In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - ~~Intra- Entity~~Intra-Entity Transfers of Assets Other Than Inventory. This standard requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments in this standard eliminate the exception for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effective for public companies for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company ~~will not be early adopting~~adopted this standard ~~and will use~~in the first quarter of 2018 using the modified retrospective approach. The modified retrospective approach ~~which will result~~resulted in a ~~reclassification~~cumulative effect of $4.2 million to "Retained loss," consisting of a ~~net~~ deferred charge of $1.3 million offset by a recording of deferred tax balances of $5.5 million from ~~“Other assets”~~"Other assets" on the Condensed Consolidated Balance Sheets.

In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendments in the standard require components of net periodic benefit cost, other than service cost, to ~~“Retained loss”~~be presented outside of income from operations. The Company adopted ASU 2017-07 in the first quarter of 2018. Prior to the adoption of this ASU, the Company presented net periodic benefit costs, other than service cost, in "Compensation and benefits" on the Condensed Consolidated Statements of Operations. Upon adoption, these costs were reclassified to "Other non-operating (income) expense" on the Condensed Consolidated Statements of Operations and the prior period was updated to reflect this change. For the three months ended March 31, 2018 and 2017, net periodic benefit cost, other than service cost, were $1.4 million and $1.3 million, respectively.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in the standard allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the "TCJA"). ASU 2018-02 will not have an impact on the Condensed Consolidated Statements of Operations. The amendments in this standard also require certain disclosures about stranded tax effects. ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The impact of this ASU is still being evaluated, but management does not expect this standard to have a material impact on the Condensed Consolidated Balance Sheets.

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

Merger Agreement — On January 26, 2017, ~~the Company~~MoneyGram International, Inc. entered into an Agreement and Plan of Merger ~~(the~~(as amended by the First Amendment to the Agreement and Plan of Merger, dated April 15, 2017, the “Merger Agreement”) ~~among the Company,~~with Alipay (UK) Limited, a United Kingdom limited company (“Alipay”), Matrix Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Alipay (“Merger Sub”), and, solely for purposes of certain specified provisions inof the Merger Agreement, Alipay (Hong Kong) Holding Limited, a Hong Kong limited ~~company. The~~company, providing for the merger of Merger ~~Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger~~ Sub ~~will merge~~ with and into the Company, ~~(the “Merger”),~~ with the Company surviving ~~the Merger~~ as a wholly owned subsidiary of Alipay and holders of the Company’s common stock would be entitled to receive $13.25 in cash, less any required withholding taxes, for each share of the Company’s common stock, on an as-converted basis, owned at the effective time of the Merger. On April 15, 2017, the Company entered into the First Amendment to the Agreement and Plan of Merger (the ~~“Merger Agreement Amendment”~~“Merger”). The ~~Merger Agreement Amendment increased the merger consideration to $18.00 per share and also increased the termination fee payable by the Company in connection with the termination~~closing of the Merger was subject to certain conditions, including clearance by the Committee on Foreign Investment in the United States (“CFIUS”) under the Defense Production Act of 1950, as amended. On January 2, 2018, the parties to the Merger Agreement ~~under specified circumstances, including the termination~~were advised that CFIUS clearance of the Merger would not be forthcoming, and after further discussion between the parties, they determined to cease efforts to seek CFIUS approval and entered into a Termination Agreement by(the “Termination Agreement”). Pursuant to the Termination Agreement, Alipay paid the Company a termination fee of $30.0 million on January 3, 2018, which is recorded in "Other non-operating (income) expense" on the Condensed Consolidated Statements of Operations. The parties agreed to ~~accept a Company Superior Proposal (as defined in the Merger Agreement), the termination~~release each other from certain claims and liabilities arising out of or relating to the Merger Agreement ~~by Alipay following a change of recommendation by~~or the Company��s Board of Directors, and other customary circumstances. Completion of the Merger is subject to a number of conditions, including the receipt of regulatory approvals. On May 16, 2017, the Company's stockholders voted to approve the Merger.transactions contemplated thereby.

In the first quarter of 2018, the Company initiated a restructuring and reorganization program (the "Digital Transformation Program") to reduce operating expenses, focus on improving profitability and better align the organization to deliver new digital touch-points for customers and agents. In connection with the Digital Transformation Program, which is expected to be completed by the end of 2018, the Company expects between 250 and 350 employees to be affected, possibly through transfers or terminations, representing approximately 9% to 12% of the Company’s global workforce. The Company expects to incur restructuring and reorganization charges totaling approximately $15.0 million, consisting primarily of severance and outplacement benefits (approximately $11.0 million), real estate lease termination and other associated costs (approximately $3.0 million), and reorganization costs (approximately $1.0 million). A substantial portion of such charges was incurred in the first quarter of 2018, and the Company expects approximately $13.0 million of the charges to be paid in cash over the course of 2018 and into the first quarter of 2019. The actual timing and costs of the plan may differ from the Company’s current expectations and estimates.

The following table is a roll-forward of the restructuring costs accrual as of March 31, 2018:

The following table is a summary of the cumulative restructuring and reorganization costs incurred to date in operating expenses and the estimated remaining restructuring and reorganization costs to be incurred as of March 31, 2018:



(Amounts in millions)	Digital Transformation Program
Cumulative restructuring costs incurred to date in operating expenses	$	7.3
Estimated additional restructuring costs to be incurred	6.7
Total restructuring costs incurred and to be incurred	14.0
Estimated reorganization costs to be incurred	1.0
Total restructuring and reorganization costs incurred and to be incurred	$	15.0

The following table summarizes the restructuring costs recorded:

~~Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments.~~ The Company records ~~corresponding~~ payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying ~~transactions occur.~~

The following table summarizes the amount of Settlement assets and Payment service obligations:

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

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

The following table provides a roll-forward of the asset-backed and other securities classified as Level 3, which are measured at fair value on a recurring basis:

Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of debt is estimated using an observable market quotation (Level 2). The following table is a summary of the Company's fair value and carrying value of debt:

The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment service obligations approximate fair value as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

The following table shows the components of the investment portfolio:

As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016, 78%~~2017, 81% and ~~40%~~80%, respectively, of the fair value of the available-for-sale portfolio were invested in residential mortgage-backed securities issued by U.S. government agencies. These securities have the implicit backing of the U.S. government, and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments.

Gains and Losses — For the three and six months ended June 30, 2017, the Company recognized $12.2 million of investment income from the redemption at par value of $12.7 million of a previously impaired asset-backed security in "Investment revenue" on the Condensed Consolidated Statement of Operations. Prior to the redemption, the security had $0.5 million in book value with $7.9 million in unrealized gains. As of June 30, 2017, the Company had $12.7 million in Receivables, net for the redemption.

Contractual Maturities — Actual maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations, sometimes without call or prepayment penalties. Maturities of residential mortgage-backed and asset-backed and other securities depend on the repayment characteristics and experience of the underlying obligations.

The Company uses forward contracts to manage its foreign currency needs and foreign currency exchange risk arising from its assets and liabilities denominated in foreign currencies. While these contracts may mitigate certain foreign currency risk, they are not designated as hedges for accounting purposes and will result in gains and losses. The Company also reports gains and losses from the spread differential between the rate set for its transactions and the actual cost of currency at the time the Company buys or sells in the open market. The following gains (losses) related to assets and liabilities denominated in foreign currencies are included in the “Transaction and operations support” line in the Condensed Consolidated Statements of Operations and in the "Net cash provided by operating activities" line in the Condensed Consolidated Statements of Cash Flows:

The Company's forward contracts are primarily executed with counterparties governed by International Swaps and Derivatives Association agreements that generally include standard netting arrangements. Asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity.

The Company is exposed to credit loss in the event of non-performance by counterparties to its derivative contracts. In the unlikely event the counterparty fails to meet the contractual terms of the derivative contract, the Company’s risk is limited to the fair value of the instrument. The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.

The Company's effective interest rate on senior secured borrowings increased from 4.94% as of December 31, 2017 to 5.55% as of March 31, 2018, due to an increase in the Eurodollar rate.

Revolving Credit Facility— As of ~~June 30, 2017,~~March 31, 2018, the Company had no outstanding letters of credit and no borrowings under its revolving credit facility, leaving ~~$125.0~~$85.8 million of availability thereunder. ~~The Company's effective interest rate increased from 4.25% as of December 31, 2016 to 4.40% as of June 30, 2017 due~~Pursuant to an ~~increase~~amendment to the credit agreement, dated December 12, 2016, among other things, the aggregate revolving credit commitments were decreased from $150.0 million to $125.0 million for the period beginning December 12, 2016 and ending March 27, 2018 (the remainder of the original revolving credit facility term). This amendment also extended the maturity date of the revolving credit commitments of the extending lenders, which represent commitments of $85.8 million in the ~~Eurodollar rate.~~aggregate, from March 28, 2018 to September 28, 2019.

Debt Covenants and Other Restrictions — Borrowings under the credit agreement that provides for the senior secured facility due 2020 and the revolving credit facility are subject to various limitations that restrict the Company’s ability to: incur additional indebtedness; create or incur additional liens; effect mergers and consolidations; make certain acquisitions or investments; sell assets or subsidiary stock; pay dividends and other restricted payments; and effect loans, advances and certain other transactions with affiliates. In addition, the revolving credit facility has covenants that place limitations on the use of proceeds from borrowings under the facility.

The revolving credit facility contains certain financial covenants, in addition to the non-financial covenants described above. The Company is required to maintain asset coverage greater than its payment service obligations. Assets used in the determination of the asset coverage covenant are cash and cash equivalents and settlement assets.

The credit agreement also has quarterly financial covenants to maintain the following interest coverage and secured leverage ratios:



	Interest Coverage Minimum Ratio	Secured Leverage Not to Exceed
January 1, ~~2017 through December 31, 2017~~	~~2.25:1~~	~~4.250:1~~
~~January 1,~~ 2018 through June 30, 2018	2.25:1	4.000:1
July 1, 2018 through December 31, 2018	2.25:1	3.750:1
January 1, 2019 through maturity	2.25:1	3.500:1

As of ~~June 30, 2017,~~March 31, 2018, the Company was in compliance with its financial covenants: our interest coverage ratio was ~~6.58~~6.38 to 1.00 and our secured leverage ratio was ~~3.382~~3.276 to 1.00. We continuously monitor our compliance with our debt covenants.

The following table is a summary of net periodic benefit income for the ~~Company’s~~Company's postretirement medical benefit plan ("Postretirement Benefits"):

Net periodic benefit expense (income) for the Pension and Postretirement Benefits is recorded in "Other non-operating (income) expense" on the Condensed Consolidated Statements of Operations.

Common Stock—No dividends were paid during the three ~~or six~~ months ended ~~June 30, 2017~~March 31, 2018 or ~~June 30, 2016.~~March 31, 2017.

Accumulated Other Comprehensive Loss — The following tables ~~summarize~~are a summary of the changes to Accumulated other comprehensive loss by component:

The following table is a summary of the significant amounts reclassified out of each component of Accumulated other comprehensive loss:

Stock Options — The following table is a summary of the Company’s stock option activity:

~~Note 10 — Income Taxes~~

For the three months ended ~~June 30, 2016, our income tax rate did not differ significantly from our statutory tax rate. For the six months ended June 30, 2016,~~March 31, 2017, the Company recognized an income tax expense of ~~$17.9~~$2.5 million on pre-tax income of ~~$16.8~~$11.3 million. The recorded income tax expense for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 differs from taxes calculated at the statutory rate primarily due to the recognition of excess tax ~~expense of $7.7 million from~~benefits on stock-based compensation vested during the ~~settlement reached with~~quarter.

On December 22, 2017, the legislation commonly known as the “Tax Cuts and Jobs Act” (the “TCJA”) and also known as H.R. 1 - 115^th Congress, which significantly revises the Internal Revenue ~~Service (the "IRS"~~Code of 1986, as amended, was enacted. The TCJA, among other things, contains significant changes to the U.S. corporate tax laws, including i) a permanent reduction of the corporate income tax rate, ii) a limitation on the deductibility of business interest expense, iii) limitation of the deductions for certain executive compensation and other business expenses, iv) limitation of the deduction for certain net operating losses to 80% of current year taxable income, v) an indefinite net operating loss carryforward, vi) immediate deductions for new investments in certain business assets instead of deductions for depreciation expense over time, vii) modification or repeal of many business deductions and credits (including certain foreign tax credits), viii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a modified territorial system (retaining certain existing rules and containing new rules, such as the global intangible low-taxed income provisions, designed to include in the U.S. income tax base certain income generated in non-U.S. territories whether or not that income has been repatriated to the U.S.), ix) a minimum taxing system related to payments deemed to erode the U.S. tax base referred to as a tax on base erosion payments, and x) a one-time tax on accumulated offshore earnings held in cash and illiquid assets (with the latter taxed at a lower rate). As the provisions under the TCJA interact with previously-existing U.S. tax law, separation of income into baskets and required expense allocations can restrict taxpayer’s ability to credit foreign taxes paid whereby causing double taxation. In addition, routine business expenses can be deemed to erode the U.S. tax base. As such, the TCJA had a material impact on our first quarter 2018 income tax expense.

Unrecognized tax benefits are recorded in “Accounts payable and other liabilities” in the Condensed Consolidated Balance Sheets. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the liability for unrecognized tax benefits was ~~$31.9~~$29.7 million and ~~$24.2~~$28.7 million, respectively, exclusive of interest and penalties. For the three months ended March 31, 2018 and 2017, the net amount of unrecognized tax benefits that if recognized could impact the effective tax rate was ~~$17.6~~$17.8 million and $16.7 million, respectively. ~~For the six months ended June 30, 2017, the Company's unrecognized tax benefits increased by $7.7 million as a result of a reorganization of our international business activities.~~ The Company accrues interest and penalties for unrecognized tax benefits through “Income tax expense” in the Condensed Consolidated Statements of Operations. For each of the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, the Company's accrual for interest and penalties increased by ~~$1.1~~$0.6 million. ~~For the six months ended June 30, 2016, the Company's accrual for interest and penalties increased by $0.8 million, which was offset by $0.5 million from the settlement of the U.S. DOJ tax matter.~~ As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company had a liability of ~~$7.5~~$9.5 million and ~~$6.4~~$8.9 million, respectively, accrued for interest and penalties ~~related to its unrecognized tax benefits.~~within "Accounts payable and other liabilities." As a result of the Company's litigation related to its securities losses previously discussed, it is possible that there could be a significant decrease to the total amount of unrecognized tax benefits over the next 12 months. AsHowever, as of ~~June 30, 2017,~~March 31, 2018, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax positions over the next 12 months.

Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation matters. In relation to various legal matters, including those described below, the Company had ~~$0.6~~$95.5 million and ~~$1.2~~$85.5 million of liability recorded in the “Accounts payable and other liabilities” line in the

On November 1, 2017, the Company agreed to a stipulation with the Government that the five-year term of the Company’s DPA be extended for 90 days to February 6, 2018. On January 31, 2018, the Company agreed with the Government that the term of the DPA be extended for an additional 45 days to March 23, 2018; on March 21, 2018, the Company agreed with the Government that the term of the DPA be further extended for an additional 45 days to May 7, 2018; and on May 7, 2018, the Company agreed with the Government that the term of the DPA be further extended for an additional 45 days to June 21, 2018. Any extension of the DPA extends all terms of the DPA, including the term of the monitorship for an equivalent period. The purpose of the extensions is to provide the Company and the Government additional time to discuss whether the Company is in compliance with the DPA. There can be no assurance that the Company and the Government will continue to be able to negotiate a mutually satisfactory outcome during the latest extension (or any further short-term extension of the DPA) or that such outcome will not include a further extension of the DPA, financial penalties or additional restrictions on the Company. Furthermore, there can be no assurance that the Government will not seek any other remedy, including criminal prosecution and financial penalties, in lieu of an extension of the DPA and monitorship.

The Company has recorded a $95.0 million accrual in connection with a possible resolution of this matter, based on the facts and circumstances known at the time. However, the Company is unable to reasonably estimate the ultimate loss and no assurance can be given that future costs and payments made in connection with this matter will not materially exceed the amount currently recorded or that the Government will not also seek to impose non-monetary remedies or penalties.

Other Matters — The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Tax Litigation — The IRS completed its examination of the Company’s consolidated income tax returns through 2013 and issued Notices of Deficiency for 2005-2007 and 2009, and an Examination Report for 2008. The Notices of Deficiency and Examination Report disallow, among other items, approximately $900.0 million of ordinary deductions on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007

summary judgment upholding the remaining adjustments in the Notices of Deficiency. The Company filed a notice of appeal with the U.S. Tax Court on July 27, 2015 for an appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, and on November 15, 2016, the Fifth Circuit vacated the Tax Court's decision and remanded the case to the Tax Court for further proceedings. The Company filed a motion for summary judgment in the Tax Court on May 31, 2017. On August 23, 2017, the IRS filed a motion for summary judgment and its response to the Company’s motion for summary judgment. The Tax Court has directed the parties to agree to a joint stipulation of facts to be filed with the court, at which point the Company expects to file a revised memorandum in support of its motion for summary judgment, and the IRS is expected to file its cross motion for summary judgment.

The January 2015 Tax Court decision was a change in facts which warranted reassessment of the Company's uncertain tax position. Although the Company believes that it has substantive tax law arguments in favor of its position and has appealed the ruling, the reassessment resulted in the Company determining that it is no longer more likely than not that its existing position will be sustained. Accordingly, the Company re-characterized certain deductions relating to securities losses to be capital in nature, rather than ordinary. The Company recorded a full valuation allowance against these losses in the quarter ended March 31, 2015. This change increased "Income tax expense" in the Consolidated Statements of Operations in the quarter ended March 31, 2015 by $63.7 million. During 2015, the Company made payments to the IRS of $61.0 million for federal tax payments and associated interest related to the matter. The November 2016 Fifth Circuit decision to remand the case back to the U.S. Tax Court does not change the Company’s current assessment regarding the likelihood that these deductions will be sustained. Accordingly, no change in the valuation allowance was made as of ~~June 30, 2017.~~March 31, 2018. Pending the outcome of the Tax Court proceeding, the Company may be required to file amended state returns and make additional cash payments of up to ~~$18.0~~ $18.7 million on amounts that have previously been accrued.

For all periods in which it is outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") is included in the weighted-average number of common shares outstanding utilized to calculate basic earnings ~~(loss)~~ per common share because the D Stock is deemed a common stock equivalent. Diluted earnings ~~(loss)~~ per common share reflects the potential dilution that could result if securities or incremental shares arising out of the Company’s stock-based compensation plans were exercised or converted into common stock. Diluted earnings ~~(loss)~~ per common share assumes the exercise of stock options using the treasury stock method.

The following table is a reconciliation of the weighted-average amounts used in calculating earnings ~~(loss)~~ per share:

Potential common shares are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are anti-dilutive in periods of net loss available to common stockholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company’s common stock for the ~~period and restricted stock units are anti-dilutive if they are subject to performance conditions that have not been met.~~period. The following table summarizes the weighted-average potential common shares excluded from diluted earnings ~~(loss)~~ per common share as their effect would be anti-dilutive:

The Company’s reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. The Company has two reporting segments: Global Funds Transfer and Financial Paper Products. SeeNote 1 — Description of the Business and Basis for Presentation for further discussion on our segments.One of the ~~Company’s~~Company's agents for ~~both~~

the total of the Global Funds Transfer ~~segment~~ and ~~the~~ Financial Paper Products ~~segment~~segments accounted for 17% and 18% of total revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017,~~, respectively, and~~ ~~18%~~ ~~and 19% of total revenue for the three and six months ended June 30, 2016,~~ respectively.

The following table is a summary of the total revenue by segment:

The following table is a summary of the operating income by segment and detail of the income before income taxes:

The following table sets forth ~~the~~ assets by segment:

In the first quarter of 2018, the Company adopted ASU 2014-09 using the cumulative effect transition method for all contracts. There was no transition impact on the Condensed Consolidated Financial Statements from the adoption of this ASU. The Company earns revenues from consideration specified in contracts with customers and recognizes revenue when it satisfies its performance obligations by transferring control over its services and products to customers. The following is a description of the principal activities, separated by reporting segments, from which the Company generates revenues. For more information about the Company's reporting segments, see Note 14 — Segment Information.

Money transfer fee revenue — The Company earns money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads on money transfer transactions involving different “send” and “receive” currencies. Fees are collected from consumers at the time of transaction. In a cash-to-cash money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally a fixed fee or is based on a percentage of the fee charged to the consumer. When a money transfer transaction is initiated at a MoneyGram-owned store, full-service kiosk or via our online platform, typically only the receiving agent earns a commission. Each money transfer is considered a separate agreement between the Company and the consumer and includes only one performance obligation that is satisfied at a point in time, which is when the funds are made available for pick up. Money transfer funds are typically available for pick up within 24 hours of being sent. The consumer is in control of the service, as the consumer picks the "send" and "receive" locations as well as the transaction currency. Normally, the Company provides fee refunds to consumers only if the transaction is canceled within 30 minutes of initiating the transfer and the transfer amount has not been picked up by the receiver. As such, fee refunds are accounted for within the same period as the origination of the transaction and no liability for the amount of expected returns is recorded on the Condensed Consolidated Balance Sheets. The Company recognizes revenues on a gross basis for money transfer services as the Company is considered the principal in these transactions.

Bill payment services fee revenue — Bill payment revenues are earned primarily from fees charged to consumers for each transaction completed. Our primary bill payment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent and Company-operated locations in the U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through our Digital solutions. Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards with cash at an agent location, Company-operated locations or through moneygram.com with a credit or debit card. We offer consumers same-day and two or three day payment service options; the service option is dependent upon our agreement with the biller. Each bill payment service is considered a separate agreement with the consumer and includes only one performance obligation that is satisfied at a point in time, when the funds are transferred to the designated institution, which is generally within the same day. The consumer is in control of the service, as the consumer picks out the "send" location and time. MoneyGram does not offer refunds for bill payment services and revenue is recognized on a gross basis as the Company is considered the principal in these transactions.

Other revenue — Includes breakage income, fees from royalties, early contract terminations, insufficient funds and other one-time charges. The Company recognizes breakage revenue for unclaimed money transfers when the likelihood of consumer pick-up becomes remote based on historical experience and there is no requirement for remitting balances to government agencies.

Money order fee revenue — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds underlying outstanding money orders. The Company contracts with agents and/or financial institutions for this product and associated services. We sell money orders under the MoneyGram brand and on a private label or on a co-branded basis with certain agents and financial institutions in the U.S. The Company recognizes revenue when an agent sells a money order because the funds are immediately made available to the consumer. As such, each sale of a money order and related service is considered a separate performance obligation that is satisfied at a point in time.

Official check outsourcing services fee revenue — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use official checks to pay their own obligations. Similar to money orders, the Company generates revenue from official check outsourcing services through U.S. banks and credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks. The Company’s consumer for official checks is considered the financial institution. The official checks services and products are considered a bundle of services and products that are provided to the financial institution on an ongoing basis. As such, revenue from these services is recognized on a monthly basis. Revenue corresponds directly with the value of MoneyGram's services and/or products completed to date and for which the Company has a right to invoice. Monthly revenue may vary based on the number of official checks issued and other ancillary services provided to the financial institution.

Other revenue— Includes fees from money order service revenue, proof adjustments, early contract terminations, money order photo and replacement fees and other one-time charges. The Company recognizes service revenue from money orders that have not been redeemed within a one year period from issuance. Proof adjustment fees are generally unresolved and not recouped as they pertain to immaterial bank variances. The Company recognizes as revenue the net proof adjustments amount on a monthly basis.

In the following table, revenue is disaggregated by services and products for each segment and timing of revenue recognition for such services and products excluding other revenue:



	Three Months Ended March 31,
(Amounts in millions)	2018		2017
Global Funds Transfer revenue
Money transfer fee revenue	$	330.6	$	338.5
Bill payment services fee revenue	20.8		25.1
Other revenue	6.0		3.2
Total Global Funds Transfer fee and other revenue	357.4		366.8
Financial Paper Products revenue
Money order fee revenue	3.1		3.5
Official check outsourcing services fee revenue	2.2		2.4
Other revenue	7.4		7.6
Total Financial Paper Products fee and other revenue	12.7		13.5
Investment revenue	9.9		5.8
Total revenue	$	380.0	$	386.1

Timing of revenue recognition:
Services and products transferred at a point in time	$	354.5	$	367.1
Products transferred over time	2.2		2.4
Total revenue from services and products	356.7		369.5
Investment revenue	9.9		5.8
Other revenue	13.4		10.8
Total revenue	$	380.0	$	386.1

Due to the short-term nature of the Company's services and products, the amount of contract assets and liabilities on the Condensed Consolidated Balance Sheets for the three months ended March 31, 2018 and 2017 is negligible. Assets for unsettled money transfers, money orders and consumer payments are included in "Settlement assets" with a corresponding liability recorded in "Payment service obligations" on the Condensed Consolidated Balance Sheets. For more information on these assets and liabilities see Note 3 — Settlement Assets and Payment Service Obligations.

The following information represents Condensed Consolidating Balance Sheets as of March 31, 2018 and December 31, 2017, along with Condensed Consolidating Statements of Operations and Condensed Consolidating Statements of Cash Flows for the three months ended March 31, 2018 and 2017. The condensed consolidating financial information presents financial information in separate columns for MoneyGram International, Inc. on a Parent-only basis carrying its investment in subsidiaries under the equity method; Guarantors on a combined basis, carrying investments in subsidiaries that are not expected to guarantee the debt (collectively, the “Non-Guarantors”) under the equity method; Non-Guarantors on a combined basis; and eliminating entries. The eliminating entries primarily reflect intercompany transactions, such as accounts receivable and payable, fee revenue and commissions expense and the elimination of equity investments and income in subsidiaries.

MoneyGram is a global provider of innovative money transfer services and is recognized worldwide as a financial connection to friends and family. Whether online, through a mobile device, at a kiosk or in a local store, we connect consumers in any way that is convenient for them. We also provide bill payment services, issue money orders and process official checks in the U.S. and in select countries and territories. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and financial institutions. WeMoneyGram also ~~have~~has limited Company-operated retail ~~locations in the U.S. and Western Europe.~~locations. Additionally, we offer Digital solutions, which include moneygram.com, mobile solutions, account deposit and kiosk-based services.

We manage our revenue and related commissions expense through two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfer services in approximately 350,000 agent locations in more than 200 countries and territories. Our global money transfer services are our primary revenue driver, accounting for ~~87% and 88%~~89% of total revenue for the three ~~and six~~ months ended ~~June 30, 2017, respectively.~~March 31, 2018. The Global Funds Transfer segment also provides bill payment services to consumers through substantially all of our money transfer agent and Company-operated locations in the U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through our Digital solutions. The Financial Paper Products segment provides money order services to consumers through retail locations and financial institutions located in the U.S. and Puerto Rico, and provides official check services to financial institutions in the U.S. Corporate expenses that are not related to our segments' performance are excluded from operating income for Global Funds Transfer and Financial Paper Products segments.

During the ~~first half of 2017,~~three months ended March 31, 2018, worldwide political and economic conditions remained ~~unstable,~~highly variable, as evidenced by ~~high unemployment rates~~both economic growth and challenges in key markets, ~~historically low oil prices, weak currencies,~~ low currency reserves, currency controls in certain countries and ~~restricted lending activity, among other factors.~~a volatile immigration environment. Also, there is continued political unrest and economic ~~unrest~~weakness in parts of the Middle East and Africa that contributed to the volatility. The remittance industry has generally been resilient during times of economic softness as money transfers are deemed essential to many, with the funds used by the receiving party for food, housing and other basic needs. Given the global reach and extent of the current economic conditions, the growth of money transfer volumes and the average face value of money transfers continued to ~~fluctuate~~be highly variable by corridor and ~~country during the first half of 2017.~~country.

The June 23, 2016 referendum by British voters to exit the European Union (referred to as Brexit), which was followed by Britain providing official notice to leave the European Union in March of 2017, introduced additional volatility and uncertainty in global markets and currency exchange rates. So far the primary impact of Brexit has been the weakening of the British pound compared to the U.S. dollar, which has negatively impacted our reported revenue on a year-over-year basis. However, our restructuring efforts and the diversification of our employment base outside of the U.S. better aligned the currency exposure of our expenses with our revenues, which lessens the currency impact. We ~~are currently unable to determine the long term impact that Brexit will have on us and the global economic environment, as any impact will depend, in part,~~generally compete for money transfer consumers on the ~~outcome~~basis of ~~tariff, trade, regulatory~~trust, convenience, price, technology and ~~other negotiations.~~

We are making progress on our journey toward becoming a digitally-enabled, customer-centric organization despite competition from new technologies that allow consumers to send and receive money in a variety of ways. We ~~generally compete for money transfer consumers on the basis of trust, convenience, price, technology and brand recognition. We~~ believe that our continued investment in innovative products and services, particularly Digital solutions, such as the global expansion of moneygram.com, mobile solutions and account deposit ~~and kiosk-based~~ services, positions the Company to ~~grow~~accelerate our ~~revenues~~digital transformation and diversify our product and service ~~offerings.~~offerings to meet consumers' needs. Digital solutions revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 was ~~$52.0~~$53.4 million and ~~$103.2~~$51.2 million, respectively, or 16% and 15%, respectively, of money transfer revenue. Moneygram.com revenue grew by $4.2 million, or 21%, over the first quarter of 2017.

In the first quarter of 2018, the Company initiated a restructuring and reorganization program (the "Digital Transformation Program") to reduce operating expenses, focus on improving profitability, and better align the organization to deliver new digital touch-points for ~~each period.~~customers and agents. In connection with the Digital ~~solutions revenue for~~Transformation Program, which is expected to be completed by the ~~three~~end of 2018, the Company expects between 250 and ~~six months ended June 30, 2016~~350 employees to be affected, possibly through transfers or terminations, representing approximately 9% to 12% of the Company’s global workforce. The Company expects to incur restructuring and reorganization charges totaling approximately $15.0 million, consisting primarily of severance and outplacement benefits (approximately $11.0 million), real estate lease termination and other associated costs (approximately $3.0 million), and reorganization costs (approximately $1.0 million). A substantial portion of such charges was ~~$47.2~~incurred in the first quarter of 2018, and the Company expects approximately $13.0 million of the charges to be paid in cash over the course of 2018 and ~~$92.4 million, respectively, or 13%~~into the first quarter of ~~money transfer revenue for each period.~~2019. The actual timing and costs of the plan may differ from the Company’s current expectations and estimates.

This discussion of trends expected to impact our business in ~~2017~~the remainder of 2018 is based on information presently available and reflects certain assumptions, including assumptions regarding future economic conditions. Differences in actual economic conditions compared with our assumptions could have a material impact on our results. See ~~“Cautionary~~“Cautionary Statements Regarding Forward-Looking ~~Statements"~~Statements” included further below and “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A ~~“Risk Factors" included in~~of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 for additional factors that could cause results to differ materially from those contemplated by the following forward-looking statements.

We continue to see increased opportunities to capitalize on growth and expansion both geographically and through product and service offerings. ~~The strengthened U.S. dollar~~However, economic and political instability, which ~~have led to increased~~can result in currency volatility, liquidity pressure on central banks and pressure on labor markets in certain countries, may continue to impact our business in ~~2017.~~2018. Additionally, ~~competitors'~~ pricing pressure continues to negatively ~~affect~~impact our growth in the U.S. to U.S. channel, along with ~~geopolitical~~economic issues in the Middle East and Africa, which have restricted our ability to ~~transact.~~transact in certain markets.

~~For~~In the first quarter of 2018, the Company and Walmart Inc. (“Walmart”), our ~~Financial Paper Products segment, we expect~~largest agent, announced the ~~decline in overall paper-based transactions to continue primarily due to continued migration~~launch of Walmart2World, Powered by MoneyGram, a new money transfer service that allows customers to ~~other payment methods. Our investment revenue, which consists primarily of interest income generated through~~send money from Walmart in the ~~investment of cash balances received from the sale of our Financial Paper Products, is dependent on the interest rate environment.~~U.S. to any MoneyGram location in more than 200 countries. The Company expects the Walmart2World products to ~~see~~have a ~~positive~~negative impact on our ~~investment~~top-line growth due to lower revenue ~~if interest rates increase.~~per transaction. We also renewed our long-term agreement to offer all MoneyGram products and services at Walmart for two more years.

We continue to see a trend among state, federal and international regulators toward enhanced scrutiny of anti-money laundering compliance programs, as well as consumer fraud prevention and education. Compliance with laws and regulations is a highly complex and integral part of our day-to-day operations; thus we have continued to increase our compliance personnel headcount and make investments in our compliance-related technology and infrastructure. Our compliance enhancement program is focused on improving our services for consumers and completing the programs recommended in adherence with our settlement with the U.S. Attorney’s Office for the Middle District of Pennsylvania ("MDPA") and the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice ("U.S. DOJ"). For the six months ended June 30, 2017,Additionally, the Company ~~has invested $19.2 million in its compliance enhancement program, which includes $13.2 million of capital expenditures~~continues to implement various consumer protection initiatives and ~~$6.0 million of expenses incurred.~~

On December 22, 2017, the legislation commonly known as the “Tax Cuts and Jobs Act” (the “TCJA”) and also known as H.R. 1 - 115^th Congress, which significantly revises the Internal Revenue Code of 1986, as amended, was ~~selected pursuant~~enacted. The TCJA, among other things, contains significant changes to the U.S. corporate tax laws, including i) a permanent reduction of the corporate income tax rate, ii) a limitation on the deductibility of business interest expense, iii) limitation of the deductions for certain executive compensation and other business expenses, iv) limitation of the deduction for certain net operating losses to 80% of current year taxable income, v) an indefinite net operating loss carryforward, vi) immediate deductions for new investments in certain business assets instead of deductions for depreciation expense over time, vii) modification or repeal of many business deductions and credits (including certain foreign tax credits), viii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a ~~requirement~~modified territorial system (retaining certain existing rules and containing new rules, such as the global intangible low-taxed income provisions, designed to include in the U.S. income tax base certain income generated in non-U.S. territories whether or not that income has been repatriated to the U.S.), ix) a minimum taxing system related to payments deemed to erode the U.S. tax base referred to as a tax on base erosion payments, and x) a one-time tax on accumulated offshore earnings held in cash and illiquid assets (with the latter taxed at a lower rate). As the provisions under the TCJA interact with previously-existing U.S. tax law, separation of income into baskets and required expense allocations can restrict taxpayer’s ability to credit foreign taxes paid whereby causing double taxation. In addition, routine business expenses can be deemed to erode the U.S. tax base. As such, the TCJA had a material impact on our first quarter 2018 income tax expense.

As the TCJA is broad and complex, we continue to examine the impact it may have on us, and it could adversely affect our future effective tax rate, our business, financial condition, cash flows, and results of operations. Given its recent enactment, the regulations are still forthcoming and other interpretive federal and state guidance is limited. As guidance is published regarding the interpretation

of the TCJA or if there are legislative modifications or amendments, the changes could have a material effect on the Company's federal and state income tax expense in future periods. See "Income Taxes" section further below and Note 11 — Income Taxes of the Notes to the Condensed Consolidated Financial Statements for more information on the impacts from the TCJA.

The June 23, 2016 referendum by British voters to exit the European Union (referred to as Brexit), which was followed by Britain providing official notice to leave the European Union in March of 2017, introduced additional uncertainty in global markets and currency exchange rates. We are currently unable to determine the long term impact that Brexit will have on us, as any impact will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. With the effective date of Brexit approaching as the UK is due to leave the European Union in the first quarter of 2019, the Company anticipates making a number of operational changes during 2018 to accommodate any potential business impact.

For our Financial Paper Products segment, we expect the decline in overall paper-based transactions to continue primarily due to continued migration by customers to other payment methods. Our investment revenue, which consists primarily of interest income generated through the investment of cash balances received from the sale of our ~~settlement with~~Financial Paper Products, is dependent on the ~~MDPA and U.S. DOJ. We have received four annual reports from the compliance monitor and we are continuing~~interest rate environment. The Company would see a positive impact on its investment revenue if interest rates continue to make investments in our compliance systems and operations as part of our compliance enhancement program. We incurred $5.4 million and $8.2 million of expense directly related to the compliance monitor for the three and six months ended June 30, 2017, respectively.rise.

This Quarterly Report on Form 10-Q includes financial information prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") as well as certain non-GAAP financial measures that we use to assess our overall performance.

GAAP Measures — We utilize certain financial measures prepared in accordance with GAAP to assess the Company's overall performance. These measures include, but are not limited to: fee and other revenue, fee and other commissions expense, fee and other revenue less commissions, operating income and operating margin. Due to our regulatory capital requirements, we deem certain ~~payment service~~ assets as settlement assets. Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and customer payments. Settlement assets include settlement cash and cash equivalents, receivables, net, interest-bearing investments and available-for-sale investments. See Note 23 — Settlement Assets and Payment Service Obligationsof the Notes to the Condensed Consolidated Financial Statements for additional disclosure.

Non-GAAP Measures — Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. While we believe that these metrics enhance investors' understanding of our business, these metrics are not necessarily comparable with similarly named metrics of other companies. The following are non-GAAP financial measures we use to assess our overall performance:

EBITDA (Earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization)

Adjusted EBITDA (EBITDA adjusted for certain significant items) — Adjusted EBITDA does not reflect cash requirements necessary to service interest or principal payments on our indebtedness or tax payments that may result in a reduction in cash available.

Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes, cash payments for capital expenditures and cash payments for agent signing bonuses) — Adjusted Free Cash Flow does not reflect cash payments related to the adjustment of certain significant items in Adjusted EBITDA.

Constant Currency — Constant currency metrics assume that amounts denominated in foreign currencies are translated to the U.S. dollar at rates consistent with those in the prior year.

The Company utilizes specific terms related to our business throughout this document, including the following:

Corridor — With regard to a money transfer transaction, the originating "send" location and the designated "receive" location are referred to as a corridor.

Corridor mix — The relative impact of increases or decreases in money transfer transaction volume in each corridor versus the comparative prior period.

Face value — The principal amount of each completed transaction, excluding any fees related to the transaction.

Foreign currency — The impact of foreign currency exchange rate fluctuations on our financial results is typically calculated as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior-year period’s currency exchange rates. We use this method to calculate the impact of changes in foreign currency exchange rates on revenues, commissions and other operating expenses for all countries where the functional currency is not the U.S. dollar.

The following table is a summary of the results of operations:

The following table is a summary of the Company's revenues:

Revenue declined primarily due to the decline in the Global Funds Transfer

The following table is a summary of the operating ~~expenses, excluding commissions expense:~~expenses:

For the three ~~and six~~ months ended ~~June 30, 2017,~~March 31, 2018, total operating expenses as a percentage of total revenue ~~remained relatively flat~~increased when compared to the same ~~periods~~period in ~~2016. The following factors impacted our total operating expenses for the three~~2017, mainly due to an increase in transaction and ~~six months ended June 30, 2017:~~operations support as a ~~decrease in cash-based incentive compensation, expenses~~result of an additional $10.0 million accrual related to the ~~Merger (as defined~~deferred prosecution agreement (the "DPA") and ~~described~~an increase in ~~Note 1~~ —~~Description of the Business~~compensation and ~~Basis of Presentation~~ ~~of the Notes to Condensed Consolidated Financial Statements) and a decrease in net realized foreign exchange gains, all~~benefits driven by severance costs, both of which are discussed below.

Total commissions and direct transaction expenses as a percent of revenues decreased for the three months ended March 31, 2018, when compared to the same period in ~~more detail below.~~2017, due to continued rationalization and negotiation of our agent contracts. See "

Compensation and benefits include salaries and benefits, management incentive programs, related payroll taxes and other employee related costs. The following table is a summary of the change in compensation and benefits from ~~2016~~2017 to ~~2017~~:2018:

For the three months ended ~~June 30, 2017,~~March 31, 2018, compensation and benefits ~~expense decreased primarily~~increased due to ~~lower cash-based incentive compensation expense~~restructuring and ~~a decrease in other employee benefits~~reorganization costs primarily driven by ~~decreased~~ severance, ~~costs. The decrease~~changes in exchange rates due to a weaker U.S. dollar and higher employee stock-based compensation and benefits expense for the six months ended June 30, 2017 was driven by the same factors that impacted the three months ended June 30, 2017, but was partially offset by an increase in salaries and related payroll taxes driven by higher headcount.expense.

Transaction and operations support primarily includes marketing, professional fees and other outside services, telecommunications, agent support costs, including forms related to our products, non-compensation employee costs, including training, travel and relocation costs, bank charges and the impact of foreign exchange rate movements on our monetary transactions, assets and liabilities denominated in a currency other than the U.S. dollar.

The following table is a summary of the change in transaction and operations support from ~~2016~~2017 to ~~2017:~~2018:

For the three months ended ~~June 30, 2017,~~March 31, 2018, transaction and operations support ~~expense~~ increased primarily due to ~~Merger-related costs,~~ an increase in ~~direct monitor costs~~legal expenses driven by the additional $10.0 million accrual related to the DPA, which is discussed in more detail in Note 12 — Commitments and ~~an increase in investments in~~Contingencies of the ~~compliance enhancement program.~~Notes to the Condensed Consolidated Financial Statements. The increase was partially offset by a decrease in ~~costs for~~ outsourcing, independent contractor and consultant ~~costs. For the six months ended June 30, 2017, the increase in transaction and operations support expense was~~costs driven by ~~the same factors that impacted the three months ended as well as~~cost saving initiatives and a decrease in ~~net realized foreign exchange gains related to certain currency purchases which traded outside of their historical norms in the first half of 2016.~~marketing costs.

Occupancy, equipment and supplies expense ~~includes~~include facilities rent and maintenance costs, software and equipment maintenance costs, freight and delivery costs and supplies.

For the three ~~and six~~ months ended ~~June 30, 2017,~~March 31, 2018, occupancy, equipment and supplies expense increased ~~$2.2 million and $2.3 million, respectively, when compared to the same periods in 2016~~ as a result of an increase in ~~equipment~~ maintenance ~~costs.~~

Depreciation and amortization includes depreciation on computer hardware and software, agent signage, point of sale equipment, capitalized software development costs, office furniture, equipment and leasehold improvements and amortization of intangible assets.

~~For the three~~Depreciation and ~~six months ended June 30, 2017, depreciation and~~ amortization decreased by $1.9 million and $4.7 million, respectively, when compared to the same periods in 2016 as a result of higher costs incurred in the first half of 2016 from the accelerated depreciation expense on our non-core point of sale equipment that was early retired.

Money Transfer Fee and Other Revenue

The following table details the ~~six months ended June 30,~~changes in money transfer fee and other revenue from 2017 ~~interest expense decreased $0.5 million when compared~~ to ~~the same period in 2016 due to our lower debt balance from additional principal payments made in the fourth quarter of 2016.~~2018:

For the three months ended ~~June 30, 2016,~~March 31, 2018, the ~~Company recognized an income tax expense~~decrease in money transfer fee and other revenue was primarily driven by a decrease in money transfer transactions volume due to newly implemented compliance measures and increased competition in the U.S. along with weakness in parts of ~~$1.9 million on~~Africa. The decline was partially offset by growth in Europe, Middle East and South America.

We also experienced growth in our Digital money transfers. Total Digital money transfer revenue grew 4% over first quarter 2017 as strong moneygram.com growth was partially offset by a ~~pre-tax income~~decline in revenue from kiosks and global economic trends. Digital represented 16% of ~~$5.0 million which did not differ significantly from our statutory tax rate.~~ total money transfer revenue.

For the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2018, bill payment fee and other revenue decreased by $4.3 million due to lower transactions resulting from shifts in industry mix.

For the three months ended ~~June 30, 2016 differs~~March 31, 2018, fee and other commissions decreased $9.4 million. The decline was primarily from ~~taxes calculated at~~decreases in money transfer revenue, money transfer corridor and agent mix, and bill payment revenue and commissions rates, which was partially offset by changes in exchange rates due to a weaker U.S. dollar compared to prior year.

For the ~~statutory rate~~three months ended March 31, 2018, direct transaction expense increased by $0.4 million, primarily due to ~~tax expense~~an increase in moneygram.com revenues.

Commissions expense for the ~~Deferred Prosecution Agreement with~~Financial Paper Product increased by $2.1 million for the ~~MDPA~~three months ended March 31, 2018 over the prior period. The increase was driven by an increase in investment commission expense due to higher interest rates, partially offset by the decline in fee and the U.S. DOJ (the "Deferred Prosecution Agreement"), the reversal of tax benefits of $3.1 million on share-based compensation and a tax expense of $1.1 million related to non-deductible executive compensation.other commissions expense.

The following table provides a summary overview of operating income and operating margin:

For the three ~~and six~~ months ended ~~June 30, 2017,~~March 31, 2018, the Company experienced a decrease in Global Funds Transfer segment operating income and operating margin primarily ~~from a decrease in segment revenue when compared~~due the additional $10.0 million accrual related to the ~~three~~DPA matter and ~~six months ended June 30, 2016. For~~restructuring and reorganization costs incurred in the ~~three and six months ended June 30, 2017,~~first quarter of 2018. Our Financial Paper Products segment operating income and ~~operating~~ margin increased primarily due to the increase in investment revenue. Other operating loss decreased when compared to the ~~three~~same period in 2017 primarily due to the prior year period including costs related to a proposed merger with Ant Financial that was terminated in January of 2018. See Note 1 — Description of Business and ~~six~~Basis of Presentation of the Notes to the Condensed Consolidated Financial Statements for more information about the terminated merger.

For the three months ended ~~June 30, 2016,~~March 31, 2018, interest expense increased $1.5 million as a result of higher interest rates when compared to the same period in 2017.

For the three months ended March 31, 2018, the Company had other non-operating income of $28.5 million, which included $30.0 million related to the terminated merger.

Although we believe that EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency measures enhance investors' understanding of our business and performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for the accompanying GAAP financial measures. These metrics are not necessarily comparable with similarly named metrics of other companies.

The following table is a reconciliation of our non-GAAP financial measures to the related GAAP financial measures:

For the three months ended March 31, 2018, Adjusted Free Cash Flow increased by $2.6 million when compared to the same period in 2016 due to the same factors that impacted Adjusted EBITDA and a decline in severance and related costs, partially offset by Merger-related costs and increased direct monitor costs. For the six months ended June 30, 2017, EBITDA decreased by $3.5 million from the

See "Results of Operations" and "Analysis of Cash Flows" sections for additional information regarding these changes.

The following table shows the components of the Company's cash and cash equivalents and settlement assets:

To ensure we maintain adequate liquidity to meet our ~~operating needs~~payment service obligations at all times, we keep a significant portion of our investment portfolio in cash and cash equivalents and interest-bearing investments at financial institutions rated A- or better by two of the following three rating agencies: Moody’s Investor Service ("Moody's"), Standard & Poor's ("S&P"), and Fitch Ratings, Inc. ("Fitch"); and in AAA rated U.S. government money market funds. If the rating agencies have split ratings, the Company uses the lower of the highest two out of three ratings across the agencies for disclosure purposes. If ~~none of~~ the ~~three rating agencies have the same rating,~~institution has only two ratings, the Company uses the ~~lowest rating across~~lower of the ~~agencies~~two ratings for disclosure purposes. As of ~~June 30, 2017,~~March 31, 2018, cash and cash equivalents (including unrestricted and settlement cash and cash equivalents) and interest-bearing investments totaled ~~$2.7~~$2.8 billion. Cash and cash equivalents consist of interest-bearing deposit accounts, non-interest bearing transaction accounts and money market securities; interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months.

Our investment portfolio includes ~~$8.3~~$6.7 million of available-for-sale investments as of ~~June 30, 2017.~~March 31, 2018. U.S. government agency residential mortgage-backed securities ~~composed $6.5~~compose $5.4 million of our available-for-sale investments, while asset-backed and other securities ~~composed~~compose the remaining ~~$1.8~~$1.3 million.

For the three and six months ended June 30, 2017, the Company recognized $12.2 million of investment income from the redemption at par value of $12.7 million of a previously impaired asset-backed security in "Investment revenue" on the Condensed Consolidated Statement of Operations. As of ~~June 30, 2017,~~March 31, 2018, the Company had ~~$12.7~~outstanding balance of $911.8 million ~~in Receivables, net for the redemption. See Note 4~~ —~~Investment Portfolio~~ ~~of the Notes to Condensed Consolidated Financial Statements for additional disclosure related to the redemption.~~

As of ~~June 30, 2017,~~March 31, 2018, our credit ratings from Moody’s and S&P were B1 with a stable outlook and B+ ~~on CreditWatch Positive,~~with a stable outlook, respectively. Our credit facilities, regulatory capital requirements and other obligations will not be impacted by a future change in our credit ratings.

For the ~~six~~three months ended ~~June 30, 2017, net~~March 31, 2018, cash provided by operating activities increased due to the $30.0 million payment related to the terminated merger with Ant Financial and a decrease spent on outsourcing, independent contractor and consultant as part of ongoing cost savings initiatives. The increase was partially offset by an increase in signing bonus payments of $1.6 million driven by the timing of agent expansion and retention efforts, and an increase in payments for interest of $1.5 million.

For the three months ended March 31, 2018, net cash used in investing activities decreased by ~~$3.1~~$6.3 million primarily due to a decrease in capital expenditures when compared to the same period in 2016. The decrease in cash from operating activities was driven by an increase in payments for prepaid expenses related to software licenses and maintenance, payments on our pension and postretirement benefits obligation and other legal and contingent matters, an increase in agent signing bonus payments due to timing of agent expansion and retention efforts, partially offset by an increase in net income of $16.1 million.2017.

For the ~~six~~three months ended ~~June 30, 2017 and 2016, investing activities~~March 31, 2018, net cash used ~~cash of $40.1 million and $38.1 million, respectively, for capital expenditures.~~



Delaware		16-1690064
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)	~~(I.R.S. Employer~~	Identification No.)
2828 N. Harwood St., 15^th15th Floor Dallas, Texas		75201 (Zip Code)
(Address of principal executive offices)	~~(Zip Code)~~



	PART I. FINANCIAL INFORMATION
		Page
Item 1. Financial Statements		1
Condensed Consolidated Balance Sheets		1-1
Condensed Consolidated Statements of Operations		2-2
Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~		3-3
Condensed Consolidated Statements of Cash Flows		4
Condensed Consolidated ~~Statements~~Statement of Stockholders’ Deficit		5
Notes to the Condensed Consolidated Financial Statements		6
Note 1 — Description of the Business and Basis of Presentation		6
Note 2 — Restructuring and Reorganization Costs		7
Note 3 — Settlement Assets and Payment Service Obligations		8
Note 4 — Fair Value Measurement		9
Note 5 — Investment Portfolio		10
Note 6 — Derivative Financial Instruments		11
Note 7 — Debt		11
Note 8 — Pension and Other Benefits		12
Note 9 — Stockholders' Deficit		13
Note 10 — Stock-Based Compensation		14
Note 11 — Income Taxes		15
Note 12 — Commitments and Contingencies		16
Note 13 — Earnings per Common Share		17
Note 14 — Segment Information		17
Note 15 — Revenue Recognition		18
Note 16 — Condensed Consolidating Financial Statements		20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1927
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3340
Item 4. Controls and Procedures		3340

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		3441
Item 1A. Risk Factors		35
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	3542
Item 6. Exhibits		3543

Signatures		36
~~Exhibit Index~~	3745


(Amounts in millions, except share data)	June 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
ASSETS
Cash and cash equivalents	$	145.1		$	157.2		$	199.7		$	190.0
Settlement assets	3,388.7			3,634.3			3,483.3			3,756.9
Property and equipment, net	212.1			201.0			206.3			214.9
Goodwill	442.2			442.2			442.2			442.2
Other assets	222.3			162.7			177.7			168.5
Total assets	$	4,410.4		$	4,597.4		$	4,509.2		$	4,772.5

LIABILITIES
Payment service obligations	$	3,388.7		$	3,634.3		$	3,483.3		$	3,756.9
Debt, net	911.7			915.2			906.3			908.1
Pension and other postretirement benefits	77.3			87.6			94.3			97.3
Accounts payable and other liabilities	224.9			168.7			258.0			255.5
Total liabilities	4,602.6			4,805.8			4,741.9			5,017.8

COMMITMENTS AND CONTINGENCIES (NOTE 11)

COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS’ DEFICIT
Participating convertible preferred stock - series D, $0.01 par value, 200,000 shares authorized, 71,282 issued at June 30, 2017 and December 31, 2016	183.9			183.9
Common stock, $0.01 par value, 162,500,000 shares authorized, 58,823,567 shares issued at June 30, 2017 and December 31, 2016	0.6			0.6
Participating convertible preferred stock - series D, $0.01 par value, 200,000 shares authorized, 71,282 issued at March 31, 2018 and December 31, 2017							183.9			183.9
Common stock, $0.01 par value, 162,500,000 shares authorized, 58,823,567 shares issued at March 31, 2018 and December 31, 2017							0.6			0.6
Additional paid-in capital	1,027.8			1,020.3			1,039.6			1,034.8
Retained loss	(1,282.6		)	(1,247.6		)	(1,367.8		)	(1,336.1		)
Accumulated other comprehensive loss	(53.5		)	(53.9		)	(59.6		)	(63.0		)
Treasury stock: 4,680,217 and 6,058,856 shares at June 30, 2017 and December 31, 2016, respectively	(68.4		)	(111.7		)
Treasury stock: 3,296,003 and 4,585,223 shares at March 31, 2018 and December 31, 2017, respectively							(29.4		)	(65.5		)
Total stockholders’ deficit	(192.2		)	(208.4		)	(232.7		)	(245.3		)
Total liabilities and stockholders’ deficit	$	4,410.4		$	4,597.4		$	4,509.2		$	4,772.5


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(Amounts in millions, except per share data)	2017		2016		2017		2016			2018			2017
REVENUE
Fee and other revenue	$	391.1	$	409.9	$	771.4	$	793.3		$	370.1		$	380.3
Investment revenue	18.9		4.4		24.7		8.1			9.9			5.8
Total revenue	410.0		414.3		796.1		801.4			380.0			386.1
EXPENSES
Fee and other commissions expense	194.2		203.5		380.2		394.5			176.5			186.0
Investment commissions expense	2.0		0.6		3.3		1.1			3.5			1.3
Total commissions expense	196.2		204.1		383.5		395.6
Direct transaction expense										5.5			5.1
Total commissions and direct transaction expenses										185.5			192.4
Compensation and benefits	66.9		74.4		138.4		146.1			79.3			70.2
Transaction and operations support	90.3		83.1		161.9		147.6			74.8			66.5
Occupancy, equipment and supplies	18.2		16.0		33.5		31.2			16.6			15.3
Depreciation and amortization	18.6		20.5		36.9		41.6			18.1			18.3
Total operating expenses	390.2		398.1		754.2		762.1			374.3			362.7
OPERATING INCOME	19.8		16.2		41.9		39.3			5.7			23.4
Other expense
Other (income) expenses
Interest expense	11.2		11.2		22.0		22.5			12.3			10.8
Total other expense	11.2		11.2		22.0		22.5
Other non-operating (income) expense										(28.5		)	1.3
Total other (income) expenses										(16.2		)	12.1
Income before income taxes	8.6		5.0		19.9		16.8			21.9			11.3
Income tax expense	2.4		1.9		4.9		17.9			14.8			2.5
NET INCOME (LOSS)	$	6.2	$	3.1	$	15.0	$	(1.1	)
NET INCOME										$	7.1		$	8.8

EARNINGS (LOSS) PER COMMON SHARE
EARNINGS PER COMMON SHARE
Basic	$	0.10	$	0.05	$	0.24	$	(0.02	)	$	0.11		$	0.14
Diluted	$	0.09	$	0.05	$	0.23	$	(0.02	)	$	0.11		$	0.13

Weighted-average outstanding common shares and equivalents used in computing earnings (loss) per common share
Weighted-average outstanding common shares and equivalents used in computing earnings per share
Basic	63.0		62.5		62.6		62.5			63.8			62.1
Diluted	66.3		66.0		66.1		62.5			66.2			66.1



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
	Form 10-Q



x(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, 2018
¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


(Amounts in millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Loss			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Loss			Accumulated Other Comprehensive Loss			Treasury Stock			Total
January 1, 2017	$	183.9	$	0.6	$	1,020.3	$	(1,247.6	)	$	(53.9	)	$	(111.7	)	$	(208.4	)
January 1, 2018																			$	183.9	$	0.6	$	1,034.8	$	(1,336.1	)	$	(63.0	)	$	(65.5	)	$	(245.3	)
Net income	—		—		—		15.0			—			—			15.0			—		—		—		7.1			—			—			7.1
Stock-based compensation activity	—		—		7.5		(50.0		)	—			43.3			0.8			—		—		4.8		(43.0		)	—			36.1			(2.1		)
Cumulative effect of adoption of ASU 2016-16																			—		—		—		4.2			—			—			4.2
Other comprehensive income	—		—		—		—			0.4			—			0.4			—		—		—		—			3.4			—			3.4
June 30, 2017	$	183.9	$	0.6	$	1,027.8	$	(1,282.6	)	$	(53.5	)	$	(68.4	)	$	(192.2	)
March 31, 2018																			$	183.9	$	0.6	$	1,039.6	$	(1,367.8	)	$	(59.6	)	$	(29.4	)	$	(232.7	)



(Amounts in millions)	Digital Transformation Program
Balance, December 31, 2017	$	—
Expenses	7.3
Cash payments	(1.3		)
Non-cash operating expenses	(1.8		)
Balance, March 31, 2018	$	4.2



(Amounts in millions)	Global Funds Transfer
Balance, December 31, 2017	$	—
First quarter 2018	7.3
Total cumulative restructuring costs incurred to date in operating expenses	7.3
Total estimated additional restructuring costs to be incurred	6.7
Total restructuring costs incurred and to be incurred	$	14.0



(Amounts in millions)	Level 2		Level 3		Total
June 30, 2017
Financial assets:
Available-for-sale investments:
Residential mortgage-backed securities	$	6.5	$	—	$	6.5
Asset-backed and other securities	—		1.8		1.8
Forward contracts	0.5		—		0.5
Total financial assets	$	7.0	$	1.8	$	8.8
Financial liabilities:
Forward contracts	$	1.9	$	—	$	1.9

December 31, 2016
Financial assets:
Available-for-sale investments:
Residential mortgage-backed securities	$	7.2	$	—	$	7.2
Asset-backed and other securities	—		10.6		10.6
Forward contracts	2.4		—		2.4
Total financial assets	$	9.6	$	10.6	$	20.2
Financial liabilities:
Forward contracts	$	0.1	$	—	$	0.1


	Fair Value				Carrying Value				Fair Value				Carrying Value
(Amounts in millions)	June 30, 2017		December 31, 2016		June 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
Senior secured credit facility	$	918.0	$	912.5	$	919.1	$	924.0	$	910.6	$	910.8	$	911.8	$	914.2


	Amortized Cost		Gross Unrealized Gains			Fair Value
(Amounts in millions)	Amortized Cost				Amortized Cost				Gross Unrealized Gains		Fair Value
June 30, 2017			Gross Unrealized Gains			Fair Value
March 31, 2018
Residential mortgage-backed securities	$	5.9	$	0.6		$	6.5	$	5.0	$	0.4	$	5.4
Asset-backed and other securities	0.2		1.6			1.8		0.3		1.0		1.3
Total	$	6.1	$	2.2		$	8.3	$	5.3	$	1.4	$	6.7

December 31, 2016
December 31, 2017
Residential mortgage-backed securities	$	6.6	$	0.6		$	7.2	$	5.2	$	0.4	$	5.6
Asset-backed and other securities	1.0		9.6			10.6		0.2		1.2		1.4
Total	$	7.6	$	10.2		$	17.8	$	5.4	$	1.6	$	7.0


		Gross Amount of Recognized Assets					Gross Amount of Offset						Net Amount of Assets Presented in the Condensed Consolidated Balance Sheets
	Balance Sheet Location	June 30, 2017		December 31, 2016			June 30, 2017		December 31, 2016				June 30, 2017			December 31, 2016			Gross Amount of Recognized Assets						Gross Amount of Offset					Net Amount of Assets Presented in the Condensed Consolidated Balance Sheets
(Amounts in millions)	Balance Sheet Location					Balance Sheet Location	June 30, 2017		December 31, 2016			March 31, 2018				December 31, 2016		December 31, 2017			March 31, 2018		December 31, 2017			March 31, 2018		December 31, 2017
Forward contracts	Other assets	June 30, 2017	$	December 31, 2016	1.2		$	2.6	$	(0.7	)		June 30, 2017	$	(0.2	)	$	0.5		$	2.4	Other assets	$	1.0		$	0.4	$	(0.2	)	$	(0.2	)	$	0.8	$	0.2


		Gross Amount of Recognized Liabilities					Gross Amount of Offset						Net Amount of Liabilities Presented in the Condensed Consolidated Balance Sheets
	Balance Sheet Location	June 30, 2017		December 31, 2016			June 30, 2017		December 31, 2016				June 30, 2017			December 31, 2016			Gross Amount of Recognized Liabilities						Gross Amount of Offset					Net Amount of Liabilities Presented in the Condensed Consolidated Balance Sheets
(Amounts in millions)	Balance Sheet Location					Balance Sheet Location	June 30, 2017		December 31, 2016			March 31, 2018				December 31, 2016		December 31, 2017			March 31, 2018		December 31, 2017			March 31, 2018		December 31, 2017
Forward contracts	Accounts payable and other liabilities	June 30, 2017	$	December 31, 2016	2.6		$	0.3	$	(0.7	)		June 30, 2017	$	(0.2	)	$	1.9		$	0.1	Accounts payable and other liabilities	$	0.2		$	1.2	$	(0.2	)	$	(0.2	)	$	—	$	1.0



(Amounts in millions)	Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax			Cumulative Foreign Currency Translation Adjustments, Net of Tax			Pension and Postretirement Benefits Adjustment, Net of Tax			Total
January 1, 2017	$	10.8		$	(19.9	)	$	(44.8	)	$	(53.9	)
Other comprehensive income before reclassification	4.2			7.0			—			11.2
Amounts reclassified from accumulated other comprehensive loss	(12.2		)	—			1.4			(10.8		)
Net current period other comprehensive (loss) income	(8.0		)	7.0			1.4			0.4
June 30, 2017	$	2.8		$	(12.9	)	$	(43.4	)	$	(53.5	)

January 1, 2016	$	11.1		$	(13.5	)	$	(46.3	)	$	(48.7	)
Other comprehensive loss before reclassification	(0.1		)	(1.1		)	—			(1.2		)
Amounts reclassified from accumulated other comprehensive loss	(0.1		)	—			1.6			1.5
Net current period other comprehensive (loss) income	(0.2		)	(1.1		)	1.6			0.3
June 30, 2016	$	10.9		$	(14.6	)	$	(44.7	)	$	(48.4	)


	Three Months Ended June 30,						Six Months Ended June 30,						Statement of Operations Location	Three Months Ended March 31,
(Amounts in millions)	2017			2016			2017			2016				2018			2017			Statement of Operations Location
Change in unrealized gains on securities classified as available-for-sale	$	(12.2	)	$	—		$	(12.2	)	$	(0.1	)	"Investment revenue"

Pension and Postretirement Benefits adjustments:
Amortization of prior service credit	(0.1		)	(0.2		)	(0.2		)	(0.3		)	"Compensation and benefits"	$	—		$	(0.1	)	"Compensation and benefits"
Amortization of net actuarial loss	1.1			1.5			2.3			2.9			"Compensation and benefits"	1.1			1.2			"Compensation and benefits"
Total before tax	1.0			1.3			2.1			2.6				1.1			1.1
Tax benefit	(0.3		)	(0.5		)	(0.7		)	(1.0		)
Tax benefit, net														(0.2		)	(0.4		)
Total, net of tax	0.7			0.8			1.4			1.6				$	0.9		$	0.7

Total reclassified for the period, net of tax	$	(11.5	)	$	0.8		$	(10.8	)	$	1.5			$	0.9		$	0.7



	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($000,000)
Options outstanding at December 31, 2016	2,485,461		$	18.02	4.0 years	$	—
Exercised	(108,726	)	14.48
Forfeited/Expired	(180,692	)	23.47
Options outstanding at June 30, 2017	2,196,043		$	17.75	3.3 years	$	3.2
Vested or expected to vest at June 30, 2017	2,195,127		$	17.75	3.3 years	$	3.2
Options exercisable at June 30, 2017	2,162,549		$	17.79	3.3 years	$	3.1


	Total Shares		Weighted Average Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($000,000)		Total Shares		Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value ($000,000)
Restricted stock units outstanding at December 31, 2016	4,630,038		$	7.68	0.9 years	$	54.7
Restricted stock units outstanding at December 31, 2017								3,266,912		$	8.78	0.7 years	$	43.1
Granted	1,361,986		12.87					1,184,182		10.59
Vested and converted to shares	(1,900,098	)	7.57					(1,894,933	)	8.13
Forfeited	(543,985	)	14.11					(247,289	)	11.09
Restricted stock units outstanding at June 30, 2017	3,547,941		$	8.75	1.2 years	$	61.2
Restricted stock units vested and outstanding at June 30, 2017	32,680		$	6.12		$	0.6
Restricted stock units outstanding at March 31, 2018								2,308,872		$	10.00	1.5 years	$	19.9
Restricted stock units vested and outstanding at March 31, 2018								32,680		$	6.12		$	0.3



(Amounts in millions)	Parent			Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	1.7		$	—	$	198.0	$	—		$	199.7
Settlement assets	—			3,262.9		220.4		—			3,483.3
Property and equipment, net	—			191.7		14.6		—			206.3
Goodwill	—			315.4		126.8		—			442.2
Other assets	54.8			152.0		160.4		(189.5		)	177.7
Equity investments in subsidiaries	821.8			225.9		—		(1,047.7		)	—
Intercompany receivables	—			592.1		120.3		(712.4		)	—
Total assets	$	878.3		$	4,740.0	$	840.5	$	(1,949.6	)	$	4,509.2
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Payment service obligations	$	—		$	3,262.9	$	220.4	$	—		$	3,483.3
Debt, net	906.3			—		—		—			906.3
Pension and other postretirement benefits	—			94.3		—		—			94.3
Accounts payable and other liabilities	2.4			406.2		44.6		(195.2		)	258.0
Intercompany liabilities	208.0			154.8		349.6		(712.4		)	—
Total liabilities	1,116.7			3,918.2		614.6		(907.6		)	4,741.9
Total stockholders’ (deficit) equity	(238.4		)	821.8		225.9		(1,042.0		)	(232.7		)
Total liabilities and stockholders’ (deficit) equity	$	878.3		$	4,740.0	$	840.5	$	(1,949.6	)	$	4,509.2


	Three Months Ended June 30,				% Change			Six Months Ended June 30,							% Change		Three Months Ended March 31,					% Change
(Amounts in millions, except percentages)	2017		2016				2017			2016				2018				2017				% Change
REVENUE					% Change										% Change
Revenue
Fee and other revenue	$	391.1	$	409.9	(5	)%		$	771.4		$	793.3			(3	)%	$	370.1		$	380.3	(3	)%
Investment revenue	18.9		4.4		NM			24.7			8.1				NM		9.9			5.8		71	%
Total revenue	410.0		414.3		(1	)		796.1			801.4				(1	)	380.0			386.1		(2	)%
EXPENSES
Expenses
Fee and other commissions expense	194.2		203.5		(5	)		380.2			394.5				(4	)	176.5			186.0		(5	)%
Investment commissions expense	2.0		0.6		NM			3.3			1.1				NM		3.5			1.3		NM
Total commissions expense	196.2		204.1		(4	)		383.5			395.6				(3	)
Direct transaction expense																	5.5			5.1		8	%
Total commissions and direct transaction expenses																	185.5			192.4		(4	)%
Compensation and benefits	66.9		74.4		(10	)		138.4			146.1				(5	)	79.3			70.2		13	%
Transaction and operations support	90.3		83.1		9			161.9			147.6				10		74.8			66.5		12	%
Occupancy, equipment and supplies	18.2		16.0		14			33.5			31.2				7		16.6			15.3		8	%
Depreciation and amortization	18.6		20.5		(9	)		36.9			41.6				(11	)	18.1			18.3		(1	)%
Total operating expenses	390.2		398.1		(2	)		754.2			762.1				(1	)	374.3			362.7		3	%
OPERATING INCOME	19.8		16.2		22			41.9			39.3				7
Other expense
Operating income																	5.7			23.4		(76	)%
Other (income) expenses
Interest expense	11.2		11.2		—			22.0			22.5				(2	)	12.3			10.8		14	%
Total other expense	11.2		11.2		—			22.0			22.5				(2	)
Other non-operating (income) expense																	(28.5		)	1.3		NM
Total other (income) expenses																	(16.2		)	12.1		NM
Income before income taxes	8.6		5.0		72			19.9			16.8				18		21.9			11.3		94	%
Income tax expense	2.4		1.9		26	%		4.9			17.9				(73	)%	14.8			2.5		NM
NET INCOME (LOSS)	$	6.2	$	3.1	NM			$	15.0		$	(1.1	)		NM
Net income																	$	7.1		$	8.8	(19	)%



(Amounts in millions)	Three Months Ended			Six Months Ended
For the period ended June 30, 2016	$	372.1		$	717.0
Change resulting from:
Corridor mix	(11.8		)	(21.3		)
Money transfer volume	7.9			22.6
Average face value per transaction and pricing	(5.8		)	(12.0		)
Impact from changes in exchange rates	(5.7		)	(11.4		)
Other	0.2			3.7
For the period ended June 30, 2017	$	356.9		$	698.6



	Three Months Ended June 30,	Six Months Ended June 30,
	2017 vs 2016	2017 vs 2016
Total money transfer fee and other revenue	(4)%	(3)%
U.S. Outbound	2%	2%
Non-U.S.	(6)%	(3)%
U.S. to U.S.	(16)%	(16)%



(Amounts in millions)	Three Months Ended
For the period ended March 31, 2017	$	70.2
Change resulting from:
Restructuring and reorganization costs	6.0
Impact from changes in exchange rates	2.1
Employee stock-based compensation	0.8
Other	0.2
For the period ended March 31, 2018	$	79.3



(Amounts in millions)	Three Months Ended March 31,				2018 vs
(Amounts in millions)	2018		2017		2017
Money transfer revenue	$	336.6	$	341.7	$	(5.1	)
Bill payment revenue	20.8		25.1		(4.3		)
Total Global Funds Transfer revenue	$	357.4	$	366.8	$	(9.4	)

Fee and other commissions and direct transaction expenses	$	181.7	$	190.7	$	(9.0	)


		Three Months Ended June 30,							Change					Six Months Ended June 30,							Change			Three Months Ended March 31,
(Amounts in millions, except percentages)		2017				2016						2017				2016				2018					2017			Change
Operating income:
Global Funds Transfer		$	14.7			$	19.7		$	(5.0	)			$	40.8			$	43.4			$	(2.6	)	$	1.4		$	25.2		$	(23.8	)
Financial Paper Products		17.2				4.6			12.6					22.0				9.1			12.9			5.6			4.7			0.9
Total segment operating income		31.9				24.3			7.6					62.8				52.5			10.3			7.0			29.9			(22.9		)
Other operating loss		(12.1		)		(8.1		)	(4.0		)			(20.9		)		(13.2		)	(7.7		)
Other																								(1.3		)	(6.5		)	5.2
Total operating income		$	19.8			$	16.2		$	3.6				$	41.9			$	39.3		$	2.6		$	5.7		$	23.4		$	(17.7	)

Total operating margin	4.8			%	3.9			%					5.3			%	4.9			%				1.5		%	6.1		%
Global Funds Transfer	3.9			%	5.0			%					5.5			%	5.7			%				0.4		%	6.9		%
Financial Paper Products	53.1			%	24.2			%					42.6			%	24.5			%				24.8		%	24.4		%



Exhibit Number	Description
2.1†	Agreement and Plan of Merger, dated January 26, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and, solely for purposes of certain specified provisions thereof, Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed January 26, 2017).
2.2†	First Amendment to the Agreement and Plan of Merger, dated April 15, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed April 17, 2017).
3.1	Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated June 28, 2004 (Incorporated by reference from Exhibit 3.1 to Registrant's Annual Report on Form 10-K filed on March 15, 2010).
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 12, 2009 (Incorporated by reference from Exhibit 3.1 to Registrant’s Annual Report on Form 10-K filed March 15, 2010).
3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed May 23, 2011).
3.4	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated November 14, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed November 14, 2011).
3.5	Amended and Restated Bylaws of MoneyGram International, Inc., as amended and restated October 28, 2015 (Incorporated by reference from Exhibit 3.5 to Registrant’s Quarterly Report on Form 10-Q filed on November 2, 2015).
3.6	Amendment to the Amended and Restated Bylaws of MoneyGram International, Inc., dated March 2, 2016 (Incorporated by reference from Exhibit 3.6 to Registrant’s Annual Report on Form 10-K filed on March 2, 2016).
3.7	Amended and Restated Certificate of Designations, Preferences and Rights of Series D Participating Convertible Preferred Stock of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.2 to Registrant's Current Report on Form 8-K filed May 23, 2011).
10.1	Termination Agreement, dated as of January 2, 2018, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed January 2, 2018).
10.2	Amended and Restated Employment Agreement, dated March 2, 2018, by and between MoneyGram International, Inc. and W. Alexander Holmes (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed March 5, 2018).
10.3*	2018 Global Time-Based Restricted Stock Unit Award Agreement, dated March 1, 2018, between MoneyGram International, Inc. and W. Alexander Holmes.
10.4*	2018 Global Performance-Based Restricted Stock Unit Award Agreement, dated March 1, 2018, between MoneyGram International, Inc. and W. Alexander Holmes.
10.5*	2018 Global Performance-Based Cash Award Agreement, dated March 1, 2018, between MoneyGram International, Inc. and W. Alexander Holmes.



10.6*+	Amendment No. 8 to Amended and Restated Master Trust Agreement, effective as of March 30, 2018, by and between MoneyGram Payment Systems, Inc. and Walmart Inc.
10.7*+	Amendment No. 9 to Amended and Restated Master Trust Agreement, effective as of April 13, 2018, by and between MoneyGram Payment Systems, Inc. and Walmart Inc.
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
101*	The following financial statements, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017; (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017; (v) Condensed Consolidated Statement of Stockholders' Deficit for the three months ended March 31, 2018; and (vi) Notes to the Condensed Consolidated Financial Statements.
*	Filed herewith.
**	Furnished herewith.
†	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act (“Rule 24b-2”) for any schedules so furnished.
+	Confidential information has been omitted from this Exhibit and has been filed separately with the SEC pursuant to a confidential treatment request under Rule 24b-2.



	MoneyGram International, Inc.
	(Registrant)

~~August 7, 2017~~May 8, 2018	By:	/s/ JOHN D. STONEHAM
		John D. Stoneham
		Corporate Controller
		(Principal Accounting Officer)



~~Exhibit~~ ~~Number~~	~~Description~~
~~2.1+~~	Agreement and Plan of Merger, dated January 26, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and, solely for purposes of certain specified provisions thereof, Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed January 26, 2017).
~~2.2~~	First Amendment to the Agreement and Plan of Merger, dated April 15, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed April 17, 2017).
~~3.1~~	Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated June 28, 2004 (Incorporated by reference from Exhibit 3.1 to Registrant's Annual Report on Form 10-K filed on March 15, 2010).
~~3.2~~	~~Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 12, 2009 (Incorporated by reference from Exhibit 3.1 to Registrant’s~~ ~~Annual Report on Form 10-K filed March 15, 2010).~~
~~3.3~~	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed May 23, 2011).
~~3.4~~	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated November 14, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed November 14, 2011).
~~3.5~~	Amended and Restated Bylaws of MoneyGram International, Inc., as amended and restated October 28, 2015 (Incorporated by reference from Exhibit 3.5 to Registrant’s Quarterly Report on Form 10-Q filed on November 2, 2015).
~~3.6~~	Amendment to the Amended and Restated Bylaws of MoneyGram International, Inc., dated March 2, 2016 (Incorporated by reference from Exhibit 3.6 to Registrant’s Annual Report on Form 10-K filed on March 2, 2016).
~~3.7~~	Amended and Restated Certificate of Designations, Preferences and Rights of Series D Participating Convertible Preferred Stock of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.2 to Registrant's Current Report on Form 8-K filed May 23, 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~~
101*	The following financial statements, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016; (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016; (v) Condensed Consolidated Statements of Stockholders' Deficit for the six months ended June 30, 2017 and 2016; and (vi) Notes to Condensed Consolidated Financial Statements.
*	~~Filed herewith.~~
**	~~Furnished herewith.~~
+	Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. MoneyGram International, Inc. hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission; provided, however, that MoneyGram International, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules so furnished.

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