MoneyGram 2009 Annual Report Download - page 29

Table of Contents
(2) Loss from continuing operations before income taxes for 2009 includes $54.8 million of legal reserves relating to securities
litigation, stockholder derivative claims, a patent lawsuit and a settlement with the FTC; $18.3 million of goodwill, intangible asset
and corporate airplane impairments and a $14.3 million net curtailment gain on our benefit plans. Loss from continuing operations
before income taxes for 2008 includes a $29.7 million net loss on the termination of swaps, a $26.5 million gain from put options on
our trading investments, a $16.0 million non-cash valuation loss from changes in the fair value of embedded derivatives on our
Series B Stock and a goodwill impairment of $8.8 million related to a component of our Other results for segment reporting
purposes. Loss from continuing operations before income taxes for 2007 includes a goodwill impairment of $6.4 million related to a
component of our Other results for segment reporting purposes.
(3) Assets in excess of payment service obligations are substantially restricted assets less payment service obligations as calculated in
Note 3 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements. Substantially restricted
assets are composed of cash and cash equivalents, receivables and investments.
(4) Mezzanine Equity relates to our Series B Stock issued in the recapitalization described in Note 2 — Recapitalization of the Notes to
Consolidated Financial Statements. See Note 12 — Mezzanine Equity of the Notes to Consolidated Financial Statements for the terms
of the Series B Stock.
(5) Investable balances are composed of cash and cash equivalents and investments.
(6) Net investment margin is determined as net investment revenue (investment revenue less investment commissions) divided by daily
average investable balances.
(7) Includes 28,000, 30,000, 18,000, 16,000, and 16,000 locations in 2009, 2008, 2007, 2006 and 2005, respectively, that offer both
money order and money transfer services.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes. This discussion
contains forward-looking statements that involve risks and uncertainties. MoneyGram's actual results could differ materially from those
anticipated due to various factors discussed below under "Cautionary Statements Regarding Forward-Looking Statements," in Part I,
Item 1A under the caption "Risk Factors" and elsewhere in this Annual Report on Form 10-K.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts of the
Company and our subsidiaries. See Note 3 — Summary of Significant Accounting Policies of the Notes to the Consolidated Financial
Statements for further information regarding consolidation. References to "MoneyGram," the "Company," "we," "us" and "our" are to
MoneyGram International, Inc. and its subsidiaries and consolidated entities. Our Consolidated Financial Statements are prepared in
conformity with accounting principles generally accepted in the United States of America ("GAAP").
Components of Net Revenue — Our net revenue consists of fee and other revenue, investment revenue and net securities gains and losses,
less fee and investment commissions expense. We generate net revenue primarily by charging transaction fees in excess of third-party
agent commissions, managing foreign currency exchange and managing our investments to provide returns in excess of commissions paid
to financial institution customers.
We derive revenue primarily through service fees charged to consumers and through our investments. Fee and other revenue consists of
transaction fees, foreign exchange and miscellaneous revenue. Transaction fees are fees earned on money transfer, money order, bill
payment and official check transactions. Money transfer transaction fees vary based on the principal amount of the transaction, the
originating location and the receiving location. Money order and bill payment transaction fees are fixed per transaction. Foreign exchange
revenue is derived from the management of currency exchange spreads on money transfer transactions involving different "send" and
"receive" currencies. Miscellaneous revenue primarily consists of processing fees on rebate checks and controlled disbursements, service
charges on aged outstanding money orders and money order dispenser fees.
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