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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
ACH Commerce — On April 29, 2005, the Company acquired substantially all of the assets of ACH Commerce L.L.C., an automated
clearing house payment processor, for a purchase price of $8.5 million. The acquisition provides the Company with the technology and
systems platform to expand its line of payment services. The financial impact of the acquisition is not material to the Consolidated Balance
Sheets or the Consolidated Statements of Income.
Viad Corp — MoneyGram is considered the divesting entity and treated as the "accounting successor" to Viad for financial reporting
purposes. The continuing business of Viad is referred to as "New Viad." The spin off of New Viad was accounted for pursuant to APB
Opinion No. 29, Accounting for Nonmonetary Transactions, and was based upon the recorded amounts of the net assets divested. On
June 30, 2004, the Company charged the historical cost carrying amount of the net assets of New Viad of $426.6 million directly to equity as
a dividend. As a result, New Viad's results of operations (with certain adjustments) are included in the Consolidated Statement of Income in
"Income and gain from discontinued operations" in accordance with the provisions of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Also included in "Income and gain from discontinued operations" in the Consolidated Statement of Income
for 2004 is a charge for spin-off related costs of $14.6 million relating primarily to legal and consulting costs. The results of operations of
Viad included in "Income and gain from discontinued operations" in the Consolidated Statement of Income include the following:
(Amounts in thousands) 2006 2005 2004
Revenue $ — $ — $ 414,933
Earnings before income taxes — — 13,495
Income from discontinued operations — — 8,233
As part of the transaction, the Company entered into several agreements with Viad for the purpose of governing the relationship. A
Separation and Distribution Agreement provides for the principal corporate transactions required to effect the separation of MoneyGram
from Viad and the spin-off and other matters governing the relationship between New Viad and MoneyGram following the spin-off. The
Employee Benefits Agreement provides for the allocation of employees, employee benefit plans and associated liabilities and related assets
between Viad and MoneyGram. The Interim Services Agreement provides for services to be provided by Viad for MoneyGram on an
interim basis. The Tax Sharing Agreement provides for the allocation of federal, state, and foreign tax liabilities for all periods through the
Distribution Date. On July 1, 2005, the Company notified Viad of our termination of certain services under the Interim Services Agreement
effective on September 28, 2005. On December 22, 2005, we notified Viad of our termination of substantially all of the remaining services
under the Interim Services Agreement effective in the second quarter of 2006. During 2006, 2005 and 2004, expenses totaling $0.3 million,
$1.4 million and $0.8 million, respectively, were recognized in connection with this agreement.
In January 2005, the Company acquired a 50 percent interest in a corporate aircraft owned by Viad at a cost of $8.6 million. The Company
paid 50 percent of all fixed costs associated with this asset and was responsible for the variable costs associated with its direct usage of the
asset. In January 2006, the Company acquired the remaining 50 percent interest in the corporate aircraft at a cost of $10.0 million.
Game Financial Corporation — During the first quarter of 2004, the Company completed the sale of a subsidiary, Game Financial
Corporation ("Game Financial"), for approximately $43.0 million in cash, resulting in net cash received of $15.2 million. Game Financial
provides cash access services to casinos and gaming establishments throughout the United States and was part of our Payment Systems
segment. As a result of the sale, the Company recorded a gain of approximately $18.9 million ($11.4 million after-tax) in 2004. In addition,
the Company recorded a gain of $1.1 million (net of taxes) in 2004 as a result of the settlement of a lawsuit brought by Game Financial. In
2005, the Company recorded a gain of $0.7 million (net of taxes) due to the partial resolution of contingencies relating to the sale of Game
Financial. The Company has a $4.8 million liability recorded in "Accounts payable and other liabilities" in the Consolidated Balance Sheets
in connection with a contingency in the Sales and Purchase Agreement related to the continued operations of Game Financial with one
casino.
In accordance with SFAS No. 144, the results of operations of Game Financial and the gain on the disposal of Game Financial have been
reflected as components of discontinued operations. All prior periods in the historical Consolidated
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