MoneyGram 2009 Annual Report Download - page 100

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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. Components of the investment portfolio as
of December 31, were as follows:
(Amounts in thousands) 2009 2008
Cash $ 1,243,060 $ 1,575,601
Money markets 1,933,764 1,626,788
Time deposits 400,000 874,992
Certificate of deposit 200,000 —
Cash and cash equivalents 3,776,824 4,077,381
Trading investments and related put options 26,951 47,990
Available-for-sale investments 298,633 438,774
Total investment portfolio $ 4,102,408 $ 4,564,145
Cash and Cash Equivalents — Cash and cash equivalents consist of cash, money-market securities, time deposits and a certificate of
deposit. Cash primarily consists of interest-bearing deposit accounts and non-interest bearing transaction accounts. The Company's
money-market securities are invested in eight funds, all of which are AAA rated and consist of United States Treasury bills, notes or other
obligations issued or guaranteed by the United States government and its agencies, as well as repurchase agreements secured by such
instruments. The time deposits have maturities of six months or less and are issued from financial institutions that are rated AA as of the
date of this filing. The certificate of deposit has a maturity of one year and is issued from an institution that is rated AA as of the date of
this filing.
Trading Investments and Related Put Options — As of December 31, 2008, trading investments consisted of three securities: an auction
rate security collateralized by commercial paper with a rating of A-1/P-1 and original maturities of less than 28 days; an auction rate
security collateralized by perpetual preferred stock issued by the monoline insurer and paying a discretionary dividend; and perpetual
preferred stock of a monoline insurer paying a discretionary dividend. The Company also held three put options which, beginning in June
2010, allow the Company to put each trading security back at par to the trading firm that originally sold the security to the Company.
Under the November 2008 buy-back program that generated the put options, the trading firm also had the right to call the related security
at any time at par plus accrued interest. The Company has received all contractual interest payments, including the penalty rate payments,
related to its trading investments.
Two trading investments were called at par during 2009, resulting in a $7.6 million gain recorded in "Net securities gains (losses)", net of
the reversal of the related put options. The fair value of the remaining trading investment is $11.8 million on a par value of $29.4 million
as of December 31, 2009, which is unchanged from the prior year. The fair value of the related put option is $15.2 million, reflecting a
valuation gain of $4.3 million from the passage of time. The put option will continue to be remeasured each period through earnings. In
February 2010, the remaining trading investment was called at par.
The fair value of the trading investments as of December 31, 2008 was $21.5 million on a par value of $62.3 million. The fair value of the
put options was $26.5 million as of December 31, 2008. The Company recorded a net valuation loss on its trading investments and
related put options of $14.1 million during the year ended December 31, 2008 due to market concerns regarding the capital position of the
monoline insurers and their intent to pay dividends on their preferred stock.
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