MoneyGram 2010 Annual Report Download - page 103

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
• Other revenue consists of service charges on aged outstanding money orders, money order dispenser fees and other
miscellaneous charges. Through 2009, other revenue also included processing fees on rebate checks and controlled
disbursements. These fees are recognized in the period the item is processed or earned.
• Investment revenue is derived from the investment of funds generated from the sale of payment instruments, primarily official
checks and money orders, and consists of interest income, dividend income and amortization of premiums and discounts. Interest
and dividends are recognized as earned, with the exception of interest related to available-for-sale investments classified as "Other
asset-backed securities." For "Other asset-backed securities," interest is recognized using the cost recovery method as described
under the accounting policy for "Investments (substantially restricted)." Premiums and discounts on investments are amortized
using a straight-line method over the life of the investment.
Fee and Other Commissions Expense — The Company pays fee commissions to third-party agents for money transfer and bill payment
services. In a money transfer transaction, both the agent initiating the transaction and the agent disbursing the funds receive a commission
that is generally based on a percentage of the fee charged to the customer. The Company generally does not pay commissions to agents
on the sale of money orders. Fee commissions are recognized at the time of the transaction. Other commissions expense includes the
amortization of capitalized signing bonuses.
Investment Commissions Expense — Investment commissions expense includes amounts paid to financial institution customers based
upon average outstanding balances generated by the sale of official checks, as well as costs associated with interest rate swaps hedging
commission payments and the sale of receivables program. The Company terminated its interest rate swaps in the second quarter of 2008,
as described in Note 6 — Derivative Financial Instruments, and terminated its sale of receivable program in the first quarter of 2008.
Commissions paid to financial institution customers generally are variable based on short-term interest rates. Investment commissions are
recognized each month based on the average outstanding balances of each financial institution customer and their contractual variable
rate for that month.
Marketing and Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes
place. Marketing and advertising expense was $47.1 million, $40.2 million and $52.9 million for 2010, 2009 and 2008, 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 13 — Stock-Based Compensation for further discussion of the Company's stock-
based compensation.
Restructuring and Related Expenses — Restructuring and related expenses may consist of direct and incremental costs associated with
restructuring and related activities, including severance; outplacement and other employee related benefits; facility closures, cease-use or
related charges; asset impairments or accelerated depreciation; and other expenses related to relocation of various operations to existing
or new Company facilities and third-party providers, including hiring, training, relocation, travel and professional fees. The Company
records severance-related expenses once they are both probable and estimable related to severance provided under an on-going benefit
arrangement. One-time, involuntary benefit arrangements and other exit costs are generally recognized when the liability is incurred. The
Company evaluates impairment issues associated with restructuring activities when the carrying amount of the assets may not be fully
recoverable, and also reviews the appropriateness of the remaining useful lives of impacted fixed assets.
In connection with restructuring and related activities during 2010, the Company recorded total expenses of $5.9 million, comprised of
$3.0 million of severance costs in the "Compensation and benefits" line, $1.3 million of costs in the "Transaction and operations support"
line and $1.6 million of facilities and related asset write-off charges in the "Occupancy, equipment and supplies" line of the Consolidated
Statements of Income (Loss).
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