MoneyGram 2010 Annual Report Download - page 98

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Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In connection with its credit facilities, one clearing bank agreement and the SPEs, the Company also has certain financial covenants that
require it to maintain pre-defined ratios of certain assets to payment service obligations. The financial covenants under the credit facilities
are described in Note 9 — Debt. One clearing bank agreement has financial covenants that include the maintenance of total cash, cash
equivalents, receivables and investments in an amount at least equal to payment service obligations, as disclosed in the Consolidated
Balance Sheets, as well as the maintenance of a minimum 103 percent ratio of total assets held at that bank to instruments estimated to
clear through that bank. Financial covenants related to the SPEs include the maintenance of specified ratios of cash, cash equivalents and
investments held in the SPE to the outstanding payment instruments issued by the related financial institution customer.
The regulatory and contractual requirements do not require the Company to specify individual assets held to meet its payment service
obligations, nor is the Company required to deposit specific assets into a trust, escrow or other special account. Rather, the Company
must maintain a pool of liquid assets sufficient to comply with the requirements. No third party places limitations, legal or otherwise, on
the Company regarding the use of its individual liquid assets. The Company is able to withdraw, deposit or sell its individual liquid assets
at will, with no prior notice or penalty, provided the Company maintains a total pool of liquid assets sufficient to meet the regulatory and
contractual requirements.
The Company is not regulated by state agencies for payment service obligations resulting from outstanding cashier's checks; however, the
Company restricts a portion of the funds related to these payment instruments due to contractual arrangements and Company policy.
Assets restricted for regulatory or contractual reasons are not available to satisfy working capital or other financing requirements.
Consequently, the Company considers a significant amount of cash and cash equivalents, receivables and investments to be restricted to
satisfy the liability to pay the principal amount of regulated payment service obligations upon presentment. Cash and cash equivalents,
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) 2010 2009
Cash and cash equivalents (substantially restricted) $ 2,865,941 $ 3,376,824
Receivables, net (substantially restricted) 982,319 1,054,381
Short-term investments (substantially restricted) 405,769 400,000
Trading investments and related put options (substantially restricted) — 26,951
Available-for-sale investments (substantially restricted) 160,936 298,633
4,414,965 5,156,789
Payment service obligations (4,184,736) (4,843,454)
Assets in excess of payment service obligations $ 230,229 $ 313,335
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 $423.2 million over the state's payment
service obligations measure at December 31, 2010, with substantially higher excess permissible investments for most other states. The
Company was in compliance with its contractual and financial regulatory requirements as of December 31, 2010.
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.
F-13