-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HzgMtoNe4ZyhP3vP70gYHD2bnTAuuGS+45oIeWTT+FeryRbSvo9RVuSEJzFLUf2c YjaHA11dlmBIwSV1Z6rukQ== 0001157523-07-006968.txt : 20070718 0001157523-07-006968.hdr.sgml : 20070718 20070718160106 ACCESSION NUMBER: 0001157523-07-006968 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070718 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20070718 DATE AS OF CHANGE: 20070718 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONEYGRAM INTERNATIONAL INC CENTRAL INDEX KEY: 0001273931 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 161690064 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31950 FILM NUMBER: 07986579 BUSINESS ADDRESS: STREET 1: 1550 UTICA AVENUE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55416 BUSINESS PHONE: 9525913000 MAIL ADDRESS: STREET 1: 1550 UTICA AVENUE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55416 8-K 1 a5450593.txt MONEYGRAM INTERNATIONAL, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): July 18, 2007 MoneyGram International, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-31950 16-1690064 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1550 Utica Avenue South, Minneapolis, Minnesota 55416 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (952) 591-3000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) None - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition --------------------------------------------- On July 18, 2007, MoneyGram International, Inc. issued a press release reporting financial results for its second quarter ended June 30, 2007. A copy of the press release is furnished herewith as Exhibit 99.1. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MONEYGRAM INTERNATIONAL, INC. By: /s/ David J. Parrin -------------------------------- Name: David J. Parrin Title: Executive Vice President and Chief Financial Officer Date: July 18, 2007 EXHIBIT INDEX Exhibit No. Description of Document - ----------- ----------------------- 99.1 Press Release dated July 18, 2007 EX-99.1 2 a5450593-ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 MoneyGram International Announces Second Quarter 2007 Results Money Transfer Volume Up 29 percent MINNEAPOLIS--(BUSINESS WIRE)--July 18, 2007--MoneyGram International, Inc. (NYSE:MGI): ($ in millions) except per share data Q2 Q2 % 2007 2006 Change Revenue $333.3 $292.9 13.8% Commissions Expense 165.6 138.7 19.4% Net Revenue 167.7 154.3 8.7% Expenses 119.8 102.4 16.9% Net Income $32.4 $36.7 (11.8%) Earnings per diluted share $0.38 $0.42 (9.5%) Operating Margin 14.4% 17.7% MoneyGram International, Inc. (NYSE:MGI), today announced second quarter 2007 net income of $32.4 million, or $0.38 per diluted share, compared to $36.7 million, or $0.42 per diluted share in the second quarter of 2006. The second quarter of 2006 benefited from $8.6 million of pretax (or $5.4 million after tax) cash flows from previously impaired investments and income from limited partnership interests, which amounted to $0.06 per diluted share. Second quarter 2007 results reflect: -- Global Funds Transfer segment revenue growth of 22 percent compared to the second quarter of 2006. The growth was driven by money transfer transaction volume growth of 29 percent and money transfer revenue growth of 29 percent. -- Net investment margin of 2.28 percent, as shown in Table One. -- Fee and other revenue of $233 million, up 24 percent from the second quarter of 2006, driven primarily by continued growth of money transfer transaction volume. -- Expenses increase of 17 percent, driven by increased headcount and infrastructure costs supporting the growth in money transfer. Philip Milne, president and chief executive officer said, "Our money transfer business continues to generate a robust growth rate, up 29 percent from last year. We are very pleased with MoneyGram International's performance in the second quarter of 2007, especially given the strong quarter we reported in the second quarter of 2006. We continue to strengthen our global presence and our infrastructure, which we believe enhances our future transaction growth and leverages our money transfer platform. Additionally, we continue to be pleased with year over year performance of our investment portfolio that allows us to continue to invest in our money transfer platform." Segment Highlights MoneyGram operates in two reportable business segments, Global Funds Transfer and Payment Systems. Global Funds Transfer ($ in millions) Q2 Q2 % 2007 2006 Change - ---------------------------------------------------------------------- Revenue $247.1 $202.0 22.3% Commissions Expense 105.2 80.3 31.0% Net Revenue 141.9 121.7 16.6% Operating Income $40.8 $40.8 0.0% Operating Margin 16.5% 20.2% For the Global Funds Transfer segment, which consists of money transfer (including urgent bill payment) and retail money orders, revenue increased 22 percent to $247 million. Revenue improved as a result of growth in money transfer transaction volume. Operating income was flat at $41 million in the second quarter of 2007 compared to the second quarter 2006. Growth in money transfer transactions was offset by higher money transfer commissions and transaction and infrastructure costs related to the expansion of the business and the global network. The increased commissions and expenses had a 290 basis point impact on the operating margin compared to the second quarter of 2006. Money transfer transaction volume grew 29 percent and money transfer revenue (see Table Four) grew 29 percent to $209.2 million compared to the second quarter of 2006. The money transfer agent network grew 30 percent to 125,000 agent locations from the second quarter of 2006. As expected, money order transaction volume was down four percent compared to the second quarter of 2006. Payment Systems ($ in millions) Q2 Q2 % 2007 2006 Change - ---------------------------------------------------------------------- Revenue $86.1 $90.9 (5.3%) Commissions Expense 60.4 58.3 3.5% Net Revenue 25.7 32.6 (21.0%) Operating Income $9.9 $16.2 (38.9%) Operating Margin 11.5% 17.8% The Payment Systems segment includes PrimeLink/Official Check outsourcing services, financial money orders and controlled disbursement processing services. Payment Systems revenue decreased 5 percent to $86.1 million in the second quarter of 2007 from $90.9 million in the second quarter of 2006 primarily due to $6.7 million of pretax income from limited partnership interests and cash flows from previously impaired securities earned in the second quarter of 2006. Operating income for the segment was $9.9 million and operating margin 11.5 percent in the second quarter of 2007, compared to $16.2 million and 17.8 percent in the second quarter of 2006. Operating income for the second quarter of 2006 benefited from the $6.7 million of pretax income mentioned above, which added 650 basis points to the operating margin in that period. Share Repurchase During the second quarter of 2007, MoneyGram International bought back 650,000 shares at an average price of $28.89 per share. The company has 5.7 million shares remaining under its current share buyback authorization. 2007 Outlook The company expects the following financial results in the full year 2007: -- Net revenue (total revenue less total commissions) is expected to be in the range of $665 million to $690 million, unchanged from previous guidance. -- Net investment margin is expected to be in the range of 200 to 215 basis points, up from previous guidance of 180 to 195 basis points. Average portfolio balances are expected to be in the range of $6.0 - $6.3 billion for the year, unchanged from previous guidance. -- Income from continuing operations before taxes is expected to be in the range of $183 million to $192 million, compared to our previous guidance of $183 to $195 million. -- Earnings per diluted share is expected to be in the range of $1.49 to $1.55, narrowing the range from previous guidance of $1.47 - $1.55. 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. The outlook does not reflect such events. 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 the second quarter of 2007. Phil Milne, chief executive officer, and Dave Parrin, chief financial officer, will speak on the call. The conference call can be accessed by calling 888-679-8040 in the U.S. The participant passcode is 69187960. 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 July 24, 2007. The replay of the call is available at 888-286-8010 for U.S. callers or 617-801-6888 for international callers, passcode 15103916. 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 product 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 $1.16 billion in revenue in 2006 and approximately 125,000 global money transfer locations in 170 countries and territories. 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) loss of key retail agents or inability to maintain our network in our Global Funds Transfer segment; (b) loss of large financial institution customers in our Payment Systems segment; (c) ability to successfully develop and timely introduce new and enhanced products and services; (d) ability to protect and defend the intellectual property rights related to our existing and any new or enhanced products and services; (e) failure to continue to compete effectively; (f) our and our agents ability to comply with U.S and International regulatory requirements; (g) conducting money transfer transactions through agents in regions that are politically volatile and/or in a limited number of cases, subject to certain OFAC restrictions; (h) ability to manage security risks related to our electronic processing and transmission of confidential customer information; (i) ability to process and settle transactions accurately and on the efficient and uninterrupted operation of our computer network systems and data centers; (j) ability to manage credit and fraud risks from our retail agents; (k) ability to manage reputational damage to our brand due to fraudulent use of our services; (l) litigation or investigations of us or our agents that could result in material settlements, fines or penalties; (m) ability to manage credit risk related to our investment portfolio and our use of derivatives; (n) fluctuations in interest rates; (o) material changes in the market value of securities we hold; (p) ability to manage risks related to opening of new retail locations and acquisition of businesses; (q) material slow down or complete disruption in international migration patterns; (r) unexpected liquidity needs; (s) ability for us or our agents to maintain adequate banking relationships; (t) ability to manage risks associated with our international sales and operations; (u) ability to maintain effective internal controls; (v) possible delay or prevention of an acquisition of our company which could inhibit a stockholder's ability to receive a premium on their investment from a possible sale of our company due to provisions contained in our charter documents, our rights plan and Delaware law; and (w) 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 2007 vs 2007 2006 2006 --------------------------------- (Dollars in thousands) Components of net investment revenue: Investment revenue $ 101,107 $ 106,516 $ (5,409) Investment commissions expense (1) (65,320) (63,036) (2,284) --------------------------------- Net investment revenue $ 35,787 $ 43,480 $ (7,693) ================================= Average balances: Cash equivalents and investments $6,298,881 $6,430,475 ($131,594) Payment service obligations (2) 4,792,377 4,904,676 (112,299) Average yields earned and rates paid (3): Investment yield 6.44% 6.64% -0.20% Investment commission rate 5.47% 5.16% 0.31% Net investment margin 2.28% 2.71% -0.43% Six months ended June 30 2007 vs 2007 2006 2006 --------------------------------- (Dollars in thousands) Components of net investment revenue: Investment revenue $ 197,161 $ 201,476 $ (4,315) Investment commissions expense (1) (127,568) (121,825) (5,743) --------------------------------- Net investment revenue $ 69,593 $ 79,651 $ (10,058) ================================= Average balances: Cash equivalents and investments $6,246,056 $6,386,878 ($140,822) Payment service obligations (2) 4,727,577 4,848,801 (121,224) Average yields earned and rates paid (3): Investment yield 6.37% 6.36% 0.01% Investment commission rate 5.44% 5.07% 0.37% Net investment margin 2.25% 2.51% -0.26% (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 ($369.7 million and $374.8 million for the second quarter of 2007 and 2006, respectively, and $369.9 million and $383.8 million for the six months ended June 30, 2007 and 2006, 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 mulitplied 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 2007 2006 2007 2006 --------- -------- -------- -------- (Dollars and shares in thousands, except per share data) REVENUE: Fee and other revenue $232,533 $186,837 $445,666 $355,968 Investment revenue 101,107 106,516 197,161 201,476 Net securities gains (losses) (381) (440) 483 (859) --------- -------- -------- -------- Total revenue 333,259 292,913 643,310 556,585 Fee commissions expense 100,279 75,619 190,291 143,103 Investment commissions expense 65,320 63,036 127,568 121,825 --------- -------- -------- -------- Total commissions expense 165,599 138,655 317,859 264,928 --------- -------- -------- -------- Net revenue 167,660 154,258 325,451 291,657 EXPENSES: Compensation and benefits 50,363 43,093 100,394 83,721 Transaction and operations support 44,238 39,210 83,852 71,296 Depreciation and amortization 12,211 9,345 23,891 17,777 Occupancy, equipment and supplies 10,985 8,817 21,402 17,434 Interest expense 1,983 1,975 3,941 3,922 --------- -------- -------- -------- Total expenses 119,780 102,440 233,480 194,150 --------- -------- -------- -------- Income before income taxes 47,880 51,818 91,971 97,507 Income tax expense 15,521 15,112 29,773 29,865 --------- -------- -------- -------- NET INCOME $ 32,359 $ 36,706 $ 62,198 $ 67,642 ========= ======== ======== ======== Basic earnings per share --------- -------- -------- -------- Earnings per common share $ 0.39 $ 0.43 $ 0.75 $ 0.80 ========= ======== ======== ======== Average outstanding common shares 82,922 84,727 83,194 84,552 ========= ======== ======== ======== Diluted earnings per share --------- -------- -------- -------- Earnings per common share $ 0.38 $ 0.42 $ 0.74 $ 0.78 ========= ======== ======== ======== Average outstanding and potentially dilutive common shares 84,169 86,483 84,477 86,329 ========= ======== ======== ======== TABLE THREE MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) 2007 ----------------------------------------------- First Second Third Fourth Full Quarter Quarter Quarter Quarter Year ----------------------------------------------- (Dollars in thousands) Revenue: Global Funds Transfer $226,636 $247,090 Payment Systems 83,197 86,092 Operating income: Global Funds Transfer 37,551 40,792 Payment Systems 9,566 9,898 Operating Margin: Global Funds Transfer 16.6% 16.5% Payment Systems 11.5% 11.5% 2006 ----------------------------------------------- First Second Third Fourth Full Quarter Quarter Quarter Quarter Year ----------------------------------------------- (Dollars in thousands) Revenue: Global Funds Transfer $182,987 $202,038 $213,451 $223,270 $821,746 Payment Systems 80,685 90,875 82,468 83,069 337,097 Operating income: Global Funds Transfer 39,907 40,801 38,566 33,305 152,579 Payment Systems 10,323 16,207 7,539 7,550 41,619 Operating Margin: Global Funds Transfer 21.8% 20.2% 18.1% 14.9% 18.6% Payment Systems 12.8% 17.8% 9.1% 9.1% 12.3% 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) 2004 86,198 95,174 102,764 111,234 395,370 2005 111,296 124,545 132,802 139,083 507,726 2006 144,987 161,917 176,220 186,728 669,852 2007 190,104 209,190 TABLE FIVE MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES UNRESTRICTED ASSETS (Unaudited) June 30 December 31 2007 2006 ------------ ------------ (Dollars in thousands) Payment service assets $ 8,508,603 $ 8,568,713 Amounts restricted to cover payment service obligations (8,211,535) (8,209,789) ------------ ------------ Unrestricted assets (1) $ 297,068 $ 358,924 ============ ============ (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. Investor Relations: Tim Gallaher, 952-591-3840 ir@moneygram.com -----END PRIVACY-ENHANCED MESSAGE-----