Wal-Mart Stores, Inc.
("Wal-Mart") accounted for 17 percent, 13 percent and 9 percent of our total revenue and 24 percent, 19 percent and 14 percent of the
revenue of our Global Funds Transfer segment in 2006, 2005 and 2004, respectively. Wal-Mart is the only customer that accounts for
more than 10 percent of our total revenues. The Company has a contract with Wal-Mart in the U.S. that provides for Wal-Mart to sell the
Company's money orders, money transfer services and real-time, urgent bill payment services on an exclusive basis. The term of the
current agreement with Wal-Mart expires in January 2010, and contains incentives for Wal-Mart to extend the term for additional one
(1) year periods. The contract also provides a tiered commission structure that contains certain caps, which rewards Wal-Mart as the
volume of its money transfer and money order activity increases.
We provide Global Funds Transfer products and services utilizing a variety of proprietary point-of-sale platforms. We also operate two
customer service call centers in the United States and contract for additional call center services in Bulgaria. These call centers provide
multi-lingual customer service for both agents and consumers 24 hours per day, 365 days per year.
MoneyGram Money Transfers: During 2006, 82 percent of our Global Funds Transfer segment revenue was generated by our money
transfer services (including bill payment). Money transfers are transfers of funds between consumers from one location to another.
Money transfers are used by consumers who want to transfer funds quickly, safely and efficiently to another individual within a country
or internationally. As of December 31, 2006, we provided money transfer services through approximately 110,000 money transfer agent
locations in approximately 170 countries and territories worldwide. These agent locations are located in the following geographic regions:
28,900 locations in North America; 19,100 locations in Latin America (including Mexico which represents 9,600 locations); 31,200
locations in Western Europe and the Middle East; 6,600 locations in the Indian subcontinent; 11,100 locations in Asia Pacific; 9,200
locations in Eastern Europe; and 3,900 locations in Africa. We also offer our money transfer services on the internet via our MoneyGram
eMoney Transfer service that allows customers to send a money transfer at www.emoneygram.com using a credit card or a debit from a
bank account and through financial institutions. As of December 31, 2006, we offer this service only to residents of the United States.
Finally, we offer our money transfer services through Company owned retail locations. In the United States, we have Company owned
retail locations in New York and Florida. In 2006, the Company opened retail locations and kiosks in France and Germany. We plan to
continue this strategy in 2007 and beyond, as expanding our global network by increasing our agent locations and opening new Company
owned locations is a core growth initiative of the Company.
Our money transfer revenues are derived primarily from consumer transaction fees and revenues from currency exchange on international
money transfers. In a typical money transfer, a consumer goes to an agent location,
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