Exhibit 99.1
MoneyGram International Announces Second Quarter Results;
Money Transfer Volume Grows 39 percent in Second Quarter
- ----------------------------------------------------------------------
($ in millions) Q2 Q2 %
2005 2004 Change
-------------------------
Revenue $240.0 $199.8 20.1
Commissions Expense 115.0 97.6 17.8
------- ---------
Net Revenue 125.0 102.2 22.4
Expenses 88.7 99.1(a) (10.6)
Income (Loss) from Continuing Operations $26.1 $(0.6)(a) NM
Earnings (Loss) per Diluted Share from
Continuing Operations $0.30 ($0.01)(a) NM
Operating Margin 15.1% 1.5% NM
(a) - Includes spin-off related expenses of $20.7 million ($19.3
million after tax) or $0.22 per diluted share for debt redemption
NM - Not Meaningful
- ----------------------------------------------------------------------
MoneyGram International, Inc. (NYSE:MGI), today announced second
quarter 2005 income from continuing operations of $26.1 million, or
$0.30 per diluted share, compared to loss from continuing operations
of ($0.6) million, or ($0.01) per diluted share in the second quarter
2004. The 2004 loss includes debt redemption costs of $20.7 million
($19.3 million after tax), or $0.22 per diluted share, related to the
spin-off.
Second quarter 2005 results reflect:
-- Global Funds Transfer segment revenue growth of 25 percent in
the second quarter 2005, driven by 39 percent growth of money
transfer volume.
-- Net investment margin of 1.89 percent, as shown in Table One,
including cash flows of $5.8 million, or $0.04 per diluted
share after tax, on previously impaired investments.
-- Fee and other revenue of $149.3 million, up 22 percent from
the second quarter of 2004 driven primarily from the growth in
money transfer volume.
-- Increased Global Funds Transfer marketing expenditures from
the prior year to continue to invest in our brand.
-- Interest expense of $2.6 million, including approximately
$900,000 of pretax expense (half-cent per diluted share after
tax), related to the amendment of our $350 million bank credit
facility.
Philip Milne, president and chief executive officer said, "In the
second quarter, our successful marketing and branding efforts drove
money transfer volume growth of 39 percent. Going forward in 2005, we
remain excited about offering customers our leading products and
services, as well as bringing them new offerings. These include our
prepaid debit card that is now being market tested, and directed sends
- - money transfer to a bank account or a prepaid card, or for home
delivery. During the quarter we also achieved two very important
client relationship milestones - Wal-Mart named us their Financial
Services Supplier of the year, and we re-signed BB&T Bank to our
official check platform. Our commitment to providing affordable,
reliable and convenient payment products and services to our consumers
and business partners continues to drive our results."
Segment Highlights
MoneyGram operates in two reportable business segments, Global
Funds Transfer and Payment Systems.
Global Funds Transfer
($ in millions)
Q2 Q2 %
2005 2004 Change
------------------------------
Revenue $159.7 $128.2 24.6%
Commissions Expense 60.6 48.1 26.1%
Net Revenue 99.1 80.1 23.8%
Operating Income $29.7 $24.8 19.8%
Operating Margin 18.6% 19.3% NM
For the Global Funds Transfer segment, which consists of money
transfer (including urgent bill payment) and retail money orders,
revenue increased 25 percent to $159.7 million and operating income
increased 20 percent to $29.7 million in the second quarter of 2005.
Both revenue and operating income improved as a result of money
transfer volume growth. Operating margin in the second quarter 2005
was 18.6 percent compared to 19.3 percent in the second quarter 2004.
The decrease in margin was primarily due to the product shift towards
money transfer from the higher margin money order product.
Money transfer transaction volume grew 39 percent and money
transfer revenue (see Table Four) grew 31 percent to $124.5 million
compared to second quarter of 2004. Money transfer revenue growth
rates are lower than volume growth rates due to targeted pricing
initiatives and product mix. The money transfer agent network grew 14
percent from the second quarter of 2004 to over 81,000 agent
locations. Money order transaction volume was down slightly, following
a trend of declining use of paper-based payment instruments.
Payment Systems
($ in millions)
Q2 Q2 %
2005 2004 Change
------------------------------
Revenue $80.3 $71.6 12.0%
Commissions Expense 54.4 49.5 9.8%
Net Revenue 25.9 22.1 16.9%
Operating Income $11.4 $5.8 95.4%
Operating Margin 14.2% 8.2% NM
The Payment Systems segment includes PrimeLink/Official Check
outsourcing services, financial money orders and controlled
disbursement processing services. Payment Systems revenue increased 12
percent to $80.3 million in the second quarter 2005. The increase was
due to a higher overall yield on the investment portfolio and Payment
Systems' $4.6 million portion of cash flows received related to
previously impaired securities. Operating income for the segment was
$11.4 million in the second quarter 2005, up 95 percent, from $5.8
million in the second quarter 2004. Operating margin for the second
quarter 2005 was 14.2 percent, up from 8.2 percent in the second
quarter 2004. Both operating income and margins increased primarily as
a result of the cash flows received related to previously impaired
securities.
Bank Credit Facility Amended
On June 29, 2005, we amended our $350 million bank credit
facility. The amended agreement extends the maturity date of the
facility from June 2008 to June 2010 and the scheduled repayment of
the $100 million term loan to the facility's maturity. In addition, we
obtained more favorable pricing terms, restrictive covenants related
to dividends and share buybacks were eliminated, and the dollar value
of permissible acquisitions without lender consent was increased.
2005 Outlook
Diluted earnings per share for the full year 2005 is expected to
be in the range of $1.11 - $1.15, unchanged from previous guidance.
This full year estimate includes the $2.2 million termination fee from
a customer due to an early contract termination in the Payment Systems
segment received in the first quarter of the year and approximately
$12 million in anticipated cash flows on previously impaired
investments for the full year (of which $11.1 million was received in
the first half of the year). Also included in the guidance are the
following items:
-- Net revenue (total revenue less total commissions) is expected
be in the range of $465 million to $485 million, unchanged
from previous guidance.
-- Net investment margin for the full year is expected to be at
the high end of our previously issued range of 150 to 165
basis points. This guidance includes the effect of actual and
anticipated cash flows on previously impaired investments.
-- Investment portfolio balances are expected to average $6.5
billion for the year, declining from 2004 due to consolidation
of client financial institutions, unchanged from previous
guidance.
-- The adoption of Statement of Financial Accounting Standards
No. 123R, Share-Based Payment (expensing of stock options) as
of January 1, 2005.
-- Income from continuing operations before taxes is expected to
increase by 42 to 48 percent from $89.0 million in income from
operations before taxes in 2004 compared to previous guidance
of 40 to 45 percent. However, we anticipate our effective tax
rate to be about 25 percent for the full year, up slightly
from previous guidance of 23 - 24 percent.
This guidance is dependent on a variety of factors, including
those listed below under Cautionary Information Regarding
Forward-Looking Statements. From time to time, events may occur which
can result in unanticipated income or losses. Our outlook does not
reflect such events.
Presentation of 2004 Financial Statements
MoneyGram International, Inc. was spun off from Viad Corp on June
30, 2004. MoneyGram is considered the divesting entity and treated as
the accounting successor to Viad for financial reporting purposes in
accordance with the EITF No. 02-11, "Accounting for Reverse Spinoffs."
MoneyGram results in 2004 include one-time debt tender and redemption
expenses of $20.7 million, which amounts to $0.22 per diluted share,
related to the spin-off in the second quarter 2004. The historical
results of MoneyGram through June 30, 2004, include Viad Corp as
discontinued operations. In addition, the historical financials
include the income and gain from discontinued operations of Game
Financial.
Description of Tables
Table One - Net Investment Revenue Analysis
Table Two - Consolidated Statements of Income
Table Three - Segment Information
Table Four - Money Transfer Revenue
Table Five - Unrestricted Assets
Conference Call and Webcast
MoneyGram International will have a conference call today at 5:00
p.m. EDT, 4:00 p.m. CDT to discuss second quarter results. Phil Milne,
chief executive officer, and Dave Parrin, chief financial officer,
will speak on the call. The conference call can be accessed by calling
(800) 299-7635 in the U.S. The participant passcode is 55799580. The
conference call will also be webcast through the company's website at
www.moneygram.com. A replay of the conference call and webcast will be
available one hour after the call concludes through 5:00 p.m. EDT on
August 3, 2005. The replay of the call is available at (888) 286-8010
in the U.S., or (617) 801-6888 internationally, passcode 15110751. The
Internet audio cast replay will be available at www.moneygram.com.
About MoneyGram International, Inc.
MoneyGram International, Inc. is a leading global payment services
company and S&P MidCap 400 company. The company's major products and
services include global money transfers, money orders and payment
processing solutions for financial institutions and retail customers.
MoneyGram is a New York Stock Exchange listed company, with over $825
million in revenue in 2004 and over 81,000 global money transfer agent
locations in 170 countries. For more information, visit the company's
website at www.moneygram.com.
Cautionary Information Regarding Forward-Looking Statements
The statements contained in this press release regarding the
business of MoneyGram International, Inc. that are not historical
facts are forward-looking statements and are made under the Safe
Harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations
and are subject to uncertainty and changes in circumstances due to a
number of factors, including, but not limited to: (a) fluctuations in
interest rates that may materially affect revenue derived from
investment of funds received from the sale of payment instruments and
commissions paid to financial institution customers; (b) material
changes in the market value of securities we hold; (c) material
changes in our need for and the availability of liquid assets; (d)
successful management of the credit and fraud risks of retail agents,
and the credit risk related to our investment portfolio; (e) continued
growth rates approximating recent levels for consumer money transfer
transactions and other payment product markets; (f) renewal of
material retail agent and financial institution customer contracts, or
loss of business from significant agents or customers; (g)
technological and competitive changes in the payment services
industry; (h) timely and successful implementation of new and/or
improved technology, delivery methods, and product offerings including
pre-paid debit/stored value cards and new bill payment services; (i)
changes in laws, regulations or other industry practices and standards
which may require significant systems redevelopment, reduce the market
for or value of the company's products or services or render products
or services less profitable or obsolete; (j) continued political
stability in countries in which MoneyGram has material agent
relationships; (k) material lawsuits or investigations; (l)
catastrophic events that could materially adversely impact operating
facilities, communication systems and technology of MoneyGram, its
clearing banks or major customers, or that may have a material adverse
impact on current economic conditions or levels of consumer spending;
(m) material breach of security of any of our systems; (n) our ability
to comply with the requirements of Sarbanes-Oxley Section 404
regarding the effectiveness of internal controls; (o) potential patent
liability for intellectual property related to our development of new
and enhanced products and services and (p) other factors more fully
discussed in MoneyGram's filings with the Securities and Exchange
Commission. Actual results may differ materially from historical and
anticipated results. These forward-looking statements speak only as of
the date on which such statements are made, and MoneyGram undertakes
no obligation to update such statements to reflect events or
circumstances arising after such date.
TABLE ONE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NET INVESTMENT REVENUE ANALYSIS
(Unaudited)
Three Months Ended
June 30 2005 vs
2005 2004 2004
--------------------------------
(Dollars in thousands)
Components of net investment revenue:
Investment revenue $91,052 $77,580 $13,472
Investment commissions expense (1) (58,813) (53,706) (5,107)
--------------------------------
Net investment revenue $32,239 $23,874 $8,365
================================
Average balances:
Cash equivalents and investments $6,839,545 $6,888,115 ($48,570)
Payment service obligations (2) 5,397,552 5,510,137 (112,585)
Average yields earned and rates paid (3):
Investment yield 5.34% 4.53% 0.81%
Investment commission rate 4.37% 3.92% 0.45%
Net investment margin 1.89% 1.39% 0.50%
Six months ended
June 30 2005 vs
2005 2004 2004
--------------------------------
(Dollars in thousands)
Components of net investment revenue:
Investment revenue $180,554 $154,234 $26,320
Investment commissions expense (1) (116,767) (103,451) (13,316)
--------------------------------
Net investment revenue $63,787 $50,783 $13,004
================================
Average balances:
Cash equivalents and investments $6,771,692 $6,736,531 $35,161
Payment service obligations (2) 5,319,074 5,334,893 (15,819)
Average yields earned and rates paid (3):
Investment yield 5.38% 4.60% 0.78%
Investment commission rate 4.43% 3.90% 0.53%
Net investment margin 1.90% 1.52% 0.38%
(1) Investment commissions expense reported includes payments made to
financial institution customers based on short-term interest rate
indices on outstanding balances of official checks sold by that
financial institution, as well as costs associated with swaps and the
sale of receivables program.
(2) Commissions are paid to financial institution customers based upon
average outstanding balances generated by the sale of official checks
only. The average balance in the table reflects only the payment
service obligations for which commissions are paid and does not
include the average balance of the sold receivables ($396 million and
$407 million for the second quarter of 2005 and 2004, respectively,
and $402 million and $411 million for the six months ended June 30,
2005 and 2004, respectively) as these are not recorded in the
Consolidated Balance Sheets.
(3) Average yields/rates are calculated by dividing the applicable
amount shown in the "Components of net investment revenue" section by
the applicable amount shown in the "Average balances" section divided
by the number of days in the period presented and multiplied by the
number of days in the year. The "Net investment margin" is calculated
by dividing "Net investment revenue" by the "Cash Equivalents and
Investments" average balance divided by the number of days in the
period presented and multiplied by the number of days in the year.
TABLE TWO
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
June 30 June 30
2005 2004 2005 2004
--------- --------- --------- ---------
(Dollars in thousands, except share and
per share data)
REVENUE:
Fee and other revenue $149,278 $122,084 $287,798 $235,706
Investment revenue 91,052 77,580 180,554 154,234
Net securities gains and
losses (330) 156 (436) 1,201
--------- --------- --------- ---------
Total revenue 240,000 199,820 467,916 391,141
Fee commissions expense 56,217 43,925 108,405 84,428
Investment commissions
expense 58,813 53,706 116,767 103,451
--------- --------- --------- ---------
Total commissions
expense 115,030 97,631 225,172 187,879
--------- --------- --------- ---------
Net revenue 124,970 102,189 242,744 203,262
EXPENSES:
Compensation and benefits 33,292 33,644 62,565 66,389
Transaction and operations
support 36,541 27,447 72,185 55,687
Depreciation and
amortization 7,648 7,396 15,085 14,619
Occupancy, equipment and
supplies 8,576 8,119 16,950 15,715
Interest expense 2,608 1,905 3,997 3,127
Debt tender and redemption
costs - 20,661 - 20,661
--------- --------- --------- ---------
Total expenses 88,665 99,172 170,782 176,198
--------- --------- --------- ---------
Income from continuing
operations before income taxes 36,305 3,017 71,962 27,064
Income tax expense 10,242 3,587 18,109 8,420
--------- --------- --------- ---------
Income (loss) from continuing
operations 26,063 (570) 53,853 18,644
Income (loss) and gain from
discontinued operations, net
of tax - (497) - 21,282
--------- --------- --------- ---------
NET INCOME (LOSS) $26,063 $(1,067) $53,853 $39,926
========= ========= ========= =========
Basic earnings (loss) per share
Income (loss) from continuing
operations $0.31 $(0.01) $0.64 $0.21
Income (loss) from discontinued
operations, net of tax - - - 0.25
--------- --------- --------- ---------
Earnings (loss) per common
share $0.31 $(0.01) $0.64 $0.46
========= ========= ========= =========
Average outstanding common
shares 84,784 86,929 84,681 86,819
========= ========= ========= =========
Diluted earnings (loss) per
share
Income (loss) from continuing
operations $0.30 $(0.01) $0.63 $0.21
Income (loss) from discontinued
operations, net of tax - - - 0.25
--------- --------- --------- ---------
Earnings (loss) per common
share $0.30 $(0.01) $0.63 $0.46
========= ========= ========= =========
Average outstanding and
potentially dilutive common
shares 85,629 86,929 85,745 87,306
========= ========= ========= =========
TABLE THREE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
2005
------------------
First Second
Quarter Quarter
------------------
(Dollars in
thousands)
Revenue:
Global Funds Transfer $147,146 $159,742
Payment Systems 80,769 80,258
------------------
227,915 240,000
Operating income:
Global Funds Transfer 26,429 29,682
Payment Systems 13,240 11,428
------------------
39,669 41,110
Interest expense 1,389 2,608
Other unallocated
expenses 2,623 2,197
------------------
Income from continuing
operations before
income taxes $35,657 $36,305
==================
Operating Margin:
Global Funds Transfer 18.0% 18.6%
Payment Systems 16.4% 14.2%
2004
---------------------------------------------
First Second Third Fourth Full
Quarter Quarter Quarter Quarter Year
---------------------------------------------
(Dollars in thousands)
Revenue:
Global Funds Transfer $120,969 $128,165 $137,688 $145,243 $532,065
Payment Systems 70,352 71,655 78,465 73,993 294,465
---------------------------------------------
191,321 199,820 216,153 219,236 826,530
Operating income:
Global Funds Transfer 20,978 24,777 27,393 29,458 102,606
Payment Systems 9,190 5,848 9,429 2,696 27,163
---------------------------------------------
30,168 30,625 36,822 32,154 129,769
Debt tender and
redemption costs - 20,661 - - 20,661
Interest expense 1,222 1,905 1,234 1,214 5,575
Other unallocated
expenses 4,899 5,042 2,129 2,443 14,513
---------------------------------------------
Income from continuing
operations before
income taxes $24,047 $3,017 $33,459 $28,497 $89,020
=============================================
Operating Margin:
Global Funds Transfer 17.3% 19.3% 19.9% 20.3% 19.3%
Payment Systems 13.1% 8.2% 12.0% 3.6% 9.2%
TABLE FOUR
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
MONEY TRANSFER REVENUE
(Unaudited)
Money Transfer Revenue (including Urgent Bill Payment)
--------------------------------------------------------------
Quarter Ended
March 31 June 30 September 30 December 31 Total Year
--------------------------------------------------------------
(Dollars in thousands)
2003 $69,836 $75,840 $80,895 $83,338 $309,909
2004 86,198 95,174 102,764 111,234 395,370
2005 111,296 124,545
TABLE FIVE
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
UNRESTRICTED ASSETS
(Unaudited)
June 30 December 31 June 30
2005 2004 2004
----------- ----------- -----------
(Dollars in thousands)
Cash and cash equivalents $1,331,492 $927,042 $1,028,814
Receivables 1,315,690 771,966 910,226
Investments 6,146,446 6,335,493 6,369,762
----------- ----------- -----------
8,793,628 8,034,501 8,308,802
Amounts restricted to cover payment
service obligations (8,421,234) (7,640,581) (7,862,106)
----------- ----------- -----------
Unrestricted assets (1) $372,394 $393,920 $446,696
=========== =========== ===========
(1) We have unrestricted cash and cash equivalents, receivables and
investments to the extent those assets exceed all payment service
obligations. These amounts are generally available; however,
management considers these amounts as providing additional assurance
that regulatory requirements are maintained during the normal
fluctuations in the value of investments.
CONTACT: MoneyGram International, Inc., Minneapolis
Investor Relations:
Tim Gallaher, 952-591-3840
ir@moneygram.com