##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the Quarterly Period Ended September 30, 2010
 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2828 N. Harwood St., 15th FloorDallas, Texas
    
    75201(Address of principal executive offices)
    
    (Zip Code)
 
 
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Consolidated Balance Sheets
    
    
    3Consolidated Statements of Income (Loss)
    
    
    4Consolidated Statements of Comprehensive Income (Loss)
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Consolidated Statement of Stockholders' Deficit
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4.
    
    Controls and Procedures
    
    
    34PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    34Item 1A.
    
    Risk Factors
    
    
    35Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 6.
    
    Exhibits
    
    
    36Signatures
    
    
    
    
    37Exhibit Index
    
    
    
    
    38EX-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
 September 30,
    
    
    December 31,(Amounts in thousands, except share data)
    
    2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    
    
    
    $
    Cash and cash equivalents (substantially restricted)
    
    
    3,292,518
    
    
    
    3,776,824Receivables, net (substantially restricted)
    
    
    1,081,521
    
    
    
    1,054,381Trading investments and related put options (substantially restricted)
    
    
    
    
    
    
    26,951Available-for-sale investments (substantially restricted)
    
    
    189,133
    
    
    
    298,633Property and equipment
    
    
    113,844
    
    
    
    127,972Intangible assets
    
    
    6,708
    
    
    
    7,680Goodwill
    
    
    428,691
    
    
    
    425,630Other assets
    
    
    151,554
    
    
    
    211,592Total assets
    
    $
    5,263,969
    
    
    $
    5,929,663LIABILITIESPayment service obligations
    
    $
    4,272,734
    
    
    $
    4,843,454Debt
    
    
    712,161
    
    
    
    796,791Pension and other postretirement benefits
    
    
    114,816
    
    
    
    118,444Accounts payable and other liabilities
    
    
    128,083
    
    
    
    189,659Total liabilities
    
    
    5,227,794
    
    
    
    5,948,348COMMITMENTS AND CONTINGENCIES (NOTE 14)MEZZANINE EQUITYParticipating Convertible Preferred Stock-Series B, $0.01 par value, 760,000 shares authorized,
495,000 shares issued and outstanding
    
    
    604,731
    
    
    
    539,084Participating Convertible Preferred Stock-Series B-1, $0.01 par value, 500,000 shares authorized,
272,500 shares issued and outstanding
    
    
    359,030
    
    
    
    325,244Total mezzanine equity
    
    
    963,761
    
    
    
    864,328STOCKHOLDERS 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
    
    
    (753,253
    )
    
    
    (694,914
    )Unearned employee benefits
    
    
    
    
    
    
    (8
    )Accumulated other comprehensive loss
    
    
    (30,117
    )
    
    
    (35,671
    )Treasury stock: 5,185,555 and 6,040,958 shares at September 30, 2010 and
December 31, 2009, respectively
    
    
    (145,102
    )
    
    
    (153,306
    )Total stockholders deficit
    
    
    (927,586
    )
    
    
    (883,013
    )Total liabilities, mezzanine equity and
stockholders deficit
    
    $
    5,263,969
    
    
    $
    5,929,663
  3




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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME (LOSS)  UNAUDITED
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(Amounts in thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUEFee and other revenue
    
    $
    288,494
    
    
    $
    294,863
    
    
    $
    847,004
    
    
    $
    841,500Investment revenue
    
    
    4,393
    
    
    
    6,849
    
    
    
    16,284
    
    
    
    26,995Net securities gains
    
    
    
    
    
    
    2,738
    
    
    
    2,115
    
    
    
    7,027Total revenue
    
    
    292,887
    
    
    
    304,450
    
    
    
    865,403
    
    
    
    875,522Fee and other commissions expense
    
    
    127,003
    
    
    
    128,352
    
    
    
    369,661
    
    
    
    368,660Investment commissions expense
    
    
    181
    
    
    
    375
    
    
    
    601
    
    
    
    1,128Total commissions expense
    
    
    127,184
    
    
    
    128,727
    
    
    
    370,262
    
    
    
    369,788Net revenue
    
    
    165,703
    
    
    
    175,723
    
    
    
    495,141
    
    
    
    505,734EXPENSESCompensation and benefits
    
    
    56,220
    
    
    
    58,963
    
    
    
    169,007
    
    
    
    158,234Transaction and operations support
    
    
    46,984
    
    
    
    82,573
    
    
    
    143,149
    
    
    
    198,223Occupancy, equipment and supplies
    
    
    12,528
    
    
    
    12,254
    
    
    
    34,672
    
    
    
    35,517Interest expense
    
    
    24,689
    
    
    
    26,127
    
    
    
    76,536
    
    
    
    79,816Depreciation and amortization
    
    
    11,497
    
    
    
    14,510
    
    
    
    35,884
    
    
    
    43,834Total expenses
    
    
    151,918
    
    
    
    194,427
    
    
    
    459,248
    
    
    
    515,624Income (loss) before income taxes
    
    
    13,785
    
    
    
    (18,704
    )
    
    
    35,893
    
    
    
    (9,890
    )Income tax expense (benefit)
    
    
    3,800
    
    
    
    (400
    )
    
    
    8,248
    
    
    
    (110
    )NET INCOME (LOSS)
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    $
    27,645
    
    
    $
    (9,780
    )BASIC AND DILUTED LOSS PER COMMON SHARE
    
    $
    (0.30
    )
    
    $
    (0.60
    )
    
    $
    (0.86
    )
    
    $
    (1.19
    )Net loss available to common stockholders:Net income (loss) as reported
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    $
    27,645
    
    
    $
    (9,780
    )Accrued preferred stock dividends
    
    
    (31,981
    )
    
    
    (28,277
    )
    
    
    (92,017
    )
    
    
    (81,111
    )Accretion recognized on preferred stock
    
    
    (2,592
    )
    
    
    (2,580
    )
    
    
    (7,416
    )
    
    
    (7,621
    )Net loss available to common stockholders
    
    $
    (24,588
    )
    
    $
    (49,161
    )
    
    $
    (71,788
    )
    
    $
    (98,512
    )Weighted-average outstanding common shares
    
    
    83,336
    
    
    
    82,505
    
    
    
    83,081
    
    
    
    82,497
  4




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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  UNAUDITED
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009NET INCOME (LOSS)
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    $
    27,645
    
    
    $
    (9,780
    )OTHER COMPREHENSIVE INCOMENet unrealized gains on available-for-sale securities:Net holding gains arising during the period
    
    
    3,284
    
    
    
    368
    
    
    
    3,613
    
    
    
    3,461Reclassification adjustment for net realized losses included
in net income (loss)
    
    
    
    
    
    
    757
    
    
    
    334
    
    
    
    3,6883,284
    
    
    
    1,125
    
    
    
    3,947
    
    
    
    7,149Net unrealized losses on derivative financial instruments:Net holding losses arising during the period, net of tax benefit
of $478 for the nine months ended September 30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (780
    )
    
    
    
    
    
    
    
    
    
    
    
    (780
    )Pension and postretirement benefit plans:Reclassification of prior service costs recorded to net income
(loss), net of tax benefit of $8 and $455 for the three
months ended September 30, 2010 and 2009, respectively,
and $24 and $454 for the nine months ended September 30,
2010 and 2009, respectively
    
    
    13
    
    
    
    742
    
    
    
    39
    
    
    
    741Reclassification of net actuarial loss recorded to net income
(loss), net of tax benefit of $456 and $359 for the three
months ended September 30, 2010 and 2009, respectively,
and $1,458 and $1,077 for the nine months ended
September 30, 2010 and 2009, respectively
    
    
    744
    
    
    
    585
    
    
    
    2,379
    
    
    
    1,756Unrealized foreign currency translation gains (losses), net of tax
expense (benefit) of $2,097 and $485 for the three months
ended September 30, 2010 and 2009, respectively, and $(497)
and $316 for the nine months ended September 30, 2010 and
2009, respectively
    
    
    3,421
    
    
    
    792
    
    
    
    (811
    )
    
    
    516Other comprehensive income
    
    
    7,462
    
    
    
    3,244
    
    
    
    5,554
    
    
    
    9,382COMPREHENSIVE INCOME (LOSS)
    
    $
    17,447
    
    
    $
    (15,060
    )
    
    $
    33,199
    
    
    $
    (398
    )
  5




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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  UNAUDITED
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    $
    27,645
    
    
    $
    (9,780
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    11,497
    
    
    
    14,510
    
    
    
    35,884
    
    
    
    43,834Investment impairment charges
    
    
    
    
    
    
    757
    
    
    
    334
    
    
    
    3,686Net realized gain on investments
    
    
    
    
    
    
    (2,395
    )
    
    
    (2,449
    )
    
    
    (7,555
    )Valuation gains on put options related to trading investments
    
    
    
    
    
    
    (1,100
    )
    
    
    
    
    
    
    (3,158
    )Provision for deferred income taxes
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    305Net amortization of investment premiums and discounts
    
    
    22
    
    
    
    211
    
    
    
    171
    
    
    
    639Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,758Impairment of assets
    
    
    284
    
    
    
    8,409
    
    
    
    1,986
    
    
    
    8,409Signing bonus amortization
    
    
    7,361
    
    
    
    7,330
    
    
    
    21,733
    
    
    
    24,413Amortization of debt discount and deferred financing costs
    
    
    3,713
    
    
    
    2,550
    
    
    
    12,009
    
    
    
    7,496Provision for uncollectible receivables
    
    
    2,388
    
    
    
    2,693
    
    
    
    6,285
    
    
    
    17,900Non-cash compensation and pension expense
    
    
    9,249
    
    
    
    8,921
    
    
    
    27,125
    
    
    
    15,375Other non-cash items, net
    
    
    455
    
    
    
    1,746
    
    
    
    (24
    )
    
    
    4,765Changes in foreign currency translation adjustments
    
    
    3,421
    
    
    
    791
    
    
    
    (811
    )
    
    
    515Change in other assets
    
    
    (6,877
    )
    
    
    4,169
    
    
    
    (26,547
    )
    
    
    (10,134
    )Change in accounts payable and other liabilities
    
    
    (58
    )
    
    
    25,560
    
    
    
    (13,633
    )
    
    
    49,793Total adjustments
    
    
    31,455
    
    
    
    74,152
    
    
    
    62,165
    
    
    
    160,041Change in cash and cash equivalents (substantially restricted)
    
    
    199,629
    
    
    
    97,580
    
    
    
    484,306
    
    
    
    201,276Change in trading investments and related put options
(substantially restricted)
    
    
    
    
    
    
    15,000
    
    
    
    29,400
    
    
    
    32,900Change in receivables, net (substantially restricted)
    
    
    (36,141
    )
    
    
    136,758
    
    
    
    (36,046
    )
    
    
    288,048Change in payment service obligations
    
    
    (199,958
    )
    
    
    (304,651
    )
    
    
    (570,784
    )
    
    
    (662,709
    )Net cash provided by (used in) operating activities
    
    
    4,970
    
    
    
    535
    
    
    
    (3,314
    )
    
    
    9,776CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from maturities of investments classified as available-for-sale
    
    
    30,744
    
    
    
    32,419
    
    
    
    113,316
    
    
    
    113,957Purchases of property and equipment
    
    
    (13,349
    )
    
    
    (6,829
    )
    
    
    (28,825
    )
    
    
    (23,148
    )Proceeds from disposal of property and equipment
    
    
    7,537
    
    
    
    
    
    
    
    7,537
    
    
    
    Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    (3,210
    )Proceeds from disposal of a business
    
    
    
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Net cash provided by investing activities
    
    
    24,932
    
    
    
    30,090
    
    
    
    91,698
    
    
    
    92,099CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    98
    
    
    
    
    
    
    
    1,616
    
    
    
    Payments on debt
    
    
    (30,000
    )
    
    
    (625
    )
    
    
    (90,000
    )
    
    
    (1,875
    )Payments on revolving credit facility
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    (100,000
    )Net cash used in financing activities
    
    
    (29,902
    )
    
    
    (30,625
    )
    
    
    (88,384
    )
    
    
    (101,875
    )NET 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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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT  UNAUDITED
 AccumulatedAdditional
    
    
    
    
    
    
    Unearned
    
    
    OtherCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Employee
    
    
    Comprehensive
    
    
    Treasury(Amounts in thousands)
    
    Stock
    
    
    Capital
    
    
    Loss
    
    
    Benefits
    
    
    Loss
    
    
    Stock
    
    
    TotalDecember 31, 2009
    
    $
    886
    
    
    $
    
    
    
    $
    (694,914
    )
    
    $
    (8
    )
    
    $
    (35,671
    )
    
    $
    (153,306
    )
    
    $
    (883,013
    )Net income
    
    
    
    
    
    
    
    
    
    
    27,645
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,645Accrued dividends on preferred stock
    
    
    
    
    
    
    (11,878
    )
    
    
    (80,139
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (92,017
    )Accretion on preferred stock
    
    
    
    
    
    
    (7,416
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,416
    )Employee benefit plans
    
    
    
    
    
    
    19,294
    
    
    
    (5,845
    )
    
    
    8
    
    
    
    
    
    
    
    8,204
    
    
    
    21,661Net unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,947
    
    
    
    
    
    
    
    3,947Amortization of prior service cost for pension and
postretirement benefits, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    39Amortization of unrealized losses on pension and
postretirement benefits, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,379
    
    
    
    
    
    
    
    2,379Unrealized foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (811
    )
    
    
    
    
    
    
    (811
    )September 30, 2010
    
    $
    886
    
    
    $
    
    
    
    $
    (753,253
    )
    
    $
    
    
    
    $
    (30,117
    )
    
    $
    (145,102
    )
    
    $
    (927,586
    )
  7




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##### Table of Contents



MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 Note 1  Basis of Presentation
  Note 2  Assets in Excess of Payment Service Obligations
  September 30,
    
    
    December 31,(Amounts in thousands)
    
    2010
    
    
    2009Cash and cash equivalents (substantially restricted)
    
    $
    3,292,518
    
    
    $
    3,776,824Receivables, net (substantially restricted)
    
    
    1,081,521
    
    
    
    1,054,381Trading investments and related put options
(substantially restricted)
    
    
    
    
    
    
    26,951Available-for-sale investments (substantially restricted)
    
    
    189,133
    
    
    
    298,6334,563,172
    
    
    
    5,156,789Payment service obligations
    
    
    (4,272,734
    )
    
    
    (4,843,454
    )Assets in excess of payment service obligations
    
    $
    290,438
    
    
    $
    313,335
  Note 3  Acquisitions and Disposals
 Blue Dolphin Financial Services N.V.
  Other Disposals 
 Note 4  Fair Value Measurement
  Investments 
 8




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##### Table of Contents



Other Financial Instruments
 Debt Debt
 Derivatives
  September 30, 2010(Amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAvailable-for-sale investments (substantially
restricted):United States government agencies
    
    $
    
    
    
    $
    8,581
    
    
    $
    
    
    
    $
    8,581Residential mortgage-backed securities  agencies
    
    
    
    
    
    
    156,353
    
    
    
    
    
    
    
    156,353Other asset-backed securities
    
    
    
    
    
    
    
    
    
    
    24,199
    
    
    
    24,199Total financial assets
    
    $
    
    
    
    $
    164,934
    
    
    $
    24,199
    
    
    $
    189,133
 December 31, 2009(Amounts in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalTrading investments and related put options
(substantially restricted)
    
    $
    
    
    
    $
    
    
    
    $
    26,951
    
    
    $
    26,951Available-for-sale investments (substantially restricted):United States government agencies
    
    
    
    
    
    
    7,715
    
    
    
    
    
    
    
    7,715Residential mortgage-backed securities  agencies
    
    
    
    
    
    
    268,830
    
    
    
    
    
    
    
    268,830Other asset-backed securities
    
    
    
    
    
    
    
    
    
    
    22,088
    
    
    
    22,088Forward contracts
    
    
    
    
    
    
    5,332
    
    
    
    
    
    
    
    5,332Total financial assets
    
    $
    
    
    
    $
    281,877
    
    
    $
    49,039
    
    
    $
    330,916
 9




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2010
    
    
    September 30, 2010Trading
    
    
    
    
    
    
    Total
    
    
    Trading
    
    
    
    
    
    
    TotalInvestments
    
    
    Other
    
    
    Level 3
    
    
    Investments
    
    
    Other
    
    
    Level 3and Related
    
    
    Asset-Backed
    
    
    Financial
    
    
    and Related
    
    
    Asset-Backed
    
    
    Financial(Amounts in thousands)
    
    Put Options
    
    
    Securities
    
    
    Assets
    
    
    Put Options
    
    
    Securities
    
    
    AssetsBeginning balance
    
    $
    
    
    
    $
    20,754
    
    
    $
    20,754
    
    
    $
    26,951
    
    
    $
    22,088
    
    
    $
    49,039Realized gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,449
    
    
    
    
    
    
    
    2,449Principal paydowns
    
    
    
    
    
    
    (282
    )
    
    
    (282
    )
    
    
    (29,400
    )
    
    
    (3,395
    )
    
    
    (32,795
    )Other-than-temporary impairments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (334
    )
    
    
    (334
    )Unrealized gains  instruments still
held at the reporting date
    
    
    
    
    
    
    4,561
    
    
    
    4,561
    
    
    
    
    
    
    
    8,875
    
    
    
    8,875Unrealized losses  instruments still
held at the reporting date
    
    
    
    
    
    
    (834
    )
    
    
    (834
    )
    
    
    
    
    
    
    (3,035
    )
    
    
    (3,035
    )Ending balance
    
    $
    
    
    
    $
    24,199
    
    
    $
    24,199
    
    
    $
    
    
    
    $
    24,199
    
    
    $
    24,199
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Trading
    
    
    
    
    
    
    Total
    
    
    Trading
    
    
    
    
    
    
    TotalInvestments
    
    
    Other
    
    
    Level 3
    
    
    Investments
    
    
    Other
    
    
    Level 3and Related
    
    
    Asset-Backed
    
    
    Financial
    
    
    and Related
    
    
    Asset-Backed
    
    
    Financial(Amounts in thousands)
    
    Put Options
    
    
    Securities
    
    
    Assets
    
    
    Put Options
    
    
    Securities
    
    
    AssetsBeginning balance
    
    $
    37,309
    
    
    $
    22,705
    
    
    $
    60,014
    
    
    $
    47,990
    
    
    $
    29,528
    
    
    $
    77,518Principal paydowns
    
    
    (12,605
    )
    
    
    (66
    )
    
    
    (12,671
    )
    
    
    (25,344
    )
    
    
    (363
    )
    
    
    (25,707
    )Other-than-temporary impairments
    
    
    
    
    
    
    (757
    )
    
    
    (757
    )
    
    
    
    
    
    
    (3,686
    )
    
    
    (3,686
    )Unrealized gains  instruments still
held at the reporting date
    
    
    1,100
    
    
    
    
    
    
    
    1,100
    
    
    
    3,158
    
    
    
    
    
    
    
    3,158Unrealized losses  instruments still
held at the reporting date
    
    
    
    
    
    
    (993
    )
    
    
    (993
    )
    
    
    
    
    
    
    (4,590
    )
    
    
    (4,590
    )Ending balance
    
    $
    25,804
    
    
    $
    20,889
    
    
    $
    46,693
    
    
    $
    25,804
    
    
    $
    20,889
    
    
    $
    46,693
 Note 5  Investment Portfolio
  September 30,
    
    
    December 31,(Amounts in thousands)
    
    2010
    
    
    2009Cash
    
    $
    1,117,598
    
    
    $
    1,243,060Money markets
    
    
    1,673,485
    
    
    
    1,933,764Deposits
    
    
    501,435
    
    
    
    600,000Cash and cash equivalents (substantially restricted)
    
    
    3,292,518
    
    
    
    3,776,824Trading investments and related put options
(substantially restricted)
    
    
    
    
    
    
    26,951Available-for-sale investments (substantially restricted)
    
    
    189,133
    
    
    
    298,633Total investment portfolio
    
    $
    3,481,651
    
    
    $
    4,102,408
 Cash and Cash Equivalents (substantially restricted)
 10




---



##### Table of Contents



Trading Investments and Related Put Options (substantially restricted)
 Available-for-sale Investments (substantially restricted)
 Gross
    
    
    Gross
    
    
    
    
    
    
    NetAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Average(Amounts in thousands, except net average price)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    PriceResidential mortgage-backed securities-agencies
    
    $
    149,159
    
    
    $
    7,293
    
    
    $
    (99
    )
    
    $
    156,353
    
    
    $
    105.47Other asset-backed securities
    
    
    12,351
    
    
    
    11,848
    
    
    
    
    
    
    
    24,199
    
    
    
    4.68United States government agencies
    
    
    7,166
    
    
    
    1,415
    
    
    
    
    
    
    
    8,581
    
    
    
    95.34Total
    
    $
    168,676
    
    
    $
    20,556
    
    
    $
    (99
    )
    
    $
    189,133
    
    
    $
    28.04
  Gross
    
    
    Gross
    
    
    
    
    
    
    NetAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    Average(Amounts in thousands, except net average price)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    PriceResidential mortgage-backed securities  agencies
    
    $
    259,563
    
    
    $
    9,296
    
    
    $
    (29
    )
    
    $
    268,830
    
    
    $
    104.13Other asset-backed securities
    
    
    15,706
    
    
    
    6,382
    
    
    
    
    
    
    
    22,088
    
    
    
    3.74United States government agencies
    
    
    6,854
    
    
    
    861
    
    
    
    
    
    
    
    7,715
    
    
    
    85.72Total
    
    $
    282,123
    
    
    $
    16,539
    
    
    $
    (29
    )
    
    $
    298,633
    
    
    $
    34.84
  Gains and Losses and Other-Than-Temporary Impairments
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Realized losses from available-for-sale investments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (2
    )Other-than-temporary impairments from available-for-sale
investments
    
    
    
    
    
    
    (757
    )
    
    
    (334
    )
    
    
    (3,686
    )Valuation gains on put options related to trading investments
    
    
    
    
    
    
    1,100
    
    
    
    
    
    
    
    3,158Realized gains from trading investments and related put options
    
    
    
    
    
    
    2,395
    
    
    
    2,449
    
    
    
    7,557Net securities gains
    
    $
    
    
    
    $
    2,738
    
    
    $
    2,115
    
    
    $
    7,027
 11




---



##### Table of Contents



Investment Ratings
 September 30, 2010
    
    
    December 31, 2009Number of
    
    
    Fair
    
    
    Percent of
    
    
    Number of
    
    
    Fair
    
    
    Percent of(Dollars in thousands)
    
    Securities
    
    
    Value
    
    
    Investments
    
    
    Securities
    
    
    Value
    
    
    InvestmentsAAA, including United States agencies
    
    
    28
    
    
    $
    164,564
    
    
    
    87
    %
    
    
    34
    
    
    $
    276,215
    
    
    
    92
    %A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    415
    
    
    
    BBB
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,842
    
    
    
    1
    %Below investment grade
    
    
    65
    
    
    
    24,569
    
    
    
    13
    %
    
    
    69
    
    
    
    20,161
    
    
    
    7
    %Total
    
    
    93
    
    
    $
    189,133
    
    
    
    100
    %
    
    
    105
    
    
    $
    298,633
    
    
    
    100
    %
  Contractual Maturities
 September 30, 2010
    
    
    December 31, 2009Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(Amounts in thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueAfter one year through five years
    
    $
    7,166
    
    
    $
    8,581
    
    
    $
    6,854
    
    
    $
    7,715Mortgage-backed and other
asset-backed securities
    
    
    161,510
    
    
    
    180,552
    
    
    
    275,269
    
    
    
    290,918Total
    
    $
    168,676
    
    
    $
    189,133
    
    
    $
    282,123
    
    
    $
    298,633
 Note 6
 Goodwill
  Total(Amounts in thousands)
    
    GoodwillBalance as of December 31, 2009
    
    $
    425,630Goodwill acquired
    
    
    3,061Balance as of September 30, 2010
    
    $
    428,691
  Acquisitions and Disposals
 Note 7  Derivative Financial Instruments
  12




---



##### Table of Contents



Derivative Assets
    
    
    Derivative LiabilitiesBalance Sheet
    
    
    September 30,
    
    
    December 31,
    
    
    September 30,
    
    
    December 31,(Amounts in thousands)
    
    Location
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Forward contracts
    
    Other assets
    
    $
    529
    
    
    $
    5,361
    
    
    $
    3,620
    
    
    $
    29
   Note 8  Debt
  September 30, 2010
    
    
    December 31, 2009Weighted-
    
    
    
    
    
    
    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
    
    
    112,161
    
    
    
    7.25
    %
    
    
    196,791
    
    
    
    7.25
    %Senior revolving credit facility, due 2013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Second lien notes, due 2018
    
    
    500,000
    
    
    
    13.25
    %
    
    
    500,000
    
    
    
    13.25
    %Total debt
    
    $
    712,161
    
    
    
    
    
    
    $
    796,791
 Senior Facility
 Second Lien Notes
 Debt Covenants
 Deferred Financing Costs
 Interest Paid in Cash
 Maturities
 13




---



##### Table of Contents



Note 9  Pensions and Other Benefits
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    
    
    
    $
    223
    
    
    $
    
    
    
    $
    671Interest cost
    
    
    2,969
    
    
    
    3,165
    
    
    
    8,907
    
    
    
    9,494Expected return on plan assets
    
    
    (2,166
    )
    
    
    (2,351
    )
    
    
    (6,498
    )
    
    
    (7,052
    )Amortization of prior service cost
    
    
    21
    
    
    
    1,287
    
    
    
    63
    
    
    
    1,460Recognized net actuarial loss
    
    
    1,196
    
    
    
    944
    
    
    
    3,587
    
    
    
    2,833Net periodic benefit expense
    
    $
    2,020
    
    
    $
    3,268
    
    
    $
    6,059
    
    
    $
    7,406
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    
    
    
    $
    143
    
    
    $
    
    
    
    $
    429Interest cost
    
    
    63
    
    
    
    209
    
    
    
    190
    
    
    
    628Amortization of prior service credits
    
    
    
    
    
    
    (88
    )
    
    
    
    
    
    
    (264
    )Recognized net actuarial loss
    
    
    4
    
    
    
    
    
    
    
    11
    
    
    
    Net periodic benefit expense
    
    $
    67
    
    
    $
    264
    
    
    $
    201
    
    
    $
    793
    Deferred Compensation Plans
 14




---



##### Table of Contents



Note 10  Mezzanine Equity
  Series(Amounts in thousands)
    
    B Stock
    
    
    B-1 Stock
    
    
    B StockBalance at December 31, 2009
    
    $
    539,084
    
    
    $
    325,244
    
    
    $
    864,328Dividends accrued
    
    
    59,347
    
    
    
    32,670
    
    
    
    92,017Accretion
    
    
    6,300
    
    
    
    1,116
    
    
    
    7,416Balance at September 30, 2010
    
    $
    604,731
    
    
    $
    359,030
    
    
    $
    963,761
 Note 11  Stockholders Deficit
 Common Stock
 September 30,
    
    
    December 31,(Amounts in thousands)
    
    2010
    
    
    2009Common shares issued
    
    
    88,556
    
    
    
    88,556Treasury stock
    
    
    (5,186
    )
    
    
    (6,041
    )Common shares outstanding
    
    
    83,370
    
    
    
    82,515
 Treasury Stock
 Treasury Stock(Amounts in thousands)
    
    SharesBalance at December 31, 2009
    
    
    6,041Exercise of stock options and release of restricted
stock, net of shares surrendered for withholding taxes
    
    
    (855
    )Balance at September 30, 2010
    
    
    5,186
 Accumulated Other Comprehensive Loss
 September 30,
    
    
    December 31,(Amounts in thousands)
    
    2010
    
    
    2009Net unrealized gains on securities classified as available-for-sale
    
    $
    20,457
    
    
    $
    16,510Cumulative foreign currency translation adjustments
    
    
    4,151
    
    
    
    4,962Prior service cost for pension and postretirement benefits, net of tax
    
    
    (184
    )
    
    
    (223
    )Unrealized losses on pension and postretirement benefits, net of tax
    
    
    (54,541
    )
    
    
    (56,920
    )Accumulated other comprehensive loss
    
    $
    (30,117
    )
    
    $
    (35,671
    )
 Note 12  Stock-Based Compensation
  Stock Options
  15




---



##### Table of Contents



Expected dividend yield
    
    
    0.0
    %Expected volatility
    
    
    73.5% - 74.8
    %Risk-free interest rate
    
    
    1.8% - 3.3
    %Expected life
    
    6.2-6.5 yearsWeighted-average grant-date fair value per option
    
    $
    2.07
  Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicExercise
    
    
    Contractual
    
    
    ValueShares
    
    
    Price
    
    
    Term
    
    
    ($000)Options outstanding at December 31, 2009
    
    
    38,145,414
    
    
    $
    3.35Granted
    
    
    12,100,000
    
    
    
    2.89Exercised
    
    
    (848,750
    )
    
    
    1.90Forfeited/Expired
    
    
    (9,813,034
    )
    
    
    3.01Options outstanding at September 30, 2010
    
    
    39,583,630
    
    
    $
    3.33
    
    
    8.71 years
    
    $
    7,214Vested or expected to vest at September 30, 2010
    
    
    39,299,202
    
    
    $
    3.33
    
    
    8.71 years
    
    $
    7,193Options exercisable at September 30, 2010
    
    
    12,737,298
    
    
    $
    5.01
    
    
    7.82 years
    
    $
    2,664
  Restricted Stock Units
 Note 13  Income Taxes
   16




---



##### Table of Contents



Note 14  Commitments and Contingencies
 Legal Proceedings
 Federal Securities Class Actions  In re MoneyGram International, Inc.
Securities Litigation
 Minnesota Stockholder Derivative Claims In re MoneyGram International, Inc.
Derivative Litigation
 ERISA Class Action 
 17




---



##### Table of Contents



California Action
  Minimum Commission Guarantees
 Note 15  Earnings per Common Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Shares related to stock options
    
    
    38,605
    
    
    
    22,545
    
    
    
    36,544
    
    
    
    15,748Shares related to restricted stock
    
    
    
    
    
    
    15
    
    
    
    2
    
    
    
    33Shares related to preferred stock
    
    
    418,555
    
    
    
    370,082
    
    
    
    418,555
    
    
    
    370,082
 Note 16  Recent Accounting Pronouncements
   18




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##### Table of Contents



Note 17  Segment Information
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueGlobal Funds Transfer:Money transfer
    
    $
    235,013
    
    
    $
    235,032
    
    
    $
    680,461
    
    
    $
    662,560Bill payment
    
    
    31,216
    
    
    
    33,116
    
    
    
    96,118
    
    
    
    101,487Total Global Funds Transfer
    
    
    266,229
    
    
    
    268,148
    
    
    
    776,579
    
    
    
    764,047Financial Paper Products:Money order
    
    
    16,603
    
    
    
    18,874
    
    
    
    52,173
    
    
    
    56,779Official check
    
    
    9,350
    
    
    
    11,755
    
    
    
    31,336
    
    
    
    35,865Total Financial Paper Products
    
    
    25,953
    
    
    
    30,629
    
    
    
    83,509
    
    
    
    92,644Other
    
    
    705
    
    
    
    5,673
    
    
    
    5,315
    
    
    
    18,831Total revenue
    
    $
    292,887
    
    
    $
    304,450
    
    
    $
    865,403
    
    
    $
    875,522Segment operating income:Global Funds Transfer
    
    $
    36,465
    
    
    $
    11,643
    
    
    $
    95,128
    
    
    $
    56,080Financial Paper Products
    
    
    7,478
    
    
    
    8,606
    
    
    
    27,955
    
    
    
    26,012Other
    
    
    (676
    )
    
    
    (1,967
    )
    
    
    (1,749
    )
    
    
    (3,366
    )Total segment operating income
    
    
    43,267
    
    
    
    18,282
    
    
    
    121,334
    
    
    
    78,726Net securities gains
    
    
    
    
    
    
    2,738
    
    
    
    2,115
    
    
    
    7,027Interest expense
    
    
    (24,689
    )
    
    
    (26,127
    )
    
    
    (76,536
    )
    
    
    (79,816
    )Other unallocated expenses
    
    
    (4,793
    )
    
    
    (13,597
    )
    
    
    (11,020
    )
    
    
    (15,827
    )Income (loss) before income taxes
    
    $
    13,785
    
    
    $
    (18,704
    )
    
    $
    35,893
    
    
    $
    (9,890
    )Depreciation and amortization:Global Funds Transfer
    
    $
    9,341
    
    
    $
    9,808
    
    
    $
    28,285
    
    
    $
    30,357Financial Paper Products
    
    
    2,153
    
    
    
    4,408
    
    
    
    7,587
    
    
    
    12,520Other
    
    
    3
    
    
    
    294
    
    
    
    12
    
    
    
    957Total depreciation and amortization
    
    $
    11,497
    
    
    $
    14,510
    
    
    $
    35,884
    
    
    $
    43,834Capital expenditures:Global Funds Transfer
    
    $
    10,088
    
    
    $
    5,029
    
    
    $
    24,513
    
    
    $
    16,363Financial Paper Products
    
    
    1,296
    
    
    
    1,840
    
    
    
    5,027
    
    
    
    6,010Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total capital expenditures
    
    $
    11,384
    
    
    $
    6,869
    
    
    $
    29,540
    
    
    $
    22,373
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009United States
    
    $
    189,863
    
    
    $
    206,335
    
    
    $
    577,694
    
    
    $
    607,435International
    
    
    103,024
    
    
    
    98,115
    
    
    
    287,709
    
    
    
    268,087Total revenue
    
    $
    292,887
    
    
    $
    304,450
    
    
    $
    865,403
    
    
    $
    875,522
 19




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Table 1  Results of Operations
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change(unaudited)
    
    
    (unaudited)
    
    
    
    
    
    
    (unaudited)
    
    
    (unaudited)Revenue:Fee and other revenue
    
    $
    288,494
    
    
    $
    294,863
    
    
    
    (2
    )%
    
    $
    847,004
    
    
    $
    841,500
    
    
    
    1
    %Investment revenue
    
    
    4,393
    
    
    
    6,849
    
    
    
    (36
    )%
    
    
    16,284
    
    
    
    26,995
    
    
    
    (40
    )%Net securities gains
    
    
    
    
    
    
    2,738
    
    
    
    NM
    
    
    
    2,115
    
    
    
    7,027
    
    
    
    NMTotal revenue
    
    
    292,887
    
    
    
    304,450
    
    
    
    (4
    )%
    
    
    865,403
    
    
    
    875,522
    
    
    
    (1
    )%Fee and other commissions expense
    
    
    127,003
    
    
    
    128,352
    
    
    
    (1
    )%
    
    
    369,661
    
    
    
    368,660
    
    
    
    0
    %Investment commissions expense
    
    
    181
    
    
    
    375
    
    
    
    (52
    )%
    
    
    601
    
    
    
    1,128
    
    
    
    (47
    )%Total commissions expense
    
    
    127,184
    
    
    
    128,727
    
    
    
    (1
    )%
    
    
    370,262
    
    
    
    369,788
    
    
    
    0
    %Net revenue
    
    
    165,703
    
    
    
    175,723
    
    
    
    (6
    )%
    
    
    495,141
    
    
    
    505,734
    
    
    
    (2
    )%Expenses:Compensation and benefits
    
    
    56,220
    
    
    
    58,963
    
    
    
    (5
    )%
    
    
    169,007
    
    
    
    158,234
    
    
    
    7
    %Transaction and operations support
    
    
    46,984
    
    
    
    82,573
    
    
    
    (43
    )%
    
    
    143,149
    
    
    
    198,223
    
    
    
    (28
    )%Occupancy, equipment and supplies
    
    
    12,528
    
    
    
    12,254
    
    
    
    2
    %
    
    
    34,672
    
    
    
    35,517
    
    
    
    (2
    )%Interest expense
    
    
    24,689
    
    
    
    26,127
    
    
    
    (6
    )%
    
    
    76,536
    
    
    
    79,816
    
    
    
    (4
    )%Depreciation and amortization
    
    
    11,497
    
    
    
    14,510
    
    
    
    (21
    )%
    
    
    35,884
    
    
    
    43,834
    
    
    
    (18
    )%Total expenses
    
    
    151,918
    
    
    
    194,427
    
    
    
    (22
    )%
    
    
    459,248
    
    
    
    515,624
    
    
    
    (11
    )%Income (loss) before income taxes
    
    
    13,785
    
    
    
    (18,704
    )
    
    
    NM
    
    
    
    35,893
    
    
    
    (9,890
    )
    
    
    NMIncome tax expense (benefit)
    
    
    3,800
    
    
    
    (400
    )
    
    
    NM
    
    
    
    8,248
    
    
    
    (110
    )
    
    
    NMNet income (loss)
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    
    NM
    
    
    $
    27,645
    
    
    $
    (9,780
    )
    
    
    NM
   
    
    Total fee and other revenue decreased $6.4 million to $288.5 million in the third quarter of 2010 due to lower revenue from the Financial Paper Products segment and bill payment products, as well as the impact of certain businesses and products discontinued in 2009. Money transfer fee and other revenue was flat for the three months ended September 30,
2010 compared to 2009 as volume growth of 9 percent was offset by the lower euro exchange rate and lower average money transfer
fees per transaction from the $50 price band introduced earlier in the year. See further discussion under Table 2 Fee and Other Revenue and Commissions Expense.
    
    Investment revenue decreased $2.5 million, or 36 percent, in the third quarter of 2010 due to lower yields earned on our investment portfolio and a decline in average investable balances.
    
    We did not record any net securities gains or losses in the third quarter of 2010. Net securities gains of $2.7 million were recognized in the third quarter of 2009 from a realized gain from the call of a trading investment and valuation gains on a put option related to a trading investment, partially offset by other-than-temporary impairments on asset-backed securities.
    
    Total commissions expense decreased $1.5 million, or 1 percent, in the third quarter of 2010, primarily due to a decline in the euro exchange rate and average commission rates, partially offset by higher money transfer volume.
 20




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##### Table of Contents




    
    Interest expense decreased 6 percent to $24.7 million in the third quarter of 2010 from $26.1 million in 2009, reflecting lower outstanding debt balances due to repayments of debt, partially offset by the pro-rata write-off of deferred financing costs and debt discount from a $30.0 million prepayment of debt during the third quarter of 2010.
    
    Total expenses decreased $42.5 million, or 22 percent, in the third quarter of 2010 compared to 2009. Expenses in 2009 included a $16.5 million accrual for a patent lawsuit, asset impairments of $8.4 million, a $6.0 million accrual for a settlement with the Federal Trade Commission and $3.8 million of executive severance and related costs.
Depreciation and amortization expense decreased $3.0 million, while employee stock-based compensation increased $1.7 million.
Expenses in 2010 include a $1.8 million accrual for various litigation
matters and $1.6 million of costs associated with restructuring initiatives.
    
    In the third quarter of 2010, we had $3.8 million of income tax expense on pre-tax income of $13.8 million, primarily reflecting the reversal of book-to-tax differences.
    
    The decline in the euro exchange rate decreased total revenue by $9.1 million, commissions expense by $4.1 million and operating expenses by $3.3 million, for a net decrease to our income before income taxes of $1.7 million.
 Table 2  Fee and Other Revenue and Commissions Expense
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeFee and other revenue
    
    $
    288,494
    
    
    $
    294,863
    
    
    
    (2
    )%
    
    $
    847,004
    
    
    $
    841,500
    
    
    
    1
    %Fee and other commissions expense
    
    
    127,003
    
    
    
    128,352
    
    
    
    (1
    )%
    
    
    369,661
    
    
    
    368,660
    
    
    
    0
    %Fee and other commissions expense as a % of
fee and other revenue
    
    
    44.0
    %
    
    
    43.5
    %
    
    
    
    
    
    
    43.6
    %
    
    
    43.8
    %
 Global Funds
Transfer Segment Financial Paper Products Segment
 Global Funds Transfer Segment Financial Paper Products Segment
  21




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##### Table of Contents



Table 3  Net Investment Revenue Analysis
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeInvestment revenue
    
    $
    4,393
    
    
    $
    6,849
    
    
    
    (36
    )%
    
    $
    16,284
    
    
    $
    26,995
    
    
    
    (40
    )%Investment commissions expense
    
    
    (181
    )
    
    
    (375
    )
    
    
    52
    %
    
    
    (601
    )
    
    
    (1,128
    )
    
    
    47
    %Net investment revenue
    
    $
    4,212
    
    
    $
    6,474
    
    
    
    (35
    )%
    
    $
    15,683
    
    
    $
    25,867
    
    
    
    (39
    )%Average balances:Cash equivalents and investments
    
    $
    3,537,657
    
    
    $
    4,200,229
    
    
    
    (16
    )%
    
    $
    3,748,800
    
    
    $
    4,281,802
    
    
    
    (12
    )%Payment service obligations (1)
    
    $
    2,556,105
    
    
    $
    3,016,491
    
    
    
    (15
    )%
    
    $
    2,691,784
    
    
    $
    3,064,993
    
    
    
    (12
    )%Average yields earned and rates 
paid (2):Investment yield
    
    
    0.49
    %
    
    
    0.65
    %
    
    
    
    
    
    
    0.58
    %
    
    
    0.84
    %Investment commission rate
    
    
    0.03
    %
    
    
    0.05
    %
    
    
    
    
    
    
    0.03
    %
    
    
    0.05
    %Net investment margin
    
    
    0.47
    %
    
    
    0.61
    %
    
    
    
    
    
    
    0.56
    %
    
    
    0.81
    %
 
 (1)
    
    Commissions are paid to financial institution customers based on amounts generated by the sale of official checks only.(2)
    
    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.    22




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##### Table of Contents



Table 4  Net Securities Gains
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Realized losses from available-for-sale investments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (2
    )Other-than-temporary impairments from available-for-sale investments
    
    
    
    
    
    
    (757
    )
    
    
    (334
    )
    
    
    (3,686
    )Valuation gains on put options related to trading investments
    
    
    
    
    
    
    1,100
    
    
    
    
    
    
    
    3,158Realized gains from trading investments and related put options
    
    
    
    
    
    
    2,395
    
    
    
    2,449
    
    
    
    7,557Net securities gains
    
    $
    
    
    
    $
    2,738
    
    
    $
    2,115
    
    
    $
    7,027
  Expenses
 Results of Operations
 Compensation and benefits
  Transaction and operations support
 23




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##### Table of Contents



Occupancy, equipment and supplies 
 Interest expense 
 Depreciation and amortization 
  Income taxes 
  Acquisitions
 Acquisitions and Disposals
 Segment Performance
  24




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##### Table of Contents



Table 5  Segment Information
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeOperating income:Global Funds Transfer
    
    $
    36,465
    
    
    $
    11,643
    
    
    $
    24,822
    
    
    $
    95,128
    
    
    $
    56,080
    
    
    $
    39,048Financial Paper Products
    
    
    7,478
    
    
    
    8,606
    
    
    
    (1,128
    )
    
    
    27,955
    
    
    
    26,012
    
    
    
    1,943Other
    
    
    (676
    )
    
    
    (1,967
    )
    
    
    1,291
    
    
    
    (1,749
    )
    
    
    (3,366
    )
    
    
    1,617Total segment operating
income
    
    
    43,267
    
    
    
    18,282
    
    
    
    24,985
    
    
    
    121,334
    
    
    
    78,726
    
    
    
    42,608Net securities gains
    
    
    
    
    
    
    2,738
    
    
    
    (2,738
    )
    
    
    2,115
    
    
    
    7,027
    
    
    
    (4,912
    )Interest expense
    
    
    (24,689
    )
    
    
    (26,127
    )
    
    
    1,438
    
    
    
    (76,536
    )
    
    
    (79,816
    )
    
    
    3,280Other unallocated expenses
    
    
    (4,793
    )
    
    
    (13,597
    )
    
    
    8,804
    
    
    
    (11,020
    )
    
    
    (15,827
    )
    
    
    4,807Income (loss) before income taxes
    
    $
    13,785
    
    
    $
    (18,704
    )
    
    $
    32,489
    
    
    $
    35,893
    
    
    $
    (9,890
    )
    
    $
    45,783
 Table 6  Global Funds Transfer Segment
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeMoney transfer revenue:Fee and other revenue
    
    $
    234,980
    
    
    $
    235,008
    
    
    
    (0
    )%
    
    $
    680,310
    
    
    $
    662,427
    
    
    
    3
    %Investment revenue
    
    
    33
    
    
    
    24
    
    
    NM
    
    
    151
    
    
    
    133
    
    
    NMTotal money transfer revenue
    
    
    235,013
    
    
    
    235,032
    
    
    
    (0
    )%
    
    
    680,461
    
    
    
    662,560
    
    
    
    3
    %Bill payment revenue:Fee and other revenue
    
    
    31,194
    
    
    
    33,072
    
    
    
    (6
    )%
    
    
    96,051
    
    
    
    101,436
    
    
    
    (5
    )%Investment revenue
    
    
    22
    
    
    
    44
    
    
    NM
    
    
    67
    
    
    
    51
    
    
    NMTotal bill payment revenue
    
    
    31,216
    
    
    
    33,116
    
    
    
    (6
    )%
    
    
    96,118
    
    
    
    101,487
    
    
    
    (5
    )%Total Global Funds Transfer revenue:Fee and other revenue
    
    
    266,174
    
    
    
    268,080
    
    
    
    (1
    )%
    
    
    776,361
    
    
    
    763,863
    
    
    
    2
    %Investment revenue
    
    
    55
    
    
    
    68
    
    
    NM
    
    
    218
    
    
    
    184
    
    
    NMTotal Global Funds Transfer
revenue
    
    
    266,229
    
    
    
    268,148
    
    
    
    (1
    )%
    
    
    776,579
    
    
    
    764,047
    
    
    
    2
    %Commissions expense
    
    
    125,935
    
    
    
    126,504
    
    
    
    (0
    )%
    
    
    366,230
    
    
    
    362,579
    
    
    
    1
    %Net revenue
    
    $
    140,294
    
    
    $
    141,644
    
    
    
    (1
    )%
    
    $
    410,349
    
    
    $
    401,468
    
    
    
    2
    %Operating income
    
    $
    36,465
    
    
    $
    11,643
    
    
    
    213
    %
    
    $
    95,128
    
    
    $
    56,080
    
    
    
    70
    %Operating margin
    
    
    13.7
    %
    
    
    4.3
    %
    
    
    
    
    
    
    12.2
    %
    
    
    7.3
    %
  25




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##### Table of Contents



26




---



##### Table of Contents



Table 7  Financial Paper Products Segment
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    %
    
    
    September 30,
    
    
    %(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    ChangeMoney order revenue:Fee and other revenue
    
    $
    15,795
    
    
    $
    17,696
    
    
    
    (11
    )%
    
    $
    49,143
    
    
    $
    52,308
    
    
    
    (6
    )%Investment revenue
    
    
    808
    
    
    
    1,178
    
    
    
    (31
    )%
    
    
    3,030
    
    
    
    4,471
    
    
    
    (32
    )%Total money order revenue
    
    
    16,603
    
    
    
    18,874
    
    
    
    (12
    )%
    
    
    52,173
    
    
    
    56,779
    
    
    
    (8
    )%Official check revenue:Fee and other revenue
    
    
    6,162
    
    
    
    6,809
    
    
    
    (10
    )%
    
    
    19,524
    
    
    
    16,203
    
    
    
    20
    %Investment revenue
    
    
    3,188
    
    
    
    4,946
    
    
    
    (36
    )%
    
    
    11,812
    
    
    
    19,662
    
    
    
    (40
    )%Total official check revenue
    
    
    9,350
    
    
    
    11,755
    
    
    
    (20
    )%
    
    
    31,336
    
    
    
    35,865
    
    
    
    (13
    )%Total Financial Paper Products revenue:Fee and other revenue
    
    
    21,957
    
    
    
    24,505
    
    
    
    (10
    )%
    
    
    68,667
    
    
    
    68,511
    
    
    
    0
    %Investment revenue
    
    
    3,996
    
    
    
    6,124
    
    
    
    (35
    )%
    
    
    14,842
    
    
    
    24,133
    
    
    
    (38
    )%Total Financial Paper Products revenue
    
    
    25,953
    
    
    
    30,629
    
    
    
    (15
    )%
    
    
    83,509
    
    
    
    92,644
    
    
    
    (10
    )%Commissions expense
    
    
    960
    
    
    
    1,729
    
    
    
    (44
    )%
    
    
    3,098
    
    
    
    5,659
    
    
    
    (45
    )%Net revenue
    
    $
    24,993
    
    
    $
    28,900
    
    
    
    (14
    )%
    
    $
    80,411
    
    
    $
    86,985
    
    
    
    (8
    )%Operating income
    
    $
    7,478
    
    
    $
    8,606
    
    
    
    (13
    )%
    
    $
    27,955
    
    
    $
    26,012
    
    
    
    7
    %Operating margin
    
    
    28.8
    %
    
    
    28.1
    %
    
    
    
    
    
    
    33.5
    %
    
    
    28.1
    %
 Net Investment Revenue Analysis
   Net Investment Revenue Analysis
  27




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##### Table of Contents



Liquidity and Capital Resources
   Table 8  Assets in Excess of Payment Service Obligations
 September 30,
    
    
    December 31,(Amounts in thousands)
    
    2010
    
    
    2009Cash and cash equivalents (substantially restricted)
    
    $
    3,292,518
    
    
    $
    3,776,824Receivables, net (substantially restricted)
    
    
    1,081,521
    
    
    
    1,054,381Trading investments and related put options (substantially restricted)
    
    
    
    
    
    
    26,951Available-for-sale investments (substantially restricted)
    
    
    189,133
    
    
    
    298,6334,563,172
    
    
    
    5,156,789Payment service obligations
    
    
    (4,272,734
    )
    
    
    (4,843,454
    )Assets in excess of payment service obligations
    
    $
    290,438
    
    
    $
    313,335
 Cash and Cash Equivalents 
 Credit Facilities   Debt
   Credit Ratings 
 Regulatory Capital Requirements 
 28




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##### Table of Contents



Investment Portfolio 
 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
    
    $
    1,255,723
    
    
    $
    83,627
    
    
    $
    374,891
    
    
    $
    132,500
    
    
    $
    664,705Operating leases
    
    
    52,650
    
    
    
    12,473
    
    
    
    25,139
    
    
    
    9,185
    
    
    
    5,853Other obligations
    
    
    319
    
    
    
    319
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    1,308,692
    
    
    $
    96,419
    
    
    $
    400,030
    
    
    $
    141,685
    
    
    $
    670,558
 Debt
     29




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##### Table of Contents



Analysis of Cash Flows
 Table 10  Cash Flows From Operating Activities
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss)
    
    $
    9,985
    
    
    $
    (18,304
    )
    
    $
    27,645
    
    
    $
    (9,780
    )Total adjustments to reconcile net income (loss)
    
    
    31,455
    
    
    
    74,152
    
    
    
    62,165
    
    
    
    160,041Net cash provided by operating activities before changes in payment
service assets and obligations
    
    
    41,440
    
    
    
    55,848
    
    
    
    89,810
    
    
    
    150,261Change in cash and cash equivalents (substantially restricted)
    
    
    199,629
    
    
    
    97,580
    
    
    
    484,306
    
    
    
    201,276Change in trading investments and related put options, net (substantially
restricted)
    
    
    
    
    
    
    15,000
    
    
    
    29,400
    
    
    
    32,900Change in receivables, net (substantially restricted)
    
    
    (36,141
    )
    
    
    136,758
    
    
    
    (36,046
    )
    
    
    288,048Change in payment service obligations
    
    
    (199,958
    )
    
    
    (304,651
    )
    
    
    (570,784
    )
    
    
    (662,709
    )Net change in payment service assets and obligations
    
    
    (36,470
    )
    
    
    (55,313
    )
    
    
    (93,124
    )
    
    
    (140,485
    )Net cash provided by (used in) operating activities
    
    $
    4,970
    
    
    $
    535
    
    
    $
    (3,314
    )
    
    $
    9,776
   Table 11  Cash Flows From Investing Activities
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Proceeds
from maturities of investments classified as available-for-sale
    
    $
    30,744
    
    
    $
    32,419
    
    
    $
    113,316
    
    
    $
    113,957Purchases of property and equipment
    
    
    (13,349
    )
    
    
    (6,829
    )
    
    
    (28,825
    )
    
    
    (23,148
    )Proceeds from disposal of property and equipment
    
    
    7,537
    
    
    
    
    
    
    
    7,537
    
    
    
    Cash paid for acquisitions, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    (3,210
    )Proceeds from disposal of business
    
    
    
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Net cash provided by investing activities
    
    $
    24,932
    
    
    $
    30,090
    
    
    $
    91,698
    
    
    $
    92,099
  30




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##### Table of Contents



Table 12  Cash Flows From Financing Activities
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Amounts in thousands)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Proceeds from exercise of stock options
    
    $
    98
    
    
    $
    
    
    
    $
    1,616
    
    
    $
    Payments on debt
    
    
    (30,000
    )
    
    
    (625
    )
    
    
    (90,000
    )
    
    
    (1,875
    )Payments on revolving credit facility
    
    
    
    
    
    
    (30,000
    )
    
    
    
    
    
    
    (100,000
    )Net cash used in financing activities
    
    $
    (29,902
    )
    
    $
    (30,625
    )
    
    $
    (88,384
    )
    
    $
    (101,875
    )
  Regulatory
     Critical Accounting Policies
   31




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##### Table of Contents



Recent Accounting Pronouncements
 Recent Accounting Pronouncements
 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.
    
    Significant Dilution to Stockholders and Control of New Investors.The Series B Stock
issued to the investors at the closing of our recapitalization in 2008, dividends accrued on
the Series B Stock post-closing and potential 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 Financial Market Disruptions.Disruption in global capital and credit markets
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.
    
    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.
 32




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##### Table of Contents




    
    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 Act and the regulations to be 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.
    
    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 Office of Foreign Assets Control restrictions, could cause contravention of United
States 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.
    
    Tax Matters.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.If we are deemed to be a subsidiary of a
bank holding company, our ability to engage in other businesses may be limited to those
permissible for a bank holding company.
    
    Internal Controls.Our inability to maintain compliance with the internal control
provisions of Section 404 of the Sarbanes-Oxley Act of 2002 could have 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.
    
    Anti-Takeover Provisions.Our capital structure, our charter documents or specific
provisions of Delaware law 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 criteria for listing on the
New York Stock Exchange.
    
    Other Factors.Additional risk factors as may be described in our other filings with the
SEC from time to time.
 33




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures 
  Changes in Internal Control over Financial Reporting 
 
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Federal Securities Class Actions  In re MoneyGram International, Inc.
Securities Litigation
 Minnesota Stockholder Derivative Claims In re MoneyGram International, Inc.
Derivative Litigation
 34




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##### Table of Contents



ERISA Class Action 
 California Action
 
 ITEM 1A. RISK FACTORS
   As a deemed subsidiary of a holding company regulated under the BHC Act, we are subject to
supervision, regulation and regular examination by the Federal Reserve.
  35




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##### Table of Contents



Changes in laws and regulations could adversely affect us.
  The recent Dodd-Frank Act increases the regulation of financial services companies generally,
including non-bank financial companies supervised by the Federal Reserve.
  We expect to be subject to various provisions of the Consumer Financial Protection Act of 2010
adopted as part of the Dodd-Frank Act, which will result in a new regulator with new and expanded
compliance requirements, which is likely to increase our costs.
  
 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)November 5, 2010
    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
    
    Description3.1
    
    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).10.1
    
    Letter Agreement, by and between MoneyGram International, Inc.
and James E. Shields, effective as of July 13, 2010
(Incorporated by reference from Exhibit 10.7 to Registrants
Quarterly Report on Form 10-Q filed August 9, 2010).10.2
    
    Severance Agreement, by and between MoneyGram International,
Inc. and James E. Shields, dated July 13, 2010 (Incorporated
by reference from Exhibit 10.8 to Registrants Quarterly
Report on Form 10-Q filed August 9, 2010).10.3
    
    Employee Trade Secret, Confidential Information and
Post-Employment Restriction Agreement, by and between
MoneyGram International, Inc. and James E. Shields, dated July
21, 2010 (Incorporated by reference from Exhibit 10.9 to
Registrants Quarterly Report on Form 10-Q filed August 9,
2010).*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