MoneyGram 2007 Annual Report Download - page 19

Table of Contents
Failure to maintain sufficient capital could adversely affect our results of operations and financial condition.
If we do not have sufficient capital, we may not be able to pursue our growth strategy and fund key strategic initiatives, such as product
development and acquisitions. While we received substantial new capital in conjunction with the Capital Transaction, there can be no
assurance that we will not need additional capital in the future. Given the leveraged nature of the Company and the significant restrictive
covenants in our debt agreements, there can be no assurance that we will have access to additional capital. Failure to have such access
could materially impact our results of operations and financial condition.
If we fail to successfully develop and timely introduce new and enhanced products and services or we make substantial investments in
an unsuccessful new product or service or infrastructure change, our business, prospects, financial condition and results of
operations could be adversely affected.
Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of
providing money transfer, money order, official check, bill payment and related services that keep pace with competitive introductions,
technological changes and the demands and preferences of our agents, financial institution customers and consumers. Many of our
competitors offer stored-value cards and other electronic payment mechanisms, including various internet-based and cellular phone
payment services, that could be substituted for traditional forms of payment, such as the money order, bill payment and money transfer
services that we offer. If these alternative payment mechanisms become widely substituted for our products and services, and we do not
develop and ramp up similar alternative payment mechanisms successfully and on a timely basis, our business and prospects could be
adversely affected. Additionally, we may make future investments or enter into strategic alliances to develop new technologies and
services or to implement infrastructure change to further our strategic objectives, strengthen our existing businesses and remain
competitive. Investments in new technologies and infrastructure and strategic alliances are inherently risky and we cannot guarantee that
such investments will be successful or will not have a material adverse effect on our business, financial condition and results of
operations.
If we are unable to adequately protect the intellectual property rights related to our existing and any new or enhanced products and
services, or if we are unable to avoid infringing on the rights of others, our business, prospects, financial condition and results of
operations could be adversely affected.
We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to
protect the intellectual property rights related to our products and services. We also investigate the intellectual property rights of third
parties to prevent our infringement of those rights. We may be subject to claims of third parties that we infringe or have misappropriated
their proprietary rights. We may be required to spend resources to defend any such claims or to protect and police our own rights. Some
of our intellectual property rights may not be protected by intellectual property laws, particularly in foreign jurisdictions. The loss of our
intellectual property protection, the inability to secure or enforce intellectual property protection or to successfully defend against an
intellectual property infringement action could harm our business and prospects.
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of
operations would be adversely affected.
The industries in which we compete are highly competitive, and we face a variety of competitors across our businesses. In addition, new
competitors or alliances among established companies may emerge. Our primary competition comes from Western Union, which has
substantially greater transaction volume than we do. Western Union has a larger agent base, a more established brand name and
substantially greater financial and marketing resources than we do. We cannot anticipate every effect that actions taken by Western Union
will have on our business, or the money transfer and bill payment industry in general.
Money transfer, money order and walk-in bill payment services within our Global Funds Transfer segment compete in a concentrated
industry, with a small number of large competitors and a large number of small, niche competitors. Our large competitors are other
providers of money orders and money transfer services, including Western Union and the U.S. Postal Service with respect to money
orders. We also compete with banks and niche person-to-person
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