MoneyGram 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 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 249

  • 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
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232
  • 233
  • 234
  • 235
  • 236
  • 237
  • 238
  • 239
  • 240
  • 241
  • 242
  • 243
  • 244
  • 245
  • 246
  • 247
  • 248
  • 249

MONEYGRAM INTERNATIONAL INC ( MGI )
10−K
Annual report pursuant to section 13 and 15(d)
Filed on 3/9/2012
Filed Period 12/31/2011

Table of contents

  • Page 1
    MONEYGRAM INTERNATIONAL INC ( MGI ) 10âˆ'K Annual report pursuant to section 13 and 15(d) Filed on 3/9/2012 Filed Period 12/31/2011

  • Page 2
    ..., computed by reference to the last sales price as reported on the New York Stock Exchange as of June 30, 2011, the last business day of the registrant's most recently completed second fiscal quarter, was $277.3 million. 57,834,779 shares of common stock were outstanding as of February 28, 2012...

  • Page 3
    ...Global Funds Transfer Segment Financial Paper Products Segment Product and Infrastructure Development and Enhancements Sales and Marketing Competition Regulation Clearing and Cash Management Bank Relationships Intellectual Property Employees Executive Officers of the Registrant Available Information...

  • Page 4
    ...limited bank relationships to meet their financial needs. Our money transfer services are available at approximately 267,000 agent locations in approximately 192 countries and territories. Our services enable consumers throughout the world to transfer money and pay bills, helping them meet financial...

  • Page 5
    ...bank account, mobile phone account or prepaid card. We typically pay both our "send" and "receive" agents a commission for the transaction. We provide money transfer services through our worldwide network of agents and through a limited number of Companyâˆ'owned retail locations in the United States...

  • Page 6
    ... revenue of our Global Funds Transfer segment. Our contract with Walâˆ'Mart in the United States, which runs through January 2013, provides for Walâˆ'Mart's sale of our money order and money transfer services and realâˆ'time, urgent bill payment services at its retail locations on an exclusive...

  • Page 7
    ... bills for credit to a biller, typically within two to three days. Financial Paper Products Segment Our Financial Paper Products segment provides money orders to consumers through our retail and financial institution agent locations in the United States and Puerto Rico, and provides official check...

  • Page 8
    ... through our network of 57,308 agent and financial institution locations in the United States and Puerto Rico. Official Check Outsourcing Services - As with money orders, we generate revenue from our official check outsourcing services from per item and other fees and from the investment of funds...

  • Page 9
    ...and regulations of the United States and other countries, including international, federal and state antiâˆ'money laundering laws and regulations; financial services regulations; currency control regulations; antiâˆ'bribery laws; regulations of the U.S. Treasury Department's Office of Foreign Assets...

  • Page 10
    ... Columbia, Puerto Rico and the United States Virgin Islands and Guam require us to be licensed to conduct business within their jurisdictions. Our primary overseas operating subsidiary, MoneyGram International Ltd, became a licensed payment institution under the Payment Services Regulations adopted...

  • Page 11
    ... not to bank money service businesses. As a result, we also utilize regional or countryâˆ'based banking partners in addition to large cash management banks. Intellectual Property The MoneyGram brand is important to our business. We have registered our MoneyGram trademark in the United States and...

  • Page 12
    ... served as Senior Executive Vice President of First Data Corporation, a global payment processing company, from March 2000 to October 2007, and President of First Data International from May 2002 to October 2007. From 1991 to 2000, Ms. Patsley served as President and Chief Executive Officer of...

  • Page 13
    ...the United States and global markets, could adversely affect our business, financial condition and results of operations. Our money transfer business relies in part on the overall strength of global economic conditions as well as international migration patterns. Consumer money transfer transactions...

  • Page 14
    ...in the United States or other countries that are important to our business, which could adversely affect our results of operations. In addition, increases in employment opportunities may lag other elements of any economic recovery. Our agents or billers may have reduced sales or business as a result...

  • Page 15
    ... business, financial condition and results of operations could be adversely affected. Revenue from our money transfer and urgent bill payment services is derived from transactions conducted through our retail agent and biller networks. Many of our high volume agents are in the check cashing industry...

  • Page 16
    ... may increase our costs of operations and may disrupt our business as we develop new business and compliance models. For example, the European Union's Payment Services Directive, or PSD, imposes potential liability on us for the conduct of our agents and the commission of third party fraud utilizing...

  • Page 17
    ...ongoing litigation may adversely affect our business, financial condition and results of operations. There may also be adverse publicity associated with lawsuits and investigations that could decrease agent and customer acceptance of our services. Additionally, our business has been in the past, and...

  • Page 18
    ... and could divert the efforts and attention of our management team from our ordinary business operations. We conduct money transfer transactions through agents in some regions that are politically volatile or, in a limited number of cases, that are subject to certain OFAC restrictions. We conduct...

  • Page 19
    ...our costs. Any delay or inability to settle our payment instruments, pay money transfers or make related settlements with our agents could adversely impact our business, financial condition and results of operations. • Clearing and cash management banks that conduct our official check, money order...

  • Page 20
    ... by us or our agents to maintain adequate banking relationships may adversely affect our business, financial condition and results of operations. We rely on domestic and international banks for international cash management, ACH and wire transfer services to pay money transfers and settle with our...

  • Page 21
    ... in some cases increased, perâˆ'item and other fees for our official check and money order services. Due to the current low interest rate environment, our official check financial institution customers have been receiving low or no commission payments from the issuance of payment service instruments...

  • Page 22
    ... introduce new and enhanced methods of providing money transfer, money order, official check, bill payment and related services that keep pace with competitive introductions, technological changes and the demands and preferences of our agents, financial institution customers and consumers...

  • Page 23
    ... of security of our systems could adversely affect our business. We obtain, transmit and store confidential customer, employer and agent information in connection with certain of our services. These activities are subject to laws and regulations in the United States and other jurisdictions. The...

  • Page 24
    ..., as well as to enhance our existing services and offer new services, is dependent on our information technology systems. If we are unable to effectively manage the technology associated with our business, we could experience increased costs, reductions in system availability and loss of agents or...

  • Page 25
    ... an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. In order to achieve effective internal controls we may need to enhance our accounting systems or processes, which could increase our cost of doing business. Any failure to achieve and...

  • Page 26
    ... from time to time, subject to market conditions and our capital needs. Sales of a substantial number of shares of our common stock, or the perception that significant sales could occur (particularly if sales are concentrated in time or amount), may depress the trading price of our common stock. Our...

  • Page 27
    ... the cash and stock payments made to THL and Goldman Sachs by the Company in connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012. On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County...

  • Page 28
    ... officer and one former chief executive officer of the Company. The U.S. Department of the Treasury Financial Crimes Enforcement Network, or FinCEN, also requested information, which information was subsequently provided by MoneyGram, concerning MoneyGram's reporting of fraudulent transactions...

  • Page 29
    ... PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange under the symbol "MGI". No dividends on our common stock were declared by our Board of Directors in 2011 or 2010. See "Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 30
    ... presents our selected consolidated financial data for the periods indicated. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and Notes thereto. For...

  • Page 31
    ..."Management's Discussion and Analysis of Financial Condition and Results of Operations - Basis of Presentation." YEAR ENDED DECEMBER 31, (Dollars and shares in thousands, except per share data) 2011 2010 2009 2008 2007 Operating Results Revenue Global Funds Transfer segment Financial Paper Products...

  • Page 32
    ...the transaction, the originating location and the receiving location. Money order, bill payment and official check transaction fees are fixed per transaction. Foreign exchange revenue is derived from the management of currency exchange spreads on money transfer transactions involving different "send...

  • Page 33
    ... the amortization of capitalized agent signing bonus payments. Investment commissions expense - Investment commissions consist of amounts paid to financial institution customers based on shortâˆ'term interest rate indices times the average outstanding cash balances of official checks sold by that...

  • Page 34
    ... balances and lower yields earned on our investment portfolio. • Total commissions expense increased in 2011 due to money transfer volume growth, the higher euro exchange rate and signing bonus amortization, partially offset by lower volumes from bill payment products. • Total operating...

  • Page 35
    ... in the country. The impact of the new legislation was partially offset as a large Italian agent has a higher send limit than nonâˆ'bank locations. In addition, bill payment products available in the United States are not as resilient as money transfers given the consumer credit markets and the...

  • Page 36
    ... by money transfer transaction volume growth, a higher euro exchange rate and higher foreign exchange revenue, partially offset by changes in corridor mix, lower average face value per transaction and the $50 price band in the United States. Bill payment products, money order and official check fee...

  • Page 37
    ... low federal funds rate, most of our financial institution customers continue to be in a "negative" commission position as of December 31, 2011, meaning we do not owe any commissions to our customers. While the majority of our contracts require that the financial institution customers pay us...

  • Page 38
    ... executive severance costs. Transaction and operations support - Transaction and operations support expense primarily includes: marketing; professional fees and other outside services; telecommunications; agent support costs, including forms related to our products; nonâˆ'compensation employee costs...

  • Page 39
    ... costs increased primarily due to the outsourcing of certain transactional support and information technology activities, as well as tax advisement and our continued investment in the enhancement of our operational processes and systems that support our infrastructure. • Foreign exchange...

  • Page 40
    ... of Contents • Marketing costs increased to support transaction and agent growth. • Foreign exchange losses increased due to the impact of high volatility in foreign currency exchange rates on our growing assets, liabilities, revenue and expenses not denominated in the U.S. dollar. • Other...

  • Page 41
    ... Financial Statements for further information. Other - Other expenses as summarized below include items deemed to be nonâˆ'operating based on management's assessment of the nature of the item in relation to our core operations. (Amounts in thousands) 2011 2010 2009 Capital transaction costs...

  • Page 42
    Table of Contents Capital transactions costs relate to the 2011 Recapitalization and the secondary offering. Losses from asset dispositions relate to land sold as part of our global business transformation and a former bill payment service. Impairment losses relate to land sold and held for sale and...

  • Page 43
    ...money transfers and bill payment services to consumers through a network of agents and, in select markets, companyâˆ'operated locations. The Financial Paper Products segment provides money orders to consumers through our retail and financial institution locations in the United States and Puerto Rico...

  • Page 44
    ... variable rate commissions were identified with the official check product in the Financial Paper Products segment, while forward foreign exchange contracts are identified with the money transfer product in the Global Funds Transfer segment. Any interest rate swaps related to our credit agreements...

  • Page 45
    ... euro exchange rate, partially offset by unfavorable changes in corridor mix, lower average face value per transaction and lower average money transfer fees from the $50 price band in the United States. In 2010, money transfer fee and other revenue increased four percent due to transaction volume...

  • Page 46
    ...$496,645 Commissions expense consists primarily of fees paid to our thirdâˆ'party agents for money transfer and bill payment services, as well as the amortization of capitalized agent signing bonuses. In 2011, signing bonus expense increased due to new agent signings. In 2010, signing bonus expense...

  • Page 47
    ...2010 operating margin benefited from money transfer volume growth and lower signing bonus amortization, partially offset by lower bill payment revenue. FINANCIAL PAPER PRODUCTS SEGMENT YEAR ENDED DECEMBER 31, (Amounts in thousands) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009 Money order revenue: Fee...

  • Page 48
    ... generated by the sale of official checks times shortâˆ'term interest rate indices, payments on money order transactions and amortization of signing bonuses. Commissions expense decreased 39 percent and 53 percent in 2011 and 2010, respectively, due primarily to lower money order agent rebates from...

  • Page 49
    ...paid to our official check financial institution customers. As a result, we anticipate that the Financial Paper Products segment will continue to experience financial institution and agent attrition in 2012. We continue to see a trend among state, federal and international regulators toward enhanced...

  • Page 50
    ... the sale of our payment instruments, our cash and cash equivalent and shortâˆ'term investment balances, proceeds from our investment portfolio and credit capacity under our credit facilities. Our primary operating liquidity needs relate to the settlement of payment service obligations to our agents...

  • Page 51
    ...agent base, and some of these large international banks have opted not to bank money service businesses. As a result, we also utilize regional or countryâˆ'based banking partners in addition to large cash management banks. Special Purpose Entities - For certain of our financial institution customers...

  • Page 52
    ...25 percent. Fees on the daily unused availability under the revolving credit facility are 62.5 basis points. Since inception of the 2011 Credit Agreement and through the date of this filing, the Company elected the Eurodollar rate as its primary interest basis, with a minimal amount of the term debt...

  • Page 53
    ... defined by each state, for our regulated payment instruments, namely teller checks, agent checks, money orders and money transfers. The regulatory requirements do not require us to specify individual assets held to meet our payment service obligations, nor are we required to deposit specific assets...

  • Page 54
    ... needing to either prefund agent settlements or hold minimum required levels of cash within the applicable country. The most material of these requirements is in the United Kingdom, where our licensed entity, MoneyGram International Limited, is required to maintain a cash and cash equivalent balance...

  • Page 55
    ... our business. Signing bonuses are payments to certain agents and financial institution customers as an incentive to enter into longâˆ'term contracts. Marketing and signage are purchase order commitments. Other obligations are unfunded capital commitments related to our limited partnership interests...

  • Page 56
    ... core business, the cash flows from operating activities relating to the payment service assets and obligations should be reviewed in conjunction with the net cash flows from investing activities related to our shortâˆ'term investments and availableâˆ'forâˆ'sale investments. We received income tax...

  • Page 57
    ... from the sale of FSMC, Inc. Cash Flows from Financing Activities YEAR ENDED DECEMBER 31, (Amounts in thousands) 2011 2010 2009 Proceeds from issuance of debt Transaction costs for issuance and amendment of debt Payments on debt Prepayment penalty on debt Payments on revolving credit facilities...

  • Page 58
    ...in 2011 and we do not anticipate declaring any dividends on our common stock during 2012. Offâˆ'Balance Sheet Arrangements None. Enterprise Risk Management Risk is an inherent part of any business. Our most prominent risk exposures are credit, interest rate, foreign currency exchange and operational...

  • Page 59
    ... asset accounts, serve as counterparties to our foreign currency transactions and conduct cash transfers on our behalf for the purpose of clearing our payment instruments and related agent receivables and agent payables. Through certain check clearing agreements and other contracts, we are required...

  • Page 60
    ... customers who are transferring money or buying money orders, and agents who receive proceeds from us in anticipation of payment to the recipients of money transfers. The Company has a credit risk management function that conducts the underwriting of credit on new agents as well as conducting credit...

  • Page 61
    ... and cash flow analyses of our agents that average high volumes of transactions and monitoring remittance patterns versus reported sales on a daily basis. Credit risk management is complimented through functionality within our point of sale system, which can enforce credit limits on a realâˆ'time...

  • Page 62
    ... accounts, time deposits and certificates of deposit, and U.S. government money market funds. These types of investments have minimal risk of declines in fair value from changes in interest rates. Our commissions paid to financial institution customers are variable rate, which was zero in 2011...

  • Page 63
    ... of cash balances that are maintained to support the level of our customer activity. Other countries that had extremely high volatility versus the U.S. dollar in 2011 were India and Mexico, both of which are significant corridors for our money transfer business. Resolution of the financial crisis...

  • Page 64
    ...Business managers maintain a system of controls to provide transaction authorization and execution, safeguarding of assets from misuse or theft, and to ensure the quality of financial and other data. Our Business Resiliency group works with each business function to develop plans to support business...

  • Page 65
    ... of the Notes to Consolidated Financial Statements. Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or...

  • Page 66
    ... a fair value for the Global Funds Transfer reporting unit that was substantially in excess of the reporting unit's carrying value. If the discount rate for the Global Funds Transfer reporting unit increases by 50 basis points from the rate used in our fair value estimate, fair value would be...

  • Page 67
    ...returns to assess the reasonableness and appropriateness of our assumption. Our pension plan asset allocations are reviewed annually and are based upon plan obligations, an evaluation of market conditions, tolerance for risk and cash requirements for benefit payments. The discount rates for the 2011...

  • Page 68
    ... between local tax laws and generally accepted accounting principles. We file tax returns in various states within the United States and various countries. Our tax filings for various periods are subject to audit by various tax authorities, with United States federal income tax filings for 2005 and...

  • Page 69
    ... in economic conditions, in both the United States and global markets; • consumers' confidence in our business; • a material slow down or complete disruption of international migration patterns; • our ability to maintain agent or biller relationships, or a reduction in transaction volume from...

  • Page 70
    ... from our retail agents and official check financial institution customers; • the ability of MoneyGram and its agents to maintain adequate banking relationships; • our ability to retain partners to operate our official check and money order businesses; • our ability to manage fraud risks from...

  • Page 71
    ... limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely...

  • Page 72
    ... ACCOUNTANT FEES AND SERVICES The information called for by this Item is contained in our definitive Proxy Statement for our 2012 Annual Meeting of Stockholders, and is incorporated herein by reference. PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) (2) (3) The financial...

  • Page 73
    ... duly authorized. MoneyGram International, Inc. (Registrant) Date: March 8, 2012 By: /S/ PAMELA H. PATSLEY Pamela H. Patsley Chairman and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by...

  • Page 74
    ... Exhibit 2.1 to Registrant's Current Report on Form 8âˆ'K filed March 9, 2011). Amendment No. 1 to Recapitalization Agreement, dated as of May 4, 2011, among MoneyGram International, Inc., certain affiliates and coâˆ'investors of Thomas H. Lee Partners, L.P. and Goldman, Sachs & Co. and certain of...

  • Page 75
    ... MoneyGram International, Inc., MoneyGram Payment Systems Worldwide, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee and collateral agent (Incorporated by reference from Exhibit 4.1 to Registrant's Current Report on Form...

  • Page 76
    ...as of March 25, 2008, by and between MoneyGram Payment Systems, Inc., as grantor, and Deutsche Bank Trust Company Americas, as collateral agent for the secured parties (Incorporated by reference from Exhibit 10.16 to Registrants' Current Report on Form 8âˆ'K filed on March 28, 2008). Second Priority...

  • Page 77
    ... reference from Exhibit 10.3 to Registrant's Current Report on Form 8âˆ'K filed on March 18, 2008). Fee Arrangement Letter, dated as of March 25, 2008, by and between the Investor parties named therein, Goldman, Sachs & Co. and MoneyGram International, Inc. (Incorporated by reference from Exhibit 10...

  • Page 78
    ... by reference from Exhibit 10.42 to Registrant's Annual Report on Form 10âˆ'K filed on March 1, 2006). Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Nonâˆ'Qualified Stock Option Agreement, effective May 8, 2007 (Incorporated by reference from Exhibit 99.04 to Registrant...

  • Page 79
    ... Money Services Agreement between Walâˆ'Mart Stores, Inc. and MoneyGram Payment Systems, Inc. dated February 1, 2005 as amended (Incorporated by reference from Exhibit 10.71 to Registrant's Annual Report on Form 10âˆ'K filed on March 25, 2008). Form of Employee Trade Secret, Confidential Information...

  • Page 80
    ...'s Current Report on Form 8âˆ'K filed May 23, 2011). Security Agreement, dated as of May 18, 2011, among MoneyGram International, Inc., MoneyGram Payment Systems Worldwide, Inc., MoneyGram Payment Systems, Inc., MoneyGram of New York LLC, and Bank of America, N.A., as collateral agent (Incorporated...

  • Page 81
    ... New York LLC, the Lenders and Bank of America, N.A., as administrative agent (Incorporated by reference from Exhibit 10.1 to Registrant's Current Report on Form 8âˆ'K filed November 22, 2011) Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Performance Restricted Stock Unit...

  • Page 82
    ..., 2011, 2010 and 2009; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text. The information in Exhibit 101 is "furnished" and not "filed" as provided in Rule 406T of Regulation Sâˆ'T. Filed herewith. Indicates management contract or compensatory plan or arrangement required...

  • Page 83
    ... Contents MoneyGram International, Inc. Annual Report on Form 10âˆ'K Items 8 and 15(a) Index to Financial Statements Management's Responsibility Statement Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2011 and 2010 Consolidated Statements of...

  • Page 84
    ... in the United States of America using, where appropriate, management's best estimates and judgments. The financial information presented throughout the Annual Report is consistent with that in the consolidated financial statements. Management is also responsible for maintaining a system of internal...

  • Page 85
    ... Management's Responsibility Statement. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those...

  • Page 86
    ... 2011, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2011...

  • Page 87
    ... BALANCE SHEETS AT DECEMBER 31, (Amounts in thousands, except share data) 2011 2010 ASSETS Cash and cash equivalents Cash and cash equivalents (substantially restricted) Receivables, net (substantially restricted) Shortâˆ'term investments (substantially restricted) Availableâˆ'forâˆ'sale...

  • Page 88
    ... thousands, except per share data) 2011 2010 2009 REVENUE Fee and other revenue Investment revenue Total revenue EXPENSES Fee and other commissions expense Investment commissions expense Total commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and...

  • Page 89
    ... of Contents MONEYGRAM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEAR ENDED DECEMBER 31, (Amounts in thousands) 2011 2010 2009 NET INCOME (LOSS) OTHER COMPREHENSIVE (LOSS) INCOME Net unrealized gains on availableâˆ'forâˆ'sale securities: Net holding gains...

  • Page 90
    ... restricted) Change in receivables, net (substantially restricted) Change in payment service obligations Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of investments classified as availableâˆ'forâˆ'sale (substantially restricted) Proceeds...

  • Page 91
    ... conversion of mezzanine equity 1 for 8 reverse stock split Conversion of D Stock to common stock Employee benefit plans Net unrealized gain on availableâˆ'forâˆ'sale securities Amortization of prior service cost for pension and postretirement benefits, net of tax Amortization of unrealized losses...

  • Page 92
    ... in cash, and Goldman Sachs received 15,503 additional shares of D Stock and $77.5 million in cash. Collectively, these transactions are referred to as the "2011 Recapitalization". Under the 2011 Recapitalization, the Investors received a cash dividend payment for amounts earned under the terms of...

  • Page 93
    ... Accounting Policies Basis of Presentation - The consolidated financial statements of MoneyGram are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Consolidated Balance Sheets are unclassified due to the shortâˆ'term nature...

  • Page 94
    ...for those regulated payment instruments, namely teller checks, agent checks, money orders and money transfers. The regulatory payment service assets measure varies by state, but in all cases excludes investments rated below Aâˆ'. The most restrictive states may also exclude assets held at banks that...

  • Page 95
    ... 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...

  • Page 96
    ... of official check payment instruments, remittances and clearing adjustments; amounts owed to agents for funds paid to consumers on behalf of the Company; commissions owed to financial institution customers and agents for instruments sold; amounts owed to investment brokers for purchased securities...

  • Page 97
    ... the remaining term of the lease or 10 years. Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate. Intangible assets...

  • Page 98
    ... service revenue, foreign exchange revenue and other revenue. • Transaction fees consist primarily of fees earned on money transfer, money order, bill payment and official check transactions. The money transfer transaction fees vary based on the principal value of the transaction and the locations...

  • Page 99
    ... the sale of payment instruments, primarily official checks and money orders, and consists of interest income, dividend income and amortization of premiums and discounts. Fee and Other Commissions Expense - The Company pays fee commissions to thirdâˆ'party agents for money transfer and bill payment...

  • Page 100
    ...2009 Capital transaction costs Disposal loss from asset dispositions Impairment loss from asset dispositions Gain on forward foreign currency contracts Total other $ 6,446 972 4,458 - $11,876 $- - - - $- $ - - - (2,401) $(2,401) Earnings Per Share - The Company utilizes the twoâˆ'class method...

  • Page 101
    ... Belgium under the European Union Payment Services Directive and additional control over sales and marketing activities. The Company finalized its purchase price allocation in 2010, resulting in $3.1 million of goodwill assigned to the Company's Global Funds Transfer segment, and the forgiveness of...

  • Page 102
    ...the "Transaction and operations support" line in the Consolidated Statements of Income (Loss). Note 4 - Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market...

  • Page 103
    ... related to trading investments were estimated using the expected cash flows from the instruments through their assumed exercise date. These cash flows were discounted at a rate corroborated by market data for a financial institution comparable to the put option counterâˆ'party, as well as the...

  • Page 104
    ... level as of December 31: Balance at December 31, 2011 Fair Value at December 31, 2011 Level 1 Level 2 Level 3 Total (Amounts in thousands) Financial assets: Availableâˆ'forâˆ'sale investments (substantially restricted): United States government agencies Residential mortgageâˆ'backed securities...

  • Page 105
    ... amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of debt is estimated using market quotations, where available, credit ratings, observable market indices and other market data. As of December 31, 2011, the fair value of the senior secured...

  • Page 106
    ...cash, moneyâˆ'market securities and time deposits. Cash primarily consists of interestâˆ'bearing deposit accounts and nonâˆ'interest bearing transaction accounts. The Company's moneyâˆ'market securities are invested in six funds, all of which are AAA rated and consist of United States Treasury bills...

  • Page 107
    ...forâˆ'sale investments are as follows at December 31: Gross Unrealized Gains 2011 Gross Unrealized Losses Net Average Price (Amounts in thousands, except net average price) Amortized Cost Fair Value Residential mortgageâˆ'backed securitiesâˆ'agencies Other assetâˆ'backed securities United States...

  • Page 108
    ... to manage its foreign currency needs and exchange risk arising from its assets and liabilities denominated in foreign currencies. While these contracts mitigate certain foreign currency risk, they are not designated as hedges for accounting purposes. The "Transaction and operations support" line in...

  • Page 109
    ... nonâˆ'performance. Historically, the Company entered into foreign currency forward contracts with 12âˆ'month durations to hedge forecasted foreign currency money transfer transactions. The Company designated these forward contracts as cash flow hedges. All cash flow hedges matured in 2009. For the...

  • Page 110
    ... final sale price. In addition, goodwill was reduced by $4.5 million from the sale of FSMC. The FSMC reporting unit was not a component of the Global Funds Transfer or Financial Paper Products segments. The Company performed an annual assessment of goodwill during the fourth quarters of 2011, 2010...

  • Page 111
    ...impairment charges of $3.6 million related to customer lists and trademarks associated with its retail money order business in the "Transaction and operations support" line of the Consolidated Statements of Income (Loss). Intangible asset amortization expense for 2011, 2010 and 2009 was $1.2 million...

  • Page 112
    ...the debt using the effective interest method. The incremental term loan has quarterly principal payments of $0.4 million beginning September 30, 2011, with the remaining outstanding principal due November 2017. The Company may elect an interest rate for the 2011 Credit Agreement at each reset period...

  • Page 113
    ...; make certain acquisitions; sell assets or subsidiary stock; pay dividends and other restricted payments; invest in certain assets; and effect loans, advances and certain other transactions with affiliates. In addition, the 2011 Credit Agreement has a covenant that places limitations on the use of...

  • Page 114
    ... under which no new service or compensation credits are accrued by the plan participants. Cash accumulation accounts continue to be credited with interest credits until participants withdraw their money from the Pension Plan. It is the Company's policy to fund the minimum required contribution each...

  • Page 115
    ... preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before longâˆ'term capital market assumptions are determined. The long...

  • Page 116
    ..., equity securities are diversified across United States and nonâˆ'United States stocks, as well as growth, value, and small and large capitalizations. Other assets, such as real estate and cash, are used judiciously to enhance longâˆ'term returns while improving portfolio diversification. The...

  • Page 117
    ... for the years ended December 31: (Amounts in thousands) 2011 Pension and SERPs 2010 2009 Postretirement Benefits 2011 2010 2009 Service cost Interest cost Expected return on plan assets Amortization of prior service cost (credit) Recognized net actuarial loss Curtailment gain Net periodic...

  • Page 118
    ...(2,800) $ $ $ $ $ $ (Amounts in thousands) Pension and SERPs Postretirement Benefits Net actuarial loss Amortization of net actuarial loss Amortization of prior service (cost) credit Curtailment gain (loss) Prior service (costs) credit Net actuarial loss Total recognized in other comprehensive...

  • Page 119
    ...SERPs 2011 2010 Postretirement Benefits 2011 2010 Components recognized in the Consolidated Balance Sheets: Pension and other postretirement benefits liability Accumulated other comprehensive loss: Unrealized losses for pension and postretirement benefits, net of tax Prior service cost (credit) for...

  • Page 120
    ... of Business - "2011 Recapitalization" for further information. Prior to May 18, 2011, the Series B Stock was recorded in the Company's Consolidated Balance Sheets as "Mezzanine equity" as it had redemption features not solely within the Company's control. During 2011 and 2010 the transaction costs...

  • Page 121
    ... of restricted stock, net of shares withheld for taxes December 31, 2010 Conversion of B Stock to common stock Conversion of Series Bâˆ'1 Stock to D stock Conversion of D stock to common stock Stock option exercises and release of restricted stock units December 31, 2011 Authorized D Stock Issued...

  • Page 122
    ... also permits the Company to offer and sell up to $500 million of its common stock, preferred stock, debt securities or any combination of these, from time to time, subject to market conditions and the Company's capital needs. The registration statement was declared effective by the SEC on July...

  • Page 123
    ... as compensation cost using the straightâˆ'line method over the vesting or service period in the Company's financial statements. Stockâˆ'based compensation is recognized only for those options, restricted stock units and stock appreciation rights expected to vest, with forfeitures estimated at the...

  • Page 124
    ... a preâˆ'defined common stock price for any period of 20 consecutive trading days, (b) a change in control of the Company resulting in a preâˆ'defined per share consideration or (c) in the event the Company's common stock does not trade on a U.S. exchange or trading market, resulting in the Company...

  • Page 125
    ... "Transaction and operations support" line in the Consolidated Statements of Income using the straightâˆ'line method over the vesting period. A summary of the Company's restricted stock unit activity for the year ended December 31, 2011 is as follows: Total Shares Weighted Average Price Restricted...

  • Page 126
    ... over a fourâˆ'year period in an equal number of shares each year. Upon exercise, the employee will receive an amount which is equal to the excess of the closing sale price of the Company's common stock at the time of exercise over the grant price paid in cash up to a maximum of $12.00. The...

  • Page 127
    ... revenue based solely on services agreements with the primary United States operating subsidiary. Income tax (benefit) expense is as follows for the year ended December 31: (Amounts in thousands) 2011 2010 2009 Current income tax expense (benefit): Federal State Foreign Current income tax expense...

  • Page 128
    ... benefits from changes in estimates to previously recorded tax amounts as a result of new information received during the year. During the second quarter of 2010, the IRS completed its examination of the Company's consolidated income tax returns for 2005 to 2007, and issued its Revenue Agent Report...

  • Page 129
    ...States federal income tax examination for 2005 through 2007 is currently in administrative appeals and a United States federal income tax examination for 2008 and 2009 currently in process. Unrecognized tax benefits are recorded in "Accounts payable and other liabilities" in the Consolidated Balance...

  • Page 130
    ...the management of investments and the clearing of payment service obligations. All of these letters of credit are outstanding as of December 31, 2011. These overdraft facilities reduce amounts available under the senior facility. Fees on the letters of credit are paid in accordance with the terms of...

  • Page 131
    ... the cash and stock payments made to THL and Goldman Sachs by the Company in connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012. On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County...

  • Page 132
    ... money transfers and bill payment services to consumers through a network of agents and, in select markets, companyâˆ'operated locations. The Financial Paper Products segment provides money orders to consumers through retail and financial institution locations in the United States and Puerto Rico...

  • Page 133
    ...for the year ended December 31: (Amounts in thousands) 2011 2010 2009 Revenue Global Funds Transfer: Money transfer Bill payment Total Global Funds Transfer Financial Paper Products: Money order Official check Total Financial Paper Products Other Total revenue (Amounts in thousands) $1,040,087 112...

  • Page 134
    ... in thousands) 2011 2010 Assets: Global Funds Transfer Financial Paper Products Other Total assets $1,247,355 3,683,393 244,830 $5,175,578 $1,017,574 3,797,911 300,251 $5,115,736 Geographic areas - International operations are located principally in Europe. International revenues are defined...

  • Page 135
    ...: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; and MoneyGram of New York LLC (collectively, the "Guarantors"). The following information represents condensed, consolidating Balance Sheets as of December 31, 2011 and 2010, along with condensed, consolidating Statements...

  • Page 136
    ...) Shortâˆ'term investments (substantially restricted) Availableâˆ'forâˆ'saleâˆ'investments (substantially restricted) Property and equipment Goodwill Other assets Equity investments in subsidiaries Intercompany receivables Total assets LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Payment service...

  • Page 137
    ... Total revenue EXPENSES Fee and other commissions expense Investment commissions expense Total commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and supplies Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other...

  • Page 138
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2011 (Amounts in thousands) Parent Subsidiary Guarantors Nonâˆ' Guarantors Eliminations Consolidated NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ...

  • Page 139
    ...sale investments (substantially restricted) Property and equipment Goodwill Other assets Equity investments in subsidiaries Intercompany receivables Total assets LIABILITIES AND STOCKHOLDERS' DEFICIT (EQUITY) Payment service obligations Debt Pension and other postretirement benefits Accounts payable...

  • Page 140
    ... Total revenue EXPENSES Fee and other commissions expense Investment commissions expense Total commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and supplies Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other...

  • Page 141
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2010 (Amounts in thousands) Parent Subsidiary Guarantors Nonâˆ' Guarantors Eliminations Consolidated NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM ...

  • Page 142
    ... Total revenue EXPENSES Fee and other commissions expense Investment commissions expense Total commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and supplies Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other...

  • Page 143
    ...) Purchases of property and equipment Proceeds from disposal of a business Cash paid for acquisitions, net of cash acquired Capital contribution to subsidiary guarantors Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Payments on debt Payments on revolving credit facility...

  • Page 144
    ... of MoneyGram Payment Systems Worldwide, Inc. (or its permitted successor), a Delaware corporation (the "Company"), the other Guarantors (as defined in the Indenture referred to herein), and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee and collateral agent under...

  • Page 145
    ...THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 5. Counterparts. The parties may sign any number...

  • Page 146
    IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: August 6, 2009 MONEYGRAM SECURITIES, LLC By: /s/ Daniel J. Collins Name: Daniel J. Collins Title: SVP + Treasurer 3

  • Page 147
    MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC. By: /s/ Daniel J. Collins Name: Daniel J. Collins Title: SVP + Treasurer 4

  • Page 148
    MONEYGRAM INTERNATIONAL, INC. MONEYGRAM PAYMENT SYSTEMS, INC. MONEYGRAM INVESTMENTS, LLC PROJECT REFUND, INC. MONEYGRAM OF NEW YORK, LLC PROPERTYBRIDGE, INC. MONEYGRAM SECURITIES, LLC By: /s/ Daniel J. Collins Name: Daniel J. Collins Title: SVP + Treasurer 5

  • Page 149
    DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as Trustee and Collateral Agent By: Deutsche Bank National Trust Company /s/ David Contino, Vice President Authorized Signatory By: /s/ Irina Golovashchuk, Assistant Vice President Authorized Signatory 6

  • Page 150
    ..., among MoneyGram Payment Systems Worldwide, Inc. (or its permitted successor), a Delaware corporation (the "Company"), the Guarantors (as defined in the Indenture referred to herein) and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee and collateral agent under the...

  • Page 151
    ... control of MoneyGram Payment Systems, Inc. (in each case, other than a Permitted Lien under clauses (v), (x), (aa) and (dd) of the definition of Permitted Liens) and (e) that the Company provides to the Trustee and the Holders within 45 days of the end of each fiscal quarter a report in the form...

  • Page 152
    ... or own or acquire any other assets or investments other than Specified SRIs and cash received from the sale thereof and (iv) not sell or transfer any Specified SRIs except to third parties for cash consideration; provided that on or after the Second Supplemental Indenture Effective Date, (x) if no...

  • Page 153
    ... (C) failure by MoneyGram Payment Systems, Inc. for 30 days after receipt of ...execution by the parties hereto (such date the "Effective Date"). NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING...

  • Page 154
    ... of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of...

  • Page 155
    IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: May 21, 2010 MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC. By: /s/ Daniel J. Collins Name: Daniel J. Collins Title: SVP + Treasurer [...

  • Page 156
    MONEYGRAM INTERNATIONAL, INC. MONEYGRAM PAYMENT SYSTEMS, INC. MONEYGRAM OF NEW YORK, LLC PROPERTYBRIDGE, INC. By: /s/ Daniel J. Collins Name: Daniel J. Collins Title: SVP + Treasurer [Signature Page to Second Supplemental Indenture]

  • Page 157
    DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as Trustee and Collateral Agent By: /s/ Chris Niesz, Associate Authorized Signatory By: /s/ Irina Golovashchuk, Assistant Vice President Authorized Signatory [Signature Page to Second Supplemental Indenture]

  • Page 158
    ANNEX A

  • Page 159
    Schedule C Par Value (12/31/2007) (a) Par Value (01/31/2008) (a) Investor Value (12/31) (a) Investor Value (1/31) (a) Category CUSIP Câˆ'1 FHLB 4 3/09 C... FNR 2003âˆ'41 PM FNR 2003âˆ'97 WC FNR 2005âˆ'53 MB FNR 2005âˆ'58 CW FNR 2007âˆ'10 VA GNR 1998âˆ'24 Z GNR 2000âˆ'26 PD GNR 2002âˆ'67 VB FHR 49 G ...

  • Page 160
    ...1A A3 CENTS 2006âˆ'1A B CLSVF 2007âˆ'3A A3 EIGHT 2007âˆ'1A A3 MARSC 2007âˆ'1A A3 PTPLS 2007âˆ'1A A2 SQRD 2007âˆ'1A A2A TRIC 2005âˆ'4A A3L TRIC 2006âˆ'6A A2L TWOLF 2007âˆ'1A A2 ZING 6A B1 Total Câˆ'2 Investor Value / Par Value (a) Per Values ($) ana Investor Values ($) for illustrative purposes only...

  • Page 161
    ...âˆ'1 ANCHORAGE FIN SUBâˆ'TR IV NORTH CASTLE CUST TR VIII SUTTON CAPITAL TRUST III TIERS 2001âˆ'6 US BANK PIPER JAFFREY TRUST Total Câˆ'3 Investor Value / Par Value (a) Par Values ($) and Investor Values ($) for illustrative purposes only 87330UAJ0 87330L200 89675YAC6 17307G4N5 17309BAF4 820018BV0...

  • Page 162
    ANNEX B

  • Page 163
    ...FNR 2003âˆ'41 PM FNR 2003âˆ'97 WC FNR 2005âˆ'53 MB FNR 2005âˆ'58 CW FNR 2007âˆ'10 VA GNR 1998âˆ'24 Z GNR 2000âˆ'26 PD GNR 2002âˆ'67 VB FHR 49 G...Total Câˆ'1 securities Investor Value / Par Value (a) (b) Par Values ($) and Investor Values ($) for illustrative purposes only Security was called or paid ...

  • Page 164
    .../31 (a) Investor Value 1/31 (a) SRI Depository Bank Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. (c) Wells Fargo Bank N.A. (c) Wells Fargo Bank N.A. Wells Fargo Bank N.A. (d) Wells Fargo Bank...

  • Page 165
    ... Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. Wells Fargo Bank N.A. (b) (b) (b) Limited Partnership Interest Limited Partnership Interest Limited Partnership Interest Category Câˆ'3 TABERNA 05âˆ'2A D TABERNA PFD TAF 1A B1 CMLTI 2006âˆ'WF1 M2 CMLTI 2006âˆ'WF2 M1 SHARP 05âˆ'HE4N N RAMC 2007...

  • Page 166
    ..., shall receive a restricted stock unit ("RSU") covering shares of common stock the fair market value of which shall be equal to $90,000, as determined by the per share closing price of the common stock on the New York Stock Exchange, as reported in the consolidated transaction reporting system, on...

  • Page 167
    ...200 West Street New York, NY 10282âˆ'2198 October 24, 2011 MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC. 2828 N. Harwood Street, 15 th Floor Dallas, TX 75201 DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee Trust & Securities Services 60 Wall Street, MS2710 New York, NY 10005 DEUTSCHE BANK TRUST COMPANY...

  • Page 168
    ... in the Indenture and each Security Documents to which it is a party, including, in each case, as such covenants and agreements may be modified by the Fifth Supplemental Indenture. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 2

  • Page 169
    [SIGNATURE PAGE FOLLOWS] 3

  • Page 170
    ... E. Bowman Name: John E. Bowman Title: Vice President Agreed and acknowledged as of the first date written above: MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC. By: /s/ James E. Shields Name: James E. Shields Title: Executive Vice President and Chief Financial Officer [Signature Page to Holder Consent]

  • Page 171
    MONEYGRAM INTERNATIONAL, INC. MONEYGRAM PAYMENT SYSTEMS, INC. MONEYGRAM OF NEW YORK, LLC By: /s/ James E. Shields Name: James E. Shields Title: Executive Vice President and Chief Financial Officer

  • Page 172
    Copies to: F. William Reindel Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, NY 10004 Valinda Wolfert Vinson & Elkins L.L.P. 2001 Ross Avenue Suite 3700 Dallas, TX 75201

  • Page 173
    ..."), among MoneyGram Payment Systems Worldwide, Inc. (or its permitted successor), a Delaware corporation (the "Company"), the Guarantors (as defined in the Indenture referred to herein) and Deutsche Bank Trust Company Americas, a New York banking corporation, as trustee and collateral agent under...

  • Page 174
    ...provided that for the avoidance of doubt the sale of Capital Stock of Holdco by the Sponsors in a primary or secondary public offering shall not constitute a Business Combination. (e) The definitions of Credit Agreement, Highly Rated Investment, Intercreditor Agreement, and Qualified Equity Offering...

  • Page 175
    ...of the United States or any national banking association or any government securities dealer which is listed as reporting to the market statistics division of the Federal Reserve Bank of New York; (5) certificates of deposit, time deposits and eurodollar time deposits with maturities of 24 months or...

  • Page 176
    ... mailed at least four Business Days before a Redemption Date, but not more than 60 days before a Redemption Date. The notice will identify the Notes (including CUSIP number(s)) to be redeemed and will state: (i) the Redemption Date; (ii) the appropriate method for calculation of the redemption price...

  • Page 177
    ... Trustee an Officer's Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph at least 35 days, or in the case of an optional redemption pursuant to Section 3.07(d) hereof four Business Days, prior...

  • Page 178
    ..., any notice to the Company under Section 14.01 shall be provided to the following address in lieu of the address in Section 14.01 of the Indenture: MoneyGram International, Inc. 2828 N. Harwood Street, 15th Floor Dallas, TX 75201 Attention: Chief Financial Officer Facsimile: (952) 591âˆ'3860 12

  • Page 179
    ...2011 (such date, the "Effective Date") upon its execution by the parties hereto. 8. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIFTH SUPPLEMENTAL INDENTURE WITHOUT GIVING...amended from time to time. 10. Separability Clause. In case any ...

  • Page 180
    13. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Fifth Supplemental Indenture or for or in respect of the ...

  • Page 181
    IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed, all as of the date first above written, to be effective as of the Effective Date. MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC. By: Name: Title:

  • Page 182
    MONEYGRAM INTERNATIONAL, INC. MONEYGRAM PAYMENT SYSTEMS, INC. MONEYGRAM OF NEW YORK, LLC By: Name: Title:

  • Page 183
    DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as Trustee and Collateral Agent By: Authorized Signatory By: Authorized Signatory

  • Page 184
    ... as may be determined by the Committee from time to time in accordance with Section 8 of this Agreement and the closing sale price of the Company's Common Stock on the exercise date of the SAR on the New York Stock Exchange, subject to the terms and conditions of this Agreement, including any...

  • Page 185
    ... United States Internal Revenue Code of 1986, as amended, and Section 4(c) of the Plan. (c) Notwithstanding the other provisions of this Section 3, if a Change in Control occurs, and after giving effect thereto (i) the Common Stock no longer trades on a United States securities exchange or trading...

  • Page 186
    ... and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting...

  • Page 187
    ... representative or the administrators of the Holder's estate or by any Person or Persons to whom the SARs have been transferred by will or the applicable laws of descent and distribution until the earlier of (i) the Expiration Date and (ii) the date that is twelve (12) months after the later of...

  • Page 188
    ... under the laws of the United States or any state thereof, (E) the Holder's willful misconduct or gross negligence in connection with the Holder's duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as...

  • Page 189
    ... report, as required by any code of ethics of the Company applicable to the Holder or by the Always Honest compliance program or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents...

  • Page 190
    ... shall receive from the Company an amount which is equal to the excess of the closing sale price of the Company's Common stock at the time of exercise on the New York Stock Exchange as reported in the consolidated transaction reporting system on such date, or if such Exchange is not open for trading...

  • Page 191
    ... covered by the SARs, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of the SARs (including, without limitation, the number and kind of shares underlying the SARs and the SARs Price) shall be adjusted as...

  • Page 192
    ... to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and (x) the following provisions apply only to the Holders providing services outside the United States, as determined by the Company: (A) the SARs...

  • Page 193
    ...she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Holder...

  • Page 194
    ...of the hearing and any required postâˆ'hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal...

  • Page 195
    ...address: MoneyGram International, Inc. EVP, General Counsel & Secretary 2828 North Harwood Street, 15 th Floor Dallas, TX 75201 (l) Amendments. The Company may amend this Agreement at any time... intent of the parties as closely as possible in order that the transactions contemplated hereby are ...

  • Page 196
    ...existence and terms of the SARs to his or her spouse, accountant and legal counsel and to the extent required by law or legal process. (r) ...line or electronic system established and maintained by the Company or a third party designated by the Company. (s) Language. If the Holder has received...

  • Page 197
    By signing below, the Holder accepts the SARs and the terms and conditions in this Agreement and the Plan. MONEYGRAM INTERNATIONAL, INC. By: Title: HOLDER Signature: Print Name: [ ] [THIS IS THE SIGNATURE PAGE TO THE STOCK APPRECIATION RIGHT AGREEMENT BETWEEN THE ABOVEâˆ'REFERENCED PARTIES] 14

  • Page 198
    ... represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The Units are granted under Section 6(c) and 6(d) of the U.S. Plan. A copy of the U.S. Plan and the French Subâˆ'Plan shall be provided to each Participant. Each capitalized...

  • Page 199
    ... deems appropriate. (c) The Participant shall have no rights to the Shares until the Units have vested and the restrictions on the sale or transfer of Shares set forth in Section 4 below are met. Prior to settlement, the Units represent an unfunded and unsecured obligation of the Company. (d) For...

  • Page 200
    ... corporate management of the Company (involved in the governance of the Company, such as the Board, Committee, etc.) possesses confidential information which could, if disclosed to the public, significantly impact the trading price of the Company's Shares, until ten (10) quotation days after the day...

  • Page 201
    ...Reason" (as such term is defined below) or is terminated by his or her employer for the reasons set forth in Section 6(b) below in each case within 12 months following the occurrence of such Change in Control, then the Units will immediately vest with respect to a number of Units that is the greater...

  • Page 202
    ... and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting...

  • Page 203
    ...or the French Social Security Code, as amended, and/or to lift the minimum mandatory holding period applicable to Frenchâˆ'qualified Restricted Stock Units is met, the Units shall no longer benefit from the favorable tax and social security regime. (d) Death. If the Participant's employment with the...

  • Page 204
    ...'s heirs do not request issuance of the Shares within six months following the Participant's date of death, the Units shall be forfeited. If applicable French law and regulations applicable to Frenchâˆ'qualified Restricted Stock Units require that the Units vest differently than set forth above in...

  • Page 205
    ... or other similar corporate transaction or event affects the shares covered by the Unit, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Unit (including, without limitation, the number and kind of...

  • Page 206
    ...in Control, the Committee may, in its sole discretion, adjust the terms of this Unit (including, without limitation, the number and kind of Shares subject to this Unit) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan. (d) Responsibility for...

  • Page 207
    ..., amended, suspended or terminated by the Company at any time; (ii) the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants of units, or benefits in lieu of units, even if units have been granted repeatedly in the past; (iii) all...

  • Page 208
    ... Employer may hold certain personal information about the Participant, including, but not limited to, the Participant's name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships...

  • Page 209
    ... that he or she may contact his or her local human resources representative. (i) Reservation of Shares. The Company shall at all times during the term of the Unit reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement. (j) Securities...

  • Page 210
    ...of the hearing and any required postâˆ'hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal...

  • Page 211
    ... to receive such documents by electronic delivery and agrees to participate in the Plan through an onâˆ'line or electronic system established and maintained by the Company or a third party designated by the Company. (v) Language Consent. By accepting the Units, the Participant confirms having read...

  • Page 212
    ... meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section...

  • Page 213
    IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement on the date set forth in the first paragraph. MONEYGRAM INTERNATIONAL, INC. By: PARTICIPANT Print Name: 16

  • Page 214
    SCHEDULE A [Insert Schedule A Performance/Vesting Details] 17

  • Page 215
    ... AGREEMENT (FOR OPTIONEES IN FRANCE) This Global Stock Option Agreement (this "Agreement") is made effective as of [ ], 20[ ] (the "Grant Date") between MoneyGram International, Inc., a Delaware corporation (the "Company"), and [ ] (the "Optionee"). Each capitalized term used but not defined in this...

  • Page 216
    ... or her Option. In order to satisfy this holding period, the Company shall restrict the transfer of the shares of Common Stock until the expiration of the relevant holding period to benefit from the favorable tax and social regime in France. (b) The sale of shares of Common Stock before the end of...

  • Page 217
    ...âˆ'Plan. (c) Notwithstanding the other provisions of this Section 5, if a Change in Control occurs, and after giving effect thereto (i) the Common Stock no longer trades on a United States securities exchange or trading market, and (ii) the Optionee's employment is terminated by the Company or any...

  • Page 218
    ... and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting...

  • Page 219
    ...representative...months of the Optionee's death. Any Options exercised in this manner will benefit from the favorable tax and social security treatment of the Frenchâˆ'qualified Options, irrespective of the date of sale of the shares of Common Stock subject to the Options; thus the minimum holding...days ...

  • Page 220
    ... under the laws of the United States or any state thereof, (E) the Optionee's willful misconduct or gross negligence in connection with the Optionee's duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as...

  • Page 221
    ...execute the Agreement (and each other document required to be executed by the Optionee in connection with the Optionee's receipt of the Option) in a timely... a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of ...

  • Page 222
    ... such time as the holding period shall have ceased to be applicable to the Optionee pursuant to Section 4(b) above, the Optionee must pay the Option Price and any Taxâˆ'Related Items withholding by cash, in United States currency (including check, draft, money order or wire transfer made payable to...

  • Page 223
    ... to pay the Option Price. (c) Upon any exercise of the Option, and subject to the payment of the Option Price under Section 8(b) and of all Taxâˆ'Related Items obligations under Section 9, the Company shall deliver the shares of Common Stock purchased in book entry form. The shares purchased shall...

  • Page 224
    ... by the Option, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Option (including, without limitation, the number and kind of shares subject to this Option and the Option Price) shall be adjusted...

  • Page 225
    ...will have no value; (ix) if the Optionee exercises the Option and acquires shares of Common Stock, the value of such shares of Common Stock may increase or decrease in value, even below the Option Price; (x) no claim or entitlement to compensation or damages shall arise from forfeiture of the Option...

  • Page 226
    ... the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee's name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships...

  • Page 227
    ...without limitation, the United States Securities Act of 1933, as amended) and provided the holding periods set forth in Section 4 have been met. (g) Reservation of Shares. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as...

  • Page 228
    ...of the hearing and any required postâˆ'hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal...

  • Page 229
    ... should send all written notices regarding this Agreement or the Plan to the Company at the following address: MoneyGram International, Inc. EVP, General Counsel & Secretary 2828 North Harwood Street, 15 th Floor Dallas, TX 75201 (n) Amendments. The Company may amend this Agreement at any time...

  • Page 230
    ... to receive such documents by electronic delivery and agrees to participate in the Plan through an onâˆ'line or electronic system established and maintained by the Company or a third party designated by the Company. (u) Language Consent. By accepting the Option, the Optionee confirms having read and...

  • Page 231
    By signing below, the Optionee accepts this Option and the terms and conditions in this Agreement and the Plan. MONEYGRAM INTERNATIONAL, INC. By: Title: OPTIONEE Signature: Print Name: [ ] 17

  • Page 232
    [THIS IS THE SIGNATURE PAGE TO THE NONâˆ'QUALIFIED STOCK OPTION AGREEMENT BETWEEN THE ABOVEâˆ'REFERENCED PARTIES] 18

  • Page 233
    ...the benefits provided by the MoneyGram International, Inc. 2005 Omnibus Incentive Plan Nonâˆ'Qualified Stock Option Agreement ("Option Agreement") as consideration for Executive's agreement to continue providing services to the Company and Executive's agreement to enter into an Employee Trade Secret...

  • Page 234
    ... to receiving any payments pursuant to this Severance Agreement, Executive shall have executed, within twentyâˆ'one (21) days, or if required for an effective release, fortyâˆ'five (45) days, following Executive's termination of employment, a waiver and release substantially in the form attached...

  • Page 235
    ... by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in...

  • Page 236
    ... under Code Section 409A payable on account of a "separation from service," such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)âˆ'month period measured from the date of such "separation from service" of Executive, and (ii) the date...

  • Page 237
    ... covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect. d. For purposes of Code Section 409A, Executive's right to receive any installment payments pursuant to this Agreement shall be treated as a right to...

  • Page 238
    IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. MONEYGRAM INTERNATIONAL, INC. By: Title: EXECUTIVE Signature: [ ] [SIGNATURE PAGE TO THE SEVERANCE AGREEMENT BETWEEN THE ABOVEâˆ'REFERENCED PARTIES]

  • Page 239
    ...Act of 1974; the Fair Credit Reporting Act; the Minnesota Human Rights Act, any other federal, state or local antiâˆ'discrimination acts, state wage payment statutes and nonâˆ'interference or nonâˆ'retaliation statutes. All claims for alleged wrongful discharge; breach of contract; breach of implied...

  • Page 240
    ... without limitation, commission payments, bonus payments, vacation pay, expense reimbursements, reimbursement for health and welfare benefits, and perquisites. All claims for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for alleged personal injury...

  • Page 241
    7. This Release shall be construed and enforced in accordance with, and governed by, the laws of the State of Minnesota, without regard to principles of conflict of laws. If any clause of this Release should ever be determined to be unenforceable, it is ...

  • Page 242
    IN WITNESS WHEREOF, the parties have executed this Release on the date first above written. MONEYGRAM INTERNATIONAL, INC. By: Name: Title: [ ]

  • Page 243
    ... Ltd. (India) MoneyGram International Holdings Limited (United Kingdom) MoneyGram International Limited (Jordan) MoneyGram International Limited (United Kingdom) MoneyGram International Payment Systems, Inc. (Delaware) MoneyGram International Pte. Ltd (Singapore) MoneyGram of New York LLC (Delaware...

  • Page 244
    ... consolidated financial statements of MoneyGram International, Inc., and the effectiveness of MoneyGram International, Inc.'s internal control over financial reporting, appearing in the Annual Report on Form 10âˆ'K of MoneyGram International, Inc. for the year ended December 31, 2011. /s/ DELOITTE...

  • Page 245
    ..., to sign MoneyGram International, Inc.'s Annual Report on Form 10âˆ'K for the fiscal year ended December 31, 2011, and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting...

  • Page 246
    ... financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 8, 2012 /s/ Pamela H. Patsley Pamela H. Patsley Chairman and Chief Executive Officer...

  • Page 247
    ...information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 8, 2012 /s/ James E. Shields James E. Shields Executive Vice President and Chief Financial Officer...

  • Page 248
    ... connection with the Annual Report on Form 10âˆ'K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof I, Pamela H. Patsley, Chairman and Chief Executive Officer of the Company...

  • Page 249
    ... with the Annual Report on Form 10âˆ'K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof I, James E. Shields, Executive Vice President and Chief Financial Officer of the...