MoneyGram 2013 Annual Report Download - page 83

Table of Contents
recorded this expense and the associated liability as points were accumulated by loyalty program members. The cost was recognized in
“Transaction and operational support” within the Consolidated Statements of Operations, and the associated liability was included in “
Accounts
payable and other liabilities” in the Consolidated Balance Sheets.
In October 2013, the Company began to transition its MoneyGram Rewards loyalty program to a convenience card program, which does not
feature points. The Company provided participants in the MoneyGram Rewards program until December 7, 2013 to redeem any outstanding
program points, after which all points were canceled. As a result of the point cancellation, the Company had a reduction of marketing expense of
$3.9 million in 2013 . As of December 31, 2013 , the Company has no remaining liability related to the loyalty program.
Fee and Other Commissions Expense
—
The Company incurs fee commissions primarily related to our Global Funds Transfer products. In a
money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally based on a
percentage of the fee charged to the consumer. In a bill payment transaction, the agent initiating the transaction receives a commission that is
generally based on a percentage of the fee charged to the consumer and, in limited circumstances, the biller receives a commission that is based
on a percentage of the fee charged to the consumer. The Company generally does not pay commissions to agents on the sale of money orders,
except, in certain limited circumstances, for large agents where we may pay a fixed commission based on total money order transactions. Other
commissions expense includes 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 the financial institution. Investment
commissions are recognized each month based on the average outstanding balances of each financial institution customer and their contractual
variable rate for that month.
Marketing and Advertising Expense
—
Marketing and advertising costs are expensed as incurred or at the time the advertising first takes place
and are recorded in the “Transaction and operations support”
line in the Consolidated Statements of Operations. Marketing and advertising
expense was $57.4 million , $59.7 million and $57.5 million for 2013 , 2012 and 2011 , respectively.
Stock-Based Compensation — Stock-
based compensation awards are measured at fair value at the date of grant and expensed over their vesting
or service periods. The expense, net of estimated forfeitures, is recognized using the straight-line method. See Note 12 — Stock-
Based
Compensation for additional disclosure of the Company’s stock-based compensation.
Reorganization and Restructuring Expenses
—
Reorganization and restructuring expenses consist of direct and incremental costs associated with
reorganization, restructuring and related activities, including technology; process improvement efforts; consulting and contractors; severance;
outplacement and other employee related benefits; facility closures, cease-
use or related charges; asset impairments or accelerated depreciation;
and other expenses related to relocation of various operations to existing or new Company facilities and third-
party providers, including hiring,
training, relocation, travel and professional fees. The Company records severance-
related expenses once they are both probable and estimable
related to severance provided under an on-going benefit arrangement. One-
time, involuntary benefit arrangements and other exit costs are
generally recognized when the liability is incurred. The Company evaluates impairment issues associated with reorganization activities when the
carrying amount of the assets may not be fully recoverable, and also reviews the appropriateness of the remaining useful lives of impacted fixed
assets.
The following table summarizes the reorganization and restructuring costs recorded for the years ended December 31 :
In connection with reorganization and restructuring activities during 2013 , 2012 and 2011 , the Company recorded total expenses of
$3.2
million , $19.8 million and $23.5 million , respectively, which have all been paid as of December 31, 2013
. Reorganization and restructuring
activities consisted of severance costs recorded in the “Compensation and benefits” line, general reorganization
F-15
(Amounts in millions) 2013
2012 2011
Reorganization costs in operating expenses:
Compensation and benefits
$
1.2
$
6.8
$
2.9
Transaction and operations support
0.7
10.2
13.7
Occupancy, equipment and supplies
1.3
1.9
2.7
Depreciation and amortization —
0.5
—
Reorganization costs in non-operating expenses:
Other —
0.1
2.4
Total reorganization costs
3.2
19.5
21.7
Restructuring costs in operating expenses:
Compensation and benefits —
0.3
1.8
Total restructuring costs —
0.3
1.8
Total reorganization and restructuring costs
$
3.2
$
19.8
$
23.5