MoneyGram 2006 Annual Report Download - page 97

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 15. Commitments and Contingencies
Operating Leases: The Company has various noncancelable operating leases for buildings and equipment that terminate through 2015.
Certain of these leases contain rent holidays and rent escalation clauses based on pre-determined annual rate increases. The Company
recognizes rent expense under the straight-line method over the term of the lease. Any difference between the straight-line rent amounts
and amounts payable under the leases are recorded as deferred rent in "Accounts payable and other liabilities" in the Consolidated
Balance Sheets. Cash or lease incentives received under certain leases are recorded as deferred rent when the incentive is received and
amortized as a reduction to rent over the term of the lease using the straight-line method. Incentives received relating to tenant
improvements are capitalized as leasehold improvements and depreciated over the remaining term of the lease. At December 31, 2006,
the deferred rent liability relating to these incentives was $4.0 million.
Rent expense under these operating leases totaled $7.8 million, $5.8 million and $6.5 million during 2006, 2005 and 2004 respectively.
Minimum future rental payments for all noncancelable operating leases with an initial term of more than one year are (amounts in
thousands):
2007 $ 8,528
2008 7,878
2009 7,254
2010 7,193
2011 6,950
Later 15,056
$ 52,859
Legal Proceedings: The Company is party to a variety of legal proceedings that arise in the normal course of our business. While the
results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings
will not have a material adverse effect on the Company's consolidated results of operations or financial position.
Credit Facilities: At December 31, 2006, the Company has various reverse repurchase agreements, letters of credit and overdraft
facilities totaling $2.3 billion to assist in the management of investments and the clearing of payment service obligations. These credit
facilities are in addition to available amounts under the revolving credit agreement described in Note 9. Included in this amount is an
uncommitted reverse repurchase agreement with one of the clearing banks totaling $1.0 billion. Overdraft facilities consist of
$11.1 million of letters of credit, all of which are outstanding at December 31, 2006. Letters of credit totaling $1.1 million reduce
amounts available under the revolving credit agreement. Fees on the letters of credit are paid in accordance with the terms of the
revolving credit agreement described in Note 9.
The Company has agreements with certain other co-investors to provide funds related to investments in limited partnership interests. As
of December 31, 2006, the total amount of unfunded commitments related to these agreements was $2.1 million.
Note 16. Minimum Commission Guarantees
In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commission guarantees to an
agent for a specified period of time at a contractually specified amount. Under the guarantees, the Company will pay to the agent the
difference between the contractually specified minimum commission and the actual commissions earned by the agent.
As of December 31, 2006, the minimum commission guarantees had a maximum payment of $17.4 million over a weighted average
remaining term of 3.7 years. The maximum payment is calculated as the contractually guaranteed minimum commission times the
remaining term of the contract and, therefore, assumes that the agent generates no money
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