10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(mark one)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended March 31, 2012

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

for the transition period from              to             .

Commission File Number: 001-31950

MONEYGRAM INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

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

(214) 999-7552

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	(Do not check if a smaller reporting company)	Accelerated filer	x
Non-accelerated filer	¨		Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of April 27, 2012, 57,836,029 shares of common stock, $0.01 par value, were outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Cash Flows	6
Consolidated Statement of Stockholders’ Deficit	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	45
Item 4. Controls and Procedures	45
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	45
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6. Exhibits	47
Signatures	48
Exhibit Index	49

2

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

MONEYGRAM INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

UNAUDITED

(Amounts in thousands, except share data)	March 31, 2012			December 31, 2011
ASSETS
Cash and cash equivalents	$	—		$	—
Cash and cash equivalents (substantially restricted)		2,547,250			2,572,174
Receivables, net (substantially restricted)		1,210,506			1,220,065
Short-term investments (substantially restricted)		525,356			522,024
Available-for-sale investments (substantially restricted)		93,127			102,771
Property and equipment		116,883			116,341
Goodwill		428,691			428,691
Other assets		214,365			213,512
Total assets	$	5,136,178		$	5,175,578
LIABILITIES
Payment service obligations	$	4,152,604		$	4,205,375
Debt		810,623			810,888
Pension and other postretirement benefits		118,690			120,252
Accounts payable and other liabilities		146,747			149,261
Total liabilities		5,228,664			5,285,776
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS’ DEFICIT
Participating Convertible Preferred Stock-Series D, $0.01 par value, 200,000 shares authorized, 109,239 issued at March 31, 2012 and December 31, 2011		281,898			281,898
Common Stock, $0.01 par value, 162,500,000 shares authorized, 62,263,963 shares issued at March 31, 2012 and December 31, 2011		623			623
Additional paid-in capital		992,711			989,188
Retained loss		(1,206,285	)		(1,216,543	)
Accumulated other comprehensive loss		(34,131	)		(38,028	)
Treasury stock: 4,427,934 and 4,429,184 shares at March 31, 2012 and December 31, 2011, respectively		(127,302	)		(127,336	)
Total stockholders’ deficit		(92,486	)		(110,198	)
Total liabilities and stockholders’ deficit	$	5,136,178		$	5,175,578

See Notes to Consolidated Financial Statements

3

MONEYGRAM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Amounts in thousands, except per share data)	Three Months Ended March 31,
	2012		2011
REVENUE
Fee and other revenue	$	314,918	$	290,009
Investment revenue		3,177		4,015
Total revenue		318,095		294,024
EXPENSES
Fee and other commissions expense		141,915		129,060
Investment commissions expense		77		140
Total commissions expense		141,992		129,200
Compensation and benefits		59,064		59,295
Transaction and operations support		58,214		50,409
Occupancy, equipment and supplies		12,211		11,753
Depreciation and amortization		10,683		11,666
Total operating expenses		282,164		262,323
OPERATING INCOME		35,931		31,701
Other expense
Interest expense		17,883		20,613
Total other expenses, net		17,883		20,613
Income before income taxes		18,048		11,088
Income tax expense (benefit)		7,779		(2,957	)
NET INCOME	$	10,269	$	14,045
INCOME (LOSS) PER COMMON SHARE
Basic	$	0.14	$	(2.08	)
Diluted	$	0.14	$	(2.08	)
Net income (loss) available to common stockholders:
Net income as reported	$	10,269	$	14,045
Accrued preferred stock dividends		—		(33,209	)
Accretion recognized on preferred stock		—		(2,559	)
Net income (loss) available to common stockholders	$	10,269	$	(21,723	)
Weighted-average outstanding common shares and equivalents used in computing earnings per share
Basic		71,490		10,455
Diluted		71,651		10,455

See Notes to Consolidated Financial Statements

4

MONEYGRAM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Amounts in thousands)	Three Months Ended March 31,
	2012			2011
NET INCOME	$	10,269		$	14,045
OTHER COMPREHENSIVE INCOME
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $532 and $0		974			1,944
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57 and $57		(92	)		(92	)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $596 and $621		972			1,012
Unrealized foreign currency translation gains, net of tax expense of $1,252 and $443		2,043			723
Other comprehensive income		3,897			3,587
COMPREHENSIVE INCOME	$	14,166		$	17,632

See Notes to Consolidated Financial Statements

5

MONEYGRAM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,269		$	14,045
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		10,683			11,666
Asset impairments and net losses upon disposal		247			(282	)
Amortization of debt discount and deferred financing costs		1,397			1,591
Provision for uncollectible receivables		1,463			1,349
Non-cash compensation and pension expense		5,331			6,922
Other non-cash items, net		(1,483	)		455
Changes in foreign currency translation adjustments		2,043			723
Signing bonus amortization		8,343			7,948
Signing bonus payments		(4,934	)		(6,778	)
Change in other assets		458			4,239
Change in accounts payable and other liabilities		(4,430	)		(20,095	)
Total adjustments		19,118			7,738
Change in cash and cash equivalents (substantially restricted)		24,924			89,932
Change in receivables, net (substantially restricted)		8,096			24,025
Change in payment service obligations		(52,771	)		(139,471	)
Net cash provided by (used in) operating activities		9,636			(3,731	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments classified as available-for-sale (substantially restricted)		10,820			17,462
Purchases of short-term investments (substantially restricted)		(211,756	)		(205,441	)
Proceeds from maturities of short-term investments (substantially restricted)		210,113			200,500
Purchases of property and equipment		(18,632	)		(8,973	)
Proceeds from disposal of assets and businesses		172			—
Net cash (used in) provided by investing activities		(9,283	)		3,548
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt		(375	)		—
Proceeds from exercise of stock options		22			183
Net cash (used in) provided by financing activities		(353	)		183
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—
CASH AND CASH EQUIVALENTS - Beginning of period		—			—
CASH AND CASH EQUIVALENTS - End of period	$	—		$	—

See Notes to Consolidated Financial Statements

6

MONEYGRAM INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

UNAUDITED

(Amounts in thousands)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Loss			Accumulated Other Comprehensive Loss			Treasury Stock			Total
December 31, 2011	$	281,898	$	623	$	989,188	$	(1,216,543	)	$	(38,028	)	$	(127,336	)	$	(110,198	)
Net income		—		—		—		10,269			—			—			10,269
Employee benefit plans		—		—		3,523		(11	)		—			34			3,546
Net unrealized gain on available-for-sale securities, net of tax		—		—		—		—			974			—			974
Amortization of prior service cost for pension and postretirement benefits, net of tax		—		—		—		—			(92	)		—			(92	)
Amortization of unrealized losses on pension and postretirement benefits, net of tax		—		—		—		—			972			—			972
Unrealized foreign currency translation adjustment, net of tax		—		—		—		—			2,043			—			2,043
March 31, 2012	$	281,898	$	623	$	992,711	$	(1,206,285	)	$	(34,131	)	$	(127,302	)	$	(92,486	)

See Notes to Consolidated Financial Statements

7

MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Basis of Presentation

The accompanying unaudited consolidated financial statements of MoneyGram International, Inc. (“MoneyGram” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for future periods. For further information, refer to the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Participation Agreement between the Investors and Wal-Mart Stores, Inc. — As previously disclosed, the Investors have a Participation Agreement with Wal-Mart Stores, Inc. (“Wal-Mart”), under which the Investors are obligated to pay Wal-Mart certain percentages of any accumulated cash payments received by the Investors in excess of the Investors’ original investment in the Company. While the Company is not a party to, and has no obligations to Wal-Mart or additional obligations to the Investors under, the Participation Agreement, the Company must recognize the Participation Agreement in its consolidated financial statements as the Company indirectly benefits from the agreement. A liability and the related expense associated with the Participation Agreement would be recognized by the Company in the period in which it becomes probable that a liquidity event will occur that would require the Investors to make a payment to Wal-Mart (a “liquidity event”). Upon payment by the Investors to Wal-Mart, the liability would be released through a credit to the Company’s additional paid-in capital. The amount of the non-operating expense could be material to the Company’s financial position or results of operations, but would have no impact on the Company’s cash flows. As liquidity events are dependent on many external factors and uncertainties, the Company does not consider a liquidity event to be probable at this time, and has not recognized a liability or expense related to the Participation Agreement. The additional consideration paid to the Investors in connection with the 2011 Recapitalization did not result in a liquidity event as the amounts received by the Investors are less than their original investment in the Company.

Note 2 — Assets in Excess of Payment Service Obligations

The following table shows the amount of assets in excess of payment service obligations at March 31, 2012 and December 31, 2011:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Cash and cash equivalents (substantially restricted)	$	2,547,250		$	2,572,174
Receivables, net (substantially restricted)		1,210,506			1,220,065
Short-term investments (substantially restricted)		525,356			522,024
Available-for-sale investments (substantially restricted)		93,127			102,771
		4,376,239			4,417,034
Payment service obligations		(4,152,604	)		(4,205,375	)
Assets in excess of payment service obligations	$	223,635		$	211,659

The Company was in compliance with its contractual and financial regulatory requirements as of March 31, 2012 and December 31, 2011.

8

Note 3 — Fair Value Measurement

The following tables set forth the Company’s financial assets and liabilities measured at fair value by hierarchy level:

	Balance at March 31,		Fair Value at March 31, 2012
(Amounts in thousands)	2012		Level 1		Level 2		Level 3		Total
Financial assets:
Available-for-sale investments (substantially restricted):
United States government agencies	$	8,856	$	—	$	8,856	$	—	$	8,856
Residential mortgage-backed securities - agencies		58,874		—		58,874		—		58,874
Other asset-backed securities		25,397		—		—		25,397		25,397
Investment related to deferred compensation trust		8,497		8,497		—		—		8,497
Total financial assets	$	101,624	$	8,497	$	67,730	$	25,397	$	101,624
Financial liabilities:
Forward contracts	$	739	$	—	$	739	$	—	$	739

	Balance at December 31,		Fair Value at December 31, 2011
(Amounts in thousands)	2011		Level 1		Level 2		Level 3		Total
Financial assets:
Available-for-sale investments (substantially restricted):
United States government agencies	$	8,827	$	—	$	8,827	$	—	$	8,827
Residential mortgage-backed securities - agencies		69,712		—		69,712		—		69,712
Other asset-backed securities		24,232		—		—		24,232		24,232
Investment related to deferred compensation trust		8,118		8,118		—		—		8,118
Forward contracts		399		—		399		—		399
Total financial assets	$	111,288	$	8,118	$	78,938	$	24,232	$	111,288
Financial liabilities:
Forward contracts	$	46	$	—	$	46	$	—	$	46

For other asset–backed securities, investments in limited partnerships and trading investments, market quotes are generally not available. If available, the Company will utilize a fair value measurement from a pricing service. The pricing service utilizes a pricing model based on market observable data and indices, such as quotes for comparable securities, yield curves, default indices, interest rates and historical prepayment speeds. If a fair value measurement is not available from the pricing service, the Company will utilize a broker quote if available. Due to a general lack of transparency in the process that the brokers use to develop prices, most valuations that are based on brokers’ quotes are classified as Level 3. If no broker quote is available, or if such quote cannot be corroborated by market data or internal valuations, the Company will perform internal valuations utilizing externally developed cash flow models. These pricing models are based on market observable spreads and, when available, observable market indices. The pricing models also use inputs such as the rate of future prepayments and expected default rates on the principal,which are derived by the Company based on the characteristics of the underlying structure and historical prepayment speeds experienced at the interest rate levels projected for the underlying collateral. The pricing models for certain asset–backed securities also include significant non–observable inputs such as internally assessed credit ratings for non–rated securities, combined with externally provided credit spreads. Observability of market inputs to the valuation models used for pricing certain of the Company’s investments deteriorated with the disruption to the credit markets as overall liquidity and trading activity in these sectors has been substantially reduced. Accordingly, securities valued using a pricing model have consistently been classified as Level 3 financial instruments. The table below provides a roll-forward of the ‘Other asset-backed securities’, the only financial assets classified in Level 3, which are measured at fair value on a recurring basis, for the three months ended March 31, 2012 and 2011:

	Three Months Ended March  31,
(Amounts in thousands)	2012			2011
Beginning balance	$	24,232		$	23,710
Realized gains		—			—
Realized losses		—			—
Principal paydowns		(64	)		(410	)
Other-than-temporary impairments		—			—
Unrealized gains - instruments still held at the reporting date		2,050			4,093
Unrealized losses - instruments still held at the reporting date		(821	)		(1,053	)
Ending balance	$	25,397		$	26,340

9

When applicable, realized gains and losses and other-than-temporary impairments related to available-for-sale investment securities are reported in the “Net securities (gains) losses” line in the Consolidated Statements of Income. Unrealized gains and losses related to available-for-sale securities are recorded in accumulated other comprehensive loss in stockholders’ deficit.

Assets and liabilities that are disclosed at fair value — Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of debt is estimated using market quotations, where available, credit ratings, observable market indices and other market data (Level 2). As of March 31, 2012, the fair value of the senior secured facility is $484.4 million compared to the carrying value of $486.0 million. As of March 31, 2012, the fair value of the Company’s second lien notes is estimated at $337.2 million compared to a carrying value of $325.0 million. As of December 31, 2011, the fair value of the senior secured facility is $479.8 million compared to the carrying value of $489.6 million. As of December 31, 2011 the fair value of the Company’s second lien notes is estimated at $335.6 million compared to a carrying value of $325.0 million.

Note 4 — Investment Portfolio

Components of the Company’s investment portfolio are as follows:

(Amounts in thousands)	March 31, 2012		December 31, 2011
Cash	$	2,069,309	$	2,016,451
Money markets		477,887		555,659
Deposits		54		64
Cash and cash equivalents (substantially restricted)		2,547,250		2,572,174
Short-term investments (substantially restricted)		525,356		522,024
Available-for-sale investments (substantially restricted)		93,127		102,771
Total investment portfolio	$	3,165,733	$	3,196,969

Cash and Cash Equivalents (substantially restricted) — Cash and cash equivalents consist of cash, money-market securities and deposits. Cash primarily consists of interest-bearing deposit accounts and non-interest bearing transaction accounts. The Company’s money-market securities are invested in six funds, all of which are AAA rated and consist of United States Treasury bills, notes or other obligations issued or guaranteed by the United States government and its agencies, as well as repurchase agreements secured by such instruments. Deposits consist of time deposits with original maturities of three months or less, and are issued from financial institutions that are rated BBB or better as of the date of this filing.

Short-term Investments (substantially restricted) — Short-term investments consist of time deposits and certificates of deposit with original maturities of greater than three months but no more than thirteen months, and are issued from financial institutions rated A+ as of the date of this filing.

10

Available-for-sale Investments (substantially restricted) — Available-for-sale investments consist of mortgage-backed securities, asset-backed securities and agency debenture securities. After other-than-temporary impairment charges, the amortized cost and fair value of available-for-sale investments are as follows at March 31, 2012:

	March 31, 2012
(Amounts in thousands, except net average price)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Net Average Price
Residential mortgage-backed securities-agencies	$	54,330	$	4,544	$	—	$	58,874	$	109.13
Other asset-backed securities		8,565		16,832		—		25,397		5.78
United States government agencies		7,840		1,016		—		8,856		98.40
Total	$	70,735	$	22,392	$	—	$	93,127	$	18.53

After other-than-temporary impairment charges, the amortized cost and fair value of available-for-sale investments were as follows at December 31, 2011:

	December 31, 2011
(Amounts in thousands, except net average price)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Net Average Price
Residential mortgage-backed securities - agencies	$	65,211	$	4,501	$	—	$	69,712	$	107.63
Other asset-backed securities		8,951		15,281		—		24,232		5.49
United States government agencies		7,723		1,104		—		8,827		98.08
Total	$	81,885	$	20,886	$	—	$	102,771	$	21.83

At March 31, 2012 and December 31, 2011, approximately 73 percent and 76 percent, respectively, of the available-for-sale portfolio were invested in debentures of United States government agencies or securities collateralized by United States government agency debentures. These securities have the implicit backing of the United States government, and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments. The “Other asset-backed securities” continue to have market exposure, as factored into the fair value estimates, with the average price of an asset-backed security at $0.06 per dollar of par at March 31, 2012.

Gains and Losses and Other-Than-Temporary Impairments — At March 31, 2012 and December 31, 2011, net unrealized gains of $22.5 million and $21.5 million, respectively, are included in the Consolidated Balance Sheets in “Accumulated other comprehensive loss.” During the three months ended March 31, 2012 and 2011, no net gains or losses were reclassified from “Accumulated other comprehensive loss” to “Net securities gains” in connection with other-than-temporary impairments and realized gains and losses recognized during the period.

Investment Ratings — In rating the securities in its investment portfolio, the Company uses ratings from Moody’s Investor Service (“Moody’s”), Standard & Poors (“S&P”) and Fitch Ratings (“Fitch”). If the rating agencies have split ratings, the Company uses the highest rating across the rating agencies for disclosure purposes. Securities issued or backed by United States government agencies are included in the AAA rating category. Investment grade is defined as a security having a Moody’s equivalent rating of Aaa, Aa, A or Baa or an S&P or Fitch equivalent rating of AAA, AA, A or BBB. The Company’s investments at March 31, 2012 and December 31, 2011 consisted of the following ratings:

	March 31, 2012							December 31, 2011
(Dollars in thousands)	Number of Securities		Fair Value		Percent of Investments			Number of Securities		Fair Value		Percent of Investments
AAA, including United States agencies		23	$	67,467		72	%		24	$	78,267		76	%
Below investment grade		59		25,660		28	%		60		24,504		24	%
Total		82	$	93,127		100	%		84	$	102,771		100	%

11

Had the Company used the lowest rating from the rating agencies in the information presented above, there would be a less than $0.1 million change to investments rated A or better at March 31, 2012 and December 31, 2011.

Contractual Maturities — The amortized cost and fair value of available-for-sale securities at March 31, 2012 and December 31, 2011, by contractual maturity, are shown below. 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 mortgage-backed and other asset-backed securities depend on the repayment characteristics and experience of the underlying obligations.

	March 31, 2012				December 31, 2011
(Amounts in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	1,001	$	1,034	$	—	$	—
After one year through five years		6,839		7,822		7,723		8,827
Mortgage-backed and other asset-backed securities		62,895		84,271		74,162		93,944
Total	$	70,735	$	93,127	$	81,885	$	102,771

Fair Value Determination — The Company uses various sources of pricing for its fair value estimates of its available-for-sale portfolio. The percentage of the portfolio for which the various pricing sources were used is as follows at March 31, 2012 and December 31, 2011: 65 percent and 69 percent, respectively, used a third party pricing service; 15 percent and 13 percent, respectively, used broker pricing; and 20 percent and 18 percent, respectively, used internal pricing.

Assessment of Unrealized Losses — As of March 31, 2012, the Company had a nominal amount of unrealized losses in its available-for-sale portfolio, with one residential mortgage-backed agency security in an unrealized loss position aged 12 months or more, after the recognition of other-than-temporary impairment charges. At December 31, 2011, the Company had no unrealized losses in its available-for-sale portfolio.

Note 5 — Derivative Financial Instruments

The Company uses forward contracts to manage its foreign currency needs and exchange risk arising from its assets and liabilities denominated in foreign currencies. While these contracts economically hedge foreign currency risk, they are not designated as hedges for accounting purposes. The “Transaction and operations support” line in the Consolidated Statements of Income includes the following (gains) losses related to assets and liabilities denominated in foreign currencies:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net realized foreign currency gains	$	(4,486	)	$	(6,590	)
Net losses from the related forward contracts		3,965			8,086
Net (gains) losses from foreign currency transactions and related forward contracts	$	(521	)	$	1,496

As of March 31, 2012 and December 31, 2011, the Company had $66.2 million and $65.5 million, respectively, of outstanding notional amounts relating to its forward contracts. At March 31, 2012 and December 31, 2011, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets:

			Derivative Assets				Derivative Liabilities
(Amounts in thousands)	Balance  Sheet Location		March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Forward contracts		Other assets	$	—	$	399	$	739	$	46

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Note 6 — Property and Equipment

Property and equipment consists of the following at March 31, 2012 and December 31, 2011:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Computer hardware and software	$	205,251		$	196,168
Signage		81,280			80,303
Agent equipment		69,278			69,643
Office furniture and equipment		35,274			36,733
Leasehold improvements		23,721			27,562
Land		410			410
		415,214			410,819
Accumulated depreciation		(298,331	)		(294,478	)
Total property and equipment	$	116,883		$	116,341

Depreciation expense for the three months ended March 31, 2012 and 2011 is as follows:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Computer hardware and software	$	5,062	$	5,410
Signage		2,770		2,271
Agent equipment		1,079		1,803
Office furniture and equipment		901		972
Leasehold improvements		709		873
Total depreciation expense	$	10,521	$	11,329

At March 31, 2012 and December 31, 2011, there was $2.7 million and $9.9 million, respectively, of property and equipment that had been received by the Company and included in “Accounts payable and other liabilities” in the Consolidated Balance Sheets.

During the three months ended March 31, 2012, the Company recognized a disposal loss of $0.4 million on furniture and equipment related to the closing of an office location. The loss is recorded in the “Occupancy, equipment and supplies” line in the Consolidated Statements of Income.

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Note 7 — Debt

Following is a summary of the Company’s outstanding debt:

	2011 Credit Agreement
(Amounts in thousands)	Senior secured credit facility due 2017			Senior secured incremental term loan due 2017			Second Lien Notes due 2018			Total Debt
Balance at December 31, 2011	$	339,232		$	146,656		$	325,000		$	810,888
Payments		—			(375	)		—			(375	)
Accretion of discount		33			77			—			110
Balance at March 31, 2012	$	339,265		$	146,358		$	325,000		$	810,623
Weighted average interest rate		4.44	%		4.44	%		13.25	%

2008 Senior Facility — In connection with the Company’s recapitalization transaction in May 2011 (the “2011 Recapitalization”), the 2008 senior facility was terminated. Prior to the termination, the Company was able to elect an interest rate for the 2008 senior facility at each reset period based on the JP Morgan prime bank rate or the Eurodollar rate. During the three months ended March 31, 2011, the Company elected the United States prime bank rate as its interest basis, and had a weighted average interest rate of 5.75 percent for the Senior Tranche A Loan and 7.25% for the Senior Tranche B Loan. The Company recognized $0.1 million of discount accretion through the “Interest expense” line in the Consolidated Statements of Income during the three months ending March 31, 2011.

2011 Credit Agreement —The Company may elect an interest rate under the agreement governing the Company’s senior secured credit facility (the “2011 Credit Agreement”) at each reset period based on the Bank of America alternate base rate or the Eurodollar rate. The interest rate election may be made individually for the term loan, incremental term loan and each draw under the revolving credit facility. The interest rate is either the BOA prime rate plus 225 basis points or the Eurodollar rate plus 300 basis points. Since inception of the 2011 Credit Agreement, the Company elected the Eurodollar rate as its primary interest basis, with a minimal amount of the term debt at the Bank of America alternate base rate. Under the terms of the 2011 Credit Agreement, the interest rate determined using the Eurodollar rate has a minimum rate of 1.25 percent.

Fees on the daily unused availability under the revolving credit facility are 62.5 basis points. Substantially all of the Company’s non-financial assets are pledged as collateral for the loans under the 2011 Credit Agreement, with the collateral guaranteed by the Company’s material domestic subsidiaries. The non-financial assets of the material domestic subsidiaries are pledged as collateral for these guarantees. As of March 31, 2012, the Company has $137.3 million of availability under the revolving credit facility, net of $12.7 million of outstanding letters of credit that reduce the amount available. At March 31, 2012 there were no amounts outstanding under the revolving credit facility.

Following is the debt discount amortization recorded in “Interest expense” in the Consolidated Statements of Income for the three months ended March 31:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Total amortization of discount	$	110	$	144

Second Lien Notes — Prior to the fifth anniversary of the issuance of the notes, the Company may redeem some or all of the second lien notes at a price equal to 100 percent of the principal, plus any accrued and unpaid interest plus a premium equal to the greater of one percent or an amount calculated by discounting the sum of (a) the redemption payment that would be due upon the fifth anniversary plus (b) all required interest payments due through such fifth anniversary using the treasury rate plus 50 basis points. Starting with the fifth anniversary of the issuance of the notes, the Company may redeem some or all of the second lien notes at prices expressed as a percentage of the outstanding principal amount of the second lien notes plus accrued and unpaid interest, starting at approximately 107 percent on the fifth anniversary, decreasing to 100 percent on or after the eighth anniversary. Upon a change of control, as defined by the Note Purchase Agreement, the Company is required to make an offer to repurchase the second lien notes at a price equal to 101 percent of the principal amount plus accrued and unpaid interest. The Company is also required to make an offer to repurchase the second lien notes with proceeds of certain asset sales that have not been reinvested in accordance with the terms of the second lien notes or have not been used to repay certain debt.

Inter-creditor Agreement — In connection with the above financing arrangements, both the lenders under the 2011 Credit Agreement and the trustee on behalf of the holders of the second lien notes entered into an inter-creditor agreement under which the lenders and trustee have agreed to waive certain rights and limit the exercise of certain remedies available to them for a limited period of time, both before and following a default under the financing arrangements.

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Debt Covenants and Other Restrictions — Borrowings under the Company’s debt agreements are subject to various covenants that limit the Company’s ability to: incur additional indebtedness; create or incur additional liens; effect mergers and consolidations; make certain acquisitions; sell assets or subsidiary stock; pay dividends and other restricted payments; invest in certain assets; and effect loans, advances and certain other transactions with affiliates. In addition, the 2011 Credit Agreement has a covenant that places limitations on the use of proceeds from borrowings under the facility.

The indenture governing the second lien notes contains a financial covenant requiring the Company to maintain a minimum liquidity ratio of at least 1:1 for certain assets to outstanding payment service obligations. The 2011 Credit Agreement also has quarterly financial covenants to maintain the following interest coverage and total leverage ratios:

	Interest Coverage Minimum Ratio		Total Leverage Not To Exceed
Present through September 30, 2012		2.00:1		4.75:1
December 31, 2012 through September 30, 2013		2.15:1		4.625:1
December 31, 2013 through September 30, 2014		2.15:1		4.375:1
December 31, 2014 through September 30, 2015		2.25:1		4.00:1
December 31, 2015 through September 30, 2016		2.25:1		3.75:1
December 31, 2016 through maturity		2.25:1		3.50:1

At March 31, 2012, the Company was in compliance with its financial covenants.

Deferred Financing Costs —The Company capitalized financing costs in “Other assets” in the Consolidated Balance Sheets and amortized them over the term of the related debt using the effective interest method. Amortization is recorded in “Interest expense” in the Consolidated Statements of Income. Following is a summary of the deferred financing costs at March 31:

	2011 Credit Agreement
(Amounts in thousands)	Senior secured credit facility			Senior secured incremental term			Senior revolving credit facility			Second Lien Notes			Total Deferred Financing Costs
Balance at December 31, 2011	$	6,882		$	3,092		$	3,523		$	16,649		$	30,146
Amortization of deferred financing costs		(293	)		(201	)		(201	)		(649	)		(1,344	)
Write-off of deferred financing costs		—			(7	)		—			—			(7	)
Balance at March 31, 2012	$	6,589		$	2,884		$	3,322		$	16,000		$	28,795

Interest Paid in Cash — The Company paid $16.5 million and $18.7 million of interest for the three months ended March 31, 2012 and 2011, respectively.

Maturities — At March 31, 2012, debt totaling $481.0 million will mature in 2017 and $325.0 million will mature in 2018, while debt principal totaling $8.3 million will be paid in increments of $0.4 million quarterly through 2017.

Note 8 — Pensions and Other Benefits

Net periodic benefit expense for the Company’s defined benefit pension plan and combined supplemental executive retirement plans (“SERPs”) includes the following components:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Interest cost	$	2,639		$	2,841
Expected return on plan assets		(1,969	)		(2,056	)
Amortization of prior service cost (credit)		7			7
Recognized net actuarial loss		1,470			1,572
Net periodic benefit expense	$	2,147		$	2,364

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Benefits paid through the defined benefit pension plan were $2.4 million and $2.2 million for the three months ended March 31, 2012 and 2011, respectively. The Company made contributions to the defined benefit pension plan of $1.4 million and $0.9 million during the three months ended March 31, 2012 and 2011, respectively. Benefits paid through, and contributions made to, the combined SERPs were $0.8 million and $1.1 million for the three months ended March 31, 2012 and 2011, respectively.

Following is a summary of the net actuarial loss and prior service costs for the defined benefit pension plan and combined SERPs that the Company amortized from “Accumulated other comprehensive loss” into “Net periodic benefit expense”:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net actuarial loss	$	1,470		$	1,572
Tax benefit on net actuarial loss		(558	)		(598	)
Prior service costs		7			7
Tax benefit on prior service costs		(3	)		(3	)
Net amortization from accumulated other comprehensive income	$	916		$	978

Net periodic benefit expense for the Company’s postretirement benefit plans includes the following components:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Interest cost	$	24		$	13
Amortization of prior service cost (credit)		(156	)		(156	)
Recognized net actuarial loss		98			61
Net periodic benefit expense	$	(34	)	$	(82	)

Benefits paid through, and contributions made to, the postretirement benefit plans were less than $0.1 million for both the three months ended March 31, 2012 and 2011.

Following is a summary of the net actuarial loss and prior service credit for the postretirement benefit plans that the Company amortized from “Accumulated other comprehensive loss” into “Net periodic benefit expense”:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net actuarial loss	$	98		$	61
Tax benefit on net actuarial loss		(37	)		(23	)
Prior service costs (credits)		(156	)		(156	)
Tax expense (benefit) on prior service costs		59			60
Net amortization from accumulated other comprehensive income	$	(36	)	$	(58	)

Contribution expense for the 401(k) defined contribution plan was $0.8 million for both the three months ended March 31, 2012 and 2011.

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International Benefit Plans — The Company’s international subsidiaries have certain defined contribution benefit plans. Contributions expense related to international plans were $0.4 million and $0.3 million for the three months ended March 31, 2012 and 2011, respectively.

Deferred Compensation Plans — In the first quarter of 2011, the MoneyGram International, Inc. Deferred Compensation Plan, a non-qualified, frozen, deferred compensation plan for a select group of management and highly compensated employees, was amended to terminate all employee deferral accounts on the amendment date and pay each participant the balance of their account in a lump sum no earlier than one year from termination and no later than December 31, 2012. In the three months ended March 31, 2012, the Company made $0.5 million in payments and no further payments are due under the amendments made in the first quarter of 2011.

The deferred compensation plans are unfunded and unsecured and the Company is not required to physically segregate any assets in connection with the deferred accounts. The Company has rabbi trusts associated with each deferred compensation plan which are funded through voluntary contributions by the Company. At March 31, 2012 and December 31, 2011, the Company had a liability related to the deferred compensation plans of $2.6 million and $3.4 million respectively, recorded in the “Accounts payable and other liabilities” line in the Consolidated Balance Sheets. The rabbi trusts had a market value of $8.5 million and $8.1 million at March 31, 2012 and December 31, 2011, respectively, recorded in “Other assets” in the Consolidated Balance Sheets.

Note 9 — Stockholders’ Deficit

Reverse Stock Split — On November 14, 2011, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock at a reverse stock split ratio of 1-for-8. All share and per share amounts have been retroactively adjusted to reflect the stock split with the exception of the Company’s treasury stock, which was not a part of the reverse stock split.

Following is a summary of the activity of the Company’s stock authorized, issued and outstanding:

	D Stock						Common Stock						Treasury Stock
(Amounts in thousands)	Authorized		Issued		Outstanding		Authorized		Issued		Outstanding
December 31, 2011		200		109		109		162,500		62,264		57,835		(4,429	)
Stock option exercise		—		—		—		—		—		1		1
March 31, 2012		200		109		109		162,500		62,264		57,836		(4,428	)
	D Stock						Common Stock						Treasury Stock
(Amounts in thousands)	Authorized		Issued		Outstanding		Authorized		Issued		Outstanding
December 31, 2010		—		—		—		162,500		15,389		10,453		(4,936	)
Stock option exercise		—		—		—		—		—		90		90
March 31, 2011		—		—		—		162,500		15,389		10,543		(4,846	)

Common Stock — The holders of MoneyGram common stock are entitled to one vote per share on all matters to be voted upon by its stockholders. The holders of common stock have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The determination to pay dividends on common stock will be at the discretion of the Board of Directors and will depend on applicable laws and the Company’s financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directors may deem relevant. No dividends were paid during the three months ended March 31, 2012. The Company’s ability to declare or pay dividends or distributions to the holders of the Company’s common stock is restricted under the Company’s 2011 Credit Agreement and the indenture governing the Company’s second lien notes.

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Accumulated Other Comprehensive Loss — The components of “Accumulated other comprehensive loss” at March 31, 2012 and December 31, 2011 include:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Net unrealized gains on securities classified as available-for-sale, net of tax	$	22,453		$	21,479
Cumulative foreign currency translation adjustments, net of tax		3,064			1,021
Prior service credit for pension and postretirement benefits, net of tax		1,942			2,034
Unrealized losses on pension and postretirement benefits, net of tax		(61,590	)		(62,562	)
Accumulated other comprehensive loss	$	(34,131	)	$	(38,028	)

Note 10 — Stock-Based Compensation

The MoneyGram International, Inc. 2005 Omnibus Incentive Plan (“2005 Plan”) provides for the granting of equity-based compensation awards, including stock options, stock appreciation rights, restricted stock units and restricted stock awards (collectively, “share-based awards”) to officers, employees and directors. The Company is authorized to issue a total of 5,875,000 of share-based awards. As of March 31, 2012, the Company has remaining authorization to issue future grants of up to 1,374,738 shares.

The calculated fair value of share-based awards is recognized as compensation cost using the straight-line method over the vesting or service period in the Company’s financial statements. Stock-based compensation is recognized only for those options, restricted stock units and stock appreciation rights expected to vest, with forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Company’s historical experience and future expectations. Any change in the forfeiture assumption will be accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the financial statements of the period in which the change is made.

Following is a summary of stock-based compensation expense for the three months ended March 31:

(Amounts in thousands)	Three Months Ended March  31,
	2012		2011
Expense recognized related to stock options	$	3,182	$	4,451
Expense recognized related to restricted stock units		341		148
Expense related to stock appreciation rights		9		—
Stock-based compensation expense	$	3,532	$	4,599

Stock Options —Option awards are generally granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. All outstanding stock options contain certain forfeiture and non-compete provisions.

Pursuant to the terms of grants made in 2012, options awarded become exercisable through the passage of time over a four-year period in an equal number of shares each year, and have a term of 10 years.

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For purposes of determining the fair value of stock options awarded in 2012, the Company uses the Black-Scholes single option pricing model. The following table provides weighted-average grant-date fair value and assumptions utilized to estimate the grant-date fair value of the options granted during the three months ended March 31, 2012:

Expected dividend yield (1)	0.0%
Expected volatility (2)	71.37% - 71.79%
Risk-free interest rate (3)	1.23% - 1.53%
Expected life (4)	6.25 years
Weighted-average grant-date fair value per option	$11.59 - $11.88

⁽¹⁾  Expected dividend yield represents the level of dividends expected to be paid on the Company’s common stock over the expected term of the option. The Company does not anticipate declaring any dividends at this time.

⁽²⁾  Expected volatility is the amount by which the Company’s stock price has fluctuated or will fluctuate during the expected term of the option. The Company’s expected volatility is calculated based on the historical volatility of the price of the Company’s common stock since the spin-off from Viad Corporation on June 30, 2004. The Company also considers any known or anticipated factors that will likely impact future volatility.

⁽³⁾  The risk-free interest rate for the Black-Scholes model is based on the United States Treasury yield curve in effect at the time of grant for periods within the expected term of the option, while the risk-free rate for the Monte-Carlo simulation is based on the five-year United States Treasury yield in effect at the time of grant.

⁽⁴⁾  Expected life represents the period of time that options are expected to be outstanding. The expected life was determined using the simplified method as the pattern of changes in the value of the Company’s common stock and exercise activity since late 2007 has been inconsistent and substantially different from historical patterns. Additionally, there have been minimal stock option exercises, which would be representative of the Company’s normal exercise activity since 2007. Accordingly, the Company does not believe that historical terms are relevant to the assessment of the expected life of the grant. Based on these factors, the Company does not believe that it has the ability to make a more refined estimate than the use of the simplified method.

A summary of the Company’s stock option activity for the three months ended March 31, 2012 is as follows:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options outstanding at December 31, 2011		5,365,085		$	23.45
Granted		42,218			18.18
Exercised		(1,250	)		17.36
Forfeited/Expired		(50,726	)		145.63
Options outstanding at March 31, 2012		5,355,327		$	22.26		7.78 years	$	4,397
Vested or expected to vest at March 31, 2012		5,196,467		$	22.28		7.75 years	$	4,353
Options exercisable at March 31, 2012		1,261,699		$	26.63		6.82 years	$	2,390

The following represents stock option compensation information as of March 31, 2012:

(Amounts in thousands)	Three Months Ended March 31,
	2012		2011
Intrinsic value of options exercised	$	1,025	$	80,410
Cash received from option exercises	$	22	$	183
Unrecognized stock option expense	$	21,220
Remaining weighted-average vesting period		1.5 years

Restricted Stock Units — In the first quarter of 2012, the Company issued performance-based restricted stock units to certain employees, which will vest and become payable in shares of common stock to the extent the Company attains the performance goals applicable to the performance period. The performance goal is based on the degree to which the Company’s average annual adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and less certain non-recurring or other unexpected expenses, meets, exceeds or falls short of the target performance goal of achieving an average annual adjusted EBITDA increase of 10 percent over a three year period. Under the terms of the grant, 50 percent of the

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target restricted stock units may vest on the second anniversary and 50 percent may vest on the third anniversary if the performance goal is achieved as of such dates. The number of restricted stock units that vest is determined on a pro rata basis by the extent to which the performance goal is met within a threshold minimum and maximum. In the event the target performance goal is not met, but the Company achieves a minimum performance goal of an average annual adjusted EBITDA growth of five percent, the participant will be entitled to vest in 50 percent of the target number of restricted stock units. In the event the Company achieves its maximum performance goal of an average annual adjusted EBITDA growth of 20 percent, the participant will be entitled to 200 percent of the target number of restricted stock units.

The fair value of restricted stock units is calculated based on the stock price at the time of grant. For performance-based restricted stock units, expense is recognized if achievement of the performance goal is deemed probable, with the amount of expense recognized based on the Company’s best estimate of the ultimate achievement level. For the 2012 performance based restricted stock unit grants, the grant date fair value at the minimum, target and maximum thresholds is $0.4 million, $0.9 million and $1.7 million, respectively. As of March 31, 2012, the Company believes it is probable it will achieve the performance goal at the target level on the third anniversary. For grants to employees, expense is recognized in the “Compensation and benefits” line and expense for grants to Directors is recorded in the “Transaction and operations support” line in the Consolidated Statements of Income using the straight-line method over the vesting period.

A summary of the Company’s restricted stock unit activity for the three months ended March 31, 2012 is as follows:

	Total Shares			Weighted Average Price
Restricted stock units outstanding at December 31, 2011		337,676		$	17.77
Granted		48,922			18.20
Forfeited		(1,120	)		18.00
Restricted stock units outstanding at March 31, 2012		385,478		$	17.82

As of March 31, 2012, the Company’s outstanding restricted stock units had unrecognized compensation expense of $2.4 million and a remaining weighted-average vesting period of 2.5 years. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented under the Company’s current estimate of achievement of the target performance goal on the third anniversary. Unrecognized restricted stock unit expense as of March 31, 2012 under the minimum and maximum thresholds is $1.2 million and $4.6 million, respectively.

Note 11 — Income Taxes

For the three months ended March 31, 2012, the Company had $7.8 million of income tax expense on pre-tax income of $18.0 million. For the three months ended March 31, 2011, the Company had $3.0 million of income tax benefit on pre-tax income of $11.1 million, primarily reflecting a discrete benefit of $3.5 million for the reversal of a portion of the valuation allowance on domestic deferred tax assets. Changes in facts and circumstances may cause the Company to record additional tax expense or benefits in the future. The Company paid $0.1 million of federal and state income taxes for each of the three months ended March 31, 2012 and 2011.

For the three months ended March 31, 2012, interest and penalties for unrecognized tax benefits were less than $0.1 million compared to $0.1 million for the three months ended March 31, 2011. The Company records interest and penalties for unrecognized tax benefits in “Income tax expense (benefit)” in the Consolidated Statements of Income. As of March 31, 2012 and December 31, 2011, the Company had a liability of $1.6 million for interest and penalties within “Accounts payable and other liabilities” in the Consolidated Balance Sheets.

During the second quarter of 2010, the IRS completed its examination of the Company’s consolidated income tax returns for 2005 to 2007 and issued its Revenue Agent Report (“RAR”) challenging the Company’s tax position relating to net securities losses and disallowing the related deductions. The Company disagreed with the RAR regarding the net securities losses and filed a protest letter. The Company had conferences with the IRS Appeals Office in 2010 and through October 2011, but was unable to reach agreement with the IRS Appeals Division. A Notice of Deficiency related to these items was received in April 2012. The Company is also currently under examination for its 2008 and 2009 tax returns, which had similar deductions, and received an RAR for 2008 and 2009 in April 2012. The Company anticipates receiving a Notice of Deficiency within the next 12 months. The Company intends to petition the United States Tax Court contesting the adjustments in the Notice of Deficiency. Approximately $955.0 million of cumulative deductions were taken for net securities losses in its 2007, 2008 and

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2009 tax returns. As of March 31, 2012, the Company has recognized a cumulative benefit of approximately $136.1 million relating to these deductions. The Company continues to believe that the amounts recorded in its consolidated financial statements reflect its best estimate of the ultimate outcome of this matter.

Note 12 — Commitments and Contingencies

Operating Leases — The Company has various non-cancelable operating leases for buildings and equipment with terms through 2021. Certain of these leases contain rent holidays and rent escalation clauses based on pre-determined annual rate increases. The Company recognizes rent expense under the straight-line method over the term of the lease. Any difference between the straight-line rent amounts and amounts payable under the leases are recorded as deferred rent in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. Cash or lease incentives received under certain leases are recorded as deferred rent when the incentive is received and amortized as a reduction to rent over the term of the lease using the straight-line method. Incentives received relating to tenant improvements are recognized as a reduction of rent expense under the straight-line method over the term of the lease. Tenant improvements are capitalized as leasehold improvements and depreciated over the shorter of the remaining term of the lease or 10 years. At March 31, 2012, the deferred rent liability relating to incentives was $2.4 million.

Rent expense under operating leases was $3.8 million and $4.1 million for the three months ended March 31, 2012 and 2011, respectively. Minimum future rental payments for all non-cancelable operating leases with an initial term of more than one year are (amounts in thousands):

Year 1	$	13,122
Year 2		12,251
Year 3		11,419
Year 4		7,376
Year 5		3,065
Thereafter		10,254
Total	$	57,487

Credit Facilities — At March 31, 2012, the Company has overdraft facilities through its senior facility consisting of $12.7 million of letters of credit to assist in the management of investments and the clearing of payment service obligations. All of these letters of credit were outstanding as of March 31, 2012. These overdraft facilities reduce amounts available under the senior facility. Fees on the letters of credit are paid in accordance with the terms of the senior facility described in Note 7 — Debt.

Minimum Commission Guarantees — In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commission guarantees for a specified period of time at a contractually specified amount. Under the guarantees, the Company will pay to the agent the difference between the contractually specified minimum commission and the actual commissions earned by the agent. Expense related to the guarantee is recognized in the “Fee commissions expense” line in the Consolidated Statements of Income.

As of March 31, 2012, the liability for minimum commission guarantees is $1.9 million and the maximum amount that could be paid under the minimum commission guarantees is $7.1 million over a weighted average remaining term of 3.7 years. The maximum payment is calculated as the contractually guaranteed minimum commission times the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. However, under the terms of certain agent contracts, the Company may terminate the contract if the projected or actual volume of transactions falls beneath a contractually specified amount. With respect to minimum commission guarantees expiring in the three months ended March 31, 2012, the Company paid less than $0.1 million, or 6 percent, of the estimated maximum payment for the year.

Other Commitments — The Company has agreements with certain co-investors to provide funds related to investments in limited partnership interests. As of March 31, 2012, the total amount of unfunded commitments related to these agreements was $0.3 million. The amortization expense was recognized as part of “Transaction and operations support” expense in the Consolidated Statements of Income.

Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable with certainty. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated.

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Further, the Company maintains insurance coverage for many claims and litigations alleged. In relation to various legal matters, including those described below, the Company had $3.6 million and $3.0 million of liability recorded in the “Accounts payable and other liabilities” line in the Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, respectively. A charge of $1.6 million and $0.8 million, net of insurance recoveries, was recorded in the “Transaction and operations support” line in the Consolidated Statements of Income during the three months ended March 31, 2012 and 2011, respectively.

Litigation Commenced Against the Company:

Shareholder Litigation — On April 15, 2011 a complaint was filed in the Court of Chancery of the State of Delaware by Willie R. Pittman purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company’s directors. Ms. Pittman alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty and disclosure claims against the Company’s directors, THL and Goldman Sachs, (ii) breach of the Company’s certificate of incorporation claims against the Company, THL and Goldman Sachs, and (iii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Pittman purported to sue on her own behalf and on behalf of the Company and its stockholders. Pittman sought to, among other things, enjoin or rescind the 2011 Recapitalization. On April 29, 2011 the plaintiff filed an amended complaint to add two additional plaintiffs, Susan Seales and Stephen Selzer. On May 16, 2011 a hearing to enjoin or rescind the 2011 Recapitalization was held in the Court of Chancery of the State of Delaware, and at the hearing, the plaintiffs’ request for a preliminary injunction was denied. The 2011 Recapitalization was completed on May 18, 2011. Since that time, Ms. Pittman has withdrawn as a putative class representative; Ms. Seales and Mr. Selzer remain as plaintiffs. The plaintiffs seek to recover damages of some or all of the cash and stock payments made to THL and Goldman Sachs by the Company in connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012.

On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County, Texas by Hilary Kramer purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company’s directors. Ms. Kramer alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty claims against the Company’s directors, THL and Goldman Sachs and (ii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Kramer purported to sue on her own behalf and on behalf of the Company and its stockholders. Ms. Kramer sought to, among other things, enjoin the 2011 Recapitalization. The defendants have moved for the Texas court to stay this litigation in favor of the Pittman litigation in Delaware, which has an overlapping class definition.

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

Government Investigations:

MoneyGram has been served with subpoenas to produce documents and testify before a grand jury in the U.S. District Court for the Middle District of Pennsylvania. The subpoenas sought information related to, inter alia, MoneyGram’s U.S. and Canadian agents, as well as certain transactions involving such agents, fraud complaint data, and MoneyGram’s consumer anti-fraud program during the period from 2004 to 2009. MoneyGram has provided information requested pursuant to the subpoenas and continues to provide additional information relating to the investigation. In addition, the Company has been provided with subpoenas for the testimony of certain current and former employees in connection with the investigation. The Company has also been notified of a request for interviews of one current executive officer and one former chief executive officer of the Company. The U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”) also requested information, which information was subsequently provided by MoneyGram, concerning MoneyGram’s reporting of fraudulent transactions during this period. In November 2010, MoneyGram met with representatives from the U.S. Attorney’s Office for the Middle District of Pennsylvania (the “MDPA USAO”) and representatives of FinCEN to discuss the investigation. In July 2011, MoneyGram had further discussions with the MDPA USAO and representatives of the Asset Forfeiture and Money Laundering Section of the U.S. Department of Justice (“US DOJ”). MoneyGram has been informed that it is being investigated by the federal grand jury in connection with these matters for the period 2004 to early 2009 as well as MoneyGram’s anti-money laundering program during that period. In January 2012, meetings were held between representatives of the Company, the MDPA USAO and the Criminal Division of the US DOJ to discuss the investigation. MoneyGram continues to engage in discussions and cooperate with such government representatives regarding the ongoing investigation. During the course of these discussions, the Company was advised that consideration is being given to a range of possible outcomes,

22

including the seeking of criminal penalties against the Company. However, no conclusions can be drawn at this time as to the outcome of the investigation, and we are unable to predict the probable loss, or range of loss, if any, associated with this matter. On March 19, 2012, the Company entered into a tolling agreement with the U.S. Attorney’s Office for the Middle District of Pennsylvania and the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice that tolled the statute of limitations applicable to any criminal proceedings that the government might later initiate to include the period from March 23, 2012 through and including December 31, 2012.

MoneyGram has also received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether the Company has taken adequate steps to prevent consumer fraud during the period from 2007 to 2011. The Civil Investigative Demands seek information and documents relating to the Company’s procedures to prevent fraudulent transfers and consumer complaint information. MoneyGram continues to cooperate fully with the states in this matter. MoneyGram has submitted the information and documents requested by the states. No claims have been made against MoneyGram at this time.

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

Action Commenced by the Company:

In March 2012, MoneyGram International initiated an arbitration proceeding before the Financial Industry Regulatory Authority (“FINRA”) against Goldman Sachs & Co. (“Goldman”). The arbitration relates to MoneyGram’s purchase of Residential Mortgage Backed Securities (“RMBS”) and Collateral Debt Obligations (“CDO”) that Goldman sold to MoneyGram during the 2005 through 2007 timeframe. The Company alleges, among other things, that Goldman made material misrepresentations and omissions in connection with the sale of these products, ultimately causing significant losses to the Company for which the Company is currently seeking damages. Goldman owns, together with certain of its affiliates, approximately 19 percent of the shares of the Company’s common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman and its affiliates.

Note 13 — Earnings per Common Share

For discrete periods from January 1, 2008 through June 30, 2011, the Company utilized the two-class method for computing basic earnings per common share, which reflects the amount of undistributed earnings allocated to the common stockholders using the participation percentage of each class of stock. Undistributed earnings was determined as the Company’s net income less dividends declared, accumulated, deemed or paid on preferred stock. The undistributed earnings allocated to the common stockholders are divided by the weighted-average number of common shares outstanding during the period to compute basic earnings per common share.

For all periods in which it is outstanding, the Company’s Series D Participating Convertible Preferred Stock (“D Stock”) is included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share as the D Stock is deemed a common stock equivalent. Diluted earnings 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 and the outstanding shares of the Company’s Series B Participating Convertible Preferred Stock (collectively, the “Series B Stock”) were exercised or converted into common stock. Diluted earnings per common share assumes the exercise of stock options using the treasury stock method and the conversion of the Series B Stock using the if-converted method.

Effective for discrete periods beginning after June 30, 2011, the Company no longer applies the two-class method of calculating basic earnings per share as the Series B Stock is no longer outstanding and the D Stock is deemed a common stock equivalent. Following is a reconciliation of the weighted-average share amounts used in calculating earnings per share:

(Amounts in thousands)	Three Months Ended March 31,
	2012		2011
Basic common shares outstanding		71,490		10,455
Shares related to stock options		143		—
Shares related to restricted stock and stock units		18		—
Diluted common shares outstanding		71,651		10,455

23

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. The Series B Stock is anti-dilutive when the incremental earnings per share of Series B Stock on an if-converted basis is greater than the basic earnings per common share. Following are the weighted-average potential common shares excluded from diluted earnings per common share as their effect would be anti-dilutive:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Shares related to stock options		4,846		5,135
Shares related to restricted stock and stock units		323		—
Shares related to preferred stock		—		55,629
Shares excluded from the computation		5,169		60,764

Note 14 — Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011–04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, (“ASU 2011–04”). ASU 2011–04 amends Accounting Standards Codification (“ASC”) 820, Fair Value Measurements, (“ASC 820”), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011–04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. The Company adopted ASU 2011–04 on January 1, 2012, which resulted in additional fair value measurement disclosures.

In June 2011, the FASB issued ASU No. 2011–05, Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income, (“ASU 2011–05”) to amend financial statement presentation guidance for other comprehensive income (“OCI”). Under ASU 2011–05, the statement of income and OCI can be presented either as a continuous statement or in two separate consecutive statements. As such, the option to present the components of other comprehensive income as part of the statement of stockholders’ equity is eliminated. The amendments in ASU 2011–05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011–05 was adopted on January 1, 2012 with no impact to the Company’s Consolidated Financial Statements.

Note 15 — Segment Information

The Company conducts its business through two reportable segments, Global Funds Transfer and Financial Paper Products. Businesses that are not operated within these segments are categorized as “Other,” and primarily relate to discontinued products and businesses. One of the Company’s agents of both the Global Funds Transfer segment and the Financial Paper Products segment accounted for 29.1 percent and 30.0 percent of total revenue for the three months ended March 31, 2012 and 2011, respectively. The following tables set forth revenue, operating results, depreciation and amortization, capital expenditures and assets by segment:

24

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Revenue:
Global Funds Transfer:
Money transfer	$	268,491	$	239,704
Bill payment		27,644		30,077
Total Global Funds Transfer		296,135		269,781
Financial Paper Products:
Money order		14,890		15,730
Official check		6,778		8,166
Total Financial Paper Products		21,668		23,896
Other		292		347
Total revenue	$	318,095	$	294,024

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Segment operating income:
Global Funds Transfer	$	33,282		$	26,447
Financial Paper Products		8,990			8,380
Other		(569	)		(263	)
Total segment operating income		41,703			34,564
Other unallocated expenses		5,772			2,863
Total operating income		35,931			31,701
Interest expense		17,883			20,613
Income before income taxes	$	18,048		$	11,088

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Depreciation and amortization:
Global Funds Transfer	$	9,749	$	10,113
Financial Paper Products		914		1,544
Other		20		9
Total depreciation and amortization	$	10,683	$	11,666
Capital expenditures:
Global Funds Transfer	$	9,537	$	6,891
Financial Paper Products		2,033		874
Total capital expenditures	$	11,570	$	7,765

25

Geographic areas — International operations are located principally in Europe. International revenues are defined as revenues generated from money transfer transactions originating in a country other than the United States. Long-lived assets are principally located in the United States. The table below presents revenue by major geographic area for the three months ended March 31:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
United States	$	200,532	$	187,898
International		117,563		106,126
Total revenue	$	318,095	$	294,024

Note 16 — Condensed Consolidating Financial Statements

In the event the Company offers debt securities pursuant to an effective registration statement on Form S-3, such debt securities may be guaranteed by certain of its subsidiaries. Accordingly, the Company is providing condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. If the Company issues debt securities, the following 100 percent directly or indirectly owned subsidiaries could fully and unconditionally guarantee the debt securities on a joint and several basis: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; PropertyBridge, Inc.; and MoneyGram of New York LLC (collectively, the “Guarantors”).

The following information represents condensed, consolidating Balance Sheets as of March 31, 2012 and December 31, 2011, along with condensed, consolidating Statements of Income (Loss), Statements of Comprehensive Income and Statements of Cash Flows for the three months ended March 31, 2012 and 2011. 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.

26

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING BALANCE SHEETS

AS OF MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	—	$	—	$	—		$	—
Cash and cash equivalents (substantially restricted)		546			2,456,657		90,047		—			2,547,250
Receivables, net (substantially restricted)		—			1,192,829		17,677		—			1,210,506
Short-term investments (substantially restricted)		—			500,000		25,356		—			525,356
Available-for-sale investments (substantially restricted)		—			93,127		—		—			93,127
Property and equipment		—			89,859		27,024		—			116,883
Goodwill		—			306,878		121,813		—			428,691
Other assets		5,169			190,066		18,885		—			214,120
Equity investments in subsidiaries		100,750			177,662		—		(278,412	)		—
Intercompany receivables		—			180,983		—		(180,738	)		245
Total assets	$	106,465		$	5,188,061	$	300,802	$	(459,150	)	$	5,136,178
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Payment service obligations	$	—		$	4,099,572	$	53,032	$	—		$	4,152,604
Debt		—			810,623		—		—			810,623
Pension and other postretirement benefits		—			116,908		1,782		—			118,690
Accounts payable and other liabilities		62,885			60,208		23,654		—			146,747
Intercompany liabilities		136,066			—		44,672		(180,738	)		—
Total liabilities		198,951			5,087,311		123,140		(180,738	)		5,228,664
Total stockholders’ (deficit) equity		(92,486	)		100,750		177,662		(278,412	)		(92,486	)
Total liabilities and stockholders’ (deficit) equity	$	106,465		$	5,188,061	$	300,802	$	(459,150	)	$	5,136,178

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	—	$	—	$	—		$	—
Cash and cash equivalents (substantially restricted)		524			2,462,106		109,544		—			2,572,174
Receivables, net (substantially restricted)		—			1,204,903		15,162		—			1,220,065
Short-term investments (substantially restricted)		—			500,000		22,024		—			522,024
Available-for-sale investments (substantially restricted)		—			102,771		—		—			102,771
Property and equipment		—			87,172		29,169		—			116,341
Goodwill		—			306,878		121,813		—			428,691
Other assets		4,820			190,295		18,397		—			213,512
Equity investments in subsidiaries		85,436			177,385		—		(262,821	)		—
Intercompany receivables		—			187,441		—		(187,441	)		—
Total assets	$	90,780		$	5,218,951	$	316,109	$	(450,262	)	$	5,175,578
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Payment service obligations	$	—		$	4,138,418	$	66,957	$	—		$	4,205,375
Debt		—			810,888		—		—			810,888
Pension and other postretirement benefits		—			118,580		1,672		—			120,252
Accounts payable and other liabilities		54,803			65,629		28,829		—			149,261
Intercompany liabilities		146,175			—		41,266		(187,441	)		—
Total liabilities		200,978			5,133,515		138,724		(187,441	)		5,285,776
Total stockholders’ (deficit) equity		(110,198	)		85,436		177,385		(262,821	)		(110,198	)
Total liabilities and stockholders’ (deficit) equity	$	90,780		$	5,218,951	$	316,109	$	(450,262	)	$	5,175,578

27

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
REVENUE
Fee and other revenue	$	—		$	340,367		$	69,312		$	(94,761	)	$	314,918
Investment revenue		—			2,943			234			—			3,177
Total revenue		—			343,310			69,546			(94,761	)		318,095
EXPENSES
Fee and other commissions expense		—			179,454			37,873			(75,412	)		141,915
Investment commissions expense		—			77			—			—			77
Total commissions expense		—			179,531			37,873			(75,412	)		141,992
Compensation and benefits		—			44,026			15,038			—			59,064
Transaction and operations support		1,766			64,022			11,775			(19,349	)		58,214
Occupancy, equipment and supplies		—			9,019			3,192			—			12,211
Depreciation and amortization		—			7,599			3,084			—			10,683
Total operating expenses		1,766			304,197			70,962			(94,761	)		282,164
OPERATING (LOSS) INCOME		(1,766	)		39,113			(1,416	)		—			35,931
Other expense
Interest expense		—			17,883			—			—			17,883
Total other expenses, net		—			17,883			—			—			17,883
(Loss) income before income taxes		(1,766	)		21,230			(1,416	)		—			18,048
Income tax (benefit) expense		(618	)		8,361			36			—			7,779
(Loss) income after income taxes		(1,148	)		12,869			(1,452	)		—			10,269
Equity income (loss) in subsidiaries		11,417			(1,452	)		—			(9,965	)		—
NET INCOME (LOSS)	$	10,269		$	11,417		$	(1,452	)	$	(9,965	)	$	10,269

28

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors		Eliminations			Consolidated
REVENUE
Fee and other revenue	$	—		$	284,678		$	63,273	$	(57,942	)	$	290,009
Investment revenue		—			3,935			80		—			4,015
Total revenue		—			288,613			63,353		(57,942	)		294,024
EXPENSES
Fee and other commissions expense		—			135,088			26,942		(32,970	)		129,060
Investment commissions expense		—			140			—		—			140
Total commissions expense		—			135,228			26,942		(32,970	)		129,200
Compensation and benefits		(31	)		44,142			15,184		—			59,295
Transaction and operations support		1,024			66,076			8,281		(24,972	)		50,409
Occupancy, equipment and supplies		—			8,811			2,942		—			11,753
Depreciation and amortization		—			9,037			2,629		—			11,666
Total operating expenses		993			263,294			55,978		(57,942	)		262,323
OPERATING (LOSS) INCOME		(993	)		25,319			7,375		—			31,701
Other expense
Interest expense		—			20,613			—		—			20,613
Total other expenses, net		—			20,613			—		—			20,613
(Loss) income before income taxes		(993	)		4,706			7,375		—			11,088
Income tax (benefit) expense		(347	)		(2,910	)		300		—			(2,957	)
(Loss) income after income taxes		(646	)		7,616			7,075		—			14,045
Equity income (loss) in subsidiaries		14,691			7,075			—		(21,766	)		—
NET INCOME (LOSS)	$	14,045		$	14,691		$	7,075	$	(21,766	)	$	14,045

29

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVEINCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET INCOME	$	10,269		$	11,417		$	(1,452	)	$	(9,965	)	$	10,269
OTHER COMPREHENSIVE INCOME
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $532		974			974			—			(974	)		974
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57		(92	)		(92	)		—			92			(92	)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $596		972			972			—			(972	)		972
Unrealized foreign currency translation gains, net of tax expense of $1,252		2,043			2,043			1,062			(3,105	)		2,043
Other comprehensive income		3,897			3,897			1,062			(4,959	)		3,897
COMPREHENSIVE INCOME	$	14,166		$	15,314		$	(390	)	$	(14,924	)	$	14,166

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVEINCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors		Eliminations			Consolidated
NET INCOME	$	14,045		$	14,691		$	7,075	$	(21,766	)	$	14,045
OTHER COMPREHENSIVE INCOME
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $0		1,944			1,944			—		(1,944	)		1,944
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57		(92	)		(92	)		—		92			(92	)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $621		1,012			1,012			—		(1,012	)		1,012
Unrealized foreign currency translation gains, net of tax expense of $443		723			1,049			369		(1,418	)		723
Other comprehensive income		3,587			3,913			369		(4,282	)		3,587
COMPREHENSIVE INCOME	$	17,632		$	18,604		$	7,444	$	(26,048	)	$	17,632

30

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	10,087		$	(5,234	)	$	4,783		$	—		$	9,636
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments (substantially restricted)		—			10,820			—			—			10,820
Purchases of short-term investments (substantially restricted)		—			(200,000	)		(11,756	)		—			(211,756	)
Proceeds from maturities of short-term investments (substantially restricted)		—			200,000			10,113			—			210,113
Purchases of property and equipment, net of disposals		—			(14,825	)		(3,807	)		—			(18,632	)
Proceeds from disposal of assets and businesses		—			172			—			—			172
Capital contribution from subsidiary guarantors		—			(667	)		—			667			—
Net cash (used in) provided by investing activities		—			(4,500	)		(5,450	)		667			(9,283	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt		—			(375	)		—			—			(375	)
Proceeds from exercise of stock options		22			—			—			—			22
Intercompany financings		(10,109	)		10,109			—			—			—
Capital contribution to non-guarantors		—			—			667			(667	)		—
Net cash (used in) provided by financing activities		(10,087	)		9,734			667			(667	)		(353	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—			—			—			—
CASH AND CASH EQUIVALENTS - Beginning of period		—			—			—			—			—
CASH AND CASH EQUIVALENTS - End of period	$	—		$	—		$	—		$	—		$	—

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(2,983	)	$	(16,079	)	$	15,331		$	—		$	(3,731	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments (substantially restricted)		—			17,462			—			—			17,462
Purchases of short-term investments (substantially restricted)		—			(194,142	)		(11,299	)		—			(205,441	)
Proceeds from maturities of short-term investments (substantially restricted)		—			200,500			—			—			200,500
Purchases of property and equipment, net of disposals		—			(4,259	)		(4,714	)		—			(8,973	)
Capital contribution from subsidiary guarantors		—			(682	)		—			682			—
Net cash provided by (used in) investing activities		—			18,879			(16,013	)		682			3,548
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		183			—			—			—			183
Intercompany financings		2,800			(2,800	)		—			—			—
Capital contribution to non-guarantors		—			—			682			(682	)		—
Net cash provided by (used in) financing activities		2,983			(2,800	)		682			(682	)		183
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—			—			—			—
CASH AND CASH EQUIVALENTS - Beginning of period		—			—			—			—			—
CASH AND CASH EQUIVALENTS - End of period	$	—		$	—		$	—		$	—		$	—

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements and related Notes of MoneyGram International, Inc. (“MoneyGram,” the “Company,” “we,” “us” and “our”). This discussion contains forward-looking statements that involve risks and uncertainties. MoneyGram’s actual results could differ materially from those anticipated due to various factors discussed under “Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

(Amounts in thousands)	Three Months Ended March 31,					% Change
	2012		2011
	(unaudited)		(unaudited)
Revenue
Fee and other revenue	$	314,918	$	290,009			9	%
Investment revenue		3,177		4,015			(21	)%
Total revenue		318,095		294,024			8	%
Expenses
Fee and other commissions expense		141,915		129,060			10	%
Investment commissions expense		77		140			(45	)%
Total commissions expense		141,992		129,200			10	%
Compensation and benefits		59,064		59,295			(0	)%
Transaction and operations support		58,214		50,409			15	%
Occupancy, equipment and supplies		12,211		11,753			4	%
Depreciation and amortization		10,683		11,666			(8	)%
Total operating expenses		282,164		262,323			8	%
Operating income		35,931		31,701			13	%
Other expense
Interest expense		17,883		20,613			(13	)%
Total other expense, net		17,883		20,613			(13	)%
Income before income taxes		18,048		11,088			63	%
Income tax expense (benefit)		7,779		(2,957	)		363	%
Net income	$	10,269	$	14,045			(27	)%

Following is a summary of our operating results in the first quarter of 2012 as compared to the first quarter of 2011:

• Total fee and other revenue increased $24.9 million, or nine percent, to $314.9 million due to higher money transfer fee and other revenue, partially offset by lower revenue from bill payment products and the Financial Paper Products segment. Volume growth of 15 percent drove the increase in money transfer fee and other revenue, but was partially offset by a lower average money transfer face amount per transaction, changes in corridor mix and the lower euro exchange rate.

• Investment revenue decreased $0.8 million, or 21 percent, to $3.2 million due to lower yields earned on our investment portfolio and a decline in average investable balances.

• Total commissions expense increased $12.8 million, or 10 percent, due to money transfer volume growth, partially offset by the lower euro exchange rate and lower commissions expense related to bill payment products and the Financial Paper Products segment.

• Total operating expenses increased $19.8 million, or eight percent, driven primarily by the increase in commissions expense, higher transaction and operations support expense and $2.9 million of incremental restructuring expense, partially offset by a decrease in depreciation and amortization. For the three months ended March 31, 2012, we recorded $5.8 million of costs associated with restructuring activities.

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• Interest expense decreased 13 percent to $17.9 million, reflecting lower interest rates from our 2011 refinancing activities, partially offset by higher debt balances.

• In the first quarter of 2012, we had an income tax expense of $7.8 million on pre-tax income of $18.0 million, reflecting the absence of valuation allowance reversals made in the prior year. In the first quarter of 2011, we recognized a discrete $3.5 million benefit and had a lower effective tax rate from the reversal of a portion of the valuation allowances on domestic deferred tax assets.

• The decline in the euro exchange rate decreased total revenue by $3.6 million and total expenses by $3.1 million, for a net decrease to our income before income taxes of $0.5 million.

FEE AND OTHER REVENUE AND COMMISSIONS EXPENSE

	Three Months Ended March 31,						% Change
(Amounts in thousands)	2012			2011
Fee and other revenue	$	314,918		$	290,009			9	%
Fee and other commissions expense		141,915			129,060			10	%
Fee and other commissions expense as a % of fee and other revenue		45.1	%		44.5	%

Fee and Other Revenue — For the three months ended March 31, 2012, fee and other revenue growth of $24.9 million, or nine percent, was primarily driven by money transfer transaction volume growth of 15 percent, partially offset by a lower euro exchange rate and lower foreign exchange revenue, changes in corridor mix and lower average face value per transaction. Bill payment products primarily saw revenue declines from lower average fees per transaction while money order and official check fee and other revenue decreased due to volume declines. See the “Segment Performance” section for more detailed discussion.

Fee and Other Commissions — For the three months ended March 31, 2012, fee and other commissions expense growth of $12.9 million, or ten percent, was primarily due to money transfer volume growth, partially offset by a lower euro exchange rate and lower average bill payment fees per transaction and Financial Paper Product volumes. Commissions expense grew at a faster rate than revenue due to payment at a higher tier from volume growth achievement for certain key agents and corridor mix. Commissions expense as a percent of fee and other revenue increased to 45.1 from 44.5 percent in the three months ended March 31, 2012 and 2011, respectively, primarily from the continued shift in overall product mix towards the Global Funds Transfer segment, particularly the money transfer product. Agents in the Global Funds Transfer segment are compensated through commissions we pay to them, whereas our Financial Paper Products agents and financial institution customers primarily earn their revenue through per item fees they charge directly to the consumer. See the “Segment Performance” section for more detailed discussion.

NET INVESTMENT REVENUE ANALYSIS

	Three Months Ended March 31,						% Change
(Amounts in thousands)	2012			2011
Investment revenue	$	3,177		$	4,015			(21	)%
Investment commissions expense		(77	)		(140	)		(45	)%
Net investment revenue	$	3,100		$	3,875			(20	)%
Average balances:
Cash equivalents and investments	$	3,139,085		$	3,384,783			(7	)%
Payment service obligations	$	2,185,093		$	2,398,738			(9	)%
Average yields earned and rates paid:
Investment yield		0.41	%		0.48	%
Investment commission rate		0.01	%		0.02	%
Net investment margin		0.40	%		0.46	%

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The average investment yield is calculated by dividing investment revenue by the average cash equivalents and investment balances for the period. The average investment commissions rate is calculated by dividing investment commissions expense by the average payment service obligations for the period. The net investment margin is calculated by dividing net investment revenue by the average cash equivalents and investment balances for the period, then dividing that amount by the number of days in the period and multiplying by the number of days in the year.

Investment revenue — Investment revenue consists of interest and dividends generated through the investment of cash balances received primarily from the sale of official checks, money orders and other payment instruments. Investment revenue decreased $0.8 million, or 21 percent, in the three months ended March 31, 2012 due to lower yields earned on our investment portfolio and lower average investment balances from the run-off of certain official check financial institution customers terminated in prior periods.

Investment commissions expense — Investment commissions expense consists of amounts paid to financial institution customers based on short-term interest rate indices times the average outstanding cash balances of official checks sold by the financial institution. Investment commissions expense decreased $0.1 million, or 45 percent, for the three months ended March 31, 2012, primarily from lower interest rates.

Net investment revenue and margin — As a result of the factors discussed above, net investment revenue decreased $0.8 million, or 20 percent, for the three months ended March 31, 2012, while the net investment margin decreased 0.06 percentage points.

OPERATING EXPENSES

The following discussion relates to operating expenses, other than commissions expense, which is discussed under the section “Fee and Other Revenue and Commissions Expense.”

Compensation and benefits — Compensation and benefits includes salaries and benefits, management incentive programs, related payroll taxes and other employee related costs. Following is a summary of the change in compensation and benefits:

(Amounts in thousands)
For the three months ending March 31, 2011	$	59,295
Change from:
Salaries and related payroll taxes		(1,981	)
Employee stock-based compensation		(1,068	)
Restructuring and reorganization		1,154
Other employee benefits		725
Impact of change in Euro currency		646
Incentive compensation		293
For the three months ending March 31, 2012	$	59,064

Salaries and related payroll taxes decreased from lower headcount and temporary help from our restructuring and outsourcing initiatives, partially offset by ordinary salary increases. Employee stock–based compensation decreased from grants fully vesting in prior periods and forfeitures, partially offset by new grants with longer vesting periods. Restructuring and reorganization costs increased primarily due to temporary help utilized during initiatives associated with the centralization and relocation of certain functions. Other employee benefits increased due to executive severance and higher insurance costs, partially offset by lower expenses from our benefit plans. Incentive compensation increased primarily from ordinary salary increases that increased the compensation base as compared to the prior year.

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Transaction and operations support — Transaction and operations support expense 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; 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. Following is a summary of the change in transaction and operations support:

(Amounts in thousands)
For the three months ending March 31, 2011	$	50,409
Change from:
Contractor, consultant and outsourcing fees		4,404
Legal expenses		2,397
Restructuring and reorganization		1,615
Marketing costs		1,593
Impact of change in Euro currency		558
Foreign currency transaction gains/losses		(2,019	)
Other		(743	)
For the three months ending March 31, 2012	$	58,214

In 2012, transaction and operations support expense increased from the following items:

• Consultant fees and outsourcing costs increased primarily due to the outsourcing of certain transactional support and information technology activities, as well as tax advisement and our continued investment in the enhancement of our operational processes and systems that support our infrastructure.

• Legal expenses increased primarily due to securities litigation and related to our May 2011 recapitalization and the Middle District of Pennsylvania U.S. Attorney investigation, partially offset by lower capital transaction activities.

• Restructuring and reorganization costs increased primarily due to resourcing costs for the centralization and relocation of certain functions, including on-going initiatives outside of the United States.

• Marketing costs increased from our new loyalty program introduced in January 2012, partially offset by timing of marketing activities.

• Foreign exchange gains increased due to the impact of high volatility in foreign currency exchange rates on our growing assets, liabilities, revenue and expenses not denominated in the U.S. dollar.

Occupancy, equipment and supplies — Occupancy, equipment and supplies includes facilities rent and maintenance costs, software and equipment maintenance costs, freight and delivery costs and supplies. Occupancy, equipment and supplies increased $0.5 million, or four percent, for the three months ended March 31, 2012. In 2012, we recorded $0.1 million of incremental facility related costs associated with restructuring activities, $0.6 million of incremental equipment maintenance costs and $0.2 million of disposal costs, partially offset by a $0.6 million decrease in supply costs and rent. Changes in the euro exchange rate increased occupancy, equipment and supplies by $0.1 million.

Depreciation and amortization — Depreciation and amortization includes depreciation on point of sale equipment, agent signage, computer hardware and software, office furniture and equipment, along with amortization of leasehold improvements, capitalized software development costs and intangible assets. Depreciation and amortization for the three months ended March 31, 2012 decreased $1.0 million, or eight percent, primarily from lower depreciation expense on point of sale equipment, office furniture and equipment and capitalized software, partially offset by an increase in signage depreciation. Changes in the euro exchange rate decreased depreciation and amortization expense by $0.1 million.

OTHER EXPENSE (INCOME)

Interest expense — Interest expense decreased $2.7 million, or 13 percent, for the three months ended March 31, 2012 due to lower interest rates from our refinancing activities in 2011, partially offset by higher debt balances.

Income taxes — For the three months ended March 31, 2012, the Company had $7.8 million of income tax expense on pre-tax income of $18.0 million, reflecting the absence of valuation allowance reversals made in the prior year. In 2011, our tax rate benefited from the release of valuation allowances. In addition, the first quarter of 2011 had a discrete benefit of $3.5 million from the release of a portion of the valuation allowances on domestic deferred tax assets.

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EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) AND ADJUSTED EBITDA

We believe that EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization) and Adjusted EBITDA (EBITDA adjusted for significant items) provide useful information to investors because they are indicators of the strength and performance of ongoing business operations, including our ability to service debt and fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies within our industry. In addition, our debt agreements require compliance with financial measures similar to Adjusted EBITDA. Finally, EBITDA and Adjusted EBITDA are financial measures used by management in reviewing results of operations, forecasting, assessing cash flow and capital, allocating resources and establishing employee incentive programs.

Although we believe EBITDA and Adjusted EBITDA enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures. The following table is a reconciliation of these non-GAAP financial measures to the related GAAP financial measures.

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Income before income taxes	$	18,048	$	11,088
Interest expense		17,883		20,613
Depreciation and amortization		10,683		11,666
Amortization of agent signing bonuses		8,343		7,948
EBITDA		54,957		51,315
Significant items impacting EBITDA:
Severance and related costs		452		(31	)
Restructuring and reorganization costs		5,844		2,939
Capital transaction costs		—		1,476
Stock-based compensation expense		3,532		4,599
Legal expenses		3,588		—
Adjusted EBITDA	$	68,373	$	60,298

For the three months ended March 31, 2012, EBITDA increased $3.6 million, or 7 percent, to $55.0 from $51.3 million. Adjusted EBITDA for the three months ended March 31, 2012 increased $8.1 million, or 13 percent, to $68.4 million from $60.3 million, primarily due to money transfer growth, partially offset by increases in compensation, marketing spend and lower investment revenue.

SEGMENT PERFORMANCE

Our reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. We primarily manage our business through two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfers and bill payment services to consumers through a network of agents and, in select markets, company-operated locations. The Financial Paper Products segment provides money orders to consumers through our retail and financial institution locations in the United States and Puerto Rico, and provides official check services to financial institutions in the United States. Businesses that are not operated within these segments are categorized as “Other” and primarily relate to discontinued products and businesses. Segment pre-tax operating income and segment operating margin are used to review operating performance and allocate resources.

We manage our investment portfolio on a consolidated level, with no specific investment security assigned to a particular segment. However, investment revenue is allocated to each segment based on the average investment balances generated by that segment’s sale of payment instruments during the period. Net securities (gains) losses are not allocated to the segments as the investment portfolio is managed at a consolidated level. While the derivatives portfolio is also managed on a consolidated level, each derivative instrument is utilized in a manner that can be identified to a particular segment. Forward foreign exchange contracts are identified with the money transfer product in the Global Funds Transfer segment.

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Also excluded from operating income for Global Funds Transfer and Financial Paper Products are interest and other expenses related to our credit agreements, items related to our preferred stock, operating income from businesses categorized as “Other,” certain pension and benefit obligation expenses, director deferred compensation plan expenses, executive severance and related costs and certain legal and corporate costs not related to the performance of the segments.

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011			Change
Operating income:
Global Funds Transfer	$	33,282		$	26,447		$	6,835
Financial Paper Products		8,990			8,380			610
Other		(569	)		(263	)		(306	)
Total segment operating income		41,703			34,564			7,139
Other unallocated expenses		5,772			2,863			2,909
Total operating income		35,931			31,701			4,230
Interest expense		17,883			20,613			(2,730	)
Income before income taxes	$	18,048		$	11,088		$	6,960

GLOBAL FUNDS TRANSFER SEGMENT

	Three Months Ended March 31,						2012 vs.
(Amounts in thousands)	2012			2011			2011
Money transfer revenue:
Fee and other revenue	$	268,259		$	239,630			12	%
Investment revenue		232			74			214	%
Total money transfer revenue		268,491			239,704			12	%
Bill payment revenue:
Fee and other revenue		27,644			30,073			(8	)%
Investment revenue		—			4			(100	)%
Total bill payment revenue		27,644			30,077			(8	)%
Total Global Funds Transfer revenue:
Fee and other revenue		295,903			269,703			10	%
Investment revenue		232			78			197	%
Total Global Funds Transfer revenue		296,135			269,781			10	%
Commissions expense	$	141,522		$	128,389			10	%
Operating income	$	33,282		$	26,447			26	%
Operating margin		11.2	%		9.8	%

Global Funds Transfer revenue — Total revenue in the Global Funds Transfer segment consists primarily of fees on money transfers and bill payment transactions. For the three months ended March 31, 2012, Global Funds Transfer total revenue increased $26.4 million, driven by money transfer volume growth, partially offset by a decline in bill payment revenue. Bill payment fee and other revenue for the three months ended March 31, 2012 decreased eight percent. Lower average fees per transaction reduced revenue by $1.6 million, while volume declines of five percent reduced revenue by $0.8 million. The decline in transaction volume was due to continued softness in our traditional consumer credit payment categories including auto, credit card and collections, as these industries continued to be negatively impacted by economic conditions.

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For the three months ended March 31, 2012, money transfer fee and other revenue increased 12 percent, driven by the items noted in the following table.

Money Transfer Fee and Other Revenue
(Amounts in thousands)
For the three months ending March 31, 2011	$	239,630
Change from:
Volume		35,313
Euro exchange rate		(3,529	)
Corridor mix and average face value per transaction		(2,835	)
Other		(320	)
For the three months ending March 31, 2012	$	268,259

Transactions and the related fee revenue are viewed as originating from the send side of a transaction. Accordingly, discussion of transactions by geographic location refers to the region originating a transaction. Money transfer transaction growth for the three months ended March 31, 2012 as compared to the same period in the prior year is as follows:

Total transactions	15	%
Transactions originating outside of the United States	17	%
Transactions originating in the United States	14	%
Transactions originating in the United States excluding those sent to Mexico	10	%

Money transfer transactions originating in the United States, excluding transactions sent to Mexico, increased due primarily to an increase in intra–United States remittances. Transactions sent to Mexico grew by 19 percent. Mexico represented approximately nine percent of our total transactions in the first quarter of 2012. The money transfer agent base expanded 18 percent to approximately 275,000 locations in the first quarter of 2012, primarily due to expansion in Asia Pacific, Indian subcontinent, Eastern Europe, Western Europe and Africa.

Global Funds Transfer commissions expense — Commissions expense consists primarily of fees paid to our third–party agents for money transfer and bill payment services, as well as the amortization of capitalized agent signing bonuses. For the three months ended March 31, 2012, fee and other commissions expense increased 10 percent, driven by the items noted in the following table.

Global Funds Transfer Fee and Other Commissions Expense
(Amounts in thousands)
For the three months ending March 31, 2011	$	128,389
Change from:
Money Transfer volume growth		15,535
Euro exchange rate		(1,811	)
Bill payment volumes		(1,421	)
Money transfer commission rates		137
Signing bonus amortization		469
Bill payment commission rates		(372	)
Other		596
For the three months ending March 31, 2012	$	141,522

Operating Margin — Operating margin in the Global Funds Transfer segment increased to 11.2 percent for the three months ended March 31, 2012 from 9.8 percent for the three months ended March 31, 2011. The higher margin in 2012 reflects the growth in money transfer revenue, partially offset by commissions expense, restructuring and reorganization costs, higher legal and marketing expense.

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FINANCIAL PAPER PRODUCTS SEGMENT

	Three Months Ended March  31,						% Change
(Amounts in thousands)	2012			2011
Money order revenue:
Fee and other revenue	$	14,365		$	14,904			(4	)%
Investment revenue		525			826			(36	)%
Total money order revenue		14,890			15,730			(5	)%
Official check revenue:
Fee and other revenue		4,672			5,362			(13	)%
Investment revenue		2,106			2,804			(25	)%
Total official check revenue		6,778			8,166			(17	)%
Total Financial Paper Products revenue:
Fee and other revenue		19,037			20,266			(6	)%
Investment revenue		2,631			3,630			(28	)%
Total Financial Paper Products revenue	$	21,668		$	23,896			(9	)%
Commissions expense	$	471		$	811			(42	)%
Operating income	$	8,990		$	8,380			7	%
Operating margin		41.5	%		35.1	%

Financial Paper Products revenue — Total revenue in the Financial Paper Products segment consists of per–item fees charged to our financial institution customers and retail agents and investment revenue.

(Amounts in thousands)
For the three months ending March 31, 2011
Change in:	$	23,896
Investment Revenue
Lower yields		(546	)
Average investable balances		(291	)
Other investment revenue		(162	)
Money order fee and other revenue		(540	)
Official check fee and other revenue		(689	)
For the three months ending March 31, 2012	$	21,668

Money order fee and other revenue decreased in the three months ended March 31, 2012 due to a two percent decline in volumes attributed to the attrition of agents from repricing initiatives, the continued migration by consumers to other payment methods, consumer pricing increases as agents pass along fee increases and the general economic environment. See the “Net Investment Revenue Analysis” section for discussion related to changes in investment revenue.

Financial Paper Products commissions expense — Commissions expense in the Financial Paper Products segment includes payments made to financial institution customers based on amounts generated by the sale of official checks multiplied by short–term interest rate indices, payments on money order transactions and amortization of signing bonuses. Commissions expense decreased 42 percent for the three months ended March 31, 2012, due to the items in the following table. See the “Net Investment Revenue Analysis” section for further discussion of investment commissions expense.

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(Amounts in thousands)	2012
For the three months ending March 31, 2011	$	811
Change in:
Money order agent rebates from repricing initiatives		(217	)
Signing bonus amortization		(61	)
Investable balances		(12	)
Investment rate		(50	)
For the three months ending March 31, 2012	$	471

Operating Margin — The operating margin for the Financial Paper Products segment increased to 41.5 percent for the three months ended March 31, 2012 from 35.1 percent for the three months ended March 31, 2011 due to lower commissions, partially offset by lower investment revenue.

LIQUIDITY AND CAPITAL RESOURCES

We have various resources available to us for purposes of managing liquidity and capital needs, including our investment portfolio, credit facilities and letters of credit. We refer to our cash and cash equivalents, short-term investments and available-for-sale investments collectively as our “investment portfolio.” Our primary sources of liquidity include cash flows generated by the sale of our payment instruments, our cash and cash equivalent and short-term balances, proceeds from our investment portfolio and credit capacity under our credit facilities. Our primary operating liquidity needs relate to the settlement of payment service obligations to our agents and financial institution customers, as well as general operating expenses.

Assets in Excess of Payment Service Obligations — We utilize the assets in excess of payment service obligations measure shown below in various liquidity and capital assessments. While assets in excess of payment service obligations, as defined, is a capital measure, it also serves as the foundation for various liquidity analyses.

(Amounts in thousands)	March 31, 2012			December 31, 2011
Cash and cash equivalents (substantially restricted)	$	2,547,250		$	2,572,174
Receivables, net (substantially restricted)		1,210,506			1,220,065
Short-term investments (substantially restricted)		525,356			522,024
Available-for-sale investments (substantially restricted)		93,127			102,771
		4,376,239			4,417,034
Payment service obligations		(4,152,604	)		(4,205,375	)
Assets in excess of payment service obligations	$	223,635		$	211,659

Cash and Cash Equivalents and Short-term Investments — To ensure we maintain adequate liquidity to meet our operating needs at all times, we keep a significant portion of our investment portfolio in cash and cash equivalents and short-term investments at financial institutions rated Aa3 or better by Moody’s Investor Service, or Moody’s, and AA- or better by Standard & Poors, or S&P, and in United States government money market funds rated Aaa by Moody’s and AAA by S&P. As of March 31, 2012, cash and cash equivalents and short-term investments totaled $3.1 billion, representing 97 percent of our total investment portfolio. Cash equivalents and short-term investments consist of money market funds that invest in United States government and government agency securities, time deposits and certificates of deposit.

Credit Facilities — Our credit facilities consist of a senior secured facility, which is comprised of a $150.0 million five-year revolver, a $390.0 million six-and-a-half year term loan and a $150.0 million incremental term loan, and second lien notes. See Note 7 —Debt of the Notes to Consolidated Financial Statements for further information. Outside of payments relating to refinance debt, we have paid down $427.7 million of our outstanding debt since January 1, 2009. We continue to evaluate further reductions of our outstanding debt ahead of scheduled maturities. Our revolving credit facility has $137.3 million of borrowing capacity as of March 31, 2012, net of $12.7 million of outstanding letters of credit.

Our credit facilities contain various financial and non-financial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and/or causing acceleration of amounts due under the credit facilities. We were in compliance with all covenants as of March 31, 2012. The terms of our credit

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facilities also place restrictions on certain types of payments we may make, including dividends to our preferred and common stockholders, acquisitions, and the funding of foreign subsidiaries, among others. We do not anticipate these restrictions to limit our ability to grow the business either domestically or internationally. In addition, we may only make dividend payments to common stockholders subject to an incremental build-up based on our consolidated net income in future periods. No dividends were paid on our common stock in the three months ended March 31, 2012 and we do not anticipate declaring any dividends on our common stock during 2012.

Credit Ratings — As of the date of the filing, our credit ratings from Moody’s and S&P were B1 and BB-, respectively. Our credit facilities, regulatory capital requirements and other obligations are not impacted by the level of our credit ratings. However, higher credit ratings could increase our ability to attract capital, minimize our weighted average cost of capital and obtain more favorable terms with our lenders, agents and clearing and cash management banks.

Regulatory Capital Requirements — We were in compliance with all financial regulatory requirements as of March 31, 2012. We believe that our liquidity and capital resources will remain sufficient to ensure on-going compliance with all financial regulatory requirements.

Available-for-sale Investments — Our investment portfolio includes $93.1 million of available-for-sale investments as of March 31, 2012. United States government agency residential mortgage-backed securities and United States government agency debentures compose $67.7 million of our available-for-sale investments, while other asset-backed securities compose the remaining $25.4 million. In completing our recapitalization transaction in March 2008, or the 2008 Recapitalization, we contemplated that our other asset-backed securities might decline further in value. Accordingly, the capital raised assumed a zero value for these securities. As a result, further unrealized losses and impairments on these securities are already funded and would not cause us to seek additional capital or financing.

Contractual Obligations — The following table includes aggregated information about the Company’s contractual obligations that impact our liquidity and capital needs. The table includes information about payments due under specified contractual obligations, aggregated by type of contractual obligation.

	Payments due by period
(Amounts in thousands)	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Debt, including interest payments	$	1,195,434	$	66,978	$	133,653	$	132,325	$	862,478
Operating leases		57,487		13,122		23,670		10,441		10,254
Signing bonuses		10,677		3,978		6,155		544		—
Signage		384		384		—		—		—
Marketing		6,131		6,131		—		—		—
Other obligations		291		291		—		—		—
Total contractual cash obligations	$	1,270,404	$	90,884	$	163,478	$	143,310	$	872,732

Debt consists of amounts outstanding under our senior facility and the second lien notes at March 31, 2012, as disclosed in Note 7 — Debt of the Notes to Consolidated Financial Statements, as well as related interest payments, facility fees and annual commitment fees. Our Consolidated Balance Sheet at March 31, 2012 includes $811.0 million of debt, net of unamortized discounts of $3.6 million, and $0.1 million of accrued interest on the debt. The above table reflects the principal and interest that will be paid through the maturity of the debt using the rates in effect on March 31, 2012, and assuming no prepayments of principal and the continued payment of interest on the second lien notes. Operating leases consist of various leases for buildings and equipment used in our business. Other obligations are unfunded capital commitments related to our limited partnership interests included in “Other asset-backed securities” in our investment portfolio. We have other commitments as described further below that are not included in the above table as the timing and/or amount of payments are difficult to estimate.

We have a funded, noncontributory pension plan that is frozen to both future benefit accruals and new participants. Our funding policy has historically been to contribute the minimum contribution required by applicable regulations. We made contributions of $1.4 million to the defined benefit pension plan during the three months ended March 31, 2012. We anticipate a remaining minimum contribution of up to $8.8 million to the pension plan trust in 2012. We also have certain unfunded pension and postretirement plans that require benefit payments over extended periods of time. During the three months ended March 31, 2012, we paid benefits totaling $0.8 million related to these unfunded plans. Benefit payments under these unfunded plans are expected to be $3.3 million for the remainder of 2012. Expected contributions and benefit payments under these plans are not included in the above table, as it is difficult to estimate the timing and amount of benefit payments and required contributions beyond the next 12 months.

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As of March 31, 2012, the liability for unrecognized tax benefits was $9.6 million. As there is a high degree of uncertainty regarding the timing of potential future cash outflows associated with liabilities, we are unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid. In addition, the Company received a Notice of Deficiency from the IRS disallowing certain cumulative deductions taken for 2007, and expects to receive a Notice of Deficiency for 2008 and 2009 related to net investment security losses. The Company intends to petition the United States Tax Court contesting the adjustments in the Notices of Deficiency. While we believe the Company’s position will be sustained, if the Company’s petition is denied in its entirety, the Company would be required to make cash payments of $101.8 million based on benefits taken through March 31, 2012. As there is a high degree of uncertainty regarding the timing of potential future cash outflows associated with liabilities, we are unable to make a reasonably reliable estimate of the amount and period in which these liabilities might be paid. These amounts are excluded from the table above as there is a high degree of uncertainty regarding the amount and timing of future cash outflows.

In limited circumstances, we may grant minimum commission guarantees as an incentive to new or renewing agents for a specified period of time at a contractually specified amount. Under the guarantees, we will pay to the agent the difference between the contractually specified minimum commission and the actual commissions earned by the agent. As of March 31, 2012, the minimum commission guarantees had a maximum payment of $7.1 million over a weighted-average remaining term of 3.7 years. The maximum payment is calculated as the contractually guaranteed minimum commission times the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. As of March 31, 2012, the liability for minimum commission guarantees was $1.9 million. Minimum commission guarantees are not reflected in the table above.

Cash flows from operating activities — Operating activities generated net cash of $9.6 million during the three months ended March 31, 2012. Our net cash provided by operating activities before changes in payments service assets and obligations was $29.4 million. Changes in our payment service assets and obligations utilized $19.8 million of operating cashflows during the quarter, from the timing of collection and settlement of our payment service assets and obligations, as well as the changes in composition of our investment portfolio.

Operating activities used net cash of $3.7 million during the three months ended March 31, 2011. In addition to funding normal operating activities, cash generated from our operations was primarily used to purchase $205.4 million of short-term investments and pay $18.7 million of interest on our debt, $6.8 million for signing bonuses and $9.0 million for capital expenditures. We also reinvested proceeds of $218.0 million from the maturity of investments into cash equivalents.

	Three Months Ended March  31,
(Amounts in thousands)	2012			2011
Net income	$	10,269		$	14,045
Total adjustments to reconcile net income		19,118			7,738
Net cash provided by operating activities before changes in paymentservice assets and obligations		29,387			21,783
Change in cash and cash equivalents (substantially restricted)		24,924			89,932
Change in receivables, net (substantially restricted)		8,096			24,025
Change in payment service obligations		(52,771	)		(139,471	)
Net change in payment service assets and obligations		(19,751	)		(25,514	)
Net cash provided by (used in) operating activities	$	9,636		$	(3,731	)

Cash flows from investing activities — Investing activities used cash of $9.3 million during the three months ended March 31, 2012 primarily for the purchase of $211.8 million of short-term investments, $18.6 million of capital expenditures, partially offset by proceeds of $220.9 million from the normal maturity of investments which were reinvested into short-term investments. Investing activities provided cash of $3.5 million during the three months ended March 31, 2011 from proceeds of $218.0 million from the normal maturity of investments, partially offset by the purchase of $205.4 million of short-term investments and $9.0 million of capital expenditures.

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	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net investment activity	$	9,177		$	12,521
Purchases of property and equipment		(18,632	)		(8,973	)
Proceeds from disposal of assets and businesses		172			—
Net cash (used in) provided by investing activities	$	(9,283	)	$	3,548

Cash flows from financing activities — For the three months ended March 31, 2012 and 2011, financing activities utilized $0.4 million and provided $0.2 million, respectively, of cash from the required quarterly payment of debt and the exercise of stock options, respectively.

	Three Months Ended March  31,
(Amounts in thousands)	2012			2011
Payments on debt	$	(375	)	$	—
Proceeds from exercise of stock options		22			183
Net cash (used in) provided by financing activities	$	(353	)	$	183

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the consolidated financial statements. Actual results could differ from those estimates. On a regular basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP.

Critical accounting policies are those policies that management believes are most important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or complex. There were no changes to our critical accounting policies during the quarter ended March 31, 2012. For further information regarding our critical accounting policies, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with respect to, among other things, the financial condition, results of operations, liquidity, plans, objectives, future performance, legal proceedings and business of MoneyGram and its subsidiaries. Forward-looking statements can be identified by words such as “believes,” “estimates,” “expects,” “projects,” “plans,” “anticipates,” “continues,” “will,” “should,” “could,” “may,” “would” and other similar expressions. These forward-looking statements speak only as of the date they are made, and MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement, except as required by federal securities law. These forward-looking statements are based on management’s current expectations, beliefs and assumptions and are subject to certain risks, uncertainties and changes in circumstances due to a number of factors. These factors include, but are not limited to:

• continued weakness in economic conditions, in both the United States and global markets;

• consumers’ confidence in our business;

• a material slow down or complete disruption of international migration patterns;

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• our ability to maintain agent or biller relationships, or a reduction in transaction volume from these relationships;

• the ability of us and our agents to comply with U.S. and international laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act;

• litigation involving MoneyGram or its agents, which could result in material settlements, fines or penalties;

• ongoing investigations involving MoneyGram by the U.S. federal government and several state governments which could result in criminal or civil penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;

• our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, that are subject to certain restrictions of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC);

• our substantial debt service obligations, significant debt covenant requirements and credit rating;

• sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;

• our ability to maintain sufficient capital;

• our ability to manage credit risks from our retail agents and official check financial institution customers;

• the ability of MoneyGram and its agents to maintain adequate banking relationships;

• our ability to retain partners to operate our official check and money order businesses;

• our ability to manage fraud risks from consumers or agents;

• our ability to compete effectively;

• our ability to successfully develop and timely introduce new and enhanced products and services;

• our investments in new products, services or infrastructure changes;

• our ability to manage risks associated with our international sales and operations;

• our ability to attract and retain key employees;

• our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others;

• a security or privacy breach in our systems;

• disruptions to our computer systems and data centers;

• our ability to effectively operate and adapt our technology to match our business growth;

• our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses;

• the European debt crisis and market perceptions concerning the euro, the potential re-introduction of individual currencies within the Eurozone or the potential dissolution of the euro;

• changes in tax laws or an unfavorable outcome with respect to tax positions, or a failure by us to establish adequate reserves for tax events;

• our ability to maintain effective internal controls;

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• our capital structure and the special voting rights provided to designees of Thomas H. Lee Partners and certain of its affiliates, referred to collectively herein as THL, on our Board of Directors; and

• the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Annual Report on Form 10-K for the year ended December 31, 2011, as well as any additional risk factors that may be described in our other filings with the Securities and Exchange Commission, or SEC, from time to time.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk since December 31, 2011. For further information on market risk, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Enterprise Risk Management” in the Company’s Annual Report on form 10-K for the year ended December 31, 2011.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed by the Company in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and include controls and procedures designed to ensure that information that the Company is required to disclose in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting — There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable with certainty. 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 litigations alleged.

Litigation Commenced Against the Company:

Shareholder Litigation — On April 15, 2011 a complaint was filed in the Court of Chancery of the State of Delaware by Willie R. Pittman purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company’s directors. Ms. Pittman alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty and disclosure claims against the Company’s directors, THL and Goldman Sachs, (ii) breach of the Company’s certificate of incorporation claims against the Company, THL and Goldman Sachs, and (iii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Pittman purported to sue on her own behalf and on behalf of the Company and its stockholders. Pittman sought to, among other things, enjoin or rescind the 2011 Recapitalization. On April 29, 2011 the plaintiff filed an amended complaint to add two additional plaintiffs, Susan Seales and Stephen Selzer. On May 16, 2011 a hearing to enjoin or rescind the 2011 Recapitalization was held in the Court of Chancery of the State of Delaware, and at the hearing, the plaintiffs’ request for a preliminary injunction was denied. The 2011 Recapitalization was completed on May 18, 2011. Since that time, Ms. Pittman has withdrawn as a putative class representative; Ms. Seales and Mr. Selzer remain as plaintiffs. The plaintiffs seek to recover damages of some or all of the cash and stock payments made to THL and Goldman Sachs by the Company in connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012.

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On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County, Texas by Hilary Kramer purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company’s directors. Ms. Kramer alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty claims against the Company’s directors, THL and Goldman Sachs and (ii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Kramer purported to sue on her own behalf and on behalf of the Company and its stockholders. Ms. Kramer sought to, among other things, enjoin the 2011 Recapitalization. The defendants have moved for the Texas court to stay this litigation in favor of the Pittman litigation in Delaware, which has an overlapping class definition.

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

Government Investigations:

MoneyGram has been served with subpoenas to produce documents and testify before a grand jury in the U.S. District Court for the Middle District of Pennsylvania. The subpoenas sought information related to, inter alia, MoneyGram’s U.S. and Canadian agents, as well as certain transactions involving such agents, fraud complaint data, and MoneyGram’s consumer anti-fraud program during the period from 2004 to 2009. MoneyGram has provided information requested pursuant to the subpoenas and continues to provide additional information relating to the investigation. In addition, the Company has been provided with subpoenas for the testimony of certain current and former employees in connection with the investigation. The Company has also been notified of a request for interviews of one current executive officer and one former chief executive officer of the Company. The U.S. Department of the Treasury Financial Crimes Enforcement Network, or FinCEN, also requested information, which information was subsequently provided by MoneyGram, concerning MoneyGram’s reporting of fraudulent transactions during this period. In November 2010, MoneyGram met with representatives from the U.S. Attorney’s Office for the Middle District of Pennsylvania, or the MDPA USAO, and representatives of FinCEN to discuss the investigation. In July 2011, MoneyGram had further discussions with the MDPA USAO and representatives of the Asset Forfeiture and Money Laundering Section of the U.S. Department of Justice, or the US DOJ. MoneyGram has been informed that it is being investigated by the federal grand jury in connection with these matters for the period 2004 to early 2009 as well as MoneyGram’s anti-money laundering program during that period. In January 2012, meetings were held between representatives of the Company, the MDPA USAO and the Criminal Division of the US DOJ to discuss the investigation. MoneyGram continues to engage in discussions and cooperate with such government representatives regarding the ongoing investigation. During the course of these discussions, the Company was advised that consideration is being given to a range of possible outcomes, including the seeking of criminal penalties against the Company. However, no conclusions can be drawn at this time as to the outcome of the investigation, and we are unable to predict the probable loss, or range of loss, if any, associated with this matter. On March 19, 2012, the Company entered into a tolling agreement with the U.S. Attorney’s Office for the Middle District of Pennsylvania and the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice that tolled the statute of limitations applicable to any criminal proceedings that the government might later initiate to include the period from March 23, 2012 through and including December 31, 2012.

MoneyGram has also received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether the Company has taken adequate steps to prevent consumer fraud during the period from 2007 to 2011. The Civil Investigative Demands seek information and documents relating to the Company’s procedures to prevent fraudulent transfers and consumer complaint information. MoneyGram continues to cooperate fully with the states in this matter. MoneyGram has submitted the information and documents requested by the states. No claims have been made against MoneyGram at this time.

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

Action Commenced by the Company:

In March 2012, MoneyGram International initiated an arbitration proceeding before the Financial Industry Regulatory Authority (“FINRA”) against Goldman Sachs & Co. (“Goldman”). The arbitration relates to MoneyGram’s purchase of Residential Mortgage Backed Securities (“RMBS”) and Collateral Debt Obligations (“CDO”) that Goldman sold to MoneyGram during the 2005 through 2007 timeframe. The Company alleges, among other things, that Goldman made

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material misrepresentations and omissions in connection with the sale of these products, ultimately causing significant losses to the Company for which the Company is currently seeking damages. Goldman owns, together with certain of its affiliates, approximately 19 percent of the shares of the Company’s common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman and its affiliates.

ITEM 1A. RISK FACTORS

There have been no changes in the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. For further information, refer to Part I, Item IA, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December  31, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company’s Board of Directors has authorized the repurchase of a total of 12,000,000 common shares. The repurchase authorization is effective until such time as the Company has repurchased 12,000,000 common shares. Common stock tendered to the Company in connection with the exercise of stock options or vesting of restricted stock are not considered repurchased shares under the terms of the repurchase authorization. As of March 31, 2012, the Company has repurchased 6,795,017 common shares under this authorization and has remaining authorization to repurchase up to 5,204,983 shares. The Company did not repurchase any shares during the three months ended March 31, 2012. However, the Company may consider repurchasing shares from time-to-time, subject to limitations in its debt agreements.

ITEM 6. EXHIBITS

Exhibits are filed with this Quarterly Report on Form 10-Q as listed in the accompanying Exhibit Index.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MoneyGram International, Inc.
	(Registrant)
May 4, 2012	By: /s/ W. ALEXANDER HOLMES
	W. Alexander Holmes Executive Vice President and Chief Financial Officer
	(Principal Financial Officer and Duly Authorized Officer)

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., as amended (Incorporated by reference from Exhibit 3.1 to Registrant’s Annual Report on Form 10-K filed on March 15, 2010).
3.2	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).
3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., filed with the Secretary of State of the State of Delaware on November 14, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed November 14, 2011).
3.4	Bylaws of MoneyGram International, Inc., as amended and restated September 10, 2009 (Incorporated by reference from Exhibit 3.01 to Registrant’s Current Report on Form 8-K filed on September 16, 2009).
3.5	Amendment to Bylaws of MoneyGram International, Inc., dated as of January 25, 2012 (Incorporated by reference from Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed January 27, 2012).
3.6	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	Summary of Non-Employee Director Compensation Agreements, effective January 1, 2012 (Incorporated by reference from Exhibit 10.64 to Registrant’s Annual Report on Form 10-K filed on March 9, 2012).
10.2*	Separation Agreement and Release, dated as of March 20, 2012, by and between MoneyGram International, Inc. and James E. Shields.
10.3*	Service Agreement, dated March 16, 2012, by and between MonyGram International Limited and Carl Scheible.
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) Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011; (ii) Consolidated Statements of Income for the three months ended March 31, 2012 and 2011; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011; (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011; (v) Consolidated Statements of Stockholders’ Deficit as of March 31, 2012; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text. The information in Exhibit 101 is “furnished” and not “filed” as provided in Rule 406T of Regulation S-T.

* Filed herewith.

** Furnished herewith.

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EX-10.2

EXHIBIT 10.2

SEPARATION AGREEMENT AND RELEASE

This SEPARATION AGREEMENT AND RELEASE (“Release”) is dated as of March 20, 2012 between MoneyGram International, Inc., a Delaware corporation (together with its parent companies, direct and indirect subsidiaries, successors and assigns, the “Company”), and James E. Shields (“Executive”).

WHEREAS, the Company and Executive previously entered into a Severance Agreement dated July 12, 2010 (the “Severance Agreement”); and

WHEREAS, Executive’s service with the Company as its Chief Financial Officer will terminate on March 20, 2012, and his participation in the Company’s Performance Bonus Plan (“PBP”) will terminate effective March 31, 2012; and

WHEREAS, Executive will continue to be employed by the Company for a transition period up to May 15, 2012; and

WHEREAS, pursuant to the Severance Agreement, Executive is entitled to certain compensation and benefits upon the termination of his employment, contingent upon the execution of this Release;

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, to which Executive understands and acknowledges he or she may not otherwise be entitled without executing this Release, the Company and Executive agree as follows:

1. Consideration for Release. In full and complete consideration for Executive’s execution of this Release, the Company will provide Executive with the following compensation and benefits:

a. Severance Salary. A sum equal to one year’s salary, Three Hundred Eighty-Five Thousand Dollars ($385,000.00), minus all applicable withholdings, payable in a lump sum on or before May 31, 2012.

b. Severance Bonus. Executive will be paid a pro rata portion (based on the period between the beginning of the applicable performance period and the date Executive’s participation in the PBP was terminated, March 31, 2012) of Executive’s cash bonus under the PBP for 2012, payable as a lump sum in the amount of Sixty-Seven Thousand Four Hundred Dollars ($67,400.00), less applicable withholdings.

c. Transition Period Benefits and Bonus. Provided that Executive agrees to make himself available to the Company to assist as reasonably requested by the Company in transitioning his responsibilities as Chief Financial Officer of the Company until May 15, 2012, Executive will continue to be employed by the Company until May 15, 2012, and will continue to receive his full salary and employee benefits coverage (other than participation in the PBP) until that date.

2. Executive, on his or her own behalf and on behalf of his or her heirs, estate and beneficiaries, hereby releases and forever discharges the Company, its parent companies, predecessors, successors, affiliates, subsidiaries, related companies, shareholders, and their respective members, managers, partners, employees, officers, agents, and directors (individually a “Released Party” and collectively the “Released Parties”) from the following:

a. All claims arising out of or relating to Executive’s employment with the Company and/or Executive’s separation from that employment.

b. All claims arising out of or relating to the statements, actions, or omissions of the Released Parties.

c. All claims for any alleged unlawful discrimination, harassment, retaliation or reprisal, or other alleged unlawful practices arising under any federal, state, or local statute, ordinance, or regulation, including without limitation, claims under Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993; the Equal Pay Act of 1963; the Worker Adjustment and Retraining Notification Act; the Employee Retirement Income Security Act of 1974; the Fair Credit Reporting Act; the Texas Commission on Human Rights Act, any other federal, state or local anti-discrimination acts, state wage payment statutes and non-interference or non-retaliation statutes.

d. All claims for alleged wrongful discharge; breach of contract; breach of implied contract; failure to keep any promise; breach of a covenant of good faith and fair dealing; breach of fiduciary duty; promissory estoppel; Executive’s activities, if any, as a “whistleblower”; defamation; infliction of emotional distress; fraud; misrepresentation; negligence; harassment; retaliation or reprisal; constructive discharge; assault; battery; false imprisonment; invasion of privacy; interference with contractual or business relationships; any other wrongful employment practices; and violation of any other principle of common law.

e. All claims for compensation of any kind, including without limitation, commission payments, bonus payments, vacation pay, expense reimbursements, reimbursement for health and welfare benefits, and perquisites.

f. All claims for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for alleged personal injury, liquidated damages, and punitive damages.

g. All claims for attorneys’ fees, costs, and interest.

3. Executive acknowledges that Executive does not release any claims that the law does not allow to be waived by private agreement or any claims that may arise after the date on which Executive signs this Release. The Executive also does not release any rights Executive may have, if any, to benefits under any plan of the Company under Section 401(a) of the Internal Revenue Code or to COBRA benefits pursuant to Internal Revenue Code Section 4980B. This Release also does not purport to limit any right Executive may have to file a charge under any local, state or federal civil rights statute or to participate in an investigation or proceeding conducted by the EEOC or other investigative agency. This Release does, however, waive and release any right Executive may have to recover damages or other relief under any local, state or federal civil rights statute.

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4. Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by him or her to exist may subsequently be discovered, it is his or her intention to fully settle and release all claims he or she may have against the Company and the persons and entities described above, whether known, unknown or suspected.

5. Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse to re-employ Executive, in each case without liability of Executive or the Company. Executive also agrees that effective March 31, 2012, he is resigning as a member of any Board of Directors of any Company affiliate of which he is a member.

6. Executive reaffirms his or her agreement to any Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement to which Executive is a party.

7. Executive agrees that for a period of up to three (3) years from his execution of this Release, Executive will cooperate fully with the Company, its officers, employees, agents, affiliates and attorneys in the defense or prosecution of, or in preparation for the defense or prosecution of any lawsuit, dispute, investigation or other legal proceedings (“Proceedings”) that may be on-going, anticipated or threatened. Executive further agrees that he will cooperate fully with the Company, its officers, employees, agents, affiliates and attorneys on any other matter related to the Company’s business (“Matters”) during the duration of his employment with the Company, including the transition period referred to in Section 1 of this Release.

Such cooperation shall include providing true and accurate information or documents concerning, or affidavits or testimony about, all or any matters at issue in any Proceedings/Matters as shall from time to time be requested by the Company, and shall be within the knowledge of Executive. Such cooperation shall be provided by Executive without remuneration, but Executive shall be entitled to reimbursement for all reasonable and appropriate expenses incurred by him in so cooperating, including (by way of example and not by way of limitation) airplane fares, hotel accommodations, meal charges and other similar expenses to attend Proceedings/Matters outside of the city of Executive’s residence. In the event Executive is asked by a third party to provide information regarding the Company, or is called other than by the Company as a witness to testify in any Proceeding/Matter related to the Company, Executive will notify the Company as soon as possible in order to give the Company a reasonable opportunity to respond and/or participate in such Proceeding/Matter.

8. Executive also agrees not to discuss, disclose, communicate, or use for any purpose any Company Information. For purposes of this Release, “Company Information” shall mean all business information, technological information, intellectual property, trade secrets, customer and other information belonging to the Company or relating to the Company’s internal affairs, or information relating to its business, technology, employees, and/or customers which is not readily available to the general public. Executive further promises not to commit any act or make any statement that is, or could reasonably be interpreted as, detrimental to the business, reputation, or good will of the Company, including disparaging or embarrassing the Company or its officers, directors, agents, and/or other personnel. The Company and Executive acknowledge the terms of this Release shall not preclude Executive from providing truthful testimony if mandated by subpoena or court order to do so, or pursuant to an informal request from a governmental agency.

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9. Executive acknowledges that he or she has been provided at least twenty-one (21) days to review the Release and has been advised to review it with an attorney of his or her choice and at his or her own expense. In the event Executive elects to sign this Release prior to this twenty-one (21) day period, he or she agrees that it is a knowing and voluntary waiver of his or her right to wait the full twenty-one (21) days. Executive further understands that he or she has seven (7) days after the signing hereof to revoke it by so notifying the Company in writing, such notice to be received by Susan Jeffus, Senior counsel, MoneyGram International, 2828 North Harwood Street, 15th Floor, Dallas, Texas 75201, within the seven (7) day period. Executive further acknowledges that he or she has carefully read this Release, knows and understands its contents and its binding legal effect. Executive acknowledges that by signing this Release, he or she does so of his or her own free will and act and that it is his or her intention that he or she be legally bound by its terms. Executive acknowledges that in deciding whether to sign this Release, he or she has not relied upon any statements made by the Company or its agents. Executive further acknowledges that he or she has not relied on any legal, tax or accounting advice from the Company or its agents in deciding whether to sign this Release.

10. This Release shall be construed and enforced in accordance with, and governed by, the laws of the State of Texas, without regard to principles of conflict of laws. If any clause of this Release should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of any other clause or the remainder of this Release.

11. No Future Lawsuits. Executive promises never to file a lawsuit, demand, action or otherwise assert any claims that are released in Second Section of this Release (other than a claim filed solely for the purpose of challenging the validity of the waiver of claims under the Age Discrimination in Employment Act).

12. Full Compensation. Executive agrees that the payments made and other consideration provided by the Company under this Release constitute full compensation for and extinguish all of Executive’s actual or potential claims, including, but not limited to, all claims for attorneys’ fees, costs, and disbursements, and all claims for any type of legal or equitable relief.

13. Advised to Consult with Attorney. Executive is hereby advised in writing to consult with an attorney of his/her choice before signing this Release. Executive is fully aware of his/her right to consult with an attorney of his/her own choosing and acknowledges that if he/she wished to consult with an attorney, he/she has done so.

14. Severability. If the scope of any provision contained in this Release is too broad to permit enforcement of such provision to its full extent, then such provision shall be enforced to the maximum extent permitted by law, and enforced as reformed or modified, in any proceedings brought to enforce such provision. Subject to the provisions of the foregoing sentence, whenever possible, each provision of this Release will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of the Release is held to be prohibited by or invalid under applicable law, such provision, to the extent of such prohibition or invalidity, shall be deemed not to be a part of the Release, and shall not invalidate the remainder of such provision or the remaining provisions of the Release.

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15. Entire Agreement. For the purpose of implementing a full and complete release and discharge of claims, Executive expressly acknowledges this Release is intended to include in its effect, without limitation, all the claims described in the preceding paragraphs, whether known or unknown, suspected or unsuspected, arising on or prior to the date Executive signs this Release, and that this Release contemplates the extinction of all such claims, including claims for attorneys’ fees. Executive expressly waives any right to assert after the execution of this Release that any such claim, demand, obligation, or cause of action has, through ignorance, oversight, or for any other reason, been omitted from the scope of this Release.

This Release, any Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement, the Severance Agreement dated July 12, 2010, the Non-Qualified Stock Option Agreement dated July 13, 2010, and any Company-provided employee benefit plans in which Executive is a participant, contain all the agreements between Executive and the Company. It is the entire agreement between Executive and the Company, and supersedes and prevails over all other prior and/or contemporaneous agreements, understandings or representations by or between the parties, whether oral or written. This Release may not be modified or amended, and there shall be no waiver of its provisions, except by a written instrument executed by Executive and a corporate officer of the Company. The Company has made no promises to Executive other than those in this Release.

EMPLOYEE ACKNOWLEDGES HE/SHE HAS READ THIS RELEASE, UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT.

PLEASE READ THIS RELEASE CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

The parties have executed this Release on the dates indicated at their respective signatures below.

Dated: March 23, 2012	/s/ James E. Shields
	JAMES E. SHIELDS
	MONEYGRAM INTERNATIONAL, INC.
Dated: March 23, 2012	By:	/s/ Steven Piano
	Name:	Steven Piano
	Title:	Executive Vice President, Human Resources

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EX-10.3

CONTENTS

		PAGE
1.	Definitions		2
2.	Commencement and Term		4
3.	Role and Duties of the Executive		4
4.	Place of Work		5
5.	Salary		5
6.	Bonus		6
7.	Equity		6
8.	Car Allowance		7
9.	Expenses		7
10.	Holidays		7
11.	Sickness Benefit		8
12.	Pension, Medical Insurance and Life Assurance		9
13.	Mobile Phone		9
14.	Gym Membership		9
15.	Restrictions during Employment		10
16.	Gifts, Inducements and Conflicts of Interest		10
17.	Confidential Information		11
18.	Intellectual Property		12
19.	Company Property		14
20.	Termination		15
21.	Garden Leave		17
22.	Restrictive Covenants		18
23.	Dismissal/Disciplinary and Grievance Procedure		20
24.	Data Protection and Communications		20
25.	Notices		22
26.	Deductions		22
27.	Former Contracts of Employment		22
28.	Staff Manual		22
29.	General		22
30.	Choice of Law and Submission to Jurisdiction		23

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THIS AGREEMENT is made the 16 day of March 2012.

BETWEEN:

(1) MoneyGram International Limited (registered number 03287157) whose registered office is at 1^st Floor Senator House, 85 Queen Victoria Street, London, United Kingdom EC4V 4AB (the “Company”);

(2) Carl-Olav Scheible of 10 Melville Ave, London, United Kingdom SW20 0NS (the “Executive”).

THE PARTIES AGREE that the Company will employ the Executive and the Executive will serve the Company on the following terms and conditions:

1. DEFINITIONS

1.1 In this Agreement unless the context otherwise requires the following expressions have the following meanings:

“Act” the Employment Rights Act 1996 as amended;

“Accrued Entitlement” means the Executive’s annual holiday entitlement (in days) multiplied by the proportion of the holiday year during which the Executive has been employed by the Company;

“Board” the board of directors for the time being of the Company or any committee of directors appointed by the board for the time being;

“Confidential Information” all and any information (whether or not recorded in documentary form, or on any optical, magnetic or computer disk or memory) which is not in the public domain relating to the business, affairs, finances, business methods, corporate plans, research, internal processes or development projects of the Company or any Group Company; all and any details of customers, potential customers or suppliers of the Company or any Group Company, the nature of the customers’ or suppliers’ business operations, all confidential aspects of customers’ or suppliers’ business relationships with the Company or any Group Company; all and any information relating to any employee of the Company or any Group Company; all and any trade secrets, secret formulae, inventions and any other intellectual property rights howsoever arising, designs or technical data of the Company or any Group Company or other confidential technical information relating to the research and development, production or supply of any past, present or future product or service of the Company or any Group Company, and other information to which the Company or any Group Company attaches an equivalent level of confidentiality or in respect of which it owes an obligation of confidentiality to a third party;

“Control” means in relation to the Company the power of a person to secure that the affairs of the Company are conducted in accordance with the wishes of that person either by means of the holding of shares or the possession of voting power or by virtue of any powers conferred by constitutional or corporate documents relating to the Company.

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“Day’s Pay” means one-fifth of the Executive’s weekly salary;

“Group” the Company and the Group Companies;

“Group Company” any company which is for the time being a subsidiary or holding company of the Company and any subsidiary of any such holding company and for the purposes of this Agreement the terms “subsidiary” and “holding company” shall have the meanings ascribed to them by section 1159 of the Companies Act 2006.

“Intellectual Property Rights” means any rights to inventions, copyright and related rights, trade marks, trade names and domain names, rights in get-up, rights in goodwill or to sue for passing off, unfair competition rights, rights in designs, rights in computer software, database rights, rights in confidential information (including know-how and trade secrets) and any other intellectual property rights, in each case whether registered or unregistered and including all applications (and rights to apply) for, and renewals or extensions of, such rights and all similar or equivalent rights or forms of protection which subsist or may subsist, now or in the future, in any part of the world.

“Works” means any design, drawing, code, document, invention, packaging, idea, concept, database or similar work product created by the Executive, whether by himself or jointly with other people, wholly or substantially in the normal course of his employment or in the course of carrying out duties specifically assigned to him, which in the sole opinion of the Company are useful for, or relate to the affairs of, the Company, whether or not the work was made at the direction of the Company or was intended for use by the Company or any Group Company.

1.2 References to Clauses and schedules are unless otherwise stated to Clauses of and schedules to this Agreement.

1.3 The headings to the Clauses are for convenience only and shall not affect the construction or interpretation of this Agreement.

1.4 Unless the context otherwise requires, references in this Agreement to the masculine gender shall, where appropriate, be deemed to include the feminine and vice versa.

1.5 Any reference to a statutory provision in this Agreement shall be deemed to include a reference to any statutory modification or re-enactment of it.

1.6 The Company accepts the benefits of this Agreement on its own behalf and on behalf of the Group and shall be entitled to assign (wholly or in part), at its sole discretion, its rights in connection with the Agreement to any other Group Company at any time with immediate effect on giving written notice to the Executive.

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2. COMMENCEMENT AND TERM

2.1 The employment of the Executive shall commence on 16^th April 2012 and shall continue (except as provided in Clause 20) unless and until terminated by either the Company or the Executive giving six months’ prior notice in writing.

2.2 For the purposes of the Act, the Executive’s period of continuous employment will commence on 16^th April 2012.

2.3 The Executive represents and warrants that the Executive is not bound by or subject to any court order, agreement, arrangement or undertaking which in any way restricts or prohibits the Executive from entering into this Agreement or from performing his duties under it.

2.4 It is a condition precedent of this Agreement that, prior to the start of the Executive’s employment, the Executive has the necessary immigration status to work under this Agreement in the United Kingdom and the Company has received satisfactory employment references and a satisfactory basic disclosure report, as may be applicable throughout the duration of this Agreement.

3. ROLE AND DUTIES OF THE EXECUTIVE

3.1 The Executive shall serve the Company as Executive Vice President, although such job title may change from time to time to reflect the actual duties he undertakes. With the prior consent of the Executive but not otherwise, the Company may appoint any other person or persons to act jointly with the Executive in any position to which he may be assigned from time to time subject to there being no loss of status by the Executive.

3.2 During his employment the Executive shall:

3.2.1 devote the whole of his time, attention and skill to the business and affairs of the Company both during normal business hours which are 9.00 am to 5.30 pm and during such additional hours as are necessary for the proper performance of the Executive’s duties or as the Board may reasonably require from time to time;

3.2.2 faithfully and diligently perform such duties and exercise such powers consistent with his position as may from time to time be assigned to him or vested in the Executive by the Board to a standard that is acceptable to the Board;

3.2.3 do all in his power to promote, develop and extend the business of the Company and the Group;

3.2.4 obey the reasonable and lawful directions of the Board;

3.2.5 comply with all the Company’s rules, regulations, policies and procedures from time to time in force; and

3.2.6 keep the Board at all times promptly and fully informed (in writing if so requested) of his conduct of the business of the Company and any Group Company and provide such explanations in connection with it as the Board may require.

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3.3 The Executive accepts that the Company may at its discretion require him to perform other duties or tasks not within the scope of his normal duties or not to perform any duties at all and save for the latter case, the Executive agrees to perform those duties or undertake those tasks as if they were specifically required under this Agreement.

3.4 The Executive agrees, for the purposes of Regulation 5 of The Working Time Regulations 1998 (the “Regulations”), that Regulation 4 of the Regulations does not apply to him. The Company and the Executive agree that the Executive’s consent, for the purpose of this Clause 3.4, shall continue indefinitely provided that the Executive may withdraw such consent at any time by giving the Company three months’ notice of his wish to do so.

3.5 The Executive shall, if and so long as the Company requires and without any further remuneration other than is specified in this Agreement:

3.5.1 carry out duties on behalf of any Group Company; and

3.5.2 act as a director or officer of any Group Company.

4. PLACE OF WORK

The Executive’s normal place of work will be the Company’s offices in London, but the Company may require the Executive to work at any place (whether inside or outside the United Kingdom) for such periods as the Company may from time to time require.

5. SALARY

5.1 The Company shall pay to the Executive a gross annual salary of £300,000 (which shall accrue from day to day), which shall be paid less such tax and employee National Insurance contributions or other deductions the Company or any Group Company is obliged or authorised to make, on or before the last day of each calendar month by credit transfer to his bank account payable by equal monthly instalments in arrears (or such other sum as may from time to time be agreed). The rate of salary will be reviewed annually in April, the first such review to take place in April 2013. There is no obligation on the Company to increase the Executive’s salary.

5.2 Salary and any bonus and/or profit share payable shall be inclusive of any fees to which the Executive may be entitled as a director of the Company or any Group Company.

5.3 Payment of salary and bonus and/or profit share (if applicable) to the Executive may be made either by the Company or to the extent the salary, bonus or profit share relates to duties carried out on behalf of any Group Company or for acting as a director or officer of any Group Company by such Group Company, and, if by more than one company, in such proportions as the Board may from time to time think fit.

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6. BONUS

6.1 The Executive will be eligible to participate in a Performance Bonus Plan (the “PBP”), at target, of up to 75% of the Executive’s base salary earned during the relevant financial year. Payment of bonus under the PBP will be dependent on both individual and corporate performance against business and financial targets for the year.

6.2 Payment of the PBP will be adjusted pro rata if the Executive works for less than the full 12 months of the financial year. The Executive shall in any event have no right to any PBP payment under this Clause 6 if he has not completed at least a full quarter’s employment during the financial year or his employment terminates for any reason or he is under notice of termination (whether given by the Executive or the Company) at or prior to the date when a PBP payment under this Clause 6 might otherwise have been paid.

6.3 Further details of the PBP are available from Human Resources. The PBP is subject to the scheme rules and targets as may be applicable in any given year. The PBP is adjusted from year to year and may be amended or withdrawn from year to year entirely at the Company’s or any Group Company’s discretion. Any bonus awarded by the Company under the PBP does not create any precedent for future years.

6.4 In addition, the Executive shall receive a sign on bonus of £10,000 (NET). The sign on bonus shall be paid within 30 days of the date of commencement of employment and provided that the Executive has satisfied the pre-conditions of his employment as set out in this Agreement. It shall be repayable immediately if, within 12 months after the commencement date, the Executive’s employment terminates for any reason or if he gives notice.

7. EQUITY

The Company may in its absolute discretion, upon the commencement of the Executive’s employment with the Company, make an initial award to the Executive valued at $2,000,000, to be awarded 50% as stock options and 50% as performance-based restricted stock units. The stock options will vest at a rate of 25% per year over four years. The restricted stock units will vest when certain performance measures are achieved. The first possible vesting of the restricted share units will be 50% to vest at the end of 2012, and the remainder to vest at the end of 2014. Future annual awards of equity may be equal to two times the Executive’s annual base salary subject always to satisfactory performance. Further details of the equity award are available from human resources. Any equity award shall be purely discretionary and shall not form part of the Executive’s contractual remuneration under this Agreement. If the Company makes an equity award to the Executive, it shall not be obliged to make any subsequent equity award. Any equity award is made subject to the terms of the relevant plan rules.

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8. CAR ALLOWANCE

The Executive will be entitled to a car allowance of £15,000 gross per annum, prorated for the duration of this Agreement and paid in equal monthly instalments in arrears, on the last working day of each month. This allowance is subject to appropriate tax and statutory deductions in line with legislation in the UK.

9. EXPENSES

9.1 The Company shall reimburse the Executive in respect of all expenses reasonably incurred by him in the proper performance of his duties, subject to his providing such receipts or other appropriate evidence as the Company may require.

9.2 The Executive will be issued with a Company credit card on condition that he:

9.2.1 takes good care of such card and immediately reports any loss of it to the Company;

9.2.2 uses the card only for the purposes of the Company’s business in accordance with any applicable Company policy thereto; and

9.2.3 returns the card immediately to the Company on request.

9.3 The Executive shall submit any expenses monthly to the Finance Department by the 15th of each calendar month, providing detailed reasons for any expenditure incurred on the cards together with appropriate back-up documentation and/or receipts.

9.4 Further terms regarding expenses and the use of Company credit cards are contained under the Company’s Travel and Entertainment Policy.

10. HOLIDAYS

10.1 The Executive shall be entitled, in addition to all Bank and public holidays normally observed in England, to 30 working days’ paid holiday in each holiday year being the period from 1 January to 31 December.

10.2 The Executive may take his holiday only at such times as are agreed with the person to whom the Executive reports.

10.3 In the respective holiday years in which his employment commences or terminates, the Executive’s entitlement to holiday shall accrue on a pro rata basis for each completed calendar month of service during the relevant year.

10.4 Holiday entitlement for one holiday year cannot be taken in a subsequent holiday year. If the Executive does not use his holiday entitlement in the holiday year to which it relates, the entitlement will be forfeited and he will not be entitled to any payment in lieu of the entitlement.

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10.5 The Company may either require the Executive to take unused holiday during any notice period or make a payment to him in lieu of it, as calculated in Clause 10.6.

10.6 If at the date on which the Executive’s employment terminates, he has taken less of his annual holiday entitlement than his Accrued Entitlement, the Company will make a payment to him in respect of untaken holiday at the rate of a Day’s Pay for each day of untaken holiday. The number of days of untaken holiday will be equal to the Accrued Entitlement less the number of days taken by the Executive between the start of the holiday year and the termination date.

10.7 If at the date on which the Executive’s employment terminates, he has taken more of his annual holiday entitlement than his Accrued Entitlement, the Company may recover any excess payment and the Executive authorises the Company to deduct it from any payments due to him.

11. SICKNESS BENEFIT

11.1 During any period of sickness absence the Executive shall from time to time if required:

11.1.1 supply the Company with medical certificates covering any period of sickness or incapacity exceeding seven days (including weekends); and

11.1.2 undergo at the Company’s expense, a medical examination by a doctor appointed by the Company (and the Executive agrees that copies of any medical reports prepared by such doctor shall be sent directly to the Company).

11.2 The Executive will receive Statutory Sick Pay only for any sickness absence during the first eight weeks of service with the Company. After the expiry of eight weeks from the date on which the Executive commenced work for the Company under this Agreement, the terms and conditions of the relevant policy in the Staff Manual of the Company will apply.

11.3 Any payment to the Executive pursuant to Clause 11.2 shall be deemed to include any Statutory Sick Pay and any Social Security Sickness Benefit or other benefits to which the Executive may be entitled.

11.4 If the Executive’s absence shall be occasioned by the actionable negligence of a third party in respect of which damages are recoverable, then the Executive shall:

11.4.1 notify the Company immediately of all the relevant circumstances and of any claim, compromise, settlement or judgment made or awarded in connection with it;

11.4.2 give to the Company such information concerning the above matters as the Company may reasonably require; and

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11.4.3 if the Company so requires, refund to the Company any amount received by him from any such third party provided that the refund shall be no more than the amount which he has recovered in respect of remuneration.

12. PENSION, MEDICAL INSURANCE AND LIFE ASSURANCE

12.1 During his employment, the Executive shall be eligible to join the Company’s Group Personal Pension Plan (“Plan”). The Executive will be eligible to join the Company’s Group Personal Pension Plan, currently with AEGON Scottish Equitable. The Company agrees to make contributions of up to 8% of the Executive’s salary subject to the terms of the Plan. The pension scheme is contracted in to the state second pension scheme and a contracting out certificate under the Pension Scheme Act 1993 is not in force. Further details can be provided by the Company’s personnel management or pension provider.

12.2 Members of the Company’s Group Personal Pension Plan will also be eligible to the Company’s Group Income Protection Insurance Scheme, subject always to the scheme rules. Inclusion may be subject to additional underwriting and satisfactory medical evidence.

12.3 Should the Executive die before reaching his retirement death in service benefits will apply as set out in the rules of the Group Personal Pension Plan and the MoneyGram International Ltd Group Life Assurance Scheme. Inclusion in the Group Life Assurance Scheme may be subject to additional underwriting and satisfactory medical evidence.

12.4 During his employment, the Executive [and his spouse and minor children] shall be entitled to participate in any private medical insurance scheme that may be arranged by the Company for the benefit of its employees subject to the insurer accepting the Executive for cover under the relevant policy at normal rates and subject to the rules of such scheme or policy from time to time in force.

12.5 The Company reserves the right to amend or withdraw the terms of any benefit or insurance arrangement at any time.

13. MOBILE PHONE

A Company mobile phone will be provided to the Executive for business use. All expenses relating to line rental and call costs will be paid for by the Company in advance or will be chargeable to the Company as appropriate. Any costs incurred on the mobile phone, which relate to personal use, must be reimbursed to the Company in line with the Travel & Entertainment policy.

14. GYM MEMBERSHIP

The Executive is eligible for subsidised gym membership if he wishes to join the Company nominated gym. Further details can be obtained from human resources.

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15. RESTRICTIONS DURING EMPLOYMENT

15.1 During his employment, the Executive shall not directly or indirectly:

15.1.1 be employed, engaged, concerned or interested in any other business or undertaking; or

15.1.2 engage in any activity which the Board reasonably considers may be, or become, harmful to the interests of the Company or of any Group Company or which might reasonably be considered to interfere with the performance of the Executive’s duties under this Agreement.

Nothing in this Agreement shall apply to the holding by the Executive (or his nominees) for investment purposes only of not more than 3% of the issued shares or securities of any company whose shares or other capital are listed on or dealt on or under the rules of an exchange which is designated as a “recognised stock exchange” pursuant to section 841(1) of the Income and Corporation Taxes Act 1988 or an exchange which is a “recognised investment exchange” or a “recognised overseas investment exchange” pursuant to section 285 or section 292 of the Financial Services and Markets Act 2000.

15.2 The Executive agrees that he will not at any time during the course of his employment take any preparatory steps to become engaged or interested in any capacity whatsoever in any business or venture which is in or is intended to enter into competition with any business of the Company.

16. GIFTS, INDUCEMENTS AND CONFLICTS OF INTEREST

16.1 Subject to any regulations from time to time issued by the Company which may apply to him, the Executive shall not receive or obtain directly or indirectly any discount, rebate, commission or other inducement in respect of any sale or purchase of any goods or services effected or other business transacted (whether or not by him) by or on behalf of the Company or any Group Company. The Executive shall not at any time accept any cash gift from any person or firm having business relations or prospective business relations with the Company or the Group.

16.2 The Executive may not engage in any business, financial, or other conduct where his personal interests actually conflict or have the appearance of conflicting with those of the Company or the Group or its other shareholders. A conflict of interest arises whenever an employee has the opportunity to obtain personal gain in a way that is contrary to the interests of the Company or any Group Company. The Executive should consult with the Legal Department if he needs advice on what constitutes a conflict of interest. Examples where the Executive should consult with the Legal Department before acting include, but are not limited to, the following:

16.2.1 Investing with a direct competitor (other than investments in public companies, not exceeding 5% in nominal value), or accepting payments, loans or offers of employment from persons or companies trying to do business with or gain information from the Company.

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16.2.2 Permitting an immediate family member to accept compensation or benefits from any competitor of the Company, except in the case of ordinary course of employment.

16.2.3 Conducting business on behalf of the Company with any contractor, vendor, supplier or his party in which the Executive or a member of his immediate family is a principal, officer or representative, or in which the Executive has any other personal interest.

The breach of any of such obligations established in this Clause will result in formal disciplinary action and may be treated as gross misconduct.

17. CONFIDENTIAL INFORMATION

17.1 The Executive acknowledges that during the course of his employment under this Agreement he is likely to create, or have access to, or be entrusted with, or come across Confidential Information. The Executive recognises that the unauthorised use or disclosure of Confidential Information could be damaging to the Group, or to any person, company, business entity or other organisation with whom or which the Group deals, or to whom any Group Company owes an obligation of confidentiality. Accordingly the Executive shall neither during his employment (except in the proper performance of his duties) nor at any time (without limit) after the termination of his employment except in compliance with an order of a competent court:

17.1.1 disclose, communicate or publish to any person, company, business entity or other organisation any Confidential Information unless such disclosure, communication or publication is required for the proper performance of the Executive’s duties;

17.1.2 remove any Confidential Information from the Company’s or any Group Company’s premises or copy, duplicate, or otherwise reproduce any document or tangible item containing Confidential Information for any purpose other than those of the Company or any Group Company;

17.1.3 use any Confidential Information for his own purposes or for any purposes other than those of the Company or any Group Company; or

17.1.4 through any failure to exercise due care and diligence, permit or cause any unauthorised disclosure of any Confidential Information.

17.2 The Executive further undertakes to use all reasonable endeavours to ensure that Confidential Information is not disclosed, communicated or published.

17.3 The Executive agrees that during his employment (except in the proper course of his duties) he will not without the Company’s prior written consent:

17.3.1 publish any opinion, fact or material;

17.3.2 deliver any lecture or presentation;

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17.3.3 participate in the making of any film, radio, television (whether cable, satellite or terrestrial), worldwide web or other media broadcast or transmission; or

17.3.4 communicate with any representative of the media or any other third person, company, business entity or other organisation in connection with anything

that comprises or concerns Confidential Information.

17.4 The Executive agrees that each of the above restrictions:

17.4.1 covers all actions by him in whatever capacity, whether directly or indirectly via any person, company, business entity, agent, associate, company, partnership, employee, employer, shareholder, trust or other organisation which, if done by the Executive personally, would breach this Agreement;

17.4.2 must be drawn by him to the attention of any person, company, business entity or other organisation who may at any time before or after the termination of his employment offers to employ or engage him in any capacity and for or with whom he intends to work.

17.5 Nothing in this Clause prevents the Executive from making a protected disclosure as defined by section 43A of the Employments Rights Act 1996.

17.6 Each of the provisions of this Clause 17 is separate and severable and in the event of any such provision being determined to be unenforceable, in whole or in part for any reason, such unenforceability shall not affect the enforceability of the remaining provisions or, in the case of a part of a provision being unenforceable, the remainder of that provision.

18. INTELLECTUAL PROPERTY

18.1 The Executive shall immediately disclose to the Company complete and accurate particulars of any Works, and

18.1.1 in the case of an invention the Executive shall give the Company full particulars of it together with all information, data (in all forms and in all media), drawings and models, embodying or relating to the invention, irrespective of the nature of the invention or when it was made; and,

18.1.2 in the case of designs or works, a copy of them,

and in either case, the Executive shall, at the Company’s request, provide to the Company complete copies of any prior works, designs or inventions from which the Works were derived.

18.2 The Executive agrees that the Company may require the Executive to provide to the Company complete and accurate particulars of any Works, such particulars to be delivered immediately to an authorised representative at any time, regardless of whether they have previously been provided to the Company.

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18.3 If an invention made by the Executive is the property of the Company under section 39 Patents Act 1977 the Executive shall execute all documents and do all things which may reasonably be necessary or desirable for applying for and obtaining the best possible patent, utility model or other legal protection for the invention (“Protection”) in any and all territories specified by the Company and the Executive hereby assigns to the Company with full title guarantee and free of all encumbrances all rights to the invention and all applications for Protection and to the grant of Protection in respect of that invention and shall execute all documents and do all such things as may be necessary or desirable for perfecting the assignment and obtaining registration of it and obtaining protection in all territories in the name of the Company.

18.4 If any invention is the Executive’s property under section 39 Patents Act 1977 and relates to or is useful in connection with the business or any product or service of the Company or any Group Company the Executive shall not grant a licence or execute an assignment in respect of that invention or any rights in it to any other person without first offering to grant a licence or execute an assignment for the benefit of the Company on reasonable commercial terms and the Company shall have fifteen working days in which to accept or reject the offer. If the Company does not accept the offer, the Executive may not thereafter offer such licence or assignment to a third party on terms more favourable than those offered to the Company. In the event that an offer is made to a third party upon terms more favourable than those offered to the Company, the Executive must make a further offer to the Company on the same or not less favourable terms than those offered to the third party, and the Company shall again have fifteen working days in which to accept or reject this offer.

18.5 All Works shall be the property of the Company, the Intellectual Property Rights in those Works shall belong absolutely to the Company and the Executive hereby assigns absolutely and irrevocably all Intellectual Property Rights in and to those Works to the Company. The existence, content and details of any Works shall not be disclosed to any other person without the prior written consent of the Company which, if given, may be subject to conditions. The Company shall be entitled to withhold such consent in its sole and absolute discretion without giving reasons.

18.6 To the extent that any Intellectual Property Rights in any of the Works are not vested in the Company for any reason, the Executive hereby agrees to assign the same to the Company, and to execute all documents and, at the expense of the Company, do all such things as are necessary or reasonably required to ensure that those Intellectual Property Rights vest entirely and absolutely in the Company.

18.7 The Executive recognises and accepts that the Company may edit, copy, add to, take from, adapt, alter and translate the Works in exercising the rights assigned under Clauses 18.5 and 18.6.

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18.8 To the fullest extent permitted by law, the Executive irrevocably and unconditionally waives any provision of law known as “moral rights” including (but not limited to) any moral rights the Executive may otherwise have under sections 77 to 89 inclusive of the Copyright Designs and Patents Act 1988 in relation to the rights referred to in this Clause 18. The Executive gives this waiver in favour of the Company and each Group Company, and all successors in title to and licensees of the Intellectual Property Rights in the Works.

18.9 The Executive agrees that he will at the Company’s request and expense, execute such further documents and do all things necessary or reasonably required to confirm, substantiate, or give effect to the rights and obligations of the parties under this Clause 18 both before and after the termination of this Agreement, at any time, and for any reason.

18.10 The Executive agrees that he will not at any time make use of, disclose or exploit the Company’s Intellectual Property Rights for any purpose which has not been authorised by the Company.

18.11 The provisions of this Clause with regard to Intellectual Property Rights shall remain in force notwithstanding the termination of the Executive’s employment and shall be binding on his personal representatives.

19. COMPANY PROPERTY

19.1 The Executive acknowledges that all property, equipment, books, notes, memoranda, records, lists of customers and suppliers and employees, correspondence, documents, computer and other discs and tapes, data listings, codes and other documents and material whatsoever (whether made or created by the Executive or otherwise) relating to the business of the Company or any Group Company (and any copies of the same) including but not limited to any document or tangible property which contains any Confidential Information:

19.1.1 shall be and remain the property of the Company or the relevant Group Company; and

19.1.2 shall be handed over by the Executive to the Company or to the relevant Group Company on demand and in any event on the termination of his employment and the Executive shall certify that all such property has been handed over on request by the Company and agrees that he will take all reasonable steps to prevent the disclosure of the same.

19.2 To ensure the protection of its workers, clients/customers and business, the Company reserves the right to search the Executive’s work space (including his desk, office, and company car) and any other property provided by the Company which he may use during his employment with the Company. The Company will use this right of access reasonably, but in entering into this Agreement the Executive warrants and represents that he is aware that no Company property of which he has use may be presumed to be private.

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20. TERMINATION

20.1 Notwithstanding any other provisions of this Agreement, in any of the following circumstances, the Company may terminate the Executive’s employment summarily and without further payment (save for any sums accrued due as at the relevant date) if the Executive:

20.1.1 commits any serious breach of this Agreement or is guilty of any gross misconduct or any wilful neglect in the discharge of his duties;

20.1.2 repeats or continues (after warning) any breach of this Agreement;

20.1.3 is guilty of any fraud, dishonesty or any conduct tending to bring himself, the Company, or any Group Company into disrepute (whether or not constituting gross misconduct);

20.1.4 consistently and/or persistently carries out or fails to carry out his duties and obligations under this Agreement in a way and/or to a standard of competence that the Board (acting reasonably) considers to be unacceptable;

20.1.5 has a petition presented for a bankruptcy order to be made in respect of him, enters into (or proposes to enter into) an individual voluntary arrangement or other composition with his creditors or takes advantage of any other legislation for the time being in force offering relief for insolvent debtors;

20.1.6 is convicted of any criminal offence (other than minor offences under road traffic legislation for which a fine or non-custodial penalty is imposed) which might reasonably be thought to affect adversely the performance of his duties;

20.1.7 is disqualified from holding office in the Company or in any other company by reason of any order made under the Company Directors Disqualification Act 1986 or any other enactment;

20.1.8 at any time does not possess the necessary immigration status required in order to work under this Agreement in the United Kingdom;

20.1.9 shall become of unsound mind or become a patient under the Mental Health Act 1983;

20.1.10 is convicted of an offence under the Criminal Justice Act 1993 Pt V32 or under any other present or future statutory enactment or regulations relating to insider dealings;

20.1.11 resigns as or otherwise ceases to be or becomes prohibited by law from being a director of the Company, otherwise than at the Company’s request.

20.2 Any delay by the Company in exercising such right of termination in Clause 20.1 shall not constitute a waiver of it.

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20.3 Notwithstanding the existence of any permanent health insurance or disability cover provided for the Executive by the Company, if at any time the Executive is unable to perform his duties properly because of ill health, accident or otherwise for a period or periods totalling at least 130 working days in any period of 12 calendar months, or becomes incapable by reason of mental disorder of managing and administering his property and affairs, then the Company may terminate his employment by giving him not less than statutory minimum written notice to that effect.

20.4 If the Company believes that it may be entitled to terminate his employment pursuant to Clause 20.1, it shall be entitled (but without prejudice to its right subsequently to terminate his employment on the same or any other ground) to suspend the Executive on full pay and other benefits for so long as it may think fit.

20.5 The Company reserves the right, at its absolute discretion, to terminate the Executive’s employment at any time by making a payment in lieu of any notice of termination corresponding either to the applicable period(s) as set out in Clause 2, or Clause 20.3 in the case of serious incapacity. For this purpose, the Executive agrees that pay in lieu will consist of basic salary only (and no benefits, bonus or profit share payments) for the notice period which is accrued due as at the date of termination of his employment. Should the Company exercise its discretion to terminate in this way:

20.5.1  all of the Executive’s post-termination obligations contained in this Agreement, in particular the confidentiality  provisions in Clause 17 and the restrictive covenants in Clause 22, shall remain in full force and effect; and

20.5.2  the Company shall notify the Executive in writing of the date on which his employment shall terminate, which date shall  be at the discretion of the Company.

20.6 The Company may pay any sums due under Clause 20.5 in equal monthly instalments until the date on which the notice period referred to at in Clause 2, or Clause 20.3 in the case of serious incapacity, would have expired if notice had been given. The Executive shall be obliged to seek alternative income during this period and to notify the Company of any income so received. The instalment payments shall then be reduced by the amount of such income.

20.7 The Executive may be required to use up any outstanding holiday during the notice period.

20.8 On the termination of his employment or upon either the Company or the Executive having served notice of such termination, the Executive shall, at the request of the Company, resign from office as a director of the Company and all offices held by him in any Group Company and shall transfer without payment to the Company or as the Company may direct any qualifying shares, held by him directly or as nominee, provided by it, provided however that such resignation shall be without prejudice to any claims which the Executive may have against the Company or any Group Company arising out of the termination

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of his employment; and the Executive irrevocably authorises the Company to appoint any person in his name and on his behalf to sign any documents and do any things necessary or requisite to give effect to his obligations under this Clause 20.8 and no payment in lieu of notice shall be due to him.

20.9 If (a) the Company in a general meeting shall remove the Executive from the office of director of the Company or any Group Company, or (b) under the Articles of Association for the time being of the Company or any Group Company, the Executive shall be obliged to retire by rotation or otherwise and the Company in general meeting shall fail to re-elect the Executive as a director of the relevant Group Company (either such case being referred to in this Clause 20.9 as an “Event”), then the Executive’s employment under this Agreement shall automatically terminate with effect from the date of the Event.

20.10 With a view to ensuring that his departure can be arranged with the minimum of inconvenience or disruption to the business of the Group and its relationship with third parties and its other employees, the Executive undertakes not, without the prior approval of the Company as to the timing and manner of any communication about his departure, to inform any of his colleagues about the proposed cessation of his employment hereunder.

20.11 The Executive acknowledges the right of the Company to monitor and control the performance of its employees and acknowledges the fiduciary obligations attaching to his position including obligations to inform the Board forthwith upon his becoming aware that any of his colleagues engaged in the business of any Group Company of which he is a director is intending or contemplating the termination of his contract of employment with the Company of any other company in the Group.

20.12 Without prejudice to any other provisions of this Agreement, the Executive may not (except in the legitimate performance of his duties as an employee) at any time and specifically not on the termination of his employment, delete, copy, forward to a third party or interfere in any way with any Company information (including e-mails or documents relating to Company business) held on a laptop or computer or other electronic device and any attempt to do so will be regarded as gross misconduct.

21. GARDEN LEAVE

21.1 At any time including after notice to terminate employment has been given by the Executive or the Company, the Company may for all or part of the duration of the notice period in its absolute discretion require the Executive:

21.1.1  to perform only such duties (including without limitation research projects) as it may allocate to the Executive;

21.1.2  not to perform any duties;

21.1.3  not to have any contact with clients of the Company or any Group Company;

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21.1.4 not to have any contact with such employees or suppliers of the Company or any Group Company as the Company shall determine;

21.1.5 to disclose to the Company any attempted contact (other than purely social contact) with him made by any client, employee or supplier with whom the Executive has been required to have no contact pursuant to this sub-Clause;

21.1.6 to take any accrued holiday entitlement;

21.1.7 not to enter any premises of the Company or any Group Company nor to visit the premises of any of the Company’s or any Group Company’s suppliers or customers;

21.1.8 to resign as a director of the Company or from any other office held by him in the Company or any other Group Company;

provided always that throughout the period of any such action and subject to the other provisions of this Agreement the Executive’s salary and contractual benefits shall not cease to accrue or be paid (subject to Clause 21.3 below) and provided further that the period of garden leave shall not be for a period exceeding six months in total.

21.2 The Executive acknowledges that such action as set out above taken on the part of the Company shall not constitute a breach of this Agreement of any kind whatsoever nor shall the Executive have any claim against the Company in respect of any such action.

21.3 During any period of garden leave, the Executive shall owe a duty of the utmost good faith to the Company and its Group Companies, must not work for any other person or on his own account and shall remain readily contactable and available to work for the Company or any Group Company. Should the Executive work for any other person or on his own account or fail to be available for work at any time having been requested by the Company to do so or otherwise be in breach of any of the provisions of this Agreement, the Executive’s right to salary and contractual benefits in respect of such period of non compliance shall be forfeit notwithstanding any other provision of this Agreement.

22. RESTRICTIVE COVENANTS

22.1 The Executive will not for a period of 12 months (less any period during which the Executive has been on garden leave) after the termination of his employment whether as principal or agent, and whether alone or jointly with, or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly:

22.1.1 carry on, or be engaged, concerned or interested in any business which is similar to or competes with any business being carried on by the Company or by any Group Company at the termination of his employment and with which the Executive was involved to a material extent at any time during the last 12 months of his employment;

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22.1.2 interfere with, tender for, canvass, solicit or endeavour to entice away from the Company or from any Group Company the business of any person, firm or business who at the date of termination of his employment or at any time during the period of 12 months prior to that date (or if earlier, prior to the date on which the Executive last carried out duties assigned to him by the Company) was, to his knowledge, a customer, client, agent of or supplier to, or who had dealings with the Company or with any Group Company, and with whom or which he had personal dealings in the normal course of his employment at that date or during that period;

22.1.3 supply any product, carry out or undertake or provide any service similar to those with which he was concerned to a material extent during the period of 12 months prior to the termination of his employment to or for any person who, at the date of termination of his employment or during the period of 12 months prior to that date was a customer, client, agent of or supplier to, or was in the habit of dealing with the Company or with any Group Company, and with whom the Executive had personal dealings in the normal course of his employment during that period of 12 months;

22.1.4 be employed by any person who or which carries on, is engaged in, or performs services in respect of, or concerned with the research into, development, supply or marketing of any product which is of the same or similar type to any product researched, or developed, or manufactured, or supplied, or marketed by the Company or any Group Company, at any time during the last 12 months of his employment, or development or provision of any services (including but not limited to technical and product support, or consultancy or customer services) which are of the same or similar type to any services provided by the Company or any Group Company, during the last 12 months of his employment;

22.1.5 be employed by, or enter into partnership with, employ or attempt to employ or negotiate or arrange the employment or engagement by any third party, of any person who was, at the date of the termination of his employment, or within 12 months prior to that date had been a senior employee of the Company or any Group Company and with whom he had personal dealings during that period;

22.1.6 solicit, interfere with, tender for or endeavour to entice away from the Company or from any Group Company any contract, project or business, or the renewal of any of them, carried on by the Company or by any Group Company which is currently in progress at the date of the termination of his employment or which was in the process of negotiation at that date and in respect of which the Executive had material contact with any customer, client, agent of or supplier to the Company or any Group Company at any time during the period of 12 months prior to the date of termination of his employment.

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22.2 None of the restrictions contained in Clause 22.1 shall prohibit any activities by the Executive which are not in direct or indirect competition with any business being carried on by the Company or by any Group Company at the date of the termination of his employment.

22.3 Nothing in Clause 22.1 shall preclude the Executive from holding (directly or through nominees) investments in the amount and of the type specified in Clause 15.1.

22.4 At no time after the termination of his employment shall the Executive directly or indirectly represent himself as being interested in or employed by or in any way connected with the Company or any Group Company, other than as a former employee of the Company.

22.5 The Executive acknowledges and agrees that he shall be obliged to draw the provisions of this Clause to the attention of any third party who may at any time before or after the termination of the Executive’s employment offer to employ or engage the Executive and for whom or with whom the Executive intends to work at any time during 12 months after the termination of his employment.

22.6 The Executive agrees that, having regard to all the circumstances and having taken independent legal advice, the restrictions contained in this Clause are reasonable and necessary for the protection of the Company and the Group Companies and that they do not bear harshly upon him and the parties agree that:

22.6.1 each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions shall not be affected; and

22.6.2 if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable.

23. DISMISSAL/DISCIPLINARY AND GRIEVANCE PROCEDURE

Any disciplinary or grievance matter affecting the Executive shall be dealt with by the Board. Any appeal shall lie to the EVP, Human Resources.

24. DATA PROTECTION AND COMMUNICATIONS

24.1 For the purposes of this Clause the following expressions shall have the following meanings:-

24.1.1 “Personal Data” means data which relate to a living individual who can be identified from those data or from those data and other information which is in the possession of, or is likely to come into the possession of, the data controller and includes any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of the individual.

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24.1.2 “Sensitive Personal Data” means personal data consisting of information as to racial or ethnic origin, political opinions, religious beliefs or other beliefs of a similar nature, membership of a trade union (within the meaning of the Trade Union & Labour Relations (Consolidation) Act 1992), physical or mental health or condition, sexual life, the commission or alleged commission of any offence or any proceedings for any offence committed or alleged to have been committed, including the disposal of such proceedings or the sentence of any Court in such proceedings.

24.2 For the purposes of the Data Protection Act 1998 by signing this Contract the Executive gives his consent to the holding and processing of personal data and sensitive personal data relating to him by the Company for all purposes relating to the performance of this Contract including but not limited to:

24.2.1 administering and maintaining personnel records;

24.2.2 paying and reviewing salary and other remuneration and benefits;

24.2.3 undertaking performance appraisals and reviews;

24.2.4 maintaining sickness and other absence records;

24.2.5 taking decisions as to his fitness for work;

24.2.6 providing references and information to future employers, and if necessary, to governmental and quasi governmental bodies for social security and other purposes;

24.2.7 providing information to potential future purchasers of the Company or any Group Company or of the business(es) in which he works;

24.2.8 transferring information about himself to a country or territory outside the European Economic Area;

24.2.9 providing and administering benefits (including if relevant, pension, life assurance, permanent health insurance and medical insurance); and

24.2.10 the monitoring of communications via the Company’s systems.

24.3 A copy of the Company’s policy on employee monitoring is set out in the Staff Manual and the Executive hereby consents to the Company monitoring the Executive for the purposes specified therein.

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25. NOTICES

A notice may be given by any party hereto to any other party hereto either personally or by sending it by prepaid first class post or airmail to the address stated in this Agreement or to any other address supplied by any party hereto to the other parties hereto for the giving of notice. A properly addressed and prepaid notice sent by first class post or airmail shall be deemed to have been served at an address within the United Kingdom at the expiry of 48 hours after the notice is posted and to have been served at an address outside the United Kingdom at the expiry of 72 hours after the notice is posted.

26. DEDUCTIONS

26.1 The Executive shall pay to the Company any sums owing by him to the Company upon demand by the Company at any time (whether during the Executive’s employment by the Company or after the termination Date).

26.2 For the purposes of the Act and otherwise, the Executive consents to the deduction from his salary (and any bonus and/or profit share) or from any other sums owed to the Executive by the Company of any sums owing by him to the Company at any time.

26.3 This Clause is without prejudice to the rights of the Company to recover any sums or balance of sums owing by the Executive to the Company by legal proceedings.

27. FORMER CONTRACTS OF EMPLOYMENT

This Agreement shall be in substitution for any previous contracts, whether by way of letters of appointment, agreements or arrangements, whether written, oral or implied, relating to the employment of the Executive (including all bonus and equity share arrangements), which shall be deemed to have been terminated by mutual consent as from the date of this Agreement and the Executive acknowledges to the Company for itself and on behalf of each Group Company that he has no outstanding claims of any kind against the Company or any Group Company in respect of any such contract.

28. STAFF MANUAL

The Staff Manual, the Code of Conduct and the Travel & Entertainment Policy and any other policies, procedures and rules (as may be issued from time to time by the Company or any Group Company) also form part of the Executive’s contract of employment. Where there is an inconsistency between the terms of this Agreement and the terms contained in such policy or rules, the terms of this Agreement will prevail.

29. GENERAL

29.1 The Executive acknowledges that the provisions of Clauses 17, 18 and 22 constitute separate undertakings given for the benefit of each Group Company and may be enforced by any of them.

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29.2 The expiration or termination of this Agreement shall not prejudice any claim which either party may have against the other in respect of any pre-existing breach of or contravention of or non-compliance with any provision of this Agreement nor shall it prejudice the coming into force or the continuance in force of any provision of this Agreement which is expressly or by implication intended to or has the effect of coming into or continuing in force on or after such expiration or termination.

29.3 This Agreement constitutes the written statement of the terms of employment of the Executive provided in compliance with Part I of the Act.

29.4 Save as otherwise herein provided, there are no terms or conditions of employment relating to hours of work or to normal working hours or to entitlement to holiday (including public holidays) or holiday pay or to incapacity for work due to sickness or injury or to pensions or pension schemes or to requirements to work abroad and no collective agreement has any effect upon the Executive’s employment under this Agreement.

29.5 No term in this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

30. CHOICE OF LAW AND SUBMISSION TO JURISDICTION

30.1 This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with English law.

30.2 The parties irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes or claims).

IN WITNESS whereof this Agreement has been executed as a deed by the Executive the day and year first written above.

Signed by Ann Knapp for and	)
on behalf of the Company	)	/s/ Ann Knapp Senior Director, Human Resources
Executed and delivered as a Deed by	)
the Executive in the presence of	)	/s/ Carl-Olav Scheible

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Witness Signature	/s/ James Richards
Witness name:	James Richards
Witness address:	16 Greenlands Road Kemsing Sevenoaks Kent TN15 6PG

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EX-31.1

Exhibit 31.1

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Pamela H. Patsley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended March 31, 2012;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012	/s/ PAMELA H. PATSLEY
	Pamela H. Patsley
	Chairman and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, W. Alexander Holmes, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended March 31, 2012;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012	/s/ W. ALEXANDER HOLMES
	W. Alexander Holmes
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. §1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof I, Pamela H. Patsley, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2012	/s/ PAMELA H. PATSLEY
	Pamela H. Patsley
	Chairman and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. §1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2012	/s/ W. ALEXANDER HOLMES
	W. Alexander Holmes
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

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Basis Of Presentation

3 Months Ended

Mar. 31, 2012

Basis Of Presentation [Abstract]

Basis Of Presentation

Note 1 — Basis of Presentation

The accompanying unaudited consolidated financial statements of MoneyGram International, Inc. ("MoneyGram" or the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for future periods. For further information, refer to the Consolidated Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

Participation Agreement between the Investors and Wal-Mart Stores, Inc. — As previously disclosed, the Investors have a Participation Agreement with Wal-Mart Stores, Inc. ("Wal-Mart"), under which the Investors are obligated to pay Wal-Mart certain percentages of any accumulated cash payments received by the Investors in excess of the Investors' original investment in the Company. While the Company is not a party to, and has no obligations to Wal-Mart or additional obligations to the Investors under, the Participation Agreement, the Company must recognize the Participation Agreement in its consolidated financial statements as the Company indirectly benefits from the agreement. A liability and the related expense associated with the Participation Agreement would be recognized by the Company in the period in which it becomes probable that a liquidity event will occur that would require the Investors to make a payment to Wal-Mart (a "liquidity event"). Upon payment by the Investors to Wal-Mart, the liability would be released through a credit to the Company's additional paid-in capital. The amount of the non-operating expense could be material to the Company's financial position or results of operations, but would have no impact on the Company's cash flows. As liquidity events are dependent on many external factors and uncertainties, the Company does not consider a liquidity event to be probable at this time, and has not recognized a liability or expense related to the Participation Agreement. The additional consideration paid to the Investors in connection with the 2011 Recapitalization did not result in a liquidity event as the amounts received by the Investors are less than their original investment in the Company.

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Consolidated Statements Of Stockholders' Deficit (USD $) In Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Loss [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2011	$ 281,898	$ 623	$ 989,188	$ (1,216,543)	$ (38,028)	$ (127,336)	$ (110,198)
Net income				10,269			10,269
Employee benefit plans			3,523	(11)		34	3,546
Net unrealized gain on available-for-sale securities, net of tax					974		974
Amortization of prior service cost for pension and postretirement benefits, net of tax					(92)		(92)
Amortization of unrealized losses on pension and postretirement benefits, net of tax					972		972
Unrealized foreign currency translation adjustment, net of tax					2,043		2,043
Balance at Mar. 31, 2012	$ 281,898	$ 623	$ 992,711	$ (1,206,285)	$ (34,131)	$ (127,302)	$ (92,486)

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents
Cash and cash equivalents (substantially restricted)	2,547,250	2,572,174
Receivables, net (substantially restricted)	1,210,506	1,220,065
Short-term investments (substantially restricted)	525,356	522,024
Available-for-sale investments (substantially restricted)	93,127	102,771
Property and equipment	116,883	116,341
Goodwill	428,691	428,691
Other assets	214,365	213,512
Total assets	5,136,178	5,175,578
LIABILITIES
Payment service obligations	4,152,604	4,205,375
Debt	810,623	810,888
Pension and other postretirement benefits	118,690	120,252
Accounts payable and other liabilities	146,747	149,261
Total liabilities	5,228,664	5,285,776
COMMITMENTS AND CONTINGENCIES (NOTE 12)
STOCKHOLDERS' DEFICIT
Common Stock, $0.01 par value, 162,500,000 shares authorized, 62,263,963 shares issued at March 31, 2012 and December 31, 2011	623	623
Additional paid-in capital	992,711	989,188
Retained loss	(1,206,285)	(1,216,543)
Accumulated other comprehensive loss	(34,131)	(38,028)
Treasury stock: 4,427,934 and 4,429,184 shares at March 31, 2012 and December 31, 2011, respectively	(127,302)	(127,336)
Total stockholders' deficit	(92,486)	(110,198)
Total liabilities and stockholders' deficit	5,136,178	5,175,578
Participating Convertible Preferred Stock-Series D [Member]
STOCKHOLDERS' DEFICIT
Participating Convertible Preferred Stock-Series D, $0.01 par value, 200,000 shares authorized, 109,239 issued at March 31, 2012 and December 31, 2011	$ 281,898	$ 281,898

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Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net unrealized gains on available-for-sale securities:
Tax expense of net holding gains	$ 532	$ 0
Pension and postretirement benefit plans:
Reclassification of prior service credit recorded to net income, net of tax expense	57	57
Reclassification of net actuarial loss recorded to net income, tax benefit	596	621
Unrealized foreign currency translation gains, tax expense	$ 1,252	$ 443

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 14 — Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011–04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, ("ASU 2011–04"). ASU 2011–04 amends Accounting Standards Codification ("ASC") 820, Fair Value Measurements, ("ASC 820"), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011–04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. The Company adopted ASU 2011–04 on January 1, 2012, which resulted in additional fair value measurement disclosures.

In June 2011, the FASB issued ASU No. 2011–05, Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income, ("ASU 2011–05") to amend financial statement presentation guidance for other comprehensive income ("OCI"). Under ASU 2011–05, the statement of income and OCI can be presented either as a continuous statement or in two separate consecutive statements. As such, the option to present the components of other comprehensive income as part of the statement of stockholders' equity is eliminated. The amendments in ASU 2011–05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011–05 was adopted on January 1, 2012 with no impact to the Company's Consolidated Financial Statements.

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Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2012

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

Note 16 — Condensed Consolidating Financial Statements

In the event the Company offers debt securities pursuant to an effective registration statement on Form S-3, such debt securities may be guaranteed by certain of its subsidiaries. Accordingly, the Company is providing condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. If the Company issues debt securities, the following 100 percent directly or indirectly owned subsidiaries could fully and unconditionally guarantee the debt securities on a joint and several basis: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; PropertyBridge, Inc.; and MoneyGram of New York LLC (collectively, the "Guarantors").

The following information represents condensed, consolidating Balance Sheets as of March 31, 2012 and December 31, 2011, along with condensed, consolidating Statements of Income (Loss), Statements of Comprehensive Income and Statements of Cash Flows for the three months ended March 31, 2012 and 2011. 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 INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING BALANCE SHEETS

AS OF MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	—	$	—	$	—		$	—
Cash and cash equivalents (substantially restricted)		546			2,456,657		90,047		—			2,547,250
Receivables, net (substantially restricted)		—			1,192,829		17,677		—			1,210,506
Short-term investments (substantially restricted)		—			500,000		25,356		—			525,356
Available-for-sale investments (substantially restricted)		—			93,127		—		—			93,127
Property and equipment		—			89,859		27,024		—			116,883
Goodwill		—			306,878		121,813		—			428,691
Other assets		5,169			190,066		18,885		—			214,120
Equity investments in subsidiaries		100,750			177,662		—		(278,412	)		—
Intercompany receivables		—			180,983		—		(180,738	)		245
Total assets	$	106,465		$	5,188,061	$	300,802	$	(459,150	)	$	5,136,178
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Payment service obligations	$	—		$	4,099,572	$	53,032	$	—		$	4,152,604
Debt		—			810,623		—		—			810,623
Pension and other postretirement benefits		—			116,908		1,782		—			118,690
Accounts payable and other liabilities		62,885			60,208		23,654		—			146,747
Intercompany liabilities		136,066			—		44,672		(180,738	)		—
Total liabilities		198,951			5,087,311		123,140		(180,738	)		5,228,664
Total stockholders' (deficit) equity		(92,486	)		100,750		177,662		(278,412	)		(92,486	)
Total liabilities and stockholders' (deficit) equity	$	106,465		$	5,188,061	$	300,802	$	(459,150	)	$	5,136,178

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	—	$	—	$	—		$	—
Cash and cash equivalents (substantially restricted)		524			2,462,106		109,544		—			2,572,174
Receivables, net (substantially restricted)		—			1,204,903		15,162		—			1,220,065
Short-term investments (substantially restricted)		—			500,000		22,024		—			522,024
Available-for-sale investments (substantially restricted)		—			102,771		—		—			102,771
Property and equipment		—			87,172		29,169		—			116,341
Goodwill		—			306,878		121,813		—			428,691
Other assets		4,820			190,295		18,397		—			213,512
Equity investments in subsidiaries		85,436			177,385		—		(262,821	)		—
Intercompany receivables		—			187,441		—		(187,441	)		—
Total assets	$	90,780		$	5,218,951	$	316,109	$	(450,262	)	$	5,175,578
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Payment service obligations	$	—		$	4,138,418	$	66,957	$	—		$	4,205,375
Debt		—			810,888		—		—			810,888
Pension and other postretirement benefits		—			118,580		1,672		—			120,252
Accounts payable and other liabilities		54,803			65,629		28,829		—			149,261
Intercompany liabilities		146,175			—		41,266		(187,441	)		—
Total liabilities		200,978			5,133,515		138,724		(187,441	)		5,285,776
Total stockholders' (deficit) equity		(110,198	)		85,436		177,385		(262,821	)		(110,198	)
Total liabilities and stockholders' (deficit) equity	$	90,780		$	5,218,951	$	316,109	$	(450,262	)	$	5,175,578

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
REVENUE
Fee and other revenue	$	—		$	340,367		$	69,312		$	(94,761	)	$	314,918
Investment revenue		—			2,943			234			—			3,177
Total revenue		—			343,310			69,546			(94,761	)		318,095
EXPENSES
Fee and other commissions expense		—			179,454			37,873			(75,412	)		141,915
Investment commissions expense		—			77			—			—			77
Total commissions expense		—			179,531			37,873			(75,412	)		141,992
Compensation and benefits		—			44,026			15,038			—			59,064
Transaction and operations support		1,766			64,022			11,775			(19,349	)		58,214
Occupancy, equipment and supplies		—			9,019			3,192			—			12,211
Depreciation and amortization		—			7,599			3,084			—			10,683
Total operating expenses		1,766			304,197			70,962			(94,761	)		282,164
OPERATING (LOSS) INCOME		(1,766	)		39,113			(1,416	)		—			35,931
Other expense
Interest expense		—			17,883			—			—			17,883
Total other expenses, net		—			17,883			—			—			17,883
(Loss) income before income taxes		(1,766	)		21,230			(1,416	)		—			18,048
Income tax (benefit) expense		(618	)		8,361			36			—			7,779
(Loss) income after income taxes		(1,148	)		12,869			(1,452	)		—			10,269
Equity income (loss) in subsidiaries		11,417			(1,452	)		—			(9,965	)		—
NET INCOME (LOSS)	$	10,269		$	11,417		$	(1,452	)	$	(9,965	)	$	10,269

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors		Eliminations			Consolidated
REVENUE
Fee and other revenue	$	—		$	284,678		$	63,273	$	(57,942	)	$	290,009
Investment revenue		—			3,935			80		—			4,015
Total revenue		—			288,613			63,353		(57,942	)		294,024
EXPENSES
Fee and other commissions expense		—			135,088			26,942		(32,970	)		129,060
Investment commissions expense		—			140			—		—			140
Total commissions expense		—			135,228			26,942		(32,970	)		129,200
Compensation and benefits		(31	)		44,142			15,184		—			59,295
Transaction and operations support		1,024			66,076			8,281		(24,972	)		50,409
Occupancy, equipment and supplies		—			8,811			2,942		—			11,753
Depreciation and amortization		—			9,037			2,629		—			11,666
Total operating expenses		993			263,294			55,978		(57,942	)		262,323
OPERATING (LOSS) INCOME		(993	)		25,319			7,375		—			31,701
Other expense
Interest expense		—			20,613			—		—			20,613
Total other expenses, net		—			20,613			—		—			20,613
(Loss) income before income taxes		(993	)		4,706			7,375		—			11,088
Income tax (benefit) expense		(347	)		(2,910	)		300		—			(2,957	)
(Loss) income after income taxes		(646	)		7,616			7,075		—			14,045
Equity income (loss) in subsidiaries		14,691			7,075			—		(21,766	)		—
NET INCOME (LOSS)	$	14,045		$	14,691		$	7,075	$	(21,766	)	$	14,045

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVEINCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET INCOME	$	10,269		$	11,417		$	(1,452	)	$	(9,965	)	$	10,269
OTHER COMPREHENSIVE INCOME
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $532		974			974			—			(974	)		974
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57		(92	)		(92	)		—			92			(92	)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $596		972			972			—			(972	)		972
Unrealized foreign currency translation gains, net of tax expense of $1,252		2,043			2,043			1,062			(3,105	)		2,043
Other comprehensive income		3,897			3,897			1,062			(4,959	)		3,897
COMPREHENSIVE INCOME	$	14,166		$	15,314		$	(390	)	$	(14,924	)	$	14,166

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVEINCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors		Eliminations			Consolidated
NET INCOME	$	14,045		$	14,691		$	7,075	$	(21,766	)	$	14,045
OTHER COMPREHENSIVE INCOME
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $0		1,944			1,944			—		(1,944	)		1,944
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57		(92	)		(92	)		—		92			(92	)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $621		1,012			1,012			—		(1,012	)		1,012
Unrealized foreign currency translation gains, net of tax expense of $443		723			1,049			369		(1,418	)		723
Other comprehensive income		3,587			3,913			369		(4,282	)		3,587
COMPREHENSIVE INCOME	$	17,632		$	18,604		$	7,444	$	(26,048	)	$	17,632

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	10,087		$	(5,234	)	$	4,783		$	—		$	9,636
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments (substantially restricted)		—			10,820			—			—			10,820
Purchases of short-term investments (substantially restricted)		—			(200,000	)		(11,756	)		—			(211,756	)
Proceeds from maturities of short-term investments (substantially restricted)		—			200,000			10,113			—			210,113
Purchases of property and equipment, net of disposals		—			(14,825	)		(3,807	)		—			(18,632	)
Proceeds from disposal of assets and businesses		—			172			—			—			172
Capital contribution from subsidiary guarantors		—			(667	)		—			667			—
Net cash (used in) provided by investing activities		—			(4,500	)		(5,450	)		667			(9,283	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt		—			(375	)		—			—			(375	)
Proceeds from exercise of stock options		22			—			—			—			22
Intercompany financings		(10,109	)		10,109			—			—			—
Capital contribution to non-guarantors		—			—			667			(667	)		—
Net cash (used in) provided by financing activities		(10,087	)		9,734			667			(667	)		(353	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—			—			—			—
CASH AND CASH EQUIVALENTS - Beginning of period		—			—			—			—			—
CASH AND CASH EQUIVALENTS - End of period	$	—		$	—		$	—		$	—		$	—

MONEYGRAM INTERNATIONAL, INC.

CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Amounts in thousands)	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(2,983	)	$	(16,079	)	$	15,331		$	—		$	(3,731	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments (substantially restricted)		—			17,462			—			—			17,462
Purchases of short-term investments (substantially restricted)		—			(194,142	)		(11,299	)		—			(205,441	)
Proceeds from maturities of short-term investments (substantially restricted)		—			200,500			—			—			200,500
Purchases of property and equipment, net of disposals		—			(4,259	)		(4,714	)		—			(8,973	)
Capital contribution from subsidiary guarantors		—			(682	)		—			682			—
Net cash provided by (used in) investing activities		—			18,879			(16,013	)		682			3,548
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		183			—			—			—			183
Intercompany financings		2,800			(2,800	)		—			—			—
Capital contribution to non-guarantors		—			—			682			(682	)		—
Net cash provided by (used in) financing activities		2,983			(2,800	)		682			(682	)		183
NET CHANGE IN CASH AND CASH EQUIVALENTS		—			—			—			—			—
CASH AND CASH EQUIVALENTS - Beginning of period		—			—			—			—			—
CASH AND CASH EQUIVALENTS - End of period	$	—		$	—		$	—		$	—		$	—

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 10,269	$ 14,045
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	10,683	11,666
Asset impairments and net losses upon disposal	247	(282)
Amortization of debt discount and deferred financing costs	1,397	1,591
Provision for uncollectible receivables	1,463	1,349
Non-cash compensation and pension expense	5,331	6,922
Other non-cash items, net	(1,483)	455
Changes in foreign currency translation adjustments	2,043	723
Signing bonus amortization	8,343	7,948
Signing bonus payments	(4,934)	(6,778)
Change in other assets	458	4,239
Change in accounts payable and other liabilities	(4,430)	(20,095)
Total adjustments	19,118	7,738
Change in cash and cash equivalents (substantially restricted)	24,924	89,932
Change in receivables, net (substantially restricted)	8,096	24,025
Change in payment service obligations	(52,771)	(139,471)
Net cash provided by (used in) operating activities	9,636	(3,731)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investments classified as available-for-sale (substantially restricted)	10,820	17,462
Purchases of short-term investments (substantially restricted)	(211,756)	(205,441)
Proceeds from maturities of short-term investments (substantially restricted)	210,113	200,500
Purchases of property and equipment	(18,632)	(8,973)
Proceeds from disposal of assets and businesses	172
Net cash (used in) provided by investing activities	(9,283)	3,548
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt	(375)
Proceeds from exercise of stock options	22	183
Net cash (used in) provided by financing activities	(353)	183
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - Beginning of period
CASH AND CASH EQUIVALENTS - End of period

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Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2012	Dec. 31, 2011
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	162,500,000	162,500,000
Common stock, shares issued	62,263,963	62,263,963
Treasury stock, shares	4,427,934	4,429,184
Participating Convertible Preferred Stock-Series D [Member]
Participating convertible preferred stock, par value	$ 0.01	$ 0.01
Participating convertible preferred stock, shares authorized	200,000	200,000
Participating convertible preferred stock, shares issued	109,239	109,239

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Stockholders' Deficit

3 Months Ended

Mar. 31, 2012

Stockholders' Deficit [Abstract]

Stockholders' Deficit

Note 9 — Stockholders' Deficit

Reverse Stock Split — On November 14, 2011, the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company's common stock at a reverse stock split ratio of 1-for-8. All share and per share amounts have been retroactively adjusted to reflect the stock split with the exception of the Company's treasury stock, which was not a part of the reverse stock split.

Following is a summary of the activity of the Company's stock authorized, issued and outstanding:

	D Stock						Common Stock						Treasury Stock
(Amounts in thousands)	Authorized		Issued		Outstanding		Authorized		Issued		Outstanding
December 31, 2011		200		109		109		162,500		62,264		57,835		(4,429	)
Stock option exercise		—		—		—		—		—		1		1
March 31, 2012		200		109		109		162,500		62,264		57,836		(4,428	)
	D Stock						Common Stock						Treasury Stock
(Amounts in thousands)	Authorized		Issued		Outstanding		Authorized		Issued		Outstanding
December 31, 2010		—		—		—		162,500		15,389		10,453		(4,936	)
Stock option exercise		—		—		—		—		—		90		90
March 31, 2011		—		—		—		162,500		15,389		10,543		(4,846	)

Common Stock — The holders of MoneyGram common stock are entitled to one vote per share on all matters to be voted upon by its stockholders. The holders of common stock have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The determination to pay dividends on common stock will be at the discretion of the Board of Directors and will depend on applicable laws and the Company's financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directors may deem relevant. No dividends were paid during the three months ended March 31, 2012. The Company's ability to declare or pay dividends or distributions to the holders of the Company's common stock is restricted under the Company's 2011 Credit Agreement and the indenture governing the Company's second lien notes.

Accumulated Other Comprehensive Loss — The components of "Accumulated other comprehensive loss" at March 31, 2012 and December 31, 2011 include:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Net unrealized gains on securities classified as available-for-sale, net of tax	$	22,453		$	21,479
Cumulative foreign currency translation adjustments, net of tax		3,064			1,021
Prior service credit for pension and postretirement benefits, net of tax		1,942			2,034
Unrealized losses on pension and postretirement benefits, net of tax		(61,590	)		(62,562	)
Accumulated other comprehensive loss	$	(34,131	)	$	(38,028	)

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Document And Entity Information	3 Months Ended
	Mar. 31, 2012	Apr. 27, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Entity Registrant Name	MONEYGRAM INTERNATIONAL INC
Entity Central Index Key	0001273931
Entity Filer Category	Accelerated Filer
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		57,836,029

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 10 — Stock-Based Compensation

The MoneyGram International, Inc. 2005 Omnibus Incentive Plan ("2005 Plan") provides for the granting of equity-based compensation awards, including stock options, stock appreciation rights, restricted stock units and restricted stock awards (collectively, "share-based awards") to officers, employees and directors. The Company is authorized to issue a total of 5,875,000 of share-based awards. As of March 31, 2012, the Company has remaining authorization to issue future grants of up to 1,374,738 shares.

The calculated fair value of share-based awards is recognized as compensation cost using the straight-line method over the vesting or service period in the Company's financial statements. Stock-based compensation is recognized only for those options, restricted stock units and stock appreciation rights expected to vest, with forfeitures estimated at the date of grant and evaluated and adjusted periodically to reflect the Company's historical experience and future expectations. Any change in the forfeiture assumption will be accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported being reflected in the financial statements of the period in which the change is made.

Following is a summary of stock-based compensation expense for the three months ended March 31:

(Amounts in thousands)	Three Months Ended March  31,
	2012		2011
Expense recognized related to stock options	$	3,182	$	4,451
Expense recognized related to restricted stock units		341		148
Expense related to stock appreciation rights		9		—
Stock-based compensation expense	$	3,532	$	4,599

Stock Options —Option awards are generally granted with an exercise price equal to the closing market price of the Company's common stock on the date of grant. All outstanding stock options contain certain forfeiture and non-compete provisions.

Pursuant to the terms of grants made in 2012, options awarded become exercisable through the passage of time over a four-year period in an equal number of shares each year, and have a term of 10 years.

For purposes of determining the fair value of stock options awarded in 2012, the Company uses the Black-Scholes single option pricing model. The following table provides weighted-average grant-date fair value and assumptions utilized to estimate the grant-date fair value of the options granted during the three months ended March 31, 2012:

Expected dividend yield (1)	0.0%
Expected volatility (2)	71.37% - 71.79%
Risk-free interest rate (3)	1.23% - 1.53%
Expected life (4)	6.25 years
Weighted-average grant-date fair value per option	$11.59 - $11.88

⁽¹⁾  Expected dividend yield represents the level of dividends expected to be paid on the Company's common stock over the expected term of the option. The Company does not anticipate declaring any dividends at this time.

⁽²⁾  Expected volatility is the amount by which the Company's stock price has fluctuated or will fluctuate during the expected term of the option. The Company's expected volatility is calculated based on the historical volatility of the price of the Company's common stock since the spin-off from Viad Corporation on June 30, 2004. The Company also considers any known or anticipated factors that will likely impact future volatility.

⁽³⁾  The risk-free interest rate for the Black-Scholes model is based on the United States Treasury yield curve in effect at the time of grant for periods within the expected term of the option, while the risk-free rate for the Monte-Carlo simulation is based on the five-year United States Treasury yield in effect at the time of grant.

⁽⁴⁾  Expected life represents the period of time that options are expected to be outstanding. The expected life was determined using the simplified method as the pattern of changes in the value of the Company's common stock and exercise activity since late 2007 has been inconsistent and substantially different from historical patterns. Additionally, there have been minimal stock option exercises, which would be representative of the Company's normal exercise activity since 2007. Accordingly, the Company does not believe that historical terms are relevant to the assessment of the expected life of the grant. Based on these factors, the Company does not believe that it has the ability to make a more refined estimate than the use of the simplified method.

A summary of the Company's stock option activity for the three months ended March 31, 2012 is as follows:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Options outstanding at December 31, 2011		5,365,085		$	23.45
Granted		42,218			18.18
Exercised		(1,250	)		17.36
Forfeited/Expired		(50,726	)		145.63
Options outstanding at March 31, 2012		5,355,327		$	22.26		7.78 years	$	4,397
Vested or expected to vest at March 31, 2012		5,196,467		$	22.28		7.75 years	$	4,353
Options exercisable at March 31, 2012		1,261,699		$	26.63		6.82 years	$	2,390

The following represents stock option compensation information as of March 31, 2012:

(Amounts in thousands)	Three Months Ended March 31,
	2012		2011
Intrinsic value of options exercised	$	1,025	$	80,410
Cash received from option exercises	$	22	$	183
Unrecognized stock option expense	$	21,220
Remaining weighted-average vesting period		1.5 years

Restricted Stock Units — In the first quarter of 2012, the Company issued performance-based restricted stock units to certain employees, which will vest and become payable in shares of common stock to the extent the Company attains the performance goals applicable to the performance period. The performance goal is based on the degree to which the Company's average annual adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization and less certain non-recurring or other unexpected expenses, meets, exceeds or falls short of the target performance goal of achieving an average annual adjusted EBITDA increase of 10 percent over a three year period. Under the terms of the grant, 50 percent of the target restricted stock units may vest on the second anniversary and 50 percent may vest on the third anniversary if the performance goal is achieved as of such dates. The number of restricted stock units that vest is determined on a pro rata basis by the extent to which the performance goal is met within a threshold minimum and maximum. In the event the target performance goal is not met, but the Company achieves a minimum performance goal of an average annual adjusted EBITDA growth of five percent, the participant will be entitled to vest in 50 percent of the target number of restricted stock units. In the event the Company achieves its maximum performance goal of an average annual adjusted EBITDA growth of 20 percent, the participant will be entitled to 200 percent of the target number of restricted stock units.

The fair value of restricted stock units is calculated based on the stock price at the time of grant. For performance-based restricted stock units, expense is recognized if achievement of the performance goal is deemed probable, with the amount of expense recognized based on the Company's best estimate of the ultimate achievement level. For the 2012 performance based restricted stock unit grants, the grant date fair value at the minimum, target and maximum thresholds is $0.4 million, $0.9 million and $1.7 million, respectively. As of March 31, 2012, the Company believes it is probable it will achieve the performance goal at the target level on the third anniversary. For grants to employees, expense is recognized in the "Compensation and benefits" line and expense for grants to Directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Income using the straight-line method over the vesting period.

A summary of the Company's restricted stock unit activity for the three months ended March 31, 2012 is as follows:

	Total Shares			Weighted Average Price
Restricted stock units outstanding at December 31, 2011		337,676		$	17.77
Granted		48,922			18.20
Forfeited		(1,120	)		18.00
Restricted stock units outstanding at March 31, 2012		385,478		$	17.82

As of March 31, 2012, the Company's outstanding restricted stock units had unrecognized compensation expense of $2.4 million and a remaining weighted-average vesting period of 2.5 years. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented under the Company's current estimate of achievement of the target performance goal on the third anniversary. Unrecognized restricted stock unit expense as of March 31, 2012 under the minimum and maximum thresholds is $1.2 million and $4.6 million, respectively.

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Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
REVENUE
Fee and other revenue	$ 314,918	$ 290,009
Investment revenue	3,177	4,015
Total revenue	318,095	294,024
EXPENSES
Fee and other commissions expense	141,915	129,060
Investment commissions expense	77	140
Total commissions expense	141,992	129,200
Compensation and benefits	59,064	59,295
Transaction and operations support	58,214	50,409
Occupancy, equipment and supplies	12,211	11,753
Depreciation and amortization	10,683	11,666
Total operating expenses	282,164	262,323
OPERATING INCOME	35,931	31,701
Other expense
Interest expense	17,883	20,613
Total other expenses, net	17,883	20,613
Income before income taxes	18,048	11,088
Income tax expense (benefit)	7,779	(2,957)
NET INCOME	10,269	14,045
INCOME (LOSS) PER COMMON SHARE
Basic	$ 0.14	$ (2.08)
Diluted	$ 0.14	$ (2.08)
Net income (loss) available to common stockholders:
Net income as reported	10,269	14,045
Accrued preferred stock dividends		(33,209)
Accretion recognized on preferred stock		(2,559)
Net income (loss) available to common stockholders	$ 10,269	$ (21,723)
Weighted-average outstanding common shares and equivalents used in computing earnings per share
Basic	71,490	10,455
Diluted	71,651	10,455

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Investment Portfolio

3 Months Ended

Mar. 31, 2012

Investment Portfolio [Abstract]

Investment Portfolio

Note 4 — Investment Portfolio

Components of the Company's investment portfolio are as follows:

(Amounts in thousands)	March 31, 2012		December 31, 2011
Cash	$	2,069,309	$	2,016,451
Money markets		477,887		555,659
Deposits		54		64
Cash and cash equivalents (substantially restricted)		2,547,250		2,572,174
Short-term investments (substantially restricted)		525,356		522,024
Available-for-sale investments (substantially restricted)		93,127		102,771
Total investment portfolio	$	3,165,733	$	3,196,969

Cash and Cash Equivalents (substantially restricted) — Cash and cash equivalents consist of cash, money-market securities and deposits. Cash primarily consists of interest-bearing deposit accounts and non-interest bearing transaction accounts. The Company's money-market securities are invested in six funds, all of which are AAA rated and consist of United States Treasury bills, notes or other obligations issued or guaranteed by the United States government and its agencies, as well as repurchase agreements secured by such instruments. Deposits consist of time deposits with original maturities of three months or less, and are issued from financial institutions that are rated BBB or better as of the date of this filing.

Short-term Investments (substantially restricted) — Short-term investments consist of time deposits and certificates of deposit with original maturities of greater than three months but no more than thirteen months, and are issued from financial institutions rated A+ as of the date of this filing.

Available-for-sale Investments (substantially restricted) — Available-for-sale investments consist of mortgage-backed securities, asset-backed securities and agency debenture securities. After other-than-temporary impairment charges, the amortized cost and fair value of available-for-sale investments are as follows at March 31, 2012:

	March 31, 2012
(Amounts in thousands, except net average price)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Net Average Price
Residential mortgage-backed securities-agencies	$	54,330	$	4,544	$	—	$	58,874	$	109.13
Other asset-backed securities		8,565		16,832		—		25,397		5.78
United States government agencies		7,840		1,016		—		8,856		98.40
Total	$	70,735	$	22,392	$	—	$	93,127	$	18.53

After other-than-temporary impairment charges, the amortized cost and fair value of available-for-sale investments were as follows at December 31, 2011:

	December 31, 2011
(Amounts in thousands, except net average price)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Net Average Price
Residential mortgage-backed securities - agencies	$	65,211	$	4,501	$	—	$	69,712	$	107.63
Other asset-backed securities		8,951		15,281		—		24,232		5.49
United States government agencies		7,723		1,104		—		8,827		98.08
Total	$	81,885	$	20,886	$	—	$	102,771	$	21.83

At March 31, 2012 and December 31, 2011, approximately 73 percent and 76 percent, respectively, of the available-for-sale portfolio were invested in debentures of United States government agencies or securities collateralized by United States government agency debentures. These securities have the implicit backing of the United States government, and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments. The "Other asset-backed securities" continue to have market exposure, as factored into the fair value estimates, with the average price of an asset-backed security at $0.06 per dollar of par at March 31, 2012.

Gains and Losses and Other-Than-Temporary Impairments — At March 31, 2012 and December 31, 2011, net unrealized gains of $22.5 million and $21.5 million, respectively, are included in the Consolidated Balance Sheets in "Accumulated other comprehensive loss." During the three months ended March 31, 2012 and 2011, no net gains or losses were reclassified from "Accumulated other comprehensive loss" to "Net securities gains" in connection with other-than-temporary impairments and realized gains and losses recognized during the period.

Investment Ratings — In rating the securities in its investment portfolio, the Company uses ratings from Moody's Investor Service ("Moody's"), Standard & Poors ("S&P") and Fitch Ratings ("Fitch"). If the rating agencies have split ratings, the Company uses the highest rating across the rating agencies for disclosure purposes. Securities issued or backed by United States government agencies are included in the AAA rating category. Investment grade is defined as a security having a Moody's equivalent rating of Aaa, Aa, A or Baa or an S&P or Fitch equivalent rating of AAA, AA, A or BBB. The Company's investments at March 31, 2012 and December 31, 2011 consisted of the following ratings:

	March 31, 2012							December 31, 2011
(Dollars in thousands)	Number of Securities		Fair Value		Percent of Investments			Number of Securities		Fair Value		Percent of Investments
AAA, including United States agencies		23	$	67,467		72	%		24	$	78,267		76	%
Below investment grade		59		25,660		28	%		60		24,504		24	%
Total		82	$	93,127		100	%		84	$	102,771		100	%

Had the Company used the lowest rating from the rating agencies in the information presented above, there would be a less than $0.1 million change to investments rated A or better at March 31, 2012 and December 31, 2011.

Contractual Maturities — The amortized cost and fair value of available-for-sale securities at March 31, 2012 and December 31, 2011, by contractual maturity, are shown below. 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 mortgage-backed and other asset-backed securities depend on the repayment characteristics and experience of the underlying obligations.

	March 31, 2012				December 31, 2011
(Amounts in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	1,001	$	1,034	$	—	$	—
After one year through five years		6,839		7,822		7,723		8,827
Mortgage-backed and other asset-backed securities		62,895		84,271		74,162		93,944
Total	$	70,735	$	93,127	$	81,885	$	102,771

Fair Value Determination — The Company uses various sources of pricing for its fair value estimates of its available-for-sale portfolio. The percentage of the portfolio for which the various pricing sources were used is as follows at March 31, 2012 and December 31, 2011: 65 percent and 69 percent, respectively, used a third party pricing service; 15 percent and 13 percent, respectively, used broker pricing; and 20 percent and 18 percent, respectively, used internal pricing.

Assessment of Unrealized Losses — As of March 31, 2012, the Company had a nominal amount of unrealized losses in its available-for-sale portfolio, with one residential mortgage-backed agency security in an unrealized loss position aged 12 months or more, after the recognition of other-than-temporary impairment charges. At December 31, 2011, the Company had no unrealized losses in its available-for-sale portfolio.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2012

Fair Value Measurement [Abstract]

Fair Value Measurement

Note 3 — Fair Value Measurement

The following tables set forth the Company's financial assets and liabilities measured at fair value by hierarchy level:

	Balance at March 31,		Fair Value at March 31, 2012
(Amounts in thousands)	2012		Level 1		Level 2		Level 3		Total
Financial assets:
Available-for-sale investments (substantially restricted):
United States government agencies	$	8,856	$	—	$	8,856	$	—	$	8,856
Residential mortgage-backed securities - agencies		58,874		—		58,874		—		58,874
Other asset-backed securities		25,397		—		—		25,397		25,397
Investment related to deferred compensation trust		8,497		8,497		—		—		8,497
Total financial assets	$	101,624	$	8,497	$	67,730	$	25,397	$	101,624
Financial liabilities:
Forward contracts	$	739	$	—	$	739	$	—	$	739

	Balance at December 31,		Fair Value at December 31, 2011
(Amounts in thousands)	2011		Level 1		Level 2		Level 3		Total
Financial assets:
Available-for-sale investments (substantially restricted):
United States government agencies	$	8,827	$	—	$	8,827	$	—	$	8,827
Residential mortgage-backed securities - agencies		69,712		—		69,712		—		69,712
Other asset-backed securities		24,232		—		—		24,232		24,232
Investment related to deferred compensation trust		8,118		8,118		—		—		8,118
Forward contracts		399		—		399		—		399
Total financial assets	$	111,288	$	8,118	$	78,938	$	24,232	$	111,288
Financial liabilities:
Forward contracts	$	46	$	—	$	46	$	—	$	46

For other asset–backed securities, investments in limited partnerships and trading investments, market quotes are generally not available. If available, the Company will utilize a fair value measurement from a pricing service. The pricing service utilizes a pricing model based on market observable data and indices, such as quotes for comparable securities, yield curves, default indices, interest rates and historical prepayment speeds. If a fair value measurement is not available from the pricing service, the Company will utilize a broker quote if available. Due to a general lack of transparency in the process that the brokers use to develop prices, most valuations that are based on brokers' quotes are classified as Level 3. If no broker quote is available, or if such quote cannot be corroborated by market data or internal valuations, the Company will perform internal valuations utilizing externally developed cash flow models. These pricing models are based on market observable spreads and, when available, observable market indices. The pricing models also use inputs such as the rate of future prepayments and expected default rates on the principal,which are derived by the Company based on the characteristics of the underlying structure and historical prepayment speeds experienced at the interest rate levels projected for the underlying collateral. The pricing models for certain asset–backed securities also include significant non–observable inputs such as internally assessed credit ratings for non–rated securities, combined with externally provided credit spreads. Observability of market inputs to the valuation models used for pricing certain of the Company's investments deteriorated with the disruption to the credit markets as overall liquidity and trading activity in these sectors has been substantially reduced. Accordingly, securities valued using a pricing model have consistently been classified as Level 3 financial instruments. The table below provides a roll-forward of the 'Other asset-backed securities', the only financial assets classified in Level 3, which are measured at fair value on a recurring basis, for the three months ended March 31, 2012 and 2011:

	Three Months Ended March  31,
(Amounts in thousands)	2012			2011
Beginning balance	$	24,232		$	23,710
Realized gains		—			—
Realized losses		—			—
Principal paydowns		(64	)		(410	)
Other-than-temporary impairments		—			—
Unrealized gains - instruments still held at the reporting date		2,050			4,093
Unrealized losses - instruments still held at the reporting date		(821	)		(1,053	)
Ending balance	$	25,397		$	26,340

When applicable, realized gains and losses and other-than-temporary impairments related to available-for-sale investment securities are reported in the "Net securities (gains) losses" line in the Consolidated Statements of Income. Unrealized gains and losses related to available-for-sale securities are recorded in accumulated other comprehensive loss in stockholders' deficit.

Assets and liabilities that are disclosed at fair value — Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of debt is estimated using market quotations, where available, credit ratings, observable market indices and other market data (Level 2). As of March 31, 2012, the fair value of the senior secured facility is $484.4 million compared to the carrying value of $486.0 million. As of March 31, 2012, the fair value of the Company's second lien notes is estimated at $337.2 million compared to a carrying value of $325.0 million. As of December 31, 2011, the fair value of the senior secured facility is $479.8 million compared to the carrying value of $489.6 million. As of December 31, 2011 the fair value of the Company's second lien notes is estimated at $335.6 million compared to a carrying value of $325.0 million.

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Segment Information

3 Months Ended

Mar. 31, 2012

Segment Information [Abstract]

Segment Information

Note 15 — Segment Information

The Company conducts its business through two reportable segments, Global Funds Transfer and Financial Paper Products. Businesses that are not operated within these segments are categorized as "Other," and primarily relate to discontinued products and businesses. One of the Company's agents of both the Global Funds Transfer segment and the Financial Paper Products segment accounted for 29.1 percent and 30.0 percent of total revenue for the three months ended March 31, 2012 and 2011, respectively. The following tables set forth revenue, operating results, depreciation and amortization, capital expenditures and assets by segment:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Revenue:
Global Funds Transfer:
Money transfer	$	268,491	$	239,704
Bill payment		27,644		30,077
Total Global Funds Transfer		296,135		269,781
Financial Paper Products:
Money order		14,890		15,730
Official check		6,778		8,166
Total Financial Paper Products		21,668		23,896
Other		292		347
Total revenue	$	318,095	$	294,024

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Segment operating income:
Global Funds Transfer	$	33,282		$	26,447
Financial Paper Products		8,990			8,380
Other		(569	)		(263	)
Total segment operating income		41,703			34,564
Other unallocated expenses		5,772			2,863
Total operating income		35,931			31,701
Interest expense		17,883			20,613
Income before income taxes	$	18,048		$	11,088

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Depreciation and amortization:
Global Funds Transfer	$	9,749	$	10,113
Financial Paper Products		914		1,544
Other		20		9
Total depreciation and amortization	$	10,683	$	11,666
Capital expenditures:
Global Funds Transfer	$	9,537	$	6,891
Financial Paper Products		2,033		874
Total capital expenditures	$	11,570	$	7,765

Geographic areas — International operations are located principally in Europe. International revenues are defined as revenues generated from money transfer transactions originating in a country other than the United States. Long-lived assets are principally located in the United States. The table below presents revenue by major geographic area for the three months ended March 31:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
United States	$	200,532	$	187,898
International		117,563		106,126
Total revenue	$	318,095	$	294,024

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Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

Income Taxes

Note 11 — Income Taxes

For the three months ended March 31, 2012, the Company had $7.8 million of income tax expense on pre-tax income of $18.0 million. For the three months ended March 31, 2011, the Company had $3.0 million of income tax benefit on pre-tax income of $11.1 million, primarily reflecting a discrete benefit of $3.5 million for the reversal of a portion of the valuation allowance on domestic deferred tax assets. Changes in facts and circumstances may cause the Company to record additional tax expense or benefits in the future. The Company paid $0.1 million of federal and state income taxes for each of the three months ended March 31, 2012 and 2011.

For the three months ended March 31, 2012, interest and penalties for unrecognized tax benefits were less than $0.1 million compared to $0.1 million for the three months ended March 31, 2011. The Company records interest and penalties for unrecognized tax benefits in "Income tax expense (benefit)" in the Consolidated Statements of Income. As of March 31, 2012 and December 31, 2011, the Company had a liability of $1.6 million for interest and penalties within "Accounts payable and other liabilities" in the Consolidated Balance Sheets.

During the second quarter of 2010, the IRS completed its examination of the Company's consolidated income tax returns for 2005 to 2007 and issued its Revenue Agent Report ("RAR") challenging the Company's tax position relating to net securities losses and disallowing the related deductions. The Company disagreed with the RAR regarding the net securities losses and filed a protest letter. The Company had conferences with the IRS Appeals Office in 2010 and through October 2011, but was unable to reach agreement with the IRS Appeals Division. A Notice of Deficiency related to these items was received in April 2012. The Company is also currently under examination for its 2008 and 2009 tax returns, which had similar deductions, and received an RAR for 2008 and 2009 in April 2012. The Company anticipates receiving a Notice of Deficiency within the next 12 months. The Company intends to petition the United States Tax Court contesting the adjustments in the Notice of Deficiency. Approximately $955.0 million of cumulative deductions were taken for net securities losses in its 2007, 2008 and 2009 tax returns. As of March 31, 2012, the Company has recognized a cumulative benefit of approximately $136.1 million relating to these deductions. The Company continues to believe that the amounts recorded in its consolidated financial statements reflect its best estimate of the ultimate outcome of this matter.

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Debt

3 Months Ended

Mar. 31, 2012

Debt [Abstract]

Debt

Note 7 — Debt

Following is a summary of the Company's outstanding debt:

	2011 Credit Agreement
(Amounts in thousands)	Senior secured credit facility due 2017			Senior secured incremental term loan due 2017			Second Lien Notes due 2018			Total Debt
Balance at December 31, 2011	$	339,232		$	146,656		$	325,000		$	810,888
Payments		—			(375	)		—			(375	)
Accretion of discount		33			77			—			110
Balance at March 31, 2012	$	339,265		$	146,358		$	325,000		$	810,623
Weighted average interest rate		4.44	%		4.44	%		13.25	%

2008 Senior Facility — In connection with the Company's recapitalization transaction in May 2011 (the "2011 Recapitalization"), the 2008 senior facility was terminated. Prior to the termination, the Company was able to elect an interest rate for the 2008 senior facility at each reset period based on the JP Morgan prime bank rate or the Eurodollar rate. During the three months ended March 31, 2011, the Company elected the United States prime bank rate as its interest basis, and had a weighted average interest rate of 5.75 percent for the Senior Tranche A Loan and 7.25% for the Senior Tranche B Loan. The Company recognized $0.1 million of discount accretion through the "Interest expense" line in the Consolidated Statements of Income during the three months ending March 31, 2011.

2011 Credit Agreement —The Company may elect an interest rate under the agreement governing the Company's senior secured credit facility (the "2011 Credit Agreement") at each reset period based on the Bank of America alternate base rate or the Eurodollar rate. The interest rate election may be made individually for the term loan, incremental term loan and each draw under the revolving credit facility. The interest rate is either the BOA prime rate plus 225 basis points or the Eurodollar rate plus 300 basis points. Since inception of the 2011 Credit Agreement, the Company elected the Eurodollar rate as its primary interest basis, with a minimal amount of the term debt at the Bank of America alternate base rate. Under the terms of the 2011 Credit Agreement, the interest rate determined using the Eurodollar rate has a minimum rate of 1.25 percent.

Fees on the daily unused availability under the revolving credit facility are 62.5 basis points. Substantially all of the Company's non-financial assets are pledged as collateral for the loans under the 2011 Credit Agreement, with the collateral guaranteed by the Company's material domestic subsidiaries. The non-financial assets of the material domestic subsidiaries are pledged as collateral for these guarantees. As of March 31, 2012, the Company has $137.3 million of availability under the revolving credit facility, net of $12.7 million of outstanding letters of credit that reduce the amount available. At March 31, 2012 there were no amounts outstanding under the revolving credit facility.

Following is the debt discount amortization recorded in "Interest expense" in the Consolidated Statements of Income for the three months ended March 31:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Total amortization of discount	$	110	$	144

Second Lien Notes — Prior to the fifth anniversary of the issuance of the notes, the Company may redeem some or all of the second lien notes at a price equal to 100 percent of the principal, plus any accrued and unpaid interest plus a premium equal to the greater of one percent or an amount calculated by discounting the sum of (a) the redemption payment that would be due upon the fifth anniversary plus (b) all required interest payments due through such fifth anniversary using the treasury rate plus 50 basis points. Starting with the fifth anniversary of the issuance of the notes, the Company may redeem some or all of the second lien notes at prices expressed as a percentage of the outstanding principal amount of the second lien notes plus accrued and unpaid interest, starting at approximately 107 percent on the fifth anniversary, decreasing to 100 percent on or after the eighth anniversary. Upon a change of control, as defined by the Note Purchase Agreement, the Company is required to make an offer to repurchase the second lien notes at a price equal to 101 percent of the principal amount plus accrued and unpaid interest. The Company is also required to make an offer to repurchase the second lien notes with proceeds of certain asset sales that have not been reinvested in accordance with the terms of the second lien notes or have not been used to repay certain debt.

Inter-creditor Agreement — In connection with the above financing arrangements, both the lenders under the 2011 Credit Agreement and the trustee on behalf of the holders of the second lien notes entered into an inter-creditor agreement under which the lenders and trustee have agreed to waive certain rights and limit the exercise of certain remedies available to them for a limited period of time, both before and following a default under the financing arrangements.

Debt Covenants and Other Restrictions — Borrowings under the Company's debt agreements are subject to various covenants that limit the Company's ability to: incur additional indebtedness; create or incur additional liens; effect mergers and consolidations; make certain acquisitions; sell assets or subsidiary stock; pay dividends and other restricted payments; invest in certain assets; and effect loans, advances and certain other transactions with affiliates. In addition, the 2011 Credit Agreement has a covenant that places limitations on the use of proceeds from borrowings under the facility.

The indenture governing the second lien notes contains a financial covenant requiring the Company to maintain a minimum liquidity ratio of at least 1:1 for certain assets to outstanding payment service obligations. The 2011 Credit Agreement also has quarterly financial covenants to maintain the following interest coverage and total leverage ratios:

	Interest Coverage Minimum Ratio		Total Leverage Not To Exceed
Present through September 30, 2012		2.00:1		4.75:1
December 31, 2012 through September 30, 2013		2.15:1		4.625:1
December 31, 2013 through September 30, 2014		2.15:1		4.375:1
December 31, 2014 through September 30, 2015		2.25:1		4.00:1
December 31, 2015 through September 30, 2016		2.25:1		3.75:1
December 31, 2016 through maturity		2.25:1		3.50:1

At March 31, 2012, the Company was in compliance with its financial covenants.

Deferred Financing Costs —The Company capitalized financing costs in "Other assets" in the Consolidated Balance Sheets and amortized them over the term of the related debt using the effective interest method. Amortization is recorded in "Interest expense" in the Consolidated Statements of Income. Following is a summary of the deferred financing costs at March 31:

	2011 Credit Agreement
(Amounts in thousands)	Senior secured credit facility			Senior secured incremental term			Senior revolving credit facility			Second Lien Notes			Total Deferred Financing Costs
Balance at December 31, 2011	$	6,882		$	3,092		$	3,523		$	16,649		$	30,146
Amortization of deferred financing costs		(293	)		(201	)		(201	)		(649	)		(1,344	)
Write-off of deferred financing costs		—			(7	)		—			—			(7	)
Balance at March 31, 2012	$	6,589		$	2,884		$	3,322		$	16,000		$	28,795

Interest Paid in Cash — The Company paid $16.5 million and $18.7 million of interest for the three months ended March 31, 2012 and 2011, respectively.

Maturities — At March 31, 2012, debt totaling $481.0 million will mature in 2017 and $325.0 million will mature in 2018, while debt principal totaling $8.3 million will be paid in increments of $0.4 million quarterly through 2017.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

Note 5 — Derivative Financial Instruments

The Company uses forward contracts to manage its foreign currency needs and exchange risk arising from its assets and liabilities denominated in foreign currencies. While these contracts economically hedge foreign currency risk, they are not designated as hedges for accounting purposes. The "Transaction and operations support" line in the Consolidated Statements of Income includes the following (gains) losses related to assets and liabilities denominated in foreign currencies:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net realized foreign currency gains	$	(4,486	)	$	(6,590	)
Net losses from the related forward contracts		3,965			8,086
Net (gains) losses from foreign currency transactions and related forward contracts	$	(521	)	$	1,496

As of March 31, 2012 and December 31, 2011, the Company had $66.2 million and $65.5 million, respectively, of outstanding notional amounts relating to its forward contracts. At March 31, 2012 and December 31, 2011, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets:

			Derivative Assets				Derivative Liabilities
(Amounts in thousands)	Balance  Sheet Location		March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Forward contracts		Other assets	$	—	$	399	$	739	$	46

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Property And Equipment

3 Months Ended

Mar. 31, 2012

Property And Equipment [Abstract]

Property And Equipment

Note 6 — Property and Equipment

Property and equipment consists of the following at March 31, 2012 and December 31, 2011:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Computer hardware and software	$	205,251		$	196,168
Signage		81,280			80,303
Agent equipment		69,278			69,643
Office furniture and equipment		35,274			36,733
Leasehold improvements		23,721			27,562
Land		410			410
		415,214			410,819
Accumulated depreciation		(298,331	)		(294,478	)
Total property and equipment	$	116,883		$	116,341

Depreciation expense for the three months ended March 31, 2012 and 2011 is as follows:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Computer hardware and software	$	5,062	$	5,410
Signage		2,770		2,271
Agent equipment		1,079		1,803
Office furniture and equipment		901		972
Leasehold improvements		709		873
Total depreciation expense	$	10,521	$	11,329

At March 31, 2012 and December 31, 2011, there was $2.7 million and $9.9 million, respectively, of property and equipment that had been received by the Company and included in "Accounts payable and other liabilities" in the Consolidated Balance Sheets.

During the three months ended March 31, 2012, the Company recognized a disposal loss of $0.4 million on furniture and equipment related to the closing of an office location. The loss is recorded in the "Occupancy, equipment and supplies" line in the Consolidated Statements of Income.

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Pensions And Other Benefits

3 Months Ended

Mar. 31, 2012

Pensions And Other Benefits [Abstract]

Pensions And Other Benefits

Note 8 — Pensions and Other Benefits

Net periodic benefit expense for the Company's defined benefit pension plan and combined supplemental executive retirement plans ("SERPs") includes the following components:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Interest cost	$	2,639		$	2,841
Expected return on plan assets		(1,969	)		(2,056	)
Amortization of prior service cost (credit)		7			7
Recognized net actuarial loss		1,470			1,572
Net periodic benefit expense	$	2,147		$	2,364

Benefits paid through the defined benefit pension plan were $2.4 million and $2.2 million for the three months ended March 31, 2012 and 2011, respectively. The Company made contributions to the defined benefit pension plan of $1.4 million and $0.9 million during the three months ended March 31, 2012 and 2011, respectively. Benefits paid through, and contributions made to, the combined SERPs were $0.8 million and $1.1 million for the three months ended March 31, 2012 and 2011, respectively.

Following is a summary of the net actuarial loss and prior service costs for the defined benefit pension plan and combined SERPs that the Company amortized from "Accumulated other comprehensive loss" into "Net periodic benefit expense":

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net actuarial loss	$	1,470		$	1,572
Tax benefit on net actuarial loss		(558	)		(598	)
Prior service costs		7			7
Tax benefit on prior service costs		(3	)		(3	)
Net amortization from accumulated other comprehensive income	$	916		$	978

Net periodic benefit expense for the Company's postretirement benefit plans includes the following components:

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Interest cost	$	24		$	13
Amortization of prior service cost (credit)		(156	)		(156	)
Recognized net actuarial loss		98			61
Net periodic benefit expense	$	(34	)	$	(82	)

Benefits paid through, and contributions made to, the postretirement benefit plans were less than $0.1 million for both the three months ended March 31, 2012 and 2011.

Following is a summary of the net actuarial loss and prior service credit for the postretirement benefit plans that the Company amortized from "Accumulated other comprehensive loss" into "Net periodic benefit expense":

	Three Months Ended March 31,
(Amounts in thousands)	2012			2011
Net actuarial loss	$	98		$	61
Tax benefit on net actuarial loss		(37	)		(23	)
Prior service costs (credits)		(156	)		(156	)
Tax expense (benefit) on prior service costs		59			60
Net amortization from accumulated other comprehensive income	$	(36	)	$	(58	)

Contribution expense for the 401(k) defined contribution plan was $0.8 million for both the three months ended March 31, 2012 and 2011.

International Benefit Plans — The Company's international subsidiaries have certain defined contribution benefit plans. Contributions expense related to international plans were $0.4 million and $0.3 million for the three months ended March 31, 2012 and 2011, respectively.

Deferred Compensation Plans — In the first quarter of 2011, the MoneyGram International, Inc. Deferred Compensation Plan, a non-qualified, frozen, deferred compensation plan for a select group of management and highly compensated employees, was amended to terminate all employee deferral accounts on the amendment date and pay each participant the balance of their account in a lump sum no earlier than one year from termination and no later than December 31, 2012. In the three months ended March 31, 2012, the Company made $0.5 million in payments and no further payments are due under the amendments made in the first quarter of 2011.

The deferred compensation plans are unfunded and unsecured and the Company is not required to physically segregate any assets in connection with the deferred accounts. The Company has rabbi trusts associated with each deferred compensation plan which are funded through voluntary contributions by the Company. At March 31, 2012 and December 31, 2011, the Company had a liability related to the deferred compensation plans of $2.6 million and $3.4 million respectively, recorded in the "Accounts payable and other liabilities" line in the Consolidated Balance Sheets. The rabbi trusts had a market value of $8.5 million and $8.1 million at March 31, 2012 and December 31, 2011, respectively, recorded in "Other assets" in the Consolidated Balance Sheets.

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2012

Earnings Per Common Share [Abstract]

Earnings Per Common Share

Note 13 — Earnings per Common Share

For discrete periods from January 1, 2008 through June 30, 2011, the Company utilized the two-class method for computing basic earnings per common share, which reflects the amount of undistributed earnings allocated to the common stockholders using the participation percentage of each class of stock. Undistributed earnings was determined as the Company's net income less dividends declared, accumulated, deemed or paid on preferred stock. The undistributed earnings allocated to the common stockholders are divided by the weighted-average number of common shares outstanding during the period to compute basic earnings per common share.

For all periods in which it is outstanding, the Company's Series D Participating Convertible Preferred Stock ("D Stock") is included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share as the D Stock is deemed a common stock equivalent. Diluted earnings 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 and the outstanding shares of the Company's Series B Participating Convertible Preferred Stock (collectively, the "Series B Stock") were exercised or converted into common stock. Diluted earnings per common share assumes the exercise of stock options using the treasury stock method and the conversion of the Series B Stock using the if-converted method.

Effective for discrete periods beginning after June 30, 2011, the Company no longer applies the two-class method of calculating basic earnings per share as the Series B Stock is no longer outstanding and the D Stock is deemed a common stock equivalent. Following is a reconciliation of the weighted-average share amounts used in calculating earnings per share:

(Amounts in thousands)	Three Months Ended March 31,
	2012		2011
Basic common shares outstanding		71,490		10,455
Shares related to stock options		143		—
Shares related to restricted stock and stock units		18		—
Diluted common shares outstanding		71,651		10,455

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. The Series B Stock is anti-dilutive when the incremental earnings per share of Series B Stock on an if-converted basis is greater than the basic earnings per common share. Following are the weighted-average potential common shares excluded from diluted earnings per common share as their effect would be anti-dilutive:

	Three Months Ended March 31,
(Amounts in thousands)	2012		2011
Shares related to stock options		4,846		5,135
Shares related to restricted stock and stock units		323		—
Shares related to preferred stock		—		55,629
Shares excluded from the computation		5,169		60,764

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Consolidated Statements Of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Consolidated Statements Of Comprehensive Income [Abstract]
NET INCOME	$ 10,269	$ 14,045
Net unrealized gains on available-for-sale securities:
Net holding gains arising during the period, net of tax expense of $532 and $0	974	1,944
Pension and postretirement benefit plans:
Reclassification of prior service credit for pension and postretirement benefit plans recorded to net income, net of tax expense of $57 and $57	(92)	(92)
Reclassification of net actuarial loss for pension and postretirement benefit plans recorded to net income, net of tax benefit of $596 and $621	972	1,012
Unrealized foreign currency translation gains, net of tax expense of $1,252 and $443	2,043	723
Other comprehensive income	3,897	3,587
COMPREHENSIVE INCOME	$ 14,166	$ 17,632

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Assets In Excess Of Payment Service Obligations

3 Months Ended

Mar. 31, 2012

Assets In Excess Of Payment Service Obligations [Abstract]

Assets In Excess Of Payment Service Obligations

Note 2 — Assets in Excess of Payment Service Obligations

The following table shows the amount of assets in excess of payment service obligations at March 31, 2012 and December 31, 2011:

(Amounts in thousands)	March 31, 2012			December 31, 2011
Cash and cash equivalents (substantially restricted)	$	2,547,250		$	2,572,174
Receivables, net (substantially restricted)		1,210,506			1,220,065
Short-term investments (substantially restricted)		525,356			522,024
Available-for-sale investments (substantially restricted)		93,127			102,771
		4,376,239			4,417,034
Payment service obligations		(4,152,604	)		(4,205,375	)
Assets in excess of payment service obligations	$	223,635		$	211,659

The Company was in compliance with its contractual and financial regulatory requirements as of March 31, 2012 and December 31, 2011.

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 12 — Commitments and Contingencies

Operating Leases — The Company has various non-cancelable operating leases for buildings and equipment with terms through 2021. Certain of these leases contain rent holidays and rent escalation clauses based on pre-determined annual rate increases. The Company recognizes rent expense under the straight-line method over the term of the lease. Any difference between the straight-line rent amounts and amounts payable under the leases are recorded as deferred rent in "Accounts payable and other liabilities" in the Consolidated Balance Sheets. Cash or lease incentives received under certain leases are recorded as deferred rent when the incentive is received and amortized as a reduction to rent over the term of the lease using the straight-line method. Incentives received relating to tenant improvements are recognized as a reduction of rent expense under the straight-line method over the term of the lease. Tenant improvements are capitalized as leasehold improvements and depreciated over the shorter of the remaining term of the lease or 10 years. At March 31, 2012, the deferred rent liability relating to incentives was $2.4 million.

Rent expense under operating leases was $3.8 million and $4.1 million for the three months ended March 31, 2012 and 2011, respectively. Minimum future rental payments for all non-cancelable operating leases with an initial term of more than one year are (amounts in thousands):

Year 1	$	13,122
Year 2		12,251
Year 3		11,419
Year 4		7,376
Year 5		3,065
Thereafter		10,254
Total	$	57,487

Credit Facilities — At March 31, 2012, the Company has overdraft facilities through its senior facility consisting of $12.7 million of letters of credit to assist in the management of investments and the clearing of payment service obligations. All of these letters of credit were outstanding as of March 31, 2012. These overdraft facilities reduce amounts available under the senior facility. Fees on the letters of credit are paid in accordance with the terms of the senior facility described in Note 7 — Debt.

Minimum Commission Guarantees — In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commission guarantees for a specified period of time at a contractually specified amount. Under the guarantees, the Company will pay to the agent the difference between the contractually specified minimum commission and the actual commissions earned by the agent. Expense related to the guarantee is recognized in the "Fee commissions expense" line in the Consolidated Statements of Income.

As of March 31, 2012, the liability for minimum commission guarantees is $1.9 million and the maximum amount that could be paid under the minimum commission guarantees is $7.1 million over a weighted average remaining term of 3.7 years. The maximum payment is calculated as the contractually guaranteed minimum commission times the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. However, under the terms of certain agent contracts, the Company may terminate the contract if the projected or actual volume of transactions falls beneath a contractually specified amount. With respect to minimum commission guarantees expiring in the three months ended March 31, 2012, the Company paid less than $0.1 million, or 6 percent, of the estimated maximum payment for the year.

Other Commitments — The Company has agreements with certain co-investors to provide funds related to investments in limited partnership interests. As of March 31, 2012, the total amount of unfunded commitments related to these agreements was $0.3 million. The amortization expense was recognized as part of "Transaction and operations support" expense in the Consolidated Statements of Income.

Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable with certainty. 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 litigations alleged. In relation to various legal matters, including those described below, the Company had $3.6 million and $3.0 million of liability recorded in the "Accounts payable and other liabilities" line in the Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011, respectively. A charge of $1.6 million and $0.8 million, net of insurance recoveries, was recorded in the "Transaction and operations support" line in the Consolidated Statements of Income during the three months ended March 31, 2012 and 2011, respectively.

Litigation Commenced Against the Company:

Shareholder Litigation — On April 15, 2011 a complaint was filed in the Court of Chancery of the State of Delaware by Willie R. Pittman purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company's directors. Ms. Pittman alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty and disclosure claims against the Company's directors, THL and Goldman Sachs, (ii) breach of the Company's certificate of incorporation claims against the Company, THL and Goldman Sachs, and (iii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Pittman purported to sue on her own behalf and on behalf of the Company and its stockholders. Pittman sought to, among other things, enjoin or rescind the 2011 Recapitalization. On April 29, 2011 the plaintiff filed an amended complaint to add two additional plaintiffs, Susan Seales and Stephen Selzer. On May 16, 2011 a hearing to enjoin or rescind the 2011 Recapitalization was held in the Court of Chancery of the State of Delaware, and at the hearing, the plaintiffs' request for a preliminary injunction was denied. The 2011 Recapitalization was completed on May 18, 2011. Since that time, Ms. Pittman has withdrawn as a putative class representative; Ms. Seales and Mr. Selzer remain as plaintiffs. The plaintiffs seek to recover damages of some or all of the cash and stock payments made to THL and Goldman Sachs by the Company in connection with the recapitalization transaction. This litigation is ongoing and is scheduled for trial in the second quarter of 2012.

On May 12, 2011 a complaint was filed in the County Court at Law No. 3 in Dallas County, Texas by Hilary Kramer purporting to be a class action complaint on behalf of all shareholders and a shareholder derivative complaint against the Company, THL, Goldman Sachs and each of the Company's directors. Ms. Kramer alleged in her complaint that she is a stockholder of the Company and asserted, among other things, (i) breach of fiduciary duty claims against the Company's directors, THL and Goldman Sachs and (ii) claims for aiding and abetting breach of fiduciary duties against Goldman Sachs. Ms. Kramer purported to sue on her own behalf and on behalf of the Company and its stockholders. Ms. Kramer sought to, among other things, enjoin the 2011 Recapitalization. The defendants have moved for the Texas court to stay this litigation in favor of the Pittman litigation in Delaware, which has an overlapping class definition.

Other Matters — The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company's business. Management does not believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results of operations and cash flows.

Government Investigations:

MoneyGram has been served with subpoenas to produce documents and testify before a grand jury in the U.S. District Court for the Middle District of Pennsylvania. The subpoenas sought information related to, inter alia, MoneyGram's U.S. and Canadian agents, as well as certain transactions involving such agents, fraud complaint data, and MoneyGram's consumer anti-fraud program during the period from 2004 to 2009. MoneyGram has provided information requested pursuant to the subpoenas and continues to provide additional information relating to the investigation. In addition, the Company has been provided with subpoenas for the testimony of certain current and former employees in connection with the investigation. The Company has also been notified of a request for interviews of one current executive officer and one former chief executive officer of the Company. The U.S. Department of the Treasury Financial Crimes Enforcement Network ("FinCEN") also requested information, which information was subsequently provided by MoneyGram, concerning MoneyGram's reporting of fraudulent transactions during this period. In November 2010, MoneyGram met with representatives from the U.S. Attorney's Office for the Middle District of Pennsylvania (the "MDPA USAO") and representatives of FinCEN to discuss the investigation. In July 2011, MoneyGram had further discussions with the MDPA USAO and representatives of the Asset Forfeiture and Money Laundering Section of the U.S. Department of Justice ("US DOJ"). MoneyGram has been informed that it is being investigated by the federal grand jury in connection with these matters for the period 2004 to early 2009 as well as MoneyGram's anti-money laundering program during that period. In January 2012, meetings were held between representatives of the Company, the MDPA USAO and the Criminal Division of the US DOJ to discuss the investigation. MoneyGram continues to engage in discussions and cooperate with such government representatives regarding the ongoing investigation. During the course of these discussions, the Company was advised that consideration is being given to a range of possible outcomes, including the seeking of criminal penalties against the Company. However, no conclusions can be drawn at this time as to the outcome of the investigation, and we are unable to predict the probable loss, or range of loss, if any, associated with this matter. On March 19, 2012, the Company entered into a tolling agreement with the U.S. Attorney's Office for the Middle District of Pennsylvania and the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice that tolled the statute of limitations applicable to any criminal proceedings that the government might later initiate to include the period from March 23, 2012 through and including December 31, 2012.

MoneyGram has also received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether the Company has taken adequate steps to prevent consumer fraud during the period from 2007 to 2011. The Civil Investigative Demands seek information and documents relating to the Company's procedures to prevent fraudulent transfers and consumer complaint information. MoneyGram continues to cooperate fully with the states in this matter. MoneyGram has submitted the information and documents requested by the states. No claims have been made against MoneyGram at this time.

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

Action Commenced by the Company:

In March 2012, MoneyGram International initiated an arbitration proceeding before the Financial Industry Regulatory Authority ("FINRA") against Goldman Sachs & Co. ("Goldman"). The arbitration relates to MoneyGram's purchase of Residential Mortgage Backed Securities ("RMBS") and Collateral Debt Obligations ("CDO") that Goldman sold to MoneyGram during the 2005 through 2007 timeframe. The Company alleges, among other things, that Goldman made material misrepresentations and omissions in connection with the sale of these products, ultimately causing significant losses to the Company for which the Company is currently seeking damages. Goldman owns, together with certain of its affiliates, approximately 19 percent of the shares of the Company's common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman and its affiliates.