MoneyGram 2009 Annual Report Download - page 94

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Marketing & Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes
place. Marketing and advertising expense was $40.2 million, $52.9 million and $56.5 million for 2009, 2008 and 2007, respectively.
Stock-Based Compensation — All stock-based compensation awards are measured at fair value at the date of grant and expensed over
their vesting or service periods. For awards meeting the criteria for equity treatment, expense is recognized using the straight-line method.
For awards meeting the criteria for liability treatment, the fair value is remeasured at each period and the pro-rata portion of the expense
is recognized using the straight-line method. See Note 14 — Stock-Based Compensation for further discussion of the Company's stock-
based compensation.
Earnings Per Share — The Company utilizes the two-class method for computing basic earnings per common share, which reflects the
amount of undistributed earnings allocated to the common stockholders using the participation percentage of each class of stock.
Undistributed earnings is determined as the Company's net loss less dividends declared or accumulated on preferred stock less any
preferred stock accretion. The undistributed earnings allocated to the common stockholders are divided by the weighted-average number
of common shares outstanding during the period to compute basic earnings per common share. Diluted earnings per common share
reflects the potential dilution that could result if securities or incremental shares arising out of the Company's stock-based compensation
plans and the outstanding shares of Series B Stock were exercised or converted into common stock. Diluted earnings per common share
assumes the exercise of stock options using the treasury stock method and the conversion of the Series B Stock using the if-converted
method.
Potential common shares are excluded from the computation of diluted earnings per common share when the effect would be anti-
dilutive. All potential common shares are anti-dilutive in periods of net loss available to common stockholders. Stock options are anti-
dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the
period. The Series B Stock is anti-dilutive when the incremental earnings per share of Series B Stock on an if-converted basis is greater
than the basic earnings per common share. Following are the potential common shares excluded from diluted earnings per common share
as their effect would be anti-dilutive:
(Amounts in thousands) 2009 2008 2007
Shares related to stock options 21,636 3,577 1,495
Shares related to restricted stock 28 127 249
Shares related to preferred stock 381,749 337,637 —
Shares excluded from the computation 403,413 341,341 1,744
Recent Accounting Pronouncements — In April 2009, the Financial Accounting Standards Board ("FASB") issued guidance to make the
other-than-temporary impairments guidance more operational and to improve the presentation of other-than-temporary impairments in the
financial statements. This guidance replaces the existing requirement that the entity's management assert it has both the intent and ability
to hold an impaired debt security until recovery with a requirement that management assert it does not have the intent to sell the security
and that it is more likely than not management will not have to sell the security before recovery of its cost basis. This guidance requires
increased disclosure about the credit and noncredit components of impaired debt securities that are not expected to be sold, as well as
increased disclosures regarding expected cash flows, credit losses and an aging of securities with unrealized losses. The Company
adopted the guidance effective for the interim period ending June 30, 2009, with no material impact on its Consolidated Financial
Statements as the Company has the intent to sell its securities which generated other-than-temporary impairments in 2009.
In June 2009, the FASB issued guidance which amends previously issued derecognition guidance for financial transfers of assets,
eliminates the exemption from consolidation for qualifying SPEs and amends the consolidation guidance applicable to variable interest
entities. This guidance will be effective for any financial transfers completed by the Company after January 1, 2010, and for consolidated
financial statements prepared subsequent
F-18