MoneyGram International Announces Second Quarter 2009 Results

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Press Release

August 6, 2009 at 12:00 AM EDT

MoneyGram International Announces Second Quarter 2009 Results

MoneyGram International Announces Second Quarter 2009 Results

MINNEAPOLIS--(BUSINESS WIRE)--Aug. 6, 2009-- MoneyGram International, Inc. (NYSE:MGI) reported a net loss of $3.3 million in the second quarter of 2009. The net loss included a pre-tax $12.0 million legal accrual and a pre-tax increase in the provision for loss of $9.0 million. The loss compares with net income of $15.2 million in the second quarter of 2008. Revenue totaled $291.2 million in the second quarter 2009 as compared with revenue of $286.1 million a year earlier. Year-to-date total revenue in 2009 was $571.1 million compared with $303.2 million in the first half of 2008. Revenue in the first half of 2008 was adversely impacted by net securities losses of $337.6 million.

“We continue to execute our strategy and, despite the loss in the second quarter of 2009, we demonstrated meaningful progress in positioning MoneyGram for accelerated long-term growth. We remain focused on aggressively managing our balance sheet, becoming more efficient, and making disciplined investments in our global network,” said Pamela H. Patsley, MoneyGram International executive chairman. “During the quarter, we expanded our distribution in all corners of the world, increased our global agent network by 15 percent over the prior year, and we ended the quarter with unrestricted assets of $386.9 million at June 30, 2009.”

During the quarter the Company signed National Commercial Bank in Saudi Arabia, the largest bank in the Middle East. In South Korea, the Company recently launched Shinhan Bank, providing the MoneyGram service in 850 of its locations. In Canada, MoneyGram completed the successful rollout of 2,000 additional Canada Post locations and received commitment to roll out several thousand more locations over the next year, significantly expanding MoneyGram’s agent network from coast to coast. In the very important Latin America region, the Company added more than 1,300 locations, reaching the significant milestone of 25,000 agent locations.

Total fee and other revenue in the quarter was $278.5 million down from $281.9 million in the second quarter of 2008. Money transfer fee and other revenue was $249.7 million in the second quarter of 2009, versus $254.7 million in the second quarter of 2008. The current quarter results were impacted by a lower euro rate, and a decline in money transfer average principal, partially offset by an increase in money transfer transaction volume.

EBITDA (earnings before interest, taxes, depreciation and amortization, and amortization of agent signing bonuses) was $46.6 million and Adjusted EBITDA (EBITDA adjusted for net securities gains and severance-related costs) was $43.4 million in the second quarter of 2009 compared with Adjusted EBITDA of $58.2 million in the comparable period last year. The second quarter of 2009 Adjusted EBITDA was impacted by the $12.0 million legal accrual and the $9.0 million increase in the provision for loss.

”Our steadfast focus is on delivering a compelling value to our consumers and creating long-term value for our shareholders,” said Anthony P. Ryan, MoneyGram International president and chief executive officer. “In the quarter, we entered the mobile money transfer business through an agreement with Affinity Global Services, and we expanded our MoneyGram Rewards loyalty program in France, Germany and Spain. We are optimistic about the opportunities to further grow our core business, introduce new products and services, and generate greater operating efficiencies.”

Global Funds Transfer Results

Total revenue for the Global Funds Transfer segment decreased to $269.7 million in the second quarter of 2009 from $272.3 million in the comparable period last year. Segment results were impacted by a lower euro rate and a decline in money transfer average principal, partially offset by a 4 percent increase in money transfer transaction volume excluding bill payment. The segment reported operating income of $10.9 million, and an operating margin of 4.0 percent in the second quarter, after giving affect to the legal accrual and provision for loss.

Money transfer fee and other revenue including bill payment declined 2 percent, or when adjusted for the change in the value of the euro, increased 1 percent. Total money transfer transaction volume was up 1 percent, as a result of a year-over-year decline in bill payment transactions, which continue to be adversely affected by the slowdown in the U.S. economy.

Money transfer transactions excluding bill payment originating in the United States and Canada, increased 8 percent in the second quarter of 2009. Including bill payment, transactions increased 2 percent in the quarter from the prior year. Transactions originating outside of North America increased 2 percent from the prior year. Spain’s severe economic downturn continues to have a significant impact on our international transaction growth. Excluding Spain, international transactions increased 11 percent from the prior year.

In the second quarter, MoneyGram’s transaction volume to Mexico decreased 9.4 percent, consistent with the industry-wide remittance volume decline into Mexico as measured by Banco de Mexico.

Payment Systems Results

Total Payment Systems net revenue for the quarter increased to $19.5 million from $18.5 million in the second quarter of 2008. Net revenue in 2009 reflects net investment revenue of $6.0 million and a net securities gain of $3.2 million, while 2008 net revenue reflects $34.5 million of net investment revenue and $25.7 million in net securities losses. The segment reported operating income of $9.4 million in the second quarter of 2009, up from $3.9 million in the second quarter of 2008.

Legal Accrual / Provision for Loss

In the second quarter, the Company recorded an accrual of $12.0 million related to the potential resolution of ongoing discussions with the staff of the Federal Trade Commission regarding customer complaints that third parties have inappropriately used MoneyGram’s money transfer services in conjunction with consumer fraud activities. There can be no assurance that the Company will reach an agreement with the staff of the Federal Trade Commission or that this matter will not result in future litigation. MoneyGram continues to implement additional systems and processes to further safeguard consumers against fraud.

Also in the second quarter, the Company increased its provision for loss by $9.0 million as a result of the closure of an international agent. The receivable from this international agent is fully reserved at June 30, 2009 and there is no additional exposure.

Non-GAAP Measures

In addition to results presented in accordance with GAAP, this press release and related tables include certain non-GAAP financial measures, including a presentation of EBITDA and Adjusted EBITDA. The following tables include a full reconciliation of these non-GAAP financial measures to the related GAAP financial measures.

MoneyGram believes these non-GAAP financial measures provide information useful to investors in understanding the underlying operations of the Company and its business and performance trends, as well as in facilitating comparisons with other companies in the money transfer industry. Specifically, MoneyGram believes the exclusion of net securities gains (losses) and the valuation gains on embedded derivatives permits evaluation and comparison of results for ongoing business operations. This adjusted view is used by management to internally assess the Company’s performance at both a consolidated and segment level, forecast results and allocate resources. Management does not find the GAAP financial measures particularly relevant or useful in evaluating the operating performance of our segments as they do not represent future period recurring costs or are costs outside of the Company’s control at this time.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations, including our ability to fund capital expenditures, acquisitions and operations and to service debt. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies within our industry. In addition, the Company’s debt agreements require compliance with financial measures based on EBITDA and Adjusted EBITDA. Finally, EBITDA and Adjusted EBITDA are financial measures used by management in reviewing results of operations, forecasting, assessing cash flow and capital, allocating resources and establishing employee incentive programs.

Although MoneyGram believes the above non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP financial measures.

Description of Tables

Table One – Consolidated Statements of (Loss) Income
Table Two - Consolidated Balance Sheets
Table Three – Unrestricted Assets
Table Four – Consolidated Statements of (Loss) Income (as Adjusted)
Table Five – Global Funds Transfer Segment Results (as Adjusted)
Table Six – Payment Systems Segment Results (as Adjusted)
Table Seven – EBITDA and Adjusted EBITDA

Conference Call

MoneyGram International will have a conference call today at 5:00 p.m. ET, 4:00 p.m. CT to discuss the second quarter of 2009. Pamela H. Patsley, executive chairman, and Anthony Ryan, president and chief executive officer, will speak on the call. The conference call can be accessed by calling (877) 419-6600 in the U.S. The participant confirmation number is 7154330. A replay of the conference call will be available one hour after the call concludes through 5:00 p.m. ET on Aug. 13, 2009. The replay of the call is available at (888) 203-1112 for U.S. callers or 1-719-457-0820 for international callers. The confirmation code will be 7154330.

About MoneyGram International, Inc.

MoneyGram International, Inc. is a leading global payment services company. The Company's major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers. MoneyGram is a New York Stock Exchange listed company with approximately 180,000 global money transfer agent locations in 190 countries and territories. For more information, visit the Company's website at www.moneygram.com.

Forward Looking Statements

The statements contained in this press release regarding MoneyGram International, Inc. that are not historical facts are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances due to a number of factors, including, but not limited to: (a) our substantial dividend and debt service obligations and our covenant requirements which could impact our ability to obtain additional financing and to operate and grow our business; (b) the continued volatility and disruption of global capital and credit markets which may adversely affect our liquidity and our agents’ liquidity, our access to credit and capital and our agents’ access to credit and capital and our earnings on our investment portfolio; © negative economic conditions generally and in geographic areas or industries that are important to our business which may cause a decline in our money transfer growth rate and transaction volume and/or revenue; (d) a material slow down or complete disruption of international migration patterns which could adversely affect our money transfer volume and growth rate; (e) a loss of material retail agent relationships or a reduction in transaction volume from them; (f) our ability to develop and implement successful pricing strategies for our services; (g) stockholder lawsuits and other litigation or government investigations of the Company or its agents which could result in material costs, settlements, fines or penalties; (h) our ability to maintain sufficient banking relationships; (i) our ability to attract and retain key employees; (j) our ability to maintain capital sufficient to pursue our growth strategy, fund key strategic initiatives and meet evolving regulatory requirements; (k) our ability to successfully and timely implement new or enhanced technology and infrastructure, delivery methods and product and service offerings and to invest in products, services and infrastructure; (l) our ability to adequately protect our brand and our other intellectual property rights and to avoid infringing on third-party intellectual property rights; (m) competition from large competitors, niche competitors or new competitors that may enter the markets in which we operate; (n) the impact of laws, regulatory requirements, and other industry practices in the U.S. and abroad, including changes in laws, regulations or other industry practices and standards that may increase our costs of doing business or reduce the market for or value of our services; (o) our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, are subject to certain Office of Foreign Assets Control (“OFAC”) restrictions which could result in contravention of U.S. law or regulations by us or our agents which could subject us to fines and penalties and cause us reputational harm; (p) a breakdown, catastrophic event, security breach, privacy breach, improper operation or other event impacting our systems or processes or our vendors’, agents’ or financial institution customers’ systems or processes, which could result in financial loss, loss of customers, regulatory sanctions and damage to our brand and reputation; (q) our ability to scale our technology to match our business and transactional growth; ® our ability to manage our credit exposure to retail agents and financial institution customers which exposure may increase during an economic downturn; (s) our ability to mitigate fraud risks from consumers and agents which risks may increase during an economic downturn; (t) our ability to successfully manage risks associated with running Company-owned retail locations and acquiring new businesses; (u) our ability to successfully manage risks associated with our international sales and operations including the potential for political, economic or other instability in countries that are important to our business; (v) our compliance with the internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002; (w) the outcome of positions we take with respect to federal, state, local and international taxation; (x) additional risk factors described in our other filings with the Securities and Exchange Commission from time to time.

TABLE ONE
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
           
 
Three Months Ended Six Months Ended
June 30,

 

June 30,

 

(Amounts in thousands, except per share data)   2009   2008  

2009 vs
2008

2009   2008  

2009 vs
2008

 
REVENUE
Fee and other revenue $ 278,493 $ 281,881 $ (3,388 ) $ 546,637 $ 544,678 $ 1,959
Investment revenue 8,455 34,498 (26,043 ) 20,146 96,063 (75,917 )
Net securities gains (losses)     4,233       (30,291 )     34,524     4,289       (337,591 )     341,880  
Total revenue 291,181 286,088 5,093 571,072 303,150 267,922
Fee commissions expense 121,764 129,098 (7,334 ) 240,308 246,330 (6,022 )
Investment commissions expense     354       (5,385 )     5,739     753       91,504       (90,751 )
Total commissions expense     122,118       123,713       (1,595 )   241,061       337,834       (96,773 )
Net revenue (losses)     169,063       162,375       6,688     330,011       (34,684 )     364,695  
 
EXPENSES
Compensation and benefits 47,639 68,136 (20,497 ) 99,271 120,435 (21,164 )
Transaction and operations support 71,166 51,335 19,831 115,650 103,364 12,286
Depreciation and amortization 14,962 14,288 674 29,324 28,506 818
Occupancy, equipment and supplies 12,237 12,391 (154 ) 23,263 23,613 (350 )
Interest expense 26,649 24,008 2,641 53,689 38,797 14,892
Valuation gain on embedded derivative - (31,203 ) 31,203 - (31,203 ) 31,203
Debt extinguishment loss     -       -       -     -       1,499       (1,499 )
Total expenses     172,653       138,955       33,698     321,197       285,011       36,186  
(Loss) income before income taxes (3,590 ) 23,420 (27,010 ) 8,814 (319,695 ) 328,509
Income tax (benefit) expense     (273 )     8,259       (8,532 )   290       25,999       (25,709 )
NET (LOSS) INCOME   $ (3,317 )   $ 15,161     $ (18,478 ) $ 8,524     $ (345,694 )   $ 354,218  
 
Basic and diluted loss per common share $ (0.40 ) $ (0.11 ) $ (0.29 ) $ (0.60 ) $ (4.51 ) $ 3.91
 
Net (loss) income as reported $ (3,317 ) $ 15,161 $ (18,478 ) $ 8,524 $ (345,694 ) $ 354,218
Preferred stock dividends (27,116 ) (23,994 ) (3,122 ) (52,834 ) (25,816 ) (27,018 )
Accretion recognized on preferred stock     (2,540 )     -       (2,540 )   (5,041 )     -       (5,041 )
Net loss available to common stockholders   $ (32,973 )   $ (8,833 )   $ (24,140 ) $ (49,351 )   $ (371,510 )   $ 322,159  
                       
Weighted-average outstanding common shares     82,504       82,464       40     82,493       82,447       46  
 

TABLE TWO
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
June 30, December 31,
(Amounts in thousands, except share data)   2009   2008
ASSETS
Cash and cash equivalents $ - $ -
Cash and cash equivalents (substantially restricted) 3,973,685 4,077,381
Receivables, net (substantially restricted) 1,098,388 1,264,885
Trading investments (substantially restricted) 13,260 21,485
Available-for-sale investments (substantially restricted) 357,432 438,774
Property and equipment 143,712 156,263
Intangible assets 12,644 14,548
Goodwill 432,591 434,337
Other assets     189,560       234,623  
Total assets   $ 6,221,272     $ 6,642,296  
 
LIABILITIES
Payment service obligations $ 5,079,941 $ 5,437,999
Debt 909,046 978,881
Pension and other postretirement benefits 132,500 130,900
Accounts payable and other liabilities 110,415 121,586
Deferred tax liabilities     12,671       12,454  
Total liabilities     6,244,573       6,681,820  
 
MEZZANINE EQUITY

Participating Convertible Preferred Stock-Series B, $0.01 par value,
 800,000 shares authorized, 495,000 shares issued and outstanding

496,695 458,408

Participating Convertible Preferred Stock-Series B-1, $0.01 par value,
 500,000 shares authorized, 272,500 shares issued and outstanding

    303,392       283,804  
Total mezzanine equity     800,087       742,212  
 
STOCKHOLDERS' DEFICIT

Preferred shares - undesignated, $0.01 par value, 5,000,000 authorized,
 none issued

- -

Preferred shares - junior participating, $0.01 par value, 2,000,000 authorized,
 none issued

- -

Common shares, $0.01 par value, 1,300,000,000 shares authorized,
 88,556,077 shares issued

886 886
Additional paid-in capital 6,268 62,324
Retained loss (640,730 ) (649,254 )
Unearned employee benefits (81 ) (424 )
Accumulated other comprehensive loss (36,569 ) (42,707 )

Treasury stock: 6,036,846 and 5,999,175 shares at June 30, 2009 and
 December 31, 2008, respectively

    (153,162 )     (152,561 )
Total stockholders' deficit     (823,388 )     (781,736 )
Total liabilities, mezzanine equity and stockholders' deficit   $ 6,221,272     $ 6,642,296  
 

TABLE THREE
MONEYGRAM INTERNATIONAL, INC.
UNRESTRICTED ASSETS
(Unaudited)
     
 
June 30, March 31, December 31,
(Amounts in thousands)   2009   2009   2008
 
Cash and cash equivalents $ 3,973,685 $ 3,904,783 $ 4,077,381
Receivables, net 1,098,388 1,117,184 1,264,885
Government agency securities     334,727       390,573       409,246  
5,406,800 5,412,540 5,751,512
Amounts restricted to cover payment service obligations     (5,079,941 )     (5,067,167 )     (5,437,999 )
Excess unrestricted assets, excluding trading investments,
put options and other asset-backed securities 326,859 345,373 313,513
 
Trading investments 13,260 19,840 21,485
Put options on trading investments 24,049 30,287 26,505
Other asset-backed securities     22,705       25,254       29,528  
 
Excess unrestricted assets   $ 386,873     $ 420,754     $ 391,031  
 

TABLE FOUR
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF (LOSS) INCOME (AS ADJUSTED)
(Unaudited)
           
   
Reported Q2 Adjusted Reported Q2 Adjusted
(Amounts in thousands)   Q2 2009   Adjustments     Q2 2009 Q2 2008   Adjustments     Q2 2008
 
REVENUE
Fee and other revenue $ 278,493 $ - $ 278,493 $ 281,881 $ - $ 281,881
Investment revenue 8,455 - 8,455 34,498 - 34,498
Net securities gains (losses)     4,233       (4,233 )

(1)

    -     (30,291 )     30,291  

(1)

    -
Total revenue 291,181 (4,233 ) 286,948 286,088 30,291 316,379
Fee commissions expense 121,764 - 121,764 129,098 - 129,098
Investment commissions expense     354       -         354     (5,385 )     29,273  

(2)

    23,888
Total commissions expense     122,118       -         122,118     123,713       29,273         152,986
Net revenue     169,063       (4,233 )       164,829     162,375       1,018         163,393
 
EXPENSES
Compensation and benefits 47,639 2,772

(3)

50,411 68,136 (16,524 )

(3)

51,612
Transaction and operations support 71,166 (3,858 )

(4)

67,308 51,335 (1,129 )

(3)

50,206
Depreciation and amortization 14,962 - 14,962 14,288 - 14,288
Occupancy, equipment and supplies 12,237 - 12,237 12,391 - 12,391
Interest expense 26,649 - 26,649 24,008 4,235

(2)

28,243
Valuation gain on embedded derivative     -       -         -     (31,203 )     31,203  

(5)

    -
Total expenses     172,653       (1,086 )       171,568     138,955       17,785         156,740
(Loss) income before income taxes   $ (3,590 )   $ (3,147 )     $ (6,739 ) $ 23,420     $ (16,767 )     $ 6,653
 
 
   
Reported Q2 YTD Adjusted Reported Q2 YTD Adjusted
(Amounts in thousands)   Q2 2009 YTD   Adjustments     Q2 2009 YTD Q2 2008 YTD   Adjustments     Q2 2008 YTD
 
REVENUE
Fee and other revenue $ 546,637 $ - $ 546,637 $ 544,678 $ - $ 544,678
Investment revenue 20,146 - 20,146 96,063 - 96,063
Net securities gains (losses)     4,289       (4,289 )

(1)

    -     (337,591 )     337,591  

(1)

    -
Total revenue 571,072 (4,289 ) 566,783 303,150 337,591 640,741
Fee commissions expense 240,308 - 240,308 246,330 - 246,330
Investment commissions expense     753       -         753     91,504       (27,735 )

(2)

    63,769
Total commissions expense     241,061       -         241,061     337,834       (27,735 )       310,099
Net revenue (losses)     330,011       (4,289 )       325,721     (34,684 )     365,326         330,642
 
EXPENSES
Compensation and benefits 99,271 (687 )

(3)

98,584 120,435 (16,524 )

(3)

103,911
Transaction and operations support 115,650 (4,008 )

(4)

111,642 103,364 (8,862 )

(3)

94,502
Depreciation and amortization 29,324 - 29,324 28,506 - 28,506
Occupancy, equipment and supplies 23,263 - 23,263 23,613 - 23,613
Interest expense 53,689 - 53,689 38,797 (1,982 )

(2)

36,815
Valuation gain on embedded derivative - - - (31,203 ) 31,203

(5)

-
Debt extinguishment loss     -       -         -     1,499       (1,499 )

(6)

    -
Total expenses     321,197       (4,695 )       316,503     285,011       2,336         287,347
Income (Loss) before income taxes   $ 8,814     $ 406       $ 9,218   $ (319,695 )   $ 362,990       $ 43,295

(1) Realized and unrealized gains and losses and other-than-temporary impairments on investments.
(2) Mark-to-market valuation gain (loss) on interest rate swaps, which were terminated in June 2008.
(3) Executive severance and related costs & transaction costs related to the recapitalization.
(4) Impairment charges and loss on non-core businesses.
(5) Change in the fair value of embedded derivatives in preferred stock.
(6) Debt extinguishment loss related to the recapitalization.

TABLE FIVE
MONEYGRAM INTERNATIONAL, INC.
GLOBAL FUNDS TRANSFER SEGMENT RESULTS (AS ADJUSTED)
(Unaudited)
             
   
Reported Q2 Adjusted Reported Q2 Adjusted
(Amounts in thousands)   Q2 2009   Adjustments     Q2 2009 Q2 2008   Adjustments       Q2 2008
 
Money transfer revenue
Fee and other revenue $ 249,726 $ - $ 249,726 $ 254,715 $ - $ 254,715
Investment revenue 107 - 107 375 - 375
Net securities losses - - - (346 ) 346

(1)

-
Retail money order and other
Fee and other revenue 18,072 - 18,072 16,727 - 16,727
Investment revenue 1,254 - 1,254 5,021 - 5,021
Net securities gains (losses)     584       (584 )

(1)

    -     (4,240 )     4,240  

(1)

    -  
Total Global Funds Transfer revenue 269,743 (584 ) 269,159 272,252 4,586 276,838
 
Commissions expense     121,318       -         121,318     128,551       -         128,551  
Net revenue   $ 148,425     $ (584 )     $ 147,841   $ 143,701     $ 4,586       $ 148,287  
 
Operating income   $ 10,905     $ 2,592  

(2)

  $ 13,497   $ 30,620     $ 4,586       $ 35,206  
 
Operating margin 4.0 %   5.0 % 11.2 %   12.7 %
 
 
   
Reported Q2 YTD Adjusted Reported Q2 YTD Adjusted
(Amounts in thousands)   Q2 2009 YTD   Adjustments     Q2 2009 YTD Q2 2008 YTD   Adjustments       Q2 2008 YTD
 
Money transfer revenue
Fee and other revenue $ 491,846 $ - $ 491,846 $ 491,600 $ - $ 491,600
Investment revenue 107 - 107 1,081 - 1,081
Net securities losses - - - (4,081 ) 4,081

(1)

-
Retail money order and other
Fee and other revenue 33,914 - 33,914 33,659 - 33,659
Investment revenue 2,976 - 2,976 13,870 - 13,870
Net securities gains (losses)     592       (592 )

(1)

    -     (44,878 )     44,878  

(1)

    -  
Total Global Funds Transfer revenue 529,435 (592 ) 528,843 491,251 48,959 540,210
 
Commissions expense     239,221       -         239,221     245,114       -         245,114  
Net revenue   $ 290,214     $ (592 )     $ 289,622   $ 246,137     $ 48,959       $ 295,096  
 
Operating income   $ 47,631     $ 2,584  

(2)

  $ 50,215   $ 26,948     $ 48,959       $ 75,907  
 
Operating margin 9.0 %   9.5 % 5.5 %   14.1 %
 

(1) Realized and unrealized gains and losses and other-than-temporary impairments on investments.
(2) Includes adjustment for goodwill impairment charge of $3.2 million on exit of non-core business.



TABLE SIX
MONEYGRAM INTERNATIONAL, INC.
PAYMENT SYSTEMS SEGMENT RESULTS (AS ADJUSTED)
(Unaudited)
           
   
Reported Q2 Adjusted Reported Q2 Adjusted
(Amounts in thousands)   Q2 2009   Adjustments     Q2 2009 Q2 2008   Adjustments     Q2 2008
 
Fee and other revenue $ 10,696 $ - $ 10,696 $ 10,300 $ - $ 10,300
Investment revenue 6,313 - 6,313 29,102 - 29,102
Net securities gains (losses)     3,242       (3,242 )

(1)

    -     (25,705 )     25,705  

(1)

    -  
Total Payment Systems revenue 20,251 (3,242 ) 17,009 13,697 25,705 39,402
 
Commissions expense     800       -         800     (4,839 )     29,273  

(2)

    24,434  
Net revenue   $ 19,451     $ (3,242 )     $ 16,209   $ 18,536     $ (3,568 )     $ 14,968  
 
Operating income   $ 9,442     $ (2,560 )

(3)

  $ 6,882   $ 3,904     $ (3,568 )     $ 336  
 
Operating margin 46.6 %   40.5 % 28.5 %   0.9 %
 
 
   
Reported Q2 YTD Adjusted Reported Q2 YTD Adjusted
(Amounts in thousands)   Q2 2009 YTD   Adjustments     Q2 2009 YTD Q2 2008 YTD   Adjustments     Q2 2008 YTD
 
Fee and other revenue $ 20,852 $ - $ 20,852 $ 19,120 $ - $ 19,120
Investment revenue 15,076 - 15,076 81,180 - 81,180
Net securities gains (losses)     3,291       (3,291 )

(1)

    -     (288,632 )     288,632  

(1)

    -  
Total Payment Systems revenue (losses) 39,219 (3,291 ) 35,928 (188,332 ) 288,632 100,300
 
Commissions expense     1,840       -         1,840     92,719       (27,735 )

(2)

    64,984  
Net revenue (losses)   $ 37,379     $ (3,291 )     $ 34,088   $ (281,051 )   $ 316,367       $ 35,316  
 
Operating income (loss)   $ 16,694     $ (2,609 )

(3)

  $ 14,085   $ (310,949 )   $ 316,367       $ 5,418  
 
Operating margin 42.6 %   39.2 % (165.1 %)   5.4 %

(1) Realized and unrealized gains and losses and other-than-temporary impairments on investments.
(2) Mark-to-market valuation gain (loss) on interest rate swaps, which were terminated in June 2008.
(3) Includes adjustment of $0.7 million for goodwill impairment and loss on pending sale of non-core business.

TABLE SEVEN
MONEYGRAM INTERNATIONAL, INC.
EBITDA AND ADJUSTED EBITDA
(Unaudited)
         
 
 
(Amounts in thousands)      

 

  Q2 2009  

 

  Q2 2008  

 
(Loss) income before income taxes $ (3,590 ) $ 23,420
Interest expense 26,649 24,008
Depreciation and amortization 14,962 14,288
Amortization of agent signing bonuses           8,554       9,007  
EBITDA 46,575 70,723
 
Net securities (gains) losses (1) (4,233 ) 30,291
Valuation gains on interest rate swaps - (29,273 )
Severance and related net costs (2,772 ) 17,653
Impairment charges and loss on non-core businesses 3,858 -
Valuation gain on embedded derivative (2)           -       (31,203 )
Adjusted EBITDA         $ 43,428     $ 58,191  

(1) Realized and unrealized gains and losses and other-than-temporary impairments on investments.
(2) Change in the fair value of embedded derivatives in preferred stock.

Source: MoneyGram International, Inc.

MoneyGram International, Inc.
Media:
Lynda Michielutti, 952-591-3846
lmichielutti@moneygram.com
or
Investors:
Alex Holmes, 720-568-8703
aholmes@moneygram.com