MoneyGram 2011 Annual Report Download - page 69

Table of Contents
Description Judgments and Uncertainties Effect if Actual Results Differ From Assumptions
Stock−based compensation
The Company has a stock−based compensation plan,
which includes stock options, restricted stock units,
restricted stock awards and stock appreciation rights.
Certain awards are subject to market and performance
conditions at threshold, target and maximum levels.
For purposes of determining the fair value of stock
option awards, the Company uses the Black−Scholes
single option pricing model. Compensation cost, net
of estimated forfeitures, is recognized using a
straight−line method over the vesting or service
period.
Assumptions for stock−based compensation
include estimating the future volatility of our
stock price, expected dividend yield, employee
turnover and employee exercise activity.
Performance−based share awards require
management to make assumptions regarding the
likelihood of achieving market and performance
goals. Assumptions used in our assessment are
consistent with our internal forecasts and
operating plans and assume achievement of
performance conditions at target.
A 10 percent change in our volatility,
forfeiture rate and term of grant for the year
ended December 31, 2011, would have
affected net income by $1.6 million.
If the Company assumed that the performance
conditions for stock−based awards would not
be met, stock−based compensation expense
would have decreased by $9.6 million. If the
Company assumed that share awards would
meet their maximum threshold, expense would
have increased by $0.6 million.
Recent Accounting Developments
Recent accounting developments are set forth in Note 2 — Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.
CAUTIONARY STATEMENTS REGARDING FORWARD−LOOKING STATEMENTS
This Annual Report on Form 10−K and the documents incorporated by reference herein may contain forward−looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements with respect to, among other things, the financial condition, results of operations,
plans, objectives, future performance and business of MoneyGram and its subsidiaries. Forward−looking statements can be identified by words such as
“believes,” “estimates,” “expects,” “projects,” “plans,” “anticipates,” “continues,” “will,” “should,” “could,” “may,” “would” and other similar expressions.
These forward−looking statements speak only as of the date they are made, and MoneyGram undertakes no obligation to publicly update or revise any
forward−looking statement, except as required by federal securities law. These forward−looking statements are based on management’s current
expectations, beliefs and assumptions and are subject to certain risks, uncertainties and changes in circumstances due to a number of factors. These factors
include, but are not limited to:
• continued weakness 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 these relationships;
• the ability of us and our agents to comply with U.S. and international laws and regulations, including the Dodd−Frank Act;
• litigation involving MoneyGram or its agents, which could result in material settlements, fines or penalties;
• ongoing investigations involving MoneyGram by the U.S. federal government and several state governments which could result in criminal or civil
penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;
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