MoneyGram 2010 Annual Report Download - page 34

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Table of Contents
(2) Income from continuing operations before income taxes for 2010 includes a $16.4 million gain related to the reversal of a patent
lawsuit; $1.8 million of legal accruals related primarily to shareholder litigation; $1.8 million of asset impairments and $5.9 million
of expense related to our global transformation initiative. Loss from continuing operations before income taxes for 2009 includes
$54.8 million of legal reserves relating to securities litigation, stockholder derivative claims, a patent lawsuit and a settlement with
the FTC; $18.3 million of goodwill and asset impairments and a $14.3 million net curtailment gain on our benefit plans. Loss from
continuing operations before income taxes for 2008 includes a $29.7 million net loss on the termination of swaps, a $26.5 million
gain from put options on our trading investments, a $16.0 million valuation loss from changes in the fair value of embedded
derivatives on our Series B Stock and a goodwill impairment of $8.8 million related to a discontinued business. Loss from
continuing operations before income taxes for 2007 includes a goodwill impairment of $6.4 million related to a discontinued
business.
(3) Assets in excess of payment service obligations are substantially restricted assets less payment service obligations as calculated in
Note 2 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements. Substantially restricted
assets are composed of cash and cash equivalents, receivables and investments.
(4) Mezzanine Equity relates to our Series B Stock. See Note 11 — Mezzanine Equity of the Notes to Consolidated Financial
Statements for the terms of the Series B Stock.
(5) Investable balances are composed of cash and cash equivalents and all classes of investments.
(6) Net investment margin is determined as net investment revenue (investment revenue less investment commissions) divided by daily
average investable balances.
(7) Includes 27,000, 28,000, 30,000, 18,000 and 16,000 locations in 2010, 2009, 2008, 2007 and 2006, respectively, that offer both
money order and money transfer services.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes. This discussion
contains forward-looking statements that involve risks and uncertainties. MoneyGram's actual results could differ materially from those
anticipated due to various factors discussed below under "Cautionary Statements Regarding Forward-Looking Statements" and under the
caption "Risk Factors" in Part 1, Item 1A of this Annual Report on Form 10-K.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the accounts of the
Company and our subsidiaries. See Note 2 — Summary of Significant Accounting Policies of the Notes to the Consolidated Financial
Statements for further information regarding consolidation. References to "MoneyGram," the "Company," "we," "us" and "our" are to
MoneyGram International, Inc. and its subsidiaries and consolidated entities. Our Consolidated Financial Statements are prepared in
conformity with accounting principles generally accepted in the United States of America ("GAAP").
During the fourth quarter of 2010, the Company revised the presentation of its Consolidated Statements of Income (Loss) as a result of an
internal review to enhance our external reporting and management reporting. As a result of this review, the Company will no longer
present net revenue, previously measured as total revenue less total commissions expense, as this measure was not found to be a
meaningful metric internally or to our external users. The Company will continue to separately disclose "Commissions expense." In
addition, the Company has created an operating income measure consistent with management reporting and to more clearly delineate
operating and non-operating items. As a result, certain items are now presented below the operating income line based on management's
assessment of their nature as non-operating, including securities (gains) losses, interest expense and (gains) losses related to cash flow
hedges. The securities (gains) losses and $2.4 million of gains and $2.8 million of losses related to historical cash flow hedges for the
year ended December 31, 2009 and 2008, respectively, were previously presented in revenue. All prior periods have been reclassified to
conform to this new presentation.
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