Moneygram International, Inc.
February 26, 2009

MoneyGram International Announces Fourth Quarter 2008 Results

Money Transfer Revenue Grows 18 Percent for Full Year, Agent Locations Increase 23 Percent

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 26, 2009-- MoneyGram International, Inc. (NYSE:MGI), today announced that in the fourth quarter of 2008 the Company expanded its global agent network by 23 percent year over year, increased money transfer transaction volume 8 percent, and ended the quarter with strong liquidity of $391.0 million in unrestricted assets, up from $368.6 million in the third quarter of 2008. For the full year, money transfer revenue was up 18 percent to $1.0 billion.

"MoneyGram continued to deliver solid growth in the fourth quarter despite an increasingly difficult global economy," said Pam Patsley, MoneyGram International executive chairman. "While it's unclear how long the economic downturn will last, we do know that our focus will remain on the long term, and we will continue to invest in MoneyGram's core money transfer and bill payment products as well as strategic growth through international expansion and product innovation."

Anthony Ryan, president and chief executive officer for MoneyGram International, said, "Our 2008 results were driven by increases in money transfer and bill payment fee revenue from continued growth in transaction volume. But our real success was in agent network expansion. In 2008, we added more than 33,000 new locations, with nearly half of those in the fourth quarter."

Consolidated Results for the fourth quarter of 2008:

Global Funds Transfer Results

Total revenue for the Global Funds Transfer segment increased to $272.4 million in the fourth quarter of 2008 from $39.8 million in the comparable period last year primarily due to $233.5 million of securities losses recorded in the fourth quarter of 2007. Total fee and other revenue for the Global Funds Transfer segment increased $14.0 million, or 6 percent, in the fourth quarter of 2008, and continues to be driven by growth in the money transfer business. Money transfer fee and other revenue grew 6 percent, while money transfer transaction volume increased 8 percent in the fourth quarter of 2008.

Transactions originated in the United States and Canada increased 10 percent in the fourth quarter of 2008, while internationally originated transactions (outside of North America) increased 4 percent from the prior year.

In the fourth quarter, MoneyGram outperformed industry-wide remittance volume into Mexico as measured by Banco de Mexico, which reported a 6 percent decline in remittances into the country during the quarter. MoneyGram transaction volume to Mexico increased 1 percent for the same period. Mexico represented 8 percent of the Company's total money transfer transactions for the fourth quarter of 2008.

Retail money order and other fee revenue decreased 6 percent in the fourth quarter of 2008 on a 7 percent decline in money order volume.

Investment revenue in the Global Funds Transfer segment decreased 75 percent in the fourth quarter of 2008, reflecting lower yields earned on short-term, highly liquid investments.

Commissions expense in the fourth quarter of 2008 increased 4 percent primarily driven by higher money transfer transaction volume, higher commission rates and amortization of signing bonuses, offset by a weaker euro and the termination of the sale of receivable program in the first quarter of 2008.

Operating income of $29.3 million and operating margin of 10.8 percent for the fourth quarter of 2008 increased from 2007, reflecting the net securities losses recorded in 2007 and an increase in fee and other revenue, offset by lower investment revenue and higher operating expenses, which increased 13 percent in the fourth quarter of 2008 versus 2007.

Payment Systems Results

Fourth quarter 2008 net revenue in the Payment Systems segment of $45.1 million includes net securities gains of $8.6 million and investment revenue of $28.2 million. This compares to a net loss of $923.9 million in the fourth quarter of 2007, which reflects $953.6 million in net securities losses and $76.9 million in investment revenue in the fourth quarter of 2007. Investment revenue was down $48.7 million from fourth quarter 2007 as a result of lower yields earned on the realigned portfolio and a decline in investable balances. Additionally, commissions expense decreased $55.1 million from the fourth quarter of 2007, reflecting declines in the effective federal funds rate and repricing initiatives, as well as lower investable balances from the departure of financial institution customers.

Interest and Dividends

In the fourth quarter of 2008, the Company elected to pay cash interest on the $500.0 million of senior secured second lien notes and accrue dividends on the $767.5 million in participating convertible preferred stock.

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 valuation loss on embedded derivatives permits evaluation and comparison of results for on-going 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 Income (Loss)
Table Two - Consolidated Balance Sheets
Table Three – Portfolio Composition
Table Four – Unrestricted Assets
Table Five – Consolidated Statements of Income (Loss) (as Adjusted)
Table Six – Global Funds Transfer Segment Results (as Adjusted)
Table Seven – Payment Systems Segment Results (as Adjusted)
Table Eight – EBITDA and Adjusted EBITDA
Table Nine – Credit Ratios
Table Ten – Common Shares, as Converted

Conference Call

MoneyGram International will have a conference call today at 5:00 p.m. ET, 4:00 p.m. CT to discuss the fourth quarter of 2008. Pam Patsley, executive chairman, Tony Ryan, president and chief executive officer, and Dave Parrin, chief financial officer, will speak on the call. The conference call can be accessed by calling (888) 668-1636 in the U.S. The participant confirmation number is 4068403. A replay of the conference call will be available one hour after the call concludes through 5:00 p.m. ET on March 5, 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 number is 4068403. The Internet audio cast replay will be available at www.moneygram.com.

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 176,000 global money transfer agent locations in 189 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; (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. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
           
 
Three months ended Full year ended

(Amounts in thousands,

December 31 2008 vs December 31 2008 vs

except per share data)

  2008   2007   2007 2008   2007   2007
 
REVENUE
Fee and other revenue $ 274,978 $ 260,650 $ 14,328 $ 1,105,676 $ 949,059 $ 156,617
Investment revenue 33,836 99,073 (65,237 ) 162,130 398,234 (236,104 )
Net securities gains (losses)     10,155       (1,187,077 )     1,197,232     (340,688 )     (1,189,756 )     849,068  
Total revenue 318,969 (827,354 ) 1,146,323 927,118 157,537 769,581
Fee commissions expense 124,590 114,557 10,033 502,317 410,301 92,016
Investment commissions expense     819       61,140       (60,321 )   102,292       253,607       (151,315 )
Total commissions expense     125,409       175,697       (50,288 )   604,609       663,908       (59,299 )
Net revenue (losses)     193,560       (1,003,051 )     1,196,611     322,509       (506,371 )     828,880  
 
EXPENSES
Compensation and benefits 50,604 38,126 12,478 224,580 188,092 36,488
Transaction and operations support 68,012 62,937 5,075 219,905 191,066 28,839
Depreciation and amortization 14,275 14,144 131 56,672 51,979 4,693
Occupancy, equipment and supplies 11,312 11,327 (15 ) 45,994 44,704 1,290
Interest expense 28,389 4,912 23,477 95,020 11,055 83,965
Valuation loss on embedded derivatives - - - 16,030 - 16,030
Debt extinguishment loss     -       -       -     1,499       -       1,499  
Total expenses     172,592       131,446       41,146     659,700       486,896       172,804  
Income (loss) from continuing operations before income taxes 20,968 (1,134,497 ) 1,155,465 (337,191 ) (993,267 ) 656,076
Income tax (benefit) expense     (101,893 )     33,741       (135,634 )   (75,806 )     78,481       (154,287 )
Income (loss) from continuing operations 122,861 (1,168,238 ) 1,291,099 (261,385 ) (1,071,748 ) 810,363
Loss from discontinued operations, net of tax     -       (249 )     249     -       (249 )     249  
NET INCOME (LOSS)   $ 122,861     $ (1,168,487 )   $ 1,291,348   $ (261,385 )   $ (1,071,997 )   $ 810,612  
 
Basic earnings (loss) per common share $ 0.23 $ (14.18 ) $ 14.41 $ (4.19 ) $ (12.94 ) $ 8.75
 
Diluted earnings (loss) per common share $ 0.47 $ (14.18 ) $ 14.65 $ (4.19 ) $ (12.94 ) $ 8.75
TABLE TWO
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
December 31, December 31,
(Amounts in thousands, except share data)   2008   2007
ASSETS
Cash and cash equivalents $ - $ -
Cash and cash equivalents (substantially restricted) 4,077,381 1,552,949
Receivables, net (substantially restricted) 1,264,885 1,408,220
Trading investments (substantially restricted) 21,485 62,105
Available-for-sale investments (substantially restricted) 438,774 4,187,384
Property and equipment 156,263 171,008
Intangible assets 14,548 17,605
Goodwill 434,337 438,839
Derivative financial instruments - 1,647
Other assets     234,623       95,254  
Total assets   $ 6,642,296     $ 7,935,011  
 
LIABILITIES
Payment service obligations $ 5,437,999 $ 7,762,470
Debt 978,881 345,000
Derivative financial instruments - 30,370
Pension and other postretirement benefits 130,900 85,451
Accounts payable and other liabilities 121,586 188,778
Deferred tax liabilities     12,454       11,459  
Total liabilities     6,681,820       8,423,528  
 
MEZZANINE EQUITY
Participating Convertible Preferred Stock-Series B, $0.01 par value,
800,000 shares authorized, 495,000 shares issued and outstanding 458,408 -
Participating Convertible Preferred Stock-Series B-1, $0.01 par value,
500,000 shares authorized, 272,500 shares issued and outstanding     283,804       -  
Total mezzanine equity     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, 250,000,000 shares authorized,
88,556,077 shares issued 886 886
Additional paid-in capital 62,324 73,077
Retained loss (649,254 ) (387,479 )
Unearned employee benefits (424 ) (3,280 )
Accumulated other comprehensive loss (42,707 ) (21,715 )
Treasury stock: 5,999,175 and 5,910,458 shares at December 31, 2008 and
December 31, 2007, respectively     (152,561 )     (150,006 )
Total stockholders' deficit     (781,736 )     (488,517 )
Total liabilities, mezzanine equity and stockholders' deficit   $ 6,642,296     $ 7,935,011  
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
PORTFOLIO COMPOSITION
(Unaudited)
         
 
December 31, September 30, June 30, March 31, December 31,
(Amounts in thousands)   2008   2008   2008   2008   2007
 
Cash and cash equivalents $ 4,077,381 $ 4,561,905 $ 4,486,064 $ 4,654,341 $ 1,552,949
Trading investments (1) 21,485 30,285 35,210 56,413 62,105
Available-for-sale investments:
Obligations of states and political sub-divisions - - - - 597,379
Commercial mortgage-backed securities - - - - 253,823
Government agency securities (2) 409,246 429,046 448,532 476,473 1,786,805
Other asset-backed securities (3) 29,528 51,898 55,872 64,580 1,318,242
Corporate debt securities - - - - 218,367
Preferred and common stock     -     -     -     -     12,768
Total available-for-sale investments     438,774     480,944     504,404     541,053     4,187,384
Total portfolio   $ 4,537,640   $ 5,073,134   $ 5,025,678   $ 5,251,807   $ 5,802,438

(1)

  Trading investments consist of auction rate preferred securities and perpetual preferred stock resulting from the conversion of an auction rate preferred security. The Company recorded $26.5 million related to put options on our trading investments. The put options are included in "Other assets" in the December 31, 2008 Consolidated Balance Sheet.

(2)

Investments included in this category consist solely of investments collateralized by U.S. government agencies at December 31, September 30, June 30 and March 31, 2008.

(3)

Other asset-backed securities consist of collateralized debt obligations that were written down in connection with the portfolio restructuring. These securities had a total par value of $667 million at December 31, 2008.

TABLE FOUR
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
       
 
December 31 September 30 June 30 March 31
(Amounts in thousands)   2008   2008   2008   2008
 
Cash and cash equivalents $ 4,077,381 $ 4,561,905 $ 4,486,064 $ 4,654,341
Receivables, net 1,264,885 1,397,179 1,959,438 1,783,241
Government agency securities     409,246       429,046       448,532       476,473  
5,751,512 6,388,130 6,894,034 6,914,055
Amounts restricted to cover payment service obligations     (5,437,999 )     (6,101,759 )     (6,636,557 )     (6,656,163 )
Excess unrestricted assets, excluding
trading, put options and other asset-backed securities 313,513 286,371 257,477 257,892
 
Trading investments 21,485 30,285 35,210 56,413
Put options on trading investments 26,505 - - -
Other asset-backed securities     29,528       51,898       55,872       64,580  
      77,518       82,183       91,082       120,993  
 
Excess unrestricted assets   $ 391,031     $ 368,554     $ 348,559     $ 378,885  
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (AS ADJUSTED)
(Unaudited)
             
   
Reported Q4 Adjusted Reported Q4 Adjusted
(Amounts in thousands)   Q4 2008   Adjustments     Q4 2008 Q4 2007   Adjustments     Q4 2007
 
REVENUE
Fee and other revenue $ 274,978 $ - $ 274,978 $ 260,650 $ - $ 260,650
Investment revenue 33,836 (10,456 )

(1)

23,380 99,073 - 99,073
Net securities gains (losses)     10,155       (10,155 )

(2)

    -   (1,187,077 )     1,187,077  

(2)

    -
Total revenue 318,969 (20,611 ) 298,358 (827,354 ) 1,187,077 359,723
Fee commissions expense 124,590 - 124,590 114,557 - 114,557
Investment commissions expense     819       -         819   61,140       -         61,140
Total commissions expense     125,409       -         125,409   175,697       -         175,697
Net revenue     193,560       (20,611 )       172,949   (1,003,051 )     1,187,077         184,026
 
EXPENSES
Compensation and benefits 50,604 - 50,604 38,126 - 38,126
Transaction and operations support 68,012 (8,809 )

(5)

59,203 62,937 (7,417 )

(8)

55,520
Depreciation and amortization 14,275 - 14,275 14,144 - 14,144
Occupancy, equipment and supplies 11,312 - 11,312 11,327 - 11,327
Interest expense 28,389 - 28,389 4,912 - 4,912
Unrealized loss on embedded derivatives - - - - - -
Debt extinguishment loss     -       -         -   -       -         -
Total expenses     172,592       (8,809 )       163,783   131,446       (7,417 )       124,029
Income (loss) before income taxes   $ 20,968     $ (11,802 )     $ 9,166 $ (1,134,497 )   $ 1,194,494       $ 59,997
 
   
Reported YTD Adjusted Reported YTD Adjusted
(Amounts in thousands)   YTD 2008   Adjustments     YTD 2008 YTD 2007   Adjustments     YTD 2007
 
REVENUE
Fee and other revenue $ 1,105,676 $ - $ 1,105,676 $ 949,059 $ - $ 949,059
Investment revenue 162,130 (10,456 )

(1)

151,674 398,234 - 398,234
Net securities losses     (340,688 )     340,688  

(2)

    -   (1,189,756 )     1,189,756  

(2)

    -
Total revenue 927,118 330,232 1,257,350 157,537 1,189,756 1,347,293
Fee commissions expense 502,317 - 502,317 410,301 - 410,301
Investment commissions expense     102,292       (27,735 )

(3)

    74,557   253,607       -         253,607
Total commissions expense     604,609       (27,735 )       576,874   663,908       -         663,908
Net revenue     322,509       357,967         680,476   (506,371 )     1,189,756         683,385
 
EXPENSES
Compensation and benefits 224,580 (16,524 )

(4)

208,056 188,092 - 188,092
Transaction and operations support 219,905 (17,662 )

(5)

202,243 191,066 (7,417 )

(8)

183,649
Depreciation and amortization 56,672 - 56,672 51,979 - 51,979
Occupancy, equipment and supplies 45,994 - 45,994 44,704 - 44,704
Interest expense 95,020 (1,982 )

(3)

93,038 11,055 - 11,055
Unrealized loss on embedded derivatives 16,030 (16,030 )

(6)

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

(7)

    -   -       -         -
Total expenses     659,700       (53,697 )       606,003   486,896       (7,417 )       479,479
(Loss) income before income taxes   $ (337,191 )   $ 411,664       $ 74,473 $ (993,267 )   $ 1,197,173       $ 203,906

(1)

  Cash received on a security which had been previously priced at zero.

(2)

Represents net realized losses on sale of securities (Q1 2008), other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments (all quarters) and the valuation of put options related to trading investments (Q4 2008).

(3)

Represents losses upon termination of interest rate swaps (Q2 2008).

(4)

Executive severance and related costs.

(5)

Transaction costs of $7.7 million related to the Capital Transaction (Q1 2008), other professional fees related to severance of $1.1 million (Q2 2008) and goodwill impairment charge of $8.8 million on exit of non-core business (Q4 2008).

(6)

Change in the fair value of embedded derivatives in preferred stock.

(7)

Debt extinguishment loss associated with the Capital Transaction.

(8)

Goodwill impairment charge in the Payment Systems segment ($6.4 million) and consultant fees related to the Capital Transaction ($1.1 million) in 2007.
TABLE SIX
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
GLOBAL FUNDS TRANSFER SEGMENT RESULTS (AS ADJUSTED)
(Unaudited)
             
 
Reported Q4 Adjusted Reported Q4 Adjusted
(Amounts in thousands)   Q4 2008   Adjustments     Q4 2008 Q4 2007   Adjustments     Q4 2007
 
Money transfer revenue
Fee and other revenue $ 249,263 $ - $ 249,263 $ 234,324 $ - $ 234,324
Investment revenue 420 (120 )

(1)

300 1,301 - 1,301
Net securities gains (losses) 140 (140 )

(2)

- (9,701 ) 9,701

 (2)

-
Retail money order and other
Fee and other revenue 15,919 - 15,919 16,902 - 16,902
Investment revenue 5,200 (1,490 )

(1)

3,710 20,812 - 20,812
Net securities gains (losses)     1,464       (1,464 )

(2)

    -     (223,823 )     223,823

 (2)

    -  
Total Global Funds Transfer revenue 272,406 (3,214 ) 269,192 39,815 233,524 273,339
 
Commissions expense     123,974       -         123,974     119,157       -       119,157  
Net revenue (losses)   $ 148,432     $ (3,214 )     $ 145,218   $ (79,342 )   $ 233,524     $ 154,182  
 
Operating income (loss)   $ 29,325     $ (3,214 )     $ 26,111   $ (184,550 )   $ 233,524     $ 48,974  
 
Operating margin 10.8 % 9.7 % NM 17.9 %
 
 
 
Reported YTD Adjusted Reported YTD Adjusted
(Amounts in thousands)   YTD 2008   Adjustments     YTD 2008 YTD 2007   Adjustments     YTD 2007
 
Money transfer revenue
Fee and other revenue $ 1,000,815 $ - $ 1,000,815 $ 850,333 $ - $ 850,333
Investment revenue 1,874 (120 )

(1)

1,754 5,190 - 5,190
Net securities losses (4,100 ) 4,100

(2)

- (9,724 ) 9,724

 (2)

-
Retail money order and other
Fee and other revenue 65,781 - 65,781 61,053 - 61,053
Investment revenue 24,119 (1,490 )

(1)

22,629 88,576 - 88,576
Net securities losses     (45,305 )     45,305  

(2)

    -     (224,433 )     224,433

 (2)

    -  
Total Global Funds Transfer revenue 1,043,184 47,795 1,090,979 770,995 234,157 1,005,152
 
Commissions expense     499,819       -         499,819     429,837       -       429,837  
Net revenue   $ 543,365     $ 47,795       $ 591,160   $ 341,158     $ 234,157     $ 575,315  
 
Operating income (loss)   $ 95,788     $ 47,795       $ 143,583   $ (60,410 )   $ 234,157     $ 173,747  
 
Operating margin 9.2 % 13.2 % -7.8 % 17.3 %
NM = Not meaningful
 

(1)

  Cash received on a security which had been previously priced at zero.

(2)

Represents net realized losses on sales of securities (Q1 2008), other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments (all quarters) and the valuation of the put options related to trading investments (Q4 2008).
TABLE SEVEN
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
PAYMENT SYSTEMS SEGMENT RESULTS (AS ADJUSTED)
(Unaudited)
             
 
Reported Q4 Adjusted Reported Q4 Adjusted
(Amounts in thousands)   Q4 2008   Adjustments     Q4 2008 Q4 2007   Adjustments     Q4 2007
 
Fee and other revenue $ 9,796 $ - $ 9,796 $ 9,257 $ - $ 9,257
Investment revenue 28,216 (8,846 )

(1)

19,370 76,892 - 76,892
Net securities gains (losses)     8,552       (8,552 )

(2)

    -     (953,553 )     953,553

 (2)

    -  
Total Payment Systems revenue (losses) 46,564 (17,398 ) 29,166 (867,404 ) 953,553 86,149
 
Commissions expense     1,436       -         1,436     56,539       -       56,539  
Net revenue (losses)   $ 45,128     $ (17,398 )     $ 27,730   $ (923,943 )   $ 953,553     $ 29,610  
 
Operating income (loss)   $ 22,260     $ (8,589 )

(4)

  $ 13,671   $ (946,212 )   $ 959,908

 (4)

  $ 13,696  
 
Operating margin 47.8 % 46.9 % NM 15.9 %
 
 
 
Reported YTD Adjusted Reported YTD Adjusted
(Amounts in thousands)   YTD 2008   Adjustments     YTD 2008 YTD 2007   Adjustments     YTD 2007
 
Fee and other revenue $ 38,786 $ - $ 38,786 $ 37,014 $ - $ 37,014
Investment revenue 136,205 (8,846 )

(1)

127,359 304,229 - 304,229
Net securities losses     (291,283 )     291,283  

(2)

    -     (955,599 )     955,599

 (2)

    -  
Total Payment Systems (losses) revenue (116,292 ) 282,437 166,145 (614,356 ) 955,599 341,243
 
Commissions expense     104,790       (27,735 )

(3)

    77,055     234,071       -       234,071  
Net (losses) revenue   $ (221,082 )   $ 310,172       $ 89,090   $ (848,427 )   $ 955,599     $ 107,172  
 
Operating (loss) income   $ (286,763 )   $ 318,981  

(4)

  $ 32,218   $ (920,130 )   $ 961,954

 (4)

  $ 41,824  
 
Operating margin NM 19.4 % NM 12.3 %
NM = Not meaningful
 

(1)

  Cash received on a security which had been previously priced at zero.

(2)

Represents net realized losses on sale of securities (Q1 2008), other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments (all quarters) and the valuation of put options related to trading investments in (Q4 2008).

(3)

Represents losses upon termination of interest rate swaps (Q2 2008).

(4)

In addition to the items listed above, operating income is also adjusted by the goodwill write off of $8.8 million (Q4 2008) and $6.4 million (Q4 2007).
TABLE EIGHT
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
   
 
(Amounts in thousands)   Q4 2008   YTD 2008
 
Income (loss) before income taxes $ 20,968 $ (337,191 )
Interest expense 28,389 95,020
Depreciation and amortization 14,275 56,672
Amortization of agent signing bonuses     9,452       37,261  

EBITDA (1)

73,084 (148,238 )
 
Net securities (gains) losses (2) (10,155 ) 340,688
Gain on security previously priced at zero (3) (10,456 ) (10,456 )
Goodwill impairment charge (4) 8,809 8,809
Losses on interest rate swaps (5) - 29,717
Valuation loss on embedded derivatives (6) - 16,030
Severance and related costs (7) - 17,653
Transaction costs (8) - 7,733
Debt extinguishment loss (9)     -       1,499  
Adjusted EBITDA   $ 61,282     $ 263,435  

(1)

  EBITDA represents earnings before interest, taxes, depreciation and amortization, and amortization of agent signing bonuses.

(2)

Represents realized (gains) losses on securities, other-than-temporary impairments on available-for-sale investments, unrealized losses on trading investments and the valuation of put options relating to trading investments.

(3)

Cash received on a security which had been previously priced at zero.

(4)

Goodwill impairment charge on exit of a non-core business.

(5)

Represents losses upon termination of interest rate swaps.

(6)

Represents change in fair value of embedded derivatives in preferred stock.

(7)

Represents executive severance and related costs.

(8)

Transaction costs related to the Capital Transaction.

(9)

Represents a loss on debt extinguishment associated with the Capital Transaction.
TABLE NINE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CREDIT RATIOS - Illustrative Purposes Only
(Unaudited)
         
 
INTEREST COVERAGE RATIO
 
(Amounts in thousands, except ratios)           Q4 2008
 
Interest expense (1)
Senior Credit Facility $ 11,010
Second Lien Notes             17,379
Total interest expense           $ 28,389
 
Adjusted EBITDA           $ 61,282
 
Adjusted EBITDA / Interest Expense (4)             2.2 x
 
 
 
SENIOR SECURED DEBT RATIO
December 31
(Amounts in thousands, except ratios)           2008
 
Outstanding debt
Senior Credit Facility (2) $ 493,125
Second Lien Notes             500,000
Total debt           $ 993,125
 
Adjusted EBITDA (3)           $ 263,435
 
Total debt / Adjusted EBITDA (3) (5)             3.8 x

(1)

  Represents interest expense in the fourth quarter of 2008, amortization of the discount on debt and deferred financing costs of $2.2 million and unused revolving credit facility fees of $0.1 million.

(2)

This amount represents the principal due at maturity and does not include the unamortized discount on the debt of $14.2 million included in the "Debt" line in the Consolidated Balance Sheets.

(3)

For illustrative purposes only. Our debt agreements require the ratio to be calculated on the most recently ended four fiscal quarters beginning with the March 31, 2009 quarter.

(4)

Under the Senior Facility, the Company must maintain a minimum interest coverage ratio of 1.5:1 from March 31, 2009 through September 30, 2010, 1.75:1 from December 31, 2010 through September 30, 2012 and 2:1 from December 31, 2012 through maturity.

(5)

Under the Senior Facility, the Company is not permitted to have a senior secured debt ratio in excess of 6.5:1 from March 31, 2009 through September 30, 2009, 6:1 from December 31, 2009 through September 30, 2010, 5.5:1 from December 31, 2010 through September 30, 2011, 5:1 from December 31, 2011 through September 30, 2012 and 4.5:1 from December 31, 2012 through maturity.
TABLE TEN
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
COMMON SHARES, AS CONVERTED
(Unaudited)
(Amounts in thousands, except per share data)
           
 
CALCULATION OF PAID-IN-KIND DIVIDEND
Preferred shares value at September 30, 2008 (1) $ 818,311
Multiplied by the dividend rate (2)               3.15 %
Value of preferred dividend for Q4 2008 $ 25,782
 
Divided by the conversion price             $ 2.50  
 
Equivalent common shares               10,313  
 
 
COMMON SHARES, AS CONVERTED
 
Preferred stock, as converted at September 30, 2008 327,324
Equivalent common shares from Q4 2008 preferred dividend               10,313  
Preferred stock, as converted at December 31, 2008 (3) 337,637
 
Common shares outstanding at December 31 2008 (4)               82,465  
 
Common shares at December 31, 2008, as converted               420,102  

(1)

  Value of preferred shares does not include discounts related to transaction costs and the embedded derivative for purposes of the dividend calculation.

(2)

The quarterly dividend rate is calculated by the pay-in-kind annual dividend rate of 12.5% multiplied by the number of days in the quarter divided by 365 days.

(3)

Preferred shares are excluded from earnings per share calculations as they are anti-dilutive.

(4)

For earnings per share purposes, weighted average outstanding shares are used rather than actual outstanding shares.


Source: MoneyGram International, Inc.

MoneyGram International, Inc.
Lynda Michielutti, 952-591-3846
ir@moneygram.com