MoneyGram 2007 Annual Report Download - page 119

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 14 — Commitments and Contingencies
Operating Leases — The Company has various non-cancelable operating leases for buildings and equipment that terminate through 2016.
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, 2007,
the deferred rent liability relating to these incentives was $3.6 million.
Rent expense under these operating leases totaled $11.4 million, $7.8 million and $5.8 million during 2007, 2006 and 2005, respectively.
Minimum future rental payments for all noncancelable operating leases with an initial term of more than one year are (amounts in
thousands):
2008 $ 10,453
2009 9,356
2010 8,630
2011 7,941
2012 4,817
Later 11,295
Total $ 52,492
Legal Proceedings — The Company is party to a variety of legal proceedings that arise in the normal course of our business. We accrue
for these items as losses become probable and can be reasonably estimated. 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.
In addition, the Company and its officers and directors are parties to two stockholder lawsuits making various claims including breach of
fiduciary duty and unfair business practices relating to its disclosure of investments. In these actions, plaintiffs may request punitive or
other damages that may not be covered by insurance.
SEC Inquiry — By letter dated February 4, 2008, the Company received a notice from the U.S. Securities Exchange and Commission (the
"SEC") that it is conducting an informal, non-public inquiry relating to the Company's financial statements, reporting and disclosures
related to the Company's investment portfolio and offers and negotiations to sell the Company or its assets. The SEC's notice states that it
has not determined that any violations of the securities laws have occurred. On February 11, 2008, the Company received an additional
letter from the SEC requesting certain information. The Company is cooperating with the SEC on a voluntary basis.
Credit Facilities — At December 31, 2007, the Company has various uncommitted 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 — Debt. Included in this amount
is an uncommitted reverse repurchase agreement with one of the clearing banks totaling $1.0 billion. Overdraft facilities consist of
$14.8 million of letters of credit, all of which are outstanding at December 31, 2007. Letters of credit totaling $4.6 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 — Debt.
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