MoneyGram 2011 Annual Report Download - page 39

Table of Contents
denominated in a currency other than the U.S. dollar. Following is a summary of the change in transaction and operations support:
YEAR ENDED DECEMBER 31, 2011 2010
(Amounts in thousands)
Transaction and operations support expense for the prior year $185,782 $284,277
Change from:
Legal reserves 10,990 (72,078)
Restructuring and reorganization 10,690 1,303
Marketing costs 10,434 6,901
Consultant fees and outsourcing 6,647 (641)
Foreign currency transaction losses 3,287 2,474
Goodwill and asset impairments (1,558) (16,206)
Other 1,322 (5,223)
Provision for loss 168 (15,025)
Transaction and operations support expense for the years ended December 31, $227,762 $185,782
In 2011, transaction and operations support expense increased from the following items, inclusive of $0.3 million of incremental expense from the higher
euro exchange rate:
• Legal fees and reserves increased primarily due to a $16.4 million benefit in 2010 from the reversal of a reserve for a patent litigation matter,
partially offset by lower settlement reserve additions for securities and other litigation matters. In addition, we incurred overall lower legal fees for
regulatory matters, general advisement and licensing matters supporting operational activities.
• Restructuring and reorganization costs increased primarily due to employee relocation and resourcing costs for the centralization and relocation of
certain functions, including preparation for further centralization and operational changes in 2012.
• Marketing costs increased from our expanded investment in marketing and the timing of marketing campaigns in 2011. During 2011, the Company
increased its investment in marketing as a percent of revenue to return to historic levels and support growth in money transfer. In future years, we
expect to return to more normalized increases in marketing expense.
• Consultant fees and outsourcing 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 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 expenses primarily relate to incremental employee costs from headcount additions to support business growth and initiatives and invest in
the development of our personnel, as well as increased security costs from process enhancements and business and product growth. Targeted cost
savings initiatives related to telecommunications and agent forms partially offset these increases.
• Included in 2010 expense is $1.5 million impairment from the disposition of a corporate aircraft.
In 2010, transaction and operations support expense decreased from the following items, inclusive of a $3.1 million benefit from a lower euro exchange
rate:
• Legal reserves and fees benefited in 2010 from a $16.4 million reversal of a reserve for a patent litigation matter. In addition, expenses in 2009
included $54.8 million of settlements related to securities litigation, the Federal Trade Commission and an unfavorable patent litigation ruling.
• Restructuring and reorganization costs relate to the early phases of our global business transformation, primarily for the relocation of certain
functions and preparation for 2011 actions.
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