MoneyGram 2015 Annual Report Download - page 30

Table of Contents
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed below under “
CautionaryStatementsRegardingForward-LookingStatements” and under the caption “ RiskFactors” in Part 1, Item 1A of this Annual Report on Form 10-K.
The comparisons presented in this discussion refer to the same period in the prior year, unless otherwise noted. This discussion is organized in the following
sections:
•Overview
• Results of Operations
• Liquidity and Capital Resources
• Critical Accounting Policies and Estimates
• Cautionary Statements Regarding Forward-Looking Statements
OVERVIEW
MoneyGram is a global provider of innovative money transfer services and is recognized worldwide as a financial connection to friends and family. Whether
online, through a mobile device, at a kiosk or in a local store, we connect consumers any way that is convenient for them. We also provide bill payment services,
issue money orders and process official checks in the U.S. and in select countries. 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 solutions, account
deposit and kiosk-based services. Additionally, we have 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 locations in more than 200 countries and territories. Our global money
transfer services are our primary revenue driver, accounting for 88 percent of total revenue for the year ended December 31, 2015 . The Global Funds Transfer
segment also provides bill payment services to consumers through substantially all of 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 provides money order services to consumers through our retail and financial institutions located in the U.S. and Puerto Rico, and provides
official check services to financial institutions in the U.S. Excluded from operating income for Global Funds Transfer and Financial Paper Products segments are
corporate expenses, which are not related to our segments' performance.
See a summary of key 2015 events as disclosed in Part 1, Item 1, " 2015Events" of this Annual Report on Form 10-K.
Business Environment
Our 2015 financial results were impacted by lower U.S. to U.S. pricing, a competitive product in the U.S. to U.S. corridor and the strengthening of the U.S. dollar,
partially offset by the Company's transaction and money transfer revenue growth in the Non-U.S. and U.S. Outbound corridors along with the continued growth of
the Digital/Self-Service channel.
The strengthening of the U.S. dollar against foreign currencies ordinarily has a negative impact on our reported revenue (and conversely, the weakening of the U.S.
dollar against these foreign currencies has a positive impact). However, our restructuring efforts and the diversification of our employment base outside of the U.S.
better aligned the currency exposure of our expenses with our revenues, allowing much of the currency impact to be offset.
Throughout 2015 , worldwide economic conditions continued to remain unstable, as evidenced by high unemployment rates in key markets, government assistance
to citizens and businesses on a global basis, lower oil prices, currency controls, restricted lending activity, weak currencies, lower currency reserves and low
consumer confidence, among other factors. Historically, the remittance industry has generally been resilient during times of economic softness as money transfers
are deemed essential to many, with the funds used by the receiving party for food, housing and other basic needs. Given the global reach and extent of the current
economic conditions, the growth of money transfer volumes and the average principal of money transfers continued to fluctuate by corridor and country in 2015 ,
particularly in Europe. Also, there is continued political unrest in parts of the Middle East and Africa that contributed to the volatility.
As of December 31, 2015 , our money transfer agent base expanded 3 percent over the prior year, primarily due to expansion in the Africa, Asia Pacific and Latin
America regions. We continue to review markets where we may have an opportunity to increase our presence through agent signings and acquisitions, specifically
in countries or cities where we are underrepresented.
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