MoneyGram 2009 Annual Report Download - page 51

Table of Contents
In limited circumstances, we may grant minimum commission guarantees as an incentive to new or renewing agents for a specified
period of time at a contractually specified amount. Under the guarantees, we will pay to the agent the difference between the
contractually specified minimum commission and the actual commissions earned by the agent. As of December 31, 2009, the minimum
commission guarantees had a maximum payment of $7.9 million over a weighted average remaining term of 1.3 years. The maximum
payment is calculated as the contractually guaranteed minimum commission times the remaining term of the contract and, therefore,
assumes that the agent generates no money transfer transactions during the remainder of its contract. As of December 31, 2009, the
liability for minimum commission guarantees is $0.6 million. Minimum commission guarantees are not reflected in the table above.
Analysis of Cash Flows
Table 11 — Cash Flows from Operating Activities
YEAR ENDED DECEMBER 31, 2009 2008 2007
(Amounts in thousands)
Net loss $ (1,906) $ (261,385) $(1,071,997)
Total adjustments to reconcile net loss 158,909 341,740 1,301,410
Net cash provided by continuing operating activities before changes in payment service assets
and obligations 157,003 80,355 229,413
Change in cash and cash equivalents (substantially restricted) 300,557 (2,524,402) (563,779)
Change in trading investments and related put options, net (substantially restricted) 32,900 — 83,200
Change in receivables, net (substantially restricted) 186,619 128,752 342,681
Change in payment service obligations (594,545) (2,324,486) (447,319)
Net change in payment service assets and obligations (74,469) (4,720,136) (585,217)
Net cash provided by (used in) continuing operating activities $ 82,534 $(4,639,781) $ (355,804)
Table 11 summarizes the net cash flows from operating activities. Operating activities provided net cash of $82.5 million in 2009. In
addition to normal operating expenses, cash generated from operations was used to pay $186.9 million and $94.4 million of principal and
interest, respectively, on our debt, $37.9 million of capital expenditures and $22.2 million for signing bonuses to new agents. We
received an income tax refund of $43.5 million during 2009 and did not make any income tax payments. We also reinvested
$141.0 million and $32.9 million of proceeds from our available-for-sale investments and trading investments, respectively, into cash and
cash equivalents during 2009.
Operating activities used net cash of $4.6 billion in 2008. Besides normal operating activities, cash provided by continuing operations
was used to pay $84.0 million of interest on our debt, $57.7 million for signing bonuses to new agents and $29.7 million to terminate our
interest rate swaps. We also received an income tax refund of $24.7 million during 2008 and did not make any tax payments. During
2008, we used $4.7 billion of proceeds from the sale and normal maturity of available-for-sale securities and the recapitalization to invest
in cash equivalents and settle payment service obligations for instruments sold by departing official check financial institution customers
in connection with the official check restructuring.
Operating activities in 2007 used net cash of $355.8 million. Our payment service assets and obligations used $585.2 million of cash due
to the normal fluctuations in the timing of settlements of outstanding payment service instruments and the receipt of collected funds from
our agents, partially offset by proceeds from the sale of a trading investment for $83.2 million. Besides normal operating activities, cash
provided by continuing operations was used to pay $33.1 million for signing bonuses to new agents, $16.0 million of income taxes and
$11.6 million of interest on our debt.
To understand the cash flow activity of our business, the cash flows from operating activities relating to the payment service assets and
obligations should be reviewed in conjunction with the cash flows from investing activities related to our investment portfolio.
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