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MONEYGRAM INTERNATIONAL INC
FORM 10-K
(Annual Report)
Filed 03/02/16 for the Period Ending 12/31/15
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 2016, 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 03/02/16 for the Period Ending 12/31/15 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 ¨ No þ 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, 2015, the last business day of...

  • Page 3
    ... I. Item 1. Business Overview History and Development 2015 Events Our Segments Global Funds Transfer Segment Financial Paper Products Segment Regulation Clearing and Cash Management Bank Relationships Intellectual Property Employees Executive Officers of the Registrant Available Information Item 1A...

  • Page 4
    ... official check products and generate revenue from the investment of funds underlying these products. Our money transfer services enable our consumers to send and receive funds around the world through our extensive global network of locations, which are primarily operated by third-party businesses...

  • Page 5
    ... limit for such purchases to $170.0 million . On April 2, 2014, the Company completed an underwritten secondary public offering by affiliates and co-investors of the Investors of an aggregate of 9,200,000 shares of the Company's common stock. As part of the transaction, affiliates of Goldman Sachs...

  • Page 6
    ... any MoneyGram agent location. In select countries, the designated recipient may also receive the transferred funds via a deposit to the recipient's bank account, mobile phone account or prepaid card. Through our online product offerings, consumers can remit funds from a bank account, credit card or...

  • Page 7
    ...-service and transaction-staging kiosks, ATMs, prepaid cards and direct-to-bank account products in various markets around the world. As of December 31, 2015 , our money transfer agent network had over 350,000 locations, with growth of 3 percent compared to 2014 . Our agent network includes agents...

  • Page 8
    ...are Western Union and the U.S. Postal Service. We generally compete for money order agents on the basis of value, service, quality, technical and operational differences, price, commission and marketing efforts. We compete for money order consumers on the basis of trust, convenience, availability of...

  • Page 9
    ... anti-money laundering laws and regulations; financial services regulations; currency control regulations; antibribery laws; regulations of the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC"); money transfer and payment instrument licensing laws; escheatment laws; privacy, data...

  • Page 10
    ... through third-party agents with whom we contract and do not directly control. As a money services business, we and our agents are required to establish anti-money laundering compliance programs that include: (i) internal policies and controls; (ii) designation of a compliance officer; (iii) ongoing...

  • Page 11
    ... Bank Relationships Our business involves the transfer 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
    ...General Manager for the Art & 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. R. Lee Furnival, age 44, has been Senior Vice President, Global Operations...

  • Page 13
    ... 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 2008 to February 2011. Mr. Lines served as Senior Vice President of First Data's Strategic Business Development...

  • Page 14
    ..., card associations, web-based services, payment processors, informal remittance systems, consumer money transfer companies and others. The services are differentiated by features and functionalities, including brand recognition, customer service, reliability, distribution network and options, price...

  • Page 15
    ...other countries in which we operate, particularly in the European Union. We are also subject to financial services regulations, money transfer and payment instrument licensing regulations, consumer protection laws, currency control regulations, escheat laws, privacy and data protection laws and anti...

  • Page 16
    ... the anti-money-laundering laws could have an adverse effect on our business, financial condition and results of operations. The Dodd-Frank Act increases the regulation and oversight of the financial services industry. The Dodd-Frank Act addresses, among other things, systemic risk, capital adequacy...

  • Page 17
    ... requirements, may reduce the market for or value of our products or services or render our products or services less profitable or obsolete. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirements for capitalization...

  • Page 18
    ... and data use and security under U.S. federal, state and foreign laws. For example, the United States Federal Trade Commission routinely investigates the privacy practices of companies and has commenced enforcement actions against many, resulting in multi-million dollar settlements and multi-year...

  • Page 19
    ... ability to conduct business if our regulatory capital falls below requirements. 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...

  • Page 20
    ... concentrate agent remittances and to deliver agent payables, potentially adversely impacting our cash flow, working capital needs and exposure to local currency value fluctuations. We and our agents are considered Money Service Businesses in the U.S. under the Bank Secrecy Act. U.S. regulators are...

  • Page 21
    ... network systems and data centers. Our business involves the movement of large sums of money and the management of data necessary to do so. The success of our business particularly depends upon the efficient and error-free handling of transactions and data. We rely on the ability of our employees...

  • Page 22
    ...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 23
    ... of retail locations and acquisition or start-up of businesses create risks and may adversely affect our business, financial condition and results of operations. We have Company-operated retail locations for the sale of our products and services. We may be subject to additional laws and regulations...

  • Page 24
    ... an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. In order to achieve effective internal controls we may need to enhance our accounting systems or processes, which could increase our cost of doing business. Any failure to achieve and...

  • Page 25
    ... leased corporate offices are located in Dallas, TX. We have a number of offices leased in more than 30 countries and territories around the world including, but not limited to: U.S., United Kingdom, Poland and United Arab Emirates. These offices provide operational, sales and marketing support. We...

  • Page 26
    ...payment of $13.0 million to the participating states to be used by the states to provide restitution to consumers. The Company also agreed to implement certain enhancements to its compliance program and provide periodic reports to the states party to the settlement agreement. As of December 31, 2015...

  • Page 27
    ... companies: Euronet Worldwide Inc., Fiserv, Inc., Global Payments Inc., Green Dot Corporation, Heartland Payment Systems, Inc., Higher One Holdings, Inc., MasterCard, Inc., Total System Services, Inc., Visa, Inc. and The Western Union Company. In 2015 , Xoom Corporation was removed from the Company...

  • Page 28
    ... return for the fiscal years ending December 31 : 12/31/2010 MoneyGram International,... Inc. S&P 500 Peer Group 100.00 100.00 100.00 12/31/2011 81.87 102.11 136.28 12/31/2012 61.30 118.45 179.87 12/31/2013 95.85 156.82 280.16 12/31/2014...

  • Page 29
    ... table presents our selected consolidated financial data for the years ended December 31 : (Amounts in millions, except per share and location data) 2015 2014 2013 2012 2011 Operating Results Revenue Global Funds Transfer segment Financial Paper Products segment Other Total revenue Net (loss...

  • Page 30
    ... Company-operated retail locations in the U.S. and Western Europe. We manage our revenue and related commissions expense through two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfer services in over 350,000 agent...

  • Page 31
    ... reduction in the decline of transactions over $50 and an increase in average face value per transaction for the year ended December 31, 2015 . We continue to see a trend among state, federal and international regulators towards enhanced scrutiny of anti-money laundering compliance programs, as well...

  • Page 32
    ...less commissions, operating income and operating margin. Due to our regulatory capital requirements, we deem certain payment service assets as settlement assets. Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and customer payments...

  • Page 33
    ... services and the management of currency exchange spreads involving different "send" and "receive" countries. Other revenue in the Global Funds Transfer segment primarily consists of breakage revenue on money transfer transactions where the likelihood of payment is remote and there is no requirement...

  • Page 34
    ...in money transfer fee and other revenue from the respective prior year for the years ended December 31 : (Amounts in millions) 2015 2014 For the period ended December 31 Change resulting from: Money transfer volume Impact from changes in exchange rates Average face value per transaction and pricing...

  • Page 35
    ... fee commissions primarily on 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...

  • Page 36
    ..., excluding commissions expense, for the years ended December 31 : 2015 (Amounts in millions, except percentages) Dollars Percent of Total Revenue Dollars 2014 Percent of Total Revenue Dollars 2013 Percent of Total Revenue Compensation and benefits Transaction and operations support Occupancy...

  • Page 37
    ..., agent support costs, including forms related to our products, non-compensation employee costs, including training, travel and relocation costs, bank charges and the impact of foreign exchange rate movements on our monetary transactions, assets and liabilities denominated in a currency other...

  • Page 38
    ... the shift from internal employees to outsourced vendors as part of the 2014 Global Transformation Program. Capital transaction costs are related to the underwritten secondary public offering and share repurchase which were completed on April 2, 2014. We incurred increased marketing costs due to the...

  • Page 39
    ... software, agent signage, point of sale equipment, capitalized software development costs, office furniture, equipment and leasehold improvements and amortization of intangible assets. In 2015 , depreciation and amortization increased $10.6 million , or 19 percent , when compared to 2014 , primarily...

  • Page 40
    ... Global Funds Transfer Financial Paper Products 2015 Compared to 2014 During 2015 , the change in "Other" operating income was nominal. "Other" expenses included $5.2 million of legal expenses, Pension and Postretirement Benefits net periodic benefit expense of $25.7 million and other net corporate...

  • Page 41
    ...of operations, forecasting, allocating resources and establishing employee incentive programs. We also present Adjusted EBITDA, constant currency adjusted, which provides information to investors regarding MoneyGram's performance without the effect of foreign currency exchange rate fluctuations year...

  • Page 42
    ...for capital expenditures Cash payments for agent signing bonuses Adjusted Free Cash Flow (1) Stock-based compensation, contingent performance awards payable after three years and certain incentive compensation. (2) Non-cash charge resulting from the partial buyout of the defined benefit pension plan...

  • Page 43
    ... capacity under our credit facilities. Our primary operating liquidity needs are related to the settlement of payment service obligations to our agents and financial institution customers, general operating expenses and debt service. To meet our payment service obligations at all times, we must have...

  • Page 44
    ... 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 electronic funds transfer and wire transfer services used in the movement of consumer funds and agent...

  • Page 45
    ... time as our business expands internationally. Assets used to meet these regulatory requirements support our payment service obligations and are not available to satisfy other liquidity needs. As of December 31, 2015 , we had $103.2 million of cash designated to meet regulatory capital requirements...

  • Page 46
    ... term of 1.9 years . The maximum payment is calculated as the contractually guaranteed minimum commission times the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. As of December 31, 2015 , the...

  • Page 47
    ..., management has identified and discussed with the Audit Committee the following critical accounting policies and estimates, including the methodology and disclosures related to those estimates. Goodwill - We have two reporting units: Global Funds Transfer and Financial Paper Products. Our Global...

  • Page 48
    ... 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 unit exceeds its carrying amount, there...

  • Page 49
    ... the fair value of stock option awards, the Company uses the Black-Scholes single option pricing model for the time-based awards and performance-based tranches. Compensation cost, net of estimated forfeitures, is recognized using a straight-line method over the vesting or service period. Assumptions...

  • Page 50
    ...; our substantial debt service obligations, significant debt covenant requirements and credit rating and our ability to maintain sufficient capital; our ability to manage risks associated with our international sales and operations; major bank failure or sustained financial market illiquidity, or...

  • Page 51
    ... as counterparties 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...

  • Page 52
    ... customers for business conducted by the Financial Paper Products segment. Financial institutions will collect proceeds for official checks and money orders and remit those proceeds to us. We actively monitor the credit risk associated with financial institutions such as banks and credit unions...

  • Page 53
    ... 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. The system also permits us to remotely disable an agent's terminals and cause a cessation of transactions. Derivative...

  • Page 54
    ... 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. Our primary source of foreign exchange...

  • Page 55
    ...'s rules and forms. Disclosure controls and procedures are designed, without limitation, 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...

  • Page 56
    ... of Contents Management's Report on 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...

  • Page 57
    .... These documents are posted on our website at corporate.moneygram.com in the Investor Relations section, and are available in print free of charge to any stockholder who requests them at the address set forth in Item 1 - Available Information of this Annual Report on Form 10-K. We will disclose...

  • Page 58
    ... authorized. MoneyGram International, Inc. (Registrant) Date: March 2, 2016 By: / S / W. ALEXANDER HOLMES W. Alexander Holmes Director 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...

  • Page 59
    ... and among MoneyGram International, Inc., certain affiliates and co-investors of Thomas H. Lee Partners, L.P., and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference from Exhibit 4.1 to Registrant's Current Report on Form 8-K filed May 23, 2011). Employee Benefits Agreement, dated...

  • Page 60
    ...as of March 25, 2008, by and between the Investor parties named therein, Goldman, Sachs & Co. and MoneyGram International, Inc. (Incorporated by reference from Exhibit 10.3 to Registrant's Current Report on Form 8-K filed on March 28, 2008). Subscription Agreement, dated as of March 25, 2008, by and...

  • Page 61
    ...'s Current Report on Form 8-K filed on November 22, 2005). Form of Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (Incorporated by reference from Exhibit 10.27 to Registrant's Quarterly Report on Form 10-Q filed on May 12, 2008). MoneyGram International...

  • Page 62
    ... 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 from Exhibit 10.3 to Registrant's Current Report on Form 8-K filed May 23, 2011). Security Agreement...

  • Page 63
    ... Report on Form 10-Q filed November 9, 2012). Supplemental Agreement Regarding Settlement, dated as of July 20, 2012, by and among MoneyGram International, Inc., Thomas H. Lee Partners, L.P., The Goldman Sachs Group, Inc., certain individual defendants party thereto, and Federal Insurance Company...

  • Page 64
    ... *32.2 *101 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 24, 2014, between MoneyGram International, Inc. and Pamela H. Patsley (Incorporated by reference from Exhibit 10.8 to Registrant's Quarterly Report on Form 10-Q filed May 2, 2014). Form of 2014 Cash Retention...

  • Page 65
    ... 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, 2015 and 2014 Consolidated Statements of Operations...

  • Page 66
    ... statements are prepared by the Company in accordance with accounting principles generally accepted in the United States of America using, where appropriate, management's best estimates and judgments. The financial information presented throughout the Annual Report is consistent with that in...

  • Page 67
    ... and Stockholders of MoneyGram International, Inc. Dallas, Texas We have audited the internal control over financial reporting of MoneyGram International, Inc. and subsidiaries (the "Company") as of December 31, 2015 , based on criteria established in Internal Control - Integrated Framework (2013...

  • Page 68
    ... of MoneyGram International, Inc. and subsidiaries at December 31, 2015 and 2014 , and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 , in conformity with accounting principles generally accepted in the United States of America...

  • Page 69
    ...BALANCE SHEETS AT DECEMBER 31, (Amounts in millions, except share data) 2015 2014 ASSETS Cash and cash equivalents Settlement assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES Payment service obligations Debt Pension and other postretirement benefits Accounts payable...

  • Page 70
    ...in millions, except per share data) 2015 2014 2013 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...

  • Page 71
    ... in unrealized holding gains on available-for-sale securities arising during the period, net of tax (benefit) expense of $0.0, ($0.2) and $4.7 for the twelve months ended December 31, 2015, 2014 and 2013, respectively Net change in pension liability due to amortization of prior service cost and net...

  • Page 72
    ... Amortization of debt discount and debt issuance costs Non-cash compensation and pension expense Signing bonus payments Change in other assets Change in accounts payable and other liabilities Other non-cash items, net Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES...

  • Page 73
    ... Net income Stock-based compensation activity Capital contribution from Investors Net change in unrealized holding gains on available-for-sale securities, net of tax Pension valuation, net of tax Net change in pension liability, net of tax Unrealized foreign currency translation adjustment, net of...

  • Page 74
    ... global money transfer services and bill payment services to consumers. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. We also offer Digital/Self-Service solutions such as moneygram.com, mobile...

  • Page 75
    ...agencies for payment service obligations resulting from outstanding cashier's checks or for amounts payable to agents and brokers. Our primary overseas operating subsidiary, MoneyGram International Ltd., is a licensed payment institution in the United Kingdom, enabling us to offer our money transfer...

  • Page 76
    ... 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 77
    ...the asset is reduced to the estimated fair value. Payments on Long-Term Contracts - The Company makes payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. The payments, or signing bonuses, are generally required to be refunded pro rata in...

  • Page 78
    .... The official check, money order and bill payment transaction fees are fixed fees charged on a per item basis. Transaction fees are recognized at the time of the transaction or sale of the product. Foreign exchange revenue is earned from the management of currency exchange spreads on money transfer...

  • Page 79
    ... 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...

  • Page 80
    ...in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic...

  • Page 81
    ... years. Early adoption is permitted. The adoption of ASU 2015-16 will not have a significant impact on our consolidated financial statements. Note 3 - Reorganization and Restructuring Costs In the first quarter of 2014 , the Company announced the implementation of a global transformation program...

  • Page 82
    ... estimated remaining restructuring costs to be incurred by reportable segment: (Amounts in millions) GFT FPP Other Total 2014 Global Transformation Program Balance, December 31, 2014 First quarter 2015 Second quarter 2015 Third quarter 2015 Fourth quarter 2015 Total cumulative restructuring costs...

  • Page 83
    ... other asset-backed securities valued using third-party pricing models are classified as Level 3. • Derivative financial instruments - Derivatives consist of forward contracts to manage income statement exposure to foreign currency exchange risk arising from the Company's assets and liabilities...

  • Page 84
    ... Fair Value at December 31, 2014 (Amounts in millions) Level 1 Level 2 Level 3 Total Financial assets: Available-for-sale investments: Residential mortgage-backed securities - agencies Other asset-backed securities Investment related to deferred compensation trust Forward contracts Total financial...

  • Page 85
    ... purposes. The fair value of debt is estimated using an observable market quotation (Level 2). The following table is a summary of fair value and carrying value of debt as of December 31 : Fair Value (Amounts in millions) 2015 2014 Carrying Value 2015 2014 Senior secured credit facility $ 858...

  • Page 86
    ... 31, 2015 and 2014 , 45 percent and 54 percent , respectively, of the available-for-sale portfolio were invested in U.S. government agency residential mortgage-backed securities. These securities have the implicit backing of the U.S. government, and the Company expects to receive full par value upon...

  • Page 87
    ... follows as of December 31, 2015 and 2014 : 95 percent used a third-party pricing service and 5 percent used broker quotes. Note 6 - Derivative Financial Instruments The Company uses forward contracts to manage its foreign currency needs and foreign currency exchange risk arising from its assets and...

  • Page 88
    ...) Global Funds Transfer Financial Paper Products Total Balance as of December 31, 2014 Currency translation Balance as of December 31, 2015 $ $ 442.5 (0.3) 442.2 $ $ - - - $ $ 442.5 (0.3) 442.2 The Company performed an annual assessment of goodwill during the fourth quarter of 2015 , 2014...

  • Page 89
    ... Agent, and the lenders party thereto (the "2011 Credit Agreement"), to purchase all $325.0 million of the outstanding second lien notes held by Goldman, Sachs & Co. ("Goldman Sachs"), to pay certain costs, fees and expenses relating to the 2013 Credit Agreement and for general corporate...

  • Page 90
    ...Compensation. Interest coverage is calculated as adjusted EBITDA to net cash interest expense. The Company is required to maintain asset coverage greater than its payment service obligations. Assets used in the determination of the asset coverage covenant are cash and cash equivalents and settlement...

  • Page 91
    ... service or compensation credits are accrued by the plan participants. Cash accumulation accounts continue to be credited with interest credits until participants withdraw their money from the Pension Plan. It is the Company's policy to fund at least the minimum required contribution each year plus...

  • Page 92
    ... used in calculating net periodic benefit expense (income) and the benefit obligation for the years ended and as of December 31 : Pension Plan 2015 Net periodic benefit expense (income): Discount rate Expected return on plan assets Rate of compensation increase Initial healthcare cost trend rate...

  • Page 93
    ... value on the calculation date by the number of units of the fund that are outstanding on the calculation date, which is derived from observable purchase and redemption activity in the collective investment fund. Real estate - The Pension Plan trust holds an investment in a real estate development...

  • Page 94
    ... for the years ended December 31 : Pension (Amounts in millions) 2015 2014 2013 2015 Postretirement Benefits 2014 2013 Settlement charges Interest cost Expected return on plan assets Amortization of net actuarial loss Amortization of prior service credit Net periodic benefit expense (income...

  • Page 95
    ...the Company recognized a reduction in the projected benefit obligation for the Pension Plan of $51.0 million for the year ended December 31 , 2015 due to the settlement and changes in the actuarial assumptions used to estimate the Pension Plan projected benefit obligation. Also, in October 2015, the...

  • Page 96
    ... liabilities" line in the Consolidated Balance Sheets. The rabbi trust had no market value at December 31 , 2015 and $10.0 million at December 31 , 2014 , recorded in "Other assets" in the Consolidated Balance Sheets. The Company made payments relating to the deferred compensation plans totaling...

  • Page 97
    ... a Participation Agreement with Wal-Mart Stores, Inc. ("Walmart"), under which the Investors are obligated to pay Walmart certain percentages of any accumulated cash payments received by the Investors in excess of the Investors' original investment in the Company. While the Company is not a party to...

  • Page 98
    Table of Contents Secondary Offering - On April 2, 2014, the Company completed an underwritten secondary public offering by the Investors of an aggregate of 9,200,000 shares of the Company's common stock. As part of the transaction, the affiliates of Goldman Sachs converted an aggregate of 37,957 ...

  • Page 99
    ...373,664 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 compensation is recognized only for those options, restricted stock units and stock...

  • Page 100
    ....23 18.97 6.3 years $ 5.2 years $ 5.2 years $ 4.5 years $ - - - - The following table is a summary of the Company's stock option compensation information during years ended December 31 : (Amounts in millions) 2015 2014 2013 Intrinsic value of options exercised Cash received from option exercises...

  • Page 101
    ... stock unit award issued in 2013 and will achieve the threshold levels for the modified 2014 annual awards. For grants to employees, expense is recognized in the "Compensation and benefits" line and expense for grants to Directors is recorded in the "Transaction and operations support" line in...

  • Page 102
    ... of the Company's restricted stock and restricted stock unit compensation information for the years ended December 31 : (Amounts in millions) 2015 2014 2013 Market value of restricted stock units vested during the year $ 6.3 $ 1.5 $ 0.8 Unrecognized restricted stock unit expense and the...

  • Page 103
    ... executive employee terminations. The following table is a summary of the Company's deferred tax assets and liabilities as of December 31 : (Amounts in millions) 2015 2014 Deferred tax assets: Basis difference in revalued investments Tax loss carryovers Tax credit carryovers Postretirement benefits...

  • Page 104
    ...61.0 million for federal tax payments and associated interest related to the matter. The IRS completed its examination of the Company's consolidated income tax returns for the tax years 2011 through 2013 and issued a Revenue Agent Report ("RAR") in the first quarter of 2015 that included disallowing...

  • Page 105
    ... of Operations. The Company's interest and penalties increased $2.7 million in 2015 related to the same reclassification from accounts payable as noted above, offset by a net income tax benefit of $0.8 million for a release of prior year positions. As of December 31, 2015 and 2014 , the Company had...

  • Page 106
    ...remaining term of 1.9 years . The maximum payment is calculated as the contractually guaranteed minimum commission multiplied by the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. However, under the...

  • Page 107
    ... our money transfer agent and Company-operated locations in the U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through Digital/Self-Service solutions. The Financial Paper Products segment aggregates the Money Order and Official Check operating...

  • Page 108
    ... for the years ended December 31 : (Amounts in millions) 2015 2014 2013 Global Funds Transfer operating income Financial Paper Products operating income Total segment operating income Other operating loss Total operating income Net securities gains Interest expense Debt extinguishment costs (Loss...

  • Page 109
    ... property and equipment and signing bonuses. Long-lived assets are principally located in the U.S. The following table details total long-lived assets by major geographic area for the years ended December 31 : (Amounts in millions) 2015 2014 U.S. International Total long-lived assets F-45 $ $ 290...

  • Page 110
    ...support and a $13.8 million pension settlement charge related to the voluntary pension buyout recorded in Compensation and benefits. See Note 10 - Pension and Other Benefit for more information regarding the voluntary pension buyout. 2014 Fiscal Quarters: (Amounts in millions, except per share data...

  • Page 111
    ... services, bill payment services and money order services for customers in Walmart stores located in the United States and Puerto Rico (the "New Agreement"). In addition, under the New Agreement, the Company will offer money transfer services to Walmart's customers through Walmart's retail website...

  • Page 112
    ... the debt securities on a joint and several basis: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; and MoneyGram of New York LLC (collectively, the "Guarantors"). The following information represents condensed, consolidating Balance Sheets as of December 31, 2015 and 2014...

  • Page 113
    ...cash equivalents Settlement assets Property and equipment, net 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...

  • Page 114
    ... 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 Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other...

  • Page 115
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2015 Subsidiary Guarantors NonGuarantors (Amounts in millions) Parent Eliminations Consolidated NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM ...

  • Page 116
    ...cash equivalents Settlement assets Property and equipment, net 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...

  • Page 117
    ... commissions expense Investment commissions 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 expenses (income) Securities settlements...

  • Page 118
    Table of Contents MONEYGRAM INTERNATIONAL, INC. CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014 Subsidiary Guarantors NonGuarantors (Amounts in millions) Parent Eliminations Consolidated NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM ...

  • Page 119
    ... 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 Depreciation and amortization Total operating expenses OPERATING (LOSS) INCOME Other...

  • Page 120
    ...Dividend from subsidiary guarantors Capital contribution from non-guarantors Net cash (used in) provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of debt Transaction costs for issuance and amendment of debt Prepayment penalty Payments on debt Proceeds from...

  • Page 121
    ... Stock, or any other series or class of capital stock as set forth in the Certificate of Incorporation, to elect additional directors under specified circumstances, any director, or the entire Board of Directors, may be removed from office at any time, with or without cause, by the affirmative vote...

  • Page 122
    December 23, 2015 Ms. Kirsty Ward Senior Director Walmart Services Wal-Mart Stores, Inc. 702 S.W. 8 th Street Bentonville, AR 72716 Dear Kirsty: MoneyGram Payment Systems, Inc. ("MoneyGram") and Wal-Mart Stores, Inc. ("Walmart") are parties to that certain Master Trust Agreement effective April 1, ...

  • Page 123
    ...Ltd. (India) MoneyGram International Holdings Limited (United Kingdom) MoneyGram International Limited (United Kingdom) MoneyGram International Payment Systems, Inc. (Delaware) 10. MoneyGram International, Inc. PAC (Federal Political Action Committee) 11. MoneyGram International Pte. Ltd (Singapore...

  • Page 124
    ... 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, 2015 . /s/ DELOITTE & TOUCHE LLP Dallas, Texas March...

  • Page 125
    ..., to sign MoneyGram International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting...

  • Page 126
    ..., 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 2, 2016 /s/ W. Alexander Holmes W. Alexander Holmes Director and Chief Executive Officer (Principal Executive Officer)

  • Page 127
    ... not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Lawrence Angelilli Lawrence Angelilli Executive Vice President and Chief Financial Officer (Principal Financial Officer) b. Date: March 2, 2016

  • Page 128
    ... with the Annual Report on Form 10-K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Director and Chief Executive Officer of the Company, certify...

  • Page 129
    ... with the Annual Report on Form 10-K (the "Report"), of MoneyGram International, Inc. (the "Company") for the period ended December 31, 2015 , as filed with the Securities and Exchange Commission on the date hereof I, Lawrence Angelilli, Executive Vice President and Chief Financial Officer of the...