MoneyGram 2009 Annual Report Download - page 89

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
receivables and investments exceeding payment service obligations are generally available; however, management considers a portion of
these amounts as providing additional assurance that business needs and regulatory requirements are maintained during the normal
fluctuations in the value of the Company's payment service assets and obligations. The following table shows the amount of assets in
excess of payment service obligations at December 31:
(Amounts in thousands) 2009 2008
Cash and cash equivalents (substantially restricted) $ 3,776,824 $ 4,077,381
Receivables, net (substantially restricted) 1,054,381 1,264,885
Trading investments and related put options (substantially restricted) 26,951 47,990
Available-for-sale investments (substantially restricted) 298,633 438,774
5,156,789 5,829,030
Payment service obligations (4,843,454) (5,437,999)
Assets in excess of payment service obligations $ 313,335 $ 391,031
Regulatory requirements also require MPSI to maintain positive net worth, with one state requiring that MPSI maintain positive tangible
net worth. In its most restrictive state, the Company had excess permissible investments of $315.3 million over the state's payment
service obligations measure at December 31, 2009, with substantially higher excess permissible investments for all other states. The
Company was in compliance with its contractual and financial regulatory requirements as of December 31, 2009.
Cash and Cash Equivalents (substantially restricted) — The Company defines cash and cash equivalents as cash on hand and all highly
liquid debt instruments with original maturities of three months or less at the purchase date which the Company does not intend to
rollover.
Receivables, net (substantially restricted) — The Company has receivables due from financial institutions and agents for payment
instruments sold. These receivables are outstanding from the day of the sale of the payment instrument until the financial institution or
agent remits the funds to the Company. The Company provides an allowance for the portion of the receivable estimated to become
uncollectible as determined based on known delinquent accounts and historical trends. Receivables are generally considered past due one
day after the contractual remittance schedule, which is typically one to three days after the sale of the underlying payment instrument.
Receivables are evaluated for collectibility by examining the facts and circumstances surrounding each customer where an account is
delinquent and a loss is deemed possible. Receivables are generally written off against the allowance one year after becoming past due.
Following is a summary of activity within the allowance for losses:
(Amounts in thousands) 2009 2008 2007
Beginning balance $ 16,178 $ 8,019 $ 6,824
Charged to expense 21,432 12,396 8,532
Write-offs, net of recoveries (13,075) (4,237) (7,337)
Ending balance $ 24,535 $ 16,178 $ 8,019
Sale of Receivables — The Company had an agreement to sell undivided percentage ownership interests in certain receivables, primarily
from its money order agents. The Company sold receivables under this agreement to accelerate the cash flow available for investment.
The receivables were sold without recourse to two commercial paper conduit trusts and represented a small percentage of the total assets
in each trust. The Company's rights and obligations were limited to the receivables transferred and the transactions were accounted for as
sales. The assets and liabilities associated with the trusts, including the sold receivables, were not recorded or consolidated in the
Company's financial statements. In January 2008, the Company terminated the facility. The agreement included a
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