MoneyGram 2007 Annual Report Download - page 109

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
unrecognized tax benefits in "Income tax expense" in the Consolidated Statements of (Loss) Income. For the year ended December 31,
2007, the Company recognized approximately $3.5 million in interest and penalties in its Consolidated Statement of (Loss) Income. As of
January 1, 2007 and December 31, 2007, the Company had accrued approximately $5.7 million and $6.4 million in interest and penalties,
respectively. The Company does not believe there will be any material change in its unrecognized tax positions over the next twelve
months.
The Company does not consider its earnings in its foreign entities to be permanently reinvested. As of December 31, 2007 and 2006, a
deferred tax liability of $5.3 million and $1.9 million, respectively, was recognized for the unremitted earnings of its foreign entities.
Prior to the spin-off, income taxes were determined on a separate return basis as if MoneyGram had not been eligible to be included in
the consolidated income tax return of Viad and its affiliates. Subsequent to the spin-off, MoneyGram is considered the divesting entity
and treated as the "accounting successor" to Viad and the continuing business of Viad is referred to as "New Viad." As part of the
Distribution, the Company entered into a Tax Sharing Agreement with Viad which provides for, among other things, the allocation
between MoneyGram and New Viad of federal, state, local and foreign tax liabilities and tax liabilities resulting from the audit or other
adjustment to previously filed tax returns. The Tax Sharing Agreement provides that through the Distribution Date, the results of
MoneyGram and its subsidiaries' operations are included in Viad's consolidated U.S. federal income tax returns. In general, the Tax
Sharing Agreement provides that MoneyGram will be liable for all federal, state, local, and foreign tax liabilities, including such
liabilities resulting from the audit of or other adjustment to previously filed tax returns, that are attributable to the business of
MoneyGram for periods through the Distribution Date, and that Viad will be responsible for all other of these taxes.
Note 11 — Stockholders' Equity
Rights Agreement — In connection with the spin-off, MoneyGram adopted a rights agreement (the "Rights Agreement") by and between
the Company and Wells Fargo Bank, N.A., as the rights agent. The preferred share purchase rights (the "rights") issuable under the Rights
Agreement were attached to the shares of MoneyGram common stock distributed in the spin-off. In addition, pursuant to the Rights
Agreement, one right will be issued with each share of MoneyGram common stock issued after the spin-off. The rights are inseparable
from MoneyGram common stock until they become exercisable. Once they become exercisable, the rights will allow its holder to
purchase one one-hundredth of a share of MoneyGram series A junior participating preferred stock for $100.00. The rights become
exercisable ten days after a person or group acquires, or begins a tender or exchange offer for, 15 percent or more of the Company's
outstanding common stock. In the event a person or group acquires 15 percent or more of the Company's outstanding common stock, and
subject to certain conditions and exceptions more fully described in the Rights Agreement, each right will entitle the holder (other than
the person or group acquiring 15 percent or more of the Company's outstanding common stock) to receive, upon exercise, common stock
of either MoneyGram or the acquiring company having a value equal to two times the exercise price of the rights. The rights are
redeemable at any time before a person or group acquires 15 percent or more of MoneyGram's outstanding common stock at the
discretion of the Company's Board of Directors for $0.01 per right and will expire, unless earlier redeemed, on June 30, 2014. After a
person or group acquires 15 percent or more of MoneyGram's outstanding common stock, but before that person or group owns
50 percent or more of MoneyGram's outstanding common stock, the Board of Directors may extinguish the rights by exchanging one
share of MoneyGram common stock or an equivalent security for each right (other than rights held by that person or group). Each one
one-hundredth of a share of MoneyGram preferred stock, if issued, will not be redeemable, will entitle holders to quarterly dividend
payments of the greater of $0.01 per share or an amount equal to the dividend paid on one share of MoneyGram common stock, will have
the same voting power as one share of MoneyGram common stock and will entitle holders, upon liquidation, to receive the greater of
$1.00 per share or the payment made on one share of MoneyGram common stock.
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