##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (mark one)
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the Quarterly Period Ended March 31, 2011
 o
    
    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
 MONEYGRAM INTERNATIONAL, INC.
  Delaware
    
    16-1690064(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2828 N. Harwood St., 15th Floor
    
    75201Dallas, Texas
    
    (Zip Code)(Address of principal executive offices)
 
 
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets
    
    
    4Consolidated Statements of Income (Loss)
    
    
    5Consolidated Statements of Comprehensive Income (Loss)
    
    
    6Consolidated Statements of Cash Flows
    
    
    7Consolidated Statement of Stockholders Deficit
    
    
    8Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    35PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 6. Exhibits
    
    
    36Signatures
    
    
    37Exhibit Index
    
    
    38EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 UNAUDITED
 March 31,
    
    December 31,(Amounts in thousands, except share data)
    
    2011
    
    2010ASSETSCash and cash equivalents
    
    $
    
    
    
    $
    Cash and cash equivalents (substantially restricted)
    
    
    2,776,009
    
    
    
    2,865,941Receivables, net (substantially restricted)
    
    
    956,945
    
    
    
    982,319Short-term investments (substantially restricted)
    
    
    411,299
    
    
    
    405,769Available-for-sale investments (substantially restricted)
    
    
    145,168
    
    
    
    160,936Property and equipment
    
    
    111,100
    
    
    
    115,111Goodwill
    
    
    428,691
    
    
    
    428,691Other assets
    
    
    146,842
    
    
    
    156,969Total assets
    
    $
    4,976,054
    
    
    $
    5,115,736LIABILITIESPayment service obligations
    
    $
    4,045,265
    
    
    $
    4,184,736Debt
    
    
    640,090
    
    
    
    639,946Pension and other postretirement benefits
    
    
    119,394
    
    
    
    120,536Accounts payable and other liabilities
    
    
    91,944
    
    
    
    113,647Total liabilities
    
    
    4,896,693
    
    
    
    5,058,865COMMITMENTS AND CONTINGENCIES (NOTE 13)MEZZANINE EQUITYParticipating Convertible Preferred Stock-Series B, $0.01 par value, 760,000 shares authorized,
495,000 shares issued and outstanding
    
    
    651,773
    
    
    
    628,199Participating Convertible Preferred Stock-Series B-1, $0.01 par value, 500,000 shares authorized,
272,500 shares issued and outstanding
    
    
    383,348
    
    
    
    371,154Total mezzanine equity
    
    
    1,035,121
    
    
    
    999,353STOCKHOLDERS DEFICITPreferred shares, $0.01 par value, none issued
    
    
    
    
    
    
    Common shares, $0.01 par value, 1,300,000,000 shares authorized, 88,556,077 shares issued
    
    
    886
    
    
    
    886Additional paid-in capital
    
    
    
    
    
    
    Retained loss
    
    
    (790,314
    )
    
    
    (771,544
    )Unearned employee benefits
    
    
    
    
    
    
    Accumulated other comprehensive loss
    
    
    (28,292
    )
    
    
    (31,879
    )Treasury stock: 4,845,555 and 4,935,555 shares at March 31, 2011 and December 31, 2010, respectively
    
    
    (138,040
    )
    
    
    (139,945
    )Total stockholders deficit
    
    
    (955,760
    )
    
    
    (942,482
    )Total liabilities, mezzanine equity and stockholders deficit
    
    $
    4,976,054
    
    
    $
    5,115,736
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MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
 UNAUDITED
 Three Months Ended March 31,(Amounts in thousands, except per share data)
    
    2011
    
    2010REVENUEFee and other revenue
    
    $
    290,009
    
    
    $
    280,866Investment revenue
    
    
    4,015
    
    
    
    5,638Total revenue
    
    
    294,024
    
    
    
    286,504EXPENSESFee and other commissions expense
    
    
    129,060
    
    
    
    122,410Investment commissions expense
    
    
    140
    
    
    
    204Total commissions expense
    
    
    129,200
    
    
    
    122,614Compensation and benefits
    
    
    59,295
    
    
    
    57,562Transaction and operations support
    
    
    50,409
    
    
    
    47,586Occupancy, equipment and supplies
    
    
    11,753
    
    
    
    11,169Depreciation and amortization
    
    
    11,666
    
    
    
    12,511Total operating expenses
    
    
    262,323
    
    
    
    251,442OPERATING INCOME
    
    
    31,701
    
    
    
    35,062Other expense (income)Net securities gains
    
    
    
    
    
    
    (2,392
    )Interest expense
    
    
    20,613
    
    
    
    24,407Total other expenses, net
    
    
    20,613
    
    
    
    22,015Income before income taxes
    
    
    11,088
    
    
    
    13,047Income tax (benefit) expense
    
    
    (2,957
    )
    
    
    2,235NET INCOME
    
    $
    14,045
    
    
    $
    10,812BASIC AND DILUTED LOSS PER COMMON SHARE
    
    $
    (0.26
    )
    
    $
    (0.26
    )Net loss available to common stockholders:Net income as reported
    
    $
    14,045
    
    
    $
    10,812Accrued preferred stock dividends
    
    
    (33,209
    )
    
    
    (29,369
    )Accretion recognized on preferred stock
    
    
    (2,559
    )
    
    
    (2,845
    )Net loss available to common stockholders
    
    
    (21,723
    )
    
    
    (21,402
    )Weighted-average outstanding common shares
    
    
    83,638
    
    
    
    82,632
  4




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MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 UNAUDITED
 Three Months Ended March 31,(Amounts in thousands)
    
    2011
    
    2010NET INCOME
    
    $
    14,045
    
    
    $
    10,812OTHER COMPREHENSIVE INCOMENet unrealized gains on available-for-sale securities:Net holding gains arising during the period
    
    
    1,944
    
    
    
    2,840Reclassification adjustment for net realized losses included in net income
    
    
    
    
    
    
    571,944
    
    
    
    2,897Pension and postretirement benefit plans:Reclassification of prior service (credit) costs for pension and postretirement benefit
plans recorded to net income, net of tax (expense) benefit of $(57) and $8
    
    
    (92
    )
    
    
    13Reclassification of net actuarial loss for pension and postretirement benefit plans
recorded to net income, net of tax benefit of $621 and $546
    
    
    1,012
    
    
    
    892Unrealized foreign currency translation gains (losses), net of tax expense (benefit)
of $443 and $(906)
    
    
    723
    
    
    
    (1,478
    )Other comprehensive income
    
    
    3,587
    
    
    
    2,324COMPREHENSIVE INCOME
    
    $
    17,632
    
    
    $
    13,136
  5




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MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 UNAUDITED
 Three Months Ended March 31,(Amounts in thousands)
    
    2011
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    14,045
    
    
    $
    10,812Adjustments to reconcile net income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    11,666
    
    
    
    12,511Net gain (loss) on maturities of investments
    
    
    
    
    
    
    (2,449
    )Net amortization of investment premiums and discounts
    
    
    6
    
    
    
    94Asset impairments and adjustments
    
    
    (282
    )
    
    
    57Signing bonus amortization
    
    
    7,948
    
    
    
    7,330Signing bonus payments
    
    
    (6,778
    )
    
    
    (11,535
    )Amortization of debt discount and deferred financing costs
    
    
    1,591
    
    
    
    2,442Provision for uncollectible receivables
    
    
    1,349
    
    
    
    2,465Non-cash compensation and pension expense
    
    
    6,922
    
    
    
    9,201Other non-cash items, net
    
    
    449
    
    
    
    103Changes in foreign currency translation adjustments
    
    
    723
    
    
    
    (1,478
    )Change in other assets
    
    
    4,239
    
    
    
    (12,904
    )Change in accounts payable and other liabilities
    
    
    (20,095
    )
    
    
    (390
    )Total adjustments
    
    
    7,738
    
    
    
    5,447Change in cash and cash equivalents (substantially restricted)
    
    
    89,932
    
    
    
    598,733Change in trading investments and related put options (substantially restricted)
    
    
    
    
    
    
    29,400Change in receivables (substantially restricted)
    
    
    24,025
    
    
    
    88,954Change in payment service obligations
    
    
    (139,471
    )
    
    
    (270,672
    )Net cash (used in) provided by operating activities
    
    
    (3,731
    )
    
    
    462,674CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from maturities of investments classified as available-for-sale (substantially restricted)
    
    
    17,462
    
    
    
    43,323Purchases of short-term investments (substantially restricted)
    
    
    (205,441
    )
    
    
    (500,408
    )Proceeds from maturities of short-term investments (substantially restricted)
    
    
    200,500
    
    
    
    Purchases of property and equipment
    
    
    (8,973
    )
    
    
    (6,324
    )Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    (341
    )Net cash provided by (used in) investing activities
    
    
    3,548
    
    
    
    (463,750
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    183
    
    
    
    1,076Net cash provided by financing activities
    
    
    183
    
    
    
    1,076NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  End of period
    
    $
    
    
    
    $
    
  6




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MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
 UNAUDITED
 AccumulatedAdditional
    
    
    
    
    
    Unearned
    
    OtherCommon
    
    Paid-In
    
    Retained
    
    Employee
    
    Comprehensive
    
    Treasury(Amounts in thousands)
    
    Stock
    
    Capital
    
    Loss
    
    Benefits
    
    Loss
    
    Stock
    
    TotalDecember 31, 2010
    
    $
    886
    
    
    $
    
    
    
    $
    (771,544
    )
    
    $
    
    
    
    $
    (31,879
    )
    
    $
    (139,945
    )
    
    $
    (942,482
    )Net income
    
    
    
    
    
    
    
    
    
    
    14,045
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,045Accrued dividends on preferred stock
    
    
    
    
    
    
    (2,115
    )
    
    
    (31,094
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,209
    )Accretion on preferred stock
    
    
    
    
    
    
    (2,559
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,559
    )Employee benefit plans
    
    
    
    
    
    
    4,674
    
    
    
    (1,721
    )
    
    
    
    
    
    
    
    
    
    
    1,905
    
    
    
    4,858Net unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,944
    
    
    
    
    
    
    
    1,944Amortization
of prior service cost for pension and
postretirement benefits, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92
    )
    
    
    
    
    
    
    (92
    )Amortization of unrealized losses on pension and
postretirement benefits, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,012
    
    
    
    
    
    
    
    1,012Unrealized foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    723
    
    
    
    
    
    
    
    723March 31, 2011
    
    $
    886
    
    
    $
    
    
    
    $
    (790,314
    )
    
    $
    
    
    
    $
    (28,292
    )
    
    $
    (138,040
    )
    
    $
    (955,760
    )
  7




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MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1  Basis of Presentation
  Correction
of Presentation of Short-term Investments
 Note 2  Proposed Recapitalization
     8




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Note 3  Assets in Excess of Payment Service Obligations
  March 31,
    
    December 31,(Amounts in thousands)
    
    2011
    
    2010Cash and cash equivalents (substantially restricted)
    
    $
    2,776,009
    
    
    $
    2,865,941Receivables, net (substantially restricted)
    
    
    956,945
    
    
    
    982,319Short-term investments (substantially restricted)
    
    
    411,299
    
    
    
    405,769Available-for-sale investments (substantially restricted)
    
    
    145,168
    
    
    
    160,9364,289,421
    
    
    
    4,414,965Payment service obligations
    
    
    (4,045,265
    )
    
    
    (4,184,736
    )Assets in excess of payment service obligations
    
    $
    244,156
    
    
    $
    230,229
  Note 4  Fair Value Measurement
  March 31, 2011(Amounts in thousands)
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalAvailable-for-sale investments (substantially restricted):United States government agencies
    
    $
    
    
    
    $
    8,530
    
    
    $
    
    
    
    $
    8,530Residential mortgage-backed securities  agencies
    
    
    
    
    
    
    110,298
    
    
    
    
    
    
    
    110,298Other asset-backed securities
    
    
    
    
    
    
    
    
    
    
    26,340
    
    
    
    26,340Total financial assets
    
    $
    
    
    
    $
    118,828
    
    
    $
    26,340
    
    
    $
    145,168
 December 31, 2010(Amounts in thousands)
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalAvailable-for-sale investments (substantially restricted):United States government agencies
    
    $
    
    
    
    $
    8,641
    
    
    $
    
    
    
    $
    8,641Residential mortgage-backed securities  agencies
    
    
    
    
    
    
    128,585
    
    
    
    
    
    
    
    128,585Other asset-backed securities
    
    
    
    
    
    
    
    
    
    
    23,710
    
    
    
    23,710Forward contracts
    
    
    
    
    
    
    582
    
    
    
    
    
    
    
    582Total financial assets
    
    $
    
    
    
    $
    137,808
    
    
    $
    23,710
    
    
    $
    161,518
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Three Months Ended
    
    Three Months EndedMarch 31, 2011
    
    March 31, 2010Total
    
    Trading
    
    
    
    
    
    TotalOther
    
    Level 3
    
    Investments
    
    Other
    
    Level 3Asset-Backed
    
    Financial
    
    and Related
    
    Asset-Backed
    
    Financial(Amounts in thousands)
    
    Securities
    
    Assets
    
    Put Options
    
    Securities
    
    AssetsBeginning balance
    
    $
    23,710
    
    
    $
    23,710
    
    
    $
    26,951
    
    
    $
    22,088
    
    
    $
    49,039Realized gains
    
    
    
    
    
    
    
    
    
    
    2,449
    
    
    
    
    
    
    
    2,449Principal paydowns
    
    
    (410
    )
    
    
    (410
    )
    
    
    (29,400
    )
    
    
    (909
    )
    
    
    (30,309
    )Other-than-temporary impairments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    (57
    )Unrealized gains  instruments still
held at the reporting date
    
    
    4,093
    
    
    
    4,093
    
    
    
    
    
    
    
    3,051
    
    
    
    3,051Unrealized losses  instruments still
held at the reporting date
    
    
    (1,053
    )
    
    
    (1,053
    )
    
    
    
    
    
    
    (340
    )
    
    
    (340
    )Ending balance
    
    $
    26,340
    
    
    $
    26,340
    
    
    $
    
    
    
    $
    23,833
    
    
    $
    23,833
 Debt Debt
 Note 5  Investment Portfolio
  March 31,
    
    December 31,(Amounts in thousands)
    
    2011
    
    2010Cash
    
    $
    1,991,979
    
    
    $
    1,042,381Money markets
    
    
    783,984
    
    
    
    1,818,138Deposits
    
    
    46
    
    
    
    5,422Cash and cash equivalents (substantially restricted)
    
    
    2,776,009
    
    
    
    2,865,941Short-term investments (substantially restricted)
    
    
    411,299
    
    
    
    405,769Available-for-sale investments (substantially restricted)
    
    
    145,168
    
    
    
    160,936Total investment portfolio
    
    $
    3,332,476
    
    
    $
    3,432,646
 Cash and Cash Equivalents (substantially restricted)
 Short-term Investments (substantially restricted)
 Available-for-sale Investments (substantially restricted)
 10




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Gross
    
    Gross
    
    
    
    
    
    NetAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    Average(Amounts in thousands, except net average price)
    
    Cost
    
    Gains
    
    Losses
    
    Value
    
    PriceResidential mortgage-backed securities-agencies
    
    $
    104,293
    
    
    $
    6,005
    
    
    $
    
    
    
    $
    110,298
    
    
    $
    106.45Other asset-backed securities
    
    
    10,252
    
    
    
    16,088
    
    
    
    
    
    
    
    26,340
    
    
    
    5.41United States government agencies
    
    
    7,383
    
    
    
    1,147
    
    
    
    
    
    
    
    8,530
    
    
    
    94.78Total
    
    $
    121,928
    
    
    $
    23,240
    
    
    $
    
    
    
    $
    145,168
    
    
    $
    24.20
  Gross
    
    Gross
    
    
    
    
    
    NetAmortized
    
    Unrealized
    
    Unrealized
    
    Fair
    
    Average(Amounts in thousands, except net average price)
    
    Cost
    
    Gains
    
    Losses
    
    Value
    
    PriceResidential mortgage-backed securities  agencies
    
    $
    121,677
    
    
    $
    7,001
    
    
    $
    (93
    )
    
    $
    128,585
    
    
    $
    106.37Other asset-backed securities
    
    
    10,690
    
    
    
    13,020
    
    
    
    
    
    
    
    23,710
    
    
    
    4.68United States government agencies
    
    
    7,273
    
    
    
    1,368
    
    
    
    
    
    
    
    8,641
    
    
    
    96.01Total
    
    $
    139,640
    
    
    $
    21,389
    
    
    $
    (93
    )
    
    $
    160,936
    
    
    $
    25.27
  Gains and Losses and Other-Than-Temporary Impairments
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Other-than-temporary impairments from available-for-sale investments
    
    $
    
    
    
    $
    57Realized gains from trading investments and related put options
    
    
    
    
    
    
    (2,449
    )Net securities gains
    
    $
    
    
    
    $
    (2,392
    )
  Investment Ratings
 March 31, 2011
    
    December 31, 2010Number of
    
    Fair
    
    Percent of
    
    Number of
    
    Fair
    
    Percent of(Dollars in thousands)
    
    Securities
    
    Value
    
    Investments
    
    Securities
    
    Value
    
    InvestmentsAAA, including United States agencies
    
    
    25
    
    
    $
    118,520
    
    
    
    82
    %
    
    
    25
    
    
    $
    136,893
    
    
    
    85
    %Below investment grade
    
    
    63
    
    
    
    26,648
    
    
    
    18
    %
    
    
    64
    
    
    
    24,043
    
    
    
    15
    %Total
    
    
    88
    
    
    $
    145,168
    
    
    
    100
    %
    
    
    89
    
    
    $
    160,936
    
    
    
    100
    %
 11




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##### Table of Contents



.
 Contractual Maturities
 March 31, 2011
    
    December 31, 2010Amortized
    
    Fair
    
    Amortized
    
    Fair(Amounts in thousands)
    
    Cost
    
    Value
    
    Cost
    
    ValueAfter one year through five years
    
    $
    7,383
    
    
    $
    8,530
    
    
    $
    7,273
    
    
    $
    8,641Mortgage-backed and other asset-backed securities
    
    
    114,545
    
    
    
    136,638
    
    
    
    132,367
    
    
    
    152,295Total
    
    $
    121,928
    
    
    $
    145,168
    
    
    $
    139,640
    
    
    $
    160,936
 Note 6  Derivative Financial Instruments
   Derivative Assets
    
    Derivative LiabilitiesBalance Sheet
    
    March 31,
    
    December 31,
    
    March 31,
    
    December 31,(Amounts in thousands)
    
    Location
    
    2011
    
    2010
    
    2011
    
    2010Forward contracts
    
    Other assets
    
    $
    1,481
    
    
    $
    1,117
    
    
    $
    1,590
    
    
    $
    535
 Note 7  Debt
  March 31, 2011
    
    December 31, 2010Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average(Amounts in thousands)
    
    Amount
    
    Interest Rate
    
    Amount
    
    Interest RateSenior Tranche A Loan, due 2013
    
    $
    100,000
    
    
    
    5.75
    %
    
    $
    100,000
    
    
    
    5.75
    %Senior Tranche B Loan, net of unamortized discount, due 2013
    
    
    40,090
    
    
    
    7.25
    %
    
    
    39,946
    
    
    
    7.25
    %Senior revolving credit facility, due 2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Second lien notes, due 2018
    
    
    500,000
    
    
    
    13.25
    %
    
    
    500,000
    
    
    
    13.25
    %Total debt
    
    $
    640,090
    
    
    
    
    
    
    $
    639,946
 Senior Facility Proposed Recapitalization
 12




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##### Table of Contents



Second Lien Notes
 Debt Covenants
 Deferred Financing Costs
 Interest Paid in Cash
 Note 8  Pensions and Other Benefits
  Pension and SERPs
    
    Postretirement Benefits(Amounts in thousands)
    
    2011
    
    2010
    
    2011
    
    2010Service cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    2,841
    
    
    
    2,969
    
    
    
    13
    
    
    
    63Expected return on plan assets
    
    
    (2,056
    )
    
    
    (2,166
    )
    
    
    
    
    
    
    Amortization of prior service cost (credit)
    
    
    7
    
    
    
    21
    
    
    
    (156
    )
    
    
    Recognized net actuarial loss
    
    
    1,572
    
    
    
    1,196
    
    
    
    61
    
    
    
    4Net periodic benefit expense
    
    $
    2,364
    
    
    $
    2,020
    
    
    $
    (82
    )
    
    $
    67
   Deferred Compensation Plans
 13




---



##### Table of Contents



Note 9  Mezzanine Equity
  Series(Amounts in thousands)
    
    B Stock
    
    B-1 Stock
    
    B StockBalance at December 31, 2010
    
    $
    628,199
    
    
    $
    371,154
    
    
    $
    999,353Dividends accrued
    
    
    21,418
    
    
    
    11,791
    
    
    
    33,209Accretion
    
    
    2,156
    
    
    
    403
    
    
    
    2,559Balance at March 31, 2011
    
    $
    651,773
    
    
    $
    383,348
    
    
    $
    1,035,121
 Proposed Recapitalization
 Note 10  Stockholders Deficit
 Common Stock
 March 31,
    
    December 31,(Amounts in thousands)
    
    2011
    
    2010Common shares issued
    
    
    88,556
    
    
    
    88,556Treasury stock
    
    
    (4,846
    )
    
    
    (4,936
    )Common shares outstanding
    
    
    83,710
    
    
    
    83,620
 Treasury Stock
 Treasury Stock(Amounts in thousands)
    
    SharesBalance at December 31, 2010
    
    
    4,936Exercise of stock options
    
    
    (90
    )Balance at March 31, 2011
    
    
    4,846
 Accumulated Other Comprehensive Loss
 March 31,
    
    December 31,(Amounts in thousands)
    
    2011
    
    2010Net unrealized gains on securities classified as available-for-sale
    
    $
    23,240
    
    
    $
    21,296Cumulative foreign currency translation adjustments
    
    
    5,917
    
    
    
    5,194Prior service cost for pension and postretirement benefits, net of tax
    
    
    2,312
    
    
    
    2,404Unrealized losses on pension and postretirement benefits, net of tax
    
    
    (59,761
    )
    
    
    (60,773
    )Accumulated other comprehensive loss
    
    $
    (28,292
    )
    
    $
    (31,879
    )
 Note 11  Stock-Based Compensation
  14




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##### Table of Contents



Stock Options
  Expected dividend yield
    
    
    0.0
    %Expected volatility
    
    
    72.4
    %Risk-free interest rate
    
    
    2.9
    %Expected life
    
    6.5 yearsWeighted-average grant-date fair value per option
    
    $
    2.08
  Weighted-Weighted-
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicExercise
    
    Contractual
    
    ValueShares
    
    Price
    
    Term
    
    ($000)Options outstanding at December 31, 2010
    
    
    39,897,474
    
    
    $
    3.31Granted
    
    
    3,600,000
    
    
    
    2.91Exercised
    
    
    (90,000
    )
    
    
    2.30Forfeited/Expired
    
    
    (1,970,516
    )
    
    
    8.62Options outstanding at March 31, 2011
    
    
    41,436,958
    
    
    $
    3.02
    
    
    8.48 years
    
    $
    36,404Vested or expected to vest at March 31, 2011
    
    
    39,737,424
    
    
    $
    3.04
    
    
    8.45 years
    
    $
    35,174Options exercisable at March 31, 2011
    
    
    7,701,958
    
    
    $
    4.89
    
    
    7.11 years
    
    $
    8,347
  15




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##### Table of Contents



Note 12  Income Taxes
    Note 13  Commitments and Contingencies
 Legal Proceedings
  Shareholder Litigation
 Patent Action  Western Union v. MoneyGram Payment Systems, Inc.
 16




---



##### Table of Contents



Note 14  Earnings per Common Share
  Three Months EndedMarch 31, 2011(Amounts in thousands)
    
    2011
    
    2010Shares related to stock options
    
    
    41,078
    
    
    
    35,154Shares related to restricted stock
    
    
    
    
    
    
    5Shares related to preferred stock
    
    
    445,034
    
    
    
    393,496
 Note 15  Segment Information
  Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010RevenueGlobal Funds Transfer:Money transfer
    
    $
    239,704
    
    
    $
    222,831Bill payment
    
    
    30,077
    
    
    
    33,863Total Global Funds Transfer
    
    
    269,781
    
    
    
    256,694Financial Paper Products:Money order
    
    
    15,730
    
    
    
    17,904Official check
    
    
    8,166
    
    
    
    10,499Total Financial Paper Products
    
    
    23,896
    
    
    
    28,403Other
    
    
    347
    
    
    
    1,407Total revenue
    
    $
    294,024
    
    
    $
    286,504
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Segment operating income:Global Funds Transfer
    
    $
    26,447
    
    
    $
    27,781Financial Paper Products
    
    
    8,380
    
    
    
    8,903Other
    
    
    (263
    )
    
    
    (518
    )Total segment operating income
    
    
    34,564
    
    
    
    36,166Net securities (gains) losses
    
    
    
    
    
    
    (2,392
    )Interest expense
    
    
    20,613
    
    
    
    24,407Other unallocated expenses
    
    
    2,863
    
    
    
    1,104Income (loss) before income taxes
    
    $
    11,088
    
    
    $
    13,047
 17




---



##### Table of Contents



Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Depreciation and amortization:Global Funds Transfer
    
    $
    10,113
    
    
    $
    9,812Financial Paper Products
    
    
    1,544
    
    
    
    2,690Other
    
    
    9
    
    
    
    9Total depreciation and amortization
    
    $
    11,666
    
    
    $
    12,511Capital expenditures:Global Funds Transfer
    
    $
    6,891
    
    
    $
    5,807Financial Paper Products
    
    
    874
    
    
    
    1,110Other
    
    
    
    
    
    
    Total capital expenditures
    
    $
    7,765
    
    
    $
    6,917
  Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010United States
    
    $
    187,898
    
    
    $
    195,463International
    
    
    106,126
    
    
    
    91,041Total revenue
    
    $
    294,024
    
    
    $
    286,504
 Note 16  Condensed Consolidating Financial Statements
 Financial Statements of Guarantors and Issuers of Guaranteed Securities
Registered or Being Registered.
  18




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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.  CONDENSED, CONSOLIDATING BALANCE SHEETS
AS OF MARCH 31, 2011
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash and cash equivalents (substantially restricted)
    
    
    10
    
    
    
    2,642,624
    
    
    
    133,375
    
    
    
    
    
    
    
    2,776,009Receivables, net (substantially restricted)
    
    
    
    
    
    
    945,017
    
    
    
    11,928
    
    
    
    
    
    
    
    956,945Short-term investments (substantially restricted)
    
    
    
    
    
    
    400,000
    
    
    
    11,299
    
    
    
    
    
    
    
    411,299Available-for-sale investments (substantially restricted)
    
    
    
    
    
    
    145,168
    
    
    
    
    
    
    
    
    
    
    
    145,168Property and equipment
    
    
    
    
    
    
    87,304
    
    
    
    23,796
    
    
    
    
    
    
    
    111,100Goodwill
    
    
    
    
    
    
    306,878
    
    
    
    121,813
    
    
    
    
    
    
    
    428,691Other assets
    
    
    7,624
    
    
    
    124,466
    
    
    
    14,669
    
    
    
    83
    
    
    
    146,842Equity investments in subsidiaries
    
    
    284,268
    
    
    
    177,158
    
    
    
    
    
    
    
    (461,426
    )
    
    
    Intercompany receivables
    
    
    
    
    
    
    253,165
    
    
    
    
    
    
    
    (253,165
    )
    
    
    Total assets
    
    $
    291,902
    
    
    $
    5,081,780
    
    
    $
    316,880
    
    
    $
    (714,508
    )
    
    $
    4,976,054LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYPayment service obligations
    
    $
    
    
    
    $
    3,972,823
    
    
    $
    72,442
    
    
    $
    
    
    
    $
    4,045,265Debt
    
    
    
    
    
    
    640,090
    
    
    
    
    
    
    
    
    
    
    
    640,090Pension and other postretirement benefits
    
    
    
    
    
    
    117,689
    
    
    
    1,705
    
    
    
    
    
    
    
    119,394Accounts payable and other liabilities
    
    
    11,819
    
    
    
    66,910
    
    
    
    13,215
    
    
    
    
    
    
    
    91,944Intercompany liabilities
    
    
    200,722
    
    
    
    
    
    
    
    52,360
    
    
    
    (253,082
    )
    
    
    Total liabilities
    
    
    212,541
    
    
    
    4,797,512
    
    
    
    139,722
    
    
    
    (253,082
    )
    
    
    4,896,693Mezzanine equity
    
    
    1,035,121
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,035,121Total stockholders (deficit) equity
    
    
    (955,760
    )
    
    
    284,268
    
    
    
    177,158
    
    
    
    (461,426
    )
    
    
    (955,760
    )Total liabilities, mezzanine equity and stockholders (deficit)
equity
    
    $
    291,902
    
    
    $
    5,081,780
    
    
    $
    316,880
    
    
    $
    (714,508
    )
    
    $
    4,976,054
 MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2010
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Cash and cash equivalents (substantially restricted)
    
    
    108
    
    
    
    2,704,865
    
    
    
    160,968
    
    
    
    
    
    
    
    2,865,941Receivables, net (substantially restricted)
    
    
    
    
    
    
    970,108
    
    
    
    12,211
    
    
    
    
    
    
    
    982,319Short-term investments (substantially restricted)
    
    
    
    
    
    
    405,769
    
    
    
    
    
    
    
    
    
    
    
    405,769Investments and related put options (substantially restricted)
    
    
    
    
    
    
    160,936
    
    
    
    
    
    
    
    
    
    
    
    160,936Property and equipment
    
    
    
    
    
    
    93,006
    
    
    
    22,105
    
    
    
    
    
    
    
    115,111Goodwill
    
    
    
    
    
    
    306,878
    
    
    
    121,813
    
    
    
    
    
    
    
    428,691Other assets
    
    
    
    
    
    
    141,469
    
    
    
    15,500
    
    
    
    
    
    
    
    156,969Equity investments in subsidiaries
    
    
    265,990
    
    
    
    168,978
    
    
    
    
    
    
    
    (434,968
    )
    
    
    Intercompany receivables
    
    
    
    
    
    
    260,803
    
    
    
    
    
    
    
    (260,803
    )
    
    
    Total assets
    
    $
    266,098
    
    
    $
    5,212,812
    
    
    $
    332,597
    
    
    $
    (695,771
    )
    
    $
    5,115,736LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYPayment service obligations
    
    $
    
    
    
    $
    4,095,734
    
    
    $
    89,002
    
    
    $
    
    
    
    $
    4,184,736Debt
    
    
    
    
    
    
    639,946
    
    
    
    
    
    
    
    
    
    
    
    639,946Pension and other postretirement benefits
    
    
    
    
    
    
    119,008
    
    
    
    1,528
    
    
    
    
    
    
    
    120,536Accounts payable and other liabilities
    
    
    6,631
    
    
    
    92,134
    
    
    
    14,882
    
    
    
    
    
    
    
    113,647Intercompany liabilities
    
    
    202,596
    
    
    
    
    
    
    
    58,207
    
    
    
    (260,803
    )
    
    
    Total liabilities
    
    
    209,227
    
    
    
    4,946,822
    
    
    
    163,619
    
    
    
    (260,803
    )
    
    
    5,058,865Mezzanine equity
    
    
    999,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999,353Total stockholders (deficit) equity
    
    
    (942,482
    )
    
    
    265,990
    
    
    
    168,978
    
    
    
    (434,968
    )
    
    
    (942,482
    )Total liabilities, mezzanine equity and stockholders (deficit)
equity
    
    $
    266,098
    
    
    $
    5,212,812
    
    
    $
    332,597
    
    
    $
    (695,771
    )
    
    $
    5,115,736




---



##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2011
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedREVENUEFee and other revenue
    
    $
    
    
    
    $
    284,678
    
    
    $
    63,273
    
    
    $
    (57,942
    )
    
    $
    290,009Investment revenue
    
    
    
    
    
    
    3,935
    
    
    
    80
    
    
    
    
    
    
    
    4,015Total revenue
    
    
    
    
    
    
    288,613
    
    
    
    63,353
    
    
    
    (57,942
    )
    
    
    294,024EXPENSESFee and other commissions expense
    
    
    
    
    
    
    135,088
    
    
    
    26,942
    
    
    
    (32,970
    )
    
    
    129,060Investment commissions expense
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    140Total commissions expense
    
    
    
    
    
    
    135,228
    
    
    
    26,942
    
    
    
    (32,970
    )
    
    
    129,200Compensation and benefits
    
    
    (31
    )
    
    
    44,142
    
    
    
    15,184
    
    
    
    
    
    
    
    59,295Transaction and operations support
    
    
    1,024
    
    
    
    66,076
    
    
    
    8,281
    
    
    
    (24,972
    )
    
    
    50,409Occupancy, equipment and supplies
    
    
    
    
    
    
    8,811
    
    
    
    2,942
    
    
    
    
    
    
    
    11,753Depreciation and amortization
    
    
    
    
    
    
    9,037
    
    
    
    2,629
    
    
    
    
    
    
    
    11,666Total operating expenses
    
    
    993
    
    
    
    263,294
    
    
    
    55,978
    
    
    
    (57,942
    )
    
    
    262,323OPERATING (LOSS) INCOME
    
    
    (993
    )
    
    
    25,319
    
    
    
    7,375
    
    
    
    
    
    
    
    31,701Other expenseInterest expense
    
    
    
    
    
    
    20,613
    
    
    
    
    
    
    
    
    
    
    
    20,613Total other expenses, net
    
    
    
    
    
    
    20,613
    
    
    
    
    
    
    
    
    
    
    
    20,613(Loss) income before income taxes
    
    
    (993
    )
    
    
    4,706
    
    
    
    7,375
    
    
    
    
    
    
    
    11,088Income tax (benefit) expense
    
    
    (347
    )
    
    
    (2,910
    )
    
    
    300
    
    
    
    
    
    
    
    (2,957
    )(Loss) income after income taxes
    
    
    (646
    )
    
    
    7,616
    
    
    
    7,075
    
    
    
    
    
    
    
    14,045Equity income (loss) in subsidiaries
    
    
    14,691
    
    
    
    7,075
    
    
    
    
    
    
    
    (21,766
    )
    
    
    NET INCOME (LOSS)
    
    $
    14,045
    
    
    $
    14,691
    
    
    $
    7,075
    
    
    $
    (21,766
    )
    
    $
    14,045
 MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2010
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedREVENUEFee and other revenue
    
    $
    
    
    
    $
    265,908
    
    
    $
    44,603
    
    
    $
    (29,645
    )
    
    $
    280,866Investment revenue
    
    
    
    
    
    
    5,592
    
    
    
    46
    
    
    
    
    
    
    
    5,638Total revenue
    
    
    
    
    
    
    271,500
    
    
    
    44,649
    
    
    
    (29,645
    )
    
    
    286,504EXPENSESFee and other commissions expense
    
    
    
    
    
    
    128,188
    
    
    
    12,934
    
    
    
    (18,712
    )
    
    
    122,410Investment commissions expense
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    
    
    
    
    204Total commissions expense
    
    
    
    
    
    
    128,392
    
    
    
    12,934
    
    
    
    (18,712
    )
    
    
    122,614Compensation and benefits
    
    
    (59
    )
    
    
    45,333
    
    
    
    12,288
    
    
    
    
    
    
    
    57,562Transaction and operations support
    
    
    2
    
    
    
    46,293
    
    
    
    12,224
    
    
    
    (10,933
    )
    
    
    47,586Occupancy, equipment and supplies
    
    
    
    
    
    
    8,870
    
    
    
    2,299
    
    
    
    
    
    
    
    11,169Depreciation and amortization
    
    
    
    
    
    
    9,621
    
    
    
    2,890
    
    
    
    
    
    
    
    12,511Total operating expenses
    
    
    (57
    )
    
    
    238,509
    
    
    
    42,635
    
    
    
    (29,645
    )
    
    
    251,442OPERATING (LOSS) INCOME
    
    
    57
    
    
    
    32,991
    
    
    
    2,014
    
    
    
    
    
    
    
    35,062Other expense (income)Net securities
(gains) losses
    
    
    
    
    
    
    (2,392
    )
    
    
    
    
    
    
    
    
    
    
    (2,392
    )Interest expense
    
    
    
    
    
    
    24,407
    
    
    
    
    
    
    
    
    
    
    
    24,407Total other expenses, net
    
    
    
    
    
    
    22,015
    
    
    
    
    
    
    
    
    
    
    
    22,015Income before income taxes
    
    
    57
    
    
    
    10,976
    
    
    
    2,014
    
    
    
    
    
    
    
    13,047Income tax expense
    
    
    19
    
    
    
    1,939
    
    
    
    277
    
    
    
    
    
    
    
    2,235Income after income taxes
    
    
    38
    
    
    
    9,037
    
    
    
    1,737
    
    
    
    
    
    
    
    10,812Equity income (loss) in subsidiaries
    
    
    10,774
    
    
    
    1,737
    
    
    
    
    
    
    
    (12,511
    )
    
    
    NET INCOME (LOSS)
    
    $
    10,812
    
    
    $
    10,774
    
    
    $
    1,737
    
    
    $
    (12,511
    )
    
    $
    10,812




---



##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
    
    $
    (2,983
    )
    
    $
    (16,079
    )
    
    $
    15,331
    
    
    $
    
    
    
    $
    (3,731
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from maturities of investments (substantially restricted)
    
    
    
    
    
    
    17,462
    
    
    
    
    
    
    
    
    
    
    
    17,462Purchases of short-term investments (substantially restricted)
    
    
    
    
    
    
    (194,142
    )
    
    
    (11,299
    )
    
    
    
    
    
    
    (205,441
    )Proceeds from maturities of short-term investments (substantially restricted)
    
    
    
    
    
    
    200,500
    
    
    
    
    
    
    
    
    
    
    
    200,500Purchases of property and equipment, net of disposals
    
    
    
    
    
    
    (4,259
    )
    
    
    (4,714
    )
    
    
    
    
    
    
    (8,973
    )Capital contribution from subsidiary guarantors
    
    
    
    
    
    
    (682
    )
    
    
    
    
    
    
    682
    
    
    
    Net cash provided by (used in) investing activities
    
    
    
    
    
    
    18,879
    
    
    
    (16,013
    )
    
    
    682
    
    
    
    3,548CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183Intercompany financings
    
    
    2,800
    
    
    
    (2,800
    )
    
    
    
    
    
    
    
    
    
    
    Capital contribution from subsidiary guarantors
    
    
    
    
    
    
    
    
    
    
    682
    
    
    
    (682
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    2,983
    
    
    
    (2,800
    )
    
    
    682
    
    
    
    (682
    )
    
    
    183NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  End of period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2010
 Subsidiary
    
    
    Non-(Amounts in thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
    
    $
    (20,404
    )
    
    $
    484,112
    
    
    $
    (1,034
    )
    
    $
    
    
    
    $
    462,674CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from maturities of investments (substantially restricted)
    
    
    
    
    
    
    43,323
    
    
    
    
    
    
    
    
    
    
    
    43,323Purchases of short-term investments (substantially restricted)
    
    
    
    
    
    
    (500,408
    )
    
    
    
    
    
    
    
    
    
    
    (500,408
    )Purchases of property and equipment
    
    
    
    
    
    
    (4,906
    )
    
    
    (1,418
    )
    
    
    
    
    
    
    (6,324
    )Cash paid
for (received from) acquisitions, net of cash acquired
    
    
    
    
    
    
    (1,436
    )
    
    
    1,095
    
    
    
    
    
    
    
    (341
    )Capital contributions from subsidiary guarantors
    
    
    20,000
    
    
    
    (1,357
    )
    
    
    
    
    
    
    (18,643
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    20,000
    
    
    
    (464,784
    )
    
    
    (323
    )
    
    
    (18,643
    )
    
    
    (463,750
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    1,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,076Intercompany financings
    
    
    (672
    )
    
    
    672
    
    
    
    
    
    
    
    
    
    
    
    Capital contributions from subsidiary guarantors
    
    
    
    
    
    
    (20,000
    )
    
    
    1,357
    
    
    
    18,643
    
    
    
    Net cash provided by (used in) financing activities
    
    
    404
    
    
    
    (19,328
    )
    
    
    1,357
    
    
    
    18,643
    
    
    
    1,076NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS  End of period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Table 1  Results of Operations
 Three Months EndedMarch 31,
    
    %(Amounts in thousands)
    
    2011
    
    2010
    
    Change(unaudited)
    
    (unaudited)RevenueFee and other revenue
    
    $
    290,009
    
    
    $
    280,866
    
    
    
    3
    %Investment revenue
    
    
    4,015
    
    
    
    5,638
    
    
    
    (29
    )%Total revenue
    
    
    294,024
    
    
    
    286,504
    
    
    
    3
    %ExpensesFee and other commissions expense
    
    
    129,060
    
    
    
    122,410
    
    
    
    5
    %Investment commissions expense
    
    
    140
    
    
    
    204
    
    
    
    (31
    )%Total commissions expense
    
    
    129,200
    
    
    
    122,614
    
    
    
    5
    %Compensation and benefits
    
    
    59,295
    
    
    
    57,562
    
    
    
    3
    %Transaction and operations support
    
    
    50,409
    
    
    
    47,586
    
    
    
    6
    %Occupancy, equipment and supplies
    
    
    11,753
    
    
    
    11,169
    
    
    
    5
    %Depreciation and amortization
    
    
    11,666
    
    
    
    12,511
    
    
    
    (7
    )%Total operating expenses
    
    
    262,323
    
    
    
    251,442
    
    
    
    4
    %Operating income
    
    
    31,701
    
    
    
    35,062
    
    
    
    (10
    )%Other expense (income)Net securities gains
    
    
    
    
    
    
    (2,392
    )
    
    
    100
    %Interest expense
    
    
    20,613
    
    
    
    24,407
    
    
    
    (16
    )%Total other expense, net
    
    
    20,613
    
    
    
    22,015
    
    
    
    (6
    )%Income before income taxes
    
    
    11,088
    
    
    
    13,047
    
    
    
    (15
    )%Income tax (benefit) expense
    
    
    (2,957
    )
    
    
    2,235
    
    
    
    (232
    )%Net income
    
    $
    14,045
    
    
    $
    10,812
    
    
    
    30
    %
  
    
    Total fee and other revenue increased $9.1 million, or 3 percent, to $290.0 million in the
first quarter of 2011 due to an increase in money transfer fee and other revenue, partially
offset by lower revenue from bill payment products and the Financial Paper Products segment.
Volume growth of 14 percent drove the increase in money transfer fee and other revenue, but
was partially offset by lower average money transfer fees per transaction due to the $50 price
band introduced in the United States late in the first quarter of 2010, changes in corridor
mix and the lower euro exchange rate. See further discussion under Table 2  Fee and Other
Revenue and Commissions Expense.
 
    
    Investment revenue decreased $1.6 million, or
29 percent, to $4.0 million in the
first quarter of 2011 due to lower yields earned on our investment portfolio and a
decline in average investable balances.
 
    
    Total commissions expense increased $6.6 million, or 5 percent, in the first quarter of
2011 due to money transfer volume growth and higher average commission rates per transaction,
partially offset by the lower euro exchange rate and lower commissions expense related to bill
payment products and the Financial Paper Products segment.
 
    
    Total operating expenses increased $10.9 million, or 4 percent, in the first quarter of
2011, driven primarily by the increase in commissions expense, higher transaction and
operations support expense and higher compensation and benefits expense partially offset by a
decrease in depreciation and amortization expense. For the three months ended March 31, 2011
we recorded $2.9 million of costs associated with restructuring activities.
 
    
    Net securities gains in the first quarter of 2010 reflect a $2.4 million realized gain from
the call of a trading investment, net of the reversal of the related put option.
 22




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##### Table of Contents




    
    Interest expense decreased 16 percent to $20.6 million in the first quarter of 2011 from
$24.4 million in 2010, reflecting lower outstanding debt balances due to $165.0 million of
debt repayments during 2010.
 
    
    In the first quarter of 2011, we had an income tax benefit of $3.0 million on pre-tax
income of $11.1 million, primarily reflecting a lower effective tax rate and a $3.5 million
reversal of valuation allowances.
 
    
    The decline in the euro exchange rate decreased total revenue by $0.9 million and total
expenses by $0.7 million, for a net decrease to our income before income taxes of $0.2
million.
 Geo-political considerations 
 Table 2  Fee and Other Revenue and Commissions Expense
 Three Months EndedMarch 31,
    
    %(Amounts in thousands)
    
    2011
    
    2010
    
    ChangeFee and other revenue
    
    $
    290,009
    
    
    $
    280,866
    
    
    
    3
    %Fee and other commissions expense
    
    
    129,060
    
    
    
    122,410
    
    
    
    5
    %Fee and other commissions expense as a % of
fee and other revenue
    
    
    44.5
    %
    
    
    43.6
    %
 Global Funds
Transfer Segment Financial Paper
Products Segment
  23




---



##### Table of Contents



Table 3  Net Investment Revenue Analysis
 Three Months EndedMarch 31,
    
    %(Amounts in thousands)
    
    2011
    
    2010
    
    ChangeInvestment revenue
    
    $
    4,015
    
    
    $
    5,638
    
    
    
    (29
    )%Investment commissions expense
    
    
    (140
    )
    
    
    (204
    )
    
    
    31
    %Net investment revenue
    
    $
    3,875
    
    
    $
    5,434
    
    
    
    (29
    )%Average balances:Cash equivalents and investments (1)
    
    $
    3,384,783
    
    
    $
    3,922,487
    
    
    
    (14
    )%Payment service obligations (2)
    
    $
    2,398,738
    
    
    $
    2,785,408
    
    
    
    (14
    )%Average yields earned and rates paid (3):Investment yield
    
    
    0.48
    %
    
    
    0.58
    %Investment commission rate
    
    
    0.02
    %
    
    
    0.03
    %Net investment margin(3)
    
    
    0.46
    %
    
    
    0.56
    %
 
 (1)
    
    Investment balances represent cash balances received primarily from the sale of official checks, money orders and
other payment instruments.(2)
    
    Commissions are paid to financial institution customers based on amounts generated by the sale of official checks only.(3)
    
    Average yields/rates are calculated by dividing the applicable amount of Net investment revenue by the applicable
amount shown in the Average balances section, divided by the number of days in the period presented and multiplied
by the number of days in the year. The Net investment margin is calculated by dividing Net investment revenue by
the Cash equivalents and investments average balance, divided by the number of days in the period presented and
multiplied by the number of days in the year.    Operating Expenses
 Results of Operations
 Compensation and benefits
 Transaction and operations support
 24




---



##### Table of Contents



Occupancy, equipment and supplies 
 Depreciation and amortization 
 Other Expense (Income)
 Net securities gains 
 Interest expense 
 Income taxes 
 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
   25




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##### Table of Contents



Table 4  EBITDA and Adjusted EBITDA
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Income before income taxes
    
    $
    11,088
    
    
    $
    13,047Interest expense
    
    
    20,613
    
    
    
    24,407Depreciation and amortization
    
    
    11,666
    
    
    
    12,511Amortization of agent signing bonuses
    
    
    7,948
    
    
    
    7,330EBITDA
    
    
    51,315
    
    
    
    57,295Significant items impacting EBITDA:Net securities gains
    
    
    
    
    
    
    (2,392
    )Severance and related costs
    
    
    (31
    )
    
    
    (59
    )Restructuring and reorganization costs
    
    
    2,939
    
    
    
    Stock-based compensation expense
    
    
    4,599
    
    
    
    6,857Legal accruals
    
    
    1,476
    
    
    
    Adjusted EBITDA
    
    $
    60,298
    
    
    $
    61,701
  Segment Performance
    26




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##### Table of Contents



Table 5  Segment Information
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010
    
    ChangeOperating income:Global Funds Transfer
    
    $
    26,447
    
    
    $
    27,781
    
    
    $
    (1,334
    )Financial Paper Products
    
    
    8,380
    
    
    
    8,903
    
    
    
    (523
    )Other
    
    
    (263
    )
    
    
    (518
    )
    
    
    255Total segment operating income
    
    
    34,564
    
    
    
    36,166
    
    
    
    (1,602
    )Net securities gains
    
    
    
    
    
    
    (2,392
    )
    
    
    2,392Interest expense
    
    
    20,613
    
    
    
    24,407
    
    
    
    (3,794
    )Other unallocated expenses
    
    
    2,863
    
    
    
    1,104
    
    
    
    1,759Income before income taxes
    
    $
    11,088
    
    
    $
    13,047
    
    
    $
    (1,959
    )
 Table 6  Global Funds Transfer Segment
 Three Months EndedMarch 31,
    
    %(Amounts in thousands)
    
    2011
    
    2010
    
    ChangeMoney transfer revenue
    
    $
    239,704
    
    
    $
    222,831
    
    
    
    8
    %Bill payment revenue
    
    
    30,077
    
    
    
    33,863
    
    
    
    (11
    )%Total Global Funds Transfer revenue
    
    $
    269,781
    
    
    $
    256,694
    
    
    
    5
    %Commissions expense
    
    $
    128,389
    
    
    $
    121,157
    
    
    
    6
    %Operating income
    
    $
    26,447
    
    
    $
    27,781
    
    
    
    (5
    )%Operating margin
    
    
    9.8
    %
    
    
    10.8
    %
     27




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##### Table of Contents



Table 7  Financial Paper Products Segment
 Three Months EndedMarch 31,
    
    %(Amounts in thousands)
    
    2011
    
    2010
    
    ChangeMoney order revenue:Fee and other revenue
    
    $
    14,904
    
    
    $
    16,847
    
    
    
    (12
    )%Investment revenue
    
    
    826
    
    
    
    1,057
    
    
(22
    )%Total money order revenue
    
    
    15,730
    
    
    
    17,904
    
    
    
    (12
    )%Official check revenue:Fee and other revenue
    
    
    5,362
    
    
    
    6,491
    
    
    
    (17
    )%Investment revenue
    
    
    2,804
    
    
    
    4,008
    
    
    
    (30
    )%Total official check revenue
    
    
    8,166
    
    
    
    10,499
    
    
    
    (22
    )%Total Financial Paper Products revenue:Fee and other revenue
    
    
    20,266
    
    
    
    23,338
    
    
    
    (13
    )%Investment revenue
    
    
    3,630
    
    
    
    5,065
    
    
    
    (28
    )%Total Financial Paper Products revenue
    
    $
    23,896
    
    
    $
    28,403
    
    
    
    (16
    )%Commissions expense
    
    $
    811
    
    
    $
    1,106
    
    
    
    (27
    )%Operating income
    
    $
    8,380
    
    
    $
    8,903
    
    
    
    (6
    )%Operating margin
    
    
    35.1
    %
    
    
    31.3
    %
 
 NM = Not meaningful Net Investment Revenue Analysis
  28




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##### Table of Contents



Net Investment Revenue Analysis
  2011 Recapitalization
    29




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##### Table of Contents



Liquidity and Capital Resources
   Table 8  Assets in Excess of Payment Service Obligations
 March 31,
    
    December 31,(Amounts in thousands)
    
    2011
    
    2010Cash and cash equivalents (substantially restricted)
    
    $
    2,776,009
    
    
    $
    2,865,941Receivables, net (substantially restricted)
    
    
    956,945
    
    
    
    982,319Short-term investments (substantially restricted)
    
    
    411,299
    
    
    
    405,769Available-for-sale investments (substantially restricted)
    
    
    145,168
    
    
    
    160,9364,289,421
    
    
    
    4,414,965Payment service obligations
    
    
    (4,045,265
    )
    
    
    (4,184,736
    )Assets in excess of payment service obligations
    
    $
    244,156
    
    
    $
    230,229
 Cash and Cash Equivalents and Short-term investments 
 Credit Facilities   Debt
  2011 Recapitalization
 Credit Ratings 
 Regulatory Capital Requirements 
 30




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##### Table of Contents



Available-for-sale Investments 
 Other Funding Sources and Requirements
 Contractual Obligations 
 Table 9  Contractual Obligations
 Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    More than(Amounts in thousands)
    
    Total
    
    1 year
    
    1-3 years
    
    4-5 years
    
    5 yearsDebt, including interest payments
    
    $
    1,124,786
    
    
    $
    76,850
    
    
    $
    283,856
    
    
    $
    132,500
    
    
    $
    631,580Operating leases
    
    
    48,137
    
    
    
    11,607
    
    
    
    23,484
    
    
    
    7,354
    
    
    
    5,692Other obligations
    
    
    300
    
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    1,173,223
    
    
    $
    88,757
    
    
    $
    307,340
    
    
    $
    139,854
    
    
    $
    637,272
 Debt
     31




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##### Table of Contents



Analysis of Cash Flows
 Table 10  Cash Flows From Operating Activities
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Net income
    
    $
    14,045
    
    
    $
    10,812Total adjustments to reconcile net income
    
    
    7,738
    
    
    
    5,447Net cash provided by operating activities before changes in payment
service assets and obligations
    
    
    21,783
    
    
    
    16,259Change in cash and cash equivalents (substantially restricted)
    
    
    89,932
    
    
    
    598,733Change in trading investments and related put options, net (substantially
restricted)
    
    
    
    
    
    
    29,400Change in receivables, net (substantially restricted)
    
    
    24,025
    
    
    
    88,954Change in payment service obligations
    
    
    (139,471
    )
    
    
    (270,672
    )Net change in payment service assets and obligations
    
    
    (25,514
    )
    
    
    446,415Net cash (used in) provided by operating activities
    
    $
    (3,731
    )
    
    $
    462,674
   Table
11  Cash Flows From Investing Activities
 Three Months EndedMarch 31,(Amounts in thousands)
    
    2011
    
    2010Net investment activity
    
    $
    12,521
    
    
    $
    (457,085
    )Purchases of property and equipment
    
    
    (8,973
    )
    
    
    (6,324
    )Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    (341
    )Net cash provided by (used in) investing activities
    
    $
    3,548
    
    
    $
    (463,750
    )
  Cash Flows From Financing Activities
  32




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Critical Accounting Policies
   Forward Looking Statements
  
    
    Substantial Debt Service and Dividend Obligations.Our substantial debt service and our
covenant requirements may adversely impact our ability to obtain additional financing and to
operate and grow our business and may make us more vulnerable to negative economic
conditions.
 
    
    Completion of the Proposed 2011 Recapitalization.Our proposed 2011 Recapitalization is
subject to a number of conditions beyond our control that may prevent, delay or otherwise
materially adversely affect the completion of the 2011
Recapitalization. In addition, the plaintiffs in the shareholder
litigation concerning the proposed 2011 Recapitalization are seeking
an injunction that could delay or prevent the consummation of the
2011 Recapitalization.
 
    
    Significant Dilution to Stockholders and Control of Investors.The Series B Stock issued
to the Investors at the closing of our 2008 Recapitalization, dividends accrued on the
Series B Stock post-closing and special voting rights provided to the Investors designees
on the Companys Board of Directors significantly dilute the interests of our existing
stockholders and give the Investors control of the Company.
 
    
    Sustained Disruptions in Financial Market or Financial Institution Liquidity.Disruption
in the financial markets or at financial institutions may adversely affect our liquidity,
our agents liquidity, our access to credit and capital, our agents access to credit and
capital and our earnings on our investment portfolio.
 
    
    Sustained Negative Economic Conditions.Negative economic conditions generally and in
geographic areas or industries that are important to our business may cause a decline in our
transaction volume, and we may be unable to timely and effectively reduce our operating
costs or take other actions in response to a significant decline in transaction volume.
 
    
    International Migration Patterns.A material slow down or complete disruption of
international migration patterns could adversely affect our money transfer volume and growth
rate.
 
    
    Retention of Global Funds Transfer Agents and Billers.We may be unable to maintain
retail agent or biller relationships or we may experience a reduction in transaction volume
from these relationships.
 
    
    Stockholder Litigation and Related Risks.Stockholder lawsuits and other litigation or
government investigations of the Company or its agents could result in material settlements,
fines, penalties or legal fees.
 
    
    Credit Risks.If we are unable to manage credit risks from our retail agents and
official check financial institution customers, which risks may increase during negative
economic conditions, our business could be harmed.
 
    
    Fraud Risks.If we are unable to manage fraud risks from consumers or certain agents,
which risks may increase during negative economic conditions, our business could be harmed.
 33




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##### Table of Contents




    
    Maintenance of Banking Relationships.We may be unable to maintain existing or establish
new banking relationships, including the Companys domestic and international clearing bank
relationships, which could adversely affect our business, results of operation and our
financial condition.
 
    
    Interest Rate Fluctuations.Fluctuations in interest rates may negatively affect the net
investment margin of our official check and money order businesses.
 
    
    Repricing of our Official Check and Money Order Businesses.We may be unable to operate
our official check and money order businesses profitably as a result of our revised pricing
strategies.
 
    
    Failure to Maintain Sufficient Capital.We may be unable to maintain sufficient capital
to pursue our growth strategy, fund key strategic initiatives, and meet evolving regulatory
requirements.
 
    
    Failure to Attract and Retain Key Employees.We may be unable to attract and retain key
employees.
 
    
    Development of New and Enhanced Products and Related Investment.We may be unable to
successfully and timely implement new or enhanced technology and infrastructure, delivery
methods and product and service offerings and to invest in new products or services and
infrastructure.
 
    
    Intellectual Property.If we are unable to adequately protect our brand and other
intellectual property rights and avoid infringing on third-party intellectual property
rights, our business could be harmed.
 
    
    Competition.We may be unable to compete against our large competitors, niche
competitors or new competitors that may enter the markets in which we operate.
 
    
    United States and International Regulation.Failure by us or our agents to comply with
the laws and regulatory requirements in the United States and abroad, including the recently
enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank
Act) and the regulations developed thereunder or changes in laws, regulations or other
industry practices and standards, could have an adverse effect on our results of operations,
or change our relationships with our customers, investors and other stakeholders.
 
    
    Changes in Laws.The Dodd-Frank Act, as well as regulations required thereby, and other
laws or regulations that may be adopted in the future, could adversely affect us.
 
    
    Increased Regulation of Financial Services Companies.The Dodd-Frank Act increases the
regulation of financial services companies generally, including non-bank financial companies
supervised by the Federal Reserve.
 
    
    Consumer Financial Protection Act.We will be subject to various provisions of the
Consumer Financial Protection Act of 2010, which will result in a new regulator with new and
expanded compliance requirements, which is likely to increase our costs.
 
    
    Operation in Politically Volatile Areas.Offering money transfer services through agents
in regions that are politically volatile or, in a limited number of cases, are subject to
certain restrictions by the Office of Foreign Assets Control, could cause contravention of
U.S. law or regulations by us or our agents, subject us to fines and penalties and cause us
reputational harm.
 
    
    Network and Data Security.A significant security or privacy breach in our facilities,
networks or databases could harm our business.
 
    
    Systems Interruption.A breakdown, catastrophic event, security breach, improper
operation or other event impacting our systems or processes or the systems or processes of
our vendors, agents and financial institution customers could result in financial loss, loss
of customers, regulatory sanctions and damage to our brand and reputation.
 
    
    Technology Scalability.We may be unable to scale our technology to match our business
and transactional growth.
 
    
    Company Retail Locations and Acquisitions.If we are unable to manage risks associated
with running Company-owned retail locations and acquiring businesses, our business could be
harmed.
 
    
    International Risks.Our business and results of operation may be adversely affected by
political, economic or other instability in countries that are important to our business.
 34




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##### Table of Contents




    
    Tax Matters.Changes in tax laws or an unfavorable outcome with respect to the audit of
our tax returns or tax positions, or a failure by us to establish adequate reserves for tax
events, could adversely affect our results of operations.
    
    Status as a Bank Holding Company Subsidiary.As a deemed subsidiary of a bank holding
company regulated under the Bank Holding Act of 1956, as amended, we are subject to
supervision, regulation and regular examination by the Federal Reserve.
    
    Internal Controls.If we are unable to maintain compliance with the internal control
provisions of Section 404 of the Sarbanes-Oxley Act of 2002 we could experience a material
adverse effect on our business.
    
    Overhang of Convertible Preferred Stock to Float.Sales of a substantial number of
shares of our common stock or the perception that significant sales could occur, may depress
the trading price of our common stock.
    
    Debt.If the Company issues a large amount of debt, it may be more difficult for the
Company to obtain future financing and our cash flow may not be sufficient to make required
payments or repay our indebtedness when it matures.
    
    Anti-Takeover Provisions.Our charter documents and Delaware law contain provisions that
may have the effect of delaying, deterring or preventing a merger or change of control of
our Company.
    
    NYSE Delisting.We may be unable to continue to satisfy the NYSE criteria for listing on
the exchange.
    
    Other Factors.Additional risk factors may be described in our other filings with the
Securities and Exchange Commission (the SEC) from time to time.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
  Changes in Internal Control over Financial Reporting 
 
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Shareholder Litigation
 35




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##### Table of Contents



Patent Action  Western Union v. MoneyGram Payment Systems, Inc.
 
 ITEM 1A. RISK FACTORS
   Legal proceedings in connection with the proposed 2011 Recapitalization could delay or
prevent the consummation of the 2011 Recapitalization.  Failure to complete the 2011
Recapitalization could adversely affect our stock price and our future business and financial
results.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 6. EXHIBITS
  36




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##### Table of Contents



SIGNATURES
  MoneyGram International, Inc.
(Registrant)May 6, 2011
    By:
    /s/ JAMES E. SHIELDSJames E. ShieldsExecutive Vice President and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer) 37




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Recapitalization Agreement, dated as of March 7, 2011, among
MoneyGram International, Inc., certain affiliates and
co-investors of Thomas H. Lee Partners, L.P. and Goldman,
Sachs & Co. and certain of its affiliates (including Annex
AForm of Certificate of Amendment of Certificate of
Designations, Preferences and Rights of Series D Participating
Convertible Preferred Stock of MoneyGram International, Inc.)
(Incorporated by reference from Exhibit 2.1 to Registrants
Current Report on Form 8-K filed March 9, 2011).2.2
    
    Amendment No. 1 to Recapitalization
Agreement, dated as of May 4, 2011, among the Company, certain
affiliates and co-investors of Thomas H. Lee Partners, L.P. and
Goldman,
Sachs & Co. and certain of its affiliates
(Incorporated by reference from Exhibit 2.1 to Registrants
Current Report on Form 8-K filed May 6, 2011).3.1
    
    Amended and Restated Certificate of Incorporation of MoneyGram
International, Inc., as amended (Incorporated by reference
from Exhibit 3.1 to Registrants Annual Report on Form 10-K
filed on March 15, 2010).3.2
    
    Bylaws of MoneyGram International, Inc., as amended and
restated September 10, 2009 (Incorporated by reference from
Exhibit 3.01 to Registrants Current Report on Form 8-K filed
on September 16, 2009).3.3
    
    Certificate of Designations, Preferences and Rights of Series
A Junior Participating Preferred Stock of MoneyGram
International, Inc. (Incorporated by reference from Exhibit
4.3 to Registrants Quarterly Report on Form 10-Q filed on
August 13, 2004).3.4
    
    Certificate of Designations, Preferences and Rights of the
Series B Participating Convertible Preferred Stock of
MoneyGram International, Inc. (Incorporated by reference from
Exhibit 4.2 to Registrants Current Report on Form 8-K filed
on March 28, 2008).3.5
    
    Certificate of Designations, Preferences and Rights of the
Series B-1 Participating Convertible Preferred Stock of
MoneyGram International, Inc. (Incorporated by reference from
Exhibit 4.3 to Registrants Current Report on Form 8-K filed
on March 28, 2008).3.6
    
    Certificate of Designations, Preferences and Rights of the
Series D Participating Convertible Preferred Stock of
MoneyGram International, Inc. (Incorporated by reference from
Exhibit 4.4 to Registrants Current Report on Form 8-K filed
on March 28, 2008).4.1
    
    Third Supplemental Indenture relating to the 13.25% Senior Secured Second Lien Notes due
2018, dated as of April 19, 2011, among MoneyGram Payment Systems Worldwide, Inc., as
issuer, MoneyGram International, Inc. and the other guarantors named therein and Deutsche
Bank Trust Company Americas, as trustee and collateral agent. (Incorporated by reference from
Exhibit 4.1 to Registrants Current Report on Form 8-K filed on April 21, 2011).*10.1
    
    Separation Agreement and Release of All Claims, by and between
MoneyGram Payment Systems, Inc. and Jean C. Benson, dated as
of February 8, 2011.10.2
    
    MoneyGram International, Inc. Deferred Compensation Plan, as
amended and restated February 16, 2011 (Incorporated by
reference from Exhibit 10.01 to Registrants Current Report on
Form 8-K filed February 23, 2011).10.3
    
    Consent Agreement, dated as of March 7, 2011, among MoneyGram
Payment Systems Worldwide, Inc., MoneyGram International, Inc.
and certain affiliates of Goldman, Sachs & Co. (Incorporated
by reference from Exhibit 10.1 to Registrants Current Report
on Form 8-K filed March 9, 2011).10.4
    
    Mutually Agreed Resignation Letter from MoneyGram International Pte. Ltd. and MoneyGram
International, Inc. to Nigel Lee, executed as of April 26, 2011. (Incorporated by reference from
Exhibit 10.1 to Registrants Current Report on Form 8-K filed on April 28, 2011).10.5
    
    Termination of Stock Option Letter from MoneyGram International Pte. Ltd. and MoneyGram
International, Inc. to Nigel Lee, dated April 26, 2011. (Incorporated by reference from Exhibit
10.2 to Registrants Current Report on Form 8-K filed on April 28, 2011).*31.1
    
    Section 302 Certification of Chief Executive Officer.*31.2
    
    Section 302 Certification of Chief Financial Officer.*32.1
    
    Section 906 Certification of Chief Executive Officer.*32.2
    
    Section 906 Certification of Chief Financial Officer.
 
 *
    
    Filed herewith. 38