SEC Filing | MoneyGram International, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

mgi-20200630

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form

10-Q


(Mark One)
☑			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2020.
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .

Commission File Number: 001-31950

https://cdn.kscope.io/8ce513e2a106a54d04d101ae5c34a3e1-mgi-20200630_g1.jpg

MONEYGRAM INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Delaware						16-1690064
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)
2828 N. Harwood St., 15th Floor Dallas, Texas						75201 (Zip Code)
(Address of principal executive offices)

(214) 999-7552

Registrant’s telephone number, including area code

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

___________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☑

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Securities Registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	MGI	The NASDAQ Stock Market LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 29, 2020, 63,564,178 shares of common stock, $0.01 par value, were outstanding.

Table of Contents

TABLE OF CONTENTS


	PART I. FINANCIAL INFORMATION
		Page
Item 1. Financial Statements - unaudited
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Comprehensive (Loss) Income			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statement of Stockholders’ Deficit			5
Notes to the Condensed Consolidated Financial Statements - unaudited			6
Note 1 — Description of the Business and Basis of Presentation			6
Note 2 — Reorganization Costs			8
Note 3 — Settlement Assets and Payment Service Obligations			8
Note 4 — Fair Value Measurement			9
Note 5 — Investment Portfolio			10
Note 6 — Derivative Financial Instruments			11
Note 7 — Debt			12
Note 8 — Pension and Other Benefits			13
Note 9 — Stockholders' Deficit			13
Note 10 — Stock-Based Compensation			15
Note 11 — Income Taxes			16
Note 12 — Commitments and Contingencies			16
Note 13 — Earnings per Common Share			19
Note 14 — Segment Information			20
Note 15 — Revenue Recognition			21
Note 16 — Related Parties			21
Note 17 —Subsequent Events			22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 6. Exhibits			39

Signatures			40

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MONEYGRAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED


(Amounts in millions, except share data)	June 30, 2020		December 31, 2019
ASSETS
Cash and cash equivalents	$	130.6	$	146.8
Settlement assets	3,501.5		3,237.0
Property and equipment, net	158.2		176.1
Goodwill	442.2		442.2
Other assets	185.3		182.9
Total assets	$	4,417.8	$	4,185.0
LIABILITIES
Payment service obligations	$	3,501.5	$	3,237.0
Debt, net	855.6		850.3
Pension and other postretirement benefits	76.3		77.5
Accounts payable and other liabilities	252.9		260.6
Total liabilities	4,686.3		4,425.4
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS’ DEFICIT
Participating convertible preferred stock - series D, $0.01 par value, 200,000 shares authorized, 71,282 issued at June 30, 2020 and December 31, 2019	183.9		183.9
Common stock, $0.01 par value, 162,500,000 shares authorized, 65,061,090 shares issued at June 30, 2020 and December 31, 2019	0.7		0.7
Additional paid-in capital	1,120.3		1,116.9
Retained loss	(1,494.1)		(1,460.1)
Accumulated other comprehensive loss	(68.0)		(63.5)
Treasury stock: 1,504,305 and 2,329,906 shares at June 30, 2020 and December 31, 2019, respectively	(11.3)		(18.3)
Total stockholders’ deficit	(268.5)		(240.4)
Total liabilities and stockholders’ deficit	$	4,417.8	$	4,185.0

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

MONEYGRAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED


	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in millions, except per share data)	2020		2019		2020		2019
REVENUE
Fee and other revenue	$	275.5	$	309.3	$	556.3	$	610.3
Investment revenue	4.3		14.5		14.4		28.9
Total revenue	279.8		323.8		570.7		639.2
EXPENSES
Fee and other commissions expense	141.4		155.4		284.6		305.0
Investment commissions expense	0.2		6.2		3.2		12.5
Direct transaction expense	11.3		6.2		19.5		11.2
Total commissions and direct transaction expenses	152.9		167.8		307.3		328.7
Compensation and benefits	53.2		53.5		106.6		112.9
Transaction and operations support	21.3		54.5		59.3		106.6
Occupancy, equipment and supplies	14.2		15.5		29.1		30.9
Depreciation and amortization	16.2		18.2		33.3		37.2
Total operating expenses	257.8		309.5		535.6		616.3
OPERATING INCOME	22.0		14.3		35.1		22.9
Other expenses
Interest expense	22.7		14.0		46.5		27.9
Other non-operating expense	1.2		35.3		2.3		36.9
Total other expenses	23.9		49.3		48.8		64.8
Loss before income taxes	(1.9)		(35.0)		(13.7)		(41.9)
Income tax expense (benefit)	2.7		(7.8)		12.4		(1.2)
NET LOSS	$	(4.6)	$	(27.2)	$	(26.1)	$	(40.7)


Basic and diluted loss per common share	$	(0.06)	$	(0.41)	$	(0.34)	$	(0.62)



Basic and diluted weighted-average outstanding common shares and equivalents used in computing loss per share	77.8		66.1		77.6		65.5

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

MONEYGRAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

UNAUDITED


	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in millions)	2020		2019		2020		2019
NET LOSS	$	(4.6)	$	(27.2)	$	(26.1)	$	(40.7)
OTHER COMPREHENSIVE INCOME (LOSS)
Net change in unrealized holding loss on available-for-sale securities arising during the period	(0.3)		(0.4)		(0.3)		(0.2)
Net change in pension liability due to amortization of prior service credit and net actuarial loss, net of tax benefit of $0.2 and $0.3 for the three months ended June 30, 2020 and 2019, respectively, and $0.3 and $0.4 for the six months ended June 30, 2020 and 2019, respectively	0.5		0.6		0.9		1.4
Pension settlement charge, net of tax benefit of $7.2 for the three and six months ended June 30, 2019	—		24.1		—		24.1
Valuation adjustment for pension, net of tax expense of $0.1 for the three and six months ended June 30, 2019	—		(0.5)		—		(0.5)
Unrealized foreign currency translation adjustments, net of tax benefit (expense) of $0.2 and ($0.1) for the three months ended June 30, 2020 and 2019, respectively, and $0.2 and ($0.1) for the six months ended June 30, 2020 and 2019, respectively	2.1		4.7		(5.1)		1.6
Other comprehensive income (loss)	2.3		28.5		(4.5)		26.4
COMPREHENSIVE (LOSS) INCOME	$	(2.3)	$	1.3	$	(30.6)	$	(14.3)

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

MONEYGRAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED


	Six Months Ended June 30,
(Amounts in millions)	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(26.1)	$	(40.7)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	33.3		37.2
Signing bonus amortization	25.1		23.4
Amortization of debt discount and debt issuance costs	5.8		1.4
Debt extinguishment costs	—		2.4
Non-cash compensation and pension expense	5.9		38.8
Signing bonus payments	(29.7)		(15.4)
Change in other assets	(4.7)		(5.9)
Change in accounts payable and other liabilities	(1.4)		(6.9)
Other non-cash items, net	(0.6)		3.8
Net cash provided by operating activities	7.6		38.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(19.9)		(29.2)
Net cash used in investing activities	(19.9)		(29.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Transaction costs for issuance and amendment of debt	—		(21.3)
Principal payments on debt	(3.2)		(28.4)
Proceeds from revolving credit facility	23.0		—
Payments on revolving credit facility	(23.0)		—
Net proceeds from issuing equity instruments	—		29.5
Payments to tax authorities for stock-based compensation	(0.7)		(0.7)

Net cash used in financing activities	(3.9)		(20.9)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(16.2)		(12.0)
CASH AND CASH EQUIVALENTS—Beginning of period	146.8		145.5
CASH AND CASH EQUIVALENTS—End of period	$	130.6	$	133.5
Supplemental cash flow information:
Cash payments for interest	$	34.4	$	26.0

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

MONEYGRAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

UNAUDITED


(Amounts in millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Loss		Accumulated Other Comprehensive Loss		Treasury Stock		Total
January 1, 2020	$	183.9	$	0.7	$	1,116.9	$	(1,460.1)	$	(63.5)	$	(18.3)	$	(240.4)
Net loss	—		—		—		(21.5)		—		—		(21.5)
Stock-based compensation activity	—		—		1.9		(6.9)		—		6.0		1.0
Other comprehensive loss	—		—		—		—		(6.8)		—		(6.8)
March 31, 2020	183.9		0.7		1,118.8		(1,488.5)		(70.3)		(12.3)		(267.7)
Net loss	—		—		—		(4.6)		—		—		(4.6)
Stock-based compensation activity	—		—		1.5		(1.0)		—		1.0		1.5


Other comprehensive income	—		—		—		—		2.3		—		2.3
June 30, 2020	$	183.9	$	0.7	$	1,120.3	$	(1,494.1)	$	(68.0)	$	(11.3)	$	(268.5)


(Amounts in millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Loss		Accumulated Other Comprehensive Loss		Treasury Stock		Total
January 1, 2019	$	183.9	$	0.6	$	1,046.8	$	(1,403.6)	$	(67.5)	$	(29.0)	$	(268.8)
Net loss	—		—		—		(13.5)		—		—		(13.5)
Stock-based compensation activity	—		—		2.6		(9.5)		—		9.0		2.1
Cumulative effect of adoption of ASU 2018-02	—		—		—		15.1		(15.1)		—		—
Other comprehensive loss	—		—		—		—		(2.1)		—		(2.1)
March 31, 2019	183.9		0.6		1,049.4		(1,411.5)		(84.7)		(20.0)		(282.3)
Net loss	—		—		—		(27.2)		—		—		(27.2)
Stock-based compensation activity	—		—		1.6		(0.7)		—		0.8		1.7
Net proceeds from issuing equity instruments	—		—		29.5		—		—		—		29.5
Equity instruments issued in connection with second lien facility	—		—		13.1		—		—		—		13.1
Other comprehensive income	—		—		—		—		28.5		—		28.5
June 30, 2019	$	183.9	$	0.6	$	1,093.6	$	(1,439.4)	$	(56.2)	$	(19.2)	$	(236.7)

See Notes to the Condensed Consolidated Financial Statements

Table of Contents

MONEYGRAM INTERNATIONAL, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

Note 1 — Description of the Business and Basis of Presentation

References to “MoneyGram,” the “Company,” “we,” “us” and “our” are to MoneyGram International, Inc. and its subsidiaries.

Nature of Operations — MoneyGram offers products and services under its two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfer services and bill payment services to consumers through two primary distribution channels: walk-in and digital. Through our walk-in channel, we offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. Additionally, we have limited Company-operated retail locations. We offer solutions such as moneygram.com, mobile solutions, digital partners, wallets and account deposit services as part of our digital channel. The Financial Paper Products segment provides official check outsourcing services and money orders through financial institutions and agent locations.

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The Condensed Consolidated Balance Sheets are unclassified due to the timing uncertainty surrounding the payment of settlement obligations. The condensed consolidated financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.

Impact of Novel Coronavirus (“COVID-19”) On Our Financial Statements — The global spread and unprecedented impact of COVID-19 is complex and ever-evolving. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak reached all of the regions in which we do business, and governmental authorities around the world implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, school closures and social distancing requirements. The global spread of COVID-19 and actions taken in response to the virus negatively affected our workforce, agents, customers, financial markets, employment rates, consumer spending and credit markets, caused significant economic and business disruption, volatility and financial uncertainty, and led to a significant economic downturn.

During the first quarter of 2020, we assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of COVID-19 using information that was reasonably available to us at the time. The accounting estimates and other matters we assessed included, but were not limited to, our goodwill and other long-lived assets, allowance for credit losses, pension and other postretirement benefits and valuation allowances for tax assets. Based on our assessment of these estimates, the Company recorded an increase in its deferred tax asset valuation allowance of $10.6 million, of which $10.1 million related to balances which existed at the beginning of the year. See Note 11 — Income Taxes for more information.

During the second quarter of 2020, governmental authorities began removing restrictions such as quarantines, shutdowns and some shelter-in-place orders. As the restrictions are eased, the ability to transact on a more normal basis will continue to return. Notwithstanding such positive trends, the impact of the COVID-19 pandemic has recently worsened in certain jurisdictions which as a result have increased or resumed their shelter-in-place and shutdown orders. During the second quarter of 2020, the Company recorded an additional $0.8 million increase to its deferred tax asset valuation allowance. See Note 11 - I nc o me Taxes for more information.

There was no other material impact to our condensed consolidated financial statements as of and for the quarter ended June 30, 2020, based on the Company's assessment of its estimates. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our consolidated financial statements in future reporting periods.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations, impact of COVID-19 and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.

Table of Contents

Recent Accounting Pronouncements and Related Developments — In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new credit impairment standard changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. To further assist with adoption and implementation of ASU 2016-13, the FASB issued the following ASUs:

•ASU 2018-19 (Issued November 2018) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses

•ASU 2019-04 (Issued April 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments

•ASU 2019-05 (Issued May 2019) — Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief

•ASU 2019-10 (Issued November 2019) — Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates

•ASU 2019-11 (Issued November 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses

•ASU 2020-02 (Issued February 2020) — Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)

•ASU 2020-03 (Issued March 2020) — Codification Improvements to Financial Instruments

ASU 2019-10 changed the effective date of ASU 2016-13 for public business entities that meet the definition of a Securities and Exchange Commission ("SEC") filer but that are eligible to be a smaller reporting company to fiscal years beginning after December 15, 2022. MoneyGram is a smaller reporting company and, as such, will adopt the amendments in these standards in 2023. We are still evaluating these ASUs, but we do not believe the adoption will have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefits Plans. The amendments in this standard require that entities now disclose the weighted-average interest credit ratings for cash balance plans and other plans with promised interest credit ratings and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period, as well as clarify and remove certain other disclosures. This standard is effective for fiscal years ending after December 15, 2020, and, as such, its disclosure requirements will be reflected in the 2020 Annual Report on Form 10-K. This standard does not impact our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide, if certain criteria are met, optional expedients and exceptions for applying the GAAP requirements for contract modifications, hedging relationships and sales or transfers of debt securities that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform through December 31, 2022. The adoption of this ASU is optional and the election can be made anytime during the effective period. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. MoneyGram is currently evaluating the impact of this standard and has not yet determined whether we will elect the optional expedients.

The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its condensed consolidated financial statements.

Table of Contents

Note 2 — Reorganization Costs

In the fourth quarter of 2019, the Company committed to an operational plan to reduce overall operating expenses, including the elimination of approximately 120 positions across the Company (the “2019 Organizational Realignment”). In the second quarter of 2020, this number was revised to approximately 100 positions as the operational plan gets closer to completion. The workforce reduction was designed to streamline operations and structure the Company in a way that is more agile and aligned around our plan to execute market-specific strategies tailored to different segments. The workforce reduction was substantially completed in the first quarter of 2020 with $8.2 million of costs incurred consisting primarily of one-time termination benefits for employee severance and related costs, which are recorded in “Compensation and benefits” on the Condensed Consolidated Statements of Operations in the Global Funds Transfer reporting segment.

The following table is a roll-forward of the reorganization costs accrual as of June 30, 2020:


(Amounts in millions)	2019 Organizational Realignment
Balance, December 31, 2019	$	4.6
Expenses	1.4
Cash payments	(5.7)

Balance, June 30, 2020	$	0.3

The following table is a summary of the cumulative reorganization costs incurred to date in operating expenses as of June 30, 2020:


(Amounts in millions)	2019 Organizational Realignment





















Balance, December 31, 2019	$	6.8
First quarter 2020	0.7
Second quarter 2020	0.7
Total cumulative reorganization costs incurred to date	$	8.2

Note 3 — Settlement Assets and Payment Service Obligations

The Company records payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying transaction occurs. The Company records corresponding settlement assets, which represent funds received or to be received for unsettled money transfers, money orders and consumer payments.

The following table summarizes the amount of settlement assets and payment service obligations:


(Amounts in millions)	June 30, 2020		December 31, 2019
Settlement assets:
Settlement cash and cash equivalents	$	2,040.8	$	1,531.1
Receivables, net	742.5		715.5
Interest-bearing investments	714.3		985.9
Available-for-sale investments	3.9		4.5
Total settlement assets	$	3,501.5	$	3,237.0
Payment service obligations	$	(3,501.5)	$	(3,237.0)

Table of Contents

Note 4 — Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date.

The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis:


(Amounts in millions)	Level 2		Level 3		Total
June 30, 2020
Financial assets:
Available-for-sale investments:
Residential mortgage-backed securities	$	3.3	$	—	$	3.3
Asset-backed and other securities	—		0.6		0.6
Forward contracts	1.3		—		1.3
Total financial assets	$	4.6	$	0.6	$	5.2
Financial liabilities:
Forward contracts	$	—	$	—	$	—

December 31, 2019
Financial assets:
Available-for-sale investments:
Residential mortgage-backed securities	$	3.6	$	—	$	3.6
Asset-backed and other securities	—		0.9		0.9
Forward contracts	—		—		—
Total financial assets	$	3.6	$	0.9	$	4.5
Financial liabilities:
Forward contracts	$	0.8	$	—	$	0.8

Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of the first lien credit facility is estimated using an observable market quotation (Level 2). As of June 30, 2020 and December 31, 2019, the fair value of the first lien credit facility was $584.3 million and $577.6 million, respectively, with a carrying value of $638.6 million and $641.8 million, respectively. The fair value of the second lien credit facility is estimated using unobservable market inputs (Level 3), including broker quotes for comparable traded securities and yield curves. As of June 30, 2020 and December 31, 2019, the fair value of the second lien credit facility was $235.2 million and $236.7 million, respectively, with a carrying value of $254.6 million and $251.4 million, respectively.

The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, receivables, interest-bearing investments and payment service obligations approximate fair value as of June 30, 2020 and December 31, 2019.

Table of Contents

Note 5 — Investment Portfolio

The following table shows the components of the investment portfolio:


(Amounts in millions)	June 30, 2020		December 31, 2019
Cash	$	2,168.9	$	1,675.4
Money market securities	2.5		2.5

Cash and cash equivalents ⁽¹⁾	2,171.4		1,677.9
Interest-bearing investments	714.3		985.9
Available-for-sale investments	3.9		4.5
Total investment portfolio	$	2,889.6	$	2,668.3

⁽¹⁾For purposes of the disclosure of the investment portfolio as a whole, the cash and cash equivalents balance includes settlement cash and cash equivalents.

The following table is a summary of the amortized cost and fair value of available-for-sale investments:


(Amounts in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
June 30, 2020
Residential mortgage-backed securities	$	2.9	$	0.4	$	—	$	3.3
Asset-backed and other securities	0.3		0.6		(0.3)		0.6
Total	$	3.2	$	1.0	$	(0.3)	$	3.9

December 31, 2019
Residential mortgage-backed securities	$	3.3	$	0.3	$	—