Exhibit 99.01
TABLE ONE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
Three months ended | Six months ended | |||||||||||||||||||||||
June 30 | 2008 vs | June 30 | 2008 vs | |||||||||||||||||||||
(Amounts in thousands, except per share data) | 2008 | 2007 | 2007 | 2008 | 2007 | 2007 | ||||||||||||||||||
REVENUE | ||||||||||||||||||||||||
Fee and other revenue | $ | 281,881 | $ | 232,533 | $ | 49,348 | $ | 544,678 | $ | 445,666 | $ | 99,012 | ||||||||||||
Investment revenue | 34,498 | 101,107 | (66,609 | ) | 96,063 | 197,161 | (101,098 | ) | ||||||||||||||||
Net securities (losses) gains | (30,291 | ) | (381 | ) | (29,910 | ) | (337,591 | ) | 483 | (338,074 | ) | |||||||||||||
Total revenue | 286,088 | 333,259 | (47,171 | ) | 303,150 | 643,310 | (340,160 | ) | ||||||||||||||||
Fee commissions expense | 129,098 | 100,279 | 28,819 | 246,330 | 190,291 | 56,039 | ||||||||||||||||||
Investment commissions expense | (5,385 | ) | 65,320 | (70,705 | ) | 91,504 | 127,568 | (36,064 | ) | |||||||||||||||
Total commissions expense | 123,713 | 165,599 | (41,886 | ) | 337,834 | 317,859 | 19,975 | |||||||||||||||||
Net revenue (losses) | 162,375 | 167,660 | (5,285 | ) | (34,684 | ) | 325,451 | (360,135 | ) | |||||||||||||||
EXPENSES | ||||||||||||||||||||||||
Compensation and benefits | 68,136 | 50,363 | 17,773 | 120,435 | 100,394 | 20,041 | ||||||||||||||||||
Transaction and operations support | 51,335 | 44,238 | 7,097 | 103,364 | 83,852 | 19,512 | ||||||||||||||||||
Depreciation and amortization | 14,288 | 12,211 | 2,077 | 28,506 | 23,891 | 4,615 | ||||||||||||||||||
Occupancy, equipment and supplies | 12,391 | 10,985 | 1,406 | 23,613 | 21,402 | 2,211 | ||||||||||||||||||
Interest expense | 24,008 | 1,983 | 22,025 | 38,797 | 3,941 | 34,856 | ||||||||||||||||||
Unrealized gain on embedded derivatives | (31,203 | ) | — | (31,203 | ) | (31,203 | ) | — | (31,203 | ) | ||||||||||||||
Debt extinguishment loss | — | — | — | 1,499 | — | 1,499 | ||||||||||||||||||
Total expenses | 138,955 | 119,780 | 19,175 | 285,011 | 233,480 | 51,531 | ||||||||||||||||||
(Loss) income before income taxes | 23,420 | 47,880 | (24,460 | ) | (319,695 | ) | 91,971 | (411,666 | ) | |||||||||||||||
Income tax expense | 8,259 | 15,521 | (7,262 | ) | 25,999 | 29,773 | (3,774 | ) | ||||||||||||||||
NET (LOSS) INCOME | $ | 15,161 | $ | 32,359 | $ | (17,198 | ) | $ | (345,694 | ) | $ | 62,198 | $ | (407,892 | ) | |||||||||
Basic (loss) earnings per common share | $ | (0.11 | ) | $ | 0.39 | $ | (0.50 | ) | $ | (4.51 | ) | $ | 0.75 | $ | (5.26 | ) | ||||||||
Diluted (loss) earnings per common share | $ | (0.11 | ) | $ | 0.38 | $ | (0.49 | ) | $ | (4.51 | ) | $ | 0.74 | $ | (5.25 | ) |
TABLE TWO
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, | December 31, | |||||||
(Amounts in thousands, except share data) | 2008 | 2007 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | — | $ | — | ||||
Cash and cash equivalents (substantially restricted) | 4,486,064 | 1,552,949 | ||||||
Receivables, net (substantially restricted) | 1,959,438 | 1,408,220 | ||||||
Trading investments (substantially restricted) | 35,210 | 62,105 | ||||||
Available for sale investments (substantially restricted) | 504,404 | 4,187,384 | ||||||
Property and equipment | 160,676 | 171,008 | ||||||
Derivative financial instruments | — | 1,647 | ||||||
Intangible assets | 15,297 | 17,605 | ||||||
Goodwill | 438,839 | 438,839 | ||||||
Other assets | 178,540 | 95,254 | ||||||
Total assets | $ | 7,778,468 | $ | 7,935,011 | ||||
LIABILITIES | ||||||||
Payment service obligations | $ | 6,636,557 | $ | 7,762,470 | ||||
Debt | 978,804 | 345,000 | ||||||
Derivative financial instruments | — | 30,370 | ||||||
Pension and other postretirement benefits | 88,650 | 85,451 | ||||||
Deferred tax liabilities | 18,281 | 11,459 | ||||||
Embedded derivatives in preferred stock | 23,594 | — | ||||||
Accounts payable and other liabilities | 203,375 | 188,778 | ||||||
Total liabilities | 7,949,261 | 8,423,528 | ||||||
MEZZANINE EQUITY | ||||||||
Participating Convertible Preferred Stock-Series B, $0.01 par value, 800,000 shares authorized, 495,000 shares issued and outstanding | 419,205 | — | ||||||
Participating Convertible Preferred Stock-Series B-1, $0.01 par value, 500,000 shares authorized, 272,500 shares issued and outstanding | 264,494 | — | ||||||
Total mezzanine equity | 683,699 | — | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred shares — undesignated, $0.01 par value, 5,000,000 authorized, none issued | — | — | ||||||
Preferred shares — junior participating, $0.01 par value, 2,000,000 authorized, none issued | — | — | ||||||
Common shares, $0.01 par value, 250,000,000 shares authorized, 88,556,077 shares issued | 886 | 886 | ||||||
Additional paid-in capital | 49,624 | 73,077 | ||||||
Retained loss | (733,563 | ) | (387,479 | ) | ||||
Unearned employee benefits | (963 | ) | (3,280 | ) | ||||
Accumulated other comprehensive loss | (17,915 | ) | (21,715 | ) | ||||
Treasury stock: 6,000,173 and 5,910,458 shares at June 30, 2008 and December 31, 2007, respectively | (152,561 | ) | (150,006 | ) | ||||
Total stockholders’ deficit | (854,492 | ) | (488,517 | ) | ||||
Total liabilities, mezzanine equity and stockholders’ deficit | $ | 7,778,468 | $ | 7,935,011 | ||||
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
INVESTMENT PORTFOLIO COMPOSITION
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
INVESTMENT PORTFOLIO COMPOSITION
(Unaudited)
(Amounts in thousands) | June 30, 2008 | March 31, 2008 | December 31, 2007 | |||||||||
Cash and cash equivalents | $ | 4,486,064 | $ | 4,654,341 | $ | 1,552,949 | ||||||
Trading investments(1) | 35,210 | 56,413 | 62,105 | |||||||||
Available-for-sale investments: | ||||||||||||
Obligations of states and political sub-divisions | — | — | 597,379 | |||||||||
Commercial mortgage-backed securities | — | — | 253,823 | |||||||||
Government agency securities(2) | 448,532 | 476,473 | 1,786,805 | |||||||||
Other asset-backed securities(3) | 55,872 | 64,580 | 1,318,242 | |||||||||
Corporate debt securities | — | — | 218,367 | |||||||||
Preferred and common stock | — | — | 12,768 | |||||||||
Total available-for-sale investments | 504,404 | 541,053 | 4,187,384 | |||||||||
Total investment portfolio | $ | 5,025,678 | $ | 5,251,807 | $ | 5,802,438 | ||||||
(1) | Auction rate preferred securities are classfied as trading. | |
(2) | Investments included in this category consist solely of investments collateralized by U.S. government agencies at June 30 and March 31, 2008. | |
(3) | Other asset-backed securities consist of collateralized debt obligations that were written down but not sold in connection with the portfolio restructuring; total par value of $762 million. |
TABLE FOUR
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
June 30 | March 31 | |||||||
(Amounts in thousands) | 2008 | 2008 | ||||||
Cash and cash equivalents | $ | 4,486,064 | $ | 4,654,341 | ||||
Receivables, net | 1,959,438 | 1,783,241 | ||||||
Government agency securities | 448,532 | 476,473 | ||||||
6,894,034 | 6,914,055 | |||||||
Amounts restricted to cover payment service obligations | (6,636,557 | ) | (6,656,163 | ) | ||||
Excess unrestricted assets, excluding auction rate and other asset-backed securities | 257,477 | 257,892 | ||||||
Trading investments (auction rate securities) | 35,210 | 56,413 | ||||||
Other asset-backed securities | 55,872 | 64,580 | ||||||
91,082 | 120,993 | |||||||
Adjusted excess unrestricted assets | $ | 348,559 | $ | 378,885 | ||||
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME (AS ADJUSTED)
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME (AS ADJUSTED)
(Unaudited)
As Reported | Adjusted | As Reported | Adjusted | |||||||||||||||||||||
(Amounts in thousands) | Q2 2008 | Adjustments | Q2 2008 | Q2 2007 | Adjustments | Q2 2007 | ||||||||||||||||||
REVENUE | ||||||||||||||||||||||||
Fee and other revenue | $ | 281,881 | $ | — | $ | 281,881 | $ | 232,533 | $ | — | $ | 232,533 | ||||||||||||
Investment revenue | 34,498 | — | 34,498 | 101,107 | — | 101,107 | ||||||||||||||||||
Net securities losses | (30,291 | ) | 30,291 | (1) | — | (381 | ) | 381 | (1) | — | ||||||||||||||
Total revenue | 286,088 | 30,291 | 316,379 | 333,259 | 381 | 333,640 | ||||||||||||||||||
Fee commissions expense | 129,098 | — | 129,098 | 100,279 | — | 100,279 | ||||||||||||||||||
Investment commissions expense | (5,385 | ) | 29,273 | (2) | 23,888 | 65,320 | — | 65,320 | ||||||||||||||||
Total commissions expense | 123,713 | 29,273 | 152,986 | 165,599 | — | 165,599 | ||||||||||||||||||
Net revenues | 162,375 | 1,018 | 163,393 | 167,660 | 381 | 168,041 | ||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||
Compensation and benefits | 68,136 | (16,524 | ) (3) | 51,612 | 50,363 | — | 50,363 | |||||||||||||||||
Transaction and operations support | 51,335 | (1,129 | ) (3) | 50,206 | 44,238 | — | 44,238 | |||||||||||||||||
Depreciation and amortization | 14,288 | — | 14,288 | 12,211 | — | 12,211 | ||||||||||||||||||
Occupancy, equipment and supplies | 12,391 | — | 12,391 | 10,985 | — | 10,985 | ||||||||||||||||||
Interest expense | 24,008 | 4,235 | (2) | 28,243 | 1,983 | — | 1,983 | |||||||||||||||||
Unrealized gain on embedded derivatives | (31,203 | ) | 31,203 | (4) | — | — | — | — | ||||||||||||||||
Total expenses | 138,955 | 17,785 | 156,740 | 119,780 | — | 119,780 | ||||||||||||||||||
(Loss) income before income taxes | $ | 23,420 | $ | (16,767 | ) | $ | 6,653 | $ | 47,880 | $ | 381 | $ | 48,261 | |||||||||||
(1) | Represents realized gains (losses) on securities, other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments. | |
(2) | Mark-to-market valuation gain on interest rate swaps, which were terminated in June 2008. | |
(3) | Executive severance and related costs. | |
(4) | Change in the fair value of embedded derivatives in preferred stock. |
TABLE SIX
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT RESULTS (AS ADJUSTED)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT RESULTS (AS ADJUSTED)
(Unaudited)
GLOBAL FUNDS TRANSFER SEGMENT
As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||||
(Amounts in thousands) | Q2 2008 | Adjustments | Q2 2008 | Q2 2007 | Adjustments | Q2 2007 | ||||||||||||||||||
Money Transfer Revenue | ||||||||||||||||||||||||
Fee and other revenue | $ | 254,715 | $ | — | $ | 254,715 | $ | 207,926 | $ | — | $ | 207,926 | ||||||||||||
Investment revenue | 375 | 375 | 1,267 | 1,267 | ||||||||||||||||||||
Net securities losses | (346 | ) | 346 | (1) | — | (3 | ) | 3 | (1) | — | ||||||||||||||
Retail Money Order and other | ||||||||||||||||||||||||
Fee and other revenue | 16,727 | 16,727 | 14,800 | 14,800 | ||||||||||||||||||||
Investment revenue | 5,021 | 5,021 | 23,047 | 23,047 | ||||||||||||||||||||
Net securities (losses) gains | (4,240 | ) | 4,240 | (1) | — | 53 | (53 | ) (1) | — | |||||||||||||||
Total Global Funds Transfer Revenue | 272,252 | 4,586 | 276,838 | 247,090 | (50 | ) | 247,040 | |||||||||||||||||
Commissions Expense | (128,551 | ) | — | (128,551 | ) | (105,225 | ) | — | (105,225 | ) | ||||||||||||||
Net Revenue | $ | 143,701 | $ | 4,586 | $ | 148,287 | $ | 141,865 | $ | (50 | ) | $ | 141,815 | |||||||||||
Operating income | $ | 30,620 | $ | 4,586 | $ | 35,206 | $ | 40,792 | $ | (50 | ) | $ | 40,742 | |||||||||||
Operating Margin | 11.2 | % | 12.7 | % | 16.5 | % | 16.5 | % |
PAYMENT SYSTEMS SEGMENT
As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||||
(Amounts in thousands) | Q2 2008 | Adjustments | Q2 2008 | Q2 2007 | Adjustments | Q2 2007 | ||||||||||||||||||
Fee and other revenue | $ | 10,300 | $ | — | $ | 10,300 | $ | 9,646 | $ | — | $ | 9,646 | ||||||||||||
Investment revenue | 29,102 | — | 29,102 | 76,741 | — | 76,741 | ||||||||||||||||||
Net securities losses | (25,705 | ) | 25,705 | (1) | — | (295 | ) | 295 | (1) | — | ||||||||||||||
Total Payment Systems Revenue | 13,697 | 25,705 | 39,402 | 86,092 | 295 | 86,387 | ||||||||||||||||||
Commissions Expense | 4,839 | (29,273 | ) (2) | (24,434 | ) | (60,374 | ) | — | (60,374 | ) | ||||||||||||||
Net Revenue | $ | 18,536 | $ | (3,568 | ) | $ | 14,968 | $ | 25,718 | $ | 295 | $ | 26,013 | |||||||||||
Operating income | $ | 3,904 | $ | (3,568 | ) | $ | 336 | $ | 9,898 | $ | 295 | $ | 10,193 | |||||||||||
Operating Margin | 28.5 | % | 0.9 | % | 11.5 | % | 11.8 | % |
(1) | Represents realized gains (losses) on securities, other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments. | |
(2) | Mark-to-market valuation gain on interest rate swaps, which were terminated in June 2008. |
TABLE SEVEN
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
EBITDA AND ADJUSTED EBITDA
(Unaudited)
(Amounts in thousands) | Q2 2008 | Q2 2007 | ||||||
Income before income taxes | $ | 23,420 | $ | 47,880 | ||||
Interest expense | 24,008 | 1,983 | ||||||
Depreciation and amortization | 14,288 | 12,211 | ||||||
Amortization of agent signing bonuses | 9,007 | 6,752 | ||||||
EBITDA (1) | 70,723 | 68,826 | ||||||
Net securities losses (2) | 30,291 | 381 | ||||||
Swap valuation gains (3) | (29,273 | ) | — | |||||
Unrealized gain on embedded derivatives(4) | (31,203 | ) | — | |||||
Severance and related costs(5) | 17,653 | — | ||||||
Adjusted EBITDA | $ | 58,191 | $ | 69,207 | ||||
(1) | EBITDA represents earnings before interest, taxes, depreciation and amortization, and amortization of agent signing bonuses. | |
(2) | Represents realized gains (losses) on securities, other-than-temporary impairments on available-for-sale investments and unrealized losses on trading investments. | |
(3) | Mark-to-market valuation gain on interest rate swaps, which were terminated in June 2008. | |
(4) | Change in fair value of embedded derivatives in preferred stock. | |
(5) | Executive severance and related costs. |
TABLE EIGHT
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CREDIT RATIOS
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CREDIT RATIOS
(Unaudited)
INTEREST COVERAGE RATIO
As of | ||||
(Amounts in thousands, except ratios) | June 30, 2008 | |||
Cash interest expense(1) | ||||
Senior Credit Facility | $ | 9,176 | ||
Second Lien Notes | 17,483 | |||
Total cash interest expense | $ | 26,659 | ||
Adjusted EBITDA | $ | 58,191 | ||
Adjusted EBITDA / Cash Interest Expense | 2.2 | x | ||
SENIOR SECURED DEBT RATIO
As of | ||||
(Amounts in thousands, except ratios) | June 30, 2008 | |||
Outstanding debt | ||||
Senior Credit Facility(2) | $ | 494,375 | ||
Second Lien Notes | 500,000 | |||
Total debt | $ | 994,375 | ||
Adjusted EBITDA, annualized(3) | $ | 232,764 | ||
Total debt / Adjusted EBITDA, annualized(3) | 4.3 | x | ||
(1) | Represents interest paid in cash in the second quarter of 2008. Amount excludes swap valuation gains of $4.2 million and amortization of discount on debt and deferred financing costs of $1.6 million. | |
(2) | This amount represents the principal due at maturity and does not include the unamortized discount on the debt of $16.2 million included in the “Debt” line in the Consolidated Balance Sheets. | |
(3) | For illustrative purposes only. Bank credit agreement requires ratio to be calculated on the most recently ended four fiscal quarters beginning with the March 31, 2009 quarter. |
TABLE NINE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
COMMON SHARES, AS CONVERTED
(Unaudited)
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
COMMON SHARES, AS CONVERTED
(Unaudited)
(Amounts in thousands, except per share data)
COMMON SHARES, AS CONVERTED
Preferred stock, as converted at March 31, 2008 | 307,729 | |||
Q2 2008 paid-in-kind dividend on preferred stock | 9,598 | |||
Preferred stock, as converted at June 30, 2008(1) | 317,327 | |||
Common shares outstanding at June 30 2008(2) | 82,464 | |||
Common shares at June 30, 2008, as converted | 399,791 | |||
CALCULATION OF PAID-IN-KIND DIVIDEND
Preferred shares value at March 31, 2008 | 769,322 | |||
Multiplied by the dividend rate(3) | 3.13 | % | ||
Value of preferred dividend for Q2 2008 | 23,994 | |||
Divided by the conversion price | $ | 2.50 | ||
Equivalent common shares | 9,598 | |||
(1) | Preferred shares are excluded from earnings per share calculations as they are anti-dilutive. | |
(2) | For earnings per share purposes, weighted average outstanding shares for the period are used compared to actual outstanding shares. For Q2 2008, these two numbers are the same as there was no share activity. | |
(3) | The quarterly dividend rate is calculated by applying an actual/365 convention to the pay-in-kind annual dividend rate of 12.5 percent. |