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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Amounts in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents (substantially restricted) $ 2,501,780 $ — $ — $ 2,501,780
Trading investments (substantially restricted) — — 21,485 21,485
Put options related to trading investments — — 26,505 26,505
Available-for-sale investments (substantially restricted) U.S. government agencies — 17,449 — 17,449
Residential mortgage-backed securities — agencies — 391,798 — 391,798
Other asset-backed securities — — 29,528 29,528
Total Financial Assets $ 2,501,780 $ 409,247 $ 77,518 $ 2,988,545
The tables below provide a roll-forward of the financial assets and liabilities classified in Level 3 which are measured at fair value on a
recurring basis.
Put Options Total
Related to Level 3
Trading Trading Available-for- Financial
(Amounts in thousands) Investments Investments Sale Investments Assets
Balance at January 1, 2008 $ 62,105 $ — $ 2,478,832 $ 2,540,937
Issuance of put options — 24,114 — 24,114
Sales and settlements — — (2,355,014) (2,355,014)
Realized losses — — (13,760) (13,760)
Principal paydowns — — (16,073) (16,073)
Other-than-temporary impairments — — (70,274) (70,274)
Unrealized gains — instruments still held at the reporting date — 2,391 5,817 8,208
Unrealized losses — instruments still held at the reporting date (40,620) — — (40,620)
Balance at December 31, 2008 $ 21,485 $ 26,505 $ 29,528 $ 77,518
Total
Embedded Derivative Level 3
Derivatives in Financial Financial
(Amounts in thousands) Preferred Stock Instruments Liabilities
Balance at January 1, 2008 $ — $ 28,723 $ 28,723
Issuance of preferred stock 54,797 — 54,797
Valuation adjustment 16,030 973 17,003
Cash settlement of derivatives upon termination — (29,696) (29,696)
Reversal of liability to Additional paid-in capital (see Note 7) (70,827) — (70,827)
Balance at December 31, 2008 $ — $ — $ —
Note 6 — Investment Portfolio
The Company's portfolio is invested in cash and cash equivalents, trading investments and available-for-sale investments, all of which are
substantially restricted as described in Note 3 — Summary of Significant Accounting Policies. During the first quarter of 2008, the
Company realigned its investment portfolio away from asset-backed securities into highly liquid assets through the sale of a substantial
portion of its available-for-sale portfolio. As a F-26