MoneyGram 2011 Annual Report Download - page 95

Table of Contents
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) 2011 2010
Cash and cash equivalents (substantially restricted) $ 2,572,174 $ 2,865,941
Receivables, net (substantially restricted) 1,220,065 982,319
Short−term investments (substantially restricted) 522,024 405,769
Available−for−sale investments (substantially restricted) 102,771 160,936
4,417,034 4,414,965
Payment service obligations (4,205,375) (4,184,736)
Assets in excess of payment service obligations $ 211,659 $ 230,229
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 $445.7 million over the state’s payment service obligations measure at
December 31, 2011, 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, 2011.
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.
Receivables, net (substantially restricted) — The Company has receivables due from financial institutions and agents for payment instruments sold and
amounts advanced by the Company to certain agents for operational and local regulatory compliance purposes. These receivables are outstanding from the
day of the sale of the payment instrument until the financial institution or agent remits the funds to the Company. The Company provides an allowance for
the portion of the receivable estimated to become uncollectible as determined based on known delinquent accounts and historical trends. Receivables are
generally considered past due one day after the contractual remittance schedule, which is typically one to three days after the sale of the underlying payment
instrument. Receivables are evaluated for collectability by examining the facts and circumstances surrounding each customer where an account is delinquent
and a loss is deemed possible. Receivables are generally written off against the allowance one year after becoming past due. Following is a summary of
activity within the allowance for losses:
(Amounts in thousands) 2011 2010 2009
Beginning balance $ 19,971 $ 24,535 $ 16,178
Charged to expense 6,571 6,404 21,432
Write−offs, net of recoveries (16,038) (10,968) (13,075)
Ending balance $ 10,504 $ 19,971 $ 24,535
Investments (substantially restricted) — The Company classifies securities as short−term, trading, or available−for−sale in its Consolidated Balance Sheets.
The Company has no securities classified as held−to−maturity. Time deposits and certificates of deposits with original maturities of greater than three
months are classified as short−term investments and recorded at amortized cost. Securities that are bought and held principally for the purpose of resale in
the near term are classified as trading securities. The Company records
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