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MONEYGRAM INTERNATIONAL INC
FORM 10-K
(Annual Report)
Filed 03/03/14 for the Period Ending 12/31/13
Address 2828 N. HARWOOD STREET, 15TH FLOOR
DALLAS, TX 75201
Telephone 2149997640
CIK 0001273931
Symbol MGI
SIC Code 7389 - Business Services, Not Elsewhere Classified
Industry Misc. Financial Services
Sector Financial
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2014, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    MONEYGRAM INTERNATIONAL INC FORM 10-K (Annual Report) Filed 03/03/14 for the Period Ending 12/31/13 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 2828 N. HARWOOD STREET, 15TH FLOOR DALLAS, TX 75201 2149997640 0001273931 MGI 7389 - Business Services, Not Elsewhere Classified ...

  • Page 2
    ... defined in Rule 12b-2 of the Exchange Act). Yes 1 No 3 The aggregate market value of voting and nonvoting common stock held by non-affiliates of the registrant, computed by reference to the last sales price as reported on the NASDAQ Stock Market LLC as of June 30, 2013, the last business day of the...

  • Page 3

  • Page 4
    ... about Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership...

  • Page 5
    ..., bill payment services, money order services and official check processing. Our global money transfer and bill payment services are our primary revenue drivers. Money transfers are movements of funds between consumers from the origination or "send" location and the designated "receive" locations...

  • Page 6
    ... April of 2013, we commenced our renewed agreement with Wal-Mart Stores, Inc., or Walmart, which is our largest agent. We continue to provide certain money transfer services, bill payment services and money order services for consumers in Walmart stores located in the U.S. and Puerto Rico. Pursuant...

  • Page 7
    ...: Global Funds Transfer and Financial Paper Products. The following table presents the components of our consolidated revenue associated with our segments for the years ended December 31 : 2013 2012 2011 Global Funds Transfer Money transfer Bill payment Financial Paper Products Money order Official...

  • Page 8
    ... Puerto Rico, and at certain agent locations in select Caribbean countries. Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards in cash at an agent location or through MoneyGram Online with a credit or debit card...

  • Page 9
    ...-term U.S. government securities and bank deposits that produce a low rate of return. Money Orders - Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds...

  • Page 10
    ...; financial services regulations; currency control regulations; anti-bribery laws; regulations of the U.S. Treasury Department's Office of Foreign Assets Control, or OFAC; money transfer and payment instrument licensing laws; escheatment laws; privacy, data protection and information security laws...

  • Page 11
    ... Bank Relationships Our business involves the movement of money on a global basis on behalf of our consumers, our agents and ourselves. We buy and sell a number of global currencies and maintain a network of settlement accounts to facilitate the funding of money transfers and foreign exchange trades...

  • Page 12
    ...& Coloring Global Business Unit of Newell Rubbermaid. Mr. Agualimpia has 20 years of leadership experience in marketing, brand management, customer relationship management and product development. Jeffrey J. Allback , age 51, has served as Executive Vice President and Chief Information Officer since...

  • Page 13
    ..., Mr. Lines served as General Manager of Black Label Solutions, a leading developer and supplier of computerized retail Point of Sale systems from May 2011 to December 2012. He served as Managing Director of First Data Corporation's ANZ business, a global payment processing company, from September...

  • Page 14
    ... we are unable to maintain our Global Funds Transfer agent or biller networks, our business, financial condition and results of operations could be adversely affected. Revenue from our money transfer and bill payment services is derived from transactions conducted through our retail agent and biller...

  • Page 15
    ... credit agreement. If we are unable to meet these demands, we could lose customers and our business, financial condition and results of operations could be adversely affected. A substantial portion of our transaction volume is generated by a limited number of key agents. During 2013 , 2012 and 2011...

  • Page 16
    ... subject to regulatory oversight and enforcement by The U.S. Department of the Treasury Financial Crimes Enforcement Network, or FinCEN. Any determination that we have violated the anti-money-laundering laws could have an adverse effect on our business, financial condition and results of operations...

  • Page 17
    ...well as its fraud complaint data and consumer anti-fraud program, during the period from 2003 to early 2009. Under the DPA, the Company agreed to pay to the U.S. a $100.0 million forfeiture that is available to victims of the consumer fraud scams perpetrated through MoneyGram agents. Pursuant to the...

  • Page 18
    ... our payment instruments, pay money transfers or make related settlements with our agents could adversely impact our business, financial condition and results of operations. Our revolving credit facility is one source of funding for our corporate transactions and liquidity needs. If any of the banks...

  • Page 19
    ... 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 20
    ... number of agents and consumers, 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...

  • Page 21
    ...face credit risks from our retail agents and financial institution customers. The vast majority of our money transfer, bill payment and money order business is conducted through independent agents that provide our products and services to consumers at their business locations. Our agents receive the...

  • Page 22
    ...adverse effect on our business, financial condition and results of operations. There are a number of risks associated with our international sales and operations that could adversely affect our business. We provide money transfer services between and among more than 200 countries and territories and...

  • Page 23
    ..., personnel, financial systems, accounting systems, distribution, operations and general operating procedures; the diversion of capital and management's attention from our core business; the impact on our financial condition and results of operations due to the timing of the new business or the...

  • Page 24
    ... of these securities, 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...

  • Page 25
    ... area in square feet and lease terms as of December 31, 2013 : Location Use Segment(s) Using Space Square Feet Lease Expiration Minneapolis, MN (1) Brooklyn Center, MN Lakewood, CO Dallas, TX Frisco, TX London, UK (1) Global Operations Center Global Operations Center Call Center Corporate...

  • Page 26
    ...is currently seeking damages. Goldman Sachs owns, together with certain of its affiliates, approximately 19 percent of the shares of the Company's common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman Sachs and its affiliates. Tax Litigation - On May 14, 2012...

  • Page 27
    ... or pay dividends or distributions to the stockholders of the Company's common stock is materially limited at this time. No dividends were paid on our common stock in 2013 or 2012 . STOCKHOLDER RETURN PERFORMANCE In 2013 , we revised our peer group, which consists of payment services companies. Our...

  • Page 28
    ... stock or index, including reinvestment of dividends. The following table is a summary of the cumulative total return for the fiscal years ending December 31 : 12/31/2008 MoneyGram International,....82 12/31/2011 217.52 148.59 186.77 196.08 12/31/2012 162.87 172.37 247.40 261.39 12/31/2013 254.66 228....

  • Page 29
    ... Statements and Notes thereto. The following table presents our selected consolidated financial data for the years ended December 31 : 2013 (Dollars in millions, except per share and location data) 2012 2011 2010 2009 Operating Results Revenue Global Funds Transfer segment Financial Paper Products...

  • Page 30
    ... and Capital Resources • Critical Accounting Policies and Estimates • Cautionary Statements Regarding Forward-Looking Statements OVERVIEW MoneyGram is a leading global money transfer and payment services company operating in approximately 336,000 agent locations in more than 200 countries and...

  • Page 31
    ... market position with accelerated investments. In 2014 , we anticipate increasing our investment in our self-service channels business, which includes MoneyGram Online, mobile, account deposit services and kiosk-based money transfer and bill payment options. These channels for the money transfer...

  • Page 32
    ... payment service obligations. We use assets in excess of payment service obligations when assessing capital resources and liquidity. See Note 2 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional disclosure. Non-GAAP Measures - Generally...

  • Page 33
    ...2011 2013 vs 2012 (%) 2012 vs 2011 (%) 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 supplies...

  • Page 34
    ..., bill payment, money order and official check transactions. The Company derives money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads involving different "send" and "receive" countries. Miscellaneous revenue primarily consists of processing...

  • Page 35
    ... prior year for the years ended December 31 : (Amounts in millions) 2013 2012 Money transfer fee and other revenue for the prior year Change resulting from: Money transfer volume growth Foreign currency exchange rate Corridor mix and average face value per transaction Other Money transfer fee and...

  • Page 36
    ...) 2013 2012 Global Funds Transfer commissions expense for the prior year Change resulting from: Money transfer volume growth Money transfer commission rates Bill payment volumes Bill payment commission rates Signing bonus amortization Foreign currency exchange rate Other Global Funds Transfer...

  • Page 37
    ... the years ended December 31 : 2013 vs 2012 (Dollars in millions) 2013 2012 2011 2012 vs 2011 Investment revenue Investment commissions expense (1) (1) $ 17.6 0.4 $ 12.6 0.3 $ 16.9 0.4 40% 33% (25)% (25)% Commissions are generated from the average outstanding cash balances of official...

  • Page 38
    ...marketing, professional fees and other outside services, telecommunications, agent support costs, including forms related to our products, non-compensation employee costs, including training and travel costs, bank charges and the impact of foreign exchange rate movements on our monetary transactions...

  • Page 39
    ... of the foreign currency exchange rates on our growing current assets and current liabilities not denominated in U.S. dollars. Other expenses consist of decreased reorganization and restructuring costs for our Global Transformation Initiative offset by increased marketing costs due to the timing of...

  • Page 40
    ... disposition relates to land sold as part of our global business transformation and a former bill payment service. Asset impairments relate to land sold and intangible assets acquired in the second quarter of 2011. Income Taxes In 2013 , the Company recognized a tax expense of $32.9 million on pre...

  • Page 41
    ... and corporate costs not related to the performance of the segments. The following table provides a summary of pre-tax operating income and operating margin for the years ended December 31 : (Amounts in millions) 2013 2012 2011 Operating income: Global Funds Transfer Financial Paper Products Total...

  • Page 42
    ... the 2013 Credit Agreement. In 2011, debt extinguishment costs relate to the termination of our 2008 senior facility in connection with the 2011 Recapitalization and the partial redemption of our second lien notes. (6) Stock-based compensation and one-time contingent performance award payable after...

  • Page 43
    ... and obligations, as well as to provide working capital for the operational and growth requirements of our business. While the assets in excess of payment service obligations would be available to us for our general operating needs and investment in the Company, we consider our assets in excess of...

  • Page 44
    ... banks to clear our retail money orders and believe that these banks provide sufficient capacity for that business. We also maintain relationships with a variety of domestic and international cash management banks for EFT and wire transfer services used in the movement of consumer funds and agent...

  • Page 45
    ... stock, debt securities or any combination of these, from time to time, subject to market conditions and the Company's capital needs. In December 2011, the Company completed a secondary offering pursuant to which the Investors sold an aggregate of 10,237,524 shares of Company common stock at a price...

  • Page 46
    ... buildings and equipment used in our business. Signing bonuses are payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. Marketing represents contractual marketing obligations with certain agents, billers and corporate sponsorships. Other...

  • Page 47
    ... and benefit payments under these plans are not included in the above table, as it is difficult to estimate the timing and amount of benefit payments and required contributions beyond the next 12 months. See Note 10 - Pensions and Other Benefits of the Notes to the Consolidated Financial Statements...

  • Page 48
    ... on the credit ratings of the Company and did not adversely affect compliance with financial covenants pertaining to any of the Company's credit agreements. Income tax refunds received were $0.8 million in 2013; no refunds were received for 2012 or 2011. We made income tax payments of $8.0 million...

  • Page 49
    ... of cash primarily associated with the 2013 Credit Agreement. In 2012 , financing activities used $1.5 million of cash associated with payments on debt. In 2011 , financing activities used $117.8 million of cash primarily associated with the debt prepayments and transaction costs related to our 2011...

  • Page 50
    ... and cash payments for agent signing bonuses) provides useful information to investors because it is an indicator of the strength and performance of ongoing business operations, including our ability to service debt and fund operations, capital expenditures and acquisitions. This calculation is...

  • Page 51
    ... years. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt and equity balances, adjusted for current market conditions and investor expectations of return on our equity. If the fair value of a reporting...

  • Page 52
    ...portfolio, was valued using internal pricing information. See Note 4 - Fair Value Measurement of the Notes to the Consolidated Financial Statements for additional disclosure. Pension - Through our qualified pension plan and various supplemental executive retirement plans, collectively referred to as...

  • Page 53
    ...reduction in business or transaction volume from these relationships, including our largest agent, Walmart, or our agents offering money transfer services under their own brand or engaging other money transfer service providers; our ability to manage fraud risks from consumers or agents; the ability...

  • Page 54
    ... ability to manage credit risks from our retail agents and official check financial institution customers; our ability to retain partners to operate our official check and money order businesses; our ability to successfully develop and timely introduce new and enhanced products and services and our...

  • Page 55
    ... 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 to utilize several of these financial...

  • Page 56
    ... or issuance of further money transfers and money orders. Credit risk management is complemented through functionality within our point of sale system, which can enforce credit limits on a real-time basis and monitor for suspicious and unauthorized transactions. The system also permits us to...

  • Page 57
    ... course of business as we offer our products and services through a network of agents and financial institutions with locations in more than 200 countries and territories. By policy, we do not speculate in foreign currencies; all currency trades relate to underlying transactional exposures. 55

  • Page 58
    ... 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 59
    ... affect, the Company's internal control over financial reporting. Management's annual report on internal control over financial reporting is provided on page F-2 of this Annual Report on Form 10-K. The attestation report of the Company's independent registered public accounting firm, Deloitte...

  • Page 60
    Table of Contents PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information called for by this Item is contained in Item 1 of this Annual Report on Form 10-K under the caption "Executive Officers of the Registrant" and in our definitive Proxy Statement for our 2014 ...

  • Page 61
    ... International, Inc. (Registrant) Date: March 3, 2014 By: / S / P AMELA H. P ATSLEY 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 the following persons...

  • Page 62
    ... 19, 2011, among MoneyGram Payment Systems Worldwide, Inc., as issuer, MoneyGram International, Inc. and the other guarantors named therein and Deutsche Bank Trust Company Americas, as trustee and collateral agent (Incorporated by reference from Exhibit 4.1 to Registrant's Current Report on Form...

  • Page 63
    ... 15, 2013, among MoneyGram Payment Systems Worldwide, Inc., as issuer, MoneyGram International, Inc. and the other guarantors named therein and Deutsche Bank Trust Company Americas, as trustee and collateral agent (Incorporated by reference from Exhibit 4.1 to Registrant's Current Report on Form...

  • Page 64
    ... and between MoneyGram International, Inc. and The Goldman Sachs Group, Inc. (Incorporated by reference from Exhibit 10.4 to Registrant's Current Report on Form 8-K filed on March 28, 2008). Amended and Restated Fee Letter, dated March 17, 2008, among MoneyGram Payment Systems Worldwide, Inc., GSMP...

  • Page 65
    ... Report on Form 8-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 by reference...

  • Page 66
    ...and Bank of America, N.A., as administrative agent (Incorporated by reference from Exhibit 10.1 to Registrant's Current Report on Form 8-K filed November 22, 2011) Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Performance Restricted Stock Unit Award Agreement (Incorporated...

  • Page 67
    ... Plan Global Stock Appreciation Right Agreement (Incorporated by reference from Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q filed May 3, 2013). Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Long-Term Incentive Cash Performance Award Agreement (for one-time...

  • Page 68
    Table of Contents MoneyGram International, Inc. Annual Report on Form 10-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, 2013 and 2012 Consolidated ...

  • Page 69
    ... 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 controls and procedures...

  • Page 70
    ... Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Company and our report dated March 3, 2014 expressed as an unqualified opinion on those financial statements. /s/ D ELOITTE & T OUCHE LLP Dallas, Texas...

  • Page 71
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the...

  • Page 72
    ... Debt Pension and other postretirement benefits Accounts payable and other liabilities Total liabilities COMMITMENTS AND CONTINGENCIES (NOTE 14) STOCKHOLDERS' DEFICIT Participating Convertible Preferred Stock - Series D, $0.01 par value, 200,000 shares authorized, 109,239 issued at December 31, 2013...

  • Page 73
    ... except per share data) 2013 2012 2011 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 supplies...

  • Page 74
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE YEAR ENDED DECEMBER 31, (Amounts in millions) 2013 2012 2011 NET INCOME (LOSS) $ OTHER COMPREHENSIVE INCOME (LOSS) Net unrealized gains on available-for-sale securities: Net holding ...

  • Page 75
    ... discount and deferred financing costs Provision for uncollectible receivables Non-cash compensation and pension expense Changes in foreign currency translation adjustments Signing bonus payments Change in other assets Change in accounts payable and other liabilities Other non-cash items, net Total...

  • Page 76
    Cash payments for interest Cash payments for income taxes $ $ 43.9 8.0 $ $ 64.4 2.9 $ $ 78.5 3.7 See Notes to the Consolidated Financial Statements F-8

  • Page 77
    ... benefit plans, net of tax Unrealized foreign currency translation adjustment, net of tax December 31, 2011 Net loss Stock-based compensation Capital contribution from investors Net unrealized gain on available-for-sale securities, net of tax Amortization of prior service credit for pension...

  • Page 78
    ... segment provides official check outsourcing services and money orders through financial institutions and agents. 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...

  • Page 79
    ... generally require the Company to maintain a pool of assets with an investment rating of A or higher ("permissible investments") in an amount equal to the payment service obligations, as defined by each state, for those regulated payment instruments, namely teller checks, agent checks, money orders...

  • Page 80
    ... cost. Securities held for indefinite periods of time, including any securities that may be sold to assist in the clearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities are recorded at fair value...

  • Page 81
    ... 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 are recorded at their estimated fair value at the date of acquisition or at cost if internally developed. In the year...

  • Page 82
    ... 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 83
    ... the amortization of capitalized agent signing bonus payments. Investment Commissions Expense - Investment commissions expense consists of amounts paid to financial institution customers based on short-term interest rate indices times the average outstanding cash balances of official checks sold by...

  • Page 84
    ... effect would be anti-dilutive or their performance conditions are not met for the years ended December 31 : (Amounts in millions) 2013 2012 2011 Shares related to stock options Shares related to restricted stock and stock units Shares related to preferred stock Shares excluded from the computation...

  • Page 85
    ... During 2013 , the Company completed four acquisitions for total cash payments, net of cash acquired, of $15.4 million . The Company entered into an asset purchase agreement with Nexxo Financial, acquiring approximately 200 kiosks primarily located in California, Illinois and Texas. The Company also...

  • Page 86
    ...transaction prices for any sold securities and any broker quotes received on the same security. For other asset-backed securities and investments in limited partnerships, market quotes are generally not available. If available, the Company will utilize a fair value measurement from a pricing service...

  • Page 87
    ...third party pricing service as of September 30, 2013; utilized a broker pricing process as of December 31, 2012 The following table provides a roll-forward of the other asset-backed securities classified as Level 3, which are measured at fair value on a recurring basis, for the years ended December...

  • Page 88

  • Page 89
    ...fair values of the Pension Plan's investments are determined by the trustee based on the current market values of the underlying assets. In instances where market prices are not available, market values are determined by using bid quotations obtained from major market makers or security exchanges or...

  • Page 90
    ...years ended December 31 : (Amounts in millions) 2013 2012 2011 Realized gains from available-for-sale investments Net securities gains $ $ - - $ $ (10.0) $ (10.0) $ (32.8) (32.8) During 2012 , the Company disposed of two securities classified as other asset-backed securities with a fair value...

  • Page 91
    ...internal pricing. Assessment of Unrealized Losses - The Company had no unrealized losses in its available-for-sale portfolio at December 31, 2013 and 2012 . Note 6 - Derivative Financial Instruments The Company uses forward contracts to manage its foreign currency needs and foreign currency exchange...

  • Page 92
    ... Balance Sheets 2013 2012 Forward contracts Accounts payable and other liabilities $ (0.8) $ (0.1) $ 0.2 $ 0.1 $ (0.6) $ - The Company's forward contracts are primarily executed with counterparties governed by an International Swaps and Derivatives Association agreement that generally...

  • Page 93
    ...entered into non-compete agreements valued at $1.0 million , which are amortized over lives ranging between three to five years . The acquisition of these agent contracts provided the Company with further network expansion in its money transfer business in its Global Funds Transfer segment. See Note...

  • Page 94
    ... discount was transferred from the 2011 Credit Agreement to the 2013 Credit Agreement. 2011 Credit Agreement - On May 18, 2011, MoneyGram Payment Systems Worldwide, Inc. ("Worldwide") entered into a $540.0 million Credit Agreement with Bank of America, N.A. ("BOA"), as Administrative Agent, and the...

  • Page 95
    ...points (depending on the Company's secured leverage ratio or total leverage ratio, as applicable, at such time). In connection with the initial funding under the 2013 Credit Agreement, the Company elected the Eurodollar rate as its primary interest basis. Under the terms of the 2013 Credit Agreement...

  • Page 96
    ...2013 , the Company was in compliance with its financial covenants: our Interest Coverage ratio was 6.90 and our Total Secured Leverage ratio was 2.781 . Debt Discount - The amortization of the debt discount for 2011 includes a pro-rata write-off of the term debt. For the year ended December 31, 2011...

  • Page 97
    ...Statements of Operations. The following table is a summary of the deferred financing costs at December 31 : 2008 Senior Facility 2011 Credit Agreement Senior revolving credit facility Senior secured credit facility Senior secured incremental term 2013 Credit Agreement Senior secured revolving credit...

  • Page 98
    ... following table is a summary of the weighted-average actuarial assumptions used in calculating the benefit obligation and net benefit cost as of and for the years ended December 31 : Pension 2013 Net periodic benefit cost: Discount rate Expected return on plan assets Rate of compensation increase...

  • Page 99
    ... activity in the collective investment fund. Mutual Funds - The fair value of the mutual fund issued by registered investment companies is determined using quoted market prices on the day of valuation. Real estate - The Pension Plan trust holds an investment in a real estate development project. The...

  • Page 100

  • Page 101
    ... used by external sources, recently executed transactions, existing contracts, economic conditions, industry and market developments, and overall credit ratings. Plan Financial Information - Net periodic benefit expense (income) for the Pension Plan and SERPs and postretirement benefit plans...

  • Page 102
    ... income (loss) and net periodic benefit expense (income) for the years ended December 31 : 2013 (Amounts in millions) Pension and SERPs Postretirement Benefits Net actuarial gain Amortization of net actuarial gain Amortization of prior service credit Total recognized in other comprehensive income...

  • Page 103
    ... 1.4 $ 2013 2.0 0.1 0.6 (0.2) 2.5 2012 Pension and SERPs Postretirement Benefits Change in plan assets: Fair value of plan assets at the beginning of the year Actual return on plan assets Employer contributions Benefits paid Fair value of plan assets at the end of the year Unfunded status at the...

  • Page 104
    ...the Company. At December 31, 2013 and 2012 , the Company had a liability related to the deferred compensation plans of $2.4 million and $2.5 million , respectively, recorded in the "Accounts payable and other liabilities" line in the Consolidated Balance Sheets. The rabbi trust had a market value of...

  • Page 105
    ... $140.8 million 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...

  • Page 106
    ..., 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 7, 2011. Secondary Offering - In November and December 2011, the Company completed...

  • Page 107
    ...31, 2013 , the Company has remaining authorization to issue future grants of up to 6,643,214 shares. The calculated fair value of share-based awards is recognized as compensation cost using the straight-line method over the vesting or service period in the Company's financial statements. Stock-based...

  • Page 108
    ... trading market, resulting in the Company's common stock meeting pre-defined equity values. All options granted in 2011 , 2012 and 2013 have a term of 10 years. Beginning in the fourth quarter of 2011 , all options issued are time-based and vest over a four -year period in an equal number of shares...

  • Page 109

  • Page 110
    ... of Contents The following table is a summary of the Company's stock option compensation information for the years ended December 31 : (Amounts in millions) 2013 2012 2011 Intrinsic value of options exercised Cash received from option exercises Unrecognized stock option expense Remaining weighted...

  • Page 111
    ...-year period in an equal number of shares each year. Upon exercise, the employee will receive an amount that 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 fair value of stock...

  • Page 112
    ... from proceeds on securities that result in a release of valuation allowance, offset by international taxes and the reversal of tax benefits recorded on cancelled stock options for executive employee terminations. Changes in facts and circumstances may cause the Company to record additional...

  • Page 113
    .... The following table is a summary is a reconciliation of unrecognized tax benefits for the years ended December 31 : (Amounts in millions) 2013 2012 2011 Beginning balance Additions based on tax positions related to prior years Additions based on tax positions related to current year Lapse in...

  • Page 114
    ... commission guarantees expiring in 2013 and 2012 , the Company paid $1.5 million and $0.5 million , respectively, or 56 percent and 22 percent , respectively, of the estimated maximum payment for the year. Other Commitments - The Company has agreements with certain co-investors to provide funds...

  • Page 115
    ... Funds Transfer segment provides global money transfers and, in the U.S., Canada, Puerto Rico, bill payment services to consumers through a network of agents and, in select markets, company-operated locations. The Financial Paper Products segment provides money orders to consumers through retail...

  • Page 116
    ...table is a summary of the total revenue by segment for the years ended December 31 : (Amounts in millions) 2013 2012 2011 Global Funds Transfer revenue Money transfer revenue Bill payment revenue Total Global Funds Transfer revenue Financial Paper Products revenue Money order revenue Official check...

  • Page 117
    ... generated from money transfer and bill payment transactions originating in a country other than the U.S. Long-lived assets are principally located in the U.S. The following table details total revenue by major geographic area for the years ended December 31 : (Amounts in millions) 2013 2012 2011...

  • Page 118
    ... and generate an annual estimated pre-tax cost savings of $15.0 million to $20.0 million . Note 18 - Condensed Consolidating Financial Statements In the event the Company offers debt securities pursuant to an effective registration statement on Form S-3, these debt securities may be guaranteed by...

  • Page 119
    ... 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 and other liabilities Intercompany liabilities Total liabilities...

  • Page 120
    ... commissions expense Total commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and supplies Depreciation and amortization Total operating expenses OPERATING INCOME Other expense Interest expense Debt extinguishment costs Total other expense (Loss...

  • Page 121
    ... on available-for-sale securities: Net holding gains arising during the period, net of tax expense of $3.1 Reclassification of net realized gains included in net income (loss), net of tax expense of $1.6 Pension and postretirement benefit plans: Amortization of prior service credit for pension and...

  • Page 122
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 Subsidiary Guarantors NonGuarantors (Amounts in millions) Parent Eliminations Consolidated NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (47.4) $ CASH ...

  • Page 123
    ... 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 and other liabilities Intercompany liabilities Total liabilities...

  • Page 124
    ... 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 expense (income) Net security gains Interest expense Other costs Total other expenses...

  • Page 125
    ... available-for-sale securities: Net holding (losses) gains arising during the period, net of tax expense of $1.4 Reclassification adjustment for net realized gains included in net (loss) income, net of tax expense of $0.0 Pension and postretirement benefit plans: Amortization of prior service credit...

  • Page 126
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2012 Subsidiary Guarantors NonGuarantors (Amounts in millions) Parent Eliminations Consolidated NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ CASH FLOWS ...

  • Page 127
    ... commissions expense Compensation and benefits Transaction and operations support Occupancy, equipment and supplies Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other expense (income) Net securities gains Interest expense Debt extinguishment costs Other costs Total...

  • Page 128
    ... (LOSS) INCOME Net unrealized gains on available-for-sale securities: Net holding gains arising during the period, net of tax expense of $0.6 Pension and postretirement benefit plans: Amortization of prior service credit for pension and postretirement benefit plans recorded to net income (loss), net...

  • Page 129
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2011 Subsidiary Guarantors NonGuarantors (Amounts in millions) Parent Eliminations Consolidated NET CASH PROVIDED BY OPERATING ACTIVITIES $ 41.7 $ CASH FLOWS FROM ...

  • Page 130
    ...annual meeting in May, shall receive a restricted stock unit ("RSU") covering shares of common stock the fair market value of which shall be equal to $100,000, as determined by the per share closing price of the common stock on the NASDAQ, as reported in the consolidated transaction reporting system...

  • Page 131
    ... audited the consolidated financial statements of MoneyGram International, Inc. and subsidiaries as of December 31, 2013 and 2012 , and for each of the three years in the period ended December 31, 2013 , included in your Annual Report on Form 10-K to the Securities and Exchange Commission and have...

  • Page 132
    ...Chrono Cash Financial Electronic Funds Transfer Services International Agencies, Brokerage, Construction Works Touristic Imports Exports S.A. Ferrum Trust (Delaware) Hematite Trust (Delaware) MIL Overseas Limited (United Kingdom) MIL Overseas Nigeria Limited (Nigeria) Money Globe Payment Institution...

  • Page 133
    ... statements of MoneyGram International, Inc. and subsidiaries (the "Company"), and the effectiveness of the Company's internal control over financial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2013 . /s/ DELOITTE & TOUCHE LLP Dallas, Texas...

  • Page 134
    ... true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign MoneyGram International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 , and...

  • Page 135
    ...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. b. Date: March 3, 2014 /s/ Pamela H. Patsley Pamela H. Patsley Chairman and Chief Executive Officer...

  • Page 136
    ... report 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. /s/ W. Alexander Holmes W. Alexander Holmes Executive Vice President, Chief Financial Officer...

  • Page 137
    ... with the Annual Report on Form 10-K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof I, Pamela H. Patsley, Chairman and Chief Executive Officer of the Company, certify...

  • Page 138
    ... Annual Report on Form 10-K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2013 , as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Executive Vice President, Chief Financial Officer and Chief Operating...