MoneyGram 2010 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2010 MoneyGram annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 158

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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) 2010 2009 2008
Shares related to stock options 37,321 21,636 3,577
Shares related to restricted stock 1 28 127
Shares related to preferred stock 431,751 381,749 337,637
Shares excluded from the computation 469,073 403,413 341,341
Recent Accounting Pronouncements and Related Developments — In January 2010, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about
Fair Value Measurements. The amendments in this update require, among other things, new disclosures and clarifications of existing
disclosures related to transfers in and out of Level 1 and Level 2 fair value measurements, further disaggregation of fair value
measurement disclosures for each class of assets and liabilities and additional details of valuation techniques and inputs utilized. This
update is consistent with the Company's current accounting application for fair value measurements and disclosures and did not have a
material impact on its Consolidated Financial Statements.
In March 2010, the Patient Protection and Affordable Care Act and the Healthcare and Education Reconciliation Act of 2010
(collectively, the "Act") was signed into law. The Company has evaluated the impact of the Act and has made the appropriate
adjustments with no material impact to its Consolidated Financial Statements.
Note 3 — Acquisitions and Disposals
Blue Dolphin Financial Services N.V. — On February 5, 2010, the Company acquired Blue Dolphin Financial Services N.V. ("Blue
Dolphin"), a former super-agent in the Netherlands, for a purchase price of $1.4 million, including cash acquired of $1.1 million, and an
earn-out potential of up to $1.4 million. The final earn-out was calculated as of December 31, 2010 in the amount of $0.8 million. As a
result, the Company recorded a gain of $0.2 million in the "Transaction and operations support" line in the Consolidated Statements of
Income (Loss). The acquisition of Blue Dolphin provided the Company with the opportunity for further network expansion in the
Netherlands and Belgium under the European Union Payment Services Directive and additional control over sales and marketing
activities.
F-19