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UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
| Form 10-K | |
| | | | | |
(Mark One) |
☑ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Fiscal Year Ended December 31, 2022. |
☐ | 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) |
Registrant's telephone number, including area code
(214) 999-7552
Securities Registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $0.01 par value | MGI | The NASDAQ Stock Market LLC |
| | |
Securities registered pursuant to Section 12(g) of the Act: None
___________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ
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 þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | þ | | Accelerated filer | | ¨ |
Non-accelerated filer | | ¨ | | Smaller reporting company | | ☐ |
| | | | Emerging growth company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | | ¨
|
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter, was $924.1 million.
96,626,432 shares of common stock were outstanding as of February 22, 2023.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Part III of this report is incorporated by reference to an amendment to the registrant's Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the Securities and Exchange Commission.
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TABLE OF CONTENTS |
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PART 1. | | |
Item 1. | | |
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Item 1A. | | |
Item 1B. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
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PART II. | | |
Item 5. | | |
Item 6. | | |
Item 7. | | |
Item 7A. | | |
Item 8. | | |
Item 9. | | |
Item 9A. | | |
Item 9B. | | |
Item 9C. | | |
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PART III. | | |
Item 10. | | |
Item 11. | | |
Item 12. | | |
Item 13. | | |
Item 14. | | |
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PART IV. | | |
Item 15. | | |
Item 16. | | |
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GLOSSARY OF TERMS
This glossary highlights some of the terms used in the Annual Report on Form 10-K ("2022 Form 10-K") and is not a complete list of all the defined terms used herein.
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Abbreviation | | Term | | |
| | | | |
API | | Application Programming Interface | | |
ATM Program | | At-the-market equity offering program | | |
BEAT | | Base erosion and anti-abuse tax | | |
CFPB | | Consumer Financial Protection Bureau was created by the Dodd-Frank Act to issue and enforce consumer protection initiatives governing financial products and services, including money transfer services, in the U.S. | | |
CID | | Civil Investigative Demand | | |
Consent Order | | Stipulated Order for Compensatory Relief and Modified Order for Permanent Injunction | | |
Corridor | | With regard to a money transfer transaction, the originating "send" location and the designated "receive" location are referred to as a corridor | | |
| | | | |
COVID-19 | | Coronavirus disease | | |
Digital Channel | | Transactions in which either the send transaction, receive transaction or both occur through one of the Company's digital properties such as moneygram.com, the native mobile application or virtual agents | | |
Dodd-Frank Act | | Dodd-Frank Wall Street Reform and Consumer Protection Act | | |
DPA | | Deferred Prosecution Agreement dated November 9, 2012 by and between MoneyGram International, Inc and the United States Department of Justice and the United States Attorney's Office for the Middle District of Pennsylvania, as amended. | | |
Face Value | | Principal amount of each completed transaction, excluding any transaction fees | | |
FCPA | | Foreign Corrupt Practices Act | | |
Fitch | | Fitch Ratings, Inc. | | |
FPP | | Financial Paper Products | | |
FTC | | Federal Trade Commission | | |
GFT | | Global Funds Transfer | | |
IRS | | Internal Revenue Service | | |
LIBOR | | London Interbank Offered Rate | | |
Merger | | Merger Sub will merge with and into the Company | | |
Merger Agreement | | On February 14, 2022, the Company, entered into an Agreement and Plan of Merger | | |
Merger Sub | | Mobius Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent | | |
MDP | | Madison Dearborn Partners, LLC, a Delaware limited liability company | | |
MGO | | MoneyGram Online | | |
Moody's | | Moody's Investor Service | | |
MPSI | | MoneyGram Payment Systems, Inc. | | |
Non-U.S. dollar | | The impact of non-U.S. dollar exchange rate fluctuations on the Company's financial results is typically calculated as the difference between current period activity translated using the current period's exchange rates and the comparable prior-year period's exchange rates; this method is used to calculate the impact of changes in non-U.S. dollar exchange rates on revenues, commissions and other operating expenses for all countries where the functional currency is not the U.S. dollar. | | |
NYAG | | New York State Office of the Attorney General | | |
NYDFS | | New York Department of Financial Services | | |
| | | | |
OFAC | | U.S. Treasury Department's Office of Foreign Assets Control | | |
Parent | | Mobius Parent Corp. | | |
Pension | | The Company’s Pension Plan and SERPs | | |
Pension Plan | | Defined benefit pension plan | | |
Postretirement Benefits | | Defined benefit postretirement plan | | |
| | | | | | | | | | |
P2P | | Peer-to-peer | | |
Receiver | | Person receiving a money transfer transaction | | |
Retail Channel | | Transactions in which both the send transaction and receive transaction occur at one of the Company's physical agent locations | | |
Ripple Warrants | | Warrants issued by the Company in connection with the SPA with Ripple | | |
ROU | | Right-of-use | | |
SERPs | | Supplemental executive retirement plans | | |
S&P | | Standard & Poor's | | |
SEC | | U.S. Securities and Exchange Commission | | |
SPA | | Securities Purchase Agreement | | |
USDC | | USD Coin | | |
U.S. DOJ | | U.S. Department of Justice, Criminal Division, Money Laundering and Asset Recovery Section | | |
U.S. GAAP | | Accounting principles generally accepted in the United States of America | | |
U.S. Judge | | United States Judge for the Middle District of Pennsylvania | | |
TCJA | | Tax Cuts and Jobs Act | | |
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This 2022 Form 10-K and certain documents incorporated by reference herein may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), including statements with respect to, among other things, the financial condition, results of operations, plans, objectives, future performance and business of MoneyGram and its subsidiaries. Statements preceded by, followed by or that include words such as “believes,” “estimates,” “expects,” “projects,” “plans,” “anticipates,” “intends,” “continues,” “will,” “should,” “could,” “may,” “might,” “would,” “goals,” “predicts,” “potential,” “target,” “forecast,” “outlook,” “currently,” and other similar expressions are intended to identify some of the forward-looking statements within the meaning of the Reform Act and are included, along with this statement, for purposes of complying with the safe harbor provisions of the Reform Act. These forward-looking statements are based on management's current expectations, beliefs and assumptions as of the date of this report, are not historical facts or guarantees of future performance and are subject to certain risks, uncertainties and changes in circumstances that are difficult to predict and many of which are outside of our control due to a number of factors. These factors include, but are not limited to:
•the impact of the COVID-19 pandemic or future pandemics on our business, including the potential for work stoppages, lockdowns, shelter-in-place or restricted movement guidelines, service delays and lower consumer and commercial activity;
•our ability to compete effectively;
•our ability to maintain key agent or biller relationships, or a reduction in business or transaction volume from these relationships, including with our largest agent, Walmart, through its introduction of additional competing white-label money transfer products or otherwise;
•our ability to continue to grow our Digital Channel, including through our direct-to-consumer digital business, MoneyGram Online;
•a security or privacy breach in systems, networks or databases on which we rely;
•current and proposed regulations addressing consumer privacy and data use and security;
•our ability to manage fraud risks from consumers or agents;
•the ability of us and our agents to comply with U.S. and international laws and regulations;
•litigation and regulatory proceedings involving us or our agents and other commercial relationships, which could result in material settlements, fines or penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;
•disruptions to our computer systems and data centers and our ability to effectively operate and adapt our technology;
•the ability of us and our agents to maintain adequate banking relationships;
•our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services or infrastructure changes;
•our high degree of leverage and substantial debt service obligations, significant debt covenant requirements and our ability to comply with such requirements;
•our below investment-grade credit rating;
•our ability to maintain sufficient capital;
•weakness in economic conditions, including recession and inflation, in both the U.S. and global markets;
•the financial health of certain European countries or the secession of a country from the European Union;
•a significant change, material slow down or complete disruption of international migration patterns;
•our ability to manage risks associated with our international sales and operations, including exchange rates among currencies;
•our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, that may be subject to certain OFAC restrictions;
•major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;
•changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;
•our ability to manage credit risks from our agents and official check financial institution customers;
•our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others;
•our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses;
•any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business;
•our capital structure;
•unpredictability and severity of catastrophic events, including acts of terrorism, outbreak of war or hostilities, civil unrest, adverse climate or weather events and pandemics or other public health emergencies, as well as our response to any of the aforementioned factors;
•risks relating to the proposed Merger, including the possibility that the consummation of the Merger could be delayed or not completed and the effect of announcement or pendency of the Merger on our business; and
•the risks and uncertainties described in the Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our 2022 Form 10-K, as well as any additional risk factors that may be described in our other filings with the SEC from time to time.
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 statements for any reason, whether as a result of new information, future events or otherwise, except as required by federal securities law.
PART I.
Item 1. BUSINESS
Overview
MoneyGram International, Inc. (together with our subsidiaries, "MoneyGram," the "Company," "we," "us" and "our") is a global leader in cross-border P2P payments and money transfers. Our consumer-centric capabilities enable the quick and affordable transfer of money to family and friends around the world. Whether through online and mobile platforms, integration with mobile wallets, kiosks, or any one of the hundreds of thousands of agent locations in over 200 countries and territories with over 100 now digitally-enabled as of December 31, 2022, the innovative MoneyGram platform leverages its leading distribution network, global financial settlement engine, cloud-based infrastructure with integrated APIs and its unparalleled compliance program to enable seamless and secure transfers around the world. Whether through our mobile application, moneygram.com, integration with account deposit and mobile wallets, kiosks, or any one of the more than 440,000 agent locations around the globe, we connect consumers, primarily those who may not be fully served by other financial institutions, in any way that is convenient for them. As an alternative financial services company, we provide individuals with essential services to help them meet the financial demands of their daily lives. Our growing direct-to-consumer digital business, our Retail Channel centered around our global distribution network, our emerging embedded finance business for enterprise customers, enable the Company to serve the entire remittance market. Given strong mobile P2P market growth rates, our direct-to-consumer digital business is a growth engine for the Company as our digital capabilities enable us to serve new customer segments who utilize our platform to transfer money around the world.
Our money transfer services are our primary revenue driver, but MoneyGram has additional offerings which include bill payment services, money order services and official check processing. We have one primary customer care center in Warsaw, Poland, with regional support centers providing ancillary services and additional call center services in various countries. MoneyGram provides call center services 24 hours per day, 365 days per year and provides customer service in dozens of languages.
The MoneyGram® brand has name recognition throughout the world. We use various trademarks and service marks in our business, including, but not limited, to MoneyGram, the red Globe design logo, MoneyGram FastSend, ExpressPayment and AgentWorks, some of which are registered in the U.S. and other countries. This document also contains trademarks and service marks of other businesses that are the property of their respective holders and are used herein solely for identification purposes. We have omitted the ® and TM designations, as applicable, for the trademarks we reference in this 2022 Form 10-K.
We conduct our business primarily through our wholly-owned subsidiary, MoneyGram Payment Systems, Inc. ("MPSI"), under the MoneyGram brand. The Company was incorporated in Delaware on December 18, 2003. Through the Company's predecessors, we have been in operation since 1940.
Our Segments
We manage our business primarily through two reporting segments: Global Funds Transfer ("GFT") and Financial Paper Products ("FPP"). The following table presents the components of our consolidated revenue associated with our reporting segments for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 | | 2020 |
GFT | | | | | | |
Money transfer | | 91 | % | | 93 | % | | 91 | % |
Bill payment | | 3 | % | | 3 | % | | 4 | % |
FPP | | | | | | |
Money order | | 3 | % | | 3 | % | | 3 | % |
Official check | | 3 | % | | 1 | % | | 2 | % |
Total revenue | | 100 | % | | 100 | % | | 100 | % |
During 2022, 2021 and 2020, our 10 largest agents accounted for 24%, 26% and 30%, respectively, of total revenue and 24%, 26% and 31%, respectively, of GFT segment revenue. In 2021 and 2020, Walmart Inc. ("Walmart") is our only agent that accounts for more than 10% of our total revenue. In 2022, 2021 and 2020 Walmart accounted for less than 10%, 11% and 13% of total revenue, respectively. In 2022, 2021 and 2020 Walmart accounted for less than 10%, 10% and 13% of GFT segment revenue, respectively.
GFT Segment
The GFT segment is our primary revenue driver, providing global money transfer services and bill payment services principally as an alternative to banking services in more than 200 countries and territories around the world. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices, banks and other financial institutions. We also offer digital solutions such as moneygram.com, mobile app solutions, account deposit and kiosk-based services. Additionally, we have limited Company-operated retail locations.
We entered into a partnership with The Stellar Development Foundation ("SDF"), a non-profit organization that supports the development and growth of Stellar, an open-source public blockchain that allows money to be tokenized and transferred anywhere in the world. MoneyGram's network, integrated with the Stellar blockchain and facilitated through Circle's USD Coin (USDC), enable cash funding and payout in local currency for consumers using USDC.
We continue to focus on the growth of our GFT segment for outbound transactions originating in the U.S. and those originating outside of the U.S. Sends originated outside of the U.S. generated 58% in 2022, 58% in 2021 and 55% in 2020 of our total revenue and 62% in 2022, 60% in 2021 and 59% in 2020 of our total GFT segment revenue. In 2022, our GFT segment had total revenue of $1.2 billion.
Money Transfer — We earn our money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads on money transfer transactions involving different "send" and "receive" currencies. We have Corridor pricing capabilities that provide us flexibility when establishing consumer fees and non-U.S. dollar exchange rates for our money transfer services, which allow us to remain competitive in all locations. In a cash-to-cash money transfer transaction, both the agent initiating and receiving the transaction earn a commission that is generally based on a percentage of the fee charged to the consumer, or in certain cases a fixed commission. When a money transfer transaction is initiated at a MoneyGram-owned store or via our online platform, typically only the agent receiving the transaction earns a commission.
In certain countries, we have multi-currency technology that allows consumers to choose a currency when initiating or receiving a money transfer. The currency choice typically consists of local currency, U.S. dollars and/or euros. These capabilities allow consumers to know the amount that will be received in the selected currency.
Retail Channel
As of December 31, 2022, our money transfer agent network had more than 440,000 locations. Our network includes agents such as international post offices, banks and broader financial services, as well as large and small retailers. Additionally, we have a limited number of Company-owned and operated retail locations in Western Europe. Some of our agents outside the U.S. manage sub-agents that offer MoneyGram branded services. We refer to these agents as super-agents. Although the sub-agents are under contract with these super-agents, the sub-agent locations typically have access to similar technology and services as our other agent locations. Many of our agents have multiple locations, a large number of which operate in locations
that are open outside of traditional banking hours, including nights and weekends. Our agents know the markets they serve, and they work with our sales and marketing teams to develop business plans for their markets. This may include contributing financial resources to, or otherwise supporting, our efforts to market MoneyGram's services.
Typically, retail send transactions are funded in cash. In retail receive transactions, the funds are available for the designated recipient to collect usually within 10 minutes at any MoneyGram agent location.
As of December 31, 2022, in over 90 countries, the designated recipient may also receive the transferred funds via a deposit to the recipient's bank account or mobile wallet account.
Digital Channel
We offer money transfer services through our Digital Channel which includes MGO (our direct-to-consumer business), digital partners, direct transfers to bank accounts, mobile wallets and debit card solutions such as Visa Direct. MGO is available in 38 countries and territories as of December 31, 2022. Through our Digital Channel, consumers can send money from the convenience of their own homes to any of our agent locations worldwide, a recipient's bank account or a recipient's mobile wallet. MGO consumers can fund their transactions from their bank accounts, debit cards, or credit cards. MGO, the Company’s single largest generator of money transfer transactions, maintains three of its individual country sites on the Company’s top 10 list of money transfer generating sources. Since 2021, MGO’s U.S. site became the Company's largest source of money transfer revenue in the world, surpassing Walmart. Cross-border money transfer transactions through MGO grew 16% in 2022 compared to the prior year.
We also offer money transfer services via digital partners, which enable our partners’ customers to send international money transfers online or through a mobile device to any MoneyGram pay-out location or directly to a recipient’s bank account or mobile wallet through the MoneyGram platform.
Transfers directly to bank accounts and mobile wallets are the third main component of our Digital Channel. Through the MoneyGram platform, customers had direct access to over 5.0 billion accounts in over 90 countries as of December 31, 2022. Total digital transactions represented 43% of money transfer transactions for the year ended December 31, 2022.
Bill Payment Services — Bill payment revenues are generated primarily from fees charged to consumers for each transaction completed. Our primary bill payment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent locations in the U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through our digital solutions.
Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards with cash at an agent location or through moneygram.com. We offer consumers same-day and two- or three-day payment service options; the service option is dependent upon our agreement with the biller. We offer payment options to over 12,000 billers in key industries, including the ability to allow the consumer to load or reload funds to over 500 prepaid debit card programs. These industries include the credit card, mortgage, auto finance, telecommunications, corrections, health care, utilities, property management, prepaid card and collections industries.
Marketing — The global marketing organization employs an omnichannel approach that tailors our brand message to each specific market, culture and consumer preferences. The organization is increasingly focusing on search related digital marketing tactics to reach consumers on their computers and mobile devices. Our marketing strategy also includes our MoneyGram Plus Rewards loyalty program that gives consumers the benefit of earning discounts on future transactions and special promotions available only to loyalty members.
Sales — Our sales teams are organized by geographic area, product and delivery channel. We have dedicated teams focused on developing our agent and biller networks to enhance the reach of our money transfer and bill payment products. Our agent requirements vary depending upon the type of outlet, location and compliance and regulatory requirements. Our sales teams and strategic partnership teams continue to improve our agent relationships and overall network strength with a goal of providing the optimal agent and consumer experience.
Competition — The market for money transfer and bill payment services is very competitive on a regional and global basis. We generally compete on customer experience, price, the ability to conduct both digital and cash transactions, the convenience of multiple payout options across a broad global network in over 200 countries & territories, commission payments, customer loyalty program initiatives and marketing efforts.
Our competitors include a small number of large money transfer and bill payment providers, financial institutions, banks and a large number of small niche money transfer service providers that serve select regions. Our largest competitor in the cross-border money transfer industry is The Western Union Company ("Western Union"), which also competes with our bill payment services and money order businesses. Additionally, Walmart has a white-label money transfer service, operated by a competitor of MoneyGram, that allows consumers to transfer money between Walmart U.S. store locations. In 2018, Walmart launched Walmart2World, powered by MoneyGram, a new white-label money transfer service that allows customers to send money from
Walmart in the U.S. to any MoneyGram location in the world. On November 4, 2019, Walmart announced that the white-label money transfer service would now be joined by other brands in becoming part of a marketplace of money transfer services at Walmart stores across the U.S. On January 19, 2021, Walmart informed us that they had entered into a new agreement that would enable Western Union money transfer, bill payment and money order services at U.S. Walmart locations.
We expect to encounter increasing competition as digitally-focused new entrants seek to grow revenue through customer acquisition initiatives focused on specific Corridors, but we believe we will continue to differentiate against the competition by competing on a global scale, addressing the entire remittance market by offering digital and cash capabilities and delivering a superior customer experience in addition to continuing to be a fintech innovator and a leader in protecting consumers through our unparalleled compliance engine and variety of product offerings.
Seasonality — A larger share of our annual money transfer revenues traditionally occurs in the second and fourth quarters as a result of major global holidays falling during these periods, in addition to seasonal travel patterns throughout the world.
FPP Segment
Our FPP segment provides money orders to consumers through our agents and financial institutions located throughout the U.S. and Puerto Rico and provides official check outsourcing services for banks and credit unions across the U.S.
In 2022, our FPP segment generated revenues of $84.2 million from fee and other revenue and investment revenue. We earn revenue from the investment of funds underlying outstanding official checks and money orders. We refer to our cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and available-for-sale investments collectively as our "investment portfolio." Our investment portfolio consists of low risk, highly liquid bank deposits that earn a market rate of return for similar investments.
Money Orders — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds underlying outstanding money orders, which generally remain outstanding for less than 11 days. We sell money orders under the MoneyGram brand and on a private label or co-branded basis with certain agents and financial institutions in the U.S. As of December 31, 2022, we issued money orders through our network of over 8,000 agents and financial institutions located in the U.S. and Puerto Rico.
Official Check Outsourcing Services — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use official checks to pay their own obligations. Similar to money orders, we generate revenue from our official check outsourcing services through U.S. banks and credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks, which generally remain outstanding for approximately four days. As of December 31, 2022, we provided official check outsourcing services through 597 financial institutions at over 5,900 branch bank locations.
Marketing — We employ a wide range of marketing methods. We use a marketing mix to support our brand, which includes traditional, digital and social media, point of sale materials, signage at our agent locations and targeted marketing campaigns. Official checks are financial institution branded, and therefore, all marketing to this segment is business to business.
Sales — Our sales teams are organized by product and delivery channel. We have dedicated teams that focus on developing our agent and financial institution networks to enhance the reach of our official check and money order products. Our agent and financial institution requirements vary depending upon the type of outlet or location, and our sales teams continue to improve and strengthen these relationships with a goal of providing the optimal consumer experience with our agents and financial institutions.
Competition — Our money order competitors include a small number of large money order providers and a large number of small regional and niche money order providers. Our largest competitors in the money order industry are Western Union and the U.S. Postal Service. We generally compete for money order agents on the basis of value, service, quality, technical and operational differences, price, commission and marketing efforts. We compete for money order consumers on the basis of trust, convenience, availability of outlets, price, technology and brand recognition.
Official check competitors include financial institution solution providers, such as core data processors and corporate credit unions. We generally compete against a financial institution's desire to perform these processes in-house with support from these types of organizations. We compete for official check customers on the basis of value, service, quality, technical and operational differences, price and commission.
Regulation
Compliance with laws and regulations is a highly complex and integral part of our day-to-day operations. Our operations are subject to a wide range of laws and regulations of the U.S. and other countries, including anti-money laundering laws and regulations; financial services regulations; currency control regulations; anti-bribery laws; sanctions laws and regulations; money transfer and payment instrument licensing laws; escheatment laws; privacy, data protection and information security laws; and consumer disclosure and consumer protection laws. Regulators worldwide are exercising heightened supervision of money transfer providers and requiring increased efforts to ensure compliance. Failure to comply with any applicable laws and regulations could result in restrictions on our ability to provide our products and services, as well as the potential imposition of civil fines and possibly criminal penalties. See the Risk Factors section in Item 1A for additional discussion regarding potential impacts of failure to comply. We continually monitor and enhance our global compliance programs in light of the most recent legal and regulatory changes.
Anti-Money Laundering Compliance
Our services are subject to U.S. anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, as well as state laws and regulations and the anti-money laundering laws and regulations of many of the countries in which we operate, particularly in the European Union. Countries in which we operate may require one or more of the following:
•reporting of large cash transactions and suspicious activity;
•limitations on amounts that may be transferred by a consumer or from a jurisdiction at any one time or over specified periods of time, which require aggregation over multiple transactions;
•consumer information gathering and reporting requirements;
•consumer disclosure requirements, including language requirements and non-U.S. dollar restrictions;
•notification requirements as to the identity of contracting agents, governmental approval of contracting agents or requirements and limitations on contract terms with our agents;
•registration or licensing of the Company or our agents with a state or federal agency in the U.S. or with the central bank or other proper authority in a foreign country; and
•minimum capital or capital adequacy requirements.
Anti-money laundering regulations are constantly evolving and vary from country to country. We continuously monitor our compliance with anti-money laundering regulations and implement policies and procedures in light of the most current legal requirements.
We offer our money transfer services primarily through third-party agents with whom we contract and do not directly control. As a money services business, we and our agents are required to establish anti-money laundering compliance programs that include: (i) internal policies and controls; (ii) designation of a compliance officer; (iii) ongoing employee training and (iv) an independent review function. We have developed an anti-money laundering training manual available in multiple languages and a program to assist with the education of our agents on the various rules and regulations. We also offer in-person and online training as part of our agent compliance training program and engage in various agent oversight activities. We have also adopted a global compliance policy that outlines key principles of our compliance program to our agents.
In connection with regulatory requirements to assist in the prevention of money laundering, terrorist financing and other illegal activities and pursuant to legal obligations and authorizations, the Company makes information available to certain U.S. federal and state, as well as certain foreign, government agencies when required by law. In recent years, the Company has experienced an increase in data sharing requests by these agencies, particularly in connection with efforts to prevent money laundering or terrorist financing or reduce the risk of consumer fraud. In certain cases, the Company is also required by government agencies to deny transactions that may be related to persons suspected of money laundering, terrorist financing or other illegal activities, and as a result the Company may inadvertently deny transactions from customers who are making legal money transfers, which could lead to liability or reputational damage. Responding to these agency requests may result in increased operational costs.
Sanctions Compliance
In addition to anti-money laundering laws and regulations, our services are subject to sanctions laws and regulations promulgated by OFAC and other jurisdictions in which our services are offered. These sanctions laws and regulations require screening of transactions against government watch-lists, including but not limited to, the watch-lists maintained by OFAC and prohibit transactions in, to or from certain countries, governments, individuals and entities. Sanctions regimes may also impose limitations on amounts that may be transferred by a consumer to or from a jurisdiction at any one time or over specified periods of time, requiring aggregation over multiple transactions, as well as transactional and other reporting to a government agency.
Money Transfer and Payment Instrument Licensing
In most countries, either we or our agents are required to obtain licenses or to register with a government authority in order to offer money transfer services. Almost all states in the U.S., the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam require us to be licensed to conduct business within their jurisdictions, exercise authority over certain aspects of our business and regularly examine us and our business.
Our primary overseas operating subsidiary, MoneyGram International SA, is a licensed payment institution under the National Bank of Belgium pursuant to the European Union Payment Services Directive ("PSD"). The Company, through its subsidiaries, is also licensed in other jurisdictions including the United Kingdom, Mexico and Canada. In 2016, the PSD was amended by a revised Payment Services Directive ("PSD2"), which was implemented in the national law of the member states during or prior to January 2018 and was further amended by the 4th and 5th Anti-Money Laundering Directives in the European Union. Among other changes, the PSD2, as amended, has increased the supervisory powers granted to member states with respect to activities performed by us and our agents in the European Union. We are also subject to increasingly significant licensing or other regulatory requirements in various other jurisdictions. The financial penalties associated with the failure to comply with anti-money laundering laws have increased in recent regulation, including the 4th Anti-Money Laundering Directive in the EU. These laws have increased and will continue to increase our costs and could also increase competition in some or all of our areas of service. Legislation that has been enacted or proposed in other jurisdictions could have similar effects.
Licensing requirements in the U.S. and abroad may include minimum net worth requirements, provision of surety bonds or letters of credit, compliance with operational procedures, agent oversight and the maintenance of reserves or "permissible investments" in an amount equivalent to outstanding payment obligations, as defined by our various regulators. The types of securities that are considered "permissible investments" vary across jurisdictions, but generally include cash and cash equivalents, U.S. government securities and other highly rated debt instruments. Many regulators require us to file reports on a quarterly or more frequent basis to verify our compliance with their requirements. Many regulators also subject us to periodic examinations and require us and our agents to comply with anti-money laundering and other laws and regulations.
Escheatment Regulations
Unclaimed property laws of every state in the U.S., the District of Columbia, Puerto Rico and the U.S. Virgin Islands require that we track certain information on all our payment instruments and money transfers and, if they are unclaimed at the end of an applicable statutory abandonment period, that we remit the proceeds of the unclaimed property to the appropriate jurisdiction. Statutory abandonment periods for payment instruments and money transfers range from three to seven years. Certain foreign jurisdictions also have unclaimed property laws. These laws are evolving and are frequently unclear and inconsistent among various jurisdictions, making compliance challenging. We have an ongoing program designed to comply with escheatment laws as they apply to our business.
Data Privacy and Cybersecurity Laws and Regulations
We are subject to federal, state and international laws and regulations relating to the collection, use, retention, security, transfer, storage and disposal of personally identifiable information of our consumers, agents and employees. In the U.S., we are subject to various federal privacy laws, including the Gramm-Leach-Bliley Act, which requires that financial institutions provide consumers with privacy notices and have in place policies and procedures regarding the safeguarding of personal information. We are also subject to privacy and data breach laws of various states. Outside the U.S., we are subject to privacy laws of numerous countries and jurisdictions. In some cases, these laws are more restrictive than the U.S. laws and impose more stringent duties on companies or penalties for non-compliance. For example, the General Data Protection Regulation in the European Union ("GDPR") imposes a higher standard of personal data protection with significant penalties for non-compliance for companies operating in the European Union or doing business with European Union residents. The new California Consumer Protection Act, which became effective on January 1, 2020, imposes heightened data privacy requirements on companies that collect information from California residents and creates a broad set of privacy rights and remedies modeled in part on the GDPR. In addition, government surveillance laws and data localization laws are evolving to address increased and changing threats and risks. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction.
Dodd-Frank Act
The Dodd-Frank Act was signed into law in 2010. The Dodd-Frank Act imposes additional regulatory requirements and creates additional regulatory oversight over us. The Dodd-Frank Act created the CFPB. The CFPB's Remittance Transfer Rule became effective on October 28, 2013. Its requirements include: a disclosure requirement to provide consumers sending funds internationally from the U.S. enhanced pre-transaction written disclosures, an obligation to resolve certain errors, including errors that may be outside our control and an obligation to cancel transactions that have not been completed at a customer's request. As a "larger participant" in the market for international money transfers, we are subject to direct examination and supervision by the CFPB. We have modified our systems and consumer disclosures in light of the requirements of the Remittance Transfer Rule. In addition, under the Dodd-Frank Act, it is unlawful for any provider of consumer financial
products or services to engage in unfair, deceptive or abusive acts or practices. The CFPB has substantial rule making and enforcement authority to prevent unfair, deceptive or abusive acts or practices in connection with any transaction with a consumer for a financial product or service.
Non-U.S. Dollar Exchange Regulation
Our money transfer services are subject to non-U.S. dollar exchange statutes of the U.S., as well as similar state laws and the laws of certain other countries in which we operate. Certain of these statutes require registration or licensure and reporting. Others may impose currency exchange restrictions with which we must comply.
Anti-Bribery Regulation
We are subject to regulations imposed by the FCPA in the U.S., the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions. We are subject to recordkeeping and other requirements imposed upon companies related to compliance with these laws. We maintain a compliance program designed to comply with applicable anti-bribery laws and regulation.
Clearing and Cash Management Bank Relationships
Our business involves the transfer of money on a global basis on behalf of our consumers, our agents and ourselves. We buy and sell a number of global currencies and maintain a network of settlement accounts to facilitate the funding of money transfers and foreign exchange trades to ensure that funds are received on a timely basis. Our relationships with the clearing, trading and cash management banks are critical to an efficient and reliable global funding network.
In the U.S., we have agreements with four active clearing banks that provide clearing and processing functions for official checks, money orders and other draft instruments. We believe that this network of banks provides sufficient capacity to handle the current and projected volumes of items for these services.
We maintain significant relationships with major international banks which provide the capability to transfer money electronically as well as through domestic electronic funds transfer networks and international wire transfer systems. There are a limited number of banks that have capabilities broad enough in scope to handle our volume and complexity. Consequently, we generally employ banks whose market is not limited to their own country or region and have extensive systems capabilities and branch networks that can support settlement needs that are often unique to different countries around the world. In 2013, we activated our participation in the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") network for international wire transfers, which improves access to all banks in the world while lowering the cost of these funds transfers.
Intellectual Property
The MoneyGram brand is important to our business. We have registered our MoneyGram trademark in the U.S. and in a majority of the other countries in which we do business. We maintain a portfolio of other trademarks that are material to our Company, which are discussed above in the Overview section. In addition, we maintain a portfolio of MoneyGram branded and related domain names.
We rely on a combination of patent, trademark and copyright laws and trade secret protection and confidentiality or license agreements to protect our proprietary rights in products, services, expertise and information. We believe the intellectual property rights in processing equipment, computer systems, software and business processes held by us and our subsidiaries provide us with a competitive advantage. We take appropriate measures to protect our intellectual property to the extent such intellectual property can be protected.
Human Capital
Global Talent — At MoneyGram, our people are our most important asset and the success of our global talent (human capital) is essential to the success of our Company. As of December 31, 2022, we employed 939 employees in the U.S. and 2,247 employees globally.
Attracting, recruiting, developing and retaining diverse talent enables us to build a strong and dynamic company. We are focused on supporting our employees across the full employee lifecycle from candidate recruitment through the full employee experience. We have transformed a number of our temporary programs first implemented during the beginning of the COVID-19 pandemic in 2020 into permanent workplace changes. For example, in 2020, we worked with our employees to provide a fully virtual work place, accommodating school, family and health needs of our employees, offering additional training, work-from-home flexibility and increased mental health support through our employee assistance program and our benefits partners. In 2021, we allowed all global employees to determine whether they wanted to return to the office full time, partially, or become permanently virtual employees. We also gave employees greater autonomy over their working hours to better accommodate their personal lives. In 2022 we continued our workforce transformation by focusing on wellness and teambuilding in the no-longer-new virtual and hybrid workplace.
Employee Engagement — At MoneyGram, we provide a variety of employee engagement programs designed to ensure that our employees have a voice in their future and are engaged in our business. We solicit direct employee feedback related to new proposals and programs, and we also have a robust engagement team (“The Red Team”) with representatives across all of our regions and offices, with a focus on employee volunteerism and community service opportunities. We host monthly employee engagement forums and a variety of internal training courses through our global Lunch and Learn program. We also work to keep our employees updated on Company opportunities and developments through quarterly Town Hall meetings with our CEO and full executive leadership team. We offer two paid Community Service days per year where all employees are encouraged to spend time volunteering within their communities. We have also won several "top workplace" awards on the local and national level, based solely on anonymous employee feedback over the past two years.
Talent Acquisition and Development — As a leading FinTech and digital payments company, we compete for top global talent around the world. We value our employees for who they are as individuals, and we believe that a strong culture focused on respect for each employee as a valuable individual is essential to the successful acquisition, retention and development of diverse talent. To that end, we focus on inclusive hiring, employee development, positive coaching and mentorship and internal and external educational opportunities. We have a robust in-house training program, and we likewise provide opportunities for formal and informal continuing education participation for our employees across their respective areas of expertise. Whether it is through tuition reimbursement, Company-paid certification courses, outside or internal continuing education or simply department-led trainings, we invest in our employees’ development. We closely track employee attrition, with a focus on creating a workplace where employees want to work.
Employee Wellness — We value our employees and work to provide competitive programs to support the total wellness of our employees, including resources, programs and services to support our employees’ physical, mental and financial wellness. We provide a variety of benefits to our employees globally, including a choice of comprehensive health insurance plans, fully-paid maternity and family leave, vacation and holiday time off and retirement planning and financial well-being services and retirement savings opportunities. We also provide fully paid employee time off for employee volunteerism and community service and provide community service opportunities for our employees who wish to participate. We also offer a global virtual, interactive wellness program for all employees. We offer a number of Company-funded as well as optional benefits and discounts for our employees, from a variety of life, disability and critical care programs, pet insurance, legal services plans, rideshare and transportation opportunities and discount insurance packages. We are constantly reviewing and improving our global benefits packages across all markets to ensure that we are providing our employees the most competitive package of benefits to meet the needs of employees and families.
Diversity, Equity & Inclusion ("DEI") — Our focus on diversity, inclusion, equity, has grown from a corporate social responsibility program to a full DEI and Social Impact program, with a formal DEI program that applies to our employees as well as our suppliers and agents. MoneyGram has boasted an inclusive and non-discriminatory workplace long before it was legally mandated and our commitment to principles of diversity, equity and inclusion extend to our recruiting practices, or our vendors and trading partners, our employee experiences and our community service activities. MoneyGram engages in global programs to promote hiring of disabled employees, as well as a focus on racial, religious, ethnic and gender diversity. We are committed to providing an inclusive workplace, with specific focus on providing opportunities to all of our global workforce. We are committed to equal pay for equal work, inclusive leadership opportunities and intentional focus on creating a workplace that celebrates and embraces our employees for who they are in all aspects of their lives.
Executive Officers of the Registrant
W. Alexander Holmes, age 48, has served as Chief Executive Officer since January 2016 and Chairman of the Board since February 2018. Prior to that, Mr. Holmes served as Executive Vice President, Chief Financial Officer and Chief Operating Officer of the Company from February 2014 to December 2015 and Executive Vice President and Chief Financial Officer from March 2012 to January 2014. He joined the Company in 2009 as Senior Vice President for Corporate Strategy and Investor Relations. From 2003 to 2009, Mr. Holmes served in a variety of positions at First Data Corporation, including chief of staff to the Chief Executive Officer, Director of Investor Relations and Senior Vice President of Global Sourcing & Strategic Initiatives. From 2002 to 2003, he managed Western Union's Benelux region from its offices in Amsterdam.
Brian Johnson, age 42, has served as the Chief Financial Officer since September 1, 2022. He joined MoneyGram in July 2018 as Head of Corporate financial planning and analysis (“FP&A”) and M&A, and was responsible for overseeing the Company’s corporate FP&A function and M&A activities before being appointed Head of Corporate Finance and Global Treasurer in January 2021, where he oversees all treasury, FP&A, pricing and M&A activity. Prior to joining MoneyGram, Mr. Johnson was a Managing Director at Commerce Street Capital from April 2014 to June 2018 where he advised clients on acquisitions and divestitures. His professional experience also includes tenures with Hudson Advisors/Lone Star Funds and Bear Stearns. Mr. Johnson holds a Bachelor of Science in Mechanical Engineering from Bucknell University and holds the Chartered Financial Analyst and Certified Valuation Analyst designations.
Anna Greenwald, age 44, has served as the Chief Operating Officer since August 4, 2022. Prior to that, she was appointed Chief Readiness Officer in March 2021 and was responsible for leading the Company’s go-to-market strategy, agent network oversight and engagement and global regulatory exam readiness. She joined MoneyGram in 2011, previously holding positions in the Product, Technology and Operations departments, including serving as the Global Head of Go-to-Market from February 2015 to April 2021. Prior to joining MoneyGram, Ms. Greenwald worked for Boston Scientific, Qumu and other leading technology companies where she led business model transformation, global expansion initiatives, managed merger activities and oversaw compliance remediation efforts. Ms. Greenwald holds a Master of Business Administration from the University of Colorado, a Master of Science from Metropolitan State University and a Bachelor of Science from Minnesota State University.
Robert L. Villaseñor, age 52, has served as General Counsel and Corporate Secretary since October 2019. He joined the Company in July 2018 as Associate General Counsel, Corporate and Securities and Assistant Secretary. He has over 20 years of experience representing public companies on a broad range of legal issues including public reporting, lending and capital markets transactions, mergers and acquisitions, strategic investments and various commercial matters. Prior to MoneyGram, he worked in the Corporate and Securities Group at Starbucks Corporation from 2012 to 2018. Prior to Starbucks, he served as the chief corporate and securities attorney at two other public companies. He began his career in private practice at the law firm of Gibson, Dunn & Crutcher LLP working in the areas of mergers and acquisitions and capital markets.
Grant A. Lines, age 58, has served as Chief Revenue Officer since January 2018. Prior to that, he served as Chief Revenue Officer, Africa, Middle East, Asia Pacific, Russia and CIS from February 2015 until January 2018. Mr. Lines previously served the Company as Executive Vice President, Asia-Pacific, South Asia and Middle East from February 2014 to February 2015. Prior to that, Mr. Lines served the Company as Senior Vice President, Asia-Pacific, South Asia and Middle East from February 2013 to February 2014. Prior to joining the Company, Mr. Lines served as General Manager of Black Label Solutions, a leading developer and supplier of computerized retail point of sale systems, from May 2011 to December 2012. He served as Managing Director of First Data Corporation's ANZ business, a global payment processing company, from September 2008 to February 2011.
Andres Villareal, age 58, has been Chief Compliance Officer since March 2016. He joined the Company in April 2015 as Senior Vice President and Deputy Chief Compliance Officer. From 2004 to April 2015, Mr. Villareal held various positions at Citigroup, a leading global bank, including Global Head of Compliance for Citi Commercial Bank and Chief Compliance Officer for Citi Assurance Services, a captive insurance company. Mr. Villareal has over 29 years of experience in various compliance, legal and business roles in a variety of industries, including financial services, banking and insurance.
Available Information
Our website address is www.moneygram.com. The information on our website is not part of this 2022 Form 10-K. We make our reports on Forms 10-K, 10-Q and 8-K, Section 16 reports on Forms 3, 4 and 5 and all amendments to those reports, available electronically free of charge in the Investor Relations section of our website (ir.moneygram.com) as soon as reasonably practicable after they are filed with or furnished to the SEC. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, which may be found at www.sec.gov.
Item 1A. RISK FACTORS
Various risks and uncertainties could affect our business. Any of the risks described below or elsewhere in the 2022 Form 10-K or our other filings with the SEC could have a material impact on our business, prospects, financial condition or results of operations.
Risks Related to the Merger
The announcement and pendency of the Merger could adversely affect our business, financial condition and results of operations.
The announcement and pendency of the proposed Merger could cause disruptions to our business or business relationships and create uncertainty surrounding our business, which could have an adverse impact on our financial condition and results of operations, regardless of whether the Merger is completed, including as a result of the following (all of which could be exacerbated by a delay in completion of the Merger):
•customers, agents or other parties with which we maintain business relationships may experience uncertainty prior to the closing of the Merger and seek alternative relationships with third parties or seek to terminate or renegotiate their relationships with us;
•our employees may experience uncertainty about their future roles with us, which might adversely affect our ability to attract, retain and motivate key personnel and other employees;
•the Merger Agreement restricts us from engaging in certain actions without the consent of Parent, including, among other things, subject to certain exceptions, acquiring other businesses and assets, selling, transferring or licensing our assets, making investments, making capital expenditures, repurchasing or issuing securities and incurring indebtedness; these restrictions could prevent or delay us from pursuing business opportunities that may arise prior to the consummation of the Merger and result in our inability to respond effectively and timely to competitive pressures, industry developments, developments relating to our customers and agents; and
•the attention of our management may be directed to Merger-related considerations and may be diverted from the day-to-day operations of our business; and.
•there may be litigation relating to the Merger, or injunctions or governmental orders initiated by a governmental entity restraining, enjoining or prohibiting the consummation of the Merger, and there may be costs related thereto.
The proposed Merger may not be completed within the timeframe we anticipate or at all, and the failure to complete or delays in completing the Merger could adversely affect our business, financial results and stock price.
We can provide no assurance that the proposed Merger will be consummated or consummated in the timeframe or manner currently anticipated. Completion of the Merger is subject to a number of conditions, such as the receipt of regulatory approvals, including approvals with respect to money transmitter licenses, and shareholder approval, which are not within our control. There can be no assurance as to when, or if, the conditions to closing of the Merger will be satisfied or waived (as applicable). In addition, the Merger Agreement may be terminated under certain specified circumstances, including, but not limited to, a change in recommendation of our Board of Directors and a termination of the Merger Agreement by us to accept a “Company Superior Proposal” (as defined in the Merger Agreement).
These conditions to closing are described in more detail in the Merger Agreement, which is included as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on February 15, 2022. In addition, while the Merger is not subject to a financing condition, Parent will need to receive equity and debt financing, as it has obtained such financing commitments, in order to satisfy its payment obligations and pay other costs and expenses related to the Merger. Further, any delay in completing the Merger could cause us or the combined company not to realize some or all of the benefits that the parties expect us or the combined company to achieve in connection with the Merger.
If the transaction is not consummated within the expected time frame or at all, we may be subject to a number of material risks. The price of our common stock may decline to the extent that current market prices reflect a market assumption that the Merger
will be completed. In addition, some costs, expenses and fees related to the Merger must be paid whether or not the Merger is completed, and we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, as well as the direction of management resources towards the Merger, for which we will have received little or no benefit if the closing of the Merger does not occur. We may also experience negative reactions from our shareholders and other investors, employees, agents and other parties with which we maintain business relationships. In addition, if the Merger Agreement is terminated, in specified circumstances, we may be required to pay a termination fee. If the Merger is not consummated, there can be no assurance that any other transaction acceptable to us will be offered or that our business, prospects or results of operations will not be adversely affected. If the Merger is not consummated for any reason, holders of our common stock will not receive the Merger Consideration for their shares in connection with the Merger. Instead, our common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC on account of our common stock.
Risks Related to Our Business and Industry
The COVID-19 outbreak, declared a pandemic by the World Health Organization, is ongoing both in the United States and globally and has adversely affected and may continue to materially adversely affect, our business operations, financial condition, liquidity and cash flow. The extent to which the COVID-19 pandemic will further impact our business depends on future developments, which are highly uncertain and difficult to predict.
The outbreak of COVID-19, which was declared a pandemic by the World Health Organization, is ongoing both in the United States and globally, causing significant macroeconomic uncertainty, volatility and disruption. In response, many governments have initiated, resumed or extended social distancing rules, lockdowns or shelter-in-place orders resulting in the closure of many businesses. These actions have resulted in an overall reduction in consumer activity and the continued closure of some of our agent locations.
The COVID-19 pandemic and the related economic fallout began to adversely impact MoneyGram's results of operations in the middle of March 2020. The inability of our agents to operate normally has reduced the volume of consumer transactions in almost all of the 200 countries and territories in which we operate. These developments have negatively impacted and may continue to negatively impact our sales and operating margin as well as our workforce, agents and customers.
It is impossible to predict the scope and duration of the impact of the pandemic on our business as the situation is ever evolving and there are a number of uncertainties related to this pandemic. These uncertainties include, but are not limited to, the potential adverse effect on the global economy, our agent network, travel and transportation services, our employees and customers. Even though some governments lifted some restrictions on citizens and businesses during the second half of 2020, the resulting economic impact of COVID-19 could still continue to negatively impact our business and the recent resurgence of COVID-19 cases (including due to variant strains) could result in further lockdowns and shelter-in-place orders by governments. The extent to which the COVID-19 pandemic will further impact our business depends on future developments, which are highly uncertain and difficult to predict, and accordingly, as the COVID-19 situation continues to evolve, additional adverse effects may arise that are currently unknown. All of these effects discussed above could have a material adverse effect on our near-term and long-term business operations, revenues, earnings, financial condition, liquidity and cash flows.
We face intense competition, and if we are unable to continue to compete effectively for any reason, including due to our enhanced compliance controls, our business, financial condition and results of operations could be adversely affected.
The markets in which we compete are highly competitive, and we face a variety of competitors across our businesses, some of which have larger and more established customer bases and substantially greater financial, marketing and other resources than we have. Money transfer, bill payment and money order services compete in a concentrated industry, with a small number of large competitors and a large number of small, niche competitors. Our money transfer products compete with a variety of financial and non-financial companies, including banks, card associations, web-based services, payment processors, informal remittance systems, consumer money transfer companies and others. The services are differentiated by features and functionalities, including brand recognition, customer service, reliability, distribution network and options, price, speed and convenience. Distribution channels such as online, mobile solutions, account deposit and kiosk-based services continue to evolve and impact the competitive environment for money transfers. The electronic bill payment services within our GFT segment compete in a highly fragmented consumer-to-business payment industry. Our official check business competes primarily with financial institutions that have developed internal processing capabilities or services similar to ours and do not outsource official check services. Financial institutions could also offer competing official check outsourcing services to our existing and prospective official check customers.
Our future growth depends on our ability to compete effectively in money transfer, bill payment, money order and official check services. For example, if our products and services do not offer competitive features and functionalities or if we do not keep up with technological advances, we may lose customers to our competitors, which could adversely affect our business, financial condition and results of operations. In addition, if we fail to price our services appropriately relative to our competitors, consumers may not use our services, which could adversely affect our business, financial condition and results of
operations. For example, transaction volume where we face intense competition could be adversely affected by pricing pressures between our money transfer services and those of some of our competitors, which could reduce margins and adversely affect our financial condition and results of operations. We have historically implemented and will likely continue to implement price adjustments from time to time in response to competition and other factors. If we reduce prices in order to more effectively compete, such reductions could adversely affect our financial condition and results of operations in the short term and may also adversely affect our financial condition and results of operations in the long term if transaction volumes do not increase sufficiently.
In addition, our enhanced compliance controls have negatively impacted and may continue to negatively impact, our revenue and net income. In 2018 we launched enhanced compliance measures representing the highest standards in the industry, including new global customer verification standards for all money transfer services, which have significantly increased our operating expenses. While these measures have resulted in a decline in fraud rates, they have negatively impacted and may continue to negatively impact, our revenue and net income. Such impacts could adversely affect our financial condition and results of operations in the short term and may also adversely affect our financial condition and results of operations in the long term if transaction volumes do not increase sufficiently.
If we lose key agents, our business with such agents is reduced or we are unable to maintain our agent network under terms consistent with those currently in place, including due to increased costs or loss of business as a result of higher compliance standards, our business, financial condition and results of operations could be adversely affected.
Most of our revenue is earned through our agent network. In addition, our international agents may have subagent relationships in which we are not directly involved. If agents or their subagents decide to leave our network, our revenue and profits could be adversely affected. Agent loss may occur for a number of reasons, including competition from other money transfer providers, an agent's dissatisfaction with its relationship with us or the revenue earned from the relationship, or an agent's unwillingness or inability to comply with our standards or legal requirements, including those related to compliance with anti-money laundering regulations, anti-fraud measures or agent monitoring.
Agents may also generate fewer transactions or reduce locations for reasons unrelated to our relationship with them, including increased competition in their business, political unrest, general economic conditions, regulatory costs or other reasons. In addition, we may not be able to maintain our agent network under terms consistent with those already in place. Larger agents may demand additional financial concessions or may not agree to enter into exclusive arrangements, which could increase competitive pressure. The inability to maintain our agent contracts on terms consistent with those already in place, including in respect of exclusivity rights, could adversely affect our business, financial condition and results of operations.
A substantial portion of our agent network locations, transaction volume and revenue is attributable to or generated by a limited number of key agents. During 2022 and 2021, our ten largest agents accounted for 24% and 26%, respectively, of our total revenue. Our largest agent, Walmart, accounted for less than 10% and 11% of our total revenue in 2022 and 2021, respectively. If our contracts with our key agents, including Walmart, are not renewed or are terminated, or are renewed but on less favorable terms, or if such agents generate fewer transactions, reduce their locations or allow our competitors to use their services (e.g. Ria and Western Union in Walmart), our business, financial condition and results of operations could be adversely affected. In addition, the introduction of additional competitive products by Walmart or our other key agents, including competing white-label products, could reduce our business with those key agents and intensify industry competition, which could adversely affect our business, financial condition and results of operations.
Complex and evolving U.S. and international laws and regulation regarding privacy and data protection could result in claims, changes to our business practices, penalties, increased cost of operations or otherwise harm our business.
We are subject to requirements relating to data privacy and the collection, processing, storage, transfer and use of data under U.S. federal, state and foreign laws. For example, the FTC routinely investigates the privacy practices of companies and has commenced enforcement actions against many, resulting in multi-million dollar settlements and multi-year agreements governing the settling companies' privacy practices. In addition, the General Data Protection Regulation in the European Union, effective May 2018, imposed a higher standard of personal data protection with significant penalties for non-compliance for companies operating in the European Union or doing business with European Union residents. The new California Consumer Protection Act, which became effective on January 1, 2020, imposes heightened data privacy requirements on companies that collect information from California residents. If we are unable to meet such requirements, we may be subject to significant fines or penalties. Furthermore, certain industry groups require us to adhere to privacy requirements in addition to federal, state and foreign laws, and certain of our business relationships depend upon our compliance with these requirements. As the number of jurisdictions enacting privacy and related laws increases and the scope of these laws and enforcement efforts expands, we will increasingly become subject to new and varying requirements. Failure to comply with existing or future data privacy laws, regulations and requirements, including by reason of inadvertent disclosure of personal information, could result in significant adverse consequences, including reputational harm, civil litigation, regulatory enforcement, costs of remediation, increased
expenses for security systems and personnel, harm to our consumers and harm to our agents. These consequences could materially adversely affect our business, financial condition and results of operations.
In addition, the Company makes information available to certain U.S. federal and state, as well as certain foreign, government agencies in connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations. In recent years, the Company has experienced increasing data sharing requests by these agencies, particularly in connection with efforts to prevent terrorist financing or reduce the risk of identity theft. During the same period, there has also been increased public attention to the corporate use and disclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information security and consumer privacy. These regulatory goals may conflict, and the law in these areas is not consistent or settled. While we believe that we are compliant with our regulatory responsibilities, the legal, political and business environments in these areas are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage that could have a material adverse effect on our business, financial condition and results of operations.
A breach of security in the systems on which we rely could adversely affect our business, financial condition and results of operations.
We rely on a variety of technologies to provide security for our systems. Advances in computer capabilities, new discoveries affecting the efficacy of cryptography or other events or developments, including improper acts by third parties, may result in a compromise or breach of the security measures we use to protect our systems. We obtain, transmit and store confidential consumer, employer and agent information in connection with certain of our services. These activities are subject to laws and regulations in the U.S. and other jurisdictions. The requirements imposed by these laws and regulations, which often differ materially among the many jurisdictions, are designed to protect the privacy of personal information and to prevent that information from being inappropriately disclosed.
Any security breaches in our or our suppliers’ source code, computer networks, systems, databases or facilities could lead to the inappropriate use or disclosure of personally identifiable or proprietary information, which could harm our business and result in, among other things, unfavorable publicity, damage to our reputation, loss in our consumers' confidence in our or our agents' business, fines or penalties from regulatory or governmental authorities, a loss of consumers, lawsuits and potential financial losses. In addition, we may be required to expend significant capital and other resources to protect against these security breaches or to alleviate problems caused by these breaches. Our agents, banks, digital asset exchanges and third-party independent contractors may also experience security breaches involving the storage and transmission of our data as well as the ability to initiate unauthorized transactions, funds transfers or digital asset transfers. If an entity gains improper access to our, our suppliers', agents' banks', digital asset exchanges' or our third-party independent contractors', source code, computer networks, systems, or databases or facilities, they may be able to steal, publish, delete or modify confidential customer information or generate unauthorized money transfers, funds transfers or digital asset transfers. Such a breach could expose us to monetary liability, losses and legal proceedings, lead to reputational harm, cause a disruption in our operations, or make our consumers and agents less confident in our services, which could have a material adverse effect on our business, financial condition and results of operations.
Cybersecurity threats continue to increase in frequency and sophistication; a successful cybersecurity attack could interrupt or disrupt our information technology systems or cause the loss of confidential or protected data which could disrupt our business, force us to incur excessive costs or cause reputational harm.
The size and complexity of our information systems make such systems potentially vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from attacks by malicious third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives and expertise. While we have invested in the protection of data and information technology, there can be no assurance that our efforts will prevent or quickly identify service interruptions or security breaches. Any such interruption or breach of our systems could adversely affect our business operations and result in the loss of critical or sensitive confidential information or intellectual property and could result in financial, legal, business and reputational harm to us.
Other attacks in recent years have included distributed denial of service ("DDoS") attacks, in which individuals or organizations flood commercial websites or application programming interfaces ("APIs") with extraordinarily high volumes of traffic with the goal of disrupting the ability of commercial enterprises to process transactions and possibly making their websites or APIs unavailable to customers for extended periods of time. We, as well as other financial services companies, have been subject to such attacks.
We maintain cyber liability insurance; however, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems.
Consumer fraud could adversely affect our business, financial condition and results of operations.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as identity theft, fraud and paper instrument counterfeiting. As we make more of our services available over the internet and other digital media, we subject ourselves to new types of consumer fraud risk because requirements relating to consumer authentication are more complex with internet services. Certain former agents have also engaged in fraud against consumers, and existing agents could engage in fraud against consumers. We use a variety of tools to protect against fraud; however, these tools may not always be successful. Allegations of fraud may result in fines, settlements, litigation expenses and reputational damage.
Our industry is under increasing scrutiny from federal, state and local regulators in the U.S. and regulatory agencies in many countries in connection with the potential for consumer fraud. If consumer fraud levels involving our services were to rise, it could lead to further regulatory intervention and reputational and financial damage. This, in turn, could lead to additional government enforcement actions and investigations, reduce the use and acceptance of our services or increase our compliance costs and thereby have a material adverse impact on our business, financial condition and results of operations.
MoneyGram is subject to compliance with U.S. anti-money laundering laws, the Bank Secrecy Act, the Dodd-Frank Act, FCPA, PSD2 and numerous international laws and regulations. Failure to comply with these laws could result in material settlements, fines, penalties and increased operating costs, all of which may adversely affect our business, financial condition and results of operations.
Our business is subject to certain regulations aimed at preventing money laundering and terrorism. We are subject to U.S. federal anti-money laundering laws, the Bank Secrecy Act and anti-money laundering laws in other countries in which we operate, particularly in the European Union. We are subject to sanctions laws and regulations, promulgated by OFAC. We are also subject to financial services regulations, money transfer and payment instrument licensing regulations, consumer protection laws, currency control regulations, escheatment laws, privacy and data protection laws and anti-bribery laws. Many of these laws are evolving, with requirements that may be unclear and inconsistent across jurisdictions, making compliance challenging. Subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage.
We are considered a Money Services Business in the U.S. under the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001. As such, we are subject to reporting, recordkeeping and anti-money laundering provisions in the U.S. as well as other jurisdictions. During 2017 and 2018, there were significant regulatory reviews and actions taken by U.S. and other regulators and law enforcement agencies against banks, Money Services Businesses and other financial institutions related to money laundering. We are also subject to regulatory oversight and enforcement by the U.S. Department of the Treasury Financial Crimes Enforcement Network. Any determination that we have violated any anti-money-laundering laws could have an adverse effect on our business, financial condition and results of operations.
The Dodd-Frank Act increases the regulation and oversight of the financial services industry. The Dodd-Frank Act addresses, among other things, systemic risk, capital adequacy, deposit insurance assessments, consumer financial protection, interchange fees, derivatives, lending limits, thrift charters and changes among the bank regulatory agencies. The Dodd-Frank Act requires enforcement by various governmental agencies, including the CFPB. Money transmitters such as the Company are subject to direct supervision by the CFPB and are required to provide additional consumer information and disclosures, adopt error resolution standards and adjust refund procedures for international transactions originating in the U.S. in a manner consistent with the Remittance Transfer Rule (a rule issued by the CFPB pursuant to the Dodd-Frank Act). In addition, the CFPB may adopt other regulations governing consumer financial services, including regulations defining unfair, deceptive, or abusive acts or practices and new model disclosures. We could be subject to fines or other penalties if we are found to have violated the Dodd-Frank Act's prohibition against unfair, deceptive or abusive acts or practices. The CFPB's authority to change regulations adopted in the past by other regulators could increase our compliance costs and litigation exposure. We may also be liable for failure of our agents to comply with the Dodd-Frank Act. The legislation and implementation of regulations associated with the Dodd-Frank Act have increased our costs of compliance and required changes in the way we and our agents conduct business. In addition, we are subject to periodic examination by the CFPB.
We are also subject to regulations imposed by the FCPA in the U.S., the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions. Because of the scope and nature of our global operations, we experience a higher risk associated with the FCPA and similar anti-bribery laws than other companies. We are subject to recordkeeping and other requirements imposed upon companies related to compliance with these laws. Between 2016 and 2021, there has been an increase in regulatory reviews and enforcement actions taken by the U.S. and other regulators related to anti-bribery laws, along with increased scrutiny on payments to and relationships with, foreign entities and individuals.
We are also subject to the PSD2, as amended by the 4th and 5th Anti-Money Laundering Directives in the EU, which governs the regulatory regime for payment services in the European Union and similar regulatory or licensing requirements in other jurisdictions. The PSD2 and other international regulatory or licensing requirements may impose liability on us for the conduct of our agents and the commission of third-party fraud utilizing our services. If we fail to comply with the PSD2 or such other
requirements, we could be subject to fines or penalties or revocation of our licenses, which could adversely impact our business, financial condition and results of operations.
Violation of laws or regulations by our agents could adversely affect our business, financial condition and results of operations.
In some cases, we could be liable for the failure of our agents or their subagents to comply with laws and regulations. As a result, the risk of adverse regulatory action against the Company related to the actions of its agents or their subagents, the cost to monitor our agents and their subagents has increased. In addition to fines and penalties, a failure by us or our agents to comply with applicable laws and regulations could seriously damage our reputation resulting in diminished revenue and profit, increased operating costs, revocation of required licenses or registrations, loss of approved status, termination of contracts with banks or retail representatives, administrative enforcement actions, class action lawsuits, cease and desist orders and civil and criminal liability. The occurrence of one or more of these events could have a material adverse effect on our business, financial condition and results of operations.
We are subject to the discretion of administrative enforcement agencies.
In certain cases, regulations may provide administrative discretion regarding enforcement, and regulations may be applied inconsistently across the industry, resulting in increased costs for the Company that may not be incurred by competitors. Changes in laws, regulations or other industry practices and standards, or interpretations of legal or regulatory requirements, may reduce the market for or value of our products or services or render our products or services less profitable or obsolete. For example, policymakers may impose heightened customer due diligence requirements or other restrictions, fees or taxes on remittances. Additionally, we have been subject to ongoing investigations and enforcement-related inquiries that resulted in a settlement and pending litigation with the NYDFS and CFPB, respectively. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirements for capitalization or ownership) could adversely affect our ability to distribute certain services and the costs of providing those services.
Litigation or investigations involving us, our agents or other contractual counterparties could result in material settlements, fines or penalties and may adversely affect our business, financial condition and results of operations.
We have been and in the future may be, subject to allegations and complaints that individuals or entities have used our money transfer services for fraud-induced money transfers, as well as certain money laundering activities, which may result in fines, penalties, judgments, settlements and litigation expenses. We also are the subject from time to time of litigation related to our business. The outcome of such allegations, complaints, claims and litigation cannot be predicted.
Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial condition and results of operations. There may also be adverse publicity associated with lawsuits and investigations that could decrease agent and consumer acceptance of our services. Additionally, our business has been in the past and may be in the future, the subject of class action lawsuits including securities litigation, regulatory actions and investigations and other general litigation. The outcome of class action lawsuits, including securities litigation, regulatory actions and investigations and other litigation is difficult to assess or quantify but may include substantial fines and expenses, as well as the revocation of required licenses or registrations or the loss of approved status, which could have a material adverse effect on our business, financial position and results of operations or consumers' confidence in our business. Plaintiffs or regulatory agencies in these lawsuits, actions or investigations may seek recovery of very large or indeterminate amounts, and the magnitude of these actions may remain unknown for substantial periods of time. The cost to defend or settle future lawsuits or investigations may be significant. In addition, improper activities, lawsuits or investigations involving our agents may adversely impact our business operations or reputation even if we are not directly involved.
If we fail to successfully develop and timely introduce new and enhanced products and services or if we make substantial investments in an unsuccessful new product, service or infrastructure change, our business, financial condition and results of operations could be adversely affected.
Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of providing money transfer, bill payment, money order, official check and related services that keep pace with competitive introductions, technological changes and the demands and preferences of our agents, financial institution customers and consumers. If alternative payment mechanisms become widely substituted for our current products and services, and we do not develop and offer similar alternative payment mechanisms successfully and on a timely basis, our business, financial condition and results of operations could be adversely affected. We may make future investments or enter into strategic alliances to develop new technologies and services or to implement infrastructure changes to further our strategic objectives, strengthen our existing businesses and remain competitive. Such investments and strategic alliances, however, are inherently risky, and we cannot guarantee that such investments or strategic alliances will be successful. If such investments and strategic alliances are not successful, they could have a material adverse effect on our business, financial condition and results of operations.
We have outstanding indebtedness in the form of Senior Secured Notes and a credit facility and may incur other debt in the future, which may adversely affect our financial condition and future financial results.
On July 21, 2021, we (i) completed a private offering of $415.0 million aggregate principal amount of 5.375% senior secured notes due 2026 (the "notes") and related guarantees (the "notes offering") and (ii) entered into a new credit agreement (the "New Credit Agreement") with the lenders from time to time party thereto and Bank of America, N.A. as administrative agent.
The New Credit Agreement provides for (i) a senior secured five-year term loan in an aggregate principal amount of $400.0 million (the "Term Loan") and (ii) a senior secured four-year revolving credit facility that may be used for revolving credit loans, swingline loans and letters of credit up to an initial aggregate principal amount of $32.5 million (the "Revolving Credit Facility" and, together with the Term Loan, the "New Credit Facilities"). In December 2021, we added additional $7.50 million capacity to our Revolving Credit Facility bringing the total Revolving Credit Facility to $40.0 million.
As of December 31, 2022, we had $795.0 million in debt, including $415.0 million under the notes and $380.0 million outstanding under the Term Loan. Our existing and future levels of indebtedness could have important consequences to stockholders and note holders and may adversely affect our financial conditions and future financial results by, among other things:
•affecting our ability to satisfy our obligations under the notes and New Credit Agreement;
•requiring a significant portion of our cash flows from operations to be dedicated to interest and principal payments, which may not be available for operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other purposes;
•impairing our ability to obtain additional financing in the future;
•limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
•increasing our vulnerability to downturns in our business, our industry or the economy in general, including any such downturn related to the impact of the COVID-19 pandemic.
Further, the Indenture governing the terms of the notes contains covenants limiting the ability of MoneyGram and certain of our subsidiaries to, among other things, incur or guarantee additional debt or issue disqualified stock or certain preferred stock; create or incur liens; pay dividends, redeem stock or make other distributions; make certain investments; create restrictions on the ability to pay dividends to or make certain intercompany transfers; transfer or sell assets; merge or consolidate, and; enter into certain transactions with affiliates.
The New Credit Agreement also contains certain financial covenants and certain negative covenants, including limitations on liens, asset sales, consolidations and mergers, acquisitions, investments, indebtedness, transactions with affiliates and payment of dividends.
These restrictions could adversely affect our ability to finance our future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business activities, including future opportunities that may be in our interest and plan for or react to market conditions or otherwise execute our business strategies. Our ability to comply with the covenants and other terms governing the notes and the New Credit Agreement will depend in part on our future operating performance. If we fail to comply with such covenants and terms, we may be in default and the maturity of the related debt could be accelerated and become immediately due and payable. In addition, because substantially all of our assets are pledged as a security under the New Credit Agreement, if we are not able to cure any default or repay outstanding borrowings, such assets are subject to the risk of foreclosure by our lenders. From time to time, we may not be in compliance with such covenants or other terms governing the New Credit Agreement and we may be required to obtain waivers or amendments to the New Credit Agreement from our lenders in order to maintain compliance and there can be no certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained, would be. If we are unable to obtain necessary waivers and the debt under such credit facility is accelerated, we would be required to obtain replacement financing at prevailing market rates, which may not be favorable to us. Additionally, a default on indebtedness could result in a default under the terms of the indenture governing the notes. There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated.
We may be adversely affected by the potential discontinuation of LIBOR.
In July 2017, the Financial Conduct Authority in the United Kingdom ("FCA"), which regulates LIBOR, publicly announced that it will no longer compel or persuade banks to make LIBOR submissions after 2021. In March 2021, the CFA announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-month tenors of USD LIBOR would be June 30, 2023, and while other alternatives have been proposed, it is unclear which, if any, alternative to LIBOR will be available and widely accepted in major financial markets.
While there is currently no consensus on what rate or rates may become accepted alternatives to LIBOR, a group of large banks, the Alternative Reference Rate Committee ("AARC"), selected the Secured Overnight Financing Rate ("SOFR") as an alternative to LIBOR for U.S. dollar denominated loans and securities. SOFR has been published by the Federal Reserve Bank of New York ("FRBNY") since May 2018, and it is intended to be a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. The FRBNY currently publishes SOFR daily on its website at apps.newyorkfed.org/markets/autorates/sofr. The FRBNY states on its publication page for SOFR that use of SOFR is subject to important disclaimers, limitations and indemnification obligations, including that the FRBNY may alter the methods of calculation, publication schedule, rate revision practices or availability of SOFR at any time without notice. Because SOFR is published by the FRBNY based on data received from other sources, the Company has no control over its determination, calculation or publication. There can be no assurance that SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the parties that utilize SOFR as the reference rate for transactions. There is also no assurance that SOFR will be widely adopted as the replacement reference rate for LIBOR.
The Term Loan and the Revolving Credit Facility each permit both base rate borrowings and LIBOR borrowings, in each case plus a spread above the base rate or LIBOR rate, as applicable. If an alternative to LIBOR is not available and widely accepted after 2022, our ability to borrow at an alternative to the base may be adversely impacted, and the costs associated with any potential future borrowings may increase.
Weakness in economic conditions could adversely affect our business, financial condition and results of operations.
Our money transfer business relies in part on the overall strength of global and local economic conditions. Our consumers tend to be employed in industries such as construction, energy, manufacturing and retail that tend to be cyclical and more significantly impacted by weak economic conditions than other industries. This may result in reduced job opportunities for our customers in the U.S. or other countries that are important to our business, which could adversely affect our business, financial condition and results of operations. For example, sustained weakness in the price of oil could adversely affect economic conditions and lead to reduced job opportunities in certain regions that constitute a significant portion of our total money transfer volume, which could result in a decrease in our transaction volume. In addition, increases in employment opportunities may lag other elements of any economic recovery.
Our agents or billers may have reduced sales or business as a result of weak economic conditions. As a result, our agents could reduce their number of locations or hours of operation, or cease doing business altogether. Our billers may have fewer consumers making payments to them, particularly billers in those industries that may be more affected by an economic downturn such as the automobile, mortgage and retail industries.
Extended periods of economic disruption and high inflation could have an adverse effect on our business. Significant inflation can impact our results of operations and financial condition by increasing interest rates and the cost of labor, equipment and other expenses. In a highly inflationary environment, we may be unable to increase prices for our offerings to offset the corresponding increase to operating costs, which may impact our margins. Further, catastrophic events, including acts of terrorism, outbreak of war or hostilities, civil unrest, adverse climate or weather events and pandemics or other public health emergencies, could lead to extended periods of economic disruption.
As economic conditions deteriorate in a market important to our business, our revenue, financial condition and results of operations can be adversely impacted. Additionally, if our consumer transactions decline due to deteriorating economic conditions, we may be unable to timely and effectively reduce our operating costs or take other actions in response, which could adversely affect our business, financial condition and results of operations.
A significant change or disruption in international migration patterns could adversely affect our business, financial condition and results of operations.
Our money transfer business relies in part on international migration patterns, as individuals move from their native countries to countries with greater economic opportunities or a more stable political environment. A significant portion of money transfer transactions are initiated by immigrants or refugees sending money back to their native countries. Changes in immigration laws that discourage international migration and political or other events (such as war, trade wars, terrorism or health emergencies including but not limited to the COVID-19 pandemic) that make it more difficult for individuals to migrate or work abroad could adversely affect our money transfer remittance volume or growth rate. Specifically, since the start of the COVID-19 pandemic, many governments have initiated, resumed or extended social distancing rules, lockdowns or shelter-in-place orders resulting in the inability of many individuals to migrate or work abroad, which has impacted our business. The resulting economic impact of prior and ongoing COVID-19 governmental lockdown orders could continue to negatively impact our business. Furthermore, continuing increases in COVID-19 cases occurring now or in the future could result in a return to lockdowns and shelter-in-place orders by governments which could negatively impact our business.
Additionally, sustained weakness in global economic conditions could reduce economic opportunities for migrant workers and result in reduced or disrupted international migration patterns. Reduced or disrupted international migration patterns,
particularly in the U.S. or Europe, are likely to reduce money transfer transaction volumes and therefore have an adverse effect on our business, financial condition and results of operations. Furthermore, significant changes in international migration patterns could adversely affect our business, financial condition and results of operations.
There are a number of risks associated with our international sales and operations that could adversely affect our business.
We provide money transfer services between and among more than 200 countries and territories and continue to expand in various international markets. Our ability to grow in international markets and our future results could be adversely affected by a number of factors, including:
•changes in political and economic conditions and potential instability in certain regions, including in particular the recent civil unrest, terrorism, political turmoil and economic uncertainty in Africa, the Middle East, Europe and other regions;
•restrictions on money transfers to, from and between certain countries;
•currency controls, new currency adoptions and repatriation issues;
•changes in regulatory requirements or in foreign policy, including the adoption of domestic or foreign laws, regulations and interpretations detrimental to our business;
•possible increased costs and additional regulatory burdens imposed on our business;
•the implementation of U.S. sanctions, resulting in bank closures in certain countries and the ultimate freezing of our assets;
•burdens of complying with a wide variety of laws and regulations;
•possible fraud or theft losses and lack of compliance by international representatives in foreign legal jurisdictions where collection and legal enforcement may be difficult or costly;
•reduced protection of our intellectual property rights;
•unfavorable tax rules or trade barriers;
•inability to secure, train or monitor international agents; and
•failure to successfully manage our exposure to non-U.S. dollar exchange rates, in particular with respect to the euro.
In particular, a portion of our revenue is generated in currencies other than the U.S. dollar. As a result, we are subject to risks associated with changes in the value of our revenues denominated in non-U.S. dollars. In addition, we maintain significant non-U.S. dollar balances that are subject to volatility and could result in losses due to a devaluation of the U.S. dollar. As exchange rates among the U.S. dollar, the euro and other currencies fluctuate, the impact of these fluctuations may have a material adverse effect on our results of operations or financial condition as reported in U.S. dollars. See Enterprise Risk Management-Non-U.S. Dollar Risk in Item 7A of this 2022 Form 10-K for more information.
Because our business is particularly dependent on the efficient and uninterrupted operation of our information technology, computer network systems and data centers, disruptions to these systems and data centers could adversely affect our business, financial condition and results of operations.
Our ability to provide reliable services largely depends on the efficient and uninterrupted operation of our computer network systems and data centers. Our business involves the movement of large sums of money and the management of data necessary to do so. The success of our business particularly depends upon the efficient and error-free handling of transactions and data. We rely on the ability of our employees and our internal systems and processes, including our consumer applications, to process these transactions in an efficient, uninterrupted and error-free manner.
In the event of a breakdown, catastrophic event (such as fire, natural disaster, power loss, telecommunications failure or physical break-in), security breach, computer virus, improper operation, improper action by our employees, agents, consumers, financial institutions or third-party vendors or any other event impacting our systems or processes or our agents' or vendors' systems or processes, we could suffer financial loss, loss of consumers, regulatory sanctions, lawsuits and damage to our reputation or consumers' confidence in our business. The measures we have enacted, such as the implementation of disaster recovery plans and redundant computer systems, may not be successful. We may also experience problems other than system failures, including software defects, development delays and installation difficulties, which would harm our business and reputation and expose us to potential liability and increased operating expenses. In addition, any work stoppages or other labor actions by employees who support our systems or perform any of our major functions could adversely affect our business. Certain of our agent contracts, including our contract with Walmart, contain service level standards pertaining to the operation of our system and give the agent a right to collect damages or engage other providers and, in extreme situations, a right of termination for system downtime exceeding agreed upon service levels. If we experience significant system interruptions or system failures, our business interruption insurance may not be adequate to compensate us for all losses or damages that we may incur.
In addition, our ability to continue to provide our services to a growing number of agents and consumers, as well as to enhance our existing services and offer new services, is dependent on our information technology systems. If we are unable to effectively manage the technology associated with our business, we could experience increased costs, reductions in system availability and loss of agents or consumers. Any failure of our systems in scalability, reliability and functionality could adversely impact our business, financial condition and results of operations.
We conduct money transfer transactions in some regions that are politically volatile and economically unstable, which could increase our cost of operating in those regions.
We conduct money transfer transactions in some regions that are politically volatile and economically unstable, which could increase our cost of operating in those regions. For example, it is possible that our money transfer services or other products could be used in contravention of applicable law or regulations. Such circumstances could result in increased compliance costs, regulatory inquiries, suspension or revocation of required licenses or registrations, seizure or forfeiture of assets and the imposition of civil and criminal fees and penalties, inability to settle due to currency restrictions or volatility, or other restrictions on our business operations. In addition to monetary fines or penalties that we could incur, we could be subject to reputational harm that could have a material adverse effect on our business, financial condition and results of operations.
Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, could adversely affect our business, financial condition and results of operations.
We face certain risks in the event of a sustained deterioration of financial market liquidity, as well as in the event of sustained deterioration in the liquidity, or failure, of our clearing, cash management and custodial financial institutions. In particular:
•We may be unable to access funds in our investment portfolio, deposit accounts and clearing accounts on a timely basis to settle our payment instruments, pay money transfers and make related settlements to agents. Any resulting need to access other sources of liquidity or short-term borrowing would increase our costs. Any delay or inability to settle our payment instruments, pay money transfers or make related settlements with our agents could adversely impact our business, financial condition and results of operations.
•In the event of a major bank failure, we could face major risks to the recovery of our bank deposits used for the purpose of settling with our agents and to the recovery of a significant portion of our investment portfolio. A substantial portion of our cash, cash equivalents and interest-bearing deposits are either held at banks that are not subject to insurance protection against loss or exceed the deposit insurance limit.
•Our Revolving Credit Facility is one source of funding for our corporate transactions and liquidity needs. If any of the lenders participating in our Revolving Credit Facility were unable or unwilling to fulfill its lending commitment to us, our short-term liquidity and ability to engage in corporate transactions, such as acquisitions, could be adversely affected.
•We may be unable to borrow from financial institutions or institutional investors on favorable terms, which could adversely impact our ability to pursue our growth strategy and fund key strategic initiatives.
If financial liquidity deteriorates, there can be no assurance we will not experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.
An inability by us or our agents to maintain adequate banking relationships may adversely affect our business, financial condition and results of operations.
We rely on domestic and international banks for international cash management, electronic funds transfer and wire transfer services to pay money transfers and settle with our agents. We also rely on domestic banks to provide clearing, processing and settlement functions for our paper-based instruments, including official checks and money orders. Our relationships with these banks are a critical component of our ability to conduct our official check, money order and money transfer businesses. The inability on our part to maintain existing or establish new banking relationships sufficient to enable us to conduct our official check, money order and money transfer businesses could adversely affect our business, financial condition and results of operations. There can be no assurance that we will be able to establish and maintain adequate banking relationships.
If we cannot maintain sufficient relationships with large international banks that provide these services, we would be required to establish a global network of local banks to provide us with these services or implement alternative cash management procedures, which may result in increased costs. Relying on local banks in each country in which we do business could alter the complexity of our treasury operations, degrade the level of automation, visibility and service we currently receive from banks and affect patterns of settlement with our agents. This could result in an increase in operating costs and an increase in the amount of time it takes to concentrate agent remittances and to deliver agent payables, potentially adversely impacting our cash flow, working capital needs and exposure to local currency value fluctuations.
We and our agents are considered Money Service Businesses in the U.S. under the Bank Secrecy Act. U.S. regulators are increasingly taking the position that Money Service Businesses, as a class, are high risk businesses. In addition, the creation of
anti-money laundering laws has created concern and awareness among banks of the negative implications of aiding and abetting money laundering activity. As a result, banks may choose not to provide banking services to Money Services Businesses in certain regions due to the risk of additional regulatory scrutiny and the cost of building and maintaining additional compliance functions. In addition, certain foreign banks have been forced to terminate relationships with Money Services Businesses by U.S. correspondent banks. As a result, we and certain of our agents have been denied access to retail banking services in certain markets by banks that have sought to reduce their exposure to Money Services Businesses and not as a result of any concern related to the Company's compliance programs. If we or our agents are unable to obtain sufficient banking relationships, we or they may not be able to offer our services in a particular region, which could adversely affect our business, financial condition and results of operations.
Changes in tax laws and unfavorable outcomes of tax positions we take could adversely affect our tax expense and liquidity.
From time to time, the U.S. federal, state, local and foreign governments may enact legislation that could increase our effective tax rates. If changes to applicable tax laws are enacted that significantly increase our corporate effective tax rate, our net income could be negatively impacted.
We file tax returns and take positions with respect to federal, state, local and international taxation, and our tax returns and tax positions are subject to review and audit by taxing authorities. An unfavorable outcome in a tax review or audit could result in higher tax expense, including interest and penalties, which could adversely affect our financial condition, results of operations and cash flows. We establish reserves for material known tax exposures; however, there can be no assurance that an actual taxation event would not exceed our reserves.
We face credit risks from our agents and financial institutions with which we do business.
The vast majority of our money transfer, bill payment and money order business is conducted through independent agents that provide our products and services to consumers at their business locations. Our agents receive the proceeds from the sale of our payment instruments and money transfers, and we must then collect these funds from the agents. If an agent becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit payment instruments or money transfer proceeds to us, we must nonetheless pay the payment instrument or complete the money transfer on behalf of the consumer.
Moreover, we have made and may make in the future, secured or unsecured loans to agents under limited circumstances or allow agents to retain our funds for a period of time before remitting them to us. As of December 31, 2022, we had credit exposure to our agents of $436.0 million in the aggregate spread across 6,378 agents.
Financial institutions, which are utilized to conduct business for our FPP segment, issue official checks and money orders and remit to us the face amounts of those instruments the day after they are issued. We may be liable for payment on all of those instruments. As of December 31, 2022, we had credit exposure for official checks and money orders conducted by financial institutions of $379.0 million in the aggregate spread across 961 financial institutions. In addition, we maintain balances in banks and digital asset exchanges around the world for our money transfer business. The deposits in these institutions may not have balance protection and, in the case of digital asset exchanges, may not be subject to regulation.
We monitor the creditworthiness of our agents and the financial institutions with which we do business on an ongoing basis. There can be no assurance that the models and approaches we use to assess and monitor the creditworthiness of our agents and these financial institutions will be sufficiently predictive, and we may be unable to detect and take steps to timely mitigate an increased credit risk.
In the event of an agent bankruptcy or a financial institution receivership or insolvency, we would generally be in the position of creditor, possibly with limited or no security, and we would therefore be at risk of a reduced recovery. We are not insured against credit losses, except in circumstances of agent theft or fraud. Significant credit losses could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to adequately protect our brand and the intellectual property rights related to our existing and any new or enhanced products and services, or if we infringe on the rights of others, our business, prospects, financial condition and results of operations could be adversely affected.
The MoneyGram brand is important to our business. We utilize trademark registrations in various countries and other tools to protect our brand. Our business would be harmed if we were unable to adequately protect our brand and the value of our brand was to decrease as a result.
We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect the intellectual property rights related to our products and services. We also investigate the intellectual property rights of third parties to prevent our infringement of those rights. We may be subject to third-party claims alleging that we infringe their intellectual property rights or have misappropriated other proprietary rights. We may be required to spend resources to defend such claims or to protect and police our own rights. We cannot be certain of the outcome of any such allegations. Some of our intellectual property rights may not be protected by intellectual property laws, particularly in foreign
jurisdictions. The loss of our intellectual property protection, the inability to secure or enforce intellectual property protection or to successfully defend against claims of intellectual property infringement could harm our business, prospects, financial condition and results of operation.
Failure to attract and retain key employees could have a material adverse impact on our business.
Our success depends to a large extent upon our ability to attract and retain key employees. Qualified individuals with experience in our industry are in high demand. In addition, legal or enforcement actions against compliance and other personnel in the money transfer industry may affect our ability to attract and retain key employees. The lack of management continuity or the loss of one or more members of our executive management team could harm our business and future development.
Any restructuring activities and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business operations.
We have undertaken and may in the future undertake various restructuring activities and cost reduction initiatives in an effort to better align our organizational structure and costs with our strategy. These activities and initiatives can be substantial in scope, and they can involve large expenditures. Such activities could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successful implementation and completion of our strategic objectives and the results of our operations. If we do not fully realize or maintain the anticipated benefits of any restructuring plan or cost reduction initiative, our business, financial condition and results of operations could be adversely affected.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business.
We are required to certify and report on our compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm addressing the effectiveness of our internal control over financial reporting. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. In order to achieve effective internal controls, we may need to enhance our accounting systems or processes, which could increase our cost of doing business. Any failure to achieve and maintain an effective internal control environment could have a material adverse effect on our business.
Risks Related to Ownership of Our Stock
Our charter and Delaware law contain provisions that could delay or prevent an acquisition of the Company, which could inhibit your ability to receive a premium on your investment from a possible sale of the Company.
Our charter contains provisions that may discourage third parties from seeking to acquire the Company. These provisions and specific provisions of Delaware law relating to business combinations with interested stockholders may have the effect of delaying, deterring or preventing certain business combinations, including a merger or change in control of the Company. Some of these provisions may discourage a future acquisition of the Company even if stockholders would receive an attractive value for their shares or if a significant number of our stockholders believed such a proposed transaction to be in their best interests. As a result, stockholders who desire to participate in such a transaction may not have the opportunity to do so.
Our amended and restated bylaws provide that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for certain types of lawsuits, which could limit our stockholders’ ability to obtain their preferred judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated bylaws provide that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for each of the following:
•any derivative action or proceeding brought on behalf of the Company;
•any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Company to the Company or the Company’s stockholders;
•any action arising pursuant to any provision of the Delaware General Corporation Law; and
•any action asserting a claim governed by the internal affairs doctrine.
These exclusive-forum provisions do not apply to claims under the Securities Act, the Exchange Act or any other claims for which the federal courts have exclusive jurisdiction.
Any person or entity purchasing or otherwise acquiring any interest in any shares of our stock shall be deemed to have notice of and to have consented to the exclusive forum provisions in our amended and restated bylaws.
These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If any other court of competent jurisdiction were to find our exclusive-forum provision in our amended and restated bylaws to be inapplicable or unenforceable, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business.
Our Board of Directors has the power to issue series of preferred stock and to designate the rights and preferences of those series, which could adversely affect the voting power, dividend, liquidation and other rights of holders of our common stock.
Under our charter, our Board of Directors has the power to issue series of preferred stock and to designate the rights and preferences of those series. Therefore, our Board of Directors may designate a new series of preferred stock with the rights, preferences and privileges that our Board of Directors deems appropriate, including special dividend, liquidation and voting rights. The creation and designation of a new series of preferred stock could adversely affect the voting power, dividend, liquidation and other rights of holders of our common stock and, possibly, any other class or series of stock that is then in existence.
The market price of our common stock may be volatile.
The market price of our common stock may fluctuate significantly in response to a number of factors, some of which may be beyond our control. These factors include the perceived prospects for or actual operating results of our business; changes in estimates of our operating results by analysts, investors or our management; our actual operating results relative to such estimates or expectations; actions or announcements by us, our agents, or our competitors; litigation and judicial decisions; legislative or regulatory actions; and changes in general economic or market conditions. In addition, the stock market in general has from time to time experienced extreme price and volume fluctuations. These market fluctuations could reduce the market price of our common stock for reasons unrelated to our operating performance.
Investors in our common stock may be subject to state money transmitter change of control notice and approval requirements if their aggregate ownership equals or exceeds 10% of our outstanding voting or non-voting shares.
MoneyGram Payment Systems, Inc., one of our wholly owned subsidiaries, owns a money transmitter license, or the statutory equivalent, in each of the 49 U.S. states that require such a license to operate, as well as in certain U.S. territories. While state statutes governing money transmitters vary, most require investors to receive the approval of, or provide notice to, the relevant licensing authority before exceeding a certain ownership threshold, including indirect ownership, in a licensed money transmitter. These ownership thresholds vary by state, with the lowest being at 10% of voting or non-voting shares outstanding. Accordingly, current or prospective investors seeking to acquire 10% or greater ownership of MoneyGram in the aggregate would need to first obtain such regulatory approvals or provide such notices to the relevant regulators.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
Our leased corporate offices are located in Dallas, TX. We have a number of offices leased in more than 30 countries and territories around the world including, but not limited to: U.S., United Kingdom, Poland and United Arab Emirates. These offices provide operational, sales and marketing support and are used by both our GFT Segment and our FPP Segment. We believe that our properties are sufficient to meet our current and projected needs. We periodically review our facility requirements and may acquire new facilities, or modify, consolidate, dispose of or sublet existing facilities, based on business needs.
Item 3. LEGAL PROCEEDINGS
A description of our legal proceedings is included in and incorporated by reference to Note 14 — Commitments and Contingencies of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report. Item 4. MINE SAFETY DISCLOSURES
None.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Nasdaq Stock Market LLC under the symbol "MGI." As of February 22, 2023, there were 6,699 stockholders of record of our common stock.
On November 6, 2021, our Board of Directors has authorized the repurchase from time to time, on the open market and in private-negotiated transactions, shares of common stock. The aggregate repurchases of common stock, inclusive of any prior repurchase authorizations previously remaining, shall not exceed $50.0 million in the aggregate, exclusive of any fees, commissions or other expenses related to such repurchases. The Company is subject to limitations in our debt agreements on the amount of shares it may repurchase. Common stock tendered to, or withheld by, the Company in connection with the exercise of stock options or vesting of restricted stock units is not considered repurchased shares under the terms of the repurchase authorization. As of December 31, 2022, the Company had repurchased 1,023,209 shares or $6.1 million in common stock and has remaining authorization to repurchase $43.9 million in common stock. The Merger Agreement contains certain restrictions that limit the Company's ability to make repurchases.
During the three months ended December 31, 2022, the Company did not repurchase any common shares.
STOCKHOLDER RETURN PERFORMANCE
The Company's peer group consists of companies that are in the money remittance and payment industries, along with companies that effectively capture our competitive landscape given the products and services that we provide. The old peer group is composed of the following companies: Euronet Worldwide Inc., Fiserv, Inc., Global Payments Inc., International Money Express, Inc., PayPal Holdings, Inc., and Western Union. The new peer group includes Block, Inc. in addition of the old peer group.
The following graph compares the cumulative total return from December 31, 2017 to December 31, 2022 for our common stock, our new and old peer groups of payment services companies and the S&P 500 Index. The graph assumes the investment of $100 in each of our common stock, our new and old peer groups and the S&P 500 Index on December 31, 2017, and the reinvestment of all dividends as and when distributed. The graph is furnished and shall not be deemed "filed" with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG MONEYGRAM INTERNATIONAL, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
*$100 invested on 12/31/2017 in stock or index, including reinvestment of dividends.
The following table is a summary of the cumulative total return for the fiscal years ending December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 12/31/2017 | | 12/31/2018 | | 12/31/2019 | | 12/31/2020 | | 12/31/2021 | | 12/31/2022 |
MoneyGram International, Inc. | | $ | 100.00 | | | $ | 15.17 | | | $ | 15.93 | | | $ | 41.46 | | | $ | 59.86 | | | $ | 82.63 | |
S&P 500 | | $ | 100.00 | | | $ | 95.62 | | | $ | 125.72 | | | $ | 148.85 | | | $ | 191.58 | | | $ | 156.89 | |
Peer Group | | $ | 100.00 | | | $ | 115.83 | | | $ | 159.33 | | | $ | 274.20 | | | $ | 216.31 | | | $ | 113.96 | |
| | | | | | | | | | | | |
Item 6. [RESERVED]
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes contained in Part II, Item 8 of this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussed above under Cautionary Statements Regarding Forward-Looking Statements and under the caption Risk Factors in Part I, Item 1A of this 2022 Form 10-K.
OVERVIEW
MoneyGram is a global leader in cross-border P2P payments and money transfers. Our consumer-centric capabilities enable the quick and affordable transfer of money to family and friends around the world. Whether through online and mobile platforms, integration with mobile wallets, kiosks, or any one of the hundreds of thousands of agent locations in over 200 countries and territories, with over 100 now digitally enabled, the innovative MoneyGram platform connects consumers in ways designed to be convenient for them. In the U.S. and in select countries and territories, we also provide bill payment services, issue money orders and process official checks. We primarily offer our services and products through our Digital Channel and third-party agents. The Digital Channel includes MGO (our direct-to-consumer business), digital partners, direct transfers to bank accounts, mobile wallets and debit card solutions such as Visa Direct. Third-party agents include retail chains, independent retailers, post offices and financial institutions. MoneyGram also has a limited number of Company-operated retail locations.
We manage our revenue and related commissions expense through two reporting segments: GFT and FPP. The GFT segment provides global money transfer services in more than 440,000 agent locations. Our global money transfer services are our primary revenue driver, accounting for 91% of total revenue for the year ended December 31, 2022. The GFT segment also provides bill payment services to consumers through substantially all of our money transfer agent locations in the U.S., at certain agent locations in select Caribbean and European countries and through our Digital Channel. The FPP segment provides money order services to consumers through retail locations and financial institutions located in the U.S. and Puerto Rico and provides official check services to financial institutions in the U.S.
Business Environment
The competitive environment continues to change as both established players and new, digital-only entrants work to innovate and deliver an affordable and convenient customer experience to win market share. Our competitors include a small number of large money transfer and bill payment providers, financial institutions, banks and a number of small niche money transfer service providers that serve select regions. We generally compete on the basis of customer experience, price, agent commissions, brand awareness and convenience.
We continue to invest in innovative products and services, such as our leading mobile app and integrations with mobile wallets and account deposit services, to position the Company to meet consumer needs. Furthermore, our partnership with Visa Direct provides consumers with additional choices on how to receive funds across a broader number of countries. We believe that combining our cash and digital capabilities enables us to differentiate against digital-only competitors who are not able to serve a significant portion of the remittance market that relies on cash.
As a leader in the evolution of digital P2P payments, we were the first company to utilize blockchain technology at scale for cross-border payments. Given our extensive global network, strong culture of fintech innovation, expertise in compliance and API-driven infrastructure, we are well-positioned to lead cross-border payment innovation.
Recent Developments
On February 14, 2022, we entered into a Merger Agreement by and among the Company, Parent and an affiliate of MDP, and Merger Sub. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. Following the Merger, the Company will become a subsidiary of Parent. At the effective time of the Merger, each outstanding share of common stock will be automatically canceled and converted into the right to receive $11.00 in cash.
On May 23, 2022, the Company held a virtual-only special meeting of stockholders related to the Merger Agreement and stockholders approved and adopted the Merger Agreement.
To date, money transmission regulators in all applicable U.S. states and territories have provided their approval or non-objection of the transaction. In addition, the parties have obtained all but one approval from international money transmission regulators and have received approval from the FCA in the United Kingdom and the National Bank of Belgium where MoneyGram holds its European license. While the waiting period under the Hart-Scott-Rodino ("HSR") Antitrust Improvements Act of 1976 had previously expired, the parties recently refiled the application as the existing approval was set to expire. The new HSR waiting period is set to expire on March 13, 2023. The parties previously received all required international antitrust and foreign direct investment approvals.
The final regulatory approval is to be issued by the Reserve Bank of India (“RBI”). The RBI is the issuer of MoneyGram’s Money Transfer Service Scheme ("MTSS") license in India. Since the Company and MDP signed the Merger Agreement, the RBI issued a new Circular covering approval requirements related to Payment System Operators ("PSO") such as the Company. The Merger will be one of the first PSOs undergoing a sale since the Circular was issued. As a result, the process has been taking longer than originally anticipated. MoneyGram has been in active dialogue with the RBI and the Central Government of India regarding its review of the Merger.
Prior to closing, the parties will engage in a financing marketing period which, pursuant to the merger agreement, may last for as long as fifteen consecutive business days. Closing would occur within a matter of days after completing the marketing period.
The parties have agreed to extend the end date beyond February 14, 2023, in accordance with the Merger Agreement, to May 14, 2023. In light of the timing and factors discussed above, the parties now expect to close the Merger either late in the first quarter or early in the second quarter of 2023.
On March 16, 2022, we announced that a final agreement had been reached to settle its previously disclosed legacy enforcement matter with NYDFS through a consent order. The Company paid a civil monetary penalty of $8.3 million to the NYDFS and will undertake various reporting obligations. This payment is consistent with the estimated amount that MoneyGram previously accrued in the fourth quarter of 2021.
On March 11, 2022, MoneyGram and Stellar Development Foundation announced a new partnership with Techstars, a global investment business that provides access to capital, one-on-one mentorship and customized programming for entrepreneurs. The program will recruit founders across the world who are focused on driving technological innovation in areas such as blockchain and digital payments to further streamline cross-border payments and support financial inclusion.
During 2022, the U.S. dollar strengthened significantly against most major currencies. The impact was a reduction in the value of foreign-based revenue as it is converted to our reporting currency, the U.S. dollar.
Anticipated Trends
This discussion of trends expected to impact our business in 2023 is based on information presently available and reflects certain assumptions, including assumptions regarding future economic conditions. Differences in actual economic conditions compared with our assumptions could have a material impact on our results. See Cautionary Statements Regarding Forward-Looking Statements and Part I, Item 1A, Risks Factors of our 2022 Form 10-K for additional factors that could cause results to differ materially from those contemplated by the following forward-looking statements.
In 2022, MoneyGram focused on positioning the Company to better compete by delivering a differentiated customer experience, scaling our digital growth, being the preferred partner for cross-border transactions, capturing new revenue by monetizing our capabilities and continuing to improve the cost structure of the Company.
Through 2023, we believe the industry will continue to see a number of trends, including the growth of digital transactions, a competitive pricing environment, continuing focus on customer experience and a broader trend towards potential diversification of product and service offerings.
We also anticipate a U.S. dollar strengthening as interest rates rise faster in the US compared to other industrialized countries, especially in Europe.
To position the Company to respond to these trends, our digital-first strategy is creating tremendous value for consumers. To address this new and evolving digital consumer, we expect to continue to invest in product innovation as we look to go deeper and wider in our consumer-direct digital offerings. We also plan to expand MGO to new countries, add new digital send partners and add more wallets and account deposit offerings.
As we grow our digital business, we will also focus on maintaining our global cash network. MoneyGram's cash receive network is essential to millions of receivers around the world who rely on cash to support the urgent needs of their families. Additionally, the cash network continues to provide benefit for those consumers who need to send cash in many markets.
During 2022, we began executing on our strategy to lead cross-border payment innovation and blockchain-enabled settlement through growing our partnership with the Stellar Development Foundation as well as through other initiatives and partnerships.
We continue monitoring the social, political, regulatory and economic environment around the world. Changes in these factors could cause us to alter our approach in certain markets. There could be adverse impacts to our revenues, earnings and cash flows should economic and political conditions deteriorate beyond the current state, including, among other potential impacts, economic recessions, inflationary pressures, war and political instability.
We expect a high level of competition for agents and customers, along with competitive pricing to be a continuous challenge in 2023. Currency volatility, inflation, liquidity pressure on certain central banks, immigration restrictions and continuing immobility of labor throughout the world may also continue to impact our business. We also anticipate continuing prioritization of our operating cost structure as well as our transaction related expenses and expect to remain price competitive across our product line.
For our FPP segment, we expect the gradual decline in overall paper-based transactions to continue primarily due to continued gradual migration by customers to other payment methods. Our investment revenue, which consists primarily of interest income generated through the investment of cash balances received from the sale of our FPP, is dependent on the prevailing short-term interest rate environment in the United States. The Company will see a positive impact on its investment revenue as U.S. money market rates rise in conjunction with actions by the Federal Reserve.
COVID-19 Update
General Economic Conditions and MoneyGram Impact
The global spread and unprecedented impact of COVID-19 and its variants is complex and ever-evolving. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak is global and has impacted all the countries in which we do business. Since the outbreak, we have seen the profound effect it is having on human health, the global economy and society at large. Public and private sector policies aimed at reducing the transmission of COVID-19 have varied significantly in different regions of the world, but have resulted in travel restrictions as well as certain business closures across many of the countries in which we operate. Multiple variants of COVID-19 combined with a lack of vaccinations in many countries have resulted in new waves of infections and new restrictions. These restrictions, combined with limitations on labor mobility, often have an impact on the ability of consumers to transact at agent locations, which can cause temporary reductions in remittance activity.
It is impossible to predict the scope and duration of the impact of the COVID-19 pandemic as the situation has been different on a country by country basis. The impact of COVID-19 and its variants in 2022 and beyond will depend on the duration and severity of economic conditions resulting from the crisis, its impact on public health, immigration, public policy actions, vaccination rates and expansion and duration of returns to lockdowns and shelter-in-place orders by governments, as well as changes in consumer behavior over the long term.
We continue to place a priority on business continuity and contingency planning, including for potential extended closures of any key agents or disruptions related to our contractual counterparties that might arise as a result of COVID-19. While disruptions in our service offerings have occurred from time to time from temporary agent location closures, the inability of labor markets to return to normal mobility can represent a longer impact on the Company. We cannot reasonably estimate the potential impact or timing of those events, and we may not be able to mitigate such impact.
Financial Measures and Key Metrics
This 2022 Form 10-K includes financial information prepared in accordance with U.S. GAAP as well as certain non-GAAP financial measures that we use to assess our overall performance.
U.S. GAAP Measures — We utilize certain financial measures prepared in accordance with U.S. GAAP to assess the Company's overall performance. These measures include fee and other revenue, commissions and other fee expense, fee and other revenue less commissions, gross profit, operating income and operating margin.
Non-GAAP Measures — Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable
measure calculated and presented in accordance with U.S. GAAP. The non-GAAP financial measures should be viewed as a supplement to and not a substitute for, financial measures presented in accordance with U.S. GAAP and are not necessarily comparable with similarly named metrics of other companies. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. We believe that the non-GAAP financial measures enhance investors' understanding of our business and performance because they are an indicator of the strength and performance of ongoing business operations. The non-GAAP measures are commonly used as a basis for investors, analysts and other interested parties to evaluate and compare the operating performance and value of companies within our industry. They are also used by management in reviewing results of operations, forecasting, allocating resources or establishing employee incentive programs. The following are non-GAAP financial measures we use to assess our overall performance:
EBITDA (Earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization).
Adjusted EBITDA (EBITDA adjusted for certain significant items) — Adjusted EBITDA does not reflect cash requirements necessary to service interest or principal payments on our indebtedness or tax payments that may result in a reduction in cash available.
Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes, cash payments for capital expenditures and cash payments for agent signing bonuses) — Adjusted Free Cash Flow does not reflect cash payments related to the adjustment of certain significant items in Adjusted EBITDA.
RESULTS OF OPERATIONS
The following table is a summary of the results of operations for the years ended December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Revenue | | | | |
Fee and other revenue | | $ | 1,272.2 | | | $ | 1,275.8 | |
Investment revenue | | 37.9 | | | 7.8 | |
Total revenue | | 1,310.1 | | | 1,283.6 | |
Cost of revenue | | | | |
Commissions and other fee expense | | 610.7 | | | 622.7 | |
Investment commissions expense | | 21.9 | | | 0.9 | |
Direct transaction expense | | 57.6 | | | 60.5 | |
Total cost of revenue | | 690.2 | | | 684.1 | |
Gross profit | | 619.9 | | | 599.5 | |
Operating expenses | | | | |
Compensation and benefits | | 228.0 | | | 227.8 | |
Transaction and operations support | | 187.2 | | | 179.1 | |
Occupancy, equipment and supplies | | 59.8 | | | 61.9 | |
Depreciation and amortization | | 51.7 | | | 57.0 | |
Total operating expenses | | 526.7 | | | 525.8 | |
Operating income | | 93.2 | | | 73.7 | |
Other expenses | | | | |
Interest expense | | 49.4 | | | 69.5 | |
Loss on early extinguishment of debt | | — | | | 44.1 | |
Other non-operating expense | | 4.0 | | | 3.7 | |
Total other expenses | | 53.4 | | | 117.3 | |
Income (loss) before income taxes | | 39.8 | | | (43.6) | |
Income tax expense (benefit) | | 5.6 | | | (5.7) | |
Net income (loss) | | $ | 34.2 | | | $ | (37.9) | |
Revenue
Revenue increased by $26.5 million for the year ended December 31, 2022, due to an increase in FPP revenue of $29.4 million, partially offset by a decrease in GFT revenue of $2.9 million. See the "Segments Results" section below for a detailed discussion of revenues by segment.
Cost of Revenue
Cost of revenue increased by $6.1 million for the year ended December 31, 2022, due to an increase in FPP cost of revenue of $21.1 million, partially offset by a decrease in GFT cost of revenue of $15.0 million. See the "Segments Results" section below for further discussions.
Compensation and Benefits
Compensation and benefits remained relatively flat for the year ended December 31, 2022.
Transaction and Operations Support
Transaction and operations support primarily includes marketing, professional fees, customer care and other outside services, telecommunications, agent support costs, including forms related to our products, non-compensation employee costs, including training, travel and relocation costs, non-employee director stock-based compensation expense, bank charges, the impact of non-U.S. dollar exchange rate movements on our monetary transactions, assets and liabilities denominated in a currency other than the U.S. dollar.
Transaction and operations support increased by $8.1 million for the year ended December 31, 2022. The increase is primarily due to a return to pre-pandemic levels of activities such as marketing campaigns and business travel, higher transaction costs associated with the pending merger, partially offset by a decrease in legal expenses related to the NYDFS and CFPB matters.
Occupancy, Equipment and Supplies
Occupancy, equipment and supplies expense includes facilities rent and maintenance costs, software and equipment maintenance costs, freight and delivery costs and supplies. Occupancy, equipment and supplies expense decreased by $2.1 million for the year ended December 31, 2022, primarily due to a decrease in facilities costs as a result of a reduction of our global footprint since providing our employees with the option of a work-from-home policy in the second quarter of 2021.
Depreciation and Amortization
Depreciation and amortization includes depreciation on computer hardware and software, agent signage, point of sale equipment, capitalized software development costs, office furniture, equipment and leasehold improvements and amortization of intangible assets. Depreciation and amortization decreased by $5.3 million for the year ended December 31, 2022, primarily due to a continued decrease in purchases of hardware and software as a result of our migration to cloud computing and a decrease in office furniture and equipment.
Other Expenses
Interest Expense decreased by $20.1 million for the year ended December 31, 2022, primarily due to interest savings as a result of our refinancing of high-cost debt in the third quarter of 2021.
Loss on Early Extinguishment of Debt of $44.1 million for the year ended December 31, 2021, included $16.5 million of prepayment call premium and $27.6 million associated with the write-off of debt issuance costs and debt discounts.
Other non-operating expense remained relatively flat.
Income Tax Expense
For the year ended December 31, 2022, the Company recognized an income tax expense of $5.6 million on a pre-tax income of $39.8 million. Our income tax rate was lower than the statutory rate primarily due to U.S. general business credits, a net decrease in valuation allowance, a net decrease in unrecognized tax benefits, recognition of excess tax benefits on share-based compensation, all of which were partially offset by non-deductible expenses and foreign taxes net of federal income tax benefits. See Note 13 — Income Taxes of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report for additional information related to our unrecognized tax benefits.
Segments Results
GFT
The following table sets forth our GFT segment results of operations for the years ended December 31:
| | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | |
Money transfer revenue | | $ | 1,190.3 | | | $ | 1,189.2 | | | |
Bill payment revenue | | 35.6 | | | 39.6 | | | |
Total revenue | | 1,225.9 | | | 1,228.8 | | | |
| | | | | | |
Cost of revenue | | 668.2 | | | 683.2 | | | |
Gross profit | | $ | 557.7 | | | $ | 545.6 | | | |
Money Transfer Revenue
Money transfer revenue for the year ended December 31, 2022, was relatively flat when compared to the same period in 2021. Money transfer revenue was negatively impacted by a strengthening U.S. Dollar relative to most other major currencies. Offsetting the currency headwinds were continued strong results for our digital business. Digital revenue increased to $98.6 million or an increase of 37% during the year ended December 31, 2022. Digital revenue now accounts for 31% of our total money transfer revenues.
Bill Payment Revenue
Bill payment revenue decreased by $4.0 million for the year ended December 31, 2022, due to lower transactions.
Cost of Revenue
Cost of revenue decreased by $15.0 million for the year ended December 31, 2022, primarily due to a decrease in commissions and other fee expense driven by lower rates in commissions associated with both MGO and walk-in business and the dollar strengthening against most major currencies.
FPP
The following table sets forth our FPP segment results of operations for the years ended December 31:
| | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | |
Money order revenue | | $ | 44.1 | | | $ | 40.9 | | | |
Official check revenue | | 40.1 | | | 13.9 | | | |
Total revenue | | 84.2 | | | 54.8 | | | |
| | | | | | |
Investment commissions expense | | 22.0 | | | 0.9 | | | |
Gross profit | | $ | 62.2 | | | $ | 53.9 | | | |
Money Order Revenue
Money order revenue increased by $3.2 million for the year ended December 31, 2022, primarily due to an increase in investment revenue as a result of higher prevailing interest rates driven by an increase in the federal funds rate.
Official check revenue
Official check revenue increased by $26.2 million for the year ended December 31, 2022, primarily due to an increase in investment revenue as a result of higher prevailing interest rates driven by an increase in the federal funds rate.
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 are recognized each month based on the average outstanding balances of each financial institution customer and their contractual variable rate for that month. In periods of extremely low interest rates, it is possible for commissions to be at or close to zero, resulting in abnormally high gross margin.
Commissions expense increased by $21.1 million for the year ended December 31, 2022, due to higher interest rates as a result of recent actions taken by the Federal Reserve.
EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and Constant Currency (Non-GAAP Measures)
The following table is a reconciliation of our non-GAAP financial measures to the related U.S. GAAP financial measures for the years ended December 31:
| | | | | | | | | | | | | | | | | | | |
(Amounts in millions, except percentages) | | | | 2022 | | 2021 | | | |
Income (loss) before income taxes | | | | $ | 39.8 | | | $ | (43.6) | | | | |
Interest expense | | | | 49.4 | | | 69.5 | | | | |
Depreciation and amortization | | | | 51.7 | | | 57.0 | | | | |
Signing bonus amortization | | | | 50.1 | | | 56.4 | | | | |
EBITDA | | | | 191.0 | | | 139.3 | | | | |
Significant items impacting EBITDA: | | | | | | | | | |
Stock-based, contingent, incentive compensation and other | | | | 15.8 | | | 7.3 | | | | |
Merger-related costs | | | | 7.7 | | | — | | | | |
Severance and related costs | | | | 1.9 | | | 0.2 | | | | |
Legal and contingent matters | | | | 1.9 | | | 14.1 | | | | |
Restructuring and reorganization costs | | | | (0.9) | | | 9.4 | | | | |
| | | | | | | | | |
Loss on early extinguishment of debt | | | | — | | | 44.1 | | | | |
Compliance enhancement program | | | | — | | | 2.9 | | | | |
Direct monitor costs | | | | — | | | 4.9 | | | | |
Adjusted EBITDA | | | | $ | 217.4 | | | $ | 222.2 | | | | |
| | | | | | | | | |
Adjusted EBITDA | | | | $ | 217.4 | | $ | 222.2 | | | |
Cash payments for interest | | | | (47.5) | | (51.8) | | | | |
Cash (payments) refunds for taxes, net | | | | (13.7) | | (5.7) | | | | |
Cash payments for capital expenditures | | | | (53.8) | | (41.4) | | | | |
Cash payments for agent signing bonuses | | | | (36.9) | | (36.0) | | | | |
Adjusted Free Cash Flow | | | | $ | 65.5 | | $ | 87.3 | | | | |
See "Results of Operations" and "Analysis of Cash Flows" sections for additional information regarding these changes.
LIQUIDITY AND CAPITAL RESOURCES
We have various resources available 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, settlement cash and cash equivalents, interest-bearing investments and available-for-sale investments collectively as our "investment portfolio." The Company utilizes cash and cash equivalents in various liquidity and capital assessments.
Cash and Cash Equivalents, Settlement Assets and Payment Service Obligations
The following table shows the components of the Company's cash and cash equivalents and settlement assets as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Cash and cash equivalents | | $ | 172.1 | | | $ | 155.2 | |
Settlement assets: | | | | |
Settlement cash and cash equivalents | | $ | 1,499.1 | | | $ | 1,895.7 | |
Receivables, net | | 1,107.0 | | | 700.4 | |
Interest-bearing investments | | 998.1 | | | 992.3 | |
Available-for-sale investments | | 3.0 | | | 3.0 | |
Total settlement assets | | $ | 3,607.2 | | | $ | 3,591.4 | |
| | | | |
Payment service obligations | | $ | (3,607.2) | | | $ | (3,591.4) | |
Our primary sources of liquidity include cash flows generated by the sale of our payment instruments, our cash and cash equivalents and interest-bearing deposit balances and proceeds from our investment portfolio. Our primary operating liquidity needs are related to the settlement of payment service obligations to our agents and financial institution customers, general operating expenses and debt service.
To meet our payment service obligations at all times, we must have sufficient highly-liquid assets and be able to move funds globally on a timely basis. On average, we receive in and pay out a similar amount of funds on a daily basis to collect and settle the principal amount of our payment instruments sold and related fees and commissions with our end-consumers and agents. This pattern of cash flows allows us to settle our payment service obligations through existing cash balances and ongoing cash generation rather than liquidating investments or utilizing our Revolving Credit Facility. We have historically generated and expect to continue generating, sufficient cash flows from daily operations to fund ongoing operational needs.
We preposition cash in various countries and currencies to facilitate settlement of transactions. We also maintain funding capacity beyond our daily operating needs to provide a cushion through the normal fluctuations in our payment service obligations, as well as to provide working capital for the operational and growth requirements of our business. We believe we have sufficient liquid assets and funding capacity to operate and grow our business for the next 12 months. Should our liquidity needs exceed our operating cash flows, we believe that external financing sources, including availability under our Revolving Credit Facility, will be sufficient to meet our anticipated funding requirements.
Cash and Cash Equivalents and Interest-bearing Investments
To ensure we maintain adequate liquidity to meet our payment service obligations at all times, we keep a significant portion of our investment portfolio in cash and cash equivalents and interest-bearing investments at financial institutions rated A- or better by two of the following three rating agencies: Moody's, S&P and Fitch; and in AAA rated U.S. government money market funds. If the rating agencies have split ratings, the Company uses the lower of the highest two out of three ratings across the agencies for disclosure purposes. If the institution has only two ratings, the Company uses the lower of the two ratings for disclosure purposes. As of December 31, 2022, cash and cash equivalents (including unrestricted and settlement cash and cash equivalents) and interest-bearing investments totaled $2.7 billion. Cash and cash equivalents consist of interest-bearing deposit accounts, non-interest-bearing transaction accounts and money market securities; interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months.
Available-for-sale Investments
Our investment portfolio includes $3.0 million of available-for-sale investments as of December 31, 2022. U.S. government agency residential mortgage-backed securities comprise $1.5 million of our available-for-sale investments, while asset-backed and other securities compose the remaining $1.5 million.
Clearing and Cash Management Banks
We collect and disburse money through a network of clearing and cash management banks. The relationships with these banks are a critical component of our ability to maintain our global active funding requirements on a timely basis. In the U.S., we have agreements with four active clearing banks that provide clearing and processing functions for official checks, money orders and other draft instruments. We believe that this network of banks provides sufficient capacity to handle the current and projected volumes of items for these services. We also maintain relationships with a variety of domestic and international cash management banks for electronic funds transfer and wire transfer services used in the movement of consumer funds and agent settlements.
Credit Facilities and Notes
The following is a summary of the Company's outstanding debt as of December 31: | | | | | | | | | | | | | | |
(Amounts in millions, except percentages) | | 2022 | | 2021 |
8.571% Term Loan due 2026 | | $ | 380.0 | | | $ | 384.0 | |
5.375% Senior Secured Notes due 2026 | | 415.0 | | | 415.0 | |
Total debt at face value | | 795.0 | | | 799.0 | |
Unamortized debt issuance costs and debt discounts | | (9.6) | | | (12.3) | |
Total debt, net | | $ | 785.4 | | | $ | 786.7 | |
As of December 31, 2022, the Company had no borrowings and no outstanding letters of credit under its Revolving Credit Facility and had $40.0 million of availability. See Note 9 — Debt of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report for additional disclosure related to the credit facilities.
During the first half of 2021, the First Lien Credit Agreement and Second Lien Credit Agreement were in effect. The First Lien Credit Agreement provided for (a) a senior secured three-year revolving credit facility available for revolving credit loans, swingline loans and letters of credit up to an aggregate principal amount of $35.0 million, and was scheduled to mature on September 30, 2022, (the "First Lien Revolving Credit Facility") and (b) a senior secured four-year term loan facility in an aggregate principal amount of $645.0 million (the "First Lien Term Credit Facility" and together with the First Lien Revolving Credit Facility, the "First Lien Credit Facility"). The Second Lien Credit Agreement provided for a second lien secured five-year term loan facility in an aggregate principal amount of $245.0 million (the "Second Lien Term Credit Facility" and together with the First Lien Credit Facility, the "Prior Credit Facilities").
On June 28, 2021, the Company prepaid $100.0 million of principal balance under its Second Lien Credit Agreement utilizing the proceeds under the ATM Program plus cash on hand as defined and further discussed in Note 11 — Stockholders' Deficit of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report. On July 21, 2021, we (i) completed the notes offering of $415.0 million aggregate principal amount of 5.375% senior secured notes due 2026 and related guarantees and (ii) entered into a New Credit Agreement with the lenders from time to time party thereto and Bank of America, N.A. as administrative agent. The New Credit Agreement provides for (i) a senior secured five-year Term Loan in an aggregate principal amount of $400.0 million and (ii) a senior secured four-year Revolving Credit Facility that may be used for revolving credit loans, swingline loans and letters of credit up to an initial aggregate principal amount of $32.5 million. In December 2021, we added additional $7.5 million capacity to our Revolving Credit Facility bringing the total Revolving Credit Facility to $40.0 million.
On July 21, 2021, the proceeds from the notes offering, together with borrowings under the Term Loan, were used to prepay the full amount of outstanding indebtedness under the Prior Credit Facilities and to pay related accrued interest, fees and expenses. Simultaneous with the prepayment, the Prior Credit Facilities were terminated. In the fourth quarter of 2021, the Company prepaid $16.0 million of principal balance under its New Credit Agreement to deleverage its balance sheet.
As a result of the implementation of this new long-term financing, we expect our interest expense to decline by approximately $47.0 million on an annualized basis and cash payments for interest to decline by approximately $36.0 million on an annualized basis.
The Indenture governing the terms of the notes contains covenants limiting our ability to, among other things, incur or guarantee additional debt or issue disqualified stock or certain preferred stock; create or incur liens; pay dividends, redeem stock or make other distributions; make certain investments; create restrictions on the ability to pay dividends or make certain other intercompany transfers; transfer or sell assets; merge or consolidate, and; enter into certain transactions with affiliates. These covenants are subject to a number of exceptions and qualifications as set forth in the Indenture. Most of these covenants will be suspended in the event and for as long as the notes have investment grade ratings.
The New Credit Agreement also contains certain representations and warranties, certain financial covenants and events of default and certain negative covenants, including without limitation, limitations on liens, asset sales, consolidations and mergers, acquisitions, investments, indebtedness, transactions with affiliates and payment of dividends. The New Credit Agreement, requires the Company and its consolidated subsidiaries to, (i) solely with respect to the Revolving Credit Facility, (A) maintain a minimum interest coverage ratio of not less than 2.150 to 1.000, (B) not permit their settlement assets to be less than their payment service obligations at any time and (C) maintain a total net leverage ratio that does not exceed 4.750 to 1.000, and (ii) solely with respect to the Term Loan, maintain a total net leverage ratio that does not exceed 5.000 to 1.000.
The Company recorded a loss on early extinguishment of debt of $44.1 million which included $16.5 million of prepayment call premium and $27.6 million associated with the write-off of debt issuance costs and debt discounts. The Company also paid accrued interest of $7.0 million.
Credit Ratings
As of December 31, 2022, our credit ratings from Moody's and S&P were B2 with a stable outlook and B with a stable outlook, respectively. The Company does not have rating triggers associated with its credit agreements or its regulatory capital requirements.
Regulatory Capital Requirements
We have capital requirements relating to government regulations in the U.S. and other countries where we operate. Such regulations typically require us to maintain certain assets in a defined ratio to our payment service obligations. Through our wholly-owned subsidiary and licensed entity, MPSI, we are regulated in the U.S. by various state agencies that generally require us to maintain a pool of liquid assets and investments in an amount generally equal to the regulatory payment service obligation measure, as defined by each state, for our regulated payment instruments, namely teller checks, agent checks, money orders and money transfers. The regulatory requirements do not require us to specify individual assets held to meet our payment service obligations, nor are we required to deposit specific assets into a trust, escrow or other special account. Rather, we must maintain a pool of liquid assets. Provided we maintain a total pool of liquid assets sufficient to meet the regulatory and contractual requirements, we are able to withdraw, deposit or sell our individual liquid assets at will, without prior notice, penalty or limitations. We were in compliance with all state and regulatory capital requirements as of December 31, 2022. We believe that our liquidity and capital resources will remain sufficient to ensure ongoing compliance with all regulatory capital requirements.
Material Cash Requirements from 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 as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payments due by period |
(Amounts in millions) | | Total | | Less than 1 year | | 1-3 years | | 3-5 years | | More than 5 years |
Debt, including interest payments (1) | | $ | 955.7 | | | $ | 49.3 | | | $ | 99.9 | | | $ | 806.5 | | | $ | — | |
Non-cancellable leases (2) | | 55.3 | | | 9.1 | | | 17.4 | | | 13.8 | | | 15.0 | |
Signing bonuses (3) | | 35.9 | | | 19.5 | | | 14.1 | | | — | | | — | |
Marketing (4) | | 102.5 | | | 37.5 | | | 65.0 | | | — | | | — | |
Unrecognized tax benefits (5) | | 9.1 | | | 2.9 | | | — | | | — | | | — | |
Total contractual cash obligations | | $ | 1,158.5 | | | $ | 118.3 | | | $ | 196.4 | | | $ | 820.3 | | | $ | 15.0 | |
(1) Our Consolidated Balance Sheet at December 31, 2022 includes $785.4 million of debt, netted with unamortized debt issuance costs and debt discount of $9.6 million. The above table reflects the principal and interest that will be paid through the maturity of the debt using the rates in effect on December 31, 2022 and assuming no prepayments of principal.
(2) Noncancellable leases include operating leases for buildings, vehicles and equipment and other leases. For more detail see Note 18 — Leases of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report. (3) Signing bonuses are payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. Signing bonuses include $2.3 million of transaction volume-related obligations for which it is not possible to reasonably estimate the timing of payments.
(4) Marketing represents contractual marketing obligations with certain agents, billers and corporate sponsorships.
(5) Unrecognized tax benefits include $6.2 million for which timing of conclusion cannot be determined with certainty.
We have other commitments as described further below that are not included in this table as the timing and/or amount of payments are difficult to estimate.
We have a Pension Plan that is frozen to both future benefit accruals and new participants. It is our policy to fund at least the minimum required contribution each year plus additional discretionary amounts as available and necessary to minimize expenses of the plan. We made contributions of $2.0 million to the Pension Plan during 2022. The Company has no minimum contribution requirement for the Pension Plan in 2023.
The Company has certain unfunded defined benefit plans: supplemental executive retirement plans ("SERPs"), which are unfunded non-qualified defined benefit pension plans providing postretirement income to their participants and a postretirement plan ("Postretirement Benefits") that provides medical and life insurance for its participants. These plans require payments over extended periods of time. The Company will continue to make contributions to the SERPs and the Postretirement Benefits to the extent benefits are paid. Aggregate benefits paid for the unfunded plans are expected to be $5.5 million in 2023.
Merger Agreement
Up to the completion of the Merger, our liquidity requirements will remain funded by our cash flow from operations, borrowings under our existing credit facility and certain other capital activities allowed under the Merger Agreement. In particular, we are subject to restrictions under the Merger Agreement on assuming additional debt, issuing additional equity or
debt, repurchasing equity, making certain capital expenditures, and entering into certain acquisition, disposition and leasing transactions, among other restrictions, subject to the restrictions under the Merger Agreement.
Analysis of Cash Flows
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Net cash provided by operating activities | | $ | 85.7 | | | $ | 37.1 | |
Net cash used in investing activities | | (62.6) | | | (44.5) | |
Net cash used in financing activities | | (402.8) | | | (21.0) | |
Net change in cash and cash equivalents and settlement cash and cash equivalents | | $ | (379.7) | | | $ | (28.4) | |
Cash Flows from Operating Activities
In 2022, net cash provided by operating activities increased by $48.6 million primarily due to interest savings as a result of our refinancing activities in the third quarter of 2021.
Cash Flows from Investing Activities
In 2022, net cash used in investing activities increased by $18.1 million, primarily due to an increase in capital expenditures.
Cash Flows from Financing Activities
In 2022, net cash used in financing activities increased by $381.8 million, primarily due to the change in receivables included in settlement assets and the change in payment service obligations. For further discussions, see Note 2 — Settlement Assets and Payment Service Obligations of the Notes to the Consolidated Financial Statements. The changes in receivables, net and payment service obligations are due to the timing of the remittance of funds by our agents and financial institution customers. Stockholders' Deficit
Stockholders' Deficit — Under the terms of our outstanding New Credit Facilities, we are restricted in our ability to pay dividends on and repurchase shares of, our common stock. No dividends were paid on our common stock in 2022 and we do not anticipate declaring any dividends on our common stock. Further, we are also restricted in our ability to pay dividends under the Merger Agreement.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and related disclosures in the Consolidated Financial Statements. Actual results could differ from those estimates. On a regular basis, management reviews its accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Our significant accounting policies are discussed in Note 2 — Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report. Critical accounting policies are those policies that management believes are very 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. Based on these criteria, management has identified and discussed with the Audit Committee the following critical accounting policies and estimates, including the methodology and disclosures related to those estimates.
Goodwill — We have two reporting units: GFT and FPP. Our GFT reporting unit is the only reporting unit that carries goodwill. We evaluate goodwill for impairment annually as of October 1, or more frequently upon occurrence of certain events. When testing goodwill for impairment, we may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, we consider the impact of any changes to the following factors: macroeconomic, industry and market factors, cost factors and changes in overall financial performance, as well as any other relevant events and uncertainties impacting a reporting unit. If our qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, we perform a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections by reporting unit. In addition, an assumed terminal value is used to project future cash flows beyond base years. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt and equity balances, adjusted for current market conditions and investor expectations of return on our equity. If the fair value of a reporting unit exceeds its carrying amount, there is no impairment. If not, we compare the fair value of the reporting unit with
its carrying amount. To the extent the carrying amount of the reporting unit exceeds its fair value, a write-down of the reporting unit's goodwill would be necessary.
We did not recognize a goodwill impairment loss for 2022, 2021 or 2020. The carrying value of goodwill assigned to the GFT reporting unit at December 31, 2022 was $442.2 million.
Pension — Through the Company's Pension, we provide defined benefit Pension plan coverage to certain of our employees and certain employees of Viad Corporation, our former parent. Our Pension obligations under these plans are measured as of December 31, the measurement date. Pension benefit obligations and the related expense are based upon actuarial projections using assumptions regarding mortality, discount rates, expected long-term return on assets and other factors.
Our assumptions reflect our historical experience and management's best judgment regarding future expectations. Certain of the assumptions, particularly the discount rate and expected return on plan assets, require significant judgment and could have a material impact on the measurement of our Pension obligation.
In order to estimate the interest cost components of net periodic benefit expense for its Pension and Postretirement Benefits, the Company utilizes a full yield curve approach by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to their underlying projected cash flows.
At each measurement date, the discount rate used to measure total benefit obligation for the Pension and Postretirement Benefits is based on the then current interest rate yield curves for long-term corporate debt securities with maturities rated AA comparable to our obligations.
Our Pension Plan assets are primarily invested in commingled trust funds. Our investments are periodically realigned in accordance with the investment guidelines. The expected return on Pension Plan assets is based on our historical market experience, asset allocations and expectations for long-term rates of return. We also consider peer data and historical returns to assess the reasonableness and appropriateness of our assumption. Our Pension Plan asset allocations are reviewed periodically and are based upon plan funded ratio, an evaluation of market conditions, tolerance for risk and cash requirements for benefit payments.
Lower discount rates increase the Pension and Postretirement Benefits obligation and subsequent year Pension expense, while higher discount rates decrease the Pension and Postretirement Benefits obligation and subsequent year Pension expense. Decreasing or increasing the discount rate by 50 basis points would have had an immaterial impact on the 2022 Pension and Postretirement Benefits net periodic benefit expense. Decreasing the expected rate of return by 50 basis points would have increased the 2022 Pension Plan net periodic benefit expense by $0.2 million and increasing the expected rate of return by 50 basis points would have decreased the 2022 Pension Plan net periodic benefit expense by $0.2 million.
Income Taxes, Tax Contingencies — We are subject to income taxes in the U.S. and various foreign jurisdictions. In determining taxable income, income or loss before income taxes is adjusted for differences between local tax laws and U.S. GAAP.
We file tax returns in all U.S. states and various countries. Generally, our tax filings are subject to audit by tax authorities for three to five years following submission of a return. With a few exceptions, the Company is no longer subject to foreign or U.S. state and local income tax examinations for years prior to 2017. The U.S. federal income tax filings are subject to audit for fiscal years 2017 through 2021.
The benefits of tax positions are recorded in the Consolidated Statements of Operations if we determine it is more likely than not, based on the technical merits of the position, that the tax position will be sustained upon examination, including any related appeals or litigation. The one exception to the more-likely-than-not recognition threshold is the reliance on past administrative practices and precedents, where a taxing authority with full knowledge of all relevant facts will accept a position as filed. In these limited situations, the Company will recognize the associated tax benefit.
Changes in tax laws, regulations, agreements and treaties, non-U.S. dollar exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes that we provide during any given year. The determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events, such as the amount, timing and character of deductions and the sources and character of income and tax credits.
These assumptions and probabilities are periodically reviewed and revised based upon new information.
Changes in our current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of operations. Actual tax amounts may be materially different from amounts accrued based upon the results of audits due to different interpretations by the tax authorities than those of the Company. While we believe that our reserves are adequate to cover reasonably expected tax risks, an unfavorable tax settlement generally requires the use of cash
and an increase in the amount of income tax expense that we recognize. A favorable tax settlement generally requires a decrease in the amount of income taxes that we recognize.
Income Taxes, Valuation of Deferred Tax Assets — Deferred tax assets and liabilities are recorded based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted statutory tax rates that will apply in the years in which we expect the temporary differences to be recovered or paid.
The carrying amount of deferred tax assets must be reduced through valuation allowances if it is more likely than not that the deferred tax asset will not be realized. In the period in which a valuation allowance is recorded, we would record tax expense, whereas a tax benefit would be recorded in the period a valuation allowance is released.
In assessing the need for valuation allowances, we consider both positive and negative evidence related to the likelihood that the deferred tax assets will be realized. Our assessment of whether a valuation allowance is required or should be adjusted requires judgment and is completed on a taxing jurisdiction basis. We consider, among other matters: the nature, frequency and severity of any cumulative financial reporting losses; the ability to carry back losses to prior years; future reversals of existing taxable temporary differences; tax planning strategies and projections of future taxable income. We also consider our best estimate of the outcome of any on-going examinations based on the technical merits of the position, historical procedures and case law, among other items.
As of December 31, 2022, we have recorded valuation allowances of $76.8 million against deferred tax assets of $131.3 million. The valuation allowances primarily relate to basis differences in revalued investments, capital loss carryover, U.S. tax credit carryovers, U.S. interest expense carryovers and certain state and foreign tax loss carryovers. While we believe that the basis for estimating our valuation allowances is appropriate, changes in our current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of operations.
RECENT ACCOUNTING PRONOUNCEMENTS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Enterprise Risk Management
Risk is an inherent part of any business. Our most prominent risk exposures are credit, interest rate and non-U.S. dollar currency exchange. See Part 1, Item 1A Risk Factors of this 2022 Form 10-K for a description of the principal risks to our business. Appropriately managing risk is important to the success of our business and the extent to which we effectively manage each of the various types of risk is critical to our financial condition and profitability. Our risk management objective is to monitor and control risk exposures to produce steady earnings growth and long-term economic value.
Management implements policies approved by our Board of Directors that cover our investment, capital, credit and non-U.S. dollar practices and strategies. The Board of Directors receives periodic reports regarding each of these areas and approves significant changes to policy and strategy. The Asset/Liability Committee ("ALCO"), composed of senior management, routinely reviews investment and risk management strategies and results. The Credit Committee, composed of senior management, routinely reviews credit exposure to consumers and our agents.
The following is a discussion of the risks we deem most critical to our business and the strategies we use to manage and mitigate such risks. While containing forward-looking statements related to risks and uncertainties, this discussion and related analyses are not predictions of future events. Our actual results could differ materially from those anticipated due to various factors discussed under Cautionary Statements Regarding Forward-Looking Statements and under Risk Factors in Part 1, Item 1A of this 2022 Form 10-K.
Credit Risk
Credit risk, or the potential risk that we may not collect amounts owed to us, affects our business primarily through receivables, investments and derivative financial instruments. In addition, the concentration of our cash, cash equivalents and investments at large financial institutions exposes us to credit risk.
Investment Portfolio — Credit risk from our investment portfolio relates to the risk that we may be unable to collect the interest or principal owed to us under the legal terms of the various securities. Our primary exposure to credit risk arises through the concentration of a large amount of our investment portfolio at a few large banks, also referred to as financial institution risk, as well as a concentration in securities issued by U.S. government agencies.
At December 31, 2022, the Company's investment portfolio of $2.7 billion was primarily composed of cash and cash equivalents, consisting of interest-bearing deposit accounts, non-interest-bearing transaction accounts and money market funds backed by U.S. government securities and interest-bearing investments consisting of time deposits and certificates of deposit. Based on investment policy restrictions, investments are limited to those rated A- or better by two of the following three rating agencies: Moody's, S&P and Fitch. If the rating agencies have split ratings, the Company uses the lower of the highest two out of three ratings across the agencies for disclosure purposes. If the institution has only two ratings, the Company uses the lower of the two ratings for disclosure purposes. No maturity of interest-bearing investments exceeds 24 months from the date of purchase.
The financial institutions holding significant portions of our investment portfolio may act as custodians for our asset accounts, serve as counterparties to our non-U.S. dollar transactions and conduct cash transfers on our behalf for the purpose of clearing our payment instruments and related agent receivables and agent payables. Through certain check clearing agreements and other contracts, we are required to utilize several of these financial institutions.
The concentration in U.S. government agencies includes agencies placed under conservatorship by the U.S. government in 2008 and extended unlimited lines of credit from the U.S. Treasury. The implicit guarantee of the U.S. government and its actions to date support our belief that the U.S. government will honor the obligations of its agencies if the agencies are unable to do so themselves.
The following table is a detailed summary of our investment portfolio as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions, except percentages and financial institutions) | | Number of Financial Institutions (1) | | Amount | | Percent of Investment Portfolio |
Cash held on-hand at owned retail locations | | N/A | | $ | — | | | — | % |
Cash equivalents collateralized by securities issued by U.S. government agencies | | 1 | | | — | | | — | % |
Available-for-sale investments issued by U.S. government agencies | | N/A | | 1.5 | | | — | % |
Cash, cash equivalents and interest-bearing investments at institutions rated AAA (2) | | 1 | | | 49.6 | | | 2 | % |
Cash, cash equivalents and interest-bearing investments at institutions rated AA | | 5 | | | 140.0 | | | 5 | % |
Cash, cash equivalents and interest-bearing investments at institutions rated A | | 15 | | | 1,551.1 | | | 58 | % |
Cash, cash equivalents and interest-bearing investments at institutions rated BBB | | 2 | | | — | | | — | % |
Cash, cash equivalents and interest-bearing investments at institutions rated below BBB | | 4 | | | 424.8 | | | 16 | % |
Asset-backed and other securities | | N/A | | 1.5 | | | — | % |
Investment portfolio held within the U.S. | | 28 | | | 2,168.5 | | | 81 | % |
Cash held on-hand at owned retail locations | | N/A | | 20.3 | | | 1 | % |
Cash, cash equivalents and interest-bearing investments held at institutions rated AA | | 7 | | | 187.1 | | | 7 | % |
Cash, cash equivalents and interest-bearing investments at institutions rated A | | 15 | | | 144.9 | | | 5 | % |
Cash, cash equivalents and interest-bearing investments at institutions rated below A | | 50 | | | 151.5 | | | 6 | % |
Investment portfolio held outside the U.S. | | 72 | | | 503.8 | | | 19 | % |
| | | | | | |
Total investment portfolio | | | | $ | 2,672.3 | | | 100 | % |
(1) Financial institutions, located both in the U.S. and outside of the U.S., are included in each of their respective total number of financial institutions.
(2) Inclusive of deposits with FDIC-insured institutions and where such deposits are fully insured by the Federal Deposit Insurance Corporation.
At December 31, 2022, all but $1.5 million of the investment portfolio is invested in cash, cash equivalents, interest-bearing investments and investments issued or collateralized by U.S. government agencies. Approximately 81% of our total investment portfolio is invested at financial institutions located within the U.S.
Receivables — We have credit exposure to receivables from our agents and partners through the money transfer, bill payment and money order settlement process. These receivables originate from independent agents and partners who collect funds from
consumers who are transferring money or buying money orders and agents and partners who receive proceeds from us in anticipation of payment to the recipients of money transfers. Agents and partners typically have from one to three days to remit the funds, with longer remittance schedules granted to certain agents and partners on a limited basis. The Company has a credit risk management function that conducts the underwriting of credit on new agents and partners as well as conducting credit surveillance on all agents and partners to monitor their financial health and the history of settlement activity with us. The Company's credit risk management function also maintains daily contact with agents and partners and performs a collection function. For the year ended December 31, 2022, our annual credit losses from agents, as a percentage of total fee and other revenue, was less than 1%. As of December 31, 2022, we had credit exposure to our agents of $436.0 million in the aggregate spread across 6,378 agents, of which two owed us in excess of $15.0 million.
In addition, we are exposed to consumer credit risk directly from transactions through our digital solutions, where transactions are originated through means other than cash, and therefore are subject to credit card chargebacks, non-insufficient funds or other collection impediments, such as fraud. As the digital solutions become a greater proportion of our money transfer business, these losses may increase.
We also have credit exposure from our financial institution customers for business conducted by the FPP segment. Financial institutions collect proceeds for official checks and money orders and remit those proceeds to us. We actively monitor the credit risk associated with financial institutions such as banks and credit unions and have not incurred any losses associated with the failure or merger of any bank or non-bank financial institution customer. As of December 31, 2022, we had a credit exposure to our official check and money order financial institution customers of $379.0 million in the aggregate spread across 961 financial institutions, of which one owed us in excess of $15.0 million.
With respect to our credit union customers, our credit exposure is partially mitigated by National Credit Union Administration insurance and we have required certain credit union customers to provide us with larger balances on deposit and/or to issue cashier's checks only. While the value of these assets is not at risk in a disruption or collapse of a counterparty financial institution, the delay in accessing our assets could adversely affect our liquidity and potentially our earnings depending upon the severity of the delay and corrective actions we may need to take.
While the extent of credit risk may vary by product, the process for mitigating risk is similar. We assess the creditworthiness of each potential agent before accepting them into our distribution network. This underwriting process includes not only a determination of whether to accept a new agent, but also the remittance schedule and volume of transactions that the agent will be allowed to perform in a given timeframe. We actively monitor the credit risk of our existing agents by conducting periodic financial reviews and cash flow analyses of our agents that average high volumes of transactions and monitoring the timeliness of payments and remittance patterns versus reported sales on a daily basis.
The timely remittance of funds by our agents and financial institution customers is an important component of our liquidity. If the timing of the remittance of funds were to deteriorate, it would alter our pattern of cash flows and could require us to liquidate investments or utilize our Revolving Credit Facility to settle payment service obligations. To manage this risk, we closely monitor the remittance patterns of our agents and financial institution customers and act quickly if we detect deterioration or alteration in remittance timing or patterns. If deemed appropriate, we have the ability to immediately deactivate an agent's equipment at any time, thereby preventing the initiation or issuance of further money transfers and money orders.
Derivative Financial Instruments — Credit risk related to our derivative financial instruments relates to the risk that we are unable to collect amounts owed to us by the counterparties to our derivative agreements. Our derivative financial instruments are used to manage exposures to fluctuations in non-U.S. dollar exchange rates. If the counterparties to any of our derivative financial instruments were to default on payments, it could result in a delay or interruption of payments to our agents. We manage credit risk related to derivative financial instruments by entering into agreements with only major banks and regularly monitoring the credit ratings of these banks. See Note 6 — Derivative Financial Instruments of the Notes to the Consolidated Financial Statements contained in Part II, Item 8 of this report for additional disclosure. Interest Rate Risk
Interest rate risk represents the risk that our operating results are negatively impacted, and our investment portfolio declines in value, due to changes in interest rates. Given the short maturity profile of the investment portfolio and the low level of interest rates, we believe there is an extremely low risk that the value of these securities would decline such that we would have a material adverse change in our operating results. As of December 31, 2022, the Company held $624.7 million, or 23%, of the investment portfolio in fixed rate investments, with a legal final maturity that is two years or less.
Our operating results are impacted by interest rate risk through our net investment margin, which is investment revenue less investment commissions expense. As the money transfer business is not materially affected by investment revenue and pays commissions that are not tied to an interest rate index, interest rate risk has the most impact on our money order and official check businesses. We are invested primarily in interest-bearing deposit accounts, non-interest-bearing transaction accounts, money market funds backed by U.S. government securities, time deposits and certificates of deposit. These types of
investments have minimal risk of declines in fair value from changes in interest rates. Our commissions paid to financial institution customers are determined using a variable rate based primarily on the federal funds effective rate and are reset daily. Accordingly, both our investment revenue and our investment commissions expense will decrease when rates decline and increase when rates rise.
Our results are impacted by interest rate risk through our interest expense for borrowings under the New Credit Agreement. The New Credit Facilities permit base rate borrowings and LIBOR borrowings plus a spread above the base rate or LIBOR, as applicable. With respect to the Revolving Credit Facility, the spread for base rate borrowings will be either 3.25% per annum or 3.00% per annum depending upon the Company's total net leverage ratio (as defined in the Credit Agreement), and the spread for LIBOR borrowings will be either 4.25% or 4.00% per annum depending on the Company's total net leverage ratio. The interest rate spread applicable to loans under the Term Loan is 3.25% per annum for base rate loans and 4.50% per annum for LIBOR loans subject to a LIBOR floor of 0.50%. Accordingly, any increases in interest rates will adversely affect interest expense and declines in LIBOR may not result in lower interest expense. As of December 31, 2022, the Company had no borrowings under the Revolving Credit Facility.
The tables below incorporate substantially all of our interest rate sensitive assets and assumptions that reflect changes in all interest rates pertaining to the balance sheet. The "ramp" analysis assumes that interest rates change in even increments over the next 12 months. The "shock" analysis assumes interest rates change immediately and remain at the changed level for the next twelve months. Components of our pre-tax loss that are interest rate sensitive include "Investment revenue," "Investment commissions expense" and "Interest expense." Many of the Company's assets reset or can be repriced when interest rates change, generally in line with changes in the Company's floating rate liabilities. Therefore, our risk associated with interest rates is not material.
The following table summarizes the changes to affected components of the Consolidated Statements of Operations under various ramp scenarios for the year ended December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Basis Point Change in Interest Rates |
| | Down | | Down | | Down | | Up | | Up | | Up |
(Amounts in millions) | | 200 | | 100 | | 50 | | 50 | | 100 | | 200 |
Investment revenue | | $ | (17.7) | | | $ | (8.8) | | | $ | (4.4) | | | $ | 4.4 | | | $ | 8.8 | | | $ | 17.7 | |
Investment commissions expense | | 12.4 | | | 5.9 | | | 2.8 | | | (2.8) | | | (5.9) | | | (12.4) | |
Interest expense | | 3.5 | | | 1.7 | | | 0.9 | | | (0.9) | | | (1.7) | | | (3.5) | |
Change in pretax income | | $ | (1.8) | | | $ | (1.2) | | | $ | (0.7) | | | $ | 0.7 | | | $ | 1.2 | | | $ | 1.8 | |
The following table summarizes the changes to affected components of the Consolidated Statements of Operations under various shock scenarios as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Basis Point Change in Interest Rates |
| | Down | | Down | | Down | | Up | | Up | | Up |
(Amounts in millions) | | 200 | | 100 | | 50 | | 50 | | 100 | | 200 |
Investment revenue | | $ | (33.1) | | | $ | (16.1) | | | $ | (7.5) | | | $ | 9.5 | | | $ | 18.1 | | | $ | 35.1 | |
Investment commissions expense | | 23.7 | | | 11.4 | | | 5.2 | | | (6.2) | | | (12.4) | | | (24.7) | |
Interest expense | | 6.9 | | | 3.5 | | | 1.7 | | | (1.7) | | | (3.5) | | | (6.9) | |
Change in pretax income | | $ | (2.5) | | | $ | (1.2) | | | $ | (0.6) | | | $ | 1.6 | | | $ | 2.2 | | | $ | 3.5 | |
Non-U.S. Dollar Risk
We are exposed to non-U.S. dollar risk in the ordinary course of business as we offer our products and services through a network of agents and financial institutions with locations in more than 200 countries and territories. By policy, we do not speculate in non-U.S. dollars; all non-U.S. dollar trades relate to underlying transactional exposures.
Our primary source of non-U.S. dollar exchange risk is transactional risk. This risk is predominantly incurred in the money transfer business in which funds are frequently transferred cross-border and we settle with agents in multiple currencies. Although this risk is somewhat limited due to the fact that these transactions are short-term in nature, we currently manage some of this risk with forward contracts to protect against potential short-term market volatility. The primary currency pairs, based on volume, that are traded against the U.S. dollar in the spot and forward markets include the European euro, Mexican peso, British pound and Indian rupee. The tenor of forward contracts is typically fewer than 30 days.
Realized and unrealized gains or losses on transactional currency and any associated revaluation of balance sheet exposures are recorded within "Transaction and operations support" in the Consolidated Statements of Operations. The fair market value of
any open forward contracts at period end are recorded within "Other assets" or "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The net effect of changes in non-U.S. dollar exchange rates and the related forward contracts for the year ended December 31, 2022 was a gain of $1.6 million.
Additional non-U.S. dollar risk is generated from fluctuations in the U.S. dollar value of future non-U.S. dollar-denominated earnings. In 2022, fluctuations in the euro exchange rate (net of transactional hedging activities) resulted in a net decrease to our operating income of $7.7 million.
In 2022, the euro was our second largest currency position in the world following the U.S. dollar. Had the euro appreciated or depreciated relative to the U.S. dollar by 20% from actual exchange rates for 2022, operating income would have increased or decreased approximately $17.8 million for the year, as applicable. There are inherent limitations in this sensitivity analysis, primarily due to the assumption that non-U.S. dollar exchange rate movements are linear and instantaneous, that the unhedged exposure is static and that we would not hedge any additional exposure. As a result, the analysis cannot reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.
Translation risk is generated from the accounting translation of the financial statements of foreign subsidiaries (from their functional currency) into U.S. dollars for consolidation and does not have a significant impact on our results. These translation adjustments are recorded within "Accumulated other comprehensive loss" on the Consolidated Balance Sheets.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Item 8 is found in a separate section of this 2022 Form 10-K starting on page F-1. See the Index to Financial Statements on page F-1. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company's 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. Disclosure controls and procedures are designed, without limitation, to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, the Company's management carried out an evaluation, under the supervision and with the participation of the 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 Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, the Company's disclosure controls and procedures were effective.
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 fiscal quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
Management's annual report on internal control over financial reporting is provided on page F-2 of this 2022 Form 10-K. The attestation report of the Company's independent registered public accounting firm, KPMG LLP, regarding the Company's internal control over financial reporting is provided on page F-3 of this 2022 Form 10-K.
Item 9B. OTHER INFORMATION
None.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III.
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information on executive officers called for by this Item is contained in Part I, Item 1 of this 2022 Form 10-K under the caption Executive Officers of the Registrant. The remaining information required by this Item 10 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K to be filed with the SEC.
All of our employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, also referred to as the Principal Officers, and our directors are subject to our Code of Conduct. Our Code of Conduct is posted on our website at ir.moneygram.com in the Corporate Governance section, and we will disclose any amendments to, or waivers of, our Code of Conduct for directors or Principal Officers on such website. The information on our website is not part of this 2022 Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER. MATTERS
The information regarding beneficial ownership required by this Item 12 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K. The information with respect to securities authorized for issuance under our equity compensation plans required by this Item 12 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item 13 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 is incorporated herein by reference from an amendment to the Company's Annual Report on Form 10-K.
PART IV.
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| | | | | |
(a) (1) | The financial statements listed in the "Index to Financial Statements" are filed as part of this 2022 Form 10-K. |
(2) | All financial statement schedules are omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or notes thereto listed in the "Index to Financial Statements." |
(3) | Exhibits are filed with this 2022 Form 10-K or incorporated herein by reference as listed in the accompanying Exhibit Index. |
(b) (1) | The following exhibits are filed or incorporated by reference herein in response to Item 601 of Regulation S-K. The Company files Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934 under Commission File No. 1-31950. |
EXHIBIT INDEX
| | | | | | | | |
Exhibit Number | | Description |
2.1 | | |
3.1 | | |
3.2 | | |
3.3 | | |
3.4 | | |
3.5 | | |
3.6 | | |
3.7 | | |
4.1 | | |
4.2 | | |
4.3 | | |
4.4 | | |
4.5 | | |
4.6 | | |
| | | | | | | | |
Exhibit Number | | Description |
10.1 | | |
10.2 | | |
10.3† | | |
10.4† | | |
10.5*† | | |
10.6† | | |
10.7† | | |
10.8† | | |
10.9† | | |
10.10† | | |
10.11† | | |
10.12† | | |
10.13+ | | |
10.14+ | | |
10.15+ | | |
10.16 | | |
10.17 | | |
10.18 | | |
10.19 | | |
10.20 | | |
| | | | | | | | |
Exhibit Number | | Description |
10.21*** | | |
10.22*** | | |
10.23*† | | |
10.24† | | |
10.25† | | |
10.26 | | |
10.27 | | Credit Agreement, dated as of July 21, 2021, by and between MoneyGram International, Inc., as borrower, the lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and as Collateral Agent (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on July 26, 2021). |
10.28 | | Letter Agreement Amendment dated August 9, 2021, to Credit Agreement, dated as of July 21, 2021, by and between MoneyGram International, Inc., as borrower, the lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and as Collateral Agent (Incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on October 29, 2021). |
10.29† | | |
10.30† | | |
10.31† | | |
10.32† | | |
10.33* | | |
10.34* | | |
10.35* | | |
10.36* | | |
10.37* | | |
10.38* | | |
21* | | |
23* | | |
24* | | |
31.1* | | |
31.2* | | |
32.1** | | |
32.2** | | |
| | | | | | | | |
Exhibit Number | | Description |
101* | | The following materials from MoneyGram's Annual Report on Form 10-K for the year ended December 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Stockholders' Deficit, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements. |
104* | | Cover Page Interactive Data File (formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101). |
| | |
* | | Filed herewith. |
| | |
** | | Furnished herewith. |
| | |
*** | | Portions of this exhibit have been omitted because they are both not material and would be competitively harmful if publicly disclosed. |
| | |
† | | Indicates management contract or compensatory plan or arrangement. |
| | |
+ | | Confidential information has been omitted from this Exhibit and has been filed separately with the SEC pursuant to a confidential treatment request under Rule 24b-2. |
Item 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | | | | | | | |
| | | MoneyGram International, Inc. |
| | | (Registrant) |
| | | |
Date: | February 24, 2023 | | By: | | /S/ W. ALEXANDER HOLMES |
| | | | | W. Alexander Holmes |
| | | | | Chairman and Chief Executive Officer (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | | | | | | |
/s/ W. Alexander Holmes | | Chairman and Chief Executive Officer (Principal Executive Officer) | | February 24, 2023 |
W. Alexander Holmes | | |
| | | | |
/s/ Brian Johnson | | Chief Financial Officer (Principal Financial Officer) | | February 24, 2023 |
Brian Johnson | | |
| | |
/s/ Christopher Russell | | Chief Accounting Officer (Principal Accounting Officer) | | February 24, 2023 |
Christopher Russell | | |
| | | | | | | | | | | | | | |
| Directors | |
| | | | |
| Antonio O. Garza | | Alka Gupta | |
| Francisco Lorca | | Michael P. Rafferty | |
| Julie E. Silcock | | W. Bruce Turner | |
| Peggy Vaughan | | | |
| | | | | | | | | | | | | | | | | | | | |
By: | | /s/ Robert L. Villaseñor | | | | February 24, 2023 |
| | Robert L. Villaseñor | | | | |
| | Attorney-in-fact | | | | |
MoneyGram International, Inc.
Annual Report on Form 10-K
Items 8 and 15 (a)
Index to Financial Statements
Management's Responsibility Statement and Report on Internal Control over Financial Reporting
The management of MoneyGram International, Inc. is responsible for the integrity, objectivity and accuracy of the consolidated financial statements of the Company. The consolidated financial statements are prepared by the Company in accordance with accounting principles generally accepted in the United States of America using, where appropriate, management's best estimates and judgments. The financial information presented throughout the Annual Report is consistent with that in the consolidated financial statements.
Management is also responsible for establishing and maintaining a system of internal controls and procedures over financial reporting designed to provide reasonable assurance that the books and records reflect the transactions of the Company and that assets are protected against loss from unauthorized use or disposition. Such a system is maintained through accounting policies and procedures administered by trained Company personnel and updated on a continuing basis to ensure their adequacy to meet the changing requirements of our business. The Company requires that all of its affairs, as reflected by the actions of its employees, be conducted according to the highest standards of personal and business conduct. This responsibility is reflected in our Code of Ethics.
To test compliance with the Company's system of internal controls and procedures over financial reporting, the Company carries out an extensive audit program. This program includes a review for compliance with written policies and procedures and a comprehensive review of the adequacy and effectiveness of the internal control system. Although control procedures are designed and tested, it must be recognized that there are limits inherent in all systems of internal control and, therefore, errors and irregularities may nevertheless occur. Also, estimates and judgments are required to assess and balance the relative cost and expected benefits of the controls. Projection of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Audit Committee of the Board of Directors, which is composed solely of outside independent directors, meets quarterly with management, internal audit and the independent registered public accounting firm to discuss internal accounting control, auditing and financial reporting matters, as well as to determine that the respective parties are properly discharging their responsibilities. Both our independent registered public accounting firm and internal auditors have had and continue to have unrestricted access to the Audit Committee without the presence of management.
Management assessed the effectiveness of the Company's internal controls over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and those criteria, management believes that the Company designed and maintained effective internal control over financial reporting as of December 31, 2022.
The Company's independent registered public accounting firm, KPMG LLP, has been engaged to audit our financial statements included in this Annual Report on Form 10-K and the effectiveness of the Company's system of internal control over financial reporting as of December 31, 2022. Their attestation report regarding the Company's internal control over financial reporting is included on page F-3 of this Annual Report on Form 10-K.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
MoneyGram International, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited MoneyGram International, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ deficit for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Responsibility Statement and Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Dallas, Texas
February 24, 2023
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
MoneyGram International, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of MoneyGram International, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ deficit for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Money transfer and bill payment revenue
As discussed in Note 2 and 17 to the consolidated financial statements, the Company derives approximately 91% of its revenue from providing money transfer and bill payment services. These services are provided through third-party agents, limited Company-operated retail locations, and digital solutions such as moneygram.com, mobile solutions, account deposit, and kiosk-based services.
We identified the evaluation of the sufficiency of audit evidence over money transfer and bill payment revenue obtained from the Company’s information technology (IT) systems to be a critical audit matter. The calculation and recording of money transfer and bill payment services is automated and relies on multiple internally developed tools and systems. Specifically, the highly automated nature of the money transfer and bill payment revenue process required extensive involvement of IT professionals to design and perform procedures related to the IT systems and evaluate the sufficiency of audit evidence obtained over money transfer and bill payment revenue.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed. We evaluated the design and tested the operating
effectiveness of certain internal controls related to the money transfer and bill payment revenue process. We involved IT professionals with specialized skills and knowledge who assisted in:
•Identifying the relevant systems used to calculate and record money transfer and bill payment revenue transactions;
•Testing the general IT controls over certain systems, including testing of user access controls, change management controls, and IT operations controls; and
•Testing automated application controls including system interfaces and the calculation and recording of money transfer and bill payment revenue transactions to the Company’s general ledgers.
We tested a sample of money transfer and bill payment revenue transactions by comparing the amounts recognized to source documents and third-party bank statements. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of audit effort.
/s/ KPMG LLP
We have served as the Company's auditor since 2016.
Dallas, Texas
February 24, 2023
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | | | |
AS OF DECEMBER 31, | | | | |
(Amounts in millions, except share data) | | 2022 | | 2021 |
ASSETS | | | | |
Cash and cash equivalents | | $ | 172.1 | | | $ | 155.2 | |
Settlement assets | | 3,607.2 | | | 3,591.4 | |
Property and equipment, net | | 134.5 | | | 133.9 | |
Goodwill | | 442.2 | | | 442.2 | |
Right-of-use assets | | 42.5 | | | 52.6 | |
Other assets | | 106.7 | | | 101.2 | |
Total assets | | $ | 4,505.2 | | | $ | 4,476.5 | |
LIABILITIES | | | | |
Payment service obligations | | $ | 3,607.2 | | | $ | 3,591.4 | |
Debt, net | | 785.4 | | | 786.7 | |
Pension and other postretirement benefits | | 53.3 | | | 67.1 | |
Lease liabilities | | 45.4 | | | 56.3 | |
Accounts payable and other liabilities | | 159.7 | | | 160.0 | |
Total liabilities | | 4,651.0 | | | 4,661.5 | |
COMMITMENTS AND CONTINGENCIES (NOTE 14) | | | | |
STOCKHOLDERS' DEFICIT | | | | |
Common stock, $0.01 par value, 162,500,000 shares authorized, 98,964,065 and 92,305,011 shares issued, 96,626,432 and 90,725,982 shares outstanding at December 31, 2022 and December 31, 2021, respectively | | 1.0 | | | 0.9 | |
Additional paid-in capital | | 1,415.3 | | | 1,400.3 | |
Retained loss | | (1,479.2) | | | (1,513.4) | |
Accumulated other comprehensive loss | | (64.9) | | | (62.8) | |
Treasury stock: 2,337,633 and 1,579,029 shares at December 31, 2022 and December 31, 2021, respectively | | (18.0) | | | (10.0) | |
Total stockholders' deficit | | (145.8) | | | (185.0) | |
Total liabilities and stockholders' deficit | | $ | 4,505.2 | | | $ | 4,476.5 | |
See Notes to the Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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FOR THE YEARS ENDED DECEMBER 31, | | | | | | |
(Amounts in millions, except share data) | | 2022 | | 2021 | | 2020 |
REVENUE | | | | | | |
Fee and other revenue | | $ | 1,272.2 | | | $ | 1,275.8 | | | $ | 1,197.2 | |
Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | |
Total revenue | | 1,310.1 | | | 1,283.6 | | | 1,217.2 | |
COST OF REVENUE | | | | | | |
Commissions and other fee expense | | 610.7 | | | 622.7 | | | 603.6 | |
Investment commissions expense | | 21.9 | | | 0.9 | | | 3.6 | |
Direct transaction expense | | 57.6 | | | 60.5 | | | 45.8 | |
Total cost of revenue | | 690.2 | | | 684.1 | | | 653.0 | |
GROSS PROFIT | | 619.9 | | | 599.5 | | | 564.2 | |
OPERATING EXPENSES | | | | | | |
Compensation and benefits | | 228.0 | | | 227.8 | | | 223.8 | |
Transaction and operations support (1) | | 187.2 | | | 179.1 | | | 111.6 | |
Occupancy, equipment and supplies | | 59.8 | | | 61.9 | | | 61.4 | |
Depreciation and amortization | | 51.7 | | | 57.0 | | | 64.4 | |
Total operating expenses | | 526.7 | | | 525.8 | | | 461.2 | |
OPERATING INCOME | | 93.2 | | | 73.7 | | | 103.0 | |
Other expenses | | | | | | |
Interest expense | | 49.4 | | | 69.5 | | | 92.4 | |
Loss on early extinguishment of debt | | — | | | 44.1 | | | — | |
Other non-operating expense | | 4.0 | | | 3.7 | | | 4.5 | |
Total other expenses | | 53.4 | | | 117.3 | | | 96.9 | |
Income (loss) before income taxes | | 39.8 | | | (43.6) | | | 6.1 | |
Income tax expense (benefit) | | 5.6 | | | (5.7) | | | 14.0 | |
NET INCOME (LOSS) | | $ | 34.2 | | | $ | (37.9) | | | $ | (7.9) | |
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EARNINGS (LOSS) PER COMMON SHARE | | | | | | |
Basic | | $ | 0.35 | | | $ | (0.42) | | | $ | (0.10) | |
Diluted | | $ | 0.34 | | | $ | (0.42) | | | $ | (0.10) | |
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Weighted-average outstanding common shares and equivalents used in computing loss per share | | | | | | |
Basic | | 96.4 | | | 89.7 | | | 77.8 | |
Diluted | | 100.1 | | | 89.7 | | | 77.8 | |
(1) 2020 includes $50.2 million of related party market development fees.
See Notes to the Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
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FOR THE YEARS ENDED DECEMBER 31, | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
NET INCOME (LOSS) | | $ | 34.2 | | | $ | (37.9) | | | $ | (7.9) | |
OTHER COMPREHENSIVE (LOSS) INCOME | | | | | | |
Net change in unrealized holding gain (loss) on available-for-sale securities arising during the period net of tax (expense) benefits of $(0.2), $(0.1) and $0.1 for the years ended December 31, 2022, 2021 and 2020, respectively | | 0.7 | | | 0.3 | | | (0.4) | |
Net change in pension liability due to amortization of prior service cost and net actuarial loss, net of tax benefit of $0.5, $0.6 and $0.5 for the years ended December 31, 2022, 2021 and 2020, respectively | | 1.8 | | | 1.9 | | | 1.7 | |
Pension settlement gain, net of tax benefit of $0.1 for the year ended December 31, 2022 | | (0.4) | | | — | | | — | |
Valuation adjustment for pension and postretirement benefits, net of tax expense (benefit) of $1.7, $0.4 and $(1.0) for the years ended December 31, 2022, 2021 and 2020, respectively | | 5.6 | | | 1.4 | | | (3.4) | |
Unrealized non-U.S. dollar translation adjustments, net of tax (benefit) expense of $0.0, $0.0 and $0.2 for the years ended December 31, 2022, 2021 and 2020, respectively | | (9.8) | | | (8.0) | | | 7.2 | |
Other comprehensive (loss) income | | (2.1) | | | (4.4) | | | 5.1 | |
COMPREHENSIVE INCOME (LOSS) | | $ | 32.1 | | | $ | (42.3) | | | $ | (2.8) | |
See Notes to the Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE YEARS ENDED DECEMBER 31, | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
Net income (loss) | | $ | 34.2 | | | $ | (37.9) | | | $ | (7.9) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | |
Depreciation and amortization | | 51.7 | | | 57.0 | | | 64.4 | |
Signing bonus amortization | | 50.1 | | | 56.4 | | | 54.5 | |
Change in right-of-use assets | | 10.1 | | | 12.6 | | | 9.9 | |
Deferred income tax expense (benefit) | | 1.2 | | | (8.8) | | | 9.1 | |
Amortization of debt discount and debt issuance costs | | 2.7 | | | 7.5 | | | 11.7 | |
Loss on early extinguishment of debt | | — | | | 44.1 | | | — | |
Non-cash compensation and pension expense | | 18.0 | | | 11.1 | | | 11.1 | |
Signing bonus payments | | (36.9) | | | (36.0) | | | (58.7) | |
Change in other assets | | (27.4) | | | (11.5) | | | (10.9) | |
Change in lease liabilities | | (10.9) | | | (13.7) | | | (15.3) | |
Change in accounts payable and other liabilities | | (7.1) | | | (43.9) | | | 29.3 | |
Other non-cash items, net | | — | | | 0.2 | | | (0.4) | |
Net cash provided by operating activities | | 85.7 | | | 37.1 | | | 96.8 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | |
Payments for capital expenditures | | (53.8) | | | (41.4) | | | (40.8) | |
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Proceeds from available-for-sale investments | | 0.6 | | | 0.8 | | | 0.7 | |
Purchases of interest-bearing investments | | (956.4) | | | (768.0) | | | (541.6) | |
Proceeds from interest-bearing investments | | 951.0 | | | 766.6 | | | 537.1 | |
Purchase of equity investments | | (4.0) | | | (5.0) | | | — | |
Sale of equity investments | | — | | | 2.5 | | | — | |
Net cash used in investing activities | | (62.6) | | | (44.5) | | | (44.6) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | |
Transaction costs for issuance and amendment of debt | | — | | | (6.6) | | | — | |
Proceeds from issuance of debt | | — | | | 807.8 | | | — | |
Principal payments on debt | | (4.0) | | | (905.9) | | | (6.5) | |
Prepayment call premium | | — | | | (16.5) | | | — | |
Proceeds from revolving credit facility | | — | | | — | | | 23.0 | |
Payments on revolving credit facility | | — | | | — | | | (23.0) | |
Change in receivables, net | | (406.6) | | | 124.6 | | | (109.5) | |
Change in payment service obligations | | 15.8 | | | (111.5) | | | 465.9 | |
Net proceeds from stock issuance | | — | | | 97.1 | | | — | |
Stock repurchases | | — | | | (6.2) | | | — | |
Payments to tax authorities for stock-based compensation | | (8.0) | | | (3.8) | | | (0.7) | |
Net cash (used in) provided by financing activities | | (402.8) | | | (21.0) | | | 349.2 | |
NET CHANGE IN CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS | | (379.7) | | | (28.4) | | | 401.4 | |
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—Beginning of year | | 2,050.9 | | | 2,079.3 | | | 1,677.9 | |
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—End of year | | $ | 1,671.2 | | | $ | 2,050.9 | | | $ | 2,079.3 | |
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See Notes to the Consolidated Financial Statements
Supplemental disclosures to the Consolidated Statements of Cash Flows are presented below: | | | | | | | | | | | | | | | | | | | | |
FOR THE YEARS ENDED DECEMBER 31, | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Cash payments for interest | | $ | 47.5 | | | $ | 51.8 | | | $ | 77.5 | |
Cash payments (refunds) for taxes, net | | $ | 13.7 | | | $ | 5.7 | | | $ | (1.8) | |
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The following table provides a reconciliation of Cash and Cash Equivalents as reported in the Consolidated Statements of Cash Flows to the line items within the Consolidated Balance Sheets as of December 31:
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(Amounts in millions) | | 2022 | | 2021 |
Cash and cash equivalents | | $ | 172.1 | | | $ | 155.2 | |
Settlement cash and cash equivalents | | 1,499.1 | | | 1,895.7 | |
Cash and cash equivalents and settlement cash and cash equivalents | | $ | 1,671.2 | | | $ | 2,050.9 | |
See Notes to the Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
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(Amounts in millions) | | Preferred Stock | | Common Stock | | Additional Paid-In Capital | | Retained Loss | | Accumulated Other Comprehensive Loss | | Treasury Stock | | Total |
January 1, 2020 | | $ | 183.9 | | | $ | 0.7 | | | $ | 1,116.9 | | | $ | (1,460.1) | | | $ | (63.5) | | | $ | (18.3) | | | $ | (240.4) | |
Net loss | | — | | | — | | | — | | | (7.9) | | | — | | | — | | | (7.9) | |
Stock-based compensation activity | | — | | | — | | | 6.6 | | | (7.3) | | | — | | | 6.9 | | | 6.2 | |
Preferred stock - series D conversion | | (183.9) | | | — | | | 172.5 | | | — | | | — | | | 11.4 | | | — | |
Other comprehensive income | | — | | | — | | | — | | | — | | | 5.1 | | | — | | | 5.1 | |
December 31, 2020 | | — | | | 0.7 | | | 1,296.0 | | | (1,475.3) | | | (58.4) | | | — | | | (237.0) | |
Net loss | | — | | | — | | | — | | | (37.9) | | | — | | | — | | | (37.9) | |
Stock-based compensation activity | | — | | | — | | | 7.3 | | | (0.2) | | | — | | | (3.8) | | | 3.3 | |
Exercise of Ripple Warrants | | — | | | 0.1 | | | (0.1) | | | — | | | — | | | — | | | — | |
ATM Equity Offering | | — | | | 0.1 | | | 97.1 | | | — | | | — | | | — | | | 97.2 | |
Stock repurchases | | — | | | — | | | — | | | — | | | — | | | (6.2) | | | (6.2) | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | (4.4) | | | — | | | (4.4) | |
December 31, 2021 | | — | | | 0.9 | | | 1,400.3 | | | (1,513.4) | | | (62.8) | | | (10.0) | | | (185.0) | |
Net income | | — | | | — | | | — | | | 34.2 | | | — | | | — | | | 34.2 | |
Stock-based compensation activity | | — | | | — | | | 15.0 | | | — | | | — | | | (8.1) | | | 6.9 | |
Exercise of Lender Warrants | | — | | | 0.1 | | | — | | | — | | | — | | | 0.1 | | | 0.2 | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | (2.1) | | | — | | | (2.1) | |
December 31, 2022 | | $ | — | | | $ | 1.0 | | | $ | 1,415.3 | | | $ | (1,479.2) | | | $ | (64.9) | | | $ | (18.0) | | | $ | (145.8) | |
See Notes to the Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Description of the Business and Basis of Presentation
References to "MoneyGram," the "Company," "we," "us" and "our" are to MoneyGram International, Inc. and its subsidiaries.
Nature of Operations — MoneyGram offers products and services under its two reporting segments: GFT and FPP. The GFT segment provides global money transfer services and bill payment services to consumers through two primary distribution channels: retail and digital. Through our Retail Channel, we offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. Additionally, we have limited Company-operated retail locations. We offer services through MGO, digital partnerships, direct transfers to bank accounts, mobile wallets and card solutions, such as Visa Direct, as part of our Digital Channel. The FPP segment provides official check outsourcing services and money orders through financial institutions and agent locations.
Basis of Presentation — The accompanying consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Consolidated Balance Sheets are unclassified due to the timing uncertainty surrounding the payment of settlement obligations.
Impact of COVID-19 Pandemic On Our Financial Statements — The global spread of COVID-19 and the unprecedented impact of the COVID-19 pandemic is complex and ever-evolving. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak reached all regions in which we do business, and governmental authorities around the world implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, school closures and social distancing requirements. The global spread of COVID-19 and its subsequent variants, in combination with the government actions taken in response to the virus have caused and may continue to cause significant economic and business disruption, volatility, financial uncertainty and a continued significant global economic downturn. This has had and may continue to have, a negative impact on the mobility of the global workforce, our agents, customers, consumer spending and global financial markets. Even after the initial impact of the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of inflation, economic weakness and lower disposable income. Therefore, the Company cannot reasonably estimate the future impact at this time.
There were no other material impacts to our Consolidated Financial Statements as of and for the year ended December 31, 2022, based on the Company's assessment of its estimates. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our Consolidated Financial Statements in the future.
Use of Estimates — The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations, impact of the COVID-19 pandemic and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
Principles of Consolidation — The Consolidated Financial Statements include the accounts of MoneyGram International, Inc. and its subsidiaries. Intercompany profits, transactions and account balances have been eliminated in consolidation.
The Company participates in various trust arrangements (special purpose entities or "SPEs") related to official check processing agreements with financial institutions and structured investments within the investment portfolio. As the Company is the primary beneficiary and bears the primary burden of any losses, the SPEs are consolidated in the Consolidated Financial Statements. The assets and obligations of the SPEs are recorded on the Consolidated Balance Sheets in a manner consistent with the assets and obligations of the Company.
Presentation — In 2021, the Company changed its presentation to disclose "Gross profit" in the Consolidated Statements of Operations. The presentation of gross profit is intended to supplement investors with an understanding of our operating performance. Gross profit is calculated as total revenue less commissions and direct transaction expenses. These expenses were previously included within "Operating expenses" and are now presented within "Cost of revenue" in the Consolidated Statements of Operations. The change in presentation was applied retrospectively to all years presented in the Consolidated Statements of Operations and it had no effect on Operating income, Net loss or Loss per share. The Consolidated Balance
Sheets, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Stockholders' Deficit and Consolidated Statements of Cash Flows are not affected by this change in presentation.
Merger Update — On February 14, 2022, we entered into a Merger Agreement by and among the Company, Parent and an affiliate of MDP, and Merger Sub. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. Following the Merger, the Company will become a subsidiary of Parent. At the effective time of the Merger, each outstanding share of common stock will be automatically canceled and converted into the right to receive $11.00 in cash.
On May 23, 2022, the Company held a virtual-only special meeting of stockholders related to the Merger Agreement and stockholders approved and adopted the Merger Agreement.
To date, money transmission regulators in all applicable U.S. states and territories have provided their approval or non-objection of the transaction. In addition, the parties have obtained all but one approval from international money transmission regulators and have received approval from the Financial Conduct Authority ("FCA") in the United Kingdom and the National Bank of Belgium where MoneyGram holds its European license. While, the waiting period under the Hart-Scott-Rodino ("HSR") Antitrust Improvements Act of 1976 had previously expired, the parties recently refiled the application as the existing approval was set to expire. The new HSR waiting period is set to expire on March 13, 2023.
The final regulatory approval is to be issued by the Reserve Bank of India (“RBI”). The RBI is the issuer of MoneyGram’s Money Transfer Service Scheme ("MTSS") license in India. Since the Company and MDP signed the Merger Agreement, the RBI issued a new Circular covering approval requirements related to Payment System Operators ("PSO") such as the Company. The Merger will be one of the first PSOs undergoing a sale since the Circular was issued. As a result, the process has been taking longer than originally anticipated. MoneyGram has been in active dialogue with the RBI and the Central Government of India regarding its review of the Merger.
Prior to closing, the parties will engage in a financing marketing period which, pursuant to the merger agreement, may last for as long as fifteen consecutive business days. Closing would occur within a matter of days after completing the marketing period.
The parties have agreed to extend the end date beyond February 14, 2023, in accordance with the Merger Agreement, to May 14, 2023. In light of the timing and factors discussed above, the parties now expect to close the Merger either late in the first quarter or early in the second quarter of 2023.
Note 2 — Summary of Significant Accounting Policies
Cash and cash equivalents — The Company defines cash and cash equivalents and settlement cash and cash equivalents as cash on hand and all highly liquid debt instruments with original maturities of three months or less at the purchase date.
Settlement assets and payment service obligations — The Company records payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying transaction occurs. The Company records corresponding settlement assets, which represent funds received or to be received for unsettled money transfers, money orders and consumer payments. Settlement assets consist of settlement cash and cash equivalents, receivables and investments. Payment service obligations primarily consist of outstanding payment instruments; amounts owed to financial institutions for funds paid to the Company to cover clearings of official check payment instruments, remittances and clearing adjustments; amounts owed to agents for funds paid to consumers on behalf of the Company; commissions owed to financial institution customers and agents for instruments sold; amounts owed to investment brokers for purchased securities and unclaimed instruments owed to various states.
Receivables, net (included in settlement assets) — The Company has receivables due from financial institutions and agents for payment instruments sold and amounts advanced by the Company to certain agents for operational and local regulatory purposes. These receivables are outstanding from the day of the sale of the payment instrument until the financial institution or agent remits the funds to the Company. The Company provides an allowance for the portion of the receivable estimated to become uncollectible based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer credit card chargebacks and insufficient funds and other matters the Company identifies in its routine collection monitoring. Receivables are generally considered past due one day after the contractual remittance schedule, which is typically one day to three days after the sale of the underlying payment instrument. Receivables are generally written off against the allowance one year after becoming past due.
The following summary details the activity within the allowance for credit losses for the years ended December 31:
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(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Beginning balance | | $ | 6.7 | | | $ | 9.5 | | | $ | 4.6 | |
Provision | | 13.3 | | | 11.1 | | | 14.3 | |
Write-offs, net of recoveries | | (13.9) | | | (13.9) | | | (9.4) | |
Ending balance | | $ | 6.1 | | | $ | 6.7 | | | $ | 9.5 | |
Investments (included in settlement assets) — The Company classifies securities as available-for-sale. The Company has no securities classified as trading or held-to-maturity. Time deposits and certificates of deposits with original maturities of up to 24 months are classified as interest-bearing investments and recorded at amortized cost. Securities held for indefinite periods of time, including any securities that may be sold to assist in the clearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities are recorded at fair value, with the net after-tax unrealized gain or loss recorded within "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets. Realized gains and losses and other-than-temporary impairments are recorded in the Consolidated Statements of Operations under "Total other expenses."
Interest income on residential mortgage-backed securities for which risk of credit loss is deemed remote is recorded utilizing the level yield method. Changes in estimated cash flows, both positive and negative, are accounted for with retrospective changes to the carrying value of investments in order to maintain a level yield over the life of the investment. Interest income on residential mortgage-backed securities for which risk of credit loss is not deemed remote is recorded under the prospective method as adjustments of yield. Additionally, the Company applies the cost recovery method of accounting for interest to some of the investments within the available-for-sale portfolio as it believes it is probable that it will not recover all, or substantially all, of its principal investment and interest for its asset-backed and other securities given the sustained deterioration in the investment and securities market, the collapse of many asset-backed securities and the low levels to which the securities have been written down.
The Company evaluates all residential mortgage-backed and other asset-backed investments for impairment based on management's evaluation of the underlying reasons for the decline in fair value on an individual security basis. When an adverse change in expected cash flows occurs, and if the fair value of a security is less than its carrying value, the investment is written down to fair value through a permanent reduction to its amortized cost in the period the impairment occurs. Securities gains and losses are recognized upon the sale, call or maturity of securities using the specific identification method to determine the cost basis of securities sold.
Fair Value of Financial Instruments — Financial instruments consist of cash and cash equivalents, settlement cash and cash equivalents, investments, derivatives, payment service obligations and debt. The carrying values of cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment service obligations approximate fair value. The carrying value of debt is stated at amortized cost; however, for disclosure purposes the fair value is estimated. See Note 4 — Fair Value Measurement for information regarding the principles and processes used to estimate the fair value of financial instruments. Derivative Financial Instruments — The Company recognizes derivative financial instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value is recognized through "Transaction and operations support" in the Consolidated Statements of Operations in the period of change. See Note 6 — Derivative Financial Instruments for additional disclosure. Property and Equipment — Property and equipment includes computer hardware, computer software, signage, equipment at agent locations, office furniture and equipment and leasehold improvements and is stated at cost net of accumulated depreciation and amortization. Property and equipment is depreciated and amortized using a straight-line method over the useful life or term of the lease or license. The cost and related accumulated depreciation and amortization of assets sold or disposed of are removed from the financial statements, with the resulting gain or loss, if any, recognized within "Occupancy, equipment and supplies" in the Consolidated Statements of Operations. See Note 7 — Property and Equipment for additional disclosure.
The following table summarizes the estimated useful lives by major asset category:
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Type of Asset | | Useful Life |
Computer hardware | | 3 years |
Computer software | | 5 - 7 years |
Signage | | 3 years |
Equipment at agent locations | | 3 - 7 years |
Office furniture and equipment | | 7 years |
Leasehold improvements | | 10 years |
Tenant allowances for leasehold improvements are capitalized as leasehold improvements upon completion of the improvement and amortized over the shorter of the remaining term of the lease or 10 years. Computer software includes acquired and internally developed software.
Property and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for property and equipment, the carrying value of the asset is reduced to the estimated fair value.
Goodwill and Intangible Assets — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate. Intangible assets are recorded at their estimated fair value at the date of acquisition. In the year following the period in which identified intangible assets become fully amortized, the fully amortized balances are removed from the gross asset and accumulated amortization amounts. Intangible assets with indefinite lives are not amortized. Intangible assets that are not amortized are evaluated for impairment on a quarterly basis. As of December 31, 2022 and 2021, the Company had no indefinite-lived intangible assets. Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for intangible assets, the carrying value of the asset is reduced to the estimated fair value.
Intangible assets with finite lives are amortized using a straight-line method over their respective useful lives as follows:
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Type of Intangible Asset | | Useful Life |
Contractual and customer relationships | | 3 - 15 years |
Non-compete agreements | | 3 - 5 years |
Developed technology | | 5 - 7 years |
Goodwill is not amortized but is instead subject to impairment testing. The Company evaluates its goodwill for impairment annually as of October 1 of each year or more frequently if impairment indicators arise in accordance with Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other. When testing goodwill for impairment, the Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, the Company considers the impact of any changes to the following factors: macroeconomic, industry and market factors, cost factors and changes in overall financial performance, as well as any other relevant events and uncertainties impacting a reporting unit. If the qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, the Company performs a quantitative analysis. In a quantitative test, the carrying value of the reporting unit is compared to its estimated fair value. If the fair value of a reporting unit exceeds its carrying amount, there is no impairment. If not, to the extent the carrying amount of the reporting unit exceeds its fair value, an impairment charge of the reporting unit's goodwill would be recognized; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.
Payments on Long-Term Contracts — The Company makes payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. The payments, or signing bonuses, are generally required to be refunded pro rata in the event of nonperformance under, or cancellation of, the contract by the customer. Signing bonuses are viewed as prepaid commissions expense and are, therefore, capitalized and amortized over the life of the related contract. Amortization of signing bonuses on long-term contracts is recorded within "Fee and other commissions expense" in the Consolidated Statements of Operations. The carrying values of the signing bonuses are reviewed whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
Income Taxes — The provision for income taxes is computed based on the pre-tax income (loss) included in the Consolidated Statements of Operations. Deferred tax assets and liabilities are recorded based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards on a taxing jurisdiction basis. The Company measures deferred tax assets and liabilities using enacted statutory tax rates that will apply in the years in which the Company expects the temporary differences to be recovered or paid. The Company's ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carry-back or carry-forward periods provided for in the tax law. The Company establishes valuation allowances for its deferred tax assets based on a more-likely-than-not threshold. To the extent management believes that recovery is not likely, a valuation allowance is established in the period in which the determination is made.
The liability for unrecognized tax benefits is recorded as a non-cash item within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The Company records interest and penalties for unrecognized tax benefits within "Income tax (benefit) expense" in the Consolidated Statements of Operations. See Note 13 — Income Taxes for additional disclosure. Treasury Stock — Repurchased common stock is stated at cost and is presented as a separate component of stockholders' deficit. See Note 11 — Stockholders' Deficit for additional disclosure. Non-U.S. Dollar Translation — The Company converts assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet dates and records the translation adjustments within "Accumulated other comprehensive loss" on the Consolidated Balance Sheets. Income statements of foreign operations are translated from the operation's functional currency to U.S. dollar equivalents at the average exchange rate for the month. Non-U.S. dollar exchange transaction gains and losses are reported within "Transaction and operations support" in the Consolidated Statements of Operations.
Revenue Recognition — The Company earns revenues from consideration specified in contracts with customers and recognizes revenue when it satisfies its performance obligations by transferring control over its services and products to customers. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The following is a description of the principal activities, separated by reporting segments, from which the Company generates revenues. For more information about the Company's reporting segments, see Note 16 — Segment Information. For tabular revenue disclosures see Note 17 — Revenue Recognition. GFT Segment:
Money transfer fee revenue — The Company earns money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads on money transfer transactions involving different "send" and "receive" currencies. Fees are collected from consumers at the time of transaction. In a cash-to-cash money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally a fixed fee or is based on a percentage of the fee charged to the consumer. When a money transfer transaction is initiated at a MoneyGram-owned store or via our online platform, typically only the receiving agent earns a commission. Each money transfer is considered a separate agreement between the Company and the consumer and includes only one performance obligation that is satisfied at a point in time, which is when the funds are made available for pick up. Money transfer funds are typically available for pick up within 24 hours of being sent. The consumer is in control of the service, as the consumer picks the "send" and "receive" locations as well as the transaction currency. Normally, the Company provides fee refunds to consumers only if the transaction is canceled within 30 minutes of initiating the transfer and the transfer amount has not been picked up by the Receiver. As such, fee refunds are accounted for within the same period as the origination of the transaction and no liability for the amount of expected returns is recorded on the Consolidated Balance Sheets. The Company recognizes revenues on a gross basis for money transfer services as the Company is considered the principal in these transactions. Under our loyalty programs for money transfer services, consumers earn rewards based on transaction frequency. In 2018, the Company introduced the MoneyGram Plus Rewards program, which allows members to earn discounts on future transactions. The MoneyGram Plus Rewards program activity for the years ended December 31, 2022 and 2021 was insignificant to the Company's results of operations.
Bill payment services fee revenue — Bill payment revenues are earned primarily from fees charged to consumers for each transaction completed. Our primary bill payment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent locations, at certain agent locations in select Caribbean and European countries and through our digital solutions. Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards with cash at an agent location or with a credit or debit card. We offer consumers same-day and two or three-day payment service options; the service option is dependent upon our agreement with the biller. Each bill payment service is considered a separate agreement with the consumer and includes only one performance obligation that is satisfied at a point in time, when the funds are transferred to the designated institution, which is generally within the same day. The consumer is in control of the service, as the consumer picks out the "send" location and time. MoneyGram does not offer refunds for bill payment services and revenue is recognized on a gross basis as the Company is considered the principal in these transactions.
Other revenue — Includes breakage income, fees from royalties, contract terminations, insufficient funds and other one-time charges. The Company recognizes breakage revenue for unclaimed money transfers when the likelihood of consumer pick-up becomes remote based on historical experience and there is no requirement for remitting balances to government agencies.
FPP Segment:
Money order fee revenue — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds underlying outstanding money orders. The Company contracts with agents and/or financial institutions for this product and associated services. We sell money orders under the MoneyGram brand and on a private label or on a co-branded basis with certain agents and financial institutions in the U.S. The Company recognizes revenue when an agent sells a money order because the funds are immediately made available to the consumer. As such, each sale of a money order and related service is considered a separate performance obligation that is satisfied at a point in time.
Official check outsourcing services fee revenue — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use official checks to pay their own obligations. Like money orders, the Company generates revenue from official check outsourcing services through U.S. banks and credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks. The Company's consumer for official checks is considered the financial institution. The official checks services and products are considered a bundle of services and products that are provided to the financial institution on an ongoing basis. As such, revenue from these services is recognized on a monthly basis. Revenue corresponds directly with the value of MoneyGram's services and/or products completed to date and for which the Company has a right to invoice. Monthly revenue may vary based on the number of official checks issued and other ancillary services provided to the financial institution.
Other revenue — Includes fees from money order service revenue, proof adjustments, early contract terminations, money order photo and replacement fees and other one-time charges. The Company recognizes service revenue from money orders that have not been redeemed within a one-year period from issuance. Proof adjustment fees are generally unresolved and not recouped as they pertain to immaterial bank variances. The Company recognizes as revenue the net proof adjustments amount on a monthly basis.
Investment Revenue — Investment revenue, which is not within the scope of ASC Topic 606 per ASC 606-10-15-2, is earned from the investment of funds generated from the sale of payment instruments, primarily official checks and money orders and consists of interest income, dividend income, income received on our cost recovery securities and amortization of premiums and discounts. Investment revenue varies depending on the level of investment balances and the yield on our investments.
Commissions and Other Fee Expense — The Company incurs fee commissions primarily related to our GFT services. In a money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally either a fixed fee or is based on a percentage of the fee charged to the consumer. The agent initiating the transaction and the receiving agent also earn non-U.S. dollar exchange commissions, which are generally based on a percentage of the non-U.S. dollar exchange spread. In a bill payment transaction, the agent initiating the transaction receives a commission that is generally based on a percentage of the fee charged to the consumer and, in limited circumstances, the biller receives a commission that is based on a percentage of the fee charged to the consumer. The Company generally does not pay commissions to agents on the sale of money orders, except, in certain limited circumstances, for large agents where we may pay a fixed commission based on total money order transactions.
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 are recognized each month based on the average outstanding balances of each financial institution customer and their contractual variable rate for that month.
Direct Transaction Expense — Direct transaction expense includes expenses related to the processing of money transfers, such as customer authentication and funding costs.
Marketing and Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes place and are recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. Marketing and advertising expense was $39.4 million, $27.7 million and $16.2 million for 2022, 2021 and 2020, respectively.
Stock-Based Compensation — Stock-based compensation awards are measured at fair value at the date of grant and expensed using the straight-line method over their vesting or service periods. For grants to employees, expense, net of estimated forfeitures, is recognized in the "Compensation and benefits" line and expense for grants to non-employee directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. The Company accounts for modifications to its share-based payment awards in accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other
pertinent factors at that date and is recognized as compensation cost on the date of modification (for vested awards) or over the remaining vesting or service period (for unvested awards). Any unrecognized compensation cost remaining from the original award is recognized over the vesting period of the modified award. See Note 12 — Stock-Based Compensation for additional disclosure of the Company's stock-based compensation. Earnings Per Share — For all periods in which they are outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") and the warrants issued by the Company in connection with the entry into the Second Lien Credit Agreement ("Second Lien Warrants") are included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share because the D Stock is deemed a common stock equivalent and the Second Lien Warrants are considered outstanding common shares.
Recently Adopted Accounting Standards — In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The ASU clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options, warrants for instance, that remain equity classified after modification or exchange. The ASU provides guidance that will clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 did not have a material impact on our Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide, if certain criteria are met, optional expedients and exceptions for applying the U.S. GAAP requirements for contract modifications, hedging relationships and sales or transfers of debt securities that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform through December 31, 2022. The adoption of this ASU is optional and the election can be made anytime during the effective period. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on our Consolidated Financial Statements.
Recently Issued Accounting Standards and Related Developments Not Yet Adopted — In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU changes how entities account for convertible instruments and contracts in an entity's own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. This ASU also modifies the guidance on diluted earnings per share calculations. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We do not believe the adoption of ASU 2020-06 will have a material impact on our Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new credit impairment standard changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. To further assist with adoption and implementation of ASU 2016-13, the FASB issued the following ASUs:
•ASU 2018-19 (Issued November 2018) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses
•ASU 2019-04 (Issued April 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
•ASU 2019-05 (Issued May 2019) — Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief
•ASU 2019-10 (Issued November 2019) — Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates
•ASU 2019-11 (Issued November 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses
•ASU 2020-02 (Issued February 2020) — Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)
•ASU 2020-03 (Issued March 2020) — Codification Improvements to Financial Instruments
•ASU 2022-02 (Issued March 2022) — Financial Instruments - Credit Losses (Topic 326): Trouble Debt Restructurings and Vintage Disclosures
ASU 2019-10 changed the effective date of ASU 2016-13 for public business entities that meet the definition of a U.S. Securities and Exchange Commission ("SEC") filer but that are eligible to be a smaller reporting company to fiscal years beginning after December 15, 2022. As of November 15, 2019, which is the determination date for ASU 2016-13, MoneyGram was a smaller reporting company and, as such, has elected to adopt the amendments in these standards in 2023. We do not believe the adoption of these ASUs will have a material impact on our Consolidated Financial Statements.
The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its Consolidated Financial Statements.
Note 3 — Settlement Assets and Payment Service Obligations
The Company's primary licensed entities are MoneyGram Payment Systems, Inc. ("MPSI"), MoneyGram International SA and MoneyGram International Limited, which enable us to offer our money transfer service in the European Economic Area as well as around the globe. MPSI is regulated by various U.S. state agencies that generally require the Company to maintain a pool of assets with an investment rating bearing one of the three highest grades as defined by a nationally recognized rating agency ("permissible investments") in an amount equal to the payment service obligations, as defined by each state, for those regulated payment instruments, namely teller checks, agent checks, money orders and money transfers. The regulatory payment service assets measure varies by state but in all cases excludes investments rated below A-. The most restrictive states may also exclude assets held at banks that do not belong to a national insurance program, varying amounts of accounts receivable balances and/or assets held in the SPE. The regulatory payment service obligations measure varies by state but in all cases is substantially lower than the Company's payment service obligations as disclosed on the Consolidated Balance Sheets as the Company is not regulated by state agencies for payment service obligations primarily resulting from outstanding cashier's checks.
We are also subject to licensing or other regulatory requirements in various other jurisdictions. Licensing requirements may include minimum net worth, provision of surety bonds or letters of credit, compliance with operational procedures, agent oversight and the maintenance of settlement assets in an amount equivalent to outstanding payment service obligations, as defined by our various regulators.
The regulatory and contractual requirements do not require the Company to specify individual assets held to meet its payment service obligations, nor is the Company required to deposit specific assets into a trust, escrow or other special account. Rather, the Company must maintain a pool of liquid assets sufficient to comply with the requirements. No third-party places limitations, legal or otherwise, on the Company regarding the use of its individual liquid assets. The Company is able to withdraw, deposit or sell its individual liquid assets at will, with no prior notice or penalty, provided the Company maintains a total pool of liquid assets sufficient to meet the regulatory and contractual requirements. Regulatory requirements also require MPSI to maintain positive net worth, with certain states requiring that MPSI maintain positive tangible net worth. The Company was in compliance with its contractual and financial regulatory requirements as of December 31, 2022.
The following table summarizes the amount of settlement assets and payment service obligations as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Settlement assets: | | | | |
Settlement cash and cash equivalents | | $ | 1,499.1 | | | $ | 1,895.7 | |
Receivables, net | | 1,107.0 | | | 700.4 | |
Interest-bearing investments | | 998.1 | | | 992.3 | |
Available-for-sale investments | | 3.0 | | | 3.0 | |
| | $ | 3,607.2 | | | $ | 3,591.4 | |
Payment service obligations | | $ | (3,607.2) | | | $ | (3,591.4) | |
Note 4 — Fair Value Measurement
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Under the hierarchy, the highest priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), followed by observable inputs (Level 2) and unobservable inputs (Level 3). A financial instrument's level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the Company's valuation methodologies used to estimate the fair value for assets and liabilities:
Assets and liabilities that are measured at fair value on a recurring basis:
•Available-for-sale investments — For residential mortgage-backed securities issued by U.S. government agencies, fair value measures are obtained from an independent pricing service. As market quotes are generally not readily available or accessible for these specific securities, the pricing service measures fair value through the use of pricing models utilizing reported market quotes adjusted for observable inputs, such as market prices for comparable securities, spreads, prepayment speeds, yield curves and delinquency rates. Accordingly, these securities are classified as Level 2 financial instruments.
For asset-backed and other securities, which include investments in limited partnerships, market quotes are generally not available. The Company utilizes broker quotes to measure market value, if available. Because the inputs and assumptions that brokers use to develop prices are unobservable, valuations that are based on brokers' quotes are classified as Level 3. Also, the Company uses pricing services that utilize pricing models based on market observable and unobservable data. The observable inputs include quotes for comparable securities, yield curves, default indices, interest rates, historical prepayment speeds and delinquency rates. These pricing models also apply an inactive market adjustment as a significant unobservable input. Accordingly, asset-backed and other securities valued using third-party pricing models are classified as Level 3.
•Derivative financial instruments — Derivatives consist of forward contracts to manage income statement exposure to non-U.S. dollar exchange risk arising from the Company's assets and liabilities denominated in non-U.S. dollar currencies. The Company's forward contracts are well-established products, allowing the use of standardized models with market-based inputs. These models do not contain a high level of subjectivity, and the inputs are readily observable. Accordingly, the Company has classified its forward contracts as Level 2 financial instruments. See Note 6 — Derivative Financial Instruments for additional disclosure on the Company's forward contracts.
There were no transfers between Level 1 and Level 2, or transfers into or out of level 3 of the fair value hierarchy. The following table summarizes the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | Level 2 | | Level 3 | | Total |
December 31, 2022 | | | | | | |
Financial assets: | | | | | | |
Available-for-sale investments: | | | | | | |
Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | 1.5 | |
Asset-backed and other securities | | — | | | 1.5 | | | 1.5 | |
Forward contracts | | 5.2 | | | — | | | 5.2 | |
Total financial assets | | $ | 6.7 | | | $ | 1.5 | | | $ | 8.2 | |
Financial liabilities: | | | | | | |
Forward contracts | | $ | 3.3 | | | $ | — | | | $ | 3.3 | |
| | | | | | |
December 31, 2021 | | | | | | |
Financial assets: | | | | | | |
Available-for-sale investments: | | | | | | |
Residential mortgage-backed securities | | $ | 2.3 | | | $ | — | | | $ | 2.3 | |
Asset-backed and other securities | | — | | | 0.7 | | | 0.7 | |
Forward contracts | | 0.1 | | | — | | | 0.1 | |
Total financial assets | | $ | 2.4 | | | $ | 0.7 | | | $ | 3.1 | |
Financial liabilities: | | | | | | |
Forward contracts | | $ | 0.2 | | | $ | — | | | $ | 0.2 | |
The following table provides a roll-forward of the asset-backed and other securities classified as Level 3, which are measured at fair value on a recurring basis for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Beginning balance | | $ | 0.7 | | | $ | 0.5 | | | $ | 0.9 | |
| | | | | | |
Change in unrealized gains (losses) | | 0.8 | | | 0.2 | | | (0.4) | |
| | | | | | |
Ending balance | | $ | 1.5 | | | $ | 0.7 | | | $ | 0.5 | |
Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair values of the Term Loan, Senior Secured Notes and First Lien Credit Facility are estimated using an observable market quotation (Level 2). The fair value of the second lien credit facility is estimated using unobservable market inputs (Level 3), including broker quotes for comparable traded securities and yield curves.
The following table provides the carrying value and fair value for the credit facilities and the senior secured notes as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
| | Carrying value | | Fair value | | Carrying value | | Fair value |
Term Loan | | $ | 380.0 | | | $ | 378.6 | | | $ | 384.0 | | | $ | 383.5 | |
Senior Secured Notes | | $ | 415.0 | | | $ | 420.2 | | | $ | 415.0 | | | $ | 421.2 | |
The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, receivables, interest-bearing investments and payment service obligations approximate fair value as of December 31, 2022 and 2021.
The Company records the investments in its Pension Plan trust at fair value. The majority of the Pension Plan's investments is common/collective trusts held by the Pension Plan's trustee. The fair values of the Pension Plan's investments are determined based on the current market values of the underlying assets. See Note 10 — Pension and Other Benefits for additional disclosure of investments held by the Pension Plan.
Assets and liabilities measured at fair value on a non-recurring basis — Assets and liabilities that are measured at fair value on a non-recurring basis relate primarily to the Company's property and equipment, goodwill and other intangible assets, which are remeasured only in the event of an impairment.
Fair value remeasurements are normally based on significant unobservable inputs (Level 3). Tangible and intangible asset fair values are derived using accepted valuation methodologies. If it is determined an impairment has occurred, the carrying value of the asset is reduced to fair value with a corresponding charge to "Other expenses" in the Consolidated Statements of Operations.
Note 5 — Investment Portfolio
The Company's portfolio is invested in cash and cash equivalents, interest-bearing investments and available-for-sale investments as described in Note 2 — Summary of Significant Accounting Policies. The following table shows the components of the investment portfolio as of December 31: | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
| | | | |
| | | | |
Cash and cash equivalents and settlement cash and cash equivalents | | $ | 1,671.2 | | | $ | 2,050.9 | |
Interest-bearing investments | | 998.1 | | | 992.3 | |
Available-for-sale investments | | 3.0 | | | 3.0 | |
Total investment portfolio | | $ | 2,672.3 | | | $ | 3,046.2 | |
Cash and Cash Equivalents and settlement cash and cash equivalents — Cash and cash equivalents and settlement cash and cash equivalents consist of interest-bearing deposit accounts, non-interest-bearing transaction accounts and money market securities. The Company's money market securities are invested in one fund, which is AAA rated and consists of U.S. Treasury bills, notes or other obligations issued or guaranteed by the U.S. government and its agencies, as well as repurchase agreements secured by such instruments.
Interest-bearing Investments — Interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months and are issued from financial institutions rated A- or better as of December 31, 2022.
Available-for-sale Investments — Available-for-sale investments consist of residential mortgage-backed securities and asset-backed and other securities. The following table is a summary of the amortized cost and fair value of available-for-sale investments:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
December 31, 2022 | | | | | | | | |
Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | — | | | $ | 1.5 | |
Asset-backed and other securities | | — | | | 1.5 | | | — | | | 1.5 | |
Total | | $ | 1.5 | | | $ | 1.5 | | | $ | — | | | $ | 3.0 | |
| | | | | | | | |
December 31, 2021 | | | | | | | | |
Residential mortgage-backed securities | | $ | 2.1 | | | $ | 0.2 | | | $ | — | | | $ | 2.3 | |
Asset-backed and other securities | | — | | | 0.7 | | | — | | | 0.7 | |
Total | | $ | 2.1 | | | $ | 0.9 | | | $ | — | | | $ | 3.0 | |
As of December 31, 2022 and 2021, 50% and 77%, respectively, of the fair value of the available-for-sale portfolio were invested in residential mortgage-backed securities issued by U.S. government agencies. These securities have the implicit backing of the U.S. government and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments.
Gains and Losses — For the years ended December 31, 2022, 2021 and 2020, the Company had no realized gains and losses.
Investment Ratings — In rating the securities in its investment portfolio, the Company uses ratings from Moody's Investor Service ("Moody's"), Standard & Poor's ("S&P") and Fitch Ratings ("Fitch"). If the rating agencies have split ratings, the Company uses the lower of the highest two out of three ratings across the rating agencies for disclosure purposes. If the institution has only two ratings, the Company uses the lower of the two ratings for disclosure purposes. Securities issued or
backed by U.S. 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 consisted of the following ratings as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 |
(Dollar amounts in millions) | | Number of Securities | | Fair Value | | Percent of Investments | | Number of Securities | | Fair Value | | Percent of Investments |
Investment grade | | 9 | | | $ | 1.5 | | | 50 | % | | 9 | | | $ | 2.3 | | | 78 | % |
Below investment grade | | 33 | | | 1.5 | | | 50 | % | | 33 | | | 0.7 | | | 22 | % |
Total | | 42 | | | $ | 3.0 | | | 100 | % | | 42 | | | $ | 3.0 | | | 100 | % |
Had the Company used the lowest rating from the rating agencies in the information presented above, there would be no change to the classifications as of December 31, 2022 and 2021.
Contractual Maturities — Actual maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations, sometimes without call or prepayment penalties. Maturities of residential mortgage-backed and asset-backed and other securities depend on the repayment characteristics and experience of the underlying obligations.
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 as of December 31, 2022 and 2021, 89% and 93% used a third-party pricing service and 11% and 7% used broker quotes, respectively.
Note 6 — Derivative Financial Instruments
The Company uses forward contracts to manage its non-U.S. dollar needs and non-U.S. dollar exchange risk arising from its assets and liabilities denominated in non-U.S. dollars. While these contracts may mitigate certain non-U.S. dollar risk, they are not designated as hedges for accounting purposes and will result in gains and losses in the Consolidated Statements of Operations. The Company also reports gains and losses from the spread differential between the rate set for its transactions and the actual cost of currency at the time the Company buys or sells in the open market.
The following net gains (losses) related to assets and liabilities denominated in non-U.S. dollar are included in "Transaction and operations support" in the Consolidated Statements of Operations and in the "Net cash provided by operating activities" line in the Consolidated Statements of Cash Flows:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Net realized non-U.S. dollar (loss) gain | | $ | (38.2) | | | $ | (20.4) | | | $ | 26.6 | |
Net gain (loss) from the related forward contracts | | 39.8 | | | 18.4 | | | (11.9) | |
Net gain (loss) from the related forward contracts | | $ | 1.6 | | | $ | (2.0) | | | $ | 14.7 | |
As of December 31, 2022 and 2021, the Company had $816.0 million and $698.7 million, respectively, of outstanding notional amounts relating to its non-U.S. dollar forward contracts. As of December 31, 2022 and 2021, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets on a net basis, allowing for the right of offset by counterparty and cash collateral:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (Amounts in millions) | | Gross Amount of Recognized Assets | | Gross Amount of Offset | Cash Collateral Posted | | Net Amount of Assets Presented on the Consolidated Balance Sheets |
| | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 |
| | "Other assets" | | $ | 1.8 | | | $ | 0.4 | | | $ | (1.6) | | | $ | (0.3) | | $ | 5.0 | | | $ | — | | | $ | 5.2 | | | $ | 0.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (Amounts in millions) | | Gross Amount of Recognized Liabilities | | Gross Amount of Offset | Cash Collateral Received | | Net Amount of Liabilities Presented on the Consolidated Balance Sheets |
| | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 |
| | "Accounts payable and other liabilities" | | $ | 4.9 | | | $ | 0.6 | | | $ | (1.6) | | | $ | (0.4) | | $ | — | | | $ | — | | | $ | 3.3 | | | $ | 0.2 | |
The Company's forward contracts are primarily executed with counterparties governed by International Swaps and Derivatives Association agreements that generally include standard netting arrangements. Asset and liability positions from forward contracts and all other non-U.S. dollar exchange transactions with the same counterparty are net settled upon maturity. In addition, the Company nets derivative liabilities against any receivables for cash collateral placed with the same counterparties.
The Company is exposed to credit loss in the event of non-performance by counterparties to its derivative contracts. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. Collateral generally is not required of the counterparties, however, it is required of the Company in some contracts. In the unlikely event the counterparty fails to meet the contractual terms of the derivative contract, the Company's risk is limited to the fair value of the instrument. The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.
Note 7 — Property and Equipment
The following table is a summary of "Property and equipment, net" as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Computer hardware and software | | $ | 476.2 | | | $ | 529.9 | |
Signage | | 41.6 | | | 50.6 | |
Equipment at agent locations | | 47.9 | | | 50.2 | |
Office furniture and equipment | | 11.6 | | | 19.5 | |
Leasehold improvements | | 21.1 | | | 22.1 | |
Total property and equipment | | 598.4 | | | 672.3 | |
Accumulated depreciation and amortization | | (463.9) | | | (538.4) | |
Total property and equipment, net | | $ | 134.5 | | | $ | 133.9 | |
Depreciation and amortization expense for property and equipment for 2022, 2021 and 2020 was $51.3 million, $56.4 million and $63.9 million, respectively. No impairments of property and equipment were recorded during 2022, 2021 and 2020.
At December 31, 2022 and 2021, the Company had $0.3 million and $1.7 million, respectively, in accrued purchases of property and equipment included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets.
During 2022, 2021 and 2020 the Company had nominal losses related to disposals of its property and equipment. The loss was recorded within "Occupancy, equipment and supplies" in the Consolidated Statements of Operations.
For the years ended December 31, 2022 and 2021, software development costs of $45.2 million and $35.0 million, respectively, were capitalized. At December 31, 2022 and 2021, there were $113.6 million and $104.3 million, respectively, of unamortized software development costs included in property and equipment.
For the years ended December 31, 2022 and 2021, the Company had $5.8 million and $1.0 million, respectively, in net capitalized implementation costs related to hosting arrangements that are service contracts. These costs are recorded within "Other assets" on the Consolidated Balance Sheets and the related amortization is recorded in the same line item in the Consolidated Statements of Operations as other fees associated with the service arrangements.
Note 8 — Goodwill and Intangible Assets
Goodwill — The Company's goodwill balance was $442.2 million as of December 31, 2022 and 2021, and all relates to the GFT segment. During the fourth quarter of 2022 and 2021, the Company performed a qualitative assessment of goodwill and a quantitative impairment test during the fourth quarter of 2020. No impairments of goodwill were recorded in 2022, 2021 and 2020.
Intangibles — All of the Company's intangible assets are included within "Other assets" on the Consolidated Balance Sheets. The following table is a summary of finite-lived intangible assets as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 |
(Amounts in millions) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value |
Contractual and customer relationships | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.1 | | | $ | (3.7) | | | $ | 0.4 | |
Developed technology | | — | | | — | | | — | | | 0.6 | | | (0.6) | | | — | |
Total finite-intangible assets | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.7 | | | $ | (4.3) | | | $ | 0.4 | |
Intangible asset amortization expense for 2022, 2021 and 2020 was $0.4 million, $0.6 million and $0.5 million, respectively. There is no future intangible asset amortization expense.
Note 9 — Debt
The following is a summary of the Company's outstanding debt as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions, except percentages) | | 2022 | | 2021 |
8.57% Term Loan due 2026 | | $ | 380.0 | | | $ | 384.0 | |
5.375% Senior Secured Notes due 2026 | | 415.0 | | | 415.0 | |
Total debt at face value | | 795.0 | | | 799.0 | |
Unamortized debt issuance costs and debt discounts | | (9.6) | | | (12.3) | |
Total debt, net | | $ | 785.4 | | | $ | 786.7 | |
Indenture and New Credit Agreement — On July 21, 2021, the Company entered into a new credit agreement (the "New Credit Agreement") with the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and completed its previously announced private offering of $415.0 million aggregate principal amount of 5.375% senior secured notes due 2026 (the "Senior Secured Notes" or "Notes" and such offering, the "Notes Offering") and related guarantees. The New Credit Agreement provides for (i) a senior secured five-year term loan in an aggregate principal amount of $400.0 million (the "Term Loan") and (ii) a senior secured four-year revolving credit facility that may be used for revolving credit loans, swingline loans and letters of credit (the "Revolving Credit Facility") and together with the Term Loan, the "New Credit Facilities") up to an initial aggregate principal amount of $32.5 million which was increased to $40.0 million in December 2021. The interest rate spread applicable to loans under the Term Loan is 3.50% per annum for base rate loans and 4.50% for LIBOR rate loans. For purposes of the Term Loan, the LIBOR rate is subject to a 0.50% per annum floor and for purposes of the Revolving Credit Facility the LIBOR rate is subject to a 0.0% floor. As of December 31, 2022 and 2021, LIBOR rate was 4.07% and 0.50%, and interest rate was 8.57% and 5.00%, respectively, for the Term Loan. As of December 31, 2022, the Company had no borrowings and no outstanding letters of credit under its Revolving Credit Facility. The New Credit Facilities were secured by substantially all of the Company's assets and its material domestic subsidiaries that guarantee the payment and performance of the Company's obligations under the Credit Facilities.
Prepayment — On June 28, 2021, the Company prepaid $100.0 million of principal balance under its Second Lien Credit Agreement utilizing the proceeds under the ATM Program plus cash on hand as defined and further discussed in Note 11 — Stockholders' Deficit. On July 21, 2021, the proceeds from the notes offering, together with borrowings under the Term Loan, were used to prepay the full amount of outstanding indebtedness under the Prior Credit Facilities, as defined below and to pay related accrued interest, fees and expenses. Simultaneous with the prepayment, the Prior Credit Facilities were terminated. In the fourth quarter of 2021, the Company prepaid a total of $16.0 million of principal balance under its New Credit Agreement. During the year ended December 31, 2021, the Company recorded a loss on early extinguishment of debt of $44.1 million which included $16.5 million of prepayment call premium and $27.6 million associated with the write-off of debt issuance costs and debt discounts. The Company also paid accrued interest of $7.0 million.
Debt Covenants and Other Restrictions — The New Credit Agreement requires the Company and its consolidated subsidiaries to maintain a minimum interest coverage ratio of 2.150:1.000 and to not exceed a total net leverage ratio of 4.750:1.000. The asset coverage covenant contained in the New Credit Agreement requires the aggregate amount of the Company's cash and cash equivalents and other settlement assets to exceed its aggregate payment service obligations. As of December 31, 2022, the Company was in compliance with its financial covenants: our interest coverage ratio was 4.742 to 1.000, our total net leverage ratio was 3.137 to 1.000 and our assets in excess of payment service obligations used for the asset coverage calculation were $172.1 million. We continuously monitor our compliance with our debt covenants.
Debt Issuance Costs —For the Term Loan and the Notes, the Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness and amortizes these costs over the term of the related debt liability using the effective interest method. For the Revolving Credit Facility, the Company presents debt issuance costs within "Other assets" on its Consolidated Balance Sheets and amortizes these costs ratably over the term of the Revolving Credit Facility. Amortization of debt issuance costs is recorded within "Interest expense" on the Consolidated Statements of Operations.
There were no unamortized costs associated with the Revolving Credit Facility as of December 31, 2022 and 2021.
Debt Discount — The Company records debt discount as a deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheets with the respective debt discount amortization recorded within "Interest expense."
Maturities — At December 31, 2022, debt totaling $781.0 million will mature in July 2026, with debt principal totaling $14.0 million will be paid quarterly in increments of $1.0 million through the maturity date. Any borrowings under the Revolving Credit Facility will mature in July 2025.
Note 10 — Pension and Other Benefits
Pension Benefits — The Company's Pension Plan is a frozen, non-contributory funded plan under which no new service or compensation credits are accrued by the plan participants. Cash accumulation accounts continue to be credited with interest credits until participants withdraw their money from the Pension Plan. It is the Company's policy to fund at least the minimum required contribution each year plus additional discretionary amounts as available and necessary to minimize expenses of the plan.
Supplemental Executive Retirement Plans — The Company has obligations under various legacy SERPs, which are unfunded non-qualified defined benefit pension plans providing postretirement income to their participants. As of December 31, 2022, all benefit accruals under the SERPs are frozen with the exception of one plan for which service is frozen but future pay increases are reflected for active participants. It is the Company's policy to fund the SERPs as benefits are paid.
The Company's Pension Plan and SERPs are collectively referred to as our "Pension."
Postretirement Benefits Other Than Pensions — The Company has an unfunded defined benefit postretirement plan ("Postretirement Benefits") that provides medical and life insurance for its participants. The Company amended the Postretirement Benefits to close it to new participants as of December 31, 2009. Effective July 1, 2011, the Postretirement Benefits was amended to eliminate eligibility for participants eligible for Medicare coverage. As a result of this plan amendment, the Company no longer receives the Medicare retiree drug subsidy. The Company's funding policy is to make contributions to the Postretirement Benefits as benefits are paid.
Actuarial Valuation Assumptions — The measurement date for the Company's Pension and Postretirement Benefits is December 31. The following table is a summary of the weighted-average actuarial assumptions used in calculating net periodic benefit expense (income) and the benefit obligation for the years ended and as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension Plan | | SERPs | | Postretirement Benefits |
| | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 |
Net periodic benefit expense (income): | | | | | | | | | | | | | | | | | | |
Discount rate for benefit obligation | | 2.86 | % | | 2.51 | % | | 3.23 | % | | 2.81 | % | | 2.41 | % | | 3.18 | % | | 2.95 | % | | 2.64 | % | | 3.33 | % |
Discount rate for interest cost | | 2.33 | % | | 1.86 | % | | 2.83 | % | | 2.16 | % | | 1.62 | % | | 2.70 | % | | 2.22 | % | | 1.74 | % | | 2.77 | % |
Expected return on plan assets | | 2.76 | % | | 1.80 | % | | 2.07 | % | | — | | | — | | | — | | | — | | | — | | | — | |
Cash balance interest crediting rate | | 1.92 | % | | 1.36 | % | | 1.73 | % | | — | | | — | | | — | | | — | | | — | | | — | |
Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | |
Medical trend rate: | | | | | | | | | | | | | | | | | | |
Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.38 | % | | 6.46 | % | | 6.79 | % |
Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.64 | % | | 7.08 | % | | 7.51 | % |
Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % |
Year ultimate healthcare cost trend rate is reached for pre/post-65, respectively | | — | | | — | | | — | | | — | | | — | | | — | | | 2030 | | 2028 | | 2025 |
Benefit obligation: | | | | | | | | | | | | | | | | | | |
Discount rate | | 5.17 | % | | 2.86 | % | | 2.51 | % | | 5.15 | % | | 2.81 | % | | 2.41 | % | | 5.22 | % | | 2.95 | % | | 2.64 | % |
Cash balance interest crediting rate | | 3.13 | % | | 1.92 | % | | 1.36 | % | | — | | | — | | | — | | | — | | | — | | | — | |
Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | |
Medical trend rate: | | | | | | | | | | | | | | | | | | |
Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.87 | % | | 6.38 | % | | 6.46 | % |
Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 7.26 | % | | 6.64 | % | | 7.08 | % |
Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % |
Year ultimate healthcare cost trend rate is reached for pre/post-65 | | — | | | — | | | — | | | — | | | — | | | — | | | 2031 | | 2030 | | 2028 |
The Company utilizes a building-block approach in determining the long-term expected rate of return on plan assets. The expected return on plan assets is calculated using a calculated value of plan assets that is determined each year by adjusting the previous year's value by expected returns, benefit payments and contributions. Asset gains and losses are reflected as equal adjustments over a three-year period. Historical markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capital market assumptions are determined. The long-term portfolio return also takes proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed for reasonableness and appropriateness.
Actuarial gains and losses are amortized using the Corridor approach, by amortizing the balance exceeding 10% of the greater of the benefit obligation or the fair value of plan assets. The amortization period is primarily based on the average remaining expected life of plan participants for the Pension and the average remaining expected life of plan participants for the Postretirement Benefits. The Company estimated the interest cost components utilizing a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to their underlying projected cash flows.
Pension Assets — The Company employs a liability-driven investment approach whereby a mix of equity and fixed income securities are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income securities. Furthermore, equity securities are diversified across large and small capitalized securities and international securities. Other assets, such as real estate and high yield bonds, are used to further
diversify equity allocations. Fixed income securities are primarily invested in a mix of investment grade corporate bonds, government bonds and a smaller allocation to non-investment grade debt. The Company uses a dynamic strategy to determine the allocation of return-seeking assets driven by the Pension Plan's funded ratio so that when the funded status increases above prescribed levels, the allocation to equities will decrease and fixed income increase proportionally. Investment risk is measured and monitored on an ongoing basis, including quarterly investment portfolio reviews and periodic liability measurements.
As of December 31, 2022, the Pension assets consisted of approximately 6% in equity securities, 81% in fixed income and 13% in real estate.
The Company records its Pension Plan's assets at fair value as described in Note 4 — Fair Value Measurement. The following is a description of the Pension Plan's investments at fair value and valuation methodologies: •Common/collective trusts — The fair values of the underlying funds in the common/collective trusts are valued based on the unit value established for each fund at each valuation date. The unit value of a collective investment fund is calculated by dividing the fund's net asset value on the calculation date by the number of units of the fund that are outstanding on the calculation date, which is derived from observable purchase and redemption activity in the collective investment fund.
•Money market fund — This investment is valued at the published per share net asset value of shares held by the Plan. There are no significant restrictions on redeeming these investments at net asset value.
•Real estate — The Pension Plan trust holds an investment in a real estate development project that the Company considers to be a Level 3 asset for valuation purposes because it requires the use of unobservable inputs in its fair value measurement. The fair value of this investment represents the estimated fair value of the plan's related ownership percentage in the project based upon an appraisal of the underlying real property as of each balance sheet date. The fund investment strategy for this asset is long-term capital appreciation.
The following table is a summary of the Pension Plan's financial assets recorded at fair value, by hierarchy level:
| | | | | | | | | | | | | | | | |
(Amounts in millions) | | | | Level 3 | | Total |
December 31, 2022 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Real estate | | | | $ | 4.5 | | | $ | 4.5 | |
Total investments in the fair value hierarchy | | | | 4.5 | | | 4.5 | |
Investments measured at net asset value (1) | | | | | | 30.9 | |
Total financial assets | | | | | | $ | 35.4 | |
| | | | | | |
December 31, 2021 | | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
Real estate | | | | $ | 4.2 | | | $ | 4.2 | |
Total investments in the fair value hierarchy | | | | 4.2 | | | 4.2 | |
Investments measured at net asset value (1) | | | | | | 41.1 | |
Total financial assets | | | | | | $ | 45.3 | |
(1) Common/collective trusts investments and money market funds that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets presented in the summary of plan assets further below.
The Company does not have participant redemption restrictions for its common/collective trust investments. The following table sets forth additional disclosures for the Pension Plan assets fair value estimated using net asset value per share:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | Fair Value | | Redemptions Frequency (if currently eligible) | | Redemption Notice Period |
December 31, 2022 | | | | | | |
Money market fund | | $ | 0.9 | | | Daily | | Same day |
Multi-asset credit fund | | 0.4 | | | Monthly | | 10 Days |
Equity and fixed income securities | | 29.6 | | | Daily | | 15 Days |
Investments measured at net asset value | | $ | 30.9 | | | | | |
| | | | | | |
| | | | | | |
December 31, 2021 | | | | | | |
Money market fund | | $ | 0.9 | | | N/A | | N/A |
Multi-asset credit fund | | 0.8 | | | Monthly | | 10 Days |
Equity and fixed income securities | | 39.4 | | | Daily | | 15 Days |
Investments measured at net asset value | | $ | 41.1 | | | | | |
Plan Financial Information — Net periodic benefit expense for the Pension includes the following components for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension | | Postretirement Benefits |
(Amounts in millions) | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 |
Interest cost | | $ | 2.4 | | | $ | 2.0 | | | $ | 3.1 | | | $ | — | | | $ | — | | | $ | — | |
Expected return on plan assets | | (1.2) | | | (0.7) | | | (0.8) | | | 0.1 | | | — | | | — | |
Amortization of net actuarial loss | | 2.3 | | | 2.4 | | | 2.0 | | | — | | | 0.1 | | | 0.1 | |
Settlement gain | | (0.5) | | | — | | | — | | | — | | | — | | | — | |
Amortization of prior service cost | | — | | | — | | | 0.1 | | | — | | | — | | | — | |
Net periodic benefit expense | | $ | 3.0 | | | $ | 3.7 | | | $ | 4.4 | | | $ | 0.1 | | | $ | 0.1 | | | $ | 0.1 | |
Net periodic benefit expense for the Pension and Postretirement Benefits is recorded within "Other non-operating expense" in the Consolidated Statements of Operations. Settlement charge, amortization of net actuarial loss and prior service cost were reclassified out of the components of "Accumulated other comprehensive loss".
The following tables are a summary of the amounts recognized in other comprehensive income (loss) and net periodic benefit expense for the years ended December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | Pension | | Postretirement Benefits |
2022 | | | | |
Net actuarial gain | | $ | (7.3) | | | $ | — | |
Amortization of net actuarial loss | | (2.3) | | | — | |
Settlement gain | | 0.5 | | | — | |
Total recognized in other comprehensive loss | | (9.1) | | | — | |
Total recognized in net periodic benefit expense | | 3.0 | | | 0.1 | |
Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (6.1) | | | $ | 0.1 | |
2021 | | | | |
Net actuarial gain | | $ | (1.8) | | | $ | — | |
Amortization of net actuarial loss | | (2.4) | | | (0.1) | |
| | | | |
Total recognized in other comprehensive loss | | (4.2) | | | (0.1) | |
Total recognized in net periodic benefit expense | | 3.7 | | | 0.1 | |
Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (0.5) | | | $ | — | |
2020 | | | | |
| | | | |
Net actuarial loss (gain) | | 4.5 | | | (0.1) | |
Amortization of net actuarial loss | | (2.0) | | | (0.1) | |
Amortization of prior service cost | | (0.1) | | | — | |
Total recognized in other comprehensive income | | 2.4 | | | (0.2) | |
Total recognized in net periodic benefit expense | | 4.4 | | | 0.1 | |
Total recognized in other comprehensive income and net periodic benefit expense | | $ | 6.8 | | | $ | (0.1) | |
The following table is a summary of the unfunded status of the Pension and Postretirement Benefits, which is recorded within "Pension and other postretirement benefits" on the Consolidated Balance Sheets and changes to the benefit obligation and plan assets as of and for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension | | Postretirement Benefits | | Total |
(Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
Change in benefit obligation: | | | | | | | | | | | | |
Benefit obligation at the beginning of the year | | $ | 111.9 | | | $ | 120.1 | | | $ | 0.6 | | | $ | 0.6 | | | $ | 112.5 | | | $ | 120.7 | |
| | | | | | | | | | | | |
Interest cost | | 2.4 | | | 2.0 | | | — | | | — | | | 2.4 | | | 2.0 | |
Actuarial (gain) loss | | (18.6) | | | (2.6) | | | 0.1 | | | — | | | (18.5) | | | (2.6) | |
Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | |
Benefit obligation at the end of the year | | 88.4 | | | 111.9 | | | 0.5 | | | 0.6 | | | 88.9 | | | 112.5 | |
| | | | | | | | | | | | |
Change in plan assets: | | | | | | | | | | | | |
Fair value of plan assets at the beginning of the year | | 45.4 | | | 46.2 | | | — | | | — | | | 45.4 | | | 46.2 | |
| | | | | | | | | | | | |
Actual return on plan assets | | (10.0) | | | (0.1) | | | — | | | — | | | (10.0) | | | (0.1) | |
Employer contributions | | 7.5 | | | 6.9 | | | 0.2 | | | — | | | 7.7 | | | 6.9 | |
Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | |
Fair value of plan assets at the end of the year | | 35.6 | | | 45.4 | | | — | | | — | | | 35.6 | | | 45.4 | |
Unfunded status at the end of the year | | $ | 52.8 | | | $ | 66.5 | | | $ | 0.5 | | | $ | 0.6 | | | $ | 53.3 | | | $ | 67.1 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
In 2022, the net actuarial gain of $18.6 million affecting the benefit obligation of the Pension was due to the increase in discount rate. Net actuarial loss affecting the benefit obligation of the Postretirement Benefits was $0.1 million.
In 2021, the net actuarial gain of $2.6 million affecting the benefit obligation of the Pension was due to the increase in discount rate and no material net actuarial gain or loss affecting the benefit obligation of the Postretirement Benefits.
In October 2022, the Retirement Plans Experience Committee ("RPEC") of the Society of Actuaries ("SOA") issued a mortality improvement update. The Company adopted the mortality projection scales on its measurement date, which decreased the Pension Plan benefit obligation. The unfunded status of the Pension Plan was $3.1 million and $3.3 million at December 31, 2022 and 2021, respectively, and the unfunded status of the SERPs was $49.7 million and $63.2 million at December 31, 2022 and 2021, respectively.
The following table summarizes the components recognized in "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets relating to the Pension and Postretirement Benefits as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension | | Postretirement Benefits | | Total |
(Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
Accumulated other comprehensive loss: | | | | | | | | | | | | |
Net actuarial loss, net of tax | | $ | 28.1 | | | $ | 35.2 | | | $ | 0.3 | | | $ | 0.2 | | | $ | 28.4 | | | $ | 35.4 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
The following table summarizes the accumulated benefit obligation for the Pension and Postretirement Benefits fair value of plan assets as of December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension | | Postretirement Benefits |
(Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 |
Accumulated benefit obligation | | $ | 88.4 | | | $ | 111.9 | | | $ | 0.5 | | | $ | — | |
Fair value of plan assets | | $ | 35.6 | | | $ | 45.4 | | | $ | — | | | $ | — | |
The following table summarizes the estimated future benefit payments for the Pension and Postretirement Benefits for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | 2028-2032 |
Pension | | $ | 8.4 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.1 | | | $ | 32.1 | |
Postretirement benefits | | — | | | — | | | — | | | — | | | — | | | 0.1 | |
The Company has no minimum required contribution for the Pension Plan in 2023. The Company will continue to make contributions to the SERPs and the Postretirement Benefits to the extent benefits are paid. Aggregate benefits paid for the unfunded plans are expected to be $5.5 million in 2023.
Employee Savings Plan — The Company has an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended. Contributions to, and costs of, the 401(k) defined contribution plan totaled $4.8 million, $4.4 million and $3.7 million in 2022, 2021 and 2020, respectively.
International Benefit Plans — The Company's international subsidiaries have certain defined contribution plans. Contributions to, and costs related to, international plans were $1.5 million, $1.9 million and $2.0 million for 2022, 2021 and 2020, respectively.
Note 11 — Stockholders' Deficit
Common Stock — The Company's Amended and Restated Certificate of Incorporation, as amended, provides for the issuance of up to 162,500,000 shares of common stock with a par value of $0.01. 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. 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 New Credit Agreement. No dividends were paid in 2022, 2021 or 2020. On June 7, 2021, MoneyGram announced its ATM Program which provided for the offer and sale, from time to time, of shares of its common stock having an aggregate sales price of up to $100.0 million. On June 18, 2021,
MoneyGram completed the ATM Program by selling $99.8 million, or 10.4 million shares, at an average price per share of $9.56, resulting in total net proceeds to the Company of 97.2 million.
Preferred Stock — The Company's Amended and Restated Certificate of Incorporation provides for the issuance of up to 7,000,000 shares of preferred stock that may be issued in one or more series, with each series to have certain rights and preferences as shall be determined in the unlimited discretion of the Company's Board of Directors, including, without limitation, voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences.
Treasury Stock — The Board of Directors has authorized the repurchase of shares up to $50.0 million in the aggregate. As of December 31, 2022, the Company repurchased 1,023,209 shares or $6.1 million in common stock.
Series D Participating Convertible Preferred Stock (the "D Stock") — In 2011, the Company issued 71,282 shares out of 200,000 authorized shares of D Stock to Goldman Sachs. Each share of D Stock has a liquidation preference of $0.01 and is convertible into 125 shares of common stock. In 2020, Goldman Sachs converted all of its 71,282 shares of D Stock into 8,910,234 shares of common stock with a par value of $0.01 per share.
The following table is a summary of the Company's authorized, issued and outstanding stock as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Common Stock |
| | | | | | | | Authorized | | Issued | | Outstanding | | Treasury Stock |
January 1, 2020 | | | | | | | | 162,500,000 | | | 65,061,090 | | | 62,731,184 | | | 2,329,906 | |
Release for restricted stock units | | | | | | | | — | | | 56,358 | | | 876,121 | | | 819,763 | |
Preferred stock - series D conversion | | | | | | | | — | | | 7,413,322 | | | 8,910,234 | | | 1,496,912 | |
December 31, 2020 | | | | | | | | 162,500,000 | | | 72,530,770 | | | 72,517,539 | | | 13,231 | |
ATM equity offering | | | | | | | | — | | | 10,441,111 | | | 10,441,111 | | | — | |
Exercise of Ripple Warrants | | | | | | | | — | | | 5,948,895 | | | 5,948,895 | | | — | |
Release for restricted stock units | | | | | | | | — | | | 2,419,079 | | | 1,877,434 | | | 541,645 | |
Exercise of Second Lien Warrants | | | | | | | | — | | | 965,156 | | | 964,212 | | | 944 | |
Stock repurchases | | | | | | | | — | | | — | | | (1,023,209) | | | 1,023,209 | |
December 31, 2021 | | | | | | | | 162,500,000 | | | 92,305,011 | | | 90,725,982 | | | 1,579,029 | |
Exercise of lender warrants | | | | | | | | — | | | 4,458,314 | | | 4,454,159 | | | 4,155 | |
Release for restricted stock units | | | | | | | | — | | | 2,200,740 | | | 1,446,291 | | | 754,449 | |
December 31, 2022 | | | | | | | | 162,500,000 | | | 98,964,065 | | | 96,626,432 | | | 2,337,633 | |
Accumulated Other Comprehensive Loss — The following table details the components and changes of "Accumulated other comprehensive loss" as of and for the years ended:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax | | Cumulative non-U.S. dollar Translation Adjustments, Net of Tax | | Pension and Postretirement Benefits Adjustment, Net of Tax | | Total |
January 1, 2020 | | $ | 1.6 | | | $ | (28.1) | | | $ | (37.0) | | | $ | (63.5) | |
Other comprehensive loss before reclassification | | (0.4) | | | 7.2 | | | (3.4) | | | 3.4 | |
Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.7 | | | 1.7 | |
Net current year other comprehensive income | | (0.4) | | | 7.2 | | | (1.7) | | | 5.1 | |
December 31, 2020 | | 1.2 | | | (20.9) | | | (38.7) | | | (58.4) | |
Other comprehensive income before reclassification | | 0.3 | | | (8.0) | | | 1.4 | | | (6.3) | |
Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.9 | | | 1.9 | |
Net current year other comprehensive income | | 0.3 | | | (8.0) | | | 3.3 | | | (4.4) | |
December 31, 2021 | | 1.5 | | | (28.9) | | | (35.4) | | | (62.8) | |
Other comprehensive loss before reclassification | | 0.7 | | | (9.8) | | | 5.6 | | | (3.5) | |
Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.4 | | | 1.4 | |
Net current year other comprehensive loss | | 0.7 | | | (9.8) | | | 7.0 | | | (2.1) | |
December 31, 2022 | | $ | 2.2 | | | $ | (38.7) | | | $ | (28.4) | | | $ | (64.9) | |
Note 12 — 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. In May 2015, the Company's stockholders approved an amendment and restatement of the 2005 Plan increasing the aggregate number of shares that may be issued from 12,925,000 to 15,425,000 shares. As of December 31, 2022, the Company has remaining authorization to issue future grants of up to 2,383,388 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 share-based awards 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.
The Company recognized stock-based compensation expense of $15.0 million, $7.3 million and $6.6 million for the years ended December 31 2022, 2021 and 2020, respectively, all of which related to restricted stock units.
Stock Options — All outstanding option awards were 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 option award agreements contain certain forfeiture and non-compete provisions.
There were no options granted in 2022, 2021 or 2020. All options granted in 2014, 2013 and 2012 have a term of 10 years. Prior to the fourth quarter of 2011, options granted were either time-based, vesting over a four-year period, or performance-based, vesting over a five-year period. All options issued after the fourth quarter of 2011 are time-based, with options granted in the fourth quarter of 2011 through the first part of 2014 vesting over a four-year period, and the remaining options granted in 2014 vesting over a three-year period, in an equal number of shares each year.
The following table is a summary of the Company's stock option activity for the year ended December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Shares | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) |
Options outstanding at December 31, 2021 | | 131,153 | | | $ | 17.54 | | | 1.4 years | | $ | — | |
Forfeited/Expired | | (20,378) | | | $ | 17.74 | | | | | |
Options outstanding, vested or expected to vest, and exercisable at December 31, 2022 | | 110,775 | | | $ | 17.51 | | | 0.6 years | | $ | — | |
There were no options exercised in 2022, 2021 or 2020. For the year ended December 31, 2022, the Company had no unrecognized stock option expense related to outstanding options.
Restricted Stock Units — In 2022 and 2021, the Company granted time-based and performance-based restricted stock units. In 2020 and in 2019, the Company granted only time-based restricted stock units. The time-based restricted stock units vest in three equal installments on each anniversary of the grant date. The performance-based restricted stock units are subject to performance conditions and a one-year performance period. When and if the conditions are satisfied at the end of the one-year performance period, vesting of the performance-based restricted stock units are subject only to the passage of time and vest in three equal installments on each anniversary of the grant date.
For purposes of determining the fair value of restricted stock units and performance-based restricted stock units, the fair value 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 grants to employees, expense is recognized in the "Compensation and benefits" line and expense for grants to Non-Employee Directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations using the straight-line method over the vesting period.
The following table is a summary of the Company's restricted stock unit activity as of December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Shares | | Weighted-Average Grant-Date Fair Value | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) |
Restricted stock units outstanding at December 31, 2021 | | 4,104,547 | | | $ | 3.82 | | | 0.86 years | | $ | 32.4 | |
Granted | | 1,777,010 | | | 10.67 | | | | | |
Vested | | (2,200,740) | | | 4.63 | | | | | |
Forfeited | | (7,302) | | | 7.07 | | | | | |
Restricted stock units outstanding at December 31, 2022 | | 3,673,515 | | | $ | 7.45 | | | 0.78 years | | $ | 40.0 | |
Restricted stock units vested and deferred at December 31, 2022 | | 174,827 | | | $ | 4.15 | | | | | $ | 1.9 | |
The following table is a summary of the Company's restricted stock unit compensation information for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Weighted-average grant-date fair value of restricted stock units vested during the year | | $ | 10.2 | | | $ | 7.0 | | | $ | 7.5 | |
Total intrinsic value of vested and converted shares | | $ | 23.3 | | | $ | 16.1 | | | $ | 2.9 | |
As of December 31, 2022, the Company's outstanding restricted stock units had unrecognized compensation expense of $15.3 million with a remaining weighted-average vesting period of 1.2 years. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented using the Company's current estimate of achievement of performance goals.
Note 13 — Income Taxes
The following table is a summary of the components of income (loss) before income taxes for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
U.S. | | $ | 33.4 | | | $ | (49.8) | | | $ | (0.3) | |
Foreign | | 6.4 | | | 6.2 | | | 6.4 | |
Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
Foreign income consists of income from the Company's international subsidiaries. Most of the Company's wholly-owned subsidiaries recognize revenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense (benefit) for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Current: | | | | | | |
Federal | | $ | 2.2 | | | $ | 0.1 | | | $ | (1.4) | |
State | | (2.4) | | | (2.7) | | | 2.1 | |
Foreign | | 4.6 | | | 5.7 | | | 4.2 | |
Current income tax expense | | 4.4 | | | 3.1 | | | 4.9 | |
Deferred: | | | | | | |
Federal | | 2.3 | | | (6.6) | | | 7.1 | |
State | | (0.9) | | | (0.3) | | | 1.9 | |
Foreign | | (0.2) | | | (1.9) | | | 0.1 | |
Deferred income tax expense (benefit) | | 1.2 | | | (8.8) | | | 9.1 | |
Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
As of December 31, 2022 and 2021, the Company had tax payable of $7.2 million and $16.2 million, respectively and tax receivable of $2.9 million and $2.5 million, respectively. Tax payable and tax receivable are recorded within "Accounts payable and other liabilities" and "Other assets", respectively, on the Consolidated Balance Sheets.
The following table is a reconciliation of the expected federal income tax (benefit) expense at statutory rates to the actual income tax (benefit) expense for the years ended in December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Income tax expense (benefit) at statutory federal income tax rate | | $ | 8.4 | | | $ | (9.2) | | | $ | 1.3 | |
Tax effect of: | | | | | | |
State income tax, net of federal income tax effect | | (0.4) | | | (0.6) | | | (0.4) | |
Valuation allowances | | (2.9) | | | 1.7 | | | 12.0 | |
International taxes | | 2.0 | | | 1.0 | | | 1.5 | |
| | | | | | |
Other net permanent differences | | 3.1 | | | 5.3 | | | 1.8 | |
U.S. general business credits | | (3.1) | | | (2.6) | | | (3.6) | |
Change in unrecognized tax benefits | | (1.5) | | | (1.7) | | | 2.4 | |
Stock-based compensation | | (0.7) | | | (0.3) | | | 0.7 | |
| | | | | | |
| | | | | | |
BEAT | | — | | | — | | | (0.6) | |
U.S. taxation of foreign earnings | | 0.3 | | | 0.5 | | | (1.1) | |
| | | | | | |
Other | | 0.4 | | | 0.2 | | | — | |
Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
The following table is a summary of the Company's deferred tax assets and liabilities as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
Deferred tax assets: | | | | |
Basis difference in revalued investments | | $ | 50.2 | | | $ | 50.4 | |
Tax loss carryovers | | 16.6 | | | 22.5 | |
Tax credit carryovers | | 13.6 | | | 17.7 | |
Postretirement benefits and other employee benefits | | 1.7 | | | 5.4 | |
Bad debt and other reserves | | 1.4 | | | 1.6 | |
Lease liabilities | | 8.8 | | | 10.9 | |
Depreciation & amortization | | 20.6 | | | 12.3 | |
Interest expense carryovers | | 14.2 | | | 16.3 | |
Other | | 4.2 | | | 5.4 | |
Valuation allowances | | (76.8) | | | (82.0) | |
Total deferred tax assets | | 54.5 | | | 60.5 | |
Deferred tax liability: | | | | |
Depreciation and amortization and other | | (63.8) | | | (64.0) | |
Lease right-of-use assets | | (8.1) | | | (10.2) | |
Total deferred tax liability | | (71.9) | | | (74.2) | |
Net deferred tax liability | | $ | (17.4) | | | $ | (13.7) | |
The Company offsets deferred tax asset positions with deferred tax liability positions based on right to offset in each respective tax jurisdiction. As of December 31, 2022, net deferred tax asset positions of $5.6 million were included within "Other assets" and net deferred tax liability positions of $23.0 million were included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. As of December 31, 2021, net deferred tax asset positions of $6.0 million were reflected within "Other assets" and net deferred tax liability positions of $19.7 million were included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The valuation allowances as of December 31, 2022 and 2021, primarily relate to basis differences in revalued investments, capital loss carryovers, U.S. tax credit carryovers U.S. interest expense carryovers and certain state and foreign tax loss carryovers. The net $5.2 million decrease in our valuation allowances reflects a net release of $2.9 million through earnings, a decrease of $1.4 million through other comprehensive loss and a $0.9 million decrease with corresponding adjustments to the respective deferred tax asset. As of December 31, 2022, the Company is no longer in a three-year cumulative pre-tax loss position. However, the Company will maintain a valuation allowance on applicable deferred tax assets until there is sufficient evidence to support the reversal of any or all of these valuation allowances. The Company continues to analyze the positive and negative evidence in determining the need for a valuation allowance with respect to its deferred tax assets. It is reasonably possible that, within the next 12 months, the valuation allowance could be reduced if there is sufficient evidence indicating it is more than likely than not that all or a portion of the Company's deferred tax assets will be realized. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability achieved and other applicable evidence.
The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected), credit carry-forwards and other expense carry-forwards (not tax effected) as of December 31, 2022:
| | | | | | | | | | | | | | |
(Amounts in millions) | | Expiration Date | | Amount |
U.S. capital loss carry-forwards | | 2023 - 2026 | | $ | 43.1 | |
U.S. net operating loss carry-forwards | | 2025 - Indefinite | | $ | 1.8 | |
U.S. tax credit carry-forwards | | 2024- 2042 | | $ | 13.6 | |
U.S. interest expense carry-forwards | | Indefinite | | $ | 64.4 | |
Unrecognized tax benefits are recorded within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The following table is a reconciliation of unrecognized tax benefits for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Beginning balance | | $ | 14.7 | | | $ | 19.7 | | | $ | 18.2 | |
Additions based on tax positions related to prior years | | 0.3 | | | 1.5 | | | 0.9 | |
Additions based on tax positions related to current year | | 0.8 | | | 0.6 | | | 0.6 | |
Settlements with cash or attributes | | (4.8) | | | (2.3) | | | — | |
| | | | | | |
Reductions for tax positions of prior years and other | | (1.9) | | | (4.8) | | | — | |
Ending balance | | $ | 9.1 | | | $ | 14.7 | | | $ | 19.7 | |
As of December 31, 2022, 2021 and 2020, the liability for unrecognized tax benefits was $9.1 million, $14.7 million and $19.7 million, respectively, exclusive of interest and penalties. For 2022, 2021 and 2020, the net amount of unrecognized tax benefits that if recognized would impact the effective tax rate was $9.1 million , $14.7 million and $19.7 million, respectively. The Company accrues interest and penalties for unrecognized tax benefits through "Income tax (benefit) expense" in the Consolidated Statements of Operations. For 2022, the Company's liability for interest and penalties decreased by $4.6 million, which was comprised of a net decrease in the accrual of $1.4 million and cash payments of $3.2 million. For 2021 and 2020, the Company’s accrual for interest and penalties decreased by $2.0 million and increased by $1.1 million, respectively. As of December 31, 2022 and 2021, the Company had a liability of $2.8 million and $7.4 million, respectively, accrued for interest and penalties within "Accounts payable and other liabilities." As a result of the Company's completion of its litigation related to its securities losses discussed in more detail in Note 14 — Commitments and Contingencies, the Company is anticipating a $2.9 million decrease to the total amount of state related unrecognized tax benefits by way cash settlements or statute lapses over the next 12 months. Note 14 — Commitments and Contingencies
Letters of Credit — At December 31, 2022, the Company had no borrowings and no outstanding letters of credit under the Revolving Credit Facility.
Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation matters. In relation to various legal matters, including those described below, the Company had $7.5 million and $15.8 million of liability recorded in "Accounts payable and other liabilities" in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively. No charges were recorded in 2022. $13.8 million and a nominal charge were recorded for the year 2021 and 2020, respectively, within "Transaction and operations support" in the Consolidated Statements of Operations.
Litigation Commenced Against the Company:
Class Action Securities Litigation — On November 14, 2018, a putative securities class action lawsuit was filed in the United States District Court for the Northern District of Illinois against MoneyGram and certain of its executive officers. The lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and alleges that MoneyGram made material misrepresentations regarding its compliance with the stipulated order for permanent injunction and final judgment that MoneyGram entered into with the FTC in October 2009 and with the DPA that MoneyGram entered into with the U.S. Attorney’s Office for the Middle District of Pennsylvania and the U.S. Department of Justice in November 2012. The lawsuit seeks unspecified damages, equitable relief, interest and costs and attorneys' fees. The Company believes the case is without merit and is vigorously defending this matter. On May 16, 2019, MoneyGram filed a motion to dismiss which the court has yet to rule upon. We are unable to predict the outcome, or the possible loss or range of loss, if any, related to this matter.
Books and Records Requests — The Company has received multiple requests from various putative shareholders for inspection of books and records pursuant to Section 220 of the Delaware General Corporation Law relating to the subject matter of the putative class lawsuit described in the preceding paragraphs. On February 26, 2019, two of these shareholders filed a petition in the Delaware Court of Chancery to compel MoneyGram to produce books and records in accordance with their request but have since dismissed their action. We are unable to predict the outcome, or the possible loss or range of loss, if any, related to these matters.
It is possible that additional shareholder lawsuits could be filed relating to the subject matter of the above putative class action, the Section 220 books and records requests or pertaining to the MDP transaction.
Other Matters — The Company is involved in various other 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 or cash flows.
Government Investigations:
On June 9, 2021, the Government filed an Amended Unopposed Motion to Dismiss that provided additional details about the Company’s satisfaction of its obligations under the DPA and enhancements to the Company’s compliance program. On June 10, 2021, the United States Judge for the Middle District of Pennsylvania signed an Order dismissing the criminal information with prejudice, which effectively discharged the Government’s criminal case against the Company and officially ended the matter.
NYDFS — As previously reported, on June 22, 2018, the Company received a request for production of documents from the NYDFS related to the Company’s failure to maintain an effective anti-money laundering program and to adequately supervise certain of the Company’s New York-based agents that conducted suspicious transactions on behalf of customers. This request followed previous inquiries by the NYDFS regarding certain of the Company's New York based agents. Following the June 22, 2018 request for production, the Company received and responded to several inquiries from the NYDFS related to this matter. On March 16, 2022, the Company and the NYDFS entered into a consent order (the “Consent Order”) to resolve this matter.
In entering into the Consent Order, the NYDFS acknowledged that there were several mitigating factors with respect to the Consent Order, including that the Company fully cooperated with the NYDFS’s investigation, including by reporting on the results of its internal investigation on the matter, had voluntarily undertaken significant enhancements to its compliance program and had undertaken remediation to prevent similar violations from occurring. Such measures and enhancements include termination of certain agents, the creation of new compliance procedures to increase the authority of compliance personnel within the Company, the implementation of new limits on and supervision of high-risk agents and a substantial increase in the resources allocated to compliance. Pursuant to the Consent Order, the Company agreed to, among other things, pay a civil monetary penalty in the amount of $8.3 million and undertake various reporting obligations. These include the obligation to (i) submit to the NYDFS a written description of the Company’s current compliance program with respect to the supervision of its New York-based agents and update such description with the NYDFS at 12 and 24 months after the date of the Consent Order, (ii) deliver to the NYDFS detailed data of all transactions in the State of New York for the one-year period prior to the date of the Consent Order, and (iii) fully cooperate with the NYDFS regarding all terms of the Consent Order. Pursuant to the Consent Order, the NYDFS agreed that it will take no further action against the Company for the conduct subject to the previous request for production of documents, provided that the Company fully complies with the terms of the Consent Order. The $8.3 million payment, which was made in the first quarter of 2022, is consistent with the estimated amount that the Company previously accrued in the fourth quarter of 2021.
CFPB — As previously reported, on February 12, 2020, the Company received a Report of Examination ("ROE") from the CFPB stating that previous findings from a 2019 exam were not remediated, and the matter would be referred to its Enforcement Unit. On March 18, 2020, the Company received a Civil Investigative Demand ("CID") from the CFPB's Enforcement Unit. On June 11, 2020, the Company provided a timely response to the ROE describing the remedial actions taken and that the findings have been substantially remediated. On August 21, 2020, the Company completed its production in response to the CID. On February 25, 2021, the CFPB provided the Company with a Notice and Opportunity to Respond and Advise ("NORA") letter, documenting the CFPB's intent to take legal action against the Company based on four alleged violations under the Remittance Rule, the Electronic Fund Transfer Act (the "EFTA") and the Consumer Financial Protection Act (the "CFPA"). MoneyGram provided the CFPB with its written response to the NORA letter on March 17, 2021. Over the next several months, the Company and the CFPB engaged in negotiations regarding a potential settlement agreement but were ultimately unable to reach an agreed resolution on this matter. On April 21, 2022, the CFPB and the NYAG filed a complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the Company and MoneyGram Payment Systems, Inc., a wholly owned subsidiary of the Company. The Complaint alleges seven counts of violations under the Remittance Rule, the CFPA, the EFTA and New York Executive Law § 63(12) and seeks injunctive relief, restitution, unspecified damages, civil money penalties and costs. On July 5, 2022, the CFPB and the NYAG filed a First Amended Complaint. In response to the First Amended Complaint, on August 4, 2022, The Company filed a consolidated motion to dismiss and to transfer venue to the United States District Court for the Northern District Texas. The CFPB and NYAG responded to the Company's motions on September 19, 2022, and MoneyGram filed its reply brief on October 3, 2022.
In a separate matter, on October 19, 2022, the United States Court of Appeals for the Fifth Circuit held the funding structure of the CFPB to be unconstitutional. On November 14, 2022, the Department of Justice ("DOJ"), on behalf of the CFPB, petitioned the Supreme Court for a writ of certiorari to review and reverse the Fifth Circuit's decision. The company had previously challenged the constitutionality of the CFPB's funding structure as part of the Company's motion to dismiss the CFPB's and NYAG's case, which was pending in the Southerm District of New York. In light of the developments, in the Fifth Circuit and the potential for the U.S. Supreme Court to grant cert, MoneyGram filed a letter motion to stay the case which was granted, over the CFPB's and NYAG's objection, by the United States District Court for the Southern District of New York on
December 9, 2022. As a result, the current lawsuit will be on hold pending the Supreme Court's ultimate decision. The parties were ordered to promptly file a joint letter apprising the District Court of the Supreme Court's decision to grant or deny the Petition once the Supreme Court issues any decision, which could impact the length of the District Court's stay. MoneyGram continues to believe the case is without merit and intends to vigorously defend this matter. Based on the prior settlement negotiations which have since terminated, the Company had accrued $7.5 million as of December 31, 2021, as our best estimate to settle this matter. Notwithstanding the termination of the settlement discussion and the filing of the lawsuit by the CFPB, we continue to maintain the $7.5 million accrual in accordance with U.S. GAAP as our best loss estimate related to this matter.
Other Matters — The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations or cash flows.
Note 15 — Earnings (Loss) Per Common Share
The following table is a reconciliation of the weighted-average share amounts used in calculating earnings (loss) per common share for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Basic and diluted common shares outstanding | | 96.4 | | | 89.7 | | | 77.8 | |
Shares related to restricted stock units | | 3.7 | | | — | | | — | |
| | | | | | |
Diluted common shares outstanding | | 100.1 | | | 89.7 | | | 77.8 | |
Potential common shares issuable to employees upon exercise or conversion of shares under the Company's stock-based compensation plans, and upon exercise of the Ripple Warrants are excluded from the computation of diluted earnings per common share in periods 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, regardless of whether the Company is in a period of net loss available to common shareholders.
The following table summarizes the weighted-average potential common shares excluded from diluted earnings (loss) per common share as their effect would be anti-dilutive:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Shares related to stock options | | 0.1 | | | 0.2 | | | 0.3 | |
Shares related to restricted stock units | | — | | | 4.2 | | | 4.5 | |
Shares related to Ripple Warrants | | — | | | 1.1 | | | 6.0 | |
Shares excluded from the computation | | 0.1 | | | 5.5 | | | 10.8 | |
Note 16 — Segment Information
The Company's reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. The Company has two reporting segments: GFT and FPP. See Note 1 — Description of the Business and Basis of Presentation for further discussion on our segments. Walmart Inc. ("Walmart") is our only agent that is considered major. The following table is a summary of revenue from Walmart as a percentage of each segment and total revenue: | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 | | 2020 |
Revenue from Walmart as a percentage of GFT revenue | | <10% | | 10 | % | | 13 | % |
Revenue from Walmart as a percentage of FPP revenue | | 34 | % | | 35 | % | | 29 | % |
Revenue from Walmart as a percentage of total revenue | | <10% | | 11 | % | | 13 | % |
The Company's Chief Operating Decision Maker reviews segment gross profit to assess segment performance and allocate resources. Segment accounting policies are the same as those described in Note 2 — Summary of Significant Accounting Policies. Investment revenue is allocated to each segment based on the average investable balances generated by that segment's sale of payment instruments during the period.
The following table is a summary of the total revenue by segment for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
GFT revenue | | | | | | |
Money transfer revenue | | $ | 1,190.3 | | | $ | 1,189.2 | | | $ | 1,104.7 | |
Bill payment revenue | | 35.6 | | | 39.6 | | | 46.2 | |
Total GFT revenue | | 1,225.9 | | | 1,228.8 | | | 1,150.9 | |
FPP revenue | | | | | | |
Money order revenue | | 44.1 | | | 40.9 | | | 43.4 | |
Official check revenue | | 40.1 | | | 13.9 | | | 22.9 | |
Total FPP revenue | | 84.2 | | | 54.8 | | | 66.3 | |
Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
The following table is a summary of the gross profit by segment and detail of the income (loss) before income taxes for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
GFT gross profit | | $ | 557.7 | | | $ | 545.6 | | | $ | 501.6 | |
| | | | | | |
FPP gross profit (1) | | 62.2 | | | 53.9 | | | 62.6 | |
Total gross profit | | 619.9 | | | 599.5 | | | 564.2 | |
Total operating expenses | | 526.7 | | | 525.8 | | | 461.2 | |
Total operating income | | 93.2 | | | 73.7 | | | 103.0 | |
Interest expense | | 49.4 | | | 69.5 | | | 92.4 | |
Loss on early extinguishment of debt | | — | | | 44.1 | | | — | |
Other non-operating expense | | 4.0 | | | 3.7 | | | 4.5 | |
Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
(1) In periods of extremely low interest rates, it is possible for commissions to be close to zero, resulting in abnormally high gross margin.
The following table is a summary of depreciation and amortization expense by segment for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
GFT | | $ | 46.6 | | | $ | 51.3 | | | $ | 57.3 | |
FPP | | 5.1 | | | 5.7 | | | 7.1 | |
Total depreciation and amortization | | $ | 51.7 | | | $ | 57.0 | | | $ | 64.4 | |
The following table is a summary of capital expenditures by segment for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
GFT | | $ | 47.1 | | | $ | 38.3 | | | $ | 31.5 | |
FPP | | 5.2 | | | 4.3 | | | 3.9 | |
Total capital expenditures | | $ | 52.3 | | | $ | 42.6 | | | $ | 35.4 | |
The following table sets forth assets by segment as of December 31:
| | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 |
GFT | | $ | 1,412.6 | | | $ | 1,269.5 | |
FPP | | 3,066.0 | | | 3,169.8 | |
Other | | 26.6 | | | 37.2 | |
Total assets | | $ | 4,505.2 | | | $ | 4,476.5 | |
Revenue by geographic area — International revenues are defined as revenues generated from money transfer and bill payment transactions originating in a country other than the U.S. There are no individual countries from which the Company generates revenues, other than the U.S., that exceed 10% of total revenues for the years ended December 31, 2022, 2021 and 2020. The following table details total revenue by major geographic area for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
U.S. | | $ | 544.7 | | | $ | 543.9 | | | $ | 543.8 | |
International | | 765.4 | | | 739.7 | | | 673.4 | |
Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
Note 17 — Revenue Recognition
The following table is a summary of the Company's revenue streams disaggregated by services and products for each segment and timing of revenue recognition for such services and products excluding other revenue for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
GFT revenue | | | | | | |
Money transfer fee revenue | | $ | 1,151.0 | | | $ | 1,160.0 | | | $ | 1,083.4 | |
Bill payment services fee revenue | | 35.6 | | | 40.5 | | | 46.2 | |
Other revenue | | 39.3 | | | 28.3 | | | 21.3 | |
Total GFT fee and other revenue | | $ | 1,225.9 | | | $ | 1,228.8 | | | $ | 1,150.9 | |
FPP revenue | | | | | | |
Money order fee revenue | | 5.4 | | | 6.3 | | | 7.3 | |
Official check outsourcing services fee revenue | | 6.7 | | | 7.1 | | | 7.4 | |
Other revenue | | 34.2 | | | 33.6 | | | 31.6 | |
Total FPP fee and other revenue | | 46.3 | | | 47.0 | | | 46.3 | |
Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | |
Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
| | | | | | |
Timing of revenue recognition: | | | | | | |
Services and products transferred at a point in time | | $ | 1,192.0 | | | $ | 1,206.8 | | | $ | 1,137.0 | |
Products transferred over time | | 6.7 | | | 7.1 | | | 7.4 | |
Total revenue from services and products | | 1,198.7 | | | 1,213.9 | | | 1,144.4 | |
Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | |
Other revenue | | 73.5 | | | 61.9 | | | 52.8 | |
Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
See Note 2 — Summary of Significant Accounting Policies for the Company's accounting policies on revenue recognition. Due to the short-term nature of the Company's services and products, the amount of contract assets and liabilities on the Consolidated Balance Sheets as of December 31, 2022 and 2021, is negligible. Assets for unsettled money transfers, money orders and consumer payments are included within "Settlement assets" with a corresponding liability recorded within "Payment service obligations" on the Consolidated Balance Sheets. For more information on these assets and liabilities see Note 2 — Summary of Significant Accounting Policies. Note 18 — Leases
The Company's leases consist primarily of operating leases for buildings, equipment and vehicles. Finance leases are immaterial. The ROU asset and the lease liability are calculated based on the remaining minimum rental payments under current leasing standards for existing operating leases. The reduction in the carrying amount of the ROU asset and changes in the lease liability are presented within "Operating activities" on the Consolidated Statements of Cash Flows. We elected the package of practical expedients, which permitted us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs under the new standard. We did not elect the use of the hindsight practical expedient or the
practical expedient pertaining to land easements, as the latter was not applicable to us. We also elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we did not recognize ROU assets or lease liabilities. The Company elected the practical expedient to not separate lease and non-lease components for our real estate and vehicle leases.
The Company's various noncancellable operating leases for buildings, equipment and vehicles terminate through 2030. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As of December 31, 2022 and 2021, the leases had a weighted-average remaining lease term of 6.5 years and 7.1 years, respectively. As most of our leases do not provide an implicit rate, the Company utilized the portfolio approach in determining the discount rate. The portfolios were grouped based on lease type and geographical location. The Company considered the most relevant major interest rate in the specific geographical location such as the Prime Rate in the U.S. and U.K. or the collateralized interest rate for non-financial institutions of the European Central Bank. These rates were then adjusted for the Company's specific credit ratings or economic conditions and lease terms of the specific portfolio. As of December 31, 2022 and 2021, the weighted-average discount rate was 5.8% and 5.3%, respectively.
The Company recognizes rent expense for operating leases under the straight-line method over the term of the lease where differences between the monthly cash payments and the lease expense are offset to the ROU asset on the Consolidated Balance Sheets. Lease expense for buildings and equipment is included within "Occupancy, equipment and supplies" on the Consolidated Statements of Operations, while lease expense for our vehicles is included within "Compensation and benefits." Some of the Company's building leases include rent expense that is associated with an index or a rate. Subsequent changes from the original index or rate would be treated as variable lease expense. Furthermore, future changes to the non-lease components of our real estate and vehicle leases will be treated as variable lease expenses.
The following table is a summary of the Company's lease expense for its operating leases for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Buildings, equipment and vehicle leases | | $ | 10.8 | | | $ | 13.3 | | | $ | 15.0 | |
Short-term and variable lease cost | | 0.3 | | | 1.1 | | | 1.2 | |
Total lease cost | | $ | 11.1 | | | $ | 14.4 | | | $ | 16.2 | |
Supplemental cash flow information related to leases was as follows for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | |
(Amounts in millions) | | 2022 | | 2021 | | 2020 |
Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 10.9 | | | $ | 13.7 | | | $ | 15.3 | |
ROU assets obtained in exchange for lease obligations | | $ | — | | | $ | 10.1 | | | $ | 15.0 | |
Maturities of operating lease liabilities as of December 31, 2022 were as follows:
| | | | | | | | |
(Amounts in millions) | | Future Minimum Lease Payments |
2023 | | $ | 9.1 | |
2024 | | 8.9 | |
2025 | | 8.5 | |
2026 | | 7.6 | |
2027 | | 6.2 | |
Thereafter | | 15.0 | |
Total | | 55.3 | |
Less: present value discount | | (9.9) | |
Lease liability - operating | | $ | 45.4 | |
MONEYGRAM INTERNATIONAL, INC.
PERFORMANCE BONUS PLAN
As Amended and Restated February 16, 2023
Section 1. Purpose. The purpose of the Plan is to provide professional, management and executive level employees of the Corporation and its subsidiaries with an incentive to achieve goals as set forth under the Plan for each Plan Year for the Corporation and/or their respective line of business, where incentive differentiation is driven by Company and individual performance, and to provide effective management and leadership to that end. The Plan will provide eligible participants incentive bonuses based upon performance measurements determined by the Committee. Awards to Executive Officers pursuant to the Plan are “Performance Awards” as defined in and are granted under and subject to the terms of the 2005 Omnibus Plan.
Section 2. Definitions. The following definitions are applicable to the Plan:
“2005 Omnibus Plan” shall mean the MoneyGram International, Inc. 2005 Omnibus Incentive Plan, as amended from time to time.
“Affiliate” shall mean any “Parent Corporation” or “Subsidiary Corporation” of the Corporation as such terms are defined in Section 425(e) and (f), or the successor provisions, if any, respectively, of the Code.
“Board” shall mean the Board of Directors of the Corporation.
“Change of Control” shall mean any of the following events:
(a) An acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either: (1) the then outstanding shares of Common Stock of the Corporation (the “Outstanding Corporation Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); excluding, however the following:
(A) any acquisition directly from the Corporation or any entity controlled by the Corporation other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Corporation or any entity controlled by the Corporation,
(B) any acquisition by the Corporation, or any entity controlled by the Corporation,
(C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any entity controlled by the Corporation or
US 8636733v.3 1
(D) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of Section (c) below; or
(b) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section (b) that any individual, who becomes a member of the Board subsequent to the effective date of the Plan, whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board, (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board, or
(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a “Corporate Transaction”) excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Corporate Transaction (the “Prior Stockholders”) beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (2) no Person (other than the Corporation or any entity controlled by the Corporation, any employee benefit plan (or related trust) of the Corporation or any entity controlled by the Corporation or such corporation or other entity resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of Common Stock of the Corporation or other entity resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of the Corporation or such other entity entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; and further excluding any disposition of all or substantially all of the assets of the Corporation pursuant to a spin-off, split-up or similar transaction (a “Spin-off”) if, immediately following the Spin-off, the Prior Stockholders beneficially own, directly or indirectly, more than 80% of the outstanding shares of common stock and the combined voting power of the
2
then outstanding voting securities entitled to vote generally in the election of directors of both entities resulting from such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, respectively; provided, that if another Corporate Transaction involving the Corporation occurs in connection with or following a Spin-off, such Corporate Transaction shall be analyzed separately for purposes of determining whether a Change of Control has occurred;
(d) The approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.
“Code” shall mean the Internal Revenue Code of 1986, as amended, or its successor general
income tax law of the United States.
“Committee” shall mean the Human Resources and Nominating Committee of the Board or any successor committee of the Board designated by the Board to administer the Plan. Each member of the Committee shall be an “outside director” within the meaning of Section 162(m) of the Code.
“Common Stock” shall mean the common stock, par value $.01 per share, of the Corporation.
“Company” shall mean MoneyGram International, Inc. and its global subsidiary entities.
“Corporation” shall mean MoneyGram International, Inc., a Delaware corporation, or any successor corporation.
“Disability” shall mean a medically determinable physical or mental impairment which: (i) renders the individual incapable of performing the essential functions of his or her job responsibilities at the Corporation or its Affiliates and incapable of holding any job at the Corporation or its Affiliates which qualifies him or her for participation in the Plan, (ii) can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, and (iii) is evidenced by a certification to this effect by a doctor of medicine approved by the Corporation.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Executive Officers” shall have the meaning set forth in Section 16(b) of the Exchange Act.
“Participant” shall mean any regular and fixed-term full-time or part-time employee of the Company who is selected for participation in the Plan pursuant to Section 3.
“Performance Goal” shall have the meaning given that term in the 2005 Omnibus Plan.
“Plan” shall mean this Amended and Restated MoneyGram International, Inc. Performance Bonus Plan, as may be further amended from time to time.
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“Plan Year” shall mean a calendar year.
“Retirement” shall mean a Participant’s voluntary termination of employment upon attaining age 55 or older and completion of at least ten (10) years of service with the Corporation or its Affiliates.
Section 3. Participant Eligibility.
(a) The Committee will select the Executive Officers, other than the CEO, who shall be
Participants for any Plan Year no later than 90 days after the beginning of the Plan Year. Other personnel will become Participants annually if they meet the eligibility requirements. If at any time an individual does not qualify under the criteria established for the Plan Year, the individual will not be eligible to remain on the Plan for the remainder of the Plan Year, unless designated and approved by the General Counsel, Corporate Secretary and Chief Administrative Officer. The CEO is selected by the Board of Directors of MoneyGram. Adherence to the Company’s compliance policies and procedures is a requirement for participation, and any violation will result in the forfeiture of eligibility under the Plan and forfeiture or any current or future payout under the Plan as provided below in Section 6.
(b) Employees must be hired prior to October 1 of the applicable Plan Year to be
eligible and payouts under the Plan will be prorated based on the employee’s period of employment during the Plan Year or on the employee’s period of employment in a Plan-eligible role if for less than the entire Plan Year. Seasonal and temporary employees and interns are not eligible to participate. A Participant may not be a participant in, or be eligible for, any other Company short-term incentive program. A Participant actively on a Performance Improvement Plan at the time of payment may not be eligible for a payout.
Section 4. Annual Funding Limit and Awards for Executive Officers. A funding limit for each
Plan Year, based on the achievement of one or more Performance Goals, shall be established by
the Committee for each Executive Officer; provided that the funding limit for any Executive
Officer may not exceed the limit on Performance Awards under the 2005 Omnibus Plan. Awards
paid under this Plan to any Executive Officer for any Plan Year shall not exceed the funding limit
for such Executive Officer or 200% of the targeted bonus achievement. However, the Committee
may in its discretion determine that the award paid under this Plan to any Executive Officer shall
be less than the funding limit for such Executive Officer, based on the level of achievement of one
or more Performance Goals established for such Executive Officer or any other factor deemed
relevant by the Committee in its sole discretion.
Section 5. Awards for Other Participants. Participants who are not Executive Officers may
earn awards based on the level of achievement of one or more Performance Goals established for
such Participants or any other factor deemed relevant by the Committee in its sole discretion;
however, bonus payouts may not exceed 200% of targeted bonus achievement.
Section 6. Repayment Provisions.
(a) Non-Compete. Unless a Change of Control shall have occurred after the date
hereof:
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(1) In order to better protect the goodwill of the Corporation and its Affiliates and to prevent the disclosure of the Corporation’s or its Affiliates’ trade secrets and confidential information and thereby help ensure the long-term success of their respective businesses, each Participant in the Plan, without prior written consent of the Corporation, will not engage in any activity or provide any services, whether as a director, manager, supervisor, employee, adviser, agent, consultant, owner of more than five percent of any enterprise or otherwise, for a period of one year following the date of such Participant’s termination of employment with the Corporation or any of its Affiliates, in connection with the manufacture, development, advertising, promotion, design, or sale of any service or product which is the same as or similar to or competitive with any services or products of the Corporation or its Affiliates (including both existing services or products as well as services or products known to such Participant, as a consequence of such Participant’s employment with the Corporation or one of its Affiliates, to be in development):
(A) with respect to which such Participant’s work has been directly concerned at any time during the one year preceding termination of employment with the Corporation or one of its Affiliates, or
(B) with respect to which during that period of time such Participant, as a consequence of Participant’s job performance and duties, acquired knowledge of trade secrets or other confidential information of the Corporation or its Affiliates.
(2) For purposes of the provisions of Section 6(a), it shall be conclusively presumed that a Participant in the Plan has knowledge of information he or she was directly exposed to through actual receipt or review of memos or documents containing such information, or through actual attendance at meetings at which such information was discussed or disclosed.
(3) If, at any time within one year following the date of a Participant’s termination of employment with the Corporation or any of its Affiliates, such Participant engages in any conduct agreed to be avoided in accordance with Section 6(a), then all bonuses paid under the Plan to such Participant during the last 12 months of employment shall be returned or otherwise repaid by such Participant to the Corporation. Participants in the Plan consent to the deduction from any amounts the Corporation or any of its Affiliates owes to such Participants to the extent of the amounts such Participants owe the Corporation hereunder.
(b) Misconduct. Unless a Change of Control shall have occurred after the date hereof, all bonuses paid thereafter under the Plan to any Participant shall be returned or otherwise repaid by such Participant to the Corporation if the Corporation reasonably determines that during a Participant’s employment with the Corporation or any of its Affiliates:
(A) such Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Corporation or any of its Affiliates or misconduct which
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represents a material violation of any code of ethics of the Corporation applicable to such Participant or of the compliance program or similar program of the Corporation; or
(B) such Participant was aware of and failed to report, as required by any code
of ethics of the Corporation applicable to such Participant or by the Always Honest
compliance program or similar program of the Corporation, misconduct that causes a
misstatement of the financial statements of the Corporation or any of its Affiliates or
misconduct which represents a material violation of any code of ethics of the Corporation
applicable to such Participant or of the Always Honest compliance program or similar
program of the Corporation.
Participants in the Plan consent to the deduction from any amounts the Corporation or any of its Affiliates owes to such Participants to the extent of the amounts such Participants owe the Corporation hereunder.
(c) Acts Contrary to the Corporation. Unless a Change of Control shall have occurred after the date hereof, if the Corporation reasonably determines that at any time within two years after the award of any bonus under the Plan to a Participant that such Participant has acted significantly contrary to the best interests of the Corporation, including, but not limited to, any direct or indirect intentional disparagement of the Corporation, then any bonus paid under the Plan to such Participant during the prior two-year period shall be returned or otherwise repaid by the Participant to the Corporation. Participants in the Plan consent to the deduction from any amounts the Corporation or any of its Affiliates owes to such Participants to the extent of the amounts such Participants owe the Corporation hereunder.
(d) Reasonable Determination. The Corporation’s reasonable determination required under Sections 6(b) and 6(c) shall be made by the Committee, in the case of Executive Officers of the Corporation, and by the Chairman and Chief Executive Officer and General Counsel of the Corporation, in the case of all other personnel.
Section 7. Approval and Distribution. The individual incentive bonus amounts and the terms of payment thereof will be fixed following the close of the Plan Year by the Committee, with such de minimis, administrative changes following such Committee approval not to exceed $100,000 in the aggregate per year, as the Chairman and Chief Executive Officer may approve for amounts paid to participants who are not Executive Officers of the Corporation. All amounts payable to Participants under the Plan shall be paid following Committee approval no later than March 15 for U.S. Participants, and no later than March 31 for non-U.S. Participants, following the close of the Plan Year in accordance with the Company’s normal pay practices and are subject to applicable taxes, withholdings and deductions. All payments under the Plan will be made in the currency of the Participant’s country of employment at the time of payment. If a Participant transfers during the year, the payment calculation will consider the current country of employment conversion rate, as provided by the Company’s Finance Department, and apply such rate to all relevant time periods.
Section 8. Plan Administration. The General Counsel’s Office is appointed by the Chairman and Chief Executive Officer of the Corporation to assist the Committee in the implementation and
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administration of the Plan. The General Counsel’s Office shall propose administrative guidelines to the Committee to govern interpretations of the Plan and to resolve ambiguities, if any, but the General Counsel’s Office will not have the power to terminate, alter, amend, or modify the Plan or any actions hereunder in any way at any time. Any disputes concerning the Plan should be referred to the Human Resources Business Partner (HRBP). In the event that disputes require escalation, the HRBP in partnership with the General Counsel’s office will have complete authority and discretion to interpret this Plan and resolve any disputes relating to interpretation of the Plan, subject to local laws and regulations. Any such decisions shall be final and binding upon all parties involved.
Section 9. Special Compensation Status. All bonuses paid under the Plan shall be deemed to be special compensation and, therefore, unless otherwise provided for in another plan or agreement, will not be included in determining the earnings of the recipients for the purposes of any pension, group insurance or other plan or agreement of the Corporation.
Section 10. Plan Termination. The Plan shall continue in effect until such time as it may be canceled or otherwise terminated by action of the Board and will not become effective with respect to any Company unless and until the Board or the Committee adopts a specific plan for such Company. The Board may terminate, amend, alter, or modify the Plan at any time and from time to time. Participation in the Plan for any Plan Year shall not create any right to participate in the Plan for any subsequent Plan Year.
Section 11. Employee Rights. No Participant in the Plan shall be deemed to have a right to any part or share of the Plan, except as provided in Section 13. The Plan does not create for any employee or Participant any right to be retained in service by the Corporation or any of its Affiliates, nor affect the right of the Corporation or any of its Affiliates to discharge any employee or Participant from employment. Except as provided for in administrative guidelines and as otherwise provided in this Plan, a Participant who is not an employee of the Corporation or one of its Affiliates on the date awards under this Plan are paid will not receive such an award.
Section 12. Effect of Change of Control. Notwithstanding anything to the contrary in the Plan, in the event of a Change of Control each Participant in the Plan shall be entitled to a pro rata bonus award calculated on the basis of achievement of Performance Goals through the date of the Change of Control.
Section 15. Effect of Retirement, Death and Disability. Notwithstanding anything to the contrary in the Plan, in the event of a Participant’s termination of employment during a Plan Year due to Retirement, death or Disability, the Participant shall be eligible to receive a bonus award if bonus awards are paid by the Corporation, the amount of which shall be prorated for the period of time from the first day on which the Participant is eligible to participate in the Plan for the applicable Plan Year to the date of Retirement or termination of employment due to death or Disability, as the case may be. Any bonus award paid pursuant to this Section shall be paid at the time all other bonus awards are paid. A deceased Participant’s bonus award shall be payable to the beneficiary or beneficiaries designated by the Participant on forms furnished and filed with the Corporation. In the absence of a designation or if such designation fails, such benefit shall be payable in accordance with the rules for beneficiaries under the MoneyGram International, Inc. 401(k) Plan.
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Section 14. Effect of Termination or Leave of Absence. Generally a Participant must be an active employee on the date of payout unless otherwise provided below or required by local, regional, deferral or international laws or regulations or by agreement, except that Participants on parental leave will receive payment at the same time all other Participant awards are paid. Notwithstanding anything to the contrary in the Plan, for employees within the United States, in the event of a Participant’s involuntary termination of employment aft er October 1 of the Plan Year and prior to payout, the Participant may be eligible to receive a pro rata bonus award under the Plan. Any bonus award paid pursuant to this Section shall be paid at the time all other bonus awards are paid. Any Participant who voluntarily terminates employment prior to payout is not eligible for a bonus award under the Plan. If a Participant is on a leave of absence that exceeds 6 months, or 26 weeks, then the payout will be prorated based on actual time work where permitted by local law.
Section 15. Relationship to 2005 Omnibus Plan. Bonus awards made under the Plan will be subject to and governed by the 2005 Omnibus Plan.
Section 16. Effective Date. The Plan was originally effective June 30, 2004. The latest amendment and restatement of the Plan shall be effective February 16, 2023.
ADOPTED: JUNE 30, 2004
AMENDED: FEBRUARY 17, 2005
AMENDED NOVEMBER 17, 2005
AMENDED AND RESTATED: FEBRUARY 15, 2007
AMENDED AND RESTATED MAY 9, 2007
AMENDED AND RESTATED MARCH 24, 2008
AMENDED AND RESTATED FEBRUARY 17, 2010
AMENDED AND RESTATED FEBRUARY 16, 2022
AMENDED AND RESTATED FEBRUARY 16, 2023
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MoneyGram International, Inc.
Non-Employee Director Compensation Arrangements
Effective as of February 16, 2023
The following compensation program is available to non-employee directors of MoneyGram International, Inc.
1. Cash Retainers and Fees
•An annual Board membership retainer of $100,000 shall be paid to each non-employee director. The retainer shall be made in arrears in four equal installments on the first business day following March 31, June 30, September 30, December 31 (each a “Payable Date”).
•The Lead Independent Director shall receive an additional $30,000 in cash per year; payment will be made in arrears in in four equal installments on each Payable Date.
•The Chair of the Audit committee shall receive an additional $30,000 in cash per year of Chairmanship; payment will be made in arrears in four equal installments on each Payable Date.
•The Chair of the Human Resource and Nominating committee and the Chair of the Compliance and Ethics Committee shall receive an additional $25,000 in cash per year of Chairmanship; payment will be made in arrears in four equal installments on each Payable Date.
•Any director serving on two or more of the above-named committees of the Board but not acting as Chair of any such committees shall receive an additional $10,000 in cash per year of joint service on such committees; payment will be made in arrears in four equal installments on each Payable Date.
•Non-employee directors are also reimbursed for their expenses for each Board or committee meeting attended. To the extent that any taxable reimbursements are provided, they shall be made or provided in accordance with Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder.
2. Equity Awards
Under the MoneyGram International, Inc. Amended and Restated 2005 Omnibus Incentive Plan, as of May 6, 2020, each non-employee director, at the annual meeting of stockholders, shall receive a restricted stock unit (“RSU”) covering shares of common stock the fair market value of which shall be equal to $150,000, as determined by the per share closing price of the common stock on the Nasdaq, as reported in the consolidated transaction reporting system, on the date of award of the RSU. RSUs awarded under this program shall be payable in shares.
Each RSU shall vest in full, if at all, upon the first anniversary of the date of award of such RSU. If a director voluntarily resigns such director’s Board membership prior to the completion of the one-year vesting period, then such director’s RSU shall be forfeited in whole. Notwithstanding the foregoing, a director’s RSUs then outstanding (i.e. granted and not previously forfeited) will vest immediately and in full upon (i) a change in control (as defined in the standard Restricted Stock Unit Award Agreement approved for use under the MoneyGram International, Inc. Amended and Restated 2005 Omnibus Incentive Plan as of May 6, 2020) so long as the director remains on the Board through the date immediately prior to the change in control; or (ii) the director ceases Board membership due to death or disability.
3. Proration of Retainer and Equity Awards
With respect to Directors who join the Board during a year, the Board may prorate such Director’s retainer and/or equity award as it deems appropriate.
4. Amendment or Termination
The Board may amend, alter, suspend, discontinue or terminate this program at any time.
Exhibit 10.33
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 6, 2020
GLOBAL PERFORMANCE-BASED CASH
AWARD AGREEMENT
This GLOBAL PERFORMANCE-BASED CASH AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and ___________ (the “Participant”). The grant date of this award is ____________ (the “Grant Date”).
1. Award.
The Company hereby grants to the Participant a cash-settled performance award (the “Award”) according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “Appendix”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 6, 2020 (as amended, restated or otherwise modified from time to time, the “Plan”). The Award represents the opportunity to receive a maximum of $______ subject to the vesting requirements of this Agreement and the terms of the Plan. The Award is granted as a Performance Award under Section 6(e) of the Plan. The Award is subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(b) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
2. Vesting.
(a) Unless otherwise provided in this Agreement, the Award granted under this Agreement
shall vest and become payable in cash as of each of the Vesting Dates (specified in the attached Schedule A, Section 6): (i) to the extent the performance goals (the “Performance Goals”) applicable to the performance period (the “Performance Period”) (specified in the attached Schedule A, Sections 2 and 3) are attained, as determined in accordance with Section 2(b) below; and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary (or one of the Company’s affiliates) from the Grant Date through each of the Vesting Dates. The amount of the Award that shall be eligible to vest on each of the Vesting Dates shall be equal to (x) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (y) the number of Vesting Dates.
(b) As soon as reasonably practicable after the completion of the Performance Period and no
later than the first Vesting Date, the Committee shall determine the actual level of attainment of the Performance Goals. On the basis of the determination of the level of attainment of the Performance Goals, the amount of the Award that is eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). The Committee may make such adjustments in accordance with the attached Schedule A, Section 4 to the Performance Goals (and to the method of determining the performance attainment level) as the Committee in its sole discretion deems appropriate.
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(c) The Participant shall have no rights to payment of the Award until the Committee
determines and certifies in writing that the applicable Performance Goals have been attained and that the Award has vested. Prior to settlement, the Award represents an unfunded and unsecured obligation of the Company.
(d) To the extent permissible under applicable local law, if the Participant commences working
on a part-time basis, then the vesting schedule specified in Section 2(a) and on Schedule A may be
adjusted by the Company in its sole discretion.
(e) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
3. Settlement of Award. If the Award (or a portion thereof) vests, the applicable Award payment amount will be paid to the Participant in cash on, or as soon as practicable after, the date the Award (or a portion thereof) vests in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4. Restrictions on Transfer. Except as otherwise provided by the Plan or by the Committee, the Award shall not be transferable other than by will or by the laws of descent and distribution. The Award may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Award shall be void and unenforceable against the Company or any Subsidiaries.
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control the following provisions shall apply:
(a) Notwithstanding the other provisions of this Section 5, if the Participant’s employment is
terminated by the Company or any of its Subsidiaries (or any of its affiliates) without Cause (as defined in Section 5(c) below) or the Participant terminates his or her employment for Good Reason (as defined in Section 5(b) below) in each case upon or within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to the amount of the Award equal to the Target Award that is specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to the amount of the Award that is subject to any unvested installments for any subsequent Vesting Date(s).
(b) “Good Reason” for purposes of this Agreement shall mean: (i) a material reduction in the
Participant’s position or responsibilities from the Participant’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or
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inadvertent action not taken in bad faith; (ii) a material reduction in the Participant’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (iii) the reassignment, without the Participant’s consent, of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (i), (ii) and (iii) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his or her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
(c) “Cause” for purposes of this Agreement shall mean: (i) the Participant’s willful refusal to
carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Participant reports or of the Board that are within the Participant’s control and consistent with the Participant’s status with the Company or its Subsidiary and his or her duties and responsibilities (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company or its Subsidiary to the Participant of such failure, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, (vi) the Participant’s material breach of the Company’s Code of Conduct or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, or (vii) the Participant’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Participant received from the Company) (the “Post-Employment Restriction Agreement”) which breach has an adverse effect on the Company or its Subsidiaries. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Cause definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
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6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries (or any of its affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation. If the Participant’s employment with the Company or
any of its Subsidiaries is terminated for Cause or the Participant resigns for any reason, including as a result of the Participant’s retirement, any amount of the Award that is not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Involuntary Termination/ Disability/Death Prior to Mid-Point of Performance Period. If
the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability (as defined in Section 6(d) below) prior to the completion of the first six months of the Performance Period, this Award in its totality shall be immediately forfeited as of the date of the Participant’s termination of employment.
(c) Involuntary Termination/Disability/Death Following Mid-Point of the Performance Period.
If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability:
(i) after the completion of the first six months of the Performance Period but on or prior to the last day of the Performance Period, then (A) the Award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) an amount of the Award equal to (1) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) the number three, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration; or
(ii) following the last day of the Performance Period but prior to the final Vesting Date, the portion of the Award subject to the installment for the next subsequent Vesting Date that is not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination; provided, however, that any portion of the Award subject to an installment for any remaining Vesting Date(s) that is not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(d) “Disability” for purposes of this Agreement shall mean that the Participant becomes
physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties (after accounting for reasonable accommodation, if applicable and required by applicable law). Any question as to the existence of the Disability of the Participant for purposes of this Agreement shall be determined in writing by a qualified independent physician selected by the Company. The determination of Disability made in writing to the Company and the Participant shall be final and
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conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Disability definition, such definition shall apply for purposes of the Agreement.
(e) For purposes of this Agreement, the Participant shall cease to be continuously employed
(whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
7. Forfeiture and Repayment Provisions.
(a) Failure to properly execute the Agreement (and each other document required to be
executed by the Participant in connection with the Participant’s receipt of the Award) in a timely manner following the Grant Date may result in the forfeiture of the Award, as determined in the sole discretion of the Company.
(b) The right to vest in the Award shall be conditional upon the fact that the Participant has
read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c) The Company is authorized to suspend or terminate this Award prior to or after termination
of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to the Post-
Employment Restriction Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
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(iii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or
recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the Award has vested or has been settled, in whole or in part, the
Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8. Miscellaneous.
(a) Treatment as Wages. Solely for tax purposes, amounts paid in settlement of a vested
Award will be treated as wages paid by the employing entity subject to applicable tax withholding (as provided under Section 8(c) below).
(b) Adjustments to Award. Upon a Change in Control, the Committee may, prior to the
Change in Control, in its sole discretion, adjust the terms of this Award by taking any of the actions permitted under this Agreement and in accordance with the Plan.
(c) Responsibility for Taxes.
(i) Regardless of any action the Company or the Participant’s employer (the
“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limited to, the grant, vesting or settlement of the Award, or the payment of cash upon settlement of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate
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the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii) In this regard, the Participant authorizes the Company or its agent to satisfy the
obligations with regard to all Tax-Related Items by withholding cash amounts to be issued upon vesting/settlement of the Award. To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash.
(iii) Finally, the Participant shall pay to the Company or the Employer, as applicable,
any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to settle the award if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(d) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(e) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and
agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and
it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the Award is voluntary and occasional and does not create any
contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted repeatedly in the past;
(iii) all decisions with respect to future award grants, if any, will be at the sole discretion
of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to further
employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v) the Participant is voluntarily participating in the Plan;
(vi) the Award is not intended to replace any pension rights or compensation;
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(vii) unless otherwise agreed with the Company, the Award, including the income and
value of the Award, is not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the Award, including the income and value of the Award, is not part of normal or
expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(ix) no claim or entitlement to compensation or damages shall arise from forfeiture of
the Award resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(x) the following provisions apply only to Participants providing services outside the
United States, as determined by the Company:
(A) the Award is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
(C) the Award grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(f) No Advice Regarding Grant. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
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(g) Data Privacy.
(i) The Participant hereby explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Award grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii) The Participant understands that the Company and the Employer may hold
certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all awards or entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii) The Participant understands that Data will be transferred to E*Trade Financial
Services, or such other plan service provider as may be selected by the Company in the future or other plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant certain awards or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
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(h) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the Participant.
(i) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(j) Headings. Headings are given to the sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(k) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of
Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action.
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Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(1) Notices. The Participant should send all written notices regarding this Agreement or the
Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
(m) Amendments. The Company may amend this Agreement at any time; provided that, subject
to Section 8(b) above, this Section 8(m) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the Award and any payments acquired upon vesting of the Award, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides to facilitate the administration of the Plan; provided, any such amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable.
(n) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other
agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(o) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being
enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(p) Participant Undertaking. The Participant agrees to take such additional action and execute
such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Award pursuant to the provisions of this Agreement.
(q) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
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(r) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(s) Language. If the Participant has received this Agreement, or any other document related to
the Award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(t) Appendix. The Award shall be subject to any special provisions set forth in the Appendix
for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the Award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(u) Waiver. The Participant acknowledges that a waiver by the Company of any provision of
this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(v) Foreign Asset/Account Reporting Requirements and Exchange Controls. The Participant’s
country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold cash received from participating in the Plan in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(w) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(x) Section 409A Provisions. The Award and the payment of cash in settlement of any portion
of the Award under this Agreement are intended to be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or separation from service,
such amount or benefit will not be payable or distributable to the Participant by reason of such
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circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). Any payment or distribution that constitutes deferred compensation subject to Code Section 409A and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code on account of separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
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SCHEDULE A
1. Target Amount of Award (“Target Award”):
2. Performance Period:
3. Performance Goals:
4. Performance Goal Adjustments:
5. Performance Criteria:
6. Vesting Dates (assuming Performance Goals are attained):
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Exhibit 10.34
MONEYGRAM INTERNATIONAL, INC.
AMENDED AND RESTATED 2005 OMNIBUS INCENTIVE PLAN,
AS OF MAY 6, 2020
GLOBAL TIME-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This GLOBAL TIME-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and ___________(the “Participant”). The grant date of this award is _______________ (the “Grant Date”).
1. Award.
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “RSU”) award covering _________ shares (the “Shares”) of Common Stock, $.01 par value per share, of the Company (“Common Stock”) according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “Appendix”), and in the Company’s Amended and Restated 2005 Omnibus Incentive Plan, as of May 6, 2020, as amended from time to time (the “Plan”). Each RSU represents the right to receive one Share, or the cash value of such Share, in the Company’s sole discretion, subject to the vesting requirements of this Agreement and the terms of the Plan. The RSUs are granted under Section 6(c) of the Plan. The RSUs are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
2. Vesting.
(a) Unless otherwise provided in this Agreement, the RSUs granted under this Agreement shall vest as follows, provided the Participant remains continuously employed by the Company or a
Subsidiary (or one of the Company’s affiliates) from the Grant Date through each stated date (each a
“Vesting Date”):
| | | | | | | | | | | | | | |
Vesting Date | | Cumulative Percentage Vested |
__________ | | | ____ | % |
__________ | | | ____ | % |
__________ | | | ______. | % |
(b) The Participant shall have no rights to the Shares until the RSUs have vested. Prior to settlement, the RSUs represent an unfunded and unsecured obligation of the Company.
(c) To the extent permissible under applicable local law, if the Participant commences working on a part-time basis, then the vesting schedule specified in Section 2(a) may be adjusted by the Company in its sole discretion.
(d) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
(e) In the event the Participant would otherwise become vested in a fractional portion of an RSU (a “Fractional RSU”) based on the vesting terms set forth in Section 2(a), the Fractional RSU shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final Vesting Date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final Vesting Date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU.
3. Settlement of RSUs. Any RSUs that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable (but in no event later than 60 days) after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below). Notwithstanding the foregoing, the Company may, in its sole discretion, settle all of a portion of any RSUs in the form of: (a) a cash payment, or (b) Shares
4. Restrictions on Transfer.
(a) Except as otherwise provided by the Plan or by the Committee, the RSUs shall not be transferable other than by will or by the laws of descent and distribution. The RSUs may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the RSUs shall be void and unenforceable against the Company or any Subsidiaries.
(b) None of the Shares acquired pursuant to the RSU award shall be assigned, transferred, pledged, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) below) the following provisions shall apply:
(a) Notwithstanding the other provisions of this Section 5, if the RSUs are assumed or otherwise replaced in connection with a Change in Control and the Participant’s employment is terminated by the Company or any of its Subsidiaries (or affiliates) without Cause (as defined in Section 5(d) below) or the Participant terminates his or her employment for Good Reason (as defined in Section 5(b) below) in each case within 12 months following the occurrence of such
Change in Control but prior to the final Vesting Date, then all unvested RSUs subject to this award will automatically accelerate and become vested upon such termination of employment.
(b) For purposes of this Agreement, “Good Reason” shall mean: (i) a material reduction in the Participant’s position or responsibilities in effect immediately prior to such Change in Control, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (iii) the reassignment, without the Participant’s consent, of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (i), (ii) and (iii) shall constitute Good Reason unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his or her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
(c) For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Participant, “Change in Control” shall mean: (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets; (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)); or (iii) the merger, consolidation, reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction; provided, however, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control.
(d) For purposes of this Agreement, “Cause” shall mean: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Participant reports or of the Board that are within the Participant’s control and consistent with the Participant’s status with the Company or its Subsidiary and his or her duties and responsibilities (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(c) below)) for a period of 10 days following written notice by the Company or its Subsidiary to the Participant of such failure, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof
or similar act under non-U.S. law for any non-U.S. Participant, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, (vi) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, or (vii) the Participant’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Participant received from the Company) (the “Post-Employment Restriction Agreement”) which breach has an adverse effect on the Company or its Subsidiaries. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Cause definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries (or affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation. If the Participant’s employment with the Company or any of its Subsidiaries is terminated for Cause or the Participant resigns for any reason, including as a result of the Participant’s retirement, any RSUs that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Involuntary Termination/Disability/Death. If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or is terminated due to death or Disability, then that portion of the unvested RSUs that would vest during the 12-month period following the date of such termination shall vest on the date of termination.
(c) “Disability” for purposes of this Agreement shall mean that the Participant becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties. Any question as to the existence of the Disability of the Participant for purposes of this Agreement shall be determined in writing by a qualified independent physician selected by the Company. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Participant is party to an employment or
severance agreement with the Company or one of its affiliates which contains a Disability definition, such definition shall apply for purposes of the Agreement.
(d) For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
7. Forfeiture and Repayment Provisions.
(a) Failure to properly execute the Agreement (and each other document required to be executed by the Participant in connection with the Participant’s receipt of the RSUs) in a timely manner following the Grant Date may result in the forfeiture of the RSUs, as determined in the sole discretion of the Company.
(b) The right to vest in the RSUs shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c) The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries, the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iii) During the Participant’s employment with the Company or any of its Subsidiaries (or affiliates), the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct and Ethics
or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the RSUs have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
(e) Without limiting any of the foregoing, for purposes of this Section 7, the Participant expressly and explicitly authorizes the Company to issue instructions, on the Participant’s behalf, to any brokerage firm and/or third party administrator engaged by the Company to hold the Participant’s Shares and other amounts acquired pursuant to the Participant’s RSUs to re-convey, transfer or otherwise return such Shares and/or other amounts to the Company upon the Company’s enforcement of this Section 7.
8. Miscellaneous.
(a) Issuance of Shares. Upon any vesting of the RSUs, and subject to the payment of any Tax-Related Items (as defined under Section 8(d) below), to the extent that the Company settles the RSUs in Shares rather than cash, the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b) Rights as Shareholder. RSUs are not actual Shares, but rather, represent a right to receive Shares, or the cash equivalent in the discretion of the Company, according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of an RSU shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c) Adjustments to Award.
(i) In the event that the Company engages in a transaction such that any dividend or
other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares covered by the RSUs, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii) Upon a Change in Control, the Committee may prior to the Change in Control, in its sole discretion, adjust the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d) Responsibility for Taxes.
(i) Regardless of any action the Company or the Participant’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii) Prior to any relevant taxable or tax withholding event, as applicable, the Participant
agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the RSUs. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the RSUs, the Participant authorizes and directs the Company and/or the Employer, or their respective agents, to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the RSUs as the
Company determines to be appropriate to generate cash proceeds sufficient to satisfy any applicable withholding obligations with regard to all Tax-Related Items.
(iii) The Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in the jurisdiction(s) applicable to the Participant, in which case the Participant may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv) Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. If any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the RSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted repeatedly in the past;
(iii) all decisions with respect to future RSU grants, if any, will be at the sole discretion of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming or amending an employment or service contract with the Company and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v) the Participant is voluntarily participating in the Plan;
(vi) the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;
(vii) unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;
(ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(x) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the RSUs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(xi) neither the Company, the Employer nor any other Subsidiary of the Company shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of the RSUs or the subsequent sale of any Shares acquired upon settlement.
(g) No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(h) Reservation of Shares. The Company shall at all times during the term of the RSU award reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(i) Securities Matters. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(j) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(k) Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(l) Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(m) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees
that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(n) Notices. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
(o) Amendments. The Company may amend this Agreement at any time; provided that, subject to Section 8(c) above, this Section 8(o) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. Notwithstanding the foregoing, any amendment that is intended to facilitate compliance with applicable law may be made without the Participant’s consent; provided, any such amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons.
(p) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(q) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(r) Participant Undertaking. The Participant agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this RSU award pursuant to the provisions of this Agreement.
(s) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(t) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(u) Language. The Participant acknowledges that he or she proficient in the English language, or has consulted with an advisor who is sufficiently proficient, so as to allow the Participant to understand the terms and conditions of this Agreement. If the Participant has received this Agreement, or any other document related to the RSU award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(v) Appendix. The RSU award shall be subject to any special provisions set forth in the Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the RSU award, the special provisions for such country shall apply to the Participant, to the extent the Company determines, in its sole discretion, that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(w) Waiver. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(x) Insider Trading Restrictions/Market Abuse Laws. By accepting the RSU award, the Participant acknowledges that he or she is bound by all the terms and conditions of the Company’s insider trading policy as may be in effect from time to time. The Grantee further acknowledges that, depending upon the Participant’s or his or her broker’s country of residence or where the Shares are listed, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., RSUs) or rights linked to the value of Shares under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before the Participant possessed inside information. Furthermore, the Participant could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and should speak with his or her personal legal advisor on this matter.
(y) Foreign Asset/Account Reporting Requirements and Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or Dividend Equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(z) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(aa) Section 409A Provisions. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant unless the Committee determines in good faith that (i) the circumstances giving rise to such Disability or separation from service meet the definition of a disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). To the extent that any amount or benefit hereunder that constitutes deferred compensation to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to a Change in Control that is not a “change in control event” within the meaning of the Treasury Regulations under Section 409A, the amount or benefit instead shall be made on the earlier of the original vesting dates contemplated under Section 2 or the Participant’s separation from service, subject to any delay required pursuant to the following sentence. Any payment or distribution that constitutes deferred compensation subject to Code Section 409A that is payable on a date or period that is by reference to the Participant’s separation from service and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code as of the date of the Participant’s separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
[1] For purposes of this Agreement, “RSU” means a restricted stock unit award to be settled in any combination of cash and Common Stock, at the sole discretion of the Company, based on the terms of the Agreement with regard to vesting and payment.
Exhibit 10.35
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 6, 2020
GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and ______________ (the “Participant”). The grant date of this award is _____________ (the “Grant Date”).
1.Award.
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “Unit”) award covering __________shares (the “Shares”) of Common Stock, $.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “Appendix”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 6, 2020 (as amended, restated or otherwise modified from time to time, the “Plan”). Each Unit represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The Units are granted under Section 6(c) of the Plan. The Units are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
1.Vesting.
(a) Unless otherwise provided in this Agreement, the Units granted under this Agreement shall
vest and become payable in Shares as of each of the Vesting Dates (specified in the attached Schedule A, Section 6), (i) to the extent the performance goals (the “Performance Goals”) applicable to the performance period (the “Performance Period”) (specified in the attached Schedule A, Sections 2 and 3) are attained, as determined in accordance with Section 2(b) below and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary (or one of the Company’s affiliates) from the Grant Date through each of the Vesting Dates. The number of Units that shall be eligible to vest on each of the Vesting Dates shall be equal to (i) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (ii) the number of Vesting Dates.
(b) As soon as reasonably practicable after the completion of the Performance Period and no
later than the first Vesting Date, the Committee shall determine the actual level of attainment of the Performance Goals. On the basis of the determination of the level of attainment of the Performance Goals, the number of Units that are eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). The Committee may make such
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adjustments in accordance with the attached Schedule A, Section 4 to the Performance Goals (and to the method of determining the performance attainment level) as the Committee in its sole discretion deems appropriate.
(c) The Participant shall have no rights to the Shares until the Units have vested. Prior to
settlement, the Units represent an unfunded and unsecured obligation of the Company.
(d) To the extent permissible under applicable local law, if the Participant commences working
on a part-time basis, then the vesting schedule specified in Section 2(a) and on Schedule A may be adjusted by the Company in its sole discretion.
(e) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
(f) In the event the Participant would otherwise become vested in a fractional portion of a Unit
(a “Fractional Unit”) based on the vesting terms set forth in Section 2(a) and on Schedule A, the Fractional Unit shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional Unit prior to the final Vesting Date for the Units and such Fractional Unit taken together with a previous Fractional Unit that remained unvested would equal a whole Unit, then such Fractional Units shall vest to the extent they equal a whole Unit. Upon the final Vesting Date, the value of any remaining Fractional Units shall be rounded up to the nearest whole Unit.
3. Settlement of Units. Any Units that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4. Restrictions on Transfer.
(a) Except as otherwise provided by the Plan or by the Committee, the Units shall not be
transferable other than by will or by the laws of descent and distribution. The Units may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Units shall be void and unenforceable against the Company or any Subsidiaries.
(b) None of the Shares acquired pursuant to the Unit award shall be assigned, transferred,
pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control the following provisions shall apply:
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(a) Notwithstanding the other provisions of this Section 5, if the Units are assumed or
otherwise replaced in connection with a Change in Control and the Participant’s employment is terminated by the Company or any of its Subsidiaries (or any of its affiliates) without Cause (as defined in Section 5(c) below) or the Participant terminates his or her employment for Good Reason (as defined in Section 5(b) below) in each case upon or within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Units subject to this award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to all Units that are subject to any unvested installments for any subsequent Vesting Date(s).
(b) “Good Reason” for purposes of this Agreement shall mean: (i) a material reduction in the
Participant’s position or responsibilities from the Participant’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction in the Participant’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (iii) the reassignment, without the Participant’s consent, of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (i), (ii) and (iii) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his or her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
(c) “Cause” for purposes of this Agreement shall mean: (i) the Participant’s willful refusal to
carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Participant reports or of the Board that are within the Participant’s control and consistent with the Participant’s status with the Company or its Subsidiary and his or her duties and responsibilities (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company or its Subsidiary to the Participant of such failure, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s
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duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, (vi) the Participant’s material breach of the Company’s Code of Conduct or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board or the Company, to the extent the Participant does not report to the Board, or (vii) the Participant’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Participant received from the Company) (the “Post-Employment Restriction Agreement”) which breach has an adverse effect on the Company or its Subsidiaries. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Cause definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries (or any of its affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation. If the Participant’s employment with the Company or
any of its Subsidiaries is terminated for Cause or the Participant resigns for any reason, including as a result of the Participant’s retirement, any Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Involuntary Termination/ Disability/Death Prior to Mid-Point of Performance Period. If
the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability (as defined in Section 6(d) below) prior to the completion of the first six months of the Performance Period, all Units subject to this award shall be immediately forfeited as of the date of the Participant’s termination of employment.
(c) Involuntary Termination/ Disability/Death Following Mid-Point of the Performance Period.
If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability:
(i) after the completion of the first six months of the Performance Period but on or
prior to the last day of the Performance Period, then (A) the total number of Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) a number of Units equal to (1) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) three, shall become vested as of the end of the Performance Period upon such determination, and any unvested Units shall be immediately forfeited for no consideration; or
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(ii) following the last day of the Performance Period but prior to the final Vesting Date,
the Units subject to the installment for the next subsequent Vesting Date that are not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination; provided, however, that the Units subject to an installment for any remaining Vesting Dates that are not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(d) “Disability” for purposes of this Agreement shall mean that the Participant becomes
physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties (after accounting for reasonable accommodation, if applicable and required by applicable law). Any question as to the existence of the Disability of the Participant for purposes of this Agreement shall be determined in writing by a qualified independent physician selected by the Company. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Participant is party to an employment or severance agreement with the Company or one of its affiliates which contains a Disability definition, such definition shall apply for purposes of the Agreement.
(e) For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
7. Forfeiture and Repayment Provisions.
(a) Failure to properly execute the Agreement (and each other document required to be
executed by the Participant in connection with the Participant’s receipt of the Units) in a timely manner following the Grant Date may result in the forfeiture of the Units, as determined in the sole discretion of the Company.
(b) The right to vest in the Units shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its
5
Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c) The Company is authorized to suspend or terminate this Unit award prior to or after
termination of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to the Post-
Employment Restriction Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(iii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or
recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the Units have vested or have been settled, in whole or in part,
the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8. Miscellaneous.
(a) Issuance of Shares. Upon any vesting of the Units, and subject to the payment of any Tax-
Related Items (as defined under Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
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(b) Rights as Shareholder. Units are not actual Shares, but rather, represent a right to receive
Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of a Unit shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c) Adjustments to Award.
(i) In the event that the Company engages in a transaction such that any dividend or
other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares covered by the Units, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii) Upon a Change in Control, the Committee may, prior to the Change in Control, in
its sole discretion, adjust the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d) Responsibility for Taxes.
(i) Regardless of any action the Company or the Participant’s employer (the
“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the issuance of Shares upon settlement of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the Units. In the event that such withholding in Shares is problematic
7
under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the Units, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the Units as the Company determines to be appropriate, to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii) To avoid negative accounting treatment, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv) Finally, the Participant shall pay to the Company or the Employer any amount of
Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and
agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and
it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the Units is voluntary and occasional and does not create any
contractual or other right to receive future grants of units, or benefits in lieu of units, even if units have been granted repeatedly in the past;
(iii) all decisions with respect to future Unit grants, if any, will be at the sole discretion
of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to further
employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
8
(v) the Participant is voluntarily participating in the Plan;
(vi) the Units and the Shares subject to the Units are not intended to replace any pension
rights or compensation;
(vii) unless otherwise agreed with the Company, the Units and the Shares subject to the
Units, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the Units and the Shares subject to the Units, and the income and value of same, are
not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(ix) the future value of the underlying Shares is unknown and cannot be predicted with
certainty;
(x) no claim or entitlement to compensation or damages shall arise from forfeiture of
the Units resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(xi) the following provisions apply only to the Participants providing services outside
the United States, as determined by the Company:
(A) the Units and the Shares subject to the Units are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the Units and the Shares subject to the Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
9
(C) the Unit grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(g) No Advice Regarding Grant. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(h) Data Privacy.
(i) The Participant hereby explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii) The Participant understands that the Company and the Employer may hold
certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii) The Participant understands that Data will be transferred to E*Trade Financial
Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by
10
contacting in writing his or her local human resources representative. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant Units or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
(i) Reservation of Shares. The Company shall at all times during the term of the Unit award
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j) Securities Matters. The Company shall not be required to deliver any Shares until the
requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the Participant.
(l) Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m) Headings. Headings are given to the sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to
11
arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o) Notices. The Participant should send all written notices regarding this Agreement or the
Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
(p) Amendments. The Company may amend this Agreement at any time; provided that, subject
to Section 8(c) above, this Section 8(p) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the Units and the Shares acquired upon vesting of the Units, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan; provided, any such amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable.
(q) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether
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in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being
enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s) Participant Undertaking. The Participant agrees to take such additional action and execute
such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Unit award pursuant to the provisions of this Agreement.
(t) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v) Language. If the Participant has received this Agreement, or any other document related to
the Unit award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(w) Appendix. The Unit award shall be subject to any special provisions set forth in the
Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the Unit award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(x) Waiver. The Participant acknowledges that a waiver by the Company of any provision of
this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(y) Insider Trading Restrictions/Market Abuse Laws. Depending upon his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to acquire or sell Shares or rights to Shares
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(e.g., Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and is advised to speak with his or her personal legal advisor on this matter.
(z) Foreign Asset/Account Reporting Requirements and Exchange Controls. The Participant’s
country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or Dividend Equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(aa) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(bb) Section 409A Provisions. The payment of Shares under this Agreement is intended to be
exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). Any payment or distribution that constitutes deferred compensation subject to Code Section 409A and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code on account of separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
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IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
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SCHEDULE A
1. Target Number of Restricted Stock Units (“Target Units”):
2. Performance Period:
3. Performance Goals:
4. Performance Goal Adjustments:
5. Performance Criteria:
6. Vesting Dates (assuming Performance Goals are attained):
16
MONEYGRAM INTERNATIONAL, INC.
AMENDED AND RESTATED 2005 OMNIBUS INCENTIVE PLAN,
AS OF MAY 6, 2020
CHIEF EXECUTIVE OFFICER
PERFORMANCE-BASED CASH
AWARD AGREEMENT
This PERFORMANCE-BASED CASH AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and _________ (the “Participant”). The grant date of this award is ___________ (the “Grant Date”).
1. Award.
The Company hereby grants to the Participant a cash-settled performance award (the “Award”) according to the terms and conditions as provided in this Agreement, in the Amended and Restated Employment Agreement dated March 2, 2018 by and among the Company and the Participant (as amended, restated or otherwise modified from time to time, the “Employment Agreement”) and effective as of January 1, 2018 (the “Effective Date”), and in the Company’s Amended and Restated 2005 Omnibus Incentive Plan, as of May 6, 2020 (as amended, restated or otherwise modified from time to time, the “Plan”). The Award represents the opportunity to receive a target amount of $_________, subject to the vesting requirements of this Agreement and the terms of the Plan. The Award is granted as a Performance Award under Section 6(e) of the Plan. The Award is subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(a) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
2. Vesting.
(a) Unless otherwise provided in this Agreement, the Award granted under this Agreement
shall vest and become payable in cash as of each of the Vesting Dates (specified in the attached Schedule A, Section 5): (i) to the extent the performance goals (the “Performance Goals”) applicable to the performance period (the “Performance Period”) (specified in the attached Schedule A, Sections 2 and 3) are attained, as determined in accordance with Section 2(b) below; and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary (or one of the Company’s affiliates) from the Grant Date through each of the Vesting Dates. The amount of the Award that shall be eligible to vest on each of the Vesting Dates shall be equal to (x) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (y) the number of Vesting Dates.
(b) As soon as reasonably practicable after the completion of the Performance Period and no
later than the first Vesting Date, the Committee shall determine the actual level of attainment of
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the Performance Goals. On the basis of the determination of the attainment level of the Performance Goals, the amount of the Award that is eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). The Committee may make such adjustments in accordance with the attached Schedule A, Section 4 to the Performance Goals (and to the method of determining the performance attainment level) as the Committee in its sole discretion deems appropriate.
(c) The Participant shall have no rights to payment of the Award until the Committee
determines and certifies in writing that the applicable Performance Goals have been attained and that the Award has vested. Prior to settlement, the Award represents an unfunded and unsecured obligation of the Company.
(d) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
3. Settlement of Award. If the Award (or a portion thereof) vests, the applicable Award payment amount will be paid to the Participant in cash on, or as soon as practicable (but in no event later than 60 days) after, the date the Award (or a portion thereof) vests in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below).
4. Restrictions on Transfer. Except as otherwise provided by the Plan or by the Committee, the Award shall not be transferable other than by will or by the laws of descent and distribution. The Award may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Award shall be void and unenforceable against the Company or any Subsidiaries.
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control the following provisions shall apply:
(a) Notwithstanding the other provisions of this Section 5, if the Participant’s
employment is terminated by the Company or any of its Subsidiaries (or any of its affiliates) without Cause (as defined in Section 5(c) below) or the Participant terminates his employment for Good Reason (as defined in Section 5(b) below) in each case upon or within 24 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to the amount of the Award equal to the Target Award that is specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to the amount of the Award that is subject to any unvested installments for any subsequent Vesting Date(s).
(b) For purposes of this Agreement, “Good Reason” shall mean, without the
Participant’s consent, (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those terms are defined in the Employment Agreement) opportunity then in effect, except in connection with an across-the-board reduction of not more than 10%
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applicable to senior executives of the Company; or (iii) the reassignment of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work on the Effective Date; provided, that none of the events described in clauses (i), (ii), and (iii) shall constitute Good Reason unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Employment Agreement contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
Notwithstanding anything else to the contrary contained in this Agreement or the Employment Agreement, if the Company temporarily suspends the Participant from his duties but retains the Participant as an employee pending or during an investigation of whether an act or omission by the Participant constitutes Cause, and the Participant tenders his resignation based on Good Reason with respect to the suspension of duties within the required period for resigning for Good Reason, the Company may delay treating such resignation as for Good Reason until the completion of the investigation and need not treat the resignation as based on Good Reason at such date if it can then establish Cause; provided, however, that the Participant shall retain his right to terminate employment for Good Reason based on other factors, if applicable.
(c) For purposes of this Agreement, “Cause” shall mean a good faith finding by the
Board of: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(e) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude, or (z) a material violation of federal or state securities laws; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach has a material adverse effect on the Company; or (vii) the Participant’s breach of the provisions of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement, which breach has a material adverse effect on the Company. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, if the Employment Agreement contains a Cause definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
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6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or one of its Subsidiaries (or one of its affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation without Good Reason. If the Participant’s employment
with the Company is terminated for Cause or the Participant resigns other than for Good Reason, any portion of the Award that is not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Termination without Cause or for Good Reason Prior to Mid-Point of Performance Period.
If the Participant’s employment with the Company is terminated by the Company without Cause or by the Participant for Good Reason prior to the completion of the first six months of the Performance Period, then (i) the total amount of the Award granted under this Agreement shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (ii) an amount of the Award equal to (A) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b), multiplied by (B) a fraction, the numerator of which is the number of days during the Performance Period that the Participant is employed by the Company and the denominator of which is the total number of days in the Performance Period, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration; provided, however, that if the Participant breaches his obligations pursuant to Section 8 of the Employment Agreement, any unvested amount of the Award shall be immediately forfeited without consideration.
(c) Termination Due to Death or Disability Prior to Mid-Point of Performance Period. If the
Participant’s employment with the Company is terminated due to death or Disability (as defined in Section 6(e) below) prior to the completion of the first six months of the Performance Period, this Award in its totality shall be immediately forfeited as of the date of the Participant’s termination of employment.
(d) Involuntary Termination/Disability/Death/Resignation for Good Reason Following Mid-
Point of the Performance Period. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to death or Disability:
(i) after the completion of the first six months of the Performance Period but on or
prior to the last day of the Performance Period, then (A) the Award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) an amount of the Award equal to (1) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) the number three, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration; or
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(ii) following the last day of the Performance Period but prior to the final Vesting Date,
the portion of the Award subject to the installment for the next subsequent Vesting Date that is not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination and any portion of the Award subject to an installment for any remaining Vesting Date(s) that is not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(e) For purposes of this Section 6, “Disability” shall mean a determination by a qualified
independent physician mutually acceptable to the Participant and the Company that the Participant is unable to perform his duties under the Employment Agreement (after accounting for reasonable accommodation, if applicable and required by applicable law) and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365-day period. The Participant shall fully cooperate in connection with the determination of whether Disability exists. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Employment Agreement contains a Disability definition, such definition shall apply for purposes of the Agreement.
(f) For purposes of this Agreement, the Participant shall cease to be continuously employed
(whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Employment Agreement) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Award, and such determination shall be made in accordance with Code Section 409A.
(g) The vesting benefits provided in Sections 5 and 6 are subject to satisfaction of the
conditions set forth in Section 6.6 of the Employment Agreement.
(h) Notwithstanding any provision herein to the contrary, in the event of any inconsistency
between Section 6 of the Employment Agreement and Section 5 or 6 of this Agreement, the provision that is more favorable to the Participant shall control, subject to compliance with Section 409A of the Code.
7. Forfeiture and Repayment Provisions.
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(a) Failure to properly execute the Agreement (and each other document required to be
executed by the Participant in connection with the Participant’s receipt of the Award) in a timely manner following the Grant Date may result in the forfeiture of the Award, as determined in the sole discretion of the Company.
(b) The right to vest in the Award shall be conditional upon the fact that the Participant has
read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c) The Company is authorized to suspend or terminate this Award prior to or after termination
of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to Sections
8.1, 8.2, 8.3 or 8.4 of the Employment Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct and Ethics or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or
recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the Award has vested or has been settled, in whole or in part, the
Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
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(e) For purposes of this Section 7, the Participant expressly and explicitly authorizes the
Company to issue instructions on the Participant’s behalf to any brokerage firm and/or third party administrator engaged by the Company to hold amounts acquired pursuant to the Participant’s Award to re-convey, transfer or otherwise return such amounts to the Company upon the Company’s enforcement of this Section 7.
8. Miscellaneous.
(a) Adjustments to Award. Upon a Change in Control, the Committee may, prior to the
Change in Control, in its sole discretion, adjust the terms of this Award by taking any of the actions permitted under this Agreement and in accordance with the Plan.
(b) Responsibility for Taxes.
(i) Regardless of any action the Company takes with respect to any or all income tax,
social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company. The Participant further acknowledges that the Company (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including, but not limited to, the grant, vesting or settlement of the Award, or the payment of cash upon settlement of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii) Prior to any relevant taxable or tax withholding event, as applicable, the Participant
agrees to make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company or its agent to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding cash amounts to be issued upon vesting/settlement of the Award. The Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant may receive a refund of any over-withheld amount in cash.
(iii) Finally, the Participant shall pay to the Company any amount of Tax-Related Items
that the Company may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to settle the award if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
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(c) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. If any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(d) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and
agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and
it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the Award is exceptional, voluntary and occasional and does not create
any contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted repeatedly in the past;
(iii) all decisions with respect to future award grants, if any, will be at the sole discretion
of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to further
employment with the Company and shall not interfere with the ability of the Company to terminate the Participant’s employment at any time according to Sections 5.3 and 5.4 of the Employment Agreement;
(v) the Participant is voluntarily participating in the Plan;
(vi) the Award, and the income from and value of same, is not intended to replace any
pension rights or compensation;
(vii) unless otherwise agreed with the Company, the Award, including the income from
and value of the Award, is not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the Award, including the income from and value of the Award, is not part of normal
or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments, except as otherwise provided in Sections 6.1(e) and 6.2 of the Employment Agreement; and
(ix) no claim or entitlement to compensation or damages shall arise from forfeiture of
the Award resulting from the Participant’s termination of continuous employment by the Company(for any reason whatsoever and whether or not later found to be invalid or in breach of the Employment Agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Company), and in consideration of the grant of the Award to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, waives his ability, if any, to bring any such claim, and releases the Company from any such claim; if, notwithstanding the foregoing, any
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such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims.
(e) No Advice Regarding Grant. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan. The Participant is hereby advised to consult with his own personal tax, legal and financial advisors regarding his participation in the Plan before taking any action related to the Plan.
(f) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the Participant.
(g) Successors and Assigns; No Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(h) Headings. Headings are given to the sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(i) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of
Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The
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arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(j) Notices. The Participant should send all written notices regarding this Agreement or the
Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
(k) Amendments. The Company may amend this Agreement at any time; provided that, subject
to Section 8(a) above, this Section 8(k) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. Notwithstanding the foregoing, any amendment that is intended to facilitate compliance with applicable law may be made without the Participant’s consent; provided, any such amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Award and on any cash payments made under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons.
(l) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other
agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(m) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being
enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
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(n) Participant Undertaking. The Participant agrees to take such additional action and execute
such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Award pursuant to the provisions of this Agreement.
(o) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(p) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(q) Waiver. The Participant acknowledges that a waiver by the Company of any provision of
this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(r) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(s) Section 409A Provisions. The Award and the payment of cash in settlement of any portion
of the Award under this Agreement are intended to be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant unless the Committee determines in good faith that (i) the circumstances giving rise to such Disability or separation from service meet the definition of a disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). To the extent that any amount or benefit hereunder that constitutes deferred compensation to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to a Change in Control that is not a “change in control event” within the meaning of the Treasury Regulations under Section 409A, the amount or benefit instead shall be made on the earlier of the original vesting dates contemplated under Section 2 or the Participant’s separation from service, subject to any delay required pursuant to the following sentence. Any payment or distribution that constitutes deferred compensation subject to Code Section 409A that is payable on a date or period that is by reference to the Participant’s separation from service and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code as of the date of the Participant’s separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
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IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
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SCHEDULE A
1. Target Amount of Award (“Target Award”)
:
2. Performance Period:
3. Performance Goals:
4. Performance Goal Adjustments:
5. Performance Criteria:
6. Vesting Dates (assuming Performance Goals are attained):
SCHEDULE A-1
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 6, 2020
CHIEF EXECUTIVE OFFICER
GLOBAL PERFORMANCE -BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and ________ (the “Participant”). The grant date of this award is _________ (the “Grant Date”).
1. Award.
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “Unit”) award covering ________ shares (the “Shares”) of Common Stock, $0.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “Appendix”), in the Amended and Restated Employment Agreement dated March 2, 2018 by and among the Company and the Participant (as amended, restated or otherwise modified from time to time, the “Employment Agreement”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 6, 2020 (as amended, restated or otherwise modified from time to time, the “Plan”). Each Unit represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The Units are granted under Section 6(c) of the Plan. The Units are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
2. Vesting.
(a) Unless otherwise provided in this Agreement, the Units granted under this Agreement shall
vest and become payable in Shares as of each of the Vesting Dates (specified in the attached Schedule A, Section 6), (i) to the extent the performance goals (the “Performance Goals”) applicable to the performance period (the “Performance Period”) (specified in the attached Schedule A, Sections 2 and 3) are attained, as determined in accordance with Section 2(b) below and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary (or one of the Company’s affiliates) from the Grant Date through each of the Vesting Dates. The number of Units that shall be eligible to vest on each of the Vesting Dates shall be equal to (i) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (ii) the number of Vesting Dates.
(b) As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, the Committee shall determine the actual level of
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attainment of the Performance Goals. On the basis of the determination of the level of attainment of the Performance Goals, the number of Units that are eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). The Committee may make such adjustments in accordance with the attached Schedule A, Section 4 to the Performance Goals (and to the method of determining the performance attainment level) as the Committee in its sole discretion deems appropriate.
(c) The Participant shall have no rights to the Shares until the Units have vested. Prior to
settlement, the Units represent an unfunded and unsecured obligation of the Company.
(d) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
(e) In the event the Participant would otherwise become vested in a fractional portion of a Unit
(a “Fractional Unit”) based on the vesting terms set forth in Section 2(a) and on Schedule A, the Fractional Unit shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional Unit prior to the final Vesting Date for the Units and such Fractional Unit taken together with a previous Fractional Unit that remained unvested would equal a whole Unit, then such Fractional Units shall vest to the extent they equal a whole Unit. Upon the final Vesting Date, the value of any remaining Fractional Units shall be rounded up to the nearest whole Unit.
3. Settlement of Units. Any Units that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4. Restrictions on Transfer.
(a) Except as otherwise provided by the Plan or by the Committee, the Units shall not be
transferable other than by will or by the laws of descent and distribution. The Units may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Units shall be void and unenforceable against the Company or any Subsidiaries.
(b) None of the Shares acquired pursuant to the Unit award shall be assigned, transferred,
pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control the following provisions shall apply:
(a) Notwithstanding the other provisions of this Section 5, if the Units are assumed or otherwise replaced in connection with a Change in Control and the Participant’s employment is
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terminated by the Company or any of its Subsidiaries (or any of its affiliates) without Cause (as defined in Section 5(c) below) or the Participant terminates his employment for Good Reason (as defined in Section 5(b) below) in each case upon or within 24 months following the occurrence of such Change in Control but prior to the final Vesting Date (a “Qualifying CIC Termination”, then the Units subject to this award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to all Units that are subject to any unvested installments for any subsequent Vesting Date(s).
(b) For purposes of this Agreement, “Good Reason” shall mean, without the Participant’s
consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those terms are defined in the Employment Agreement) opportunity then in effect, except in connection with an across-the-board reduction of not more than 10% applicable to senior executives of the Company; or (iii) the reassignment of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work on the Grant Date; provided, that none of the events described in clauses (i), (ii), and (iii) shall constitute Good Reason unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Employment Agreement contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
Notwithstanding anything else to the contrary contained in this Agreement or the Employment Agreement, if the Company temporarily suspends the Participant from his duties but retains the Participant as an employee pending or during an investigation of whether an act or omission by the Participant constitutes Cause, and the Participant tenders his resignation based on Good Reason with respect to the suspension of duties within the required period for resigning for Good Reason, the Company may delay treating such resignation as for Good Reason until the completion of the investigation and need not treat the resignation as based on Good Reason at such date if it can then establish Cause; provided, however, that the Participant shall retain his right to terminate employment for Good Reason based on other factors, if applicable.
(c) For purposes of this Agreement, “Cause” shall mean a good faith finding by the Board of: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(e) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any
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state thereof, (y) a misdemeanor involving moral turpitude, or (z) a material violation of federal or state securities laws; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach has a material adverse effect on the Company; or (vii) the Participant’s breach of the provisions of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement which breach has a material adverse effect on the Company. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries (or any of its affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation without Good Reason. If the Participant’s employment
with the Company is terminated for Cause or the Participant resigns other than for Good Reason, any Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Termination without Cause or for Good Reason. If the Participant’s employment with the
Company is terminated by the Company without Cause or by the Participant for Good Reason:
(i) prior to the completion of the Performance Period, then a pro rata portion of the
Units, determined by multiplying (A) the total number of Units subject to this award by (B) a fraction, the numerator of which is the number of days during the Performance Period that the Participant is employed with the Company and the denominator of which is the total number of days in the Performance Period, shall remain outstanding and eligible to vest following such termination of employment, subject only to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above, and, after giving effect to the foregoing and to the extent the Performance Goals are not achieved, the applicable portion of this award shall be immediately forfeited for no consideration; provided, however, that if the Participant breaches his obligations pursuant to Section 8 of the Employment Agreement, any unvested Units shall be immediately forfeited without consideration; or
(ii) following the last day of the Performance Period but prior to the final Vesting Date,
then all Units that are subject to any unvested installments for any subsequent Vesting Date(s) that are not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination.
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(c) Termination Due to Death or Disability Prior to Mid-Point of Performance Period. If the Participant’s employment with the Company is terminated due to death or Disability (as defined in Section 6(e) below) prior to the completion of the first six months of the Performance Period, all Units subject to this award shall be immediately forfeited as of the date of the Participant’s termination of employment.
(d) Termination Due to Death or Disability Following Mid-Point of the Performance Period. If the Participant’s employment with the Company is terminated due to death or Disability:
(i) after the completion of the first six months of the Performance Period but on or
prior to the last day of the Performance Period, then (A) the total number of Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) a number of Units equal to (1) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) three, shall become vested as of the end of the Performance Period upon such determination, and any unvested Units shall be immediately forfeited for no consideration; or
(ii) following the last day of the Performance Period but prior to the final Vesting Date,
the Units subject to the installment for the next subsequent Vesting Date that are not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination; provided, however, that the Units subject to an installment for any remaining Vesting Dates that are not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(e) For purposes of this Section 6, “Disability” shall mean a determination by a
qualified independent physician mutually acceptable to the Participant and the Company that the Participant is unable to perform his duties under the Employment Agreement (after accounting for reasonable accommodation, if applicable and required by applicable law) and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365 day period. The Participant shall fully cooperate in connection with the determination of whether Disability exists. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Employment Agreement contains a Disability definition, such definition shall apply for purposes of the Agreement.
(f) For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Employment Agreement) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is
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employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and such determination shall be made in accordance with Code Section 409A.
(g) The vesting benefits provided in Sections 5 and 6 are subject to satisfaction of the
conditions set forth in Section 6.6 of the Employment Agreement.
(h) Notwithstanding any provision herein to the contrary, in the event of any inconsistency
between Section 6 of the Employment Agreement and Section 5 or 6 of this Agreement, the provision that is more favorable to the Participant shall control, subject to compliance with Section 409A of the Code.
7. Forfeiture and Repayment Provisions.
(a) Failure to properly execute the Agreement (and each other document required to be
executed by the Participant in connection with the Participant’s receipt of the Units) in a timely manner following the Grant Date may result in the forfeiture of the Units, as determined in the sole discretion of the Company.
(b) The right to vest in the Units shall be conditional upon the fact that the Participant has read
and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c) The Company is authorized to suspend or terminate this Unit award prior to or after
termination of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to Sections
8.1, 8.2, 8.3 or 8.4 of the Employment Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(iii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of
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ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or
recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the Units have vested or have been settled, in whole or in part, the
Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8. Miscellaneous.
(a) Issuance of Shares. Upon any vesting of the Units, and subject to the payment of any Tax-
Related Items (as defined in Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b) Rights as Shareholder. Units are not actual Shares, but rather, represent a right to receive Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of a Unit shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c) Adjustments to Award.
(i) In the event that the Company engages in a transaction such that any dividend or
other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares covered by the Units, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) shall be adjusted as set forth in Section 4(c) of the Plan.
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(ii) Upon a Change in Control, the Committee may, prior to the Change in Control, in
its sole discretion, adjust the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d) Responsibility for Taxes.
(i) Regardless of any action the Company or the Participant’s employer (the
“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the issuance of Shares upon settlement of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii) In this regard, the Participant authorizes the Company or its agent to satisfy the
obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the Units. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the Units, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the Units as the Company determines to be appropriate, to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii) To avoid negative accounting treatment, the Company may withhold or account for
Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv) Finally, the Participant shall pay to the Company or the Employer any amount of
Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the
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means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and
agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and
it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the Units is voluntary and occasional and does not create any
contractual or other right to receive future grants of units, or benefits in lieu of units, even if units have been granted repeatedly in the past;
(iii) all decisions with respect to future Unit grants, if any, will be at the sole discretion
of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to further
employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v) the Participant is voluntarily participating in the Plan;
(vi) the Units and the Shares subject to the Units are not intended to replace any pension
rights or compensation;
(vii) unless otherwise agreed with the Company, the Units and the Shares subject to the
Units, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the Units and the Shares subject to the Units, and the income and value of same, are
not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(ix) the future value of the underlying Shares is unknown and cannot be predicted with
certainty; and
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(x) no claim or entitlement to compensation or damages shall arise from forfeiture of
the Units resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims.
(g) No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his own personal tax, legal and financial advisors regarding his participation in the Plan before taking any action related to the Plan.
(h) Data Privacy.
(i) The Participant hereby explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii) The Participant understands that the Company and the Employer may hold
certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii) The Participant understands that Data will be transferred to E*Trade Financial
Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than the Participant’s country. The Participant understands that he may request a list with the names and addresses of any potential recipients of the Data by contacting his local human resources representative. The Participant authorizes the Company, E*Trade
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Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. The Participant understands that he may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his local human resources representative. Further, the Participant understands that he is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke his consent, his status as an employee and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing his consent is that the Company would not be able to grant Units or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing his consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he may contact his local human resources representative.
(i) Reservation of Shares. The Company shall at all times during the term of the Unit award
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j) Securities Matters. The Company shall not be required to deliver any Shares until the
requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the Participant.
(l) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m) Headings. Headings are given to the sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be
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held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o) Notices. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
(p) Amendments. The Company may amend this Agreement at any time; provided that, subject to Section 8(c) above, this Section 8(p) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the Units and the Shares acquired upon vesting of the Units, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan; provided, any such
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amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable.
(q) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other
agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being
enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s) Participant Undertaking. The Participant agrees to take such additional action and execute
such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Unit award pursuant to the provisions of this Agreement.
(t) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v) Waiver. The Participant acknowledges that a waiver by the Company of any provision of
this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(w) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(x) Section 409A Provisions. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit
13
hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). Any payment or distribution that constitutes deferred compensation subject to Code Section 409A and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code on account of separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
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SCHEDULE A
1. Target Number of Restricted Stock Units (“Target Units”):
2. Performance Period:
3. Performance Goals:
4. Performance Goal Adjustments:
5. Performance Criteria:
6. Vesting Dates (assuming Performance Goals are attained):
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MONEYGRAM INTERNATIONAL, INC.
AMENDED AND RESTATED 2005 OMNIBUS INCENTIVE PLAN,
AS OF MAY 6, 2020
CHIEF EXECUTIVE OFFICER
TIME-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This Time-Based RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) is made by and between MoneyGram International, Inc., a Delaware corporation (the “Company”), and _________ (the “Participant”). The grant date of this award is _________ (the “Grant Date”).
1. Award.
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “RSU”) award covering _______ shares (the “Shares”) of Common Stock, $0.01 par value per share, of the Company (“Common Stock”) according to the terms and conditions as provided in this Agreement, in the Amended and Restated Employment Agreement dated March 2, 2018 by and among the Company and the Participant (as amended, restated or otherwise modified from time to time, the “Employment Agreement”) and effective as of January 1, 2018 (the “Effective Date”), and in the Company’s Amended and Restated 2005 Omnibus Incentive Plan, as of May 6, 2020 (as amended, restated or otherwise modified from time to time, the “Plan”). Each RSU represents the right to receive one Share, a cash amount equal to the Fair Market Value of one Share, or a combination of the foregoing, in the Company’s sole discretion, subject to the vesting requirements of this Agreement and the terms of the Plan. The RSUs are granted under Section 6(c) of the Plan. The RSUs are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
2. Vesting.
(a) Unless otherwise provided in this Agreement, the RSUs granted under this Agreement shall
vest as follows, provided the Participant remains continuously employed by the Company or a Subsidiary (or one of the Company’s affiliates) from the Grant Date through each stated date (each a “Vesting Date”):
| | | | | | | | | | | | | | |
Vesting Date | | Cumulative Percentage Vested |
| | | _____ | % |
| | | _____ | % |
| | | ______ | % |
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(b) The Participant shall have no rights to the Shares until the RSUs have vested. Prior to
settlement, the RSUs represent an unfunded and unsecured obligation of the Company.
(c) For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
(d) In the event the Participant would otherwise become vested in a fractional portion of an
RSU (a “Fractional RSU”) based on the vesting terms set forth in Section 2(a), the Fractional RSU shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final Vesting Date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final Vesting Date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU.
3. Settlement of RSUs. Any RSUs that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable (but in no event later than 60 days) after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below). Notwithstanding the foregoing, the Company may, in its sole discretion, settle all or a portion of any RSUs in the form of: (a) a cash payment, (b) Shares or (c) a combination of cash and Shares.
4. Restrictions on Transfer.
(a) Except as otherwise provided by the Plan or by the Committee, the RSUs shall not be
transferable other than by will or by the laws of descent and distribution. The RSUs may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the RSUs shall be void and unenforceable against the Company or any Subsidiaries.
(b) None of the Shares acquired pursuant to the RSU award shall be assigned, transferred,
pledged, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5. Effect of Involuntary Termination or Termination for Good Reason From and After a Change in Control. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control the following provisions shall apply:
(a) Notwithstanding the other provisions of this Section 5, if the RSUs are assumed or otherwise replaced in connection with a Change in Control and the Participant’s employment is terminated by the Company or any of its Subsidiaries (or any of its affiliates) without Cause (as defined in Section 5(c) below) or the Participant terminates his employment for Good Reason (as defined in Section 5(b) below) in each case upon or within 24 months following the occurrence of such Change in Control but prior to the final Vesting Date, then all unvested RSUs
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subject to this award will automatically accelerate and become vested upon such termination of employment.
(b) For purposes of this Agreement, “Good Reason” shall mean, without the Participant’s
consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those terms are defined in the Employment Agreement) opportunity then in effect, except in connection with an across-the-board reduction of not more than 10% applicable to senior executives of the Company; or (iii) the reassignment of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work on the Effective Date; provided, that none of the events described in clauses (i), (ii), and (iii) shall constitute Good Reason unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period. Notwithstanding the foregoing, if the Employment Agreement contains a Good Reason definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
Notwithstanding anything else to the contrary contained in this Agreement or the Employment Agreement, if the Company temporarily suspends the Participant from his duties but retains the Participant as an employee pending or during an investigation of whether an act or omission by the Participant constitutes Cause, and the Participant tenders his resignation based on Good Reason with respect to the suspension of duties within the required period for resigning for Good Reason, the Company may delay treating such resignation as for Good Reason until the completion of the investigation and need not treat the resignation as based on Good Reason at such date if it can then establish Cause; provided, however, that the Participant shall retain his right to terminate employment for Good Reason based on other factors, if applicable.
(c) For purposes of this Agreement, “Cause” shall mean a good faith finding by the Board of: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(c) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude, or (z) a material violation of federal or state securities laws; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach has a material adverse effect on the Company; or (vii) the Participant’s breach of the provisions of
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Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement which breach has a material adverse effect on the Company. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, if the Employment Agreement contains a Cause definition more favorable to the Participant, such definition shall apply for purposes of the Agreement.
6. Effect of Termination of Employment. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries (or any of its affiliates) prior to the final Vesting Date, the following actions shall occur:
(a) Termination for Cause; Resignation without Good Reason. If the Participant’s employment
with the Company is terminated for Cause or the Participant resigns other than for Good Reason, any RSUs that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b) Involuntary Termination/Disability/Death/Resignation for Good Reason. If the
Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability, then that portion of the unvested RSUs that would vest during the 12-month period following the date of such termination shall vest on the date of termination; provided, however, that if the Participant’s employment with the Company is terminated by the Company without Cause or by the Participant for Good Reason on or within 45 days of the next regularly schedule Vesting Date set forth in this Agreement, then the RSUs that are scheduled to vest on the next two regularly-scheduled Vesting Dates pursuant to this Agreement shall become immediately vested on the date of termination.
(c) For purposes of this Section 6, “Disability” shall mean a determination by a qualified independent physician mutually acceptable to the Participant and the Company that the Participant is unable to perform his duties under the Employment Agreement (after accounting for reasonable accommodation, if applicable and required by applicable law) and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365-day period. The Participant shall fully cooperate in connection with the determination of whether Disability exists. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement. Notwithstanding the foregoing, if the Employment Agreement contains a Disability definition, such definition shall apply for purposes of the Agreement.
(d) For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Employment Agreement) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated
4
under an employment law or practice in the country where the Participant resides and/or is
employed, even if otherwise applicable to the Participant’s employment benefits (e.g., continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and such determination shall be made in accordance with Code Section 409A.
(e) The vesting benefits provided in Sections 5 and 6 are subject to satisfaction of the
conditions set forth in Section 6.6 of the Employment Agreement.
(f) Notwithstanding any provision herein to the contrary, in the event of any inconsistency
between Section 6 of the Employment Agreement and Section 5 or 6 of this Agreement, the provision that is more favorable to the Participant shall control, subject to compliance with Section 409A of the Code.
7. Forfeiture and Repayment Provisions.
(a) Failure to properly execute the Agreement (and each other document required to be
executed by the Participant in connection with the Participant’s receipt of the RSUs) in a timely manner following the Grant Date may result in the forfeiture of the RSUs, as determined in the sole discretion of the Company.
(b) The right to vest in the RSUs shall be conditional upon the fact that the Participant has read
and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c) The Company is authorized to suspend or terminate this RSU award prior to or after
termination of employment if the Company reasonably determines that:
(i) The Participant engaged in any conduct agreed to be avoided pursuant to Sections
8.1, 8.2, 8.3 or 8.4 of the Employment Agreement; or
(ii) During the Participant’s employment with the Company or any of its Subsidiaries,
the Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iii)During the Participant’s employment with the Company or any of its Subsidiaries (or
affiliates), the Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct and Ethics or similar program of the Company, misconduct that causes a misstatement of the
5
financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct and Ethics or similar program of the Company; or
(iv) Such suspension or termination is permitted or required by any written clawback or
recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d) If, at any time after the RSUs have vested or have been settled, in whole or in part, the
Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
(e) Without limiting any of the foregoing, for purposes of this Section 7, the Participant
expressly and explicitly authorizes the Company to issue instructions, on the Participant’s behalf, to any brokerage firm and/or third party administrator engaged by the Company to hold the Participant’s Shares and other amounts acquired pursuant to the Participant’s RSUs to re-convey, transfer or otherwise return such Shares and/or other amounts to the Company upon the Company’s enforcement of this Section 7.
8. Miscellaneous.
(a) Issuance of Shares. Upon any vesting of the RSUs, and subject to the payment of any Tax-
Related Items (as defined under Section 8(d) below), to the extent that the Company settles the RSUs in Shares rather than cash, the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b) Rights as Shareholder. RSUs are not actual Shares, but rather, represent a right to receive
Shares, or the cash equivalent in the discretion of the Company, according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of an RSU shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c) Adjustments to Award.
(i) In the event that the Company engages in a transaction such that any dividend or
other distribution (whether in the form of cash, Shares, other securities or other
6
property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares covered by the RSUs, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii) Upon a Change in Control, the Committee may, prior to the Change in Control, in
its sole discretion, adjust the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d) Responsibility for Taxes.
(i) Regardless of any action the Company takes with respect to any or all income tax,
social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company. The Participant further acknowledges that the Company (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any Dividend Equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction, the Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii) Prior to any relevant taxable or tax withholding event, as applicable, the Participant
agrees to make adequate arrangements satisfactory to the Company to satisfy all Tax-Related Items. In this regard, the Participant authorizes the Company or its agent to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the RSUs. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the RSUs, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy any applicable withholding obligations with regard to all Tax-Related Items.
(iii) The Company may withhold or account for Tax-Related Items by considering
applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant may receive a refund
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of any over-withheld amount in cash and will have no entitlement to the equivalent amount in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv) Finally, the Participant shall pay to the Company any amount of Tax-Related Items
that the Company may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e) Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. If any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f) Nature of Grant. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i) the Plan is established voluntarily by the Company, it is discretionary in nature and
it may be modified, amended, suspended or terminated by the Company at any time;
(ii) the grant of the RSUs is exceptional, voluntary and occasional and does not create
any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted repeatedly in the past;
(iii) all decisions with respect to future RSU grants, if any, will be at the sole discretion
of the Company;
(iv) the Participant’s participation in the Plan shall not create a right to further
employment with the Company and shall not interfere with the ability of the Company to terminate the Participant’s employment at any time according to Sections 5.3 and 5.4 of the Employment Agreement;
(v) the Participant is voluntarily participating in the Plan;
(vi) the RSUs and the Shares subject to the RSUs, and the income from and value of
same, are not intended to replace any pension rights or compensation;
(vii) unless otherwise agreed with the Company, the RSUs and the Shares subject to the
RSUs, and the income from and value of same, are not granted as consideration
8
for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii) the RSUs and the Shares subject to the RSUs, and the income from and value of
same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments, except as otherwise provided in Sections 6.1(e) and 6.2 of the Employment Agreement;
(ix) the future value of the underlying Shares is unknown and cannot be predicted with
certainty; and
(x) no claim or entitlement to compensation or damages shall arise from forfeiture of
the RSUs resulting from the Participant’s termination of continuous employment by the Company (for any reason whatsoever and whether or not later found to be invalid or in breach of the Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Company), and in consideration of the grant of the RSUs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company, waives his ability, if any, to bring any such claim, and releases the Company from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims.
(g) No Advice Regarding Grant. The Company is not providing any tax, legal or financial
advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his own personal tax, legal and financial advisors regarding his participation in the Plan before taking any action related to the Plan.
(h) Reservation of Shares. The Company shall at all times during the term of the RSU award
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(i) Securities Matters. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(j) Assignment. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(k) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
9
(l) Headings. Headings are given to the sections and subsections of this Agreement solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(m) Governing Law; Arbitration. The internal law, and not the law of conflicts, of the State of
Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “AAA”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(n) Notices. The Participant should send all written notices regarding this Agreement or the
Plan to the Company at the following address:
MoneyGram International, Inc.
General Counsel & Secretary
2828 North Harwood Street, 15th Floor
Dallas, TX 75201
10
(o) Amendments. The Company may amend this Agreement at any time; provided that, subject
to Section 8(c) above, this Section 8(o) and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. Notwithstanding the foregoing, any amendment that is intended to facilitate compliance with applicable law may be made without the Participant’s consent; provided, any such amendment shall be made so as to limit any adverse impact on the intended economic benefits of this Agreement, to the extent practicable. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons.
(p) Entire Agreement. This Agreement, including the Appendix, and the Plan and the other
agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(q) Severability. If any provision of this Agreement is invalid, illegal, or incapable of being
enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(r) Participant Undertaking. The Participant agrees to take such additional action and execute
such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this RSU award pursuant to the provisions of this Agreement.
(s) Counterparts. For the convenience of the parties and to facilitate execution, this Agreement
may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(t) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any
documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(u) Waiver. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as
11
a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(v) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(w) Section 409A Provisions. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant unless the Committee determines in good faith that (i) the circumstances giving rise to such Disability or separation from service meet the definition of a disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). To the extent that any amount or benefit hereunder that constitutes deferred compensation to the Participant under Section 409A is otherwise payable or distributable to the Participant under the Plan or this Agreement on a date or period that is by reference to a Change in Control that is not a “change in control event” within the meaning of the Treasury Regulations under Section 409A, the amount or benefit instead shall be made on the earlier of the original vesting dates contemplated under Section 2 or the Participant’s separation from service, subject to any delay required pursuant to the following sentence. Any payment or distribution that constitutes deferred compensation subject to Code Section 409A that is payable on a date or period that is by reference to the Participant’s separation from service and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code as of the date of the Participant’s separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF, the Company and the Participant have executed this Agreement as of the date set forth in the first paragraph.
12
Exhibit 21
Active Subsidiaries of MoneyGram International, Inc. as of December 31, 2022
| | | | | | | | |
| Entity | Jurisdiction |
1 | MIL Overseas Limited | United Kingdom |
2 | MIL Overseas Nigeria Limited | Nigeria |
3 | Money Globe Payment Institution S.A. | Greece |
4 | MoneyGram Consulting (Shanghai) Co. Ltd. | China |
5 | MoneyGram GmbH | Germany |
6 | MoneyGram India Private Limited | India |
7 | MoneyGram International B.V. | Netherlands |
8 | MoneyGram International Holdings Limited | United Kingdom |
9 | MoneyGram International Limited | United Kingdom |
10 | MoneyGram International Payment Systems, Inc. | Delaware, USA |
11 | MoneyGram International Pte. Ltd. | Singapore |
12 | MoneyGram International SA | Belgium |
13 | MoneyGram Mexico S.A. de C.V. | Mexico |
15 | MoneyGram Overseas (Pty) Limited | South Africa |
16 | MoneyGram Payment Systems Brasil LTDA | Brazil |
17 | MoneyGram Payment Systems Canada, Inc. | Canada |
18 | MoneyGram Payment Systems Greece S.A. | Greece |
19 | MoneyGram Payment Systems Hong Kong Limited | Hong Kong |
20 | MoneyGram Payment Systems Ireland Limited | Ireland |
21 | MoneyGram Payment Systems Italy S.r.l. | Italy |
22 | MoneyGram Payment Systems Malaysia Sdn. Bhd | Malaysia |
14 | MoneyGram Payment Systems Netherlands B.V. | Netherlands |
23 | MoneyGram Payment Systems Philippines, Inc. | Philippines |
25 | MoneyGram Payment Systems Spain S.A. | Spain |
26 | MoneyGram Payment Systems Worldwide, Inc. | Delaware, USA |
27 | MoneyGram Payment Systems, Inc. | Delaware, USA |
24 | MoneyGram Poland sp. Z.o.o. | Poland |
28 | MoneyGram Turkey Ödeme Hizmetleri Anonim Şirketi | Turkey |
29 | MPS France S.A.S. | France |
30 | MPSG Holdings Limited | United Kingdom |
31 | MPSG International Limited | Dubai |
32 | MPSG Limited | United Kingdom |
33 | PT MoneyGram Payment Systems Indonesia | Indonesia |
34 | Travelers Express Company (P.R.), Inc. | Puerto Rico |
35 | MoneyGram Payment Systems Chile SpA | Chile |
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements No. 333-239160, No. 333-204934, No. 333-190257, No. 333-176567, No. 333-159709, No. 333-125122, and No. 333-116976 on Form S-8 and registration statement No. 333-255122 on Form S-3 of our reports dated February 24, 2023, with respect to the consolidated financial statements of MoneyGram International, Inc. and subsidiaries and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Dallas, Texas
February 24, 2023
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each director whose signature appears below constitutes and appoints Brian Johnson, Robert L. Villaseñor and Christopher H. Russell, and each of them severally, his or her true and lawful attorney-in-fact and agent, each with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign MoneyGram International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and any and all amendments thereto, and to file the same, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission and to appear before the Securities and Exchange Commission in connection with any matter relating to said Annual Report, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that such said attorney-in-fact and agent, or any of them, or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney as of the 24th day of February 2023.
| | | | | | | | | | | |
| | |
/s/ Antonio O. Garza | | |
Antonio O. Garza | | |
| | |
| | |
/s/ Alka Gupta | | |
Alka Gupta | | |
| | |
| | |
/s/ Francisco Lorca | | |
Francisco Lorca | | |
| | |
| | |
/s/ Michael P. Rafferty | | |
Michael P. Rafferty | | |
| | |
| | |
/s/ Julie E. Silcock | | |
Julie E. Silcock | | |
| | |
| | |
/s/ W. Bruce Turner | | |
W. Bruce Turner | | |
| | |
| | |
/s/ Peggy Vaughan | | |
Peggy Vaughan | | |
| | | |
| | | |
Exhibit 31.1
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, W. Alexander Holmes, certify that:
1.I have reviewed this Annual Report on Form 10-K of MoneyGram International, Inc. for the fiscal year ended December 31, 2022;
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: | February 24, 2023 | | /s/ W. Alexander Holmes |
| | | W. Alexander Holmes |
| | | Chairman and Chief Executive Officer |
| | | (Principal Executive Officer) |
Exhibit 31.2
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Brian Johnson, certify that:
1.I have reviewed this Annual Report on Form 10-K of MoneyGram International, Inc. for the fiscal year ended December 31, 2022;
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: | February 24, 2023 | | /s/ Brian Johnson |
| | | Brian Johnson |
| | | Chief Financial Officer |
| | | (Principal Financial Officer) |
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 Annual Report on Form 10-K (the “Report”) of MoneyGram International, Inc. (the “Company”) for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof, I, W. Alexander Holmes, 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 to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: | February 24, 2023 | | /s/ W. Alexander Holmes |
| | | W. Alexander Holmes |
| | | Chairman and Chief Executive Officer |
| | | (Principal Executive Officer) |
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 Annual Report on Form 10-K (the “Report”) of MoneyGram International, Inc. (the “Company”) for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof, I, Brian Johnson, 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 to my knowledge:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: | February 24, 2023 | | /s/ Brian Johnson |
| | | Brian Johnson |
| | | Chief Financial Officer |
| | | (Principal Financial Officer) |
v3.22.4
Cover - USD ($) $ in Thousands |
12 Months Ended |
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Dec. 31, 2022 |
Feb. 22, 2023 |
Jun. 30, 2022 |
Cover [Abstract] |
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Entity File Number |
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Entity Registrant Name |
MONEYGRAM INTERNATIONAL, INC.
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Entity Incorporation, State or Country Code |
DE
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Entity Tax Identification Number |
16-1690064
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Entity Address, Address Line One |
2828 N. Harwood St., 15th Floor
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Dallas
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TX
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214
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999-7552
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Title of 12(b) Security |
Common stock, $0.01 par value
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MGI
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NASDAQ
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Documents Incorporated by Reference |
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v3.22.4
Condensed Consolidated Balance Sheets - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
ASSETS |
|
|
Cash and cash equivalents |
$ 172.1
|
$ 155.2
|
Settlement assets |
3,607.2
|
3,591.4
|
Property and equipment, net |
134.5
|
133.9
|
Goodwill |
442.2
|
442.2
|
Right-of-use asset, operating lease |
42.5
|
52.6
|
Other assets |
106.7
|
101.2
|
Total assets |
4,505.2
|
4,476.5
|
LIABILITIES |
|
|
Payment service obligations |
3,607.2
|
3,591.4
|
Debt, net |
785.4
|
786.7
|
Pension and other postretirement benefits |
53.3
|
67.1
|
Lease liability - operating |
45.4
|
56.3
|
Accounts payable and other liabilities |
159.7
|
160.0
|
Total liabilities |
4,651.0
|
4,661.5
|
Commitments and Contingencies |
|
|
STOCKHOLDERS' DEFICIT |
|
|
Common Stock, Value, Issued |
1.0
|
0.9
|
Additional Paid in Capital |
1,415.3
|
1,400.3
|
Retained Earnings (Accumulated Deficit) |
(1,479.2)
|
(1,513.4)
|
Accumulated Other Comprehensive Income (Loss), Net of Tax |
(64.9)
|
(62.8)
|
Treasury Stock, Value |
(18.0)
|
(10.0)
|
Total stockholders' deficit |
(145.8)
|
(185.0)
|
Total liabilities and stockholders' deficit |
$ 4,505.2
|
$ 4,476.5
|
Common stock, par value (usd per share) |
$ 0.01
|
$ 0.01
|
Preferred Stock, Shares Authorized |
7,000,000
|
|
Common Stock, Shares, Outstanding |
96,626,432
|
90,725,982
|
Common stock, shares authorized |
162,500,000
|
162,500,000
|
Common Stock, Shares, Issued |
98,964,065
|
92,305,011
|
Treasury stock (shares) |
2,337,633
|
1,579,029
|
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v3.22.4
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2019 |
Preferred Stock, Shares Authorized |
7,000,000
|
|
|
Common stock, par value (usd per share) |
$ 0.01
|
$ 0.01
|
|
Common stock, shares authorized (shares) |
162,500,000
|
162,500,000
|
|
Common Stock, Shares, Issued |
98,964,065
|
92,305,011
|
|
Treasury stock (shares) |
2,337,633
|
1,579,029
|
|
D Stock |
|
|
|
Participating convertible preferred stock, par value (usd per share) |
$ 0.01
|
$ 0.01
|
|
Preferred Stock, Shares Authorized |
|
|
200,000
|
Participating convertible preferred stock, shares issued (shares) |
|
|
71,282
|
X |
- DefinitionFace amount or stated value per share of common stock.
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v3.22.4
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
REVENUE |
|
|
|
Fee and other revenue |
$ 1,272.2
|
$ 1,275.8
|
$ 1,197.2
|
Investment revenue |
37.9
|
7.8
|
20.0
|
Total revenue |
1,310.1
|
1,283.6
|
1,217.2
|
COST OF REVENUE |
|
|
|
Commissions and other fee expense |
610.7
|
622.7
|
603.6
|
Investment commissions expense |
21.9
|
0.9
|
3.6
|
Direct transaction expense |
57.6
|
60.5
|
45.8
|
Total cost of revenue |
690.2
|
684.1
|
653.0
|
Gross Profit |
619.9
|
599.5
|
564.2
|
Compensation and benefits |
228.0
|
227.8
|
223.8
|
Transaction and operations support (1) |
187.2
|
179.1
|
111.6
|
Occupancy, equipment and supplies |
59.8
|
61.9
|
61.4
|
Depreciation and amortization |
51.7
|
57.0
|
64.4
|
Total operating expenses |
526.7
|
525.8
|
461.2
|
OPERATING INCOME |
93.2
|
73.7
|
103.0
|
Other expenses |
|
|
|
Interest expense |
49.4
|
69.5
|
92.4
|
Loss on early extinguishment of debt |
0.0
|
44.1
|
0.0
|
Other non-operating expense |
4.0
|
3.7
|
4.5
|
Total other expenses |
53.4
|
117.3
|
96.9
|
Income (loss) before income taxes |
39.8
|
(43.6)
|
6.1
|
Income tax expense (benefit) |
5.6
|
(5.7)
|
14.0
|
NET INCOME (LOSS) |
$ 34.2
|
$ (37.9)
|
$ (7.9)
|
EARNINGS (LOSS) PER COMMON SHARE |
|
|
|
Basic (usd per share) |
$ 0.35
|
$ (0.42)
|
$ (0.10)
|
Diluted (usd per share) |
$ 0.34
|
$ (0.42)
|
$ (0.10)
|
Weighted-average outstanding common shares and equivalents used in computing loss per share |
|
|
|
Basic |
96.4
|
89.7
|
77.8
|
Diluted |
100.1
|
89.7
|
77.8
|
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- DefinitionAmounts paid to financial institution customers based on short-term interest rate indices times the average outstanding cash balances of official checks sold by that financial institution.
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Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Statement of Comprehensive Income [Abstract] |
|
|
|
NET INCOME (LOSS) |
$ 34.2
|
$ (37.9)
|
$ (7.9)
|
OTHER COMPREHENSIVE (LOSS) INCOME |
|
|
|
Net change in unrealized holding gain (loss) on available-for-sale securities arising during the period net of tax (expense) benefits of $(0.2), $(0.1) and $0.1 for the years ended December 31, 2022, 2021 and 2020, respectively |
0.7
|
0.3
|
(0.4)
|
Net change in pension liability due to amortization of prior service cost and net actuarial loss, net of tax benefit of $0.5, $0.6 and $0.5 for the years ended December 31, 2022, 2021 and 2020, respectively |
1.8
|
1.9
|
1.7
|
Pension settlement gain, net of tax benefit of $0.1 for the year ended December 31, 2022 |
(0.4)
|
0.0
|
0.0
|
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, after Tax |
5.6
|
1.4
|
(3.4)
|
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax |
(9.8)
|
(8.0)
|
7.2
|
Other comprehensive (loss) income |
(2.1)
|
(4.4)
|
5.1
|
COMPREHENSIVE INCOME (LOSS) |
$ 32.1
|
$ (42.3)
|
$ (2.8)
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v3.22.4
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Statement of Comprehensive Income [Abstract] |
|
|
|
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment, Tax |
$ (0.2)
|
$ (0.1)
|
$ 0.1
|
Net change in pension liability, tax |
0.5
|
0.6
|
0.5
|
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Plan Amendments, Tax Effect |
(0.1)
|
|
|
Tax benefit, net |
1.7
|
0.4
|
(1.0)
|
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$ 0.0
|
$ 0.0
|
$ 0.2
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Consolidated Statements of Cash Flows - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income (loss) |
$ 34.2
|
$ (37.9)
|
$ (7.9)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
51.7
|
57.0
|
64.4
|
Signing bonus amortization |
50.1
|
56.4
|
54.5
|
Proceeds from Lease Payment, Operating Activity |
10.1
|
12.6
|
9.9
|
Deferred income tax expense (benefit) |
1.2
|
(8.8)
|
9.1
|
Amortization of debt discount and debt issuance costs |
2.7
|
7.5
|
11.7
|
Loss on early extinguishment of debt |
0.0
|
44.1
|
0.0
|
Non-cash compensation and pension expense |
18.0
|
11.1
|
11.1
|
Signing bonus payments |
(36.9)
|
(36.0)
|
(58.7)
|
Change in other assets |
(27.4)
|
(11.5)
|
(10.9)
|
Change in lease liabilities |
(10.9)
|
(13.7)
|
(15.3)
|
Change in accounts payable and other liabilities |
(7.1)
|
(43.9)
|
29.3
|
Other non-cash items, net |
0.0
|
0.2
|
(0.4)
|
Net Cash Provided by (Used in) Operating Activities |
85.7
|
37.1
|
96.8
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Payments for capital expenditures |
(53.8)
|
(41.4)
|
(40.8)
|
Proceeds from available-for-sale investments |
0.6
|
0.8
|
0.7
|
Purchases of interest-bearing investments |
(956.4)
|
(768.0)
|
(541.6)
|
Proceeds from interest-bearing investments |
951.0
|
766.6
|
537.1
|
Purchase of equity investments |
(4.0)
|
(5.0)
|
0.0
|
Proceeds from Sale of Other Investments |
0.0
|
2.5
|
0.0
|
Net cash used in investing activities |
(62.6)
|
(44.5)
|
(44.6)
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Transaction costs for issuance and amendment of debt |
0.0
|
(6.6)
|
0.0
|
Proceeds from Issuance of Debt |
0.0
|
807.8
|
0.0
|
Principal payments on debt |
(4.0)
|
(905.9)
|
(6.5)
|
Prepayment Call Premium |
0.0
|
(16.5)
|
0.0
|
Proceeds from revolving credit facility |
0.0
|
0.0
|
23.0
|
Payments on revolving credit facility |
0.0
|
0.0
|
(23.0)
|
Change in receivables, net |
(406.6)
|
124.6
|
(109.5)
|
Change in payment service obligations |
15.8
|
(111.5)
|
465.9
|
Net proceeds from stock issuance |
0.0
|
97.1
|
0.0
|
Payments for Repurchase of Common Stock |
0.0
|
(6.2)
|
0.0
|
Payments to tax authorities for stock-based compensation |
(8.0)
|
(3.8)
|
(0.7)
|
Net cash (used in) provided by financing activities |
(402.8)
|
(21.0)
|
349.2
|
NET CHANGE IN CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS |
(379.7)
|
(28.4)
|
401.4
|
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—Beginning of year |
2,050.9
|
2,079.3
|
1,677.9
|
CASH AND CASH EQUIVALENTS AND SETTLEMENT CASH AND CASH EQUIVALENTS—End of year |
1,671.2
|
2,050.9
|
2,079.3
|
Supplemental Cash Flow Information [Abstract] |
|
|
|
Cash payments for interest |
47.5
|
51.8
|
77.5
|
Cash payments (refunds) for taxes, net |
13.7
|
5.7
|
(1.8)
|
Cash and cash equivalents |
172.1
|
155.2
|
|
Settlement Cash and Cash Equivalents |
1,499.1
|
1,895.7
|
|
Cash and Cash Equivalents and Settlement Cash and Cash Equivalents |
$ 1,671.2
|
$ 2,050.9
|
$ 2,079.3
|
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v3.22.4
Consdensed Consolidated Statements of Stockholders' Deficit - USD ($) shares in Millions, $ in Millions |
Total |
Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Retained Loss |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Beginning Balance at Dec. 31, 2019 |
$ (240.4)
|
$ 183.9
|
$ 0.7
|
$ 1,116.9
|
$ (1,460.1)
|
$ (63.5)
|
$ (18.3)
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
|
|
Net loss |
(7.9)
|
|
|
|
(7.9)
|
|
|
Stock-based compensation activity |
$ 6.2
|
|
|
$ 6.6
|
(7.3)
|
|
$ 6.9
|
Stock Issued During Period, Shares, Conversion of Convertible Securities |
0.0
|
(183.9)
|
|
172.5
|
|
|
11.4
|
Other comprehensive loss |
$ 5.1
|
|
|
|
|
5.1
|
|
Ending Balance at Dec. 31, 2020 |
(237.0)
|
$ 0.0
|
0.7
|
$ 1,296.0
|
(1,475.3)
|
(58.4)
|
$ 0.0
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
|
|
Net loss |
(37.9)
|
|
|
|
(37.9)
|
|
|
Stock-based compensation activity |
3.3
|
|
|
7.3
|
(0.2)
|
|
(3.8)
|
Exercise of Ripple Warrants |
0.0
|
|
0.1
|
(0.1)
|
|
|
|
ATM Equity Offering |
97.2
|
|
0.1
|
97.1
|
|
|
|
Stock repurchases |
(6.2)
|
|
|
|
|
|
(6.2)
|
Other comprehensive loss |
(4.4)
|
|
|
|
|
(4.4)
|
|
Ending Balance at Dec. 31, 2021 |
(185.0)
|
0.0
|
0.9
|
1,400.3
|
(1,513.4)
|
(62.8)
|
(10.0)
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
|
|
Net loss |
34.2
|
|
|
|
34.2
|
|
|
Stock-based compensation activity |
6.9
|
|
|
15.0
|
|
|
(8.1)
|
Exercise of Lender Warrants |
0.2
|
|
0.1
|
|
|
|
0.1
|
Other comprehensive loss |
(2.1)
|
|
|
|
|
(2.1)
|
|
Ending Balance at Dec. 31, 2022 |
$ (145.8)
|
$ 0.0
|
$ 1.0
|
$ 1,415.3
|
$ (1,479.2)
|
$ (64.9)
|
$ (18.0)
|
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v3.22.4
Description of the Business and Basis of Presentation
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12 Months Ended |
Dec. 31, 2022 |
Description of the Business and Basis of Presentation [Abstract] |
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Description of the Business and Basis of Presentation |
References to "MoneyGram," the "Company," "we," "us" and "our" are to MoneyGram International, Inc. and its subsidiaries. Nature of Operations — MoneyGram offers products and services under its two reporting segments: GFT and FPP. The GFT segment provides global money transfer services and bill payment services to consumers through two primary distribution channels: retail and digital. Through our Retail Channel, we offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. Additionally, we have limited Company-operated retail locations. We offer services through MGO, digital partnerships, direct transfers to bank accounts, mobile wallets and card solutions, such as Visa Direct, as part of our Digital Channel. The FPP segment provides official check outsourcing services and money orders through financial institutions and agent locations. Basis of Presentation — The accompanying consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Consolidated Balance Sheets are unclassified due to the timing uncertainty surrounding the payment of settlement obligations. Impact of COVID-19 Pandemic On Our Financial Statements — The global spread of COVID-19 and the unprecedented impact of the COVID-19 pandemic is complex and ever-evolving. In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended extensive containment and mitigation measures worldwide. The outbreak reached all regions in which we do business, and governmental authorities around the world implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, border closings, quarantines, shelter-in-place orders, shutdowns, limitations or closures of non-essential businesses, school closures and social distancing requirements. The global spread of COVID-19 and its subsequent variants, in combination with the government actions taken in response to the virus have caused and may continue to cause significant economic and business disruption, volatility, financial uncertainty and a continued significant global economic downturn. This has had and may continue to have, a negative impact on the mobility of the global workforce, our agents, customers, consumer spending and global financial markets. Even after the initial impact of the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of inflation, economic weakness and lower disposable income. Therefore, the Company cannot reasonably estimate the future impact at this time. There were no other material impacts to our Consolidated Financial Statements as of and for the year ended December 31, 2022, based on the Company's assessment of its estimates. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our Consolidated Financial Statements in the future. Use of Estimates — The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations, impact of the COVID-19 pandemic and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates. Principles of Consolidation — The Consolidated Financial Statements include the accounts of MoneyGram International, Inc. and its subsidiaries. Intercompany profits, transactions and account balances have been eliminated in consolidation. The Company participates in various trust arrangements (special purpose entities or "SPEs") related to official check processing agreements with financial institutions and structured investments within the investment portfolio. As the Company is the primary beneficiary and bears the primary burden of any losses, the SPEs are consolidated in the Consolidated Financial Statements. The assets and obligations of the SPEs are recorded on the Consolidated Balance Sheets in a manner consistent with the assets and obligations of the Company. Presentation — In 2021, the Company changed its presentation to disclose "Gross profit" in the Consolidated Statements of Operations. The presentation of gross profit is intended to supplement investors with an understanding of our operating performance. Gross profit is calculated as total revenue less commissions and direct transaction expenses. These expenses were previously included within "Operating expenses" and are now presented within "Cost of revenue" in the Consolidated Statements of Operations. The change in presentation was applied retrospectively to all years presented in the Consolidated Statements of Operations and it had no effect on Operating income, Net loss or Loss per share. The Consolidated Balance Sheets, Consolidated Statements of Comprehensive Loss, Consolidated Statements of Stockholders' Deficit and Consolidated Statements of Cash Flows are not affected by this change in presentation. Merger Update — On February 14, 2022, we entered into a Merger Agreement by and among the Company, Parent and an affiliate of MDP, and Merger Sub. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company. Following the Merger, the Company will become a subsidiary of Parent. At the effective time of the Merger, each outstanding share of common stock will be automatically canceled and converted into the right to receive $11.00 in cash. On May 23, 2022, the Company held a virtual-only special meeting of stockholders related to the Merger Agreement and stockholders approved and adopted the Merger Agreement. To date, money transmission regulators in all applicable U.S. states and territories have provided their approval or non-objection of the transaction. In addition, the parties have obtained all but one approval from international money transmission regulators and have received approval from the Financial Conduct Authority ("FCA") in the United Kingdom and the National Bank of Belgium where MoneyGram holds its European license. While, the waiting period under the Hart-Scott-Rodino ("HSR") Antitrust Improvements Act of 1976 had previously expired, the parties recently refiled the application as the existing approval was set to expire. The new HSR waiting period is set to expire on March 13, 2023. The final regulatory approval is to be issued by the Reserve Bank of India (“RBI”). The RBI is the issuer of MoneyGram’s Money Transfer Service Scheme ("MTSS") license in India. Since the Company and MDP signed the Merger Agreement, the RBI issued a new Circular covering approval requirements related to Payment System Operators ("PSO") such as the Company. The Merger will be one of the first PSOs undergoing a sale since the Circular was issued. As a result, the process has been taking longer than originally anticipated. MoneyGram has been in active dialogue with the RBI and the Central Government of India regarding its review of the Merger. Prior to closing, the parties will engage in a financing marketing period which, pursuant to the merger agreement, may last for as long as fifteen consecutive business days. Closing would occur within a matter of days after completing the marketing period. The parties have agreed to extend the end date beyond February 14, 2023, in accordance with the Merger Agreement, to May 14, 2023. In light of the timing and factors discussed above, the parties now expect to close the Merger either late in the first quarter or early in the second quarter of 2023.
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- DefinitionThe entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
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v3.22.4
Summary of Significant Accounting Policies
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12 Months Ended |
Dec. 31, 2022 |
Accounting Policies [Abstract] |
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Basis of Presentation and Significant Accounting Policies |
Cash and cash equivalents — The Company defines cash and cash equivalents and settlement cash and cash equivalents as cash on hand and all highly liquid debt instruments with original maturities of three months or less at the purchase date. Settlement assets and payment service obligations — The Company records payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying transaction occurs. The Company records corresponding settlement assets, which represent funds received or to be received for unsettled money transfers, money orders and consumer payments. Settlement assets consist of settlement cash and cash equivalents, receivables and investments. Payment service obligations primarily consist of outstanding payment instruments; amounts owed to financial institutions for funds paid to the Company to cover clearings of official check payment instruments, remittances and clearing adjustments; amounts owed to agents for funds paid to consumers on behalf of the Company; commissions owed to financial institution customers and agents for instruments sold; amounts owed to investment brokers for purchased securities and unclaimed instruments owed to various states. Receivables, net (included in settlement assets) — The Company has receivables due from financial institutions and agents for payment instruments sold and amounts advanced by the Company to certain agents for operational and local regulatory purposes. These receivables are outstanding from the day of the sale of the payment instrument until the financial institution or agent remits the funds to the Company. The Company provides an allowance for the portion of the receivable estimated to become uncollectible based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer credit card chargebacks and insufficient funds and other matters the Company identifies in its routine collection monitoring. Receivables are generally considered past due one day after the contractual remittance schedule, which is typically one day to three days after the sale of the underlying payment instrument. Receivables are generally written off against the allowance one year after becoming past due. The following summary details the activity within the allowance for credit losses for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 6.7 | | | $ | 9.5 | | | $ | 4.6 | | Provision | | 13.3 | | | 11.1 | | | 14.3 | | Write-offs, net of recoveries | | (13.9) | | | (13.9) | | | (9.4) | | Ending balance | | $ | 6.1 | | | $ | 6.7 | | | $ | 9.5 | |
Investments (included in settlement assets) — The Company classifies securities as available-for-sale. The Company has no securities classified as trading or held-to-maturity. Time deposits and certificates of deposits with original maturities of up to 24 months are classified as interest-bearing investments and recorded at amortized cost. Securities held for indefinite periods of time, including any securities that may be sold to assist in the clearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities are recorded at fair value, with the net after-tax unrealized gain or loss recorded within "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets. Realized gains and losses and other-than-temporary impairments are recorded in the Consolidated Statements of Operations under "Total other expenses." Interest income on residential mortgage-backed securities for which risk of credit loss is deemed remote is recorded utilizing the level yield method. Changes in estimated cash flows, both positive and negative, are accounted for with retrospective changes to the carrying value of investments in order to maintain a level yield over the life of the investment. Interest income on residential mortgage-backed securities for which risk of credit loss is not deemed remote is recorded under the prospective method as adjustments of yield. Additionally, the Company applies the cost recovery method of accounting for interest to some of the investments within the available-for-sale portfolio as it believes it is probable that it will not recover all, or substantially all, of its principal investment and interest for its asset-backed and other securities given the sustained deterioration in the investment and securities market, the collapse of many asset-backed securities and the low levels to which the securities have been written down. The Company evaluates all residential mortgage-backed and other asset-backed investments for impairment based on management's evaluation of the underlying reasons for the decline in fair value on an individual security basis. When an adverse change in expected cash flows occurs, and if the fair value of a security is less than its carrying value, the investment is written down to fair value through a permanent reduction to its amortized cost in the period the impairment occurs. Securities gains and losses are recognized upon the sale, call or maturity of securities using the specific identification method to determine the cost basis of securities sold. Fair Value of Financial Instruments — Financial instruments consist of cash and cash equivalents, settlement cash and cash equivalents, investments, derivatives, payment service obligations and debt. The carrying values of cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment service obligations approximate fair value. The carrying value of debt is stated at amortized cost; however, for disclosure purposes the fair value is estimated. See Note 4 — Fair Value Measurement for information regarding the principles and processes used to estimate the fair value of financial instruments. Derivative Financial Instruments — The Company recognizes derivative financial instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value is recognized through "Transaction and operations support" in the Consolidated Statements of Operations in the period of change. See Note 6 — Derivative Financial Instruments for additional disclosure. Property and Equipment — Property and equipment includes computer hardware, computer software, signage, equipment at agent locations, office furniture and equipment and leasehold improvements and is stated at cost net of accumulated depreciation and amortization. Property and equipment is depreciated and amortized using a straight-line method over the useful life or term of the lease or license. The cost and related accumulated depreciation and amortization of assets sold or disposed of are removed from the financial statements, with the resulting gain or loss, if any, recognized within "Occupancy, equipment and supplies" in the Consolidated Statements of Operations. See Note 7 — Property and Equipment for additional disclosure. The following table summarizes the estimated useful lives by major asset category: | | | | | | | | | Type of Asset | | Useful Life | Computer hardware | | 3 years | Computer software | | 5 - 7 years | Signage | | 3 years | Equipment at agent locations | | 3 - 7 years | Office furniture and equipment | | 7 years | Leasehold improvements | | 10 years |
Tenant allowances for leasehold improvements are capitalized as leasehold improvements upon completion of the improvement and amortized over the shorter of the remaining term of the lease or 10 years. Computer software includes acquired and internally developed software. Property and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for property and equipment, the carrying value of the asset is reduced to the estimated fair value. Goodwill and Intangible Assets — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate. Intangible assets are recorded at their estimated fair value at the date of acquisition. In the year following the period in which identified intangible assets become fully amortized, the fully amortized balances are removed from the gross asset and accumulated amortization amounts. Intangible assets with indefinite lives are not amortized. Intangible assets that are not amortized are evaluated for impairment on a quarterly basis. As of December 31, 2022 and 2021, the Company had no indefinite-lived intangible assets. Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for intangible assets, the carrying value of the asset is reduced to the estimated fair value. Intangible assets with finite lives are amortized using a straight-line method over their respective useful lives as follows: | | | | | | | | | Type of Intangible Asset | | Useful Life | Contractual and customer relationships | | 3 - 15 years | Non-compete agreements | | 3 - 5 years | Developed technology | | 5 - 7 years |
Goodwill is not amortized but is instead subject to impairment testing. The Company evaluates its goodwill for impairment annually as of October 1 of each year or more frequently if impairment indicators arise in accordance with Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other. When testing goodwill for impairment, the Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, the Company considers the impact of any changes to the following factors: macroeconomic, industry and market factors, cost factors and changes in overall financial performance, as well as any other relevant events and uncertainties impacting a reporting unit. If the qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, the Company performs a quantitative analysis. In a quantitative test, the carrying value of the reporting unit is compared to its estimated fair value. If the fair value of a reporting unit exceeds its carrying amount, there is no impairment. If not, to the extent the carrying amount of the reporting unit exceeds its fair value, an impairment charge of the reporting unit's goodwill would be recognized; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Payments on Long-Term Contracts — The Company makes payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. The payments, or signing bonuses, are generally required to be refunded pro rata in the event of nonperformance under, or cancellation of, the contract by the customer. Signing bonuses are viewed as prepaid commissions expense and are, therefore, capitalized and amortized over the life of the related contract. Amortization of signing bonuses on long-term contracts is recorded within "Fee and other commissions expense" in the Consolidated Statements of Operations. The carrying values of the signing bonuses are reviewed whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Income Taxes — The provision for income taxes is computed based on the pre-tax income (loss) included in the Consolidated Statements of Operations. Deferred tax assets and liabilities are recorded based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards on a taxing jurisdiction basis. The Company measures deferred tax assets and liabilities using enacted statutory tax rates that will apply in the years in which the Company expects the temporary differences to be recovered or paid. The Company's ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carry-back or carry-forward periods provided for in the tax law. The Company establishes valuation allowances for its deferred tax assets based on a more-likely-than-not threshold. To the extent management believes that recovery is not likely, a valuation allowance is established in the period in which the determination is made. The liability for unrecognized tax benefits is recorded as a non-cash item within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The Company records interest and penalties for unrecognized tax benefits within "Income tax (benefit) expense" in the Consolidated Statements of Operations. See Note 13 — Income Taxes for additional disclosure. Treasury Stock — Repurchased common stock is stated at cost and is presented as a separate component of stockholders' deficit. See Note 11 — Stockholders' Deficit for additional disclosure. Non-U.S. Dollar Translation — The Company converts assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet dates and records the translation adjustments within "Accumulated other comprehensive loss" on the Consolidated Balance Sheets. Income statements of foreign operations are translated from the operation's functional currency to U.S. dollar equivalents at the average exchange rate for the month. Non-U.S. dollar exchange transaction gains and losses are reported within "Transaction and operations support" in the Consolidated Statements of Operations. Revenue Recognition — The Company earns revenues from consideration specified in contracts with customers and recognizes revenue when it satisfies its performance obligations by transferring control over its services and products to customers. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The following is a description of the principal activities, separated by reporting segments, from which the Company generates revenues. For more information about the Company's reporting segments, see Note 16 — Segment Information. For tabular revenue disclosures see Note 17 — Revenue Recognition. GFT Segment: Money transfer fee revenue — The Company earns money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads on money transfer transactions involving different "send" and "receive" currencies. Fees are collected from consumers at the time of transaction. In a cash-to-cash money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally a fixed fee or is based on a percentage of the fee charged to the consumer. When a money transfer transaction is initiated at a MoneyGram-owned store or via our online platform, typically only the receiving agent earns a commission. Each money transfer is considered a separate agreement between the Company and the consumer and includes only one performance obligation that is satisfied at a point in time, which is when the funds are made available for pick up. Money transfer funds are typically available for pick up within 24 hours of being sent. The consumer is in control of the service, as the consumer picks the "send" and "receive" locations as well as the transaction currency. Normally, the Company provides fee refunds to consumers only if the transaction is canceled within 30 minutes of initiating the transfer and the transfer amount has not been picked up by the Receiver. As such, fee refunds are accounted for within the same period as the origination of the transaction and no liability for the amount of expected returns is recorded on the Consolidated Balance Sheets. The Company recognizes revenues on a gross basis for money transfer services as the Company is considered the principal in these transactions. Under our loyalty programs for money transfer services, consumers earn rewards based on transaction frequency. In 2018, the Company introduced the MoneyGram Plus Rewards program, which allows members to earn discounts on future transactions. The MoneyGram Plus Rewards program activity for the years ended December 31, 2022 and 2021 was insignificant to the Company's results of operations. Bill payment services fee revenue — Bill payment revenues are earned primarily from fees charged to consumers for each transaction completed. Our primary bill payment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent locations, at certain agent locations in select Caribbean and European countries and through our digital solutions. Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards with cash at an agent location or with a credit or debit card. We offer consumers same-day and two or three-day payment service options; the service option is dependent upon our agreement with the biller. Each bill payment service is considered a separate agreement with the consumer and includes only one performance obligation that is satisfied at a point in time, when the funds are transferred to the designated institution, which is generally within the same day. The consumer is in control of the service, as the consumer picks out the "send" location and time. MoneyGram does not offer refunds for bill payment services and revenue is recognized on a gross basis as the Company is considered the principal in these transactions. Other revenue — Includes breakage income, fees from royalties, contract terminations, insufficient funds and other one-time charges. The Company recognizes breakage revenue for unclaimed money transfers when the likelihood of consumer pick-up becomes remote based on historical experience and there is no requirement for remitting balances to government agencies. FPP Segment: Money order fee revenue — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds underlying outstanding money orders. The Company contracts with agents and/or financial institutions for this product and associated services. We sell money orders under the MoneyGram brand and on a private label or on a co-branded basis with certain agents and financial institutions in the U.S. The Company recognizes revenue when an agent sells a money order because the funds are immediately made available to the consumer. As such, each sale of a money order and related service is considered a separate performance obligation that is satisfied at a point in time. Official check outsourcing services fee revenue — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use official checks to pay their own obligations. Like money orders, the Company generates revenue from official check outsourcing services through U.S. banks and credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks. The Company's consumer for official checks is considered the financial institution. The official checks services and products are considered a bundle of services and products that are provided to the financial institution on an ongoing basis. As such, revenue from these services is recognized on a monthly basis. Revenue corresponds directly with the value of MoneyGram's services and/or products completed to date and for which the Company has a right to invoice. Monthly revenue may vary based on the number of official checks issued and other ancillary services provided to the financial institution. Other revenue — Includes fees from money order service revenue, proof adjustments, early contract terminations, money order photo and replacement fees and other one-time charges. The Company recognizes service revenue from money orders that have not been redeemed within a one-year period from issuance. Proof adjustment fees are generally unresolved and not recouped as they pertain to immaterial bank variances. The Company recognizes as revenue the net proof adjustments amount on a monthly basis. Investment Revenue — Investment revenue, which is not within the scope of ASC Topic 606 per ASC 606-10-15-2, is earned from the investment of funds generated from the sale of payment instruments, primarily official checks and money orders and consists of interest income, dividend income, income received on our cost recovery securities and amortization of premiums and discounts. Investment revenue varies depending on the level of investment balances and the yield on our investments. Commissions and Other Fee Expense — The Company incurs fee commissions primarily related to our GFT services. In a money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally either a fixed fee or is based on a percentage of the fee charged to the consumer. The agent initiating the transaction and the receiving agent also earn non-U.S. dollar exchange commissions, which are generally based on a percentage of the non-U.S. dollar exchange spread. In a bill payment transaction, the agent initiating the transaction receives a commission that is generally based on a percentage of the fee charged to the consumer and, in limited circumstances, the biller receives a commission that is based on a percentage of the fee charged to the consumer. The Company generally does not pay commissions to agents on the sale of money orders, except, in certain limited circumstances, for large agents where we may pay a fixed commission based on total money order transactions. 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 are recognized each month based on the average outstanding balances of each financial institution customer and their contractual variable rate for that month. Direct Transaction Expense — Direct transaction expense includes expenses related to the processing of money transfers, such as customer authentication and funding costs. Marketing and Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes place and are recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. Marketing and advertising expense was $39.4 million, $27.7 million and $16.2 million for 2022, 2021 and 2020, respectively. Stock-Based Compensation — Stock-based compensation awards are measured at fair value at the date of grant and expensed using the straight-line method over their vesting or service periods. For grants to employees, expense, net of estimated forfeitures, is recognized in the "Compensation and benefits" line and expense for grants to non-employee directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. The Company accounts for modifications to its share-based payment awards in accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date and is recognized as compensation cost on the date of modification (for vested awards) or over the remaining vesting or service period (for unvested awards). Any unrecognized compensation cost remaining from the original award is recognized over the vesting period of the modified award. See Note 12 — Stock-Based Compensation for additional disclosure of the Company's stock-based compensation. Earnings Per Share — For all periods in which they are outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") and the warrants issued by the Company in connection with the entry into the Second Lien Credit Agreement ("Second Lien Warrants") are included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share because the D Stock is deemed a common stock equivalent and the Second Lien Warrants are considered outstanding common shares. Recently Adopted Accounting Standards — In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The ASU clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options, warrants for instance, that remain equity classified after modification or exchange. The ASU provides guidance that will clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 did not have a material impact on our Consolidated Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide, if certain criteria are met, optional expedients and exceptions for applying the U.S. GAAP requirements for contract modifications, hedging relationships and sales or transfers of debt securities that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform through December 31, 2022. The adoption of this ASU is optional and the election can be made anytime during the effective period. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on our Consolidated Financial Statements. Recently Issued Accounting Standards and Related Developments Not Yet Adopted — In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU changes how entities account for convertible instruments and contracts in an entity's own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. This ASU also modifies the guidance on diluted earnings per share calculations. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We do not believe the adoption of ASU 2020-06 will have a material impact on our Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new credit impairment standard changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. To further assist with adoption and implementation of ASU 2016-13, the FASB issued the following ASUs: •ASU 2018-19 (Issued November 2018) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses •ASU 2019-04 (Issued April 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments •ASU 2019-05 (Issued May 2019) — Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief •ASU 2019-10 (Issued November 2019) — Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates •ASU 2019-11 (Issued November 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses •ASU 2020-02 (Issued February 2020) — Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update) •ASU 2020-03 (Issued March 2020) — Codification Improvements to Financial Instruments •ASU 2022-02 (Issued March 2022) — Financial Instruments - Credit Losses (Topic 326): Trouble Debt Restructurings and Vintage Disclosures ASU 2019-10 changed the effective date of ASU 2016-13 for public business entities that meet the definition of a U.S. Securities and Exchange Commission ("SEC") filer but that are eligible to be a smaller reporting company to fiscal years beginning after December 15, 2022. As of November 15, 2019, which is the determination date for ASU 2016-13, MoneyGram was a smaller reporting company and, as such, has elected to adopt the amendments in these standards in 2023. We do not believe the adoption of these ASUs will have a material impact on our Consolidated Financial Statements.
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v3.22.4
Settlement Assets and Payment Service Obligations
|
12 Months Ended |
Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
|
Other Assets Disclosure |
The Company's primary licensed entities are MoneyGram Payment Systems, Inc. ("MPSI"), MoneyGram International SA and MoneyGram International Limited, which enable us to offer our money transfer service in the European Economic Area as well as around the globe. MPSI is regulated by various U.S. state agencies that generally require the Company to maintain a pool of assets with an investment rating bearing one of the three highest grades as defined by a nationally recognized rating agency ("permissible investments") in an amount equal to the payment service obligations, as defined by each state, for those regulated payment instruments, namely teller checks, agent checks, money orders and money transfers. The regulatory payment service assets measure varies by state but in all cases excludes investments rated below A-. The most restrictive states may also exclude assets held at banks that do not belong to a national insurance program, varying amounts of accounts receivable balances and/or assets held in the SPE. The regulatory payment service obligations measure varies by state but in all cases is substantially lower than the Company's payment service obligations as disclosed on the Consolidated Balance Sheets as the Company is not regulated by state agencies for payment service obligations primarily resulting from outstanding cashier's checks. We are also subject to licensing or other regulatory requirements in various other jurisdictions. Licensing requirements may include minimum net worth, provision of surety bonds or letters of credit, compliance with operational procedures, agent oversight and the maintenance of settlement assets in an amount equivalent to outstanding payment service obligations, as defined by our various regulators. The regulatory and contractual requirements do not require the Company to specify individual assets held to meet its payment service obligations, nor is the Company required to deposit specific assets into a trust, escrow or other special account. Rather, the Company must maintain a pool of liquid assets sufficient to comply with the requirements. No third-party places limitations, legal or otherwise, on the Company regarding the use of its individual liquid assets. The Company is able to withdraw, deposit or sell its individual liquid assets at will, with no prior notice or penalty, provided the Company maintains a total pool of liquid assets sufficient to meet the regulatory and contractual requirements. Regulatory requirements also require MPSI to maintain positive net worth, with certain states requiring that MPSI maintain positive tangible net worth. The Company was in compliance with its contractual and financial regulatory requirements as of December 31, 2022. The following table summarizes the amount of settlement assets and payment service obligations as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Settlement assets: | | | | | Settlement cash and cash equivalents | | $ | 1,499.1 | | | $ | 1,895.7 | | Receivables, net | | 1,107.0 | | | 700.4 | | Interest-bearing investments | | 998.1 | | | 992.3 | | Available-for-sale investments | | 3.0 | | | 3.0 | | | | $ | 3,607.2 | | | $ | 3,591.4 | | Payment service obligations | | $ | (3,607.2) | | | $ | (3,591.4) | |
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v3.22.4
Fair Value Measurement
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12 Months Ended |
Dec. 31, 2022 |
Fair Value Disclosures [Abstract] |
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Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring |
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Under the hierarchy, the highest priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), followed by observable inputs (Level 2) and unobservable inputs (Level 3). A financial instrument's level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the Company's valuation methodologies used to estimate the fair value for assets and liabilities: Assets and liabilities that are measured at fair value on a recurring basis: •Available-for-sale investments — For residential mortgage-backed securities issued by U.S. government agencies, fair value measures are obtained from an independent pricing service. As market quotes are generally not readily available or accessible for these specific securities, the pricing service measures fair value through the use of pricing models utilizing reported market quotes adjusted for observable inputs, such as market prices for comparable securities, spreads, prepayment speeds, yield curves and delinquency rates. Accordingly, these securities are classified as Level 2 financial instruments. For asset-backed and other securities, which include investments in limited partnerships, market quotes are generally not available. The Company utilizes broker quotes to measure market value, if available. Because the inputs and assumptions that brokers use to develop prices are unobservable, valuations that are based on brokers' quotes are classified as Level 3. Also, the Company uses pricing services that utilize pricing models based on market observable and unobservable data. The observable inputs include quotes for comparable securities, yield curves, default indices, interest rates, historical prepayment speeds and delinquency rates. These pricing models also apply an inactive market adjustment as a significant unobservable input. Accordingly, asset-backed and other securities valued using third-party pricing models are classified as Level 3. •Derivative financial instruments — Derivatives consist of forward contracts to manage income statement exposure to non-U.S. dollar exchange risk arising from the Company's assets and liabilities denominated in non-U.S. dollar currencies. The Company's forward contracts are well-established products, allowing the use of standardized models with market-based inputs. These models do not contain a high level of subjectivity, and the inputs are readily observable. Accordingly, the Company has classified its forward contracts as Level 2 financial instruments. See Note 6 — Derivative Financial Instruments for additional disclosure on the Company's forward contracts. There were no transfers between Level 1 and Level 2, or transfers into or out of level 3 of the fair value hierarchy. The following table summarizes the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Level 2 | | Level 3 | | Total | December 31, 2022 | | | | | | | Financial assets: | | | | | | | Available-for-sale investments: | | | | | | | Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | 1.5 | | Asset-backed and other securities | | — | | | 1.5 | | | 1.5 | | Forward contracts | | 5.2 | | | — | | | 5.2 | | Total financial assets | | $ | 6.7 | | | $ | 1.5 | | | $ | 8.2 | | Financial liabilities: | | | | | | | Forward contracts | | $ | 3.3 | | | $ | — | | | $ | 3.3 | | | | | | | | | December 31, 2021 | | | | | | | Financial assets: | | | | | | | Available-for-sale investments: | | | | | | | Residential mortgage-backed securities | | $ | 2.3 | | | $ | — | | | $ | 2.3 | | Asset-backed and other securities | | — | | | 0.7 | | | 0.7 | | Forward contracts | | 0.1 | | | — | | | 0.1 | | Total financial assets | | $ | 2.4 | | | $ | 0.7 | | | $ | 3.1 | | Financial liabilities: | | | | | | | Forward contracts | | $ | 0.2 | | | $ | — | | | $ | 0.2 | |
The following table provides a roll-forward of the asset-backed and other securities classified as Level 3, which are measured at fair value on a recurring basis for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 0.7 | | | $ | 0.5 | | | $ | 0.9 | | | | | | | | | Change in unrealized gains (losses) | | 0.8 | | | 0.2 | | | (0.4) | | | | | | | | | Ending balance | | $ | 1.5 | | | $ | 0.7 | | | $ | 0.5 | |
Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair values of the Term Loan, Senior Secured Notes and First Lien Credit Facility are estimated using an observable market quotation (Level 2). The fair value of the second lien credit facility is estimated using unobservable market inputs (Level 3), including broker quotes for comparable traded securities and yield curves. The following table provides the carrying value and fair value for the credit facilities and the senior secured notes as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | | Carrying value | | Fair value | | Carrying value | | Fair value | Term Loan | | $ | 380.0 | | | $ | 378.6 | | | $ | 384.0 | | | $ | 383.5 | | Senior Secured Notes | | $ | 415.0 | | | $ | 420.2 | | | $ | 415.0 | | | $ | 421.2 | |
The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, receivables, interest-bearing investments and payment service obligations approximate fair value as of December 31, 2022 and 2021. The Company records the investments in its Pension Plan trust at fair value. The majority of the Pension Plan's investments is common/collective trusts held by the Pension Plan's trustee. The fair values of the Pension Plan's investments are determined based on the current market values of the underlying assets. See Note 10 — Pension and Other Benefits for additional disclosure of investments held by the Pension Plan. Assets and liabilities measured at fair value on a non-recurring basis — Assets and liabilities that are measured at fair value on a non-recurring basis relate primarily to the Company's property and equipment, goodwill and other intangible assets, which are remeasured only in the event of an impairment. Fair value remeasurements are normally based on significant unobservable inputs (Level 3). Tangible and intangible asset fair values are derived using accepted valuation methodologies. If it is determined an impairment has occurred, the carrying value of the asset is reduced to fair value with a corresponding charge to "Other expenses" in the Consolidated Statements of Operations.
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v3.22.4
Investment Portfolio
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12 Months Ended |
Dec. 31, 2022 |
Investments [Abstract] |
|
Investment Portfolio |
The Company's portfolio is invested in cash and cash equivalents, interest-bearing investments and available-for-sale investments as described in Note 2 — Summary of Significant Accounting Policies. The following table shows the components of the investment portfolio as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | | | | | | | | | | Cash and cash equivalents and settlement cash and cash equivalents | | $ | 1,671.2 | | | $ | 2,050.9 | | Interest-bearing investments | | 998.1 | | | 992.3 | | Available-for-sale investments | | 3.0 | | | 3.0 | | Total investment portfolio | | $ | 2,672.3 | | | $ | 3,046.2 | |
Cash and Cash Equivalents and settlement cash and cash equivalents — Cash and cash equivalents and settlement cash and cash equivalents consist of interest-bearing deposit accounts, non-interest-bearing transaction accounts and money market securities. The Company's money market securities are invested in one fund, which is AAA rated and consists of U.S. Treasury bills, notes or other obligations issued or guaranteed by the U.S. government and its agencies, as well as repurchase agreements secured by such instruments. Interest-bearing Investments — Interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months and are issued from financial institutions rated A- or better as of December 31, 2022. Available-for-sale Investments — Available-for-sale investments consist of residential mortgage-backed securities and asset-backed and other securities. The following table is a summary of the amortized cost and fair value of available-for-sale investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | December 31, 2022 | | | | | | | | | Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | — | | | $ | 1.5 | | Asset-backed and other securities | | — | | | 1.5 | | | — | | | 1.5 | | Total | | $ | 1.5 | | | $ | 1.5 | | | $ | — | | | $ | 3.0 | | | | | | | | | | | December 31, 2021 | | | | | | | | | Residential mortgage-backed securities | | $ | 2.1 | | | $ | 0.2 | | | $ | — | | | $ | 2.3 | | Asset-backed and other securities | | — | | | 0.7 | | | — | | | 0.7 | | Total | | $ | 2.1 | | | $ | 0.9 | | | $ | — | | | $ | 3.0 | |
As of December 31, 2022 and 2021, 50% and 77%, respectively, of the fair value of the available-for-sale portfolio were invested in residential mortgage-backed securities issued by U.S. government agencies. These securities have the implicit backing of the U.S. government and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments. Gains and Losses — For the years ended December 31, 2022, 2021 and 2020, the Company had no realized gains and losses. Investment Ratings — In rating the securities in its investment portfolio, the Company uses ratings from Moody's Investor Service ("Moody's"), Standard & Poor's ("S&P") and Fitch Ratings ("Fitch"). If the rating agencies have split ratings, the Company uses the lower of the highest two out of three ratings across the rating agencies for disclosure purposes. If the institution has only two ratings, the Company uses the lower of the two ratings for disclosure purposes. Securities issued or backed by U.S. 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 consisted of the following ratings as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | (Dollar amounts in millions) | | Number of Securities | | Fair Value | | Percent of Investments | | Number of Securities | | Fair Value | | Percent of Investments | Investment grade | | 9 | | | $ | 1.5 | | | 50 | % | | 9 | | | $ | 2.3 | | | 78 | % | Below investment grade | | 33 | | | 1.5 | | | 50 | % | | 33 | | | 0.7 | | | 22 | % | Total | | 42 | | | $ | 3.0 | | | 100 | % | | 42 | | | $ | 3.0 | | | 100 | % |
Had the Company used the lowest rating from the rating agencies in the information presented above, there would be no change to the classifications as of December 31, 2022 and 2021. Contractual Maturities — Actual maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations, sometimes without call or prepayment penalties. Maturities of residential mortgage-backed and asset-backed and other securities depend on the repayment characteristics and experience of the underlying obligations. 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 as of December 31, 2022 and 2021, 89% and 93% used a third-party pricing service and 11% and 7% used broker quotes, respectively.
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v3.22.4
Derivative Financial Instruments
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12 Months Ended |
Dec. 31, 2022 |
Derivative Instrument Detail [Abstract] |
|
Derivative Financial Instruments |
The Company uses forward contracts to manage its non-U.S. dollar needs and non-U.S. dollar exchange risk arising from its assets and liabilities denominated in non-U.S. dollars. While these contracts may mitigate certain non-U.S. dollar risk, they are not designated as hedges for accounting purposes and will result in gains and losses in the Consolidated Statements of Operations. The Company also reports gains and losses from the spread differential between the rate set for its transactions and the actual cost of currency at the time the Company buys or sells in the open market. The following net gains (losses) related to assets and liabilities denominated in non-U.S. dollar are included in "Transaction and operations support" in the Consolidated Statements of Operations and in the "Net cash provided by operating activities" line in the Consolidated Statements of Cash Flows: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Net realized non-U.S. dollar (loss) gain | | $ | (38.2) | | | $ | (20.4) | | | $ | 26.6 | | Net gain (loss) from the related forward contracts | | 39.8 | | | 18.4 | | | (11.9) | | Net gain (loss) from the related forward contracts | | $ | 1.6 | | | $ | (2.0) | | | $ | 14.7 | |
As of December 31, 2022 and 2021, the Company had $816.0 million and $698.7 million, respectively, of outstanding notional amounts relating to its non-U.S. dollar forward contracts. As of December 31, 2022 and 2021, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets on a net basis, allowing for the right of offset by counterparty and cash collateral: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Gross Amount of Recognized Assets | | Gross Amount of Offset | Cash Collateral Posted | | Net Amount of Assets Presented on the Consolidated Balance Sheets | | | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 | | | "Other assets" | | $ | 1.8 | | | $ | 0.4 | | | $ | (1.6) | | | $ | (0.3) | | $ | 5.0 | | | $ | — | | | $ | 5.2 | | | $ | 0.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Gross Amount of Recognized Liabilities | | Gross Amount of Offset | Cash Collateral Received | | Net Amount of Liabilities Presented on the Consolidated Balance Sheets | | | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 | | | "Accounts payable and other liabilities" | | $ | 4.9 | | | $ | 0.6 | | | $ | (1.6) | | | $ | (0.4) | | $ | — | | | $ | — | | | $ | 3.3 | | | $ | 0.2 | |
The Company's forward contracts are primarily executed with counterparties governed by International Swaps and Derivatives Association agreements that generally include standard netting arrangements. Asset and liability positions from forward contracts and all other non-U.S. dollar exchange transactions with the same counterparty are net settled upon maturity. In addition, the Company nets derivative liabilities against any receivables for cash collateral placed with the same counterparties. The Company is exposed to credit loss in the event of non-performance by counterparties to its derivative contracts. The Company actively monitors its exposure to credit risk through the use of credit approvals and credit limits and by selecting major international banks and financial institutions as counterparties. Collateral generally is not required of the counterparties, however, it is required of the Company in some contracts. In the unlikely event the counterparty fails to meet the contractual terms of the derivative contract, the Company's risk is limited to the fair value of the instrument. The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.
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v3.22.4
Property and Equipment
|
12 Months Ended |
Dec. 31, 2022 |
Property, Plant and Equipment [Abstract] |
|
Property and Equipment |
The following table is a summary of "Property and equipment, net" as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Computer hardware and software | | $ | 476.2 | | | $ | 529.9 | | Signage | | 41.6 | | | 50.6 | | Equipment at agent locations | | 47.9 | | | 50.2 | | Office furniture and equipment | | 11.6 | | | 19.5 | | Leasehold improvements | | 21.1 | | | 22.1 | | Total property and equipment | | 598.4 | | | 672.3 | | Accumulated depreciation and amortization | | (463.9) | | | (538.4) | | Total property and equipment, net | | $ | 134.5 | | | $ | 133.9 | |
Depreciation and amortization expense for property and equipment for 2022, 2021 and 2020 was $51.3 million, $56.4 million and $63.9 million, respectively. No impairments of property and equipment were recorded during 2022, 2021 and 2020. At December 31, 2022 and 2021, the Company had $0.3 million and $1.7 million, respectively, in accrued purchases of property and equipment included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. During 2022, 2021 and 2020 the Company had nominal losses related to disposals of its property and equipment. The loss was recorded within "Occupancy, equipment and supplies" in the Consolidated Statements of Operations. For the years ended December 31, 2022 and 2021, software development costs of $45.2 million and $35.0 million, respectively, were capitalized. At December 31, 2022 and 2021, there were $113.6 million and $104.3 million, respectively, of unamortized software development costs included in property and equipment. For the years ended December 31, 2022 and 2021, the Company had $5.8 million and $1.0 million, respectively, in net capitalized implementation costs related to hosting arrangements that are service contracts. These costs are recorded within "Other assets" on the Consolidated Balance Sheets and the related amortization is recorded in the same line item in the Consolidated Statements of Operations as other fees associated with the service arrangements.
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- DefinitionThe entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections.
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v3.22.4
Goodwill and Intangible Assets
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12 Months Ended |
Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] |
|
Goodwill and Intangible Assets Disclosure |
Goodwill — The Company's goodwill balance was $442.2 million as of December 31, 2022 and 2021, and all relates to the GFT segment. During the fourth quarter of 2022 and 2021, the Company performed a qualitative assessment of goodwill and a quantitative impairment test during the fourth quarter of 2020. No impairments of goodwill were recorded in 2022, 2021 and 2020. Intangibles — All of the Company's intangible assets are included within "Other assets" on the Consolidated Balance Sheets. The following table is a summary of finite-lived intangible assets as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | (Amounts in millions) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | Contractual and customer relationships | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.1 | | | $ | (3.7) | | | $ | 0.4 | | Developed technology | | — | | | — | | | — | | | 0.6 | | | (0.6) | | | — | | Total finite-intangible assets | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.7 | | | $ | (4.3) | | | $ | 0.4 | |
Intangible asset amortization expense for 2022, 2021 and 2020 was $0.4 million, $0.6 million and $0.5 million, respectively. There is no future intangible asset amortization expense
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- DefinitionThe entire disclosure for goodwill and intangible assets.
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v3.22.4
Debt
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12 Months Ended |
Dec. 31, 2022 |
Debt Disclosure [Abstract] |
|
Debt |
The following is a summary of the Company's outstanding debt as of December 31: | | | | | | | | | | | | | | | (Amounts in millions, except percentages) | | 2022 | | 2021 | 8.57% Term Loan due 2026 | | $ | 380.0 | | | $ | 384.0 | | 5.375% Senior Secured Notes due 2026 | | 415.0 | | | 415.0 | | Total debt at face value | | 795.0 | | | 799.0 | | Unamortized debt issuance costs and debt discounts | | (9.6) | | | (12.3) | | Total debt, net | | $ | 785.4 | | | $ | 786.7 | |
Indenture and New Credit Agreement — On July 21, 2021, the Company entered into a new credit agreement (the "New Credit Agreement") with the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and completed its previously announced private offering of $415.0 million aggregate principal amount of 5.375% senior secured notes due 2026 (the "Senior Secured Notes" or "Notes" and such offering, the "Notes Offering") and related guarantees. The New Credit Agreement provides for (i) a senior secured five-year term loan in an aggregate principal amount of $400.0 million (the "Term Loan") and (ii) a senior secured four-year revolving credit facility that may be used for revolving credit loans, swingline loans and letters of credit (the "Revolving Credit Facility") and together with the Term Loan, the "New Credit Facilities") up to an initial aggregate principal amount of $32.5 million which was increased to $40.0 million in December 2021. The interest rate spread applicable to loans under the Term Loan is 3.50% per annum for base rate loans and 4.50% for LIBOR rate loans. For purposes of the Term Loan, the LIBOR rate is subject to a 0.50% per annum floor and for purposes of the Revolving Credit Facility the LIBOR rate is subject to a 0.0% floor. As of December 31, 2022 and 2021, LIBOR rate was 4.07% and 0.50%, and interest rate was 8.57% and 5.00%, respectively, for the Term Loan. As of December 31, 2022, the Company had no borrowings and no outstanding letters of credit under its Revolving Credit Facility. The New Credit Facilities were secured by substantially all of the Company's assets and its material domestic subsidiaries that guarantee the payment and performance of the Company's obligations under the Credit Facilities. Prepayment — On June 28, 2021, the Company prepaid $100.0 million of principal balance under its Second Lien Credit Agreement utilizing the proceeds under the ATM Program plus cash on hand as defined and further discussed in Note 11 — Stockholders' Deficit. On July 21, 2021, the proceeds from the notes offering, together with borrowings under the Term Loan, were used to prepay the full amount of outstanding indebtedness under the Prior Credit Facilities, as defined below and to pay related accrued interest, fees and expenses. Simultaneous with the prepayment, the Prior Credit Facilities were terminated. In the fourth quarter of 2021, the Company prepaid a total of $16.0 million of principal balance under its New Credit Agreement. During the year ended December 31, 2021, the Company recorded a loss on early extinguishment of debt of $44.1 million which included $16.5 million of prepayment call premium and $27.6 million associated with the write-off of debt issuance costs and debt discounts. The Company also paid accrued interest of $7.0 million. Debt Covenants and Other Restrictions — The New Credit Agreement requires the Company and its consolidated subsidiaries to maintain a minimum interest coverage ratio of 2.150:1.000 and to not exceed a total net leverage ratio of 4.750:1.000. The asset coverage covenant contained in the New Credit Agreement requires the aggregate amount of the Company's cash and cash equivalents and other settlement assets to exceed its aggregate payment service obligations. As of December 31, 2022, the Company was in compliance with its financial covenants: our interest coverage ratio was 4.742 to 1.000, our total net leverage ratio was 3.137 to 1.000 and our assets in excess of payment service obligations used for the asset coverage calculation were $172.1 million. We continuously monitor our compliance with our debt covenants. Debt Issuance Costs —For the Term Loan and the Notes, the Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness and amortizes these costs over the term of the related debt liability using the effective interest method. For the Revolving Credit Facility, the Company presents debt issuance costs within "Other assets" on its Consolidated Balance Sheets and amortizes these costs ratably over the term of the Revolving Credit Facility. Amortization of debt issuance costs is recorded within "Interest expense" on the Consolidated Statements of Operations. There were no unamortized costs associated with the Revolving Credit Facility as of December 31, 2022 and 2021. Debt Discount — The Company records debt discount as a deduction from the carrying amount of the related indebtedness on its Consolidated Balance Sheets with the respective debt discount amortization recorded within "Interest expense." Maturities — At December 31, 2022, debt totaling $781.0 million will mature in July 2026, with debt principal totaling $14.0 million will be paid quarterly in increments of $1.0 million through the maturity date. Any borrowings under the Revolving Credit Facility will mature in July 2025.
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- DefinitionThe entire disclosure for long-term debt.
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v3.22.4
Pension and Other Benefits
|
12 Months Ended |
Dec. 31, 2022 |
Retirement Benefits [Abstract] |
|
Pension and Other Benefits |
Pension Benefits — The Company's Pension Plan is a frozen, non-contributory funded plan under which no new service or compensation credits are accrued by the plan participants. Cash accumulation accounts continue to be credited with interest credits until participants withdraw their money from the Pension Plan. It is the Company's policy to fund at least the minimum required contribution each year plus additional discretionary amounts as available and necessary to minimize expenses of the plan. Supplemental Executive Retirement Plans — The Company has obligations under various legacy SERPs, which are unfunded non-qualified defined benefit pension plans providing postretirement income to their participants. As of December 31, 2022, all benefit accruals under the SERPs are frozen with the exception of one plan for which service is frozen but future pay increases are reflected for active participants. It is the Company's policy to fund the SERPs as benefits are paid. The Company's Pension Plan and SERPs are collectively referred to as our "Pension." Postretirement Benefits Other Than Pensions — The Company has an unfunded defined benefit postretirement plan ("Postretirement Benefits") that provides medical and life insurance for its participants. The Company amended the Postretirement Benefits to close it to new participants as of December 31, 2009. Effective July 1, 2011, the Postretirement Benefits was amended to eliminate eligibility for participants eligible for Medicare coverage. As a result of this plan amendment, the Company no longer receives the Medicare retiree drug subsidy. The Company's funding policy is to make contributions to the Postretirement Benefits as benefits are paid. Actuarial Valuation Assumptions — The measurement date for the Company's Pension and Postretirement Benefits is December 31. The following table is a summary of the weighted-average actuarial assumptions used in calculating net periodic benefit expense (income) and the benefit obligation for the years ended and as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan | | SERPs | | Postretirement Benefits | | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | Net periodic benefit expense (income): | | | | | | | | | | | | | | | | | | | Discount rate for benefit obligation | | 2.86 | % | | 2.51 | % | | 3.23 | % | | 2.81 | % | | 2.41 | % | | 3.18 | % | | 2.95 | % | | 2.64 | % | | 3.33 | % | Discount rate for interest cost | | 2.33 | % | | 1.86 | % | | 2.83 | % | | 2.16 | % | | 1.62 | % | | 2.70 | % | | 2.22 | % | | 1.74 | % | | 2.77 | % | Expected return on plan assets | | 2.76 | % | | 1.80 | % | | 2.07 | % | | — | | | — | | | — | | | — | | | — | | | — | | Cash balance interest crediting rate | | 1.92 | % | | 1.36 | % | | 1.73 | % | | — | | | — | | | — | | | — | | | — | | | — | | Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | | Medical trend rate: | | | | | | | | | | | | | | | | | | | Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.38 | % | | 6.46 | % | | 6.79 | % | Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.64 | % | | 7.08 | % | | 7.51 | % | Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % | Year ultimate healthcare cost trend rate is reached for pre/post-65, respectively | | — | | | — | | | — | | | — | | | — | | | — | | | 2030 | | 2028 | | 2025 | Benefit obligation: | | | | | | | | | | | | | | | | | | | Discount rate | | 5.17 | % | | 2.86 | % | | 2.51 | % | | 5.15 | % | | 2.81 | % | | 2.41 | % | | 5.22 | % | | 2.95 | % | | 2.64 | % | Cash balance interest crediting rate | | 3.13 | % | | 1.92 | % | | 1.36 | % | | — | | | — | | | — | | | — | | | — | | | — | | Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | | Medical trend rate: | | | | | | | | | | | | | | | | | | | Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.87 | % | | 6.38 | % | | 6.46 | % | Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 7.26 | % | | 6.64 | % | | 7.08 | % | Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % | Year ultimate healthcare cost trend rate is reached for pre/post-65 | | — | | | — | | | — | | | — | | | — | | | — | | | 2031 | | 2030 | | 2028 |
The Company utilizes a building-block approach in determining the long-term expected rate of return on plan assets. The expected return on plan assets is calculated using a calculated value of plan assets that is determined each year by adjusting the previous year's value by expected returns, benefit payments and contributions. Asset gains and losses are reflected as equal adjustments over a three-year period. Historical markets are studied and long-term historical relationships between equity securities and fixed income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capital market assumptions are determined. The long-term portfolio return also takes proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed for reasonableness and appropriateness. Actuarial gains and losses are amortized using the Corridor approach, by amortizing the balance exceeding 10% of the greater of the benefit obligation or the fair value of plan assets. The amortization period is primarily based on the average remaining expected life of plan participants for the Pension and the average remaining expected life of plan participants for the Postretirement Benefits. The Company estimated the interest cost components utilizing a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to their underlying projected cash flows. Pension Assets — The Company employs a liability-driven investment approach whereby a mix of equity and fixed income securities are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income securities. Furthermore, equity securities are diversified across large and small capitalized securities and international securities. Other assets, such as real estate and high yield bonds, are used to further diversify equity allocations. Fixed income securities are primarily invested in a mix of investment grade corporate bonds, government bonds and a smaller allocation to non-investment grade debt. The Company uses a dynamic strategy to determine the allocation of return-seeking assets driven by the Pension Plan's funded ratio so that when the funded status increases above prescribed levels, the allocation to equities will decrease and fixed income increase proportionally. Investment risk is measured and monitored on an ongoing basis, including quarterly investment portfolio reviews and periodic liability measurements. As of December 31, 2022, the Pension assets consisted of approximately 6% in equity securities, 81% in fixed income and 13% in real estate. The Company records its Pension Plan's assets at fair value as described in Note 4 — Fair Value Measurement. The following is a description of the Pension Plan's investments at fair value and valuation methodologies: •Common/collective trusts — The fair values of the underlying funds in the common/collective trusts are valued based on the unit value established for each fund at each valuation date. The unit value of a collective investment fund is calculated by dividing the fund's net asset value on the calculation date by the number of units of the fund that are outstanding on the calculation date, which is derived from observable purchase and redemption activity in the collective investment fund. •Money market fund — This investment is valued at the published per share net asset value of shares held by the Plan. There are no significant restrictions on redeeming these investments at net asset value. •Real estate — The Pension Plan trust holds an investment in a real estate development project that the Company considers to be a Level 3 asset for valuation purposes because it requires the use of unobservable inputs in its fair value measurement. The fair value of this investment represents the estimated fair value of the plan's related ownership percentage in the project based upon an appraisal of the underlying real property as of each balance sheet date. The fund investment strategy for this asset is long-term capital appreciation. The following table is a summary of the Pension Plan's financial assets recorded at fair value, by hierarchy level: | | | | | | | | | | | | | | | | | (Amounts in millions) | | | | Level 3 | | Total | December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | $ | 4.5 | | | $ | 4.5 | | Total investments in the fair value hierarchy | | | | 4.5 | | | 4.5 | | Investments measured at net asset value (1) | | | | | | 30.9 | | Total financial assets | | | | | | $ | 35.4 | | | | | | | | | December 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | $ | 4.2 | | | $ | 4.2 | | Total investments in the fair value hierarchy | | | | 4.2 | | | 4.2 | | Investments measured at net asset value (1) | | | | | | 41.1 | | Total financial assets | | | | | | $ | 45.3 | |
(1) Common/collective trusts investments and money market funds that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets presented in the summary of plan assets further below. The Company does not have participant redemption restrictions for its common/collective trust investments. The following table sets forth additional disclosures for the Pension Plan assets fair value estimated using net asset value per share: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Fair Value | | Redemptions Frequency (if currently eligible) | | Redemption Notice Period | December 31, 2022 | | | | | | | Money market fund | | $ | 0.9 | | | Daily | | Same day | Multi-asset credit fund | | 0.4 | | | Monthly | | 10 Days | Equity and fixed income securities | | 29.6 | | | Daily | | 15 Days | Investments measured at net asset value | | $ | 30.9 | | | | | | | | | | | | | | | | | | | | December 31, 2021 | | | | | | | Money market fund | | $ | 0.9 | | | N/A | | N/A | Multi-asset credit fund | | 0.8 | | | Monthly | | 10 Days | Equity and fixed income securities | | 39.4 | | | Daily | | 15 Days | Investments measured at net asset value | | $ | 41.1 | | | | | |
Plan Financial Information — Net periodic benefit expense for the Pension includes the following components for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | (Amounts in millions) | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | Interest cost | | $ | 2.4 | | | $ | 2.0 | | | $ | 3.1 | | | $ | — | | | $ | — | | | $ | — | | Expected return on plan assets | | (1.2) | | | (0.7) | | | (0.8) | | | 0.1 | | | — | | | — | | Amortization of net actuarial loss | | 2.3 | | | 2.4 | | | 2.0 | | | — | | | 0.1 | | | 0.1 | | Settlement gain | | (0.5) | | | — | | | — | | | — | | | — | | | — | | Amortization of prior service cost | | — | | | — | | | 0.1 | | | — | | | — | | | — | | Net periodic benefit expense | | $ | 3.0 | | | $ | 3.7 | | | $ | 4.4 | | | $ | 0.1 | | | $ | 0.1 | | | $ | 0.1 | |
Net periodic benefit expense for the Pension and Postretirement Benefits is recorded within "Other non-operating expense" in the Consolidated Statements of Operations. Settlement charge, amortization of net actuarial loss and prior service cost were reclassified out of the components of "Accumulated other comprehensive loss". The following tables are a summary of the amounts recognized in other comprehensive income (loss) and net periodic benefit expense for the years ended December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | Pension | | Postretirement Benefits | 2022 | | | | | Net actuarial gain | | $ | (7.3) | | | $ | — | | Amortization of net actuarial loss | | (2.3) | | | — | | Settlement gain | | 0.5 | | | — | | Total recognized in other comprehensive loss | | (9.1) | | | — | | Total recognized in net periodic benefit expense | | 3.0 | | | 0.1 | | Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (6.1) | | | $ | 0.1 | | 2021 | | | | | Net actuarial gain | | $ | (1.8) | | | $ | — | | Amortization of net actuarial loss | | (2.4) | | | (0.1) | | | | | | | Total recognized in other comprehensive loss | | (4.2) | | | (0.1) | | Total recognized in net periodic benefit expense | | 3.7 | | | 0.1 | | Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (0.5) | | | $ | — | | 2020 | | | | | | | | | | Net actuarial loss (gain) | | 4.5 | | | (0.1) | | Amortization of net actuarial loss | | (2.0) | | | (0.1) | | Amortization of prior service cost | | (0.1) | | | — | | Total recognized in other comprehensive income | | 2.4 | | | (0.2) | | Total recognized in net periodic benefit expense | | 4.4 | | | 0.1 | | Total recognized in other comprehensive income and net periodic benefit expense | | $ | 6.8 | | | $ | (0.1) | |
The following table is a summary of the unfunded status of the Pension and Postretirement Benefits, which is recorded within "Pension and other postretirement benefits" on the Consolidated Balance Sheets and changes to the benefit obligation and plan assets as of and for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | | Total | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | Change in benefit obligation: | | | | | | | | | | | | | Benefit obligation at the beginning of the year | | $ | 111.9 | | | $ | 120.1 | | | $ | 0.6 | | | $ | 0.6 | | | $ | 112.5 | | | $ | 120.7 | | | | | | | | | | | | | | | Interest cost | | 2.4 | | | 2.0 | | | — | | | — | | | 2.4 | | | 2.0 | | Actuarial (gain) loss | | (18.6) | | | (2.6) | | | 0.1 | | | — | | | (18.5) | | | (2.6) | | Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | | Benefit obligation at the end of the year | | 88.4 | | | 111.9 | | | 0.5 | | | 0.6 | | | 88.9 | | | 112.5 | | | | | | | | | | | | | | | Change in plan assets: | | | | | | | | | | | | | Fair value of plan assets at the beginning of the year | | 45.4 | | | 46.2 | | | — | | | — | | | 45.4 | | | 46.2 | | | | | | | | | | | | | | | Actual return on plan assets | | (10.0) | | | (0.1) | | | — | | | — | | | (10.0) | | | (0.1) | | Employer contributions | | 7.5 | | | 6.9 | | | 0.2 | | | — | | | 7.7 | | | 6.9 | | Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | | Fair value of plan assets at the end of the year | | 35.6 | | | 45.4 | | | — | | | — | | | 35.6 | | | 45.4 | | Unfunded status at the end of the year | | $ | 52.8 | | | $ | 66.5 | | | $ | 0.5 | | | $ | 0.6 | | | $ | 53.3 | | | $ | 67.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In 2022, the net actuarial gain of $18.6 million affecting the benefit obligation of the Pension was due to the increase in discount rate. Net actuarial loss affecting the benefit obligation of the Postretirement Benefits was $0.1 million. In 2021, the net actuarial gain of $2.6 million affecting the benefit obligation of the Pension was due to the increase in discount rate and no material net actuarial gain or loss affecting the benefit obligation of the Postretirement Benefits. In October 2022, the Retirement Plans Experience Committee ("RPEC") of the Society of Actuaries ("SOA") issued a mortality improvement update. The Company adopted the mortality projection scales on its measurement date, which decreased the Pension Plan benefit obligation. The unfunded status of the Pension Plan was $3.1 million and $3.3 million at December 31, 2022 and 2021, respectively, and the unfunded status of the SERPs was $49.7 million and $63.2 million at December 31, 2022 and 2021, respectively. The following table summarizes the components recognized in "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets relating to the Pension and Postretirement Benefits as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | | Total | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | Accumulated other comprehensive loss: | | | | | | | | | | | | | Net actuarial loss, net of tax | | $ | 28.1 | | | $ | 35.2 | | | $ | 0.3 | | | $ | 0.2 | | | $ | 28.4 | | | $ | 35.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following table summarizes the accumulated benefit obligation for the Pension and Postretirement Benefits fair value of plan assets as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | Accumulated benefit obligation | | $ | 88.4 | | | $ | 111.9 | | | $ | 0.5 | | | $ | — | | Fair value of plan assets | | $ | 35.6 | | | $ | 45.4 | | | $ | — | | | $ | — | |
The following table summarizes the estimated future benefit payments for the Pension and Postretirement Benefits for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | 2028-2032 | Pension | | $ | 8.4 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.1 | | | $ | 32.1 | | Postretirement benefits | | — | | | — | | | — | | | — | | | — | | | 0.1 | |
The Company has no minimum required contribution for the Pension Plan in 2023. The Company will continue to make contributions to the SERPs and the Postretirement Benefits to the extent benefits are paid. Aggregate benefits paid for the unfunded plans are expected to be $5.5 million in 2023. Employee Savings Plan — The Company has an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended. Contributions to, and costs of, the 401(k) defined contribution plan totaled $4.8 million, $4.4 million and $3.7 million in 2022, 2021 and 2020, respectively. International Benefit Plans — The Company's international subsidiaries have certain defined contribution plans. Contributions to, and costs related to, international plans were $1.5 million, $1.9 million and $2.0 million for 2022, 2021 and 2020, respectively.
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- DefinitionThe entire disclosure for retirement benefits.
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v3.22.4
Stockholders' Deficit
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12 Months Ended |
Dec. 31, 2022 |
Stockholders' Equity Note [Abstract] |
|
Stockholders' Deficit |
Common Stock — The Company's Amended and Restated Certificate of Incorporation, as amended, provides for the issuance of up to 162,500,000 shares of common stock with a par value of $0.01. 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. 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 New Credit Agreement. No dividends were paid in 2022, 2021 or 2020. On June 7, 2021, MoneyGram announced its ATM Program which provided for the offer and sale, from time to time, of shares of its common stock having an aggregate sales price of up to $100.0 million. On June 18, 2021, MoneyGram completed the ATM Program by selling $99.8 million, or 10.4 million shares, at an average price per share of $9.56, resulting in total net proceeds to the Company of 97.2 million. Preferred Stock — The Company's Amended and Restated Certificate of Incorporation provides for the issuance of up to 7,000,000 shares of preferred stock that may be issued in one or more series, with each series to have certain rights and preferences as shall be determined in the unlimited discretion of the Company's Board of Directors, including, without limitation, voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences. Treasury Stock — The Board of Directors has authorized the repurchase of shares up to $50.0 million in the aggregate. As of December 31, 2022, the Company repurchased 1,023,209 shares or $6.1 million in common stock. Series D Participating Convertible Preferred Stock (the "D Stock") — In 2011, the Company issued 71,282 shares out of 200,000 authorized shares of D Stock to Goldman Sachs. Each share of D Stock has a liquidation preference of $0.01 and is convertible into 125 shares of common stock. In 2020, Goldman Sachs converted all of its 71,282 shares of D Stock into 8,910,234 shares of common stock with a par value of $0.01 per share. The following table is a summary of the Company's authorized, issued and outstanding stock as of December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common Stock | | | | | | | | | Authorized | | Issued | | Outstanding | | Treasury Stock | January 1, 2020 | | | | | | | | 162,500,000 | | | 65,061,090 | | | 62,731,184 | | | 2,329,906 | | Release for restricted stock units | | | | | | | | — | | | 56,358 | | | 876,121 | | | 819,763 | | Preferred stock - series D conversion | | | | | | | | — | | | 7,413,322 | | | 8,910,234 | | | 1,496,912 | | December 31, 2020 | | | | | | | | 162,500,000 | | | 72,530,770 | | | 72,517,539 | | | 13,231 | | ATM equity offering | | | | | | | | — | | | 10,441,111 | | | 10,441,111 | | | — | | Exercise of Ripple Warrants | | | | | | | | — | | | 5,948,895 | | | 5,948,895 | | | — | | Release for restricted stock units | | | | | | | | — | | | 2,419,079 | | | 1,877,434 | | | 541,645 | | Exercise of Second Lien Warrants | | | | | | | | — | | | 965,156 | | | 964,212 | | | 944 | | Stock repurchases | | | | | | | | — | | | — | | | (1,023,209) | | | 1,023,209 | | December 31, 2021 | | | | | | | | 162,500,000 | | | 92,305,011 | | | 90,725,982 | | | 1,579,029 | | Exercise of lender warrants | | | | | | | | — | | | 4,458,314 | | | 4,454,159 | | | 4,155 | | Release for restricted stock units | | | | | | | | — | | | 2,200,740 | | | 1,446,291 | | | 754,449 | | December 31, 2022 | | | | | | | | 162,500,000 | | | 98,964,065 | | | 96,626,432 | | | 2,337,633 | |
Accumulated Other Comprehensive Loss — The following table details the components and changes of "Accumulated other comprehensive loss" as of and for the years ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax | | Cumulative non-U.S. dollar Translation Adjustments, Net of Tax | | Pension and Postretirement Benefits Adjustment, Net of Tax | | Total | January 1, 2020 | | $ | 1.6 | | | $ | (28.1) | | | $ | (37.0) | | | $ | (63.5) | | Other comprehensive loss before reclassification | | (0.4) | | | 7.2 | | | (3.4) | | | 3.4 | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.7 | | | 1.7 | | Net current year other comprehensive income | | (0.4) | | | 7.2 | | | (1.7) | | | 5.1 | | December 31, 2020 | | 1.2 | | | (20.9) | | | (38.7) | | | (58.4) | | Other comprehensive income before reclassification | | 0.3 | | | (8.0) | | | 1.4 | | | (6.3) | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.9 | | | 1.9 | | Net current year other comprehensive income | | 0.3 | | | (8.0) | | | 3.3 | | | (4.4) | | December 31, 2021 | | 1.5 | | | (28.9) | | | (35.4) | | | (62.8) | | Other comprehensive loss before reclassification | | 0.7 | | | (9.8) | | | 5.6 | | | (3.5) | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.4 | | | 1.4 | | Net current year other comprehensive loss | | 0.7 | | | (9.8) | | | 7.0 | | | (2.1) | | December 31, 2022 | | $ | 2.2 | | | $ | (38.7) | | | $ | (28.4) | | | $ | (64.9) | |
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- DefinitionThe entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
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v3.22.4
Stock-Based Compensation
|
12 Months Ended |
Dec. 31, 2022 |
Share-Based Payment Arrangement [Abstract] |
|
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. In May 2015, the Company's stockholders approved an amendment and restatement of the 2005 Plan increasing the aggregate number of shares that may be issued from 12,925,000 to 15,425,000 shares. As of December 31, 2022, the Company has remaining authorization to issue future grants of up to 2,383,388 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 share-based awards 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. The Company recognized stock-based compensation expense of $15.0 million, $7.3 million and $6.6 million for the years ended December 31 2022, 2021 and 2020, respectively, all of which related to restricted stock units. Stock Options — All outstanding option awards were 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 option award agreements contain certain forfeiture and non-compete provisions. There were no options granted in 2022, 2021 or 2020. All options granted in 2014, 2013 and 2012 have a term of 10 years. Prior to the fourth quarter of 2011, options granted were either time-based, vesting over a four-year period, or performance-based, vesting over a five-year period. All options issued after the fourth quarter of 2011 are time-based, with options granted in the fourth quarter of 2011 through the first part of 2014 vesting over a four-year period, and the remaining options granted in 2014 vesting over a three-year period, in an equal number of shares each year. The following table is a summary of the Company's stock option activity for the year ended December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) | Options outstanding at December 31, 2021 | | 131,153 | | | $ | 17.54 | | | 1.4 years | | $ | — | | Forfeited/Expired | | (20,378) | | | $ | 17.74 | | | | | | Options outstanding, vested or expected to vest, and exercisable at December 31, 2022 | | 110,775 | | | $ | 17.51 | | | 0.6 years | | $ | — | |
There were no options exercised in 2022, 2021 or 2020. For the year ended December 31, 2022, the Company had no unrecognized stock option expense related to outstanding options. Restricted Stock Units — In 2022 and 2021, the Company granted time-based and performance-based restricted stock units. In 2020 and in 2019, the Company granted only time-based restricted stock units. The time-based restricted stock units vest in three equal installments on each anniversary of the grant date. The performance-based restricted stock units are subject to performance conditions and a one-year performance period. When and if the conditions are satisfied at the end of the one-year performance period, vesting of the performance-based restricted stock units are subject only to the passage of time and vest in three equal installments on each anniversary of the grant date. For purposes of determining the fair value of restricted stock units and performance-based restricted stock units, the fair value 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 grants to employees, expense is recognized in the "Compensation and benefits" line and expense for grants to Non-Employee Directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations using the straight-line method over the vesting period. The following table is a summary of the Company's restricted stock unit activity as of December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Shares | | Weighted-Average Grant-Date Fair Value | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) | Restricted stock units outstanding at December 31, 2021 | | 4,104,547 | | | $ | 3.82 | | | 0.86 years | | $ | 32.4 | | Granted | | 1,777,010 | | | 10.67 | | | | | | Vested | | (2,200,740) | | | 4.63 | | | | | | Forfeited | | (7,302) | | | 7.07 | | | | | | Restricted stock units outstanding at December 31, 2022 | | 3,673,515 | | | $ | 7.45 | | | 0.78 years | | $ | 40.0 | | Restricted stock units vested and deferred at December 31, 2022 | | 174,827 | | | $ | 4.15 | | | | | $ | 1.9 | |
The following table is a summary of the Company's restricted stock unit compensation information for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Weighted-average grant-date fair value of restricted stock units vested during the year | | $ | 10.2 | | | $ | 7.0 | | | $ | 7.5 | | Total intrinsic value of vested and converted shares | | $ | 23.3 | | | $ | 16.1 | | | $ | 2.9 | |
As of December 31, 2022, the Company's outstanding restricted stock units had unrecognized compensation expense of $15.3 million with a remaining weighted-average vesting period of 1.2 years. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented using the Company's current estimate of achievement of performance goals.
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- DefinitionThe entire disclosure for share-based payment arrangement.
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v3.22.4
Income Taxes
|
12 Months Ended |
Dec. 31, 2022 |
Income Tax Disclosure [Abstract] |
|
Income Taxes |
The following table is a summary of the components of income (loss) before income taxes for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | U.S. | | $ | 33.4 | | | $ | (49.8) | | | $ | (0.3) | | Foreign | | 6.4 | | | 6.2 | | | 6.4 | | Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
Foreign income consists of income from the Company's international subsidiaries. Most of the Company's wholly-owned subsidiaries recognize revenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense (benefit) for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Current: | | | | | | | Federal | | $ | 2.2 | | | $ | 0.1 | | | $ | (1.4) | | State | | (2.4) | | | (2.7) | | | 2.1 | | Foreign | | 4.6 | | | 5.7 | | | 4.2 | | Current income tax expense | | 4.4 | | | 3.1 | | | 4.9 | | Deferred: | | | | | | | Federal | | 2.3 | | | (6.6) | | | 7.1 | | State | | (0.9) | | | (0.3) | | | 1.9 | | Foreign | | (0.2) | | | (1.9) | | | 0.1 | | Deferred income tax expense (benefit) | | 1.2 | | | (8.8) | | | 9.1 | | Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
As of December 31, 2022 and 2021, the Company had tax payable of $7.2 million and $16.2 million, respectively and tax receivable of $2.9 million and $2.5 million, respectively. Tax payable and tax receivable are recorded within "Accounts payable and other liabilities" and "Other assets", respectively, on the Consolidated Balance Sheets. The following table is a reconciliation of the expected federal income tax (benefit) expense at statutory rates to the actual income tax (benefit) expense for the years ended in December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Income tax expense (benefit) at statutory federal income tax rate | | $ | 8.4 | | | $ | (9.2) | | | $ | 1.3 | | Tax effect of: | | | | | | | State income tax, net of federal income tax effect | | (0.4) | | | (0.6) | | | (0.4) | | Valuation allowances | | (2.9) | | | 1.7 | | | 12.0 | | International taxes | | 2.0 | | | 1.0 | | | 1.5 | | | | | | | | | Other net permanent differences | | 3.1 | | | 5.3 | | | 1.8 | | U.S. general business credits | | (3.1) | | | (2.6) | | | (3.6) | | Change in unrecognized tax benefits | | (1.5) | | | (1.7) | | | 2.4 | | Stock-based compensation | | (0.7) | | | (0.3) | | | 0.7 | | | | | | | | | | | | | | | | BEAT | | — | | | — | | | (0.6) | | U.S. taxation of foreign earnings | | 0.3 | | | 0.5 | | | (1.1) | | | | | | | | | Other | | 0.4 | | | 0.2 | | | — | | Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
The following table is a summary of the Company's deferred tax assets and liabilities as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Deferred tax assets: | | | | | Basis difference in revalued investments | | $ | 50.2 | | | $ | 50.4 | | Tax loss carryovers | | 16.6 | | | 22.5 | | Tax credit carryovers | | 13.6 | | | 17.7 | | Postretirement benefits and other employee benefits | | 1.7 | | | 5.4 | | Bad debt and other reserves | | 1.4 | | | 1.6 | | Lease liabilities | | 8.8 | | | 10.9 | | Depreciation & amortization | | 20.6 | | | 12.3 | | Interest expense carryovers | | 14.2 | | | 16.3 | | Other | | 4.2 | | | 5.4 | | Valuation allowances | | (76.8) | | | (82.0) | | Total deferred tax assets | | 54.5 | | | 60.5 | | Deferred tax liability: | | | | | Depreciation and amortization and other | | (63.8) | | | (64.0) | | Lease right-of-use assets | | (8.1) | | | (10.2) | | Total deferred tax liability | | (71.9) | | | (74.2) | | Net deferred tax liability | | $ | (17.4) | | | $ | (13.7) | |
The Company offsets deferred tax asset positions with deferred tax liability positions based on right to offset in each respective tax jurisdiction. As of December 31, 2022, net deferred tax asset positions of $5.6 million were included within "Other assets" and net deferred tax liability positions of $23.0 million were included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. As of December 31, 2021, net deferred tax asset positions of $6.0 million were reflected within "Other assets" and net deferred tax liability positions of $19.7 million were included within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The valuation allowances as of December 31, 2022 and 2021, primarily relate to basis differences in revalued investments, capital loss carryovers, U.S. tax credit carryovers U.S. interest expense carryovers and certain state and foreign tax loss carryovers. The net $5.2 million decrease in our valuation allowances reflects a net release of $2.9 million through earnings, a decrease of $1.4 million through other comprehensive loss and a $0.9 million decrease with corresponding adjustments to the respective deferred tax asset. As of December 31, 2022, the Company is no longer in a three-year cumulative pre-tax loss position. However, the Company will maintain a valuation allowance on applicable deferred tax assets until there is sufficient evidence to support the reversal of any or all of these valuation allowances. The Company continues to analyze the positive and negative evidence in determining the need for a valuation allowance with respect to its deferred tax assets. It is reasonably possible that, within the next 12 months, the valuation allowance could be reduced if there is sufficient evidence indicating it is more than likely than not that all or a portion of the Company's deferred tax assets will be realized. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period in which the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change based on the level of profitability achieved and other applicable evidence. The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected), credit carry-forwards and other expense carry-forwards (not tax effected) as of December 31, 2022: | | | | | | | | | | | | | | | (Amounts in millions) | | Expiration Date | | Amount | U.S. capital loss carry-forwards | | 2023 - 2026 | | $ | 43.1 | | U.S. net operating loss carry-forwards | | 2025 - Indefinite | | $ | 1.8 | | U.S. tax credit carry-forwards | | 2024- 2042 | | $ | 13.6 | | U.S. interest expense carry-forwards | | Indefinite | | $ | 64.4 | |
Unrecognized tax benefits are recorded within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The following table is a reconciliation of unrecognized tax benefits for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 14.7 | | | $ | 19.7 | | | $ | 18.2 | | Additions based on tax positions related to prior years | | 0.3 | | | 1.5 | | | 0.9 | | Additions based on tax positions related to current year | | 0.8 | | | 0.6 | | | 0.6 | | Settlements with cash or attributes | | (4.8) | | | (2.3) | | | — | | | | | | | | | Reductions for tax positions of prior years and other | | (1.9) | | | (4.8) | | | — | | Ending balance | | $ | 9.1 | | | $ | 14.7 | | | $ | 19.7 | |
As of December 31, 2022, 2021 and 2020, the liability for unrecognized tax benefits was $9.1 million, $14.7 million and $19.7 million, respectively, exclusive of interest and penalties. For 2022, 2021 and 2020, the net amount of unrecognized tax benefits that if recognized would impact the effective tax rate was $9.1 million , $14.7 million and $19.7 million, respectively. The Company accrues interest and penalties for unrecognized tax benefits through "Income tax (benefit) expense" in the Consolidated Statements of Operations. For 2022, the Company's liability for interest and penalties decreased by $4.6 million, which was comprised of a net decrease in the accrual of $1.4 million and cash payments of $3.2 million. For 2021 and 2020, the Company’s accrual for interest and penalties decreased by $2.0 million and increased by $1.1 million, respectively. As of December 31, 2022 and 2021, the Company had a liability of $2.8 million and $7.4 million, respectively, accrued for interest and penalties within "Accounts payable and other liabilities." As a result of the Company's completion of its litigation related to its securities losses discussed in more detail in Note 14 — Commitments and Contingencies, the Company is anticipating a $2.9 million decrease to the total amount of state related unrecognized tax benefits by way cash settlements or statute lapses over the next 12 months.
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- DefinitionThe entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
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v3.22.4
Commitments and Contingencies
|
12 Months Ended |
Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] |
|
Commitments and Contingencies |
Letters of Credit — At December 31, 2022, the Company had no borrowings and no outstanding letters of credit under the Revolving Credit Facility. Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation matters. In relation to various legal matters, including those described below, the Company had $7.5 million and $15.8 million of liability recorded in "Accounts payable and other liabilities" in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021, respectively. No charges were recorded in 2022. $13.8 million and a nominal charge were recorded for the year 2021 and 2020, respectively, within "Transaction and operations support" in the Consolidated Statements of Operations. Litigation Commenced Against the Company: Class Action Securities Litigation — On November 14, 2018, a putative securities class action lawsuit was filed in the United States District Court for the Northern District of Illinois against MoneyGram and certain of its executive officers. The lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and alleges that MoneyGram made material misrepresentations regarding its compliance with the stipulated order for permanent injunction and final judgment that MoneyGram entered into with the FTC in October 2009 and with the DPA that MoneyGram entered into with the U.S. Attorney’s Office for the Middle District of Pennsylvania and the U.S. Department of Justice in November 2012. The lawsuit seeks unspecified damages, equitable relief, interest and costs and attorneys' fees. The Company believes the case is without merit and is vigorously defending this matter. On May 16, 2019, MoneyGram filed a motion to dismiss which the court has yet to rule upon. We are unable to predict the outcome, or the possible loss or range of loss, if any, related to this matter. Books and Records Requests — The Company has received multiple requests from various putative shareholders for inspection of books and records pursuant to Section 220 of the Delaware General Corporation Law relating to the subject matter of the putative class lawsuit described in the preceding paragraphs. On February 26, 2019, two of these shareholders filed a petition in the Delaware Court of Chancery to compel MoneyGram to produce books and records in accordance with their request but have since dismissed their action. We are unable to predict the outcome, or the possible loss or range of loss, if any, related to these matters. It is possible that additional shareholder lawsuits could be filed relating to the subject matter of the above putative class action, the Section 220 books and records requests or pertaining to the MDP transaction. Other Matters — The Company is involved in various other 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 or cash flows. Government Investigations: On June 9, 2021, the Government filed an Amended Unopposed Motion to Dismiss that provided additional details about the Company’s satisfaction of its obligations under the DPA and enhancements to the Company’s compliance program. On June 10, 2021, the United States Judge for the Middle District of Pennsylvania signed an Order dismissing the criminal information with prejudice, which effectively discharged the Government’s criminal case against the Company and officially ended the matter. NYDFS — As previously reported, on June 22, 2018, the Company received a request for production of documents from the NYDFS related to the Company’s failure to maintain an effective anti-money laundering program and to adequately supervise certain of the Company’s New York-based agents that conducted suspicious transactions on behalf of customers. This request followed previous inquiries by the NYDFS regarding certain of the Company's New York based agents. Following the June 22, 2018 request for production, the Company received and responded to several inquiries from the NYDFS related to this matter. On March 16, 2022, the Company and the NYDFS entered into a consent order (the “Consent Order”) to resolve this matter. In entering into the Consent Order, the NYDFS acknowledged that there were several mitigating factors with respect to the Consent Order, including that the Company fully cooperated with the NYDFS’s investigation, including by reporting on the results of its internal investigation on the matter, had voluntarily undertaken significant enhancements to its compliance program and had undertaken remediation to prevent similar violations from occurring. Such measures and enhancements include termination of certain agents, the creation of new compliance procedures to increase the authority of compliance personnel within the Company, the implementation of new limits on and supervision of high-risk agents and a substantial increase in the resources allocated to compliance. Pursuant to the Consent Order, the Company agreed to, among other things, pay a civil monetary penalty in the amount of $8.3 million and undertake various reporting obligations. These include the obligation to (i) submit to the NYDFS a written description of the Company’s current compliance program with respect to the supervision of its New York-based agents and update such description with the NYDFS at 12 and 24 months after the date of the Consent Order, (ii) deliver to the NYDFS detailed data of all transactions in the State of New York for the one-year period prior to the date of the Consent Order, and (iii) fully cooperate with the NYDFS regarding all terms of the Consent Order. Pursuant to the Consent Order, the NYDFS agreed that it will take no further action against the Company for the conduct subject to the previous request for production of documents, provided that the Company fully complies with the terms of the Consent Order. The $8.3 million payment, which was made in the first quarter of 2022, is consistent with the estimated amount that the Company previously accrued in the fourth quarter of 2021. CFPB — As previously reported, on February 12, 2020, the Company received a Report of Examination ("ROE") from the CFPB stating that previous findings from a 2019 exam were not remediated, and the matter would be referred to its Enforcement Unit. On March 18, 2020, the Company received a Civil Investigative Demand ("CID") from the CFPB's Enforcement Unit. On June 11, 2020, the Company provided a timely response to the ROE describing the remedial actions taken and that the findings have been substantially remediated. On August 21, 2020, the Company completed its production in response to the CID. On February 25, 2021, the CFPB provided the Company with a Notice and Opportunity to Respond and Advise ("NORA") letter, documenting the CFPB's intent to take legal action against the Company based on four alleged violations under the Remittance Rule, the Electronic Fund Transfer Act (the "EFTA") and the Consumer Financial Protection Act (the "CFPA"). MoneyGram provided the CFPB with its written response to the NORA letter on March 17, 2021. Over the next several months, the Company and the CFPB engaged in negotiations regarding a potential settlement agreement but were ultimately unable to reach an agreed resolution on this matter. On April 21, 2022, the CFPB and the NYAG filed a complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the Company and MoneyGram Payment Systems, Inc., a wholly owned subsidiary of the Company. The Complaint alleges seven counts of violations under the Remittance Rule, the CFPA, the EFTA and New York Executive Law § 63(12) and seeks injunctive relief, restitution, unspecified damages, civil money penalties and costs. On July 5, 2022, the CFPB and the NYAG filed a First Amended Complaint. In response to the First Amended Complaint, on August 4, 2022, The Company filed a consolidated motion to dismiss and to transfer venue to the United States District Court for the Northern District Texas. The CFPB and NYAG responded to the Company's motions on September 19, 2022, and MoneyGram filed its reply brief on October 3, 2022. In a separate matter, on October 19, 2022, the United States Court of Appeals for the Fifth Circuit held the funding structure of the CFPB to be unconstitutional. On November 14, 2022, the Department of Justice ("DOJ"), on behalf of the CFPB, petitioned the Supreme Court for a writ of certiorari to review and reverse the Fifth Circuit's decision. The company had previously challenged the constitutionality of the CFPB's funding structure as part of the Company's motion to dismiss the CFPB's and NYAG's case, which was pending in the Southerm District of New York. In light of the developments, in the Fifth Circuit and the potential for the U.S. Supreme Court to grant cert, MoneyGram filed a letter motion to stay the case which was granted, over the CFPB's and NYAG's objection, by the United States District Court for the Southern District of New York on December 9, 2022. As a result, the current lawsuit will be on hold pending the Supreme Court's ultimate decision. The parties were ordered to promptly file a joint letter apprising the District Court of the Supreme Court's decision to grant or deny the Petition once the Supreme Court issues any decision, which could impact the length of the District Court's stay. MoneyGram continues to believe the case is without merit and intends to vigorously defend this matter. Based on the prior settlement negotiations which have since terminated, the Company had accrued $7.5 million as of December 31, 2021, as our best estimate to settle this matter. Notwithstanding the termination of the settlement discussion and the filing of the lawsuit by the CFPB, we continue to maintain the $7.5 million accrual in accordance with U.S. GAAP as our best loss estimate related to this matter. Other Matters — The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations or cash flows.
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- DefinitionThe entire disclosure for commitments and contingencies.
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v3.22.4
Earnings per Common Share
|
12 Months Ended |
Dec. 31, 2022 |
Earnings Per Share [Abstract] |
|
Earnings per Common Share |
The following table is a reconciliation of the weighted-average share amounts used in calculating earnings (loss) per common share for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Basic and diluted common shares outstanding | | 96.4 | | | 89.7 | | | 77.8 | | Shares related to restricted stock units | | 3.7 | | | — | | | — | | | | | | | | | Diluted common shares outstanding | | 100.1 | | | 89.7 | | | 77.8 | |
Potential common shares issuable to employees upon exercise or conversion of shares under the Company's stock-based compensation plans, and upon exercise of the Ripple Warrants are excluded from the computation of diluted earnings per common share in periods 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, regardless of whether the Company is in a period of net loss available to common shareholders. The following table summarizes the weighted-average potential common shares excluded from diluted earnings (loss) per common share as their effect would be anti-dilutive: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Shares related to stock options | | 0.1 | | | 0.2 | | | 0.3 | | Shares related to restricted stock units | | — | | | 4.2 | | | 4.5 | | Shares related to Ripple Warrants | | — | | | 1.1 | | | 6.0 | | Shares excluded from the computation | | 0.1 | | | 5.5 | | | 10.8 | |
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- DefinitionThe entire disclosure for earnings per share.
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v3.22.4
Segment Information
|
12 Months Ended |
Dec. 31, 2022 |
Segment Reporting [Abstract] |
|
Segment Information |
The Company's reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. The Company has two reporting segments: GFT and FPP. See Note 1 — Description of the Business and Basis of Presentation for further discussion on our segments. Walmart Inc. ("Walmart") is our only agent that is considered major. The following table is a summary of revenue from Walmart as a percentage of each segment and total revenue: | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | | 2020 | Revenue from Walmart as a percentage of GFT revenue | | <10% | | 10 | % | | 13 | % | Revenue from Walmart as a percentage of FPP revenue | | 34 | % | | 35 | % | | 29 | % | Revenue from Walmart as a percentage of total revenue | | <10% | | 11 | % | | 13 | % |
The Company's Chief Operating Decision Maker reviews segment gross profit to assess segment performance and allocate resources. Segment accounting policies are the same as those described in Note 2 — Summary of Significant Accounting Policies. Investment revenue is allocated to each segment based on the average investable balances generated by that segment's sale of payment instruments during the period. The following table is a summary of the total revenue by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT revenue | | | | | | | Money transfer revenue | | $ | 1,190.3 | | | $ | 1,189.2 | | | $ | 1,104.7 | | Bill payment revenue | | 35.6 | | | 39.6 | | | 46.2 | | Total GFT revenue | | 1,225.9 | | | 1,228.8 | | | 1,150.9 | | FPP revenue | | | | | | | Money order revenue | | 44.1 | | | 40.9 | | | 43.4 | | Official check revenue | | 40.1 | | | 13.9 | | | 22.9 | | Total FPP revenue | | 84.2 | | | 54.8 | | | 66.3 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
The following table is a summary of the gross profit by segment and detail of the income (loss) before income taxes for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT gross profit | | $ | 557.7 | | | $ | 545.6 | | | $ | 501.6 | | | | | | | | | FPP gross profit (1) | | 62.2 | | | 53.9 | | | 62.6 | | Total gross profit | | 619.9 | | | 599.5 | | | 564.2 | | Total operating expenses | | 526.7 | | | 525.8 | | | 461.2 | | Total operating income | | 93.2 | | | 73.7 | | | 103.0 | | Interest expense | | 49.4 | | | 69.5 | | | 92.4 | | Loss on early extinguishment of debt | | — | | | 44.1 | | | — | | Other non-operating expense | | 4.0 | | | 3.7 | | | 4.5 | | Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
(1) In periods of extremely low interest rates, it is possible for commissions to be close to zero, resulting in abnormally high gross margin. The following table is a summary of depreciation and amortization expense by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT | | $ | 46.6 | | | $ | 51.3 | | | $ | 57.3 | | FPP | | 5.1 | | | 5.7 | | | 7.1 | | Total depreciation and amortization | | $ | 51.7 | | | $ | 57.0 | | | $ | 64.4 | |
The following table is a summary of capital expenditures by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT | | $ | 47.1 | | | $ | 38.3 | | | $ | 31.5 | | FPP | | 5.2 | | | 4.3 | | | 3.9 | | Total capital expenditures | | $ | 52.3 | | | $ | 42.6 | | | $ | 35.4 | |
The following table sets forth assets by segment as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | GFT | | $ | 1,412.6 | | | $ | 1,269.5 | | FPP | | 3,066.0 | | | 3,169.8 | | Other | | 26.6 | | | 37.2 | | Total assets | | $ | 4,505.2 | | | $ | 4,476.5 | |
Revenue by geographic area — International revenues are defined as revenues generated from money transfer and bill payment transactions originating in a country other than the U.S. There are no individual countries from which the Company generates revenues, other than the U.S., that exceed 10% of total revenues for the years ended December 31, 2022, 2021 and 2020. The following table details total revenue by major geographic area for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | U.S. | | $ | 544.7 | | | $ | 543.9 | | | $ | 543.8 | | International | | 765.4 | | | 739.7 | | | 673.4 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
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- DefinitionThe entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.
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v3.22.4
Revenue Recognition
|
12 Months Ended |
Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] |
|
Revenue Recognition |
The following table is a summary of the Company's revenue streams disaggregated by services and products for each segment and timing of revenue recognition for such services and products excluding other revenue for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT revenue | | | | | | | Money transfer fee revenue | | $ | 1,151.0 | | | $ | 1,160.0 | | | $ | 1,083.4 | | Bill payment services fee revenue | | 35.6 | | | 40.5 | | | 46.2 | | Other revenue | | 39.3 | | | 28.3 | | | 21.3 | | Total GFT fee and other revenue | | $ | 1,225.9 | | | $ | 1,228.8 | | | $ | 1,150.9 | | FPP revenue | | | | | | | Money order fee revenue | | 5.4 | | | 6.3 | | | 7.3 | | Official check outsourcing services fee revenue | | 6.7 | | | 7.1 | | | 7.4 | | Other revenue | | 34.2 | | | 33.6 | | | 31.6 | | Total FPP fee and other revenue | | 46.3 | | | 47.0 | | | 46.3 | | Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | | | | | | | | | Timing of revenue recognition: | | | | | | | Services and products transferred at a point in time | | $ | 1,192.0 | | | $ | 1,206.8 | | | $ | 1,137.0 | | Products transferred over time | | 6.7 | | | 7.1 | | | 7.4 | | Total revenue from services and products | | 1,198.7 | | | 1,213.9 | | | 1,144.4 | | Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | | Other revenue | | 73.5 | | | 61.9 | | | 52.8 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
See Note 2 — Summary of Significant Accounting Policies for the Company's accounting policies on revenue recognition. Due to the short-term nature of the Company's services and products, the amount of contract assets and liabilities on the Consolidated Balance Sheets as of December 31, 2022 and 2021, is negligible. Assets for unsettled money transfers, money orders and consumer payments are included within "Settlement assets" with a corresponding liability recorded within "Payment service obligations" on the Consolidated Balance Sheets. For more information on these assets and liabilities see Note 2 — Summary of Significant Accounting Policies.
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- DefinitionThe entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
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v3.22.4
Leases
|
12 Months Ended |
Dec. 31, 2022 |
Leases [Abstract] |
|
Leases |
The Company's leases consist primarily of operating leases for buildings, equipment and vehicles. Finance leases are immaterial. The ROU asset and the lease liability are calculated based on the remaining minimum rental payments under current leasing standards for existing operating leases. The reduction in the carrying amount of the ROU asset and changes in the lease liability are presented within "Operating activities" on the Consolidated Statements of Cash Flows. We elected the package of practical expedients, which permitted us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs under the new standard. We did not elect the use of the hindsight practical expedient or the practical expedient pertaining to land easements, as the latter was not applicable to us. We also elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we did not recognize ROU assets or lease liabilities. The Company elected the practical expedient to not separate lease and non-lease components for our real estate and vehicle leases. The Company's various noncancellable operating leases for buildings, equipment and vehicles terminate through 2030. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As of December 31, 2022 and 2021, the leases had a weighted-average remaining lease term of 6.5 years and 7.1 years, respectively. As most of our leases do not provide an implicit rate, the Company utilized the portfolio approach in determining the discount rate. The portfolios were grouped based on lease type and geographical location. The Company considered the most relevant major interest rate in the specific geographical location such as the Prime Rate in the U.S. and U.K. or the collateralized interest rate for non-financial institutions of the European Central Bank. These rates were then adjusted for the Company's specific credit ratings or economic conditions and lease terms of the specific portfolio. As of December 31, 2022 and 2021, the weighted-average discount rate was 5.8% and 5.3%, respectively. The Company recognizes rent expense for operating leases under the straight-line method over the term of the lease where differences between the monthly cash payments and the lease expense are offset to the ROU asset on the Consolidated Balance Sheets. Lease expense for buildings and equipment is included within "Occupancy, equipment and supplies" on the Consolidated Statements of Operations, while lease expense for our vehicles is included within "Compensation and benefits." Some of the Company's building leases include rent expense that is associated with an index or a rate. Subsequent changes from the original index or rate would be treated as variable lease expense. Furthermore, future changes to the non-lease components of our real estate and vehicle leases will be treated as variable lease expenses. The following table is a summary of the Company's lease expense for its operating leases for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Buildings, equipment and vehicle leases | | $ | 10.8 | | | $ | 13.3 | | | $ | 15.0 | | Short-term and variable lease cost | | 0.3 | | | 1.1 | | | 1.2 | | Total lease cost | | $ | 11.1 | | | $ | 14.4 | | | $ | 16.2 | |
Supplemental cash flow information related to leases was as follows for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 10.9 | | | $ | 13.7 | | | $ | 15.3 | | ROU assets obtained in exchange for lease obligations | | $ | — | | | $ | 10.1 | | | $ | 15.0 | |
Maturities of operating lease liabilities as of December 31, 2022 were as follows: | | | | | | | | | (Amounts in millions) | | Future Minimum Lease Payments | 2023 | | $ | 9.1 | | 2024 | | 8.9 | | 2025 | | 8.5 | | 2026 | | 7.6 | | 2027 | | 6.2 | | Thereafter | | 15.0 | | Total | | 55.3 | | Less: present value discount | | (9.9) | | Lease liability - operating | | $ | 45.4 | |
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v3.22.4
Summary of Significant Accounting Policies (Policies)
|
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2020 |
Accounting Policies [Abstract] |
|
|
Basis of Presentation |
Basis of Presentation — The accompanying consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Consolidated Balance Sheets are unclassified due to the timing uncertainty surrounding the payment of settlement obligations.
|
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Use of Estimates |
Use of Estimates — The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations, impact of the COVID-19 pandemic and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
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Principles of Consolidation |
Principles of Consolidation — The Consolidated Financial Statements include the accounts of MoneyGram International, Inc. and its subsidiaries. Intercompany profits, transactions and account balances have been eliminated in consolidation.
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Cash and Cash Equivalents, Policy |
Cash and cash equivalents — The Company defines cash and cash equivalents and settlement cash and cash equivalents as cash on hand and all highly liquid debt instruments with original maturities of three months or less at the purchase date.
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Restricted Assets Policy |
Settlement assets and payment service obligations — The Company records payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying transaction occurs. The Company records corresponding settlement assets, which represent funds received or to be received for unsettled money transfers, money orders and consumer payments. Settlement assets consist of settlement cash and cash equivalents, receivables and investments. Payment service obligations primarily consist of outstanding payment instruments; amounts owed to financial institutions for funds paid to the Company to cover clearings of official check payment instruments, remittances and clearing adjustments; amounts owed to agents for funds paid to consumers on behalf of the Company; commissions owed to financial institution customers and agents for instruments sold; amounts owed to investment brokers for purchased securities and unclaimed instruments owed to various states.
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Receivables, Policy |
Receivables, net (included in settlement assets) — The Company has receivables due from financial institutions and agents for payment instruments sold and amounts advanced by the Company to certain agents for operational and local regulatory purposes. These receivables are outstanding from the day of the sale of the payment instrument until the financial institution or agent remits the funds to the Company. The Company provides an allowance for the portion of the receivable estimated to become uncollectible based on its history of collection experience, known collection issues, such as agent suspensions and bankruptcies, consumer credit card chargebacks and insufficient funds and other matters the Company identifies in its routine collection monitoring. Receivables are generally considered past due one day after the contractual remittance schedule, which is typically one day to three days after the sale of the underlying payment instrument. Receivables are generally written off against the allowance one year after becoming past due.
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Investment, Policy |
Investments (included in settlement assets) — The Company classifies securities as available-for-sale. The Company has no securities classified as trading or held-to-maturity. Time deposits and certificates of deposits with original maturities of up to 24 months are classified as interest-bearing investments and recorded at amortized cost. Securities held for indefinite periods of time, including any securities that may be sold to assist in the clearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities are recorded at fair value, with the net after-tax unrealized gain or loss recorded within "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets. Realized gains and losses and other-than-temporary impairments are recorded in the Consolidated Statements of Operations under "Total other expenses." Interest income on residential mortgage-backed securities for which risk of credit loss is deemed remote is recorded utilizing the level yield method. Changes in estimated cash flows, both positive and negative, are accounted for with retrospective changes to the carrying value of investments in order to maintain a level yield over the life of the investment. Interest income on residential mortgage-backed securities for which risk of credit loss is not deemed remote is recorded under the prospective method as adjustments of yield. Additionally, the Company applies the cost recovery method of accounting for interest to some of the investments within the available-for-sale portfolio as it believes it is probable that it will not recover all, or substantially all, of its principal investment and interest for its asset-backed and other securities given the sustained deterioration in the investment and securities market, the collapse of many asset-backed securities and the low levels to which the securities have been written down. The Company evaluates all residential mortgage-backed and other asset-backed investments for impairment based on management's evaluation of the underlying reasons for the decline in fair value on an individual security basis. When an adverse change in expected cash flows occurs, and if the fair value of a security is less than its carrying value, the investment is written down to fair value through a permanent reduction to its amortized cost in the period the impairment occurs. Securities gains and losses are recognized upon the sale, call or maturity of securities using the specific identification method to determine the cost basis of securities sold.
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Fair Value of Financial Instruments, Policy |
Fair Value of Financial Instruments — Financial instruments consist of cash and cash equivalents, settlement cash and cash equivalents, investments, derivatives, payment service obligations and debt. The carrying values of cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment service obligations approximate fair value. The carrying value of debt is stated at amortized cost; however, for disclosure purposes the fair value is estimated. See Note 4 — Fair Value Measurement for information regarding the principles and processes used to estimate the fair value of financial instruments.Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair values of the Term Loan, Senior Secured Notes and First Lien Credit Facility are estimated using an observable market quotation (Level 2). The fair value of the second lien credit facility is estimated using unobservable market inputs (Level 3), including broker quotes for comparable traded securities and yield curves.
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Derivatives, Policy |
Derivative Financial Instruments — The Company recognizes derivative financial instruments on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value is recognized through "Transaction and operations support" in the Consolidated Statements of Operations in the period of change. See Note 6 — Derivative Financial Instruments for additional disclosure.
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Property, Plant and Equipment, Policy |
Property and Equipment — Property and equipment includes computer hardware, computer software, signage, equipment at agent locations, office furniture and equipment and leasehold improvements and is stated at cost net of accumulated depreciation and amortization. Property and equipment is depreciated and amortized using a straight-line method over the useful life or term of the lease or license. The cost and related accumulated depreciation and amortization of assets sold or disposed of are removed from the financial statements, with the resulting gain or loss, if any, recognized within "Occupancy, equipment and supplies" in the Consolidated Statements of Operations. See Note 7 — Property and Equipment for additional disclosure. The following table summarizes the estimated useful lives by major asset category: | | | | | | | | | Type of Asset | | Useful Life | Computer hardware | | 3 years | Computer software | | 5 - 7 years | Signage | | 3 years | Equipment at agent locations | | 3 - 7 years | Office furniture and equipment | | 7 years | Leasehold improvements | | 10 years |
Tenant allowances for leasehold improvements are capitalized as leasehold improvements upon completion of the improvement and amortized over the shorter of the remaining term of the lease or 10 years. Computer software includes acquired and internally developed software. Property and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for property and equipment, the carrying value of the asset is reduced to the estimated fair value.
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Goodwill and Intangible Assets, Policy |
Goodwill and Intangible Assets — Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate. Intangible assets are recorded at their estimated fair value at the date of acquisition. In the year following the period in which identified intangible assets become fully amortized, the fully amortized balances are removed from the gross asset and accumulated amortization amounts. Intangible assets with indefinite lives are not amortized. Intangible assets that are not amortized are evaluated for impairment on a quarterly basis. As of December 31, 2022 and 2021, the Company had no indefinite-lived intangible assets. Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for intangible assets, the carrying value of the asset is reduced to the estimated fair value. Intangible assets with finite lives are amortized using a straight-line method over their respective useful lives as follows: | | | | | | | | | Type of Intangible Asset | | Useful Life | Contractual and customer relationships | | 3 - 15 years | Non-compete agreements | | 3 - 5 years | Developed technology | | 5 - 7 years |
Goodwill is not amortized but is instead subject to impairment testing. The Company evaluates its goodwill for impairment annually as of October 1 of each year or more frequently if impairment indicators arise in accordance with Accounting Standards Codification ("ASC") Topic 350, Intangibles - Goodwill and Other. When testing goodwill for impairment, the Company may elect to perform either a qualitative test or a quantitative test to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. During a qualitative analysis, the Company considers the impact of any changes to the following factors: macroeconomic, industry and market factors, cost factors and changes in overall financial performance, as well as any other relevant events and uncertainties impacting a reporting unit. If the qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, the Company performs a quantitative analysis. In a quantitative test, the carrying value of the reporting unit is compared to its estimated fair value. If the fair value of a reporting unit exceeds its carrying amount, there is no impairment. If not, to the extent the carrying amount of the reporting unit exceeds its fair value, an impairment charge of the reporting unit's goodwill would be recognized; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.
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Long-Duration Contracts, Policy |
Payments on Long-Term Contracts — The Company makes payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. The payments, or signing bonuses, are generally required to be refunded pro rata in the event of nonperformance under, or cancellation of, the contract by the customer. Signing bonuses are viewed as prepaid commissions expense and are, therefore, capitalized and amortized over the life of the related contract. Amortization of signing bonuses on long-term contracts is recorded within "Fee and other commissions expense" in the Consolidated Statements of Operations. The carrying values of the signing bonuses are reviewed whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
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Income Tax, Policy |
Income Taxes — The provision for income taxes is computed based on the pre-tax income (loss) included in the Consolidated Statements of Operations. Deferred tax assets and liabilities are recorded based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards on a taxing jurisdiction basis. The Company measures deferred tax assets and liabilities using enacted statutory tax rates that will apply in the years in which the Company expects the temporary differences to be recovered or paid. The Company's ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carry-back or carry-forward periods provided for in the tax law. The Company establishes valuation allowances for its deferred tax assets based on a more-likely-than-not threshold. To the extent management believes that recovery is not likely, a valuation allowance is established in the period in which the determination is made. The liability for unrecognized tax benefits is recorded as a non-cash item within "Accounts payable and other liabilities" on the Consolidated Balance Sheets. The Company records interest and penalties for unrecognized tax benefits within "Income tax (benefit) expense" in the Consolidated Statements of Operations. See Note 13 — Income Taxes for additional disclosure.
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Stockholders' Equity, Policy |
Treasury Stock — Repurchased common stock is stated at cost and is presented as a separate component of stockholders' deficit. See Note 11 — Stockholders' Deficit for additional disclosure.
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Foreign Currency Transactions and Translations Policy |
Non-U.S. Dollar Translation — The Company converts assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet dates and records the translation adjustments within "Accumulated other comprehensive loss" on the Consolidated Balance Sheets. Income statements of foreign operations are translated from the operation's functional currency to U.S. dollar equivalents at the average exchange rate for the month. Non-U.S. dollar exchange transaction gains and losses are reported within "Transaction and operations support" in the Consolidated Statements of Operations.
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Revenue Recognition, Policy |
Revenue Recognition — The Company earns revenues from consideration specified in contracts with customers and recognizes revenue when it satisfies its performance obligations by transferring control over its services and products to customers. Revenue is recognized net of any taxes collected from customers that are subsequently remitted to governmental authorities. The following is a description of the principal activities, separated by reporting segments, from which the Company generates revenues. For more information about the Company's reporting segments, see Note 16 — Segment Information. For tabular revenue disclosures see Note 17 — Revenue Recognition. GFT Segment: Money transfer fee revenue — The Company earns money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads on money transfer transactions involving different "send" and "receive" currencies. Fees are collected from consumers at the time of transaction. In a cash-to-cash money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally a fixed fee or is based on a percentage of the fee charged to the consumer. When a money transfer transaction is initiated at a MoneyGram-owned store or via our online platform, typically only the receiving agent earns a commission. Each money transfer is considered a separate agreement between the Company and the consumer and includes only one performance obligation that is satisfied at a point in time, which is when the funds are made available for pick up. Money transfer funds are typically available for pick up within 24 hours of being sent. The consumer is in control of the service, as the consumer picks the "send" and "receive" locations as well as the transaction currency. Normally, the Company provides fee refunds to consumers only if the transaction is canceled within 30 minutes of initiating the transfer and the transfer amount has not been picked up by the Receiver. As such, fee refunds are accounted for within the same period as the origination of the transaction and no liability for the amount of expected returns is recorded on the Consolidated Balance Sheets. The Company recognizes revenues on a gross basis for money transfer services as the Company is considered the principal in these transactions. Under our loyalty programs for money transfer services, consumers earn rewards based on transaction frequency. In 2018, the Company introduced the MoneyGram Plus Rewards program, which allows members to earn discounts on future transactions. The MoneyGram Plus Rewards program activity for the years ended December 31, 2022 and 2021 was insignificant to the Company's results of operations. Bill payment services fee revenue — Bill payment revenues are earned primarily from fees charged to consumers for each transaction completed. Our primary bill payment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent locations, at certain agent locations in select Caribbean and European countries and through our digital solutions. Through our bill payment services, consumers can complete urgent bill payments, pay routine bills, or load and reload prepaid debit cards with cash at an agent location or with a credit or debit card. We offer consumers same-day and two or three-day payment service options; the service option is dependent upon our agreement with the biller. Each bill payment service is considered a separate agreement with the consumer and includes only one performance obligation that is satisfied at a point in time, when the funds are transferred to the designated institution, which is generally within the same day. The consumer is in control of the service, as the consumer picks out the "send" location and time. MoneyGram does not offer refunds for bill payment services and revenue is recognized on a gross basis as the Company is considered the principal in these transactions. Other revenue — Includes breakage income, fees from royalties, contract terminations, insufficient funds and other one-time charges. The Company recognizes breakage revenue for unclaimed money transfers when the likelihood of consumer pick-up becomes remote based on historical experience and there is no requirement for remitting balances to government agencies. FPP Segment: Money order fee revenue — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per item and other fees, as well as from the investment of funds underlying outstanding money orders. The Company contracts with agents and/or financial institutions for this product and associated services. We sell money orders under the MoneyGram brand and on a private label or on a co-branded basis with certain agents and financial institutions in the U.S. The Company recognizes revenue when an agent sells a money order because the funds are immediately made available to the consumer. As such, each sale of a money order and related service is considered a separate performance obligation that is satisfied at a point in time. Official check outsourcing services fee revenue — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use official checks to pay their own obligations. Like money orders, the Company generates revenue from official check outsourcing services through U.S. banks and credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks. The Company's consumer for official checks is considered the financial institution. The official checks services and products are considered a bundle of services and products that are provided to the financial institution on an ongoing basis. As such, revenue from these services is recognized on a monthly basis. Revenue corresponds directly with the value of MoneyGram's services and/or products completed to date and for which the Company has a right to invoice. Monthly revenue may vary based on the number of official checks issued and other ancillary services provided to the financial institution. Other revenue — Includes fees from money order service revenue, proof adjustments, early contract terminations, money order photo and replacement fees and other one-time charges. The Company recognizes service revenue from money orders that have not been redeemed within a one-year period from issuance. Proof adjustment fees are generally unresolved and not recouped as they pertain to immaterial bank variances. The Company recognizes as revenue the net proof adjustments amount on a monthly basis. Investment Revenue — Investment revenue, which is not within the scope of ASC Topic 606 per ASC 606-10-15-2, is earned from the investment of funds generated from the sale of payment instruments, primarily official checks and money orders and consists of interest income, dividend income, income received on our cost recovery securities and amortization of premiums and discounts. Investment revenue varies depending on the level of investment balances and the yield on our investments.
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Commissions Expense, Policy |
Commissions and Other Fee Expense — The Company incurs fee commissions primarily related to our GFT services. In a money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally either a fixed fee or is based on a percentage of the fee charged to the consumer. The agent initiating the transaction and the receiving agent also earn non-U.S. dollar exchange commissions, which are generally based on a percentage of the non-U.S. dollar exchange spread. In a bill payment transaction, the agent initiating the transaction receives a commission that is generally based on a percentage of the fee charged to the consumer and, in limited circumstances, the biller receives a commission that is based on a percentage of the fee charged to the consumer. The Company generally does not pay commissions to agents on the sale of money orders, except, in certain limited circumstances, for large agents where we may pay a fixed commission based on total money order transactions.
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Investment Commissions Expense Policy |
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 are recognized each month based on the average outstanding balances of each financial institution customer and their contractual variable rate for that month.
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Selling, General and Administrative Expenses, Policy |
Direct Transaction Expense — Direct transaction expense includes expenses related to the processing of money transfers, such as customer authentication and funding costs.
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Advertising Cost, Policy |
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Marketing and Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes place and are recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. Marketing and advertising expense was $39.4 million, $27.7 million and $16.2 million for 2022, 2021 and 2020, respectively.
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Share-based Compensation, Option and Incentive Plans Policy |
Stock-Based Compensation — Stock-based compensation awards are measured at fair value at the date of grant and expensed using the straight-line method over their vesting or service periods. For grants to employees, expense, net of estimated forfeitures, is recognized in the "Compensation and benefits" line and expense for grants to non-employee directors is recorded in the "Transaction and operations support" line in the Consolidated Statements of Operations. The Company accounts for modifications to its share-based payment awards in accordance with the provisions of ASC Topic 718, Compensation - Stock Compensation. Incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date and is recognized as compensation cost on the date of modification (for vested awards) or over the remaining vesting or service period (for unvested awards). Any unrecognized compensation cost remaining from the original award is recognized over the vesting period of the modified award. See Note 12 — Stock-Based Compensation for additional disclosure of the Company's stock-based compensation.
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Earnings Per Share, Policy |
Earnings Per Share — For all periods in which they are outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") and the warrants issued by the Company in connection with the entry into the Second Lien Credit Agreement ("Second Lien Warrants") are included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share because the D Stock is deemed a common stock equivalent and the Second Lien Warrants are considered outstanding common shares.
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New Accounting Pronouncements, Policy |
Recently Adopted Accounting Standards — In May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The ASU clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options, warrants for instance, that remain equity classified after modification or exchange. The ASU provides guidance that will clarify whether an issuer should account for a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related earnings per share effects, if any, or (2) an expense and, if so, the manner and pattern of recognition. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 did not have a material impact on our Consolidated Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide, if certain criteria are met, optional expedients and exceptions for applying the U.S. GAAP requirements for contract modifications, hedging relationships and sales or transfers of debt securities that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform through December 31, 2022. The adoption of this ASU is optional and the election can be made anytime during the effective period. The amendments in this ASU are effective as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on our Consolidated Financial Statements. Recently Issued Accounting Standards and Related Developments Not Yet Adopted — In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity. This ASU changes how entities account for convertible instruments and contracts in an entity's own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. This ASU also modifies the guidance on diluted earnings per share calculations. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. We do not believe the adoption of ASU 2020-06 will have a material impact on our Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new credit impairment standard changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities. To further assist with adoption and implementation of ASU 2016-13, the FASB issued the following ASUs: •ASU 2018-19 (Issued November 2018) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses •ASU 2019-04 (Issued April 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments •ASU 2019-05 (Issued May 2019) — Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief •ASU 2019-10 (Issued November 2019) — Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates •ASU 2019-11 (Issued November 2019) — Codification Improvements to Topic 326, Financial Instruments - Credit Losses •ASU 2020-02 (Issued February 2020) — Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update) •ASU 2020-03 (Issued March 2020) — Codification Improvements to Financial Instruments •ASU 2022-02 (Issued March 2022) — Financial Instruments - Credit Losses (Topic 326): Trouble Debt Restructurings and Vintage Disclosures ASU 2019-10 changed the effective date of ASU 2016-13 for public business entities that meet the definition of a U.S. Securities and Exchange Commission ("SEC") filer but that are eligible to be a smaller reporting company to fiscal years beginning after December 15, 2022. As of November 15, 2019, which is the determination date for ASU 2016-13, MoneyGram was a smaller reporting company and, as such, has elected to adopt the amendments in these standards in 2023. We do not believe the adoption of these ASUs will have a material impact on our Consolidated Financial Statements.
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v3.22.4
Summary of Significant Accounting Policies (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Accounting Policies [Abstract] |
|
Allowance for Credit Losses on Financing Receivables |
The following summary details the activity within the allowance for credit losses for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 6.7 | | | $ | 9.5 | | | $ | 4.6 | | Provision | | 13.3 | | | 11.1 | | | 14.3 | | Write-offs, net of recoveries | | (13.9) | | | (13.9) | | | (9.4) | | Ending balance | | $ | 6.1 | | | $ | 6.7 | | | $ | 9.5 | |
|
Property, Plant and Equipment |
The following table summarizes the estimated useful lives by major asset category: | | | | | | | | | Type of Asset | | Useful Life | Computer hardware | | 3 years | Computer software | | 5 - 7 years | Signage | | 3 years | Equipment at agent locations | | 3 - 7 years | Office furniture and equipment | | 7 years | Leasehold improvements | | 10 years |
The following table is a summary of "Property and equipment, net" as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Computer hardware and software | | $ | 476.2 | | | $ | 529.9 | | Signage | | 41.6 | | | 50.6 | | Equipment at agent locations | | 47.9 | | | 50.2 | | Office furniture and equipment | | 11.6 | | | 19.5 | | Leasehold improvements | | 21.1 | | | 22.1 | | Total property and equipment | | 598.4 | | | 672.3 | | Accumulated depreciation and amortization | | (463.9) | | | (538.4) | | Total property and equipment, net | | $ | 134.5 | | | $ | 133.9 | |
|
Schedule of Finite-Lived Intangible Assets |
Intangible assets with finite lives are amortized using a straight-line method over their respective useful lives as follows: | | | | | | | | | Type of Intangible Asset | | Useful Life | Contractual and customer relationships | | 3 - 15 years | Non-compete agreements | | 3 - 5 years | Developed technology | | 5 - 7 years |
The following table is a summary of finite-lived intangible assets as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | (Amounts in millions) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | Contractual and customer relationships | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.1 | | | $ | (3.7) | | | $ | 0.4 | | Developed technology | | — | | | — | | | — | | | 0.6 | | | (0.6) | | | — | | Total finite-intangible assets | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.7 | | | $ | (4.3) | | | $ | 0.4 | |
|
Schedule of Earnings Per Share, Basic and Diluted |
The following table is a reconciliation of the weighted-average share amounts used in calculating earnings (loss) per common share for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Basic and diluted common shares outstanding | | 96.4 | | | 89.7 | | | 77.8 | | Shares related to restricted stock units | | 3.7 | | | — | | | — | | | | | | | | | Diluted common shares outstanding | | 100.1 | | | 89.7 | | | 77.8 | |
|
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share |
The following table summarizes the weighted-average potential common shares excluded from diluted earnings (loss) per common share as their effect would be anti-dilutive: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Shares related to stock options | | 0.1 | | | 0.2 | | | 0.3 | | Shares related to restricted stock units | | — | | | 4.2 | | | 4.5 | | Shares related to Ripple Warrants | | — | | | 1.1 | | | 6.0 | | Shares excluded from the computation | | 0.1 | | | 5.5 | | | 10.8 | |
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v3.22.4
Settlement Assets and Payment Service Obligations (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
|
Schedule of Other Assets and Other Liabilities |
The following table summarizes the amount of settlement assets and payment service obligations as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Settlement assets: | | | | | Settlement cash and cash equivalents | | $ | 1,499.1 | | | $ | 1,895.7 | | Receivables, net | | 1,107.0 | | | 700.4 | | Interest-bearing investments | | 998.1 | | | 992.3 | | Available-for-sale investments | | 3.0 | | | 3.0 | | | | $ | 3,607.2 | | | $ | 3,591.4 | | Payment service obligations | | $ | (3,607.2) | | | $ | (3,591.4) | |
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v3.22.4
Fair Value Measurement (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Fair Value Disclosures [Abstract] |
|
Financial Assets Measured at Fair Value by Hierarchy Level |
The following table summarizes the Company's financial assets and liabilities measured at fair value by hierarchy level on a recurring basis: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Level 2 | | Level 3 | | Total | December 31, 2022 | | | | | | | Financial assets: | | | | | | | Available-for-sale investments: | | | | | | | Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | 1.5 | | Asset-backed and other securities | | — | | | 1.5 | | | 1.5 | | Forward contracts | | 5.2 | | | — | | | 5.2 | | Total financial assets | | $ | 6.7 | | | $ | 1.5 | | | $ | 8.2 | | Financial liabilities: | | | | | | | Forward contracts | | $ | 3.3 | | | $ | — | | | $ | 3.3 | | | | | | | | | December 31, 2021 | | | | | | | Financial assets: | | | | | | | Available-for-sale investments: | | | | | | | Residential mortgage-backed securities | | $ | 2.3 | | | $ | — | | | $ | 2.3 | | Asset-backed and other securities | | — | | | 0.7 | | | 0.7 | | Forward contracts | | 0.1 | | | — | | | 0.1 | | Total financial assets | | $ | 2.4 | | | $ | 0.7 | | | $ | 3.1 | | Financial liabilities: | | | | | | | Forward contracts | | $ | 0.2 | | | $ | — | | | $ | 0.2 | |
|
Roll-Forward of Other Asset-Backed Securities |
The following table provides a roll-forward of the asset-backed and other securities classified as Level 3, which are measured at fair value on a recurring basis for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 0.7 | | | $ | 0.5 | | | $ | 0.9 | | | | | | | | | Change in unrealized gains (losses) | | 0.8 | | | 0.2 | | | (0.4) | | | | | | | | | Ending balance | | $ | 1.5 | | | $ | 0.7 | | | $ | 0.5 | |
|
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments |
The following table provides the carrying value and fair value for the credit facilities and the senior secured notes as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | | Carrying value | | Fair value | | Carrying value | | Fair value | Term Loan | | $ | 380.0 | | | $ | 378.6 | | | $ | 384.0 | | | $ | 383.5 | | Senior Secured Notes | | $ | 415.0 | | | $ | 420.2 | | | $ | 415.0 | | | $ | 421.2 | |
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v3.22.4
Investment Portfolio (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Investments [Abstract] |
|
Components of Investment Portfolio |
The following table shows the components of the investment portfolio as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | | | | | | | | | | Cash and cash equivalents and settlement cash and cash equivalents | | $ | 1,671.2 | | | $ | 2,050.9 | | Interest-bearing investments | | 998.1 | | | 992.3 | | Available-for-sale investments | | 3.0 | | | 3.0 | | Total investment portfolio | | $ | 2,672.3 | | | $ | 3,046.2 | |
|
Debt Securities, Available-for-sale |
The following table is a summary of the amortized cost and fair value of available-for-sale investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | December 31, 2022 | | | | | | | | | Residential mortgage-backed securities | | $ | 1.5 | | | $ | — | | | $ | — | | | $ | 1.5 | | Asset-backed and other securities | | — | | | 1.5 | | | — | | | 1.5 | | Total | | $ | 1.5 | | | $ | 1.5 | | | $ | — | | | $ | 3.0 | | | | | | | | | | | December 31, 2021 | | | | | | | | | Residential mortgage-backed securities | | $ | 2.1 | | | $ | 0.2 | | | $ | — | | | $ | 2.3 | | Asset-backed and other securities | | — | | | 0.7 | | | — | | | 0.7 | | Total | | $ | 2.1 | | | $ | 0.9 | | | $ | — | | | $ | 3.0 | |
|
Schedule of Investment Ratings |
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 consisted of the following ratings as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | (Dollar amounts in millions) | | Number of Securities | | Fair Value | | Percent of Investments | | Number of Securities | | Fair Value | | Percent of Investments | Investment grade | | 9 | | | $ | 1.5 | | | 50 | % | | 9 | | | $ | 2.3 | | | 78 | % | Below investment grade | | 33 | | | 1.5 | | | 50 | % | | 33 | | | 0.7 | | | 22 | % | Total | | 42 | | | $ | 3.0 | | | 100 | % | | 42 | | | $ | 3.0 | | | 100 | % |
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v3.22.4
Derivative Financial Instruments (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Derivative Instrument Detail [Abstract] |
|
Summary of Gains (Losses) Related to Assets and Liabilities Denominated in Foreign Currencies |
The following net gains (losses) related to assets and liabilities denominated in non-U.S. dollar are included in "Transaction and operations support" in the Consolidated Statements of Operations and in the "Net cash provided by operating activities" line in the Consolidated Statements of Cash Flows: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Net realized non-U.S. dollar (loss) gain | | $ | (38.2) | | | $ | (20.4) | | | $ | 26.6 | | Net gain (loss) from the related forward contracts | | 39.8 | | | 18.4 | | | (11.9) | | Net gain (loss) from the related forward contracts | | $ | 1.6 | | | $ | (2.0) | | | $ | 14.7 | |
|
Fair Values of Derivative Forward Contract Instruments |
As of December 31, 2022 and 2021, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets on a net basis, allowing for the right of offset by counterparty and cash collateral: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Gross Amount of Recognized Assets | | Gross Amount of Offset | Cash Collateral Posted | | Net Amount of Assets Presented on the Consolidated Balance Sheets | | | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 | | | "Other assets" | | $ | 1.8 | | | $ | 0.4 | | | $ | (1.6) | | | $ | (0.3) | | $ | 5.0 | | | $ | — | | | $ | 5.2 | | | $ | 0.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Gross Amount of Recognized Liabilities | | Gross Amount of Offset | Cash Collateral Received | | Net Amount of Liabilities Presented on the Consolidated Balance Sheets | | | Balance Sheet Location | | 2022 | | 2021 | | 2022 | | 2021 | 2022 | | 2021 | | 2022 | | 2021 | | | "Accounts payable and other liabilities" | | $ | 4.9 | | | $ | 0.6 | | | $ | (1.6) | | | $ | (0.4) | | $ | — | | | $ | — | | | $ | 3.3 | | | $ | 0.2 | |
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v3.22.4
Property and Equipment (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Property, Plant and Equipment [Abstract] |
|
Components of Property and Equipment |
The following table summarizes the estimated useful lives by major asset category: | | | | | | | | | Type of Asset | | Useful Life | Computer hardware | | 3 years | Computer software | | 5 - 7 years | Signage | | 3 years | Equipment at agent locations | | 3 - 7 years | Office furniture and equipment | | 7 years | Leasehold improvements | | 10 years |
The following table is a summary of "Property and equipment, net" as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Computer hardware and software | | $ | 476.2 | | | $ | 529.9 | | Signage | | 41.6 | | | 50.6 | | Equipment at agent locations | | 47.9 | | | 50.2 | | Office furniture and equipment | | 11.6 | | | 19.5 | | Leasehold improvements | | 21.1 | | | 22.1 | | Total property and equipment | | 598.4 | | | 672.3 | | Accumulated depreciation and amortization | | (463.9) | | | (538.4) | | Total property and equipment, net | | $ | 134.5 | | | $ | 133.9 | |
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v3.22.4
Goodwill and Intangible Assets (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] |
|
Schedule of Finite-Lived Intangible Assets |
Intangible assets with finite lives are amortized using a straight-line method over their respective useful lives as follows: | | | | | | | | | Type of Intangible Asset | | Useful Life | Contractual and customer relationships | | 3 - 15 years | Non-compete agreements | | 3 - 5 years | Developed technology | | 5 - 7 years |
The following table is a summary of finite-lived intangible assets as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2022 | | 2021 | (Amounts in millions) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | Contractual and customer relationships | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.1 | | | $ | (3.7) | | | $ | 0.4 | | Developed technology | | — | | | — | | | — | | | 0.6 | | | (0.6) | | | — | | Total finite-intangible assets | | $ | 3.5 | | | $ | (3.5) | | | $ | — | | | $ | 4.7 | | | $ | (4.3) | | | $ | 0.4 | |
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v3.22.4
Debt (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Debt Disclosure [Abstract] |
|
Summary of Outstanding Debt |
The following is a summary of the Company's outstanding debt as of December 31: | | | | | | | | | | | | | | | (Amounts in millions, except percentages) | | 2022 | | 2021 | 8.57% Term Loan due 2026 | | $ | 380.0 | | | $ | 384.0 | | 5.375% Senior Secured Notes due 2026 | | 415.0 | | | 415.0 | | Total debt at face value | | 795.0 | | | 799.0 | | Unamortized debt issuance costs and debt discounts | | (9.6) | | | (12.3) | | Total debt, net | | $ | 785.4 | | | $ | 786.7 | |
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v3.22.4
Pension and Other Benefits (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Retirement Benefits [Abstract] |
|
Schedule of Assumptions Used |
The measurement date for the Company's Pension and Postretirement Benefits is December 31. The following table is a summary of the weighted-average actuarial assumptions used in calculating net periodic benefit expense (income) and the benefit obligation for the years ended and as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Plan | | SERPs | | Postretirement Benefits | | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | Net periodic benefit expense (income): | | | | | | | | | | | | | | | | | | | Discount rate for benefit obligation | | 2.86 | % | | 2.51 | % | | 3.23 | % | | 2.81 | % | | 2.41 | % | | 3.18 | % | | 2.95 | % | | 2.64 | % | | 3.33 | % | Discount rate for interest cost | | 2.33 | % | | 1.86 | % | | 2.83 | % | | 2.16 | % | | 1.62 | % | | 2.70 | % | | 2.22 | % | | 1.74 | % | | 2.77 | % | Expected return on plan assets | | 2.76 | % | | 1.80 | % | | 2.07 | % | | — | | | — | | | — | | | — | | | — | | | — | | Cash balance interest crediting rate | | 1.92 | % | | 1.36 | % | | 1.73 | % | | — | | | — | | | — | | | — | | | — | | | — | | Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | | Medical trend rate: | | | | | | | | | | | | | | | | | | | Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.38 | % | | 6.46 | % | | 6.79 | % | Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.64 | % | | 7.08 | % | | 7.51 | % | Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % | Year ultimate healthcare cost trend rate is reached for pre/post-65, respectively | | — | | | — | | | — | | | — | | | — | | | — | | | 2030 | | 2028 | | 2025 | Benefit obligation: | | | | | | | | | | | | | | | | | | | Discount rate | | 5.17 | % | | 2.86 | % | | 2.51 | % | | 5.15 | % | | 2.81 | % | | 2.41 | % | | 5.22 | % | | 2.95 | % | | 2.64 | % | Cash balance interest crediting rate | | 3.13 | % | | 1.92 | % | | 1.36 | % | | — | | | — | | | — | | | — | | | — | | | — | | Rate of compensation increase | | — | | | — | | | — | | | 5.75 | % | | 5.75 | % | | 5.75 | % | | — | | | — | | | — | | Medical trend rate: | | | | | | | | | | | | | | | | | | | Pre-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 6.87 | % | | 6.38 | % | | 6.46 | % | Post-65 initial healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 7.26 | % | | 6.64 | % | | 7.08 | % | Pre and post-65 ultimate healthcare cost trend rate | | — | | | — | | | — | | | — | | | — | | | — | | | 4.50 | % | | 4.50 | % | | 4.50 | % | Year ultimate healthcare cost trend rate is reached for pre/post-65 | | — | | | — | | | — | | | — | | | — | | | — | | | 2031 | | 2030 | | 2028 |
|
Schedule of Allocation of Plan Assets |
The following table is a summary of the Pension Plan's financial assets recorded at fair value, by hierarchy level: | | | | | | | | | | | | | | | | | (Amounts in millions) | | | | Level 3 | | Total | December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | $ | 4.5 | | | $ | 4.5 | | Total investments in the fair value hierarchy | | | | 4.5 | | | 4.5 | | Investments measured at net asset value (1) | | | | | | 30.9 | | Total financial assets | | | | | | $ | 35.4 | | | | | | | | | December 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Real estate | | | | $ | 4.2 | | | $ | 4.2 | | Total investments in the fair value hierarchy | | | | 4.2 | | | 4.2 | | Investments measured at net asset value (1) | | | | | | 41.1 | | Total financial assets | | | | | | $ | 45.3 | |
(1) Common/collective trusts investments and money market funds that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets presented in the summary of plan assets further below.
|
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share |
The following table sets forth additional disclosures for the Pension Plan assets fair value estimated using net asset value per share: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Fair Value | | Redemptions Frequency (if currently eligible) | | Redemption Notice Period | December 31, 2022 | | | | | | | Money market fund | | $ | 0.9 | | | Daily | | Same day | Multi-asset credit fund | | 0.4 | | | Monthly | | 10 Days | Equity and fixed income securities | | 29.6 | | | Daily | | 15 Days | Investments measured at net asset value | | $ | 30.9 | | | | | | | | | | | | | | | | | | | | December 31, 2021 | | | | | | | Money market fund | | $ | 0.9 | | | N/A | | N/A | Multi-asset credit fund | | 0.8 | | | Monthly | | 10 Days | Equity and fixed income securities | | 39.4 | | | Daily | | 15 Days | Investments measured at net asset value | | $ | 41.1 | | | | | |
|
Schedule of Net Periodic Benefit Expense (Income) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | (Amounts in millions) | | 2022 | | 2021 | | 2020 | | 2022 | | 2021 | | 2020 | Interest cost | | $ | 2.4 | | | $ | 2.0 | | | $ | 3.1 | | | $ | — | | | $ | — | | | $ | — | | Expected return on plan assets | | (1.2) | | | (0.7) | | | (0.8) | | | 0.1 | | | — | | | — | | Amortization of net actuarial loss | | 2.3 | | | 2.4 | | | 2.0 | | | — | | | 0.1 | | | 0.1 | | Settlement gain | | (0.5) | | | — | | | — | | | — | | | — | | | — | | Amortization of prior service cost | | — | | | — | | | 0.1 | | | — | | | — | | | — | | Net periodic benefit expense | | $ | 3.0 | | | $ | 3.7 | | | $ | 4.4 | | | $ | 0.1 | | | $ | 0.1 | | | $ | 0.1 | |
|
Schedule of Defined Benefit Plan Amounts Recognized in Other Comprehensive Income (Loss) |
The following tables are a summary of the amounts recognized in other comprehensive income (loss) and net periodic benefit expense for the years ended December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | Pension | | Postretirement Benefits | 2022 | | | | | Net actuarial gain | | $ | (7.3) | | | $ | — | | Amortization of net actuarial loss | | (2.3) | | | — | | Settlement gain | | 0.5 | | | — | | Total recognized in other comprehensive loss | | (9.1) | | | — | | Total recognized in net periodic benefit expense | | 3.0 | | | 0.1 | | Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (6.1) | | | $ | 0.1 | | 2021 | | | | | Net actuarial gain | | $ | (1.8) | | | $ | — | | Amortization of net actuarial loss | | (2.4) | | | (0.1) | | | | | | | Total recognized in other comprehensive loss | | (4.2) | | | (0.1) | | Total recognized in net periodic benefit expense | | 3.7 | | | 0.1 | | Total recognized in other comprehensive loss and net periodic benefit expense | | $ | (0.5) | | | $ | — | | 2020 | | | | | | | | | | Net actuarial loss (gain) | | 4.5 | | | (0.1) | | Amortization of net actuarial loss | | (2.0) | | | (0.1) | | Amortization of prior service cost | | (0.1) | | | — | | Total recognized in other comprehensive income | | 2.4 | | | (0.2) | | Total recognized in net periodic benefit expense | | 4.4 | | | 0.1 | | Total recognized in other comprehensive income and net periodic benefit expense | | $ | 6.8 | | | $ | (0.1) | |
|
Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets |
The following table is a summary of the unfunded status of the Pension and Postretirement Benefits, which is recorded within "Pension and other postretirement benefits" on the Consolidated Balance Sheets and changes to the benefit obligation and plan assets as of and for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | | Total | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | Change in benefit obligation: | | | | | | | | | | | | | Benefit obligation at the beginning of the year | | $ | 111.9 | | | $ | 120.1 | | | $ | 0.6 | | | $ | 0.6 | | | $ | 112.5 | | | $ | 120.7 | | | | | | | | | | | | | | | Interest cost | | 2.4 | | | 2.0 | | | — | | | — | | | 2.4 | | | 2.0 | | Actuarial (gain) loss | | (18.6) | | | (2.6) | | | 0.1 | | | — | | | (18.5) | | | (2.6) | | Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | | Benefit obligation at the end of the year | | 88.4 | | | 111.9 | | | 0.5 | | | 0.6 | | | 88.9 | | | 112.5 | | | | | | | | | | | | | | | Change in plan assets: | | | | | | | | | | | | | Fair value of plan assets at the beginning of the year | | 45.4 | | | 46.2 | | | — | | | — | | | 45.4 | | | 46.2 | | | | | | | | | | | | | | | Actual return on plan assets | | (10.0) | | | (0.1) | | | — | | | — | | | (10.0) | | | (0.1) | | Employer contributions | | 7.5 | | | 6.9 | | | 0.2 | | | — | | | 7.7 | | | 6.9 | | Benefits paid | | (7.3) | | | (7.6) | | | (0.2) | | | — | | | (7.5) | | | (7.6) | | Fair value of plan assets at the end of the year | | 35.6 | | | 45.4 | | | — | | | — | | | 35.6 | | | 45.4 | | Unfunded status at the end of the year | | $ | 52.8 | | | $ | 66.5 | | | $ | 0.5 | | | $ | 0.6 | | | $ | 53.3 | | | $ | 67.1 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Schedule of Amounts Recognized in Balance Sheet |
The following table summarizes the components recognized in "Accumulated other comprehensive loss" in the stockholders' deficit section of the Consolidated Balance Sheets relating to the Pension and Postretirement Benefits as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | | Total | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | Accumulated other comprehensive loss: | | | | | | | | | | | | | Net actuarial loss, net of tax | | $ | 28.1 | | | $ | 35.2 | | | $ | 0.3 | | | $ | 0.2 | | | $ | 28.4 | | | $ | 35.4 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Schedule of Accumulated and Projected Benefit Obligations |
The following table summarizes the accumulated benefit obligation for the Pension and Postretirement Benefits fair value of plan assets as of December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension | | Postretirement Benefits | (Amounts in millions) | | 2022 | | 2021 | | 2022 | | 2021 | Accumulated benefit obligation | | $ | 88.4 | | | $ | 111.9 | | | $ | 0.5 | | | $ | — | | Fair value of plan assets | | $ | 35.6 | | | $ | 45.4 | | | $ | — | | | $ | — | |
|
Schedule of Expected Benefit Payments |
The following table summarizes the estimated future benefit payments for the Pension and Postretirement Benefits for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | 2028-2032 | Pension | | $ | 8.4 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.2 | | | $ | 7.1 | | | $ | 32.1 | | Postretirement benefits | | — | | | — | | | — | | | — | | | — | | | 0.1 | |
|
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v3.22.4
Stockholders' Deficit (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Stockholders' Equity Note [Abstract] |
|
Schedule of Activity of Company's Authorized Issued and Outstanding |
The following table is a summary of the Company's authorized, issued and outstanding stock as of December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common Stock | | | | | | | | | Authorized | | Issued | | Outstanding | | Treasury Stock | January 1, 2020 | | | | | | | | 162,500,000 | | | 65,061,090 | | | 62,731,184 | | | 2,329,906 | | Release for restricted stock units | | | | | | | | — | | | 56,358 | | | 876,121 | | | 819,763 | | Preferred stock - series D conversion | | | | | | | | — | | | 7,413,322 | | | 8,910,234 | | | 1,496,912 | | December 31, 2020 | | | | | | | | 162,500,000 | | | 72,530,770 | | | 72,517,539 | | | 13,231 | | ATM equity offering | | | | | | | | — | | | 10,441,111 | | | 10,441,111 | | | — | | Exercise of Ripple Warrants | | | | | | | | — | | | 5,948,895 | | | 5,948,895 | | | — | | Release for restricted stock units | | | | | | | | — | | | 2,419,079 | | | 1,877,434 | | | 541,645 | | Exercise of Second Lien Warrants | | | | | | | | — | | | 965,156 | | | 964,212 | | | 944 | | Stock repurchases | | | | | | | | — | | | — | | | (1,023,209) | | | 1,023,209 | | December 31, 2021 | | | | | | | | 162,500,000 | | | 92,305,011 | | | 90,725,982 | | | 1,579,029 | | Exercise of lender warrants | | | | | | | | — | | | 4,458,314 | | | 4,454,159 | | | 4,155 | | Release for restricted stock units | | | | | | | | — | | | 2,200,740 | | | 1,446,291 | | | 754,449 | | December 31, 2022 | | | | | | | | 162,500,000 | | | 98,964,065 | | | 96,626,432 | | | 2,337,633 | |
|
Schedule of Accumulated Other Comprehensive Income (Loss) |
The following table details the components and changes of "Accumulated other comprehensive loss" as of and for the years ended:
|
Summary of Changes to Accumulated Other Comprehensive Loss By Component |
| | | | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax | | Cumulative non-U.S. dollar Translation Adjustments, Net of Tax | | Pension and Postretirement Benefits Adjustment, Net of Tax | | Total | January 1, 2020 | | $ | 1.6 | | | $ | (28.1) | | | $ | (37.0) | | | $ | (63.5) | | Other comprehensive loss before reclassification | | (0.4) | | | 7.2 | | | (3.4) | | | 3.4 | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.7 | | | 1.7 | | Net current year other comprehensive income | | (0.4) | | | 7.2 | | | (1.7) | | | 5.1 | | December 31, 2020 | | 1.2 | | | (20.9) | | | (38.7) | | | (58.4) | | Other comprehensive income before reclassification | | 0.3 | | | (8.0) | | | 1.4 | | | (6.3) | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.9 | | | 1.9 | | Net current year other comprehensive income | | 0.3 | | | (8.0) | | | 3.3 | | | (4.4) | | December 31, 2021 | | 1.5 | | | (28.9) | | | (35.4) | | | (62.8) | | Other comprehensive loss before reclassification | | 0.7 | | | (9.8) | | | 5.6 | | | (3.5) | | Amounts reclassified from accumulated other comprehensive loss | | — | | | — | | | 1.4 | | | 1.4 | | Net current year other comprehensive loss | | 0.7 | | | (9.8) | | | 7.0 | | | (2.1) | | December 31, 2022 | | $ | 2.2 | | | $ | (38.7) | | | $ | (28.4) | | | $ | (64.9) | |
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v3.22.4
Stock-Based Compensation (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Share-Based Payment Arrangement [Abstract] |
|
Summary of Stock Option Activity |
The following table is a summary of the Company's stock option activity for the year ended December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | Weighted-Average Exercise Price | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) | Options outstanding at December 31, 2021 | | 131,153 | | | $ | 17.54 | | | 1.4 years | | $ | — | | Forfeited/Expired | | (20,378) | | | $ | 17.74 | | | | | | Options outstanding, vested or expected to vest, and exercisable at December 31, 2022 | | 110,775 | | | $ | 17.51 | | | 0.6 years | | $ | — | |
|
Summary of Restricted Stock Unit Activity |
The following table is a summary of the Company's restricted stock unit activity as of December 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total Shares | | Weighted-Average Grant-Date Fair Value | | Weighted-Average Remaining Contractual Term | | Aggregate Intrinsic Value (in millions) | Restricted stock units outstanding at December 31, 2021 | | 4,104,547 | | | $ | 3.82 | | | 0.86 years | | $ | 32.4 | | Granted | | 1,777,010 | | | 10.67 | | | | | | Vested | | (2,200,740) | | | 4.63 | | | | | | Forfeited | | (7,302) | | | 7.07 | | | | | | Restricted stock units outstanding at December 31, 2022 | | 3,673,515 | | | $ | 7.45 | | | 0.78 years | | $ | 40.0 | | Restricted stock units vested and deferred at December 31, 2022 | | 174,827 | | | $ | 4.15 | | | | | $ | 1.9 | |
|
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity |
The following table is a summary of the Company's restricted stock unit compensation information for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Weighted-average grant-date fair value of restricted stock units vested during the year | | $ | 10.2 | | | $ | 7.0 | | | $ | 7.5 | | Total intrinsic value of vested and converted shares | | $ | 23.3 | | | $ | 16.1 | | | $ | 2.9 | |
|
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v3.22.4
Income Taxes Income Taxes (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Income Tax Disclosure [Abstract] |
|
Schedule of Income before Income Tax, Domestic and Foreign |
The following table is a summary of the components of income (loss) before income taxes for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | U.S. | | $ | 33.4 | | | $ | (49.8) | | | $ | (0.3) | | Foreign | | 6.4 | | | 6.2 | | | 6.4 | | Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
|
Schedule of Components of Income Tax Expense (Benefit) |
Foreign income consists of income from the Company's international subsidiaries. Most of the Company's wholly-owned subsidiaries recognize revenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense (benefit) for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Current: | | | | | | | Federal | | $ | 2.2 | | | $ | 0.1 | | | $ | (1.4) | | State | | (2.4) | | | (2.7) | | | 2.1 | | Foreign | | 4.6 | | | 5.7 | | | 4.2 | | Current income tax expense | | 4.4 | | | 3.1 | | | 4.9 | | Deferred: | | | | | | | Federal | | 2.3 | | | (6.6) | | | 7.1 | | State | | (0.9) | | | (0.3) | | | 1.9 | | Foreign | | (0.2) | | | (1.9) | | | 0.1 | | Deferred income tax expense (benefit) | | 1.2 | | | (8.8) | | | 9.1 | | Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
|
Schedule of Effective Income Tax Rate Reconciliation |
The following table is a reconciliation of the expected federal income tax (benefit) expense at statutory rates to the actual income tax (benefit) expense for the years ended in December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Income tax expense (benefit) at statutory federal income tax rate | | $ | 8.4 | | | $ | (9.2) | | | $ | 1.3 | | Tax effect of: | | | | | | | State income tax, net of federal income tax effect | | (0.4) | | | (0.6) | | | (0.4) | | Valuation allowances | | (2.9) | | | 1.7 | | | 12.0 | | International taxes | | 2.0 | | | 1.0 | | | 1.5 | | | | | | | | | Other net permanent differences | | 3.1 | | | 5.3 | | | 1.8 | | U.S. general business credits | | (3.1) | | | (2.6) | | | (3.6) | | Change in unrecognized tax benefits | | (1.5) | | | (1.7) | | | 2.4 | | Stock-based compensation | | (0.7) | | | (0.3) | | | 0.7 | | | | | | | | | | | | | | | | BEAT | | — | | | — | | | (0.6) | | U.S. taxation of foreign earnings | | 0.3 | | | 0.5 | | | (1.1) | | | | | | | | | Other | | 0.4 | | | 0.2 | | | — | | Income tax expense (benefit) | | $ | 5.6 | | | $ | (5.7) | | | $ | 14.0 | |
|
Schedule of Deferred Tax Assets and Liabilities |
The following table is a summary of the Company's deferred tax assets and liabilities as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | Deferred tax assets: | | | | | Basis difference in revalued investments | | $ | 50.2 | | | $ | 50.4 | | Tax loss carryovers | | 16.6 | | | 22.5 | | Tax credit carryovers | | 13.6 | | | 17.7 | | Postretirement benefits and other employee benefits | | 1.7 | | | 5.4 | | Bad debt and other reserves | | 1.4 | | | 1.6 | | Lease liabilities | | 8.8 | | | 10.9 | | Depreciation & amortization | | 20.6 | | | 12.3 | | Interest expense carryovers | | 14.2 | | | 16.3 | | Other | | 4.2 | | | 5.4 | | Valuation allowances | | (76.8) | | | (82.0) | | Total deferred tax assets | | 54.5 | | | 60.5 | | Deferred tax liability: | | | | | Depreciation and amortization and other | | (63.8) | | | (64.0) | | Lease right-of-use assets | | (8.1) | | | (10.2) | | Total deferred tax liability | | (71.9) | | | (74.2) | | Net deferred tax liability | | $ | (17.4) | | | $ | (13.7) | |
|
Summary of Operating Loss Carryforwards and Tax Credit Carryforwards Expirations |
The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected), credit carry-forwards and other expense carry-forwards (not tax effected) as of December 31, 2022: | | | | | | | | | | | | | | | (Amounts in millions) | | Expiration Date | | Amount | U.S. capital loss carry-forwards | | 2023 - 2026 | | $ | 43.1 | | U.S. net operating loss carry-forwards | | 2025 - Indefinite | | $ | 1.8 | | U.S. tax credit carry-forwards | | 2024- 2042 | | $ | 13.6 | | U.S. interest expense carry-forwards | | Indefinite | | $ | 64.4 | |
|
Schedule of Unrecognized Tax Benefit Roll Forward |
The following table is a reconciliation of unrecognized tax benefits for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Beginning balance | | $ | 14.7 | | | $ | 19.7 | | | $ | 18.2 | | Additions based on tax positions related to prior years | | 0.3 | | | 1.5 | | | 0.9 | | Additions based on tax positions related to current year | | 0.8 | | | 0.6 | | | 0.6 | | Settlements with cash or attributes | | (4.8) | | | (2.3) | | | — | | | | | | | | | Reductions for tax positions of prior years and other | | (1.9) | | | (4.8) | | | — | | Ending balance | | $ | 9.1 | | | $ | 14.7 | | | $ | 19.7 | |
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v3.22.4
Earnings per Common Share (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Earnings Per Share [Abstract] |
|
Schedule of Earnings Per Share, Basic and Diluted |
The following table is a reconciliation of the weighted-average share amounts used in calculating earnings (loss) per common share for the years ended December 31:
| | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Basic and diluted common shares outstanding | | 96.4 | | | 89.7 | | | 77.8 | | Shares related to restricted stock units | | 3.7 | | | — | | | — | | | | | | | | | Diluted common shares outstanding | | 100.1 | | | 89.7 | | | 77.8 | |
|
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share |
The following table summarizes the weighted-average potential common shares excluded from diluted earnings (loss) per common share as their effect would be anti-dilutive: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Shares related to stock options | | 0.1 | | | 0.2 | | | 0.3 | | Shares related to restricted stock units | | — | | | 4.2 | | | 4.5 | | Shares related to Ripple Warrants | | — | | | 1.1 | | | 6.0 | | Shares excluded from the computation | | 0.1 | | | 5.5 | | | 10.8 | |
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v3.22.4
Segment Information (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Segment Reporting [Abstract] |
|
Revenue by Segment |
The following table is a summary of the total revenue by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT revenue | | | | | | | Money transfer revenue | | $ | 1,190.3 | | | $ | 1,189.2 | | | $ | 1,104.7 | | Bill payment revenue | | 35.6 | | | 39.6 | | | 46.2 | | Total GFT revenue | | 1,225.9 | | | 1,228.8 | | | 1,150.9 | | FPP revenue | | | | | | | Money order revenue | | 44.1 | | | 40.9 | | | 43.4 | | Official check revenue | | 40.1 | | | 13.9 | | | 22.9 | | Total FPP revenue | | 84.2 | | | 54.8 | | | 66.3 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
The following table is a summary of the gross profit by segment and detail of the income (loss) before income taxes for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT gross profit | | $ | 557.7 | | | $ | 545.6 | | | $ | 501.6 | | | | | | | | | FPP gross profit (1) | | 62.2 | | | 53.9 | | | 62.6 | | Total gross profit | | 619.9 | | | 599.5 | | | 564.2 | | Total operating expenses | | 526.7 | | | 525.8 | | | 461.2 | | Total operating income | | 93.2 | | | 73.7 | | | 103.0 | | Interest expense | | 49.4 | | | 69.5 | | | 92.4 | | Loss on early extinguishment of debt | | — | | | 44.1 | | | — | | Other non-operating expense | | 4.0 | | | 3.7 | | | 4.5 | | Income (loss) before income taxes | | $ | 39.8 | | | $ | (43.6) | | | $ | 6.1 | |
|
Reconciliation of Depreciation, Amortization and Capital Expenditures from Segments to Consolidated |
The following table is a summary of depreciation and amortization expense by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT | | $ | 46.6 | | | $ | 51.3 | | | $ | 57.3 | | FPP | | 5.1 | | | 5.7 | | | 7.1 | | Total depreciation and amortization | | $ | 51.7 | | | $ | 57.0 | | | $ | 64.4 | |
|
Schedule of Capital Expenditures from Segments to Consolidated |
The following table is a summary of capital expenditures by segment for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT | | $ | 47.1 | | | $ | 38.3 | | | $ | 31.5 | | FPP | | 5.2 | | | 4.3 | | | 3.9 | | Total capital expenditures | | $ | 52.3 | | | $ | 42.6 | | | $ | 35.4 | |
|
Assets by Segment |
The following table sets forth assets by segment as of December 31: | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | GFT | | $ | 1,412.6 | | | $ | 1,269.5 | | FPP | | 3,066.0 | | | 3,169.8 | | Other | | 26.6 | | | 37.2 | | Total assets | | $ | 4,505.2 | | | $ | 4,476.5 | |
|
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area |
The following table details total revenue by major geographic area for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | U.S. | | $ | 544.7 | | | $ | 543.9 | | | $ | 543.8 | | International | | 765.4 | | | 739.7 | | | 673.4 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
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v3.22.4
Revenue Recognition (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] |
|
Summary of Revenue Streams |
The following table is a summary of the Company's revenue streams disaggregated by services and products for each segment and timing of revenue recognition for such services and products excluding other revenue for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | GFT revenue | | | | | | | Money transfer fee revenue | | $ | 1,151.0 | | | $ | 1,160.0 | | | $ | 1,083.4 | | Bill payment services fee revenue | | 35.6 | | | 40.5 | | | 46.2 | | Other revenue | | 39.3 | | | 28.3 | | | 21.3 | | Total GFT fee and other revenue | | $ | 1,225.9 | | | $ | 1,228.8 | | | $ | 1,150.9 | | FPP revenue | | | | | | | Money order fee revenue | | 5.4 | | | 6.3 | | | 7.3 | | Official check outsourcing services fee revenue | | 6.7 | | | 7.1 | | | 7.4 | | Other revenue | | 34.2 | | | 33.6 | | | 31.6 | | Total FPP fee and other revenue | | 46.3 | | | 47.0 | | | 46.3 | | Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | | | | | | | | | Timing of revenue recognition: | | | | | | | Services and products transferred at a point in time | | $ | 1,192.0 | | | $ | 1,206.8 | | | $ | 1,137.0 | | Products transferred over time | | 6.7 | | | 7.1 | | | 7.4 | | Total revenue from services and products | | 1,198.7 | | | 1,213.9 | | | 1,144.4 | | Investment revenue | | 37.9 | | | 7.8 | | | 20.0 | | Other revenue | | 73.5 | | | 61.9 | | | 52.8 | | Total revenue | | $ | 1,310.1 | | | $ | 1,283.6 | | | $ | 1,217.2 | |
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v3.22.4
Leases (Tables)
|
12 Months Ended |
Dec. 31, 2022 |
Leases [Abstract] |
|
Summary of the Lease Expense and Supplemental Cash Flow Information |
The following table is a summary of the Company's lease expense for its operating leases for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Buildings, equipment and vehicle leases | | $ | 10.8 | | | $ | 13.3 | | | $ | 15.0 | | Short-term and variable lease cost | | 0.3 | | | 1.1 | | | 1.2 | | Total lease cost | | $ | 11.1 | | | $ | 14.4 | | | $ | 16.2 | |
Supplemental cash flow information related to leases was as follows for the years ended December 31: | | | | | | | | | | | | | | | | | | | | | (Amounts in millions) | | 2022 | | 2021 | | 2020 | Cash paid for amounts included in the measurement of operating lease liabilities | | $ | 10.9 | | | $ | 13.7 | | | $ | 15.3 | | ROU assets obtained in exchange for lease obligations | | $ | — | | | $ | 10.1 | | | $ | 15.0 | |
|
Schedule of Operating Lease Maturities |
Maturities of operating lease liabilities as of December 31, 2022 were as follows: | | | | | | | | | (Amounts in millions) | | Future Minimum Lease Payments | 2023 | | $ | 9.1 | | 2024 | | 8.9 | | 2025 | | 8.5 | | 2026 | | 7.6 | | 2027 | | 6.2 | | Thereafter | | 15.0 | | Total | | 55.3 | | Less: present value discount | | (9.9) | | Lease liability - operating | | $ | 45.4 | |
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v3.22.4
Summary of Significant Accounting Policies - Estimated Useful Lives by Major Asset Category (Details)
|
12 Months Ended |
Dec. 31, 2022 |
Minimum | Contractual and Customer Relationships |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
3 years
|
Minimum | Non-compete Agreements |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
3 years
|
Minimum | Developed Technology |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
5 years
|
Maximum | Contractual and Customer Relationships |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
15 years
|
Maximum | Non-compete Agreements |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
5 years
|
Maximum | Developed Technology |
|
Property, Plant and Equipment [Line Items] |
|
Finite-lived intangible asset, useful life |
7 years
|
Computer Hardware and Software |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
3 years
|
Computer Software, Intangible Asset | Minimum |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
5 years
|
Computer Software, Intangible Asset | Maximum |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
7 years
|
Signage |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
3 years
|
Agent Equipment | Minimum |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
3 years
|
Agent Equipment | Maximum |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
7 years
|
Furniture and Fixtures |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
7 years
|
Leasehold Improvements |
|
Property, Plant and Equipment [Line Items] |
|
Useful life (in years) |
10 years
|
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v3.22.4
Settlement Assets and Payment Service Obligations (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
|
|
Receivables, net |
$ 1,107.0
|
$ 700.4
|
Interest-bearing investments |
998.1
|
992.3
|
Available-for-sale investments: |
3.0
|
3.0
|
Settlement assets |
3,607.2
|
3,591.4
|
Payment service obligations |
(3,607.2)
|
(3,591.4)
|
Settlement cash and cash equivalents |
$ 1,499.1
|
$ 1,895.7
|
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v3.22.4
Fair Value Measurement - Financial Assets and Liabilities Measured at Fair Value by Hierarchy Level (Detail) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Financial Assets: |
|
|
Available-for-sale investments: |
$ 3.0
|
$ 3.0
|
Total financial assets |
35.4
|
45.3
|
Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Total financial assets |
8.2
|
3.1
|
Residential Mortgage-Backed Securities — Agencies | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
1.5
|
2.3
|
Asset-Backed and Other Securities |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
1.5
|
0.7
|
Asset-Backed and Other Securities | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
1.5
|
0.7
|
Forward Contracts | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Forward contracts |
5.2
|
0.1
|
Financial Liabilities: |
|
|
Forward contracts |
3.3
|
0.2
|
Level 2 | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Total financial assets |
6.7
|
2.4
|
Level 2 | Residential Mortgage-Backed Securities — Agencies | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
1.5
|
2.3
|
Level 2 | Asset-Backed and Other Securities | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
0.0
|
0.0
|
Level 2 | Forward Contracts | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Forward contracts |
5.2
|
0.1
|
Financial Liabilities: |
|
|
Forward contracts |
3.3
|
0.2
|
Level 3 | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Total financial assets |
1.5
|
0.7
|
Level 3 | Residential Mortgage-Backed Securities — Agencies | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Available-for-sale investments: |
0.0
|
0.0
|
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|
|
Financial Assets: |
|
|
Available-for-sale investments: |
1.5
|
0.7
|
Level 3 | Forward Contracts | Fair Value, Measurements, Recurring |
|
|
Financial Assets: |
|
|
Forward contracts |
0.0
|
0.0
|
Financial Liabilities: |
|
|
Forward contracts |
$ 0.0
|
$ 0.0
|
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v3.22.4
Fair Value Measurement (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
|
|
Senior secured credit facilities |
$ 795.0
|
$ 799.0
|
Level 2 | Fair Value, Measurements, Nonrecurring |
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
|
|
Fair Value |
378.6
|
383.5
|
Term Loan due 2026 | Level 2 |
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
|
|
Senior secured credit facilities |
380.0
|
384.0
|
Senior Notes | Level 2 |
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
|
|
Senior secured credit facilities |
415.0
|
415.0
|
Senior Notes | Level 2 | Fair Value, Measurements, Nonrecurring |
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] |
|
|
Fair Value |
$ 420.2
|
$ 421.2
|
X |
- DefinitionAmount, before unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but is not limited to, notes payable, bonds payable, commercial loans, mortgage loans, convertible debt, subordinated debt and other types of debt.
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v3.22.4
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] |
|
|
Property and equipment, gross |
$ 598.4
|
$ 672.3
|
Accumulated depreciation and amortization |
(463.9)
|
(538.4)
|
Property and equipment, net |
134.5
|
133.9
|
Computer Hardware and Software |
|
|
Property, Plant and Equipment [Line Items] |
|
|
Property and equipment, gross |
476.2
|
529.9
|
Signage |
|
|
Property, Plant and Equipment [Line Items] |
|
|
Property and equipment, gross |
41.6
|
50.6
|
Office Furniture and Equipment |
|
|
Property, Plant and Equipment [Line Items] |
|
|
Property and equipment, gross |
11.6
|
19.5
|
Leasehold Improvements |
|
|
Property, Plant and Equipment [Line Items] |
|
|
Property and equipment, gross |
21.1
|
22.1
|
Equipment At Agent Locations |
|
|
Property, Plant and Equipment [Line Items] |
|
|
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$ 47.9
|
$ 50.2
|
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v3.22.4
Property and Equipment - Additional Information (Details) - USD ($)
|
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] |
|
|
|
Depreciation, depletion and amortization |
$ 51,300,000
|
$ 56,400,000
|
$ 63,900,000
|
Tangible asset impairment charges |
0
|
0
|
$ 0
|
Accrued purchases of property and equipment |
300,000
|
1,700,000
|
|
Capitalized computer software, additions |
45,200,000
|
35,000,000
|
|
Capitalized computer software, gross |
113,600,000
|
104,300,000
|
|
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$ 5,800,000
|
$ 1,000,000
|
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v3.22.4
Debt - Additional Information (Detail) - USD ($)
|
|
3 Months Ended |
12 Months Ended |
|
|
Jun. 28, 2021 |
Dec. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Sep. 30, 2022 |
Jun. 26, 2019 |
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt, Instrument, Pre-Payments On Debt |
$ 100,000,000
|
|
|
|
|
|
Debt prepayment cost |
|
$ 16,000,000
|
|
|
|
|
Extinguishment of Debt, Amount |
|
|
|
$ 44,100,000
|
|
|
Debt Instrument, Unamortized Premium |
16,500,000
|
|
|
|
|
|
Write off of Deferred Debt Issuance Cost |
$ 27,600,000
|
|
|
|
|
|
Repayments of Debt |
|
|
$ 7,000,000
|
|
|
|
Interest coverage minimum ratio |
|
4.742
|
4.742
|
|
|
|
Total leverage ratio not to exceed |
|
3.137
|
3.137
|
|
|
|
Assets In excess of payment service obligations |
|
$ 172,100,000
|
$ 172,100,000
|
|
|
|
Debt issuance costs, net |
|
0
|
0
|
|
|
|
Long-term debt, maturities, repayments of principal in year five |
|
781,000,000
|
781,000,000
|
|
|
|
Debt instrument quarterly incremental payment amount |
|
$ 14,000,000
|
$ 14,000,000
|
|
|
|
July 1, 2020 through December 31, 2020 |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Interest coverage minimum ratio |
|
4.742
|
4.742
|
|
|
|
Second Lien Credit Facility due 2026 |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt instrument, face amount |
|
|
|
|
|
$ 415,000,000
|
Senior Secured Notes due 2026 |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt instrument, face amount |
|
$ 415,000,000.0
|
$ 415,000,000.0
|
415,000,000.0
|
|
|
Effective interest rate |
|
5.375%
|
5.375%
|
|
|
|
First Lien Credit Facility due 2023 |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt instrument, face amount |
|
|
|
|
|
$ 400,000,000
|
Debt instrument principal amount to be paid in quarterly increments |
|
$ 1,000,000
|
$ 1,000,000
|
|
|
|
Revolving Credit Facility |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Long-term line of credit |
|
$ 40,000,000
|
$ 40,000,000
|
|
$ 32,500,000
|
|
Term Loan | Base Rate |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Effective interest rate |
|
3.50%
|
3.50%
|
|
|
|
Term Loan | London Interbank Offered Rate (LIBOR) |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Effective interest rate |
|
4.50%
|
4.50%
|
|
|
|
Debt Instrument, Basis Spread on Variable Rate |
|
|
4.07%
|
|
|
|
Term Loan | London Interbank Offered Rate (LIBOR) | Minimum |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt Instrument, Basis Spread on Variable Rate |
|
|
0.50%
|
|
|
|
Term Credit Facility |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt instrument, face amount |
|
$ 0
|
$ 0
|
|
|
|
Term Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt Instrument, Basis Spread on Variable Rate |
|
|
0.00%
|
|
|
|
Term Loan due 2026 |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Debt instrument, face amount |
|
$ 380,000,000.0
|
$ 380,000,000.0
|
$ 384,000,000.0
|
|
|
Effective interest rate |
|
8.57%
|
8.57%
|
5.00%
|
|
|
New Credit Agreement |
|
|
|
|
|
|
Debt Instrument [Line Items] |
|
|
|
|
|
|
Interest coverage minimum ratio |
|
2.150
|
2.150
|
|
|
|
Total leverage ratio not to exceed |
|
4.750
|
4.750
|
|
|
|
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v3.22.4
Pension and Other Benefits Pension assumptions (Details)
|
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Pension Plan |
|
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.86%
|
2.51%
|
3.23%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate for interest cost |
2.33%
|
1.86%
|
2.83%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, expected long-term rate of return on plan assets |
2.76%
|
1.80%
|
2.07%
|
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Weighted-Average Interest Crediting Rate |
1.92%
|
1.36%
|
1.73%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, rate of compensation increase |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial pre-65 health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial post-65 health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost ultimate health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation, discount rate |
5.17%
|
2.86%
|
2.51%
|
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Weighted-Average Interest Crediting Rate |
3.13%
|
1.92%
|
1.36%
|
Defined benefit plan, assumptions used calculating benefit obligation, rate of compensation increase |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation pre-65 initial health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation post-65 initial health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation ultimate health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Supplemental Employee Retirement Plan |
|
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.81%
|
2.41%
|
3.18%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate for interest cost |
2.16%
|
1.62%
|
2.70%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, expected long-term rate of return on plan assets |
0.00%
|
0.00%
|
0.00%
|
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Weighted-Average Interest Crediting Rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, rate of compensation increase |
5.75%
|
5.75%
|
5.75%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial pre-65 health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial post-65 health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost ultimate health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation, discount rate |
5.15%
|
2.81%
|
2.41%
|
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Weighted-Average Interest Crediting Rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation, rate of compensation increase |
5.75%
|
5.75%
|
5.75%
|
Defined benefit plan, assumptions used calculating benefit obligation pre-65 initial health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation post-65 initial health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation ultimate health care cost trend rate |
0.00%
|
0.00%
|
0.00%
|
Other Postretirement Benefits Plan |
|
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.95%
|
2.64%
|
3.33%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate for interest cost |
2.22%
|
1.74%
|
2.77%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, expected long-term rate of return on plan assets |
0.00%
|
0.00%
|
0.00%
|
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Weighted-Average Interest Crediting Rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, rate of compensation increase |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial pre-65 health care cost trend rate |
6.38%
|
6.46%
|
6.79%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost initial post-65 health care cost trend rate |
6.64%
|
7.08%
|
7.51%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost ultimate health care cost trend rate |
4.50%
|
4.50%
|
4.50%
|
Defined benefit plan, assumptions used calculating net periodic benefit cost year that rate reaches ultimate pre-65 trend rate |
2030
|
2028
|
|
Defined benefit plan, assumptions used calculating benefit obligation, discount rate |
5.22%
|
2.95%
|
2.64%
|
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Weighted-Average Interest Crediting Rate |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation, rate of compensation increase |
0.00%
|
0.00%
|
0.00%
|
Defined benefit plan, assumptions used calculating benefit obligation pre-65 initial health care cost trend rate |
6.87%
|
6.38%
|
6.46%
|
Defined benefit plan, assumptions used calculating benefit obligation post-65 initial health care cost trend rate |
7.26%
|
6.64%
|
7.08%
|
Defined benefit plan, assumptions used calculating benefit obligation ultimate health care cost trend rate |
4.50%
|
4.50%
|
4.50%
|
Defined benefit plan, assumptions used calculating benefit obligation year that rate reaches ultimate pre-65 trend rate |
2031
|
2030
|
2028
|
X |
- DefinitionDefined Benefit Plan, Assumptions Used Calculating Benefit Obligation Post-65 Initial Health Care Cost Trend Rate
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v3.22.4
Pension and Other Benefits Financial Assets Recorded at Fair Value by Hierarchy (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
$ 35.4
|
$ 45.3
|
Fair Value Measured at Net Asset Value Per Share |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
30.9
|
41.1
|
Pension Plan |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
4.5
|
4.2
|
Pension Plan | Defined Benefit Plan, Real Estate |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
4.5
|
4.2
|
Pension Plan | Level 3 |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
4.5
|
4.2
|
Pension Plan | Level 3 | Defined Benefit Plan, Real Estate |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
4.5
|
4.2
|
Pension Plan | Fair Value Measured at Net Asset Value Per Share |
|
|
Defined Benefit Plan Disclosure [Line Items] |
|
|
Assets, fair value disclosure |
$ 30.9
|
$ 41.1
|
X |
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Pension and Other Benefits Pension Plan Assets Fair Value (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
$ 35.4
|
$ 45.3
|
Pension Plan |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
4.5
|
4.2
|
Money Market Funds |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
0.9
|
0.9
|
Multi-Asset Credit Fund |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
$ 0.4
|
$ 0.8
|
Fair value, investments, entities that calculate net asset value per share, investment redemption, notice period |
10 days
|
10 days
|
Fair value, investments, entities that calculate net asset value per share, investment redemption, frequency |
Monthly
|
Monthly
|
Equity and Fixed Income Securities |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
$ 29.6
|
$ 39.4
|
Fair value, investments, entities that calculate net asset value per share, investment redemption, notice period |
15 days
|
15 days
|
Fair value, investments, entities that calculate net asset value per share, investment redemption, frequency |
Daily
|
Daily
|
Fair Value Measured at Net Asset Value Per Share |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
$ 30.9
|
$ 41.1
|
Fair Value Measured at Net Asset Value Per Share | Pension Plan |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Investments measured at net asset value |
$ 30.9
|
$ 41.1
|
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v3.22.4
Pension and Other Benefits Amounts Recognized in Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Pension Plan |
|
|
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] |
|
|
|
Other comprehensive income (loss), defined benefit plan, gain (loss) arising during period, before tax |
$ (7.3)
|
$ (1.8)
|
$ 4.5
|
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(2.3)
|
(2.4)
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(2.0)
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|
|
(0.1)
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(9.1)
|
(4.2)
|
2.4
|
Defined benefit plan, net periodic benefit cost (credit) |
3.0
|
3.7
|
4.4
|
Defined benefit plan, amount recognized in net periodic benefit cost (credit) and other comprehensive (income) loss, before tax |
(6.1)
|
(0.5)
|
6.8
|
Other Postretirement Benefits Plan |
|
|
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] |
|
|
|
Other comprehensive income (loss), defined benefit plan, gain (loss) arising during period, before tax |
0.0
|
0.0
|
(0.1)
|
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0.0
|
(0.1)
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(0.1)
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0.0
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|
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(0.1)
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0.1
|
0.1
|
0.1
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$ 0.0
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$ (0.1)
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v3.22.4
Pension and Other Benefits Pension Unfunded Status Table (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
|
Defined benefit plan, benefit obligation |
$ 88.9
|
$ 112.5
|
$ 120.7
|
Interest cost |
2.4
|
2.0
|
|
Defined benefit plan, benefit obligation, actuarial gain (loss) |
(18.5)
|
(2.6)
|
|
Defined benefit plan, benefit obligation, benefits paid |
(7.5)
|
(7.6)
|
|
Defined benefit plan, plan assets, amount |
35.6
|
45.4
|
46.2
|
Defined benefit plan, plan assets, increase (decrease) for actual return (loss) |
(10.0)
|
(0.1)
|
|
Defined benefit plan, plan assets, contributions by employer |
7.7
|
6.9
|
|
Defined benefit plan, plan assets, benefits paid |
(7.5)
|
(7.6)
|
|
Defined benefit plan, funded (unfunded) status of plan |
$ 53.3
|
67.1
|
|
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] |
Pension and other postretirement benefits
|
|
|
Pension Plan |
|
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
|
Defined benefit plan, benefit obligation |
$ 88.4
|
111.9
|
120.1
|
Interest cost |
2.4
|
2.0
|
3.1
|
Defined benefit plan, benefit obligation, actuarial gain (loss) |
(18.6)
|
(2.6)
|
|
Defined benefit plan, benefit obligation, benefits paid |
(7.3)
|
(7.6)
|
|
Defined benefit plan, plan assets, amount |
35.6
|
45.4
|
46.2
|
Defined benefit plan, plan assets, increase (decrease) for actual return (loss) |
(10.0)
|
(0.1)
|
|
Defined benefit plan, plan assets, contributions by employer |
7.5
|
6.9
|
|
Defined benefit plan, plan assets, benefits paid |
(7.3)
|
(7.6)
|
|
Defined benefit plan, funded (unfunded) status of plan |
52.8
|
66.5
|
|
Other Postretirement Benefits Plan |
|
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
|
Defined benefit plan, benefit obligation |
0.5
|
0.6
|
0.6
|
Interest cost |
0.0
|
0.0
|
0.0
|
Defined benefit plan, benefit obligation, actuarial gain (loss) |
0.1
|
0.0
|
|
Defined benefit plan, benefit obligation, benefits paid |
(0.2)
|
0.0
|
|
Defined benefit plan, plan assets, amount |
0.0
|
0.0
|
$ 0.0
|
Defined benefit plan, plan assets, increase (decrease) for actual return (loss) |
0.0
|
0.0
|
|
Defined benefit plan, plan assets, contributions by employer |
0.2
|
0.0
|
|
Defined benefit plan, plan assets, benefits paid |
(0.2)
|
0.0
|
|
Defined benefit plan, funded (unfunded) status of plan |
$ 0.5
|
$ 0.6
|
|
X |
- DefinitionAmount of increase (decrease) in plan assets of defined benefit plan from actual return (loss) determined by change in fair value of plan assets adjusted for contributions, benefit payments, and other expenses.
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v3.22.4
Pension and Other Benefits Amounts Recognized in Balance Sheet (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Accumulated other comprehensive income (loss), defined benefit plan, gain (loss), after tax |
$ 28.4
|
$ 35.4
|
Pension Plan |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Accumulated other comprehensive income (loss), defined benefit plan, gain (loss), after tax |
28.1
|
35.2
|
Other Postretirement Benefits Plan |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
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$ 0.3
|
$ 0.2
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v3.22.4
Pension and Other Benefits Accumulated and Projected Benefit Obligations (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Pension Plan |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, accumulated benefit obligation |
$ 88.4
|
$ 111.9
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, plan assets |
35.6
|
45.4
|
Other Postretirement Benefits Plan |
|
|
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|
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, accumulated benefit obligation |
0.5
|
0.0
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, plan assets |
$ 0.0
|
$ 0.0
|
X |
- DefinitionAmount of accumulated benefit obligation for defined benefit plan with accumulated benefit obligation in excess of plan assets.
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v3.22.4
Pension and Other Benefits Expected Benefit Payments (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Pension Plan 1 |
|
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] |
|
|
Defined benefit plan, expected future benefit payment, next twelve months |
|
$ 8.4
|
Defined benefit plan, expected future benefit payment, year two |
$ 7.2
|
|
Defined benefit plan, expected future benefit payment, year three |
7.2
|
|
Defined benefit plan, expected future benefit payment, year four |
7.2
|
|
Defined benefit plan, expected future benefit payment, year five |
7.1
|
|
Defined benefit plan, expected future benefit payment, five fiscal years thereafter |
32.1
|
|
Other Postretirement Benefits Plan |
|
|
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|
|
Defined benefit plan, expected future benefit payment, next twelve months |
0.0
|
|
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0.0
|
|
Defined benefit plan, expected future benefit payment, year three |
0.0
|
|
Defined benefit plan, expected future benefit payment, year four |
0.0
|
|
Defined benefit plan, expected future benefit payment, year five |
0.0
|
|
Defined benefit plan, expected future benefit payment, five fiscal years thereafter |
$ 0.1
|
|
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v3.22.4
Pension and Other Benefits Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Defined benefit plan, funded (unfunded) status of plan |
$ (53.3)
|
$ (67.1)
|
|
Equity Securities |
|
|
|
Defined Benefit Plan, Plan Assets, Investment within Plan Asset Category, Percentage |
6.00%
|
|
|
Fixed Income |
|
|
|
Defined Benefit Plan, Plan Assets, Investment within Plan Asset Category, Percentage |
81.00%
|
|
|
Real Estate |
|
|
|
Defined Benefit Plan, Plan Assets, Investment within Plan Asset Category, Percentage |
13.00%
|
|
|
Pension Plan |
|
|
|
Defined benefit plan, funded (unfunded) status of plan |
$ (52.8)
|
$ (66.5)
|
|
Defined benefit plan, required future payment, next twelve months |
$ 0.0
|
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.86%
|
2.51%
|
3.23%
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, accumulated benefit obligation |
$ 88.4
|
$ 111.9
|
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, plan assets |
35.6
|
45.4
|
|
Pension Plan 1 |
|
|
|
Defined benefit plan, funded (unfunded) status of plan |
3.1
|
3.3
|
|
Defined benefit plan, expected future benefit payment, next twelve months |
|
8.4
|
|
Supplemental Employee Retirement Plan |
|
|
|
Defined benefit plan, funded (unfunded) status of plan |
$ 49.7
|
$ 63.2
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.81%
|
2.41%
|
3.18%
|
SERP and Postretirement Benefits |
|
|
|
Defined benefit plan, expected future benefit payment, next twelve months |
$ 5.5
|
|
|
Deferred Compensation, Excluding Share-based Payments and Retirement Benefits |
|
|
|
Defined contribution plan, cost |
4.8
|
$ 4.4
|
$ 3.7
|
Contribution expense related to international benefit plans |
1.5
|
1.9
|
$ 2.0
|
Other Postretirement Benefits Plan |
|
|
|
Defined benefit plan, funded (unfunded) status of plan |
(0.5)
|
$ (0.6)
|
|
Defined benefit plan, expected future benefit payment, next twelve months |
$ 0.0
|
|
|
Defined benefit plan, assumptions used calculating net periodic benefit cost, discount rate |
2.95%
|
2.64%
|
3.33%
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, accumulated benefit obligation |
$ 0.5
|
$ 0.0
|
|
Defined benefit plan, plan with accumulated benefit obligation in excess of plan assets, plan assets |
$ 0.0
|
$ 0.0
|
|
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v3.22.4
Stockholders' Deficit - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
|
12 Months Ended |
|
|
|
Jun. 07, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Feb. 14, 2022 |
Jun. 18, 2021 |
Dec. 31, 2019 |
Class of Stock [Line Items] |
|
|
|
|
|
|
|
Common stock, shares authorized |
|
162,500,000
|
162,500,000
|
|
|
|
|
Dividends paid |
|
$ 0.0
|
$ 0.0
|
$ 0.0
|
|
|
|
Convertible Preferred Stock, Nonredeemable or Redeemable, Issuer Option, Value |
|
|
|
|
|
$ 99.8
|
|
Sale of Stock, Price Per Share |
|
|
|
|
$ 11.00
|
$ 9.56
|
|
ATM Equity Offering |
|
|
$ 97.2
|
|
|
|
|
Preferred Stock, Shares Authorized |
|
7,000,000
|
|
|
|
|
|
Stock Repurchase Program, Authorized Amount |
|
$ 50.0
|
|
|
|
|
|
Treasury Stock, Shares, Acquired |
|
1,023,209
|
|
|
|
|
|
Treasury Stock, Value, Acquired, Par Value Method |
|
$ 6.1
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
Class of Stock [Line Items] |
|
|
|
|
|
|
|
Sale Of Stock, Aggregate Sales Price |
$ 100.0
|
|
|
|
|
|
|
Convertible Preferred Stock, Shares Issued upon Conversion |
|
|
10,441,111
|
|
|
|
|
ATM Equity Offering |
|
|
$ 0.1
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
Class of Stock [Line Items] |
|
|
|
|
|
|
|
Common stock, shares authorized |
|
162,500,000
|
162,500,000
|
162,500,000
|
|
|
162,500,000
|
Convertible Preferred Stock, Shares Issued upon Conversion |
|
|
|
8,910,234
|
|
10,400,000
|
|
Treasury Stock, Shares, Acquired |
|
|
1,023,209
|
|
|
|
|
D Stock |
|
|
|
|
|
|
|
Class of Stock [Line Items] |
|
|
|
|
|
|
|
Preferred Stock, Par or Stated Value Per Share |
|
$ 0.01
|
$ 0.01
|
|
|
|
|
Preferred Stock, Shares Authorized |
|
|
|
|
|
|
200,000
|
Preferred stock, shares issued |
|
|
|
|
|
|
71,282
|
Preferred stock, conversion basis |
|
125
|
|
|
|
|
|
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v3.22.4
Stockholders' Deficit Schedule of Activity of Company's Common Stock (Details) - shares
|
12 Months Ended |
|
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Jun. 18, 2021 |
Dec. 31, 2019 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
Common stock, shares authorized |
162,500,000
|
162,500,000
|
|
|
|
Common stock, shares, issued |
98,964,065
|
92,305,011
|
|
|
|
Common Stock, Shares, Outstanding |
96,626,432
|
90,725,982
|
|
|
|
Treasury stock (shares) |
2,337,633
|
1,579,029
|
|
|
|
Treasury Stock, Shares, Acquired |
(1,023,209)
|
|
|
|
|
Common Stock |
|
|
|
|
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
Convertible Preferred Stock, Shares Issued upon Conversion |
|
10,441,111
|
|
|
|
Stock issued during period, shares, new issues |
|
10,441,111
|
|
|
|
Treasury Stock |
|
|
|
|
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
Convertible Preferred Stock, Shares Issued upon Conversion |
|
|
1,496,912
|
|
|
Common Stock |
|
|
|
|
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
Common stock, shares authorized |
162,500,000
|
162,500,000
|
162,500,000
|
|
162,500,000
|
Common stock, shares, issued |
98,964,065
|
92,305,011
|
72,530,770
|
|
65,061,090
|
Common Stock, Shares, Outstanding |
96,626,432
|
90,725,982
|
72,517,539
|
|
62,731,184
|
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures |
1,446,291
|
1,877,434
|
876,121
|
|
|
Stock issued during period, shares, share-based compensation, net of forfeitures |
2,200,740
|
2,419,079
|
56,358
|
|
|
Convertible Preferred Stock, Shares Issued upon Conversion |
|
|
8,910,234
|
10,400,000
|
|
Stock issued during period, shares, new issues |
4,458,314
|
5,948,895
|
7,413,322
|
|
|
Class of Warrant or Right, Issued |
4,454,159
|
965,156
|
|
|
|
Class of warrant or right, outstanding |
|
964,212
|
|
|
|
Treasury Stock, Shares, Acquired |
|
(1,023,209)
|
|
|
|
Treasury Stock |
|
|
|
|
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] |
|
|
|
|
|
Treasury stock (shares) |
2,337,633
|
1,579,029
|
13,231
|
|
2,329,906
|
Stock issued during period, shares, share-based compensation, net of forfeitures |
754,449
|
541,645
|
819,763
|
|
|
Class of Warrant or Right, Issued |
4,155
|
|
|
|
|
Class of warrant or right, outstanding |
|
944
|
|
|
|
Treasury Stock, Shares, Acquired |
|
(1,023,209)
|
|
|
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v3.22.4
Stockholders' Deficit Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Accumulated Other Comprehensive Income (Loss) [Line Items] |
|
|
|
|
Accumulated Other Comprehensive Income (Loss), Net of Tax |
$ (64.9)
|
$ (62.8)
|
|
|
Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax |
|
|
|
|
Accumulated Other Comprehensive Income (Loss) [Line Items] |
|
|
|
|
Accumulated Other Comprehensive Income (Loss), Net of Tax |
2.2
|
1.5
|
$ 1.2
|
$ 1.6
|
Cumulative non-U.S. dollar Translation Adjustments, Net of Tax |
|
|
|
|
Accumulated Other Comprehensive Income (Loss) [Line Items] |
|
|
|
|
Accumulated Other Comprehensive Income (Loss), Net of Tax |
(38.7)
|
(28.9)
|
(20.9)
|
(28.1)
|
Pension and Postretirement Benefits Adjustment, Net of Tax |
|
|
|
|
Accumulated Other Comprehensive Income (Loss) [Line Items] |
|
|
|
|
Accumulated Other Comprehensive Income (Loss), Net of Tax |
$ (28.4)
|
$ (35.4)
|
$ (38.7)
|
$ (37.0)
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v3.22.4
Stockholders' Deficit - Summary of Changes To Accumulated Other Comprehensive Loss By Component (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Roll Forward] |
|
|
|
Beginning balance |
$ (62.8)
|
|
|
Other comprehensive income (loss), net of tax |
(2.1)
|
$ (4.4)
|
$ 5.1
|
Ending balance |
(64.9)
|
(62.8)
|
|
Net Unrealized Gains on Securities Classified as Available-for-sale, Net of Tax |
|
|
|
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Roll Forward] |
|
|
|
Beginning balance |
1.5
|
1.2
|
1.6
|
Other comprehensive income (loss) before reclassification |
0.7
|
0.3
|
(0.4)
|
Amounts reclassified from accumulated other comprehensive loss |
0.0
|
0.0
|
0.0
|
Other comprehensive income (loss), net of tax |
0.7
|
0.3
|
(0.4)
|
Ending balance |
2.2
|
1.5
|
1.2
|
Cumulative non-U.S. dollar Translation Adjustments, Net of Tax |
|
|
|
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Roll Forward] |
|
|
|
Beginning balance |
(28.9)
|
(20.9)
|
(28.1)
|
Other comprehensive income (loss) before reclassification |
(9.8)
|
(8.0)
|
7.2
|
Amounts reclassified from accumulated other comprehensive loss |
0.0
|
0.0
|
0.0
|
Other comprehensive income (loss), net of tax |
(9.8)
|
(8.0)
|
7.2
|
Ending balance |
(38.7)
|
(28.9)
|
(20.9)
|
Pension and Postretirement Benefits Adjustment, Net of Tax |
|
|
|
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Roll Forward] |
|
|
|
Beginning balance |
(35.4)
|
(38.7)
|
(37.0)
|
Other comprehensive income (loss) before reclassification |
5.6
|
1.4
|
(3.4)
|
Amounts reclassified from accumulated other comprehensive loss |
(1.4)
|
(1.9)
|
(1.7)
|
Other comprehensive income (loss), net of tax |
7.0
|
3.3
|
(1.7)
|
Ending balance |
(28.4)
|
(35.4)
|
(38.7)
|
Accumulated Other Comprehensive Loss |
|
|
|
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Roll Forward] |
|
|
|
Beginning balance |
(62.8)
|
(58.4)
|
(63.5)
|
Other comprehensive income (loss) before reclassification |
(3.5)
|
(6.3)
|
3.4
|
Amounts reclassified from accumulated other comprehensive loss |
(1.4)
|
(1.9)
|
(1.7)
|
Other comprehensive income (loss), net of tax |
(2.1)
|
(4.4)
|
5.1
|
Ending balance |
$ (64.9)
|
$ (62.8)
|
$ (58.4)
|
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v3.22.4
Stock-Based Compensation - Summary of Stock Option Activity (Detail) - Stock Options - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Stock Option Activity |
|
|
Shares, options outstanding, beginning balance |
131,153
|
|
Shares, forfeited/expired |
(20,378)
|
|
Shares, options outstanding, ending balance |
110,775
|
131,153
|
Weighted Average Exercise Price |
|
|
Weighted average exercise price, options outstanding (usd per share), beginning balance |
$ 17.54
|
|
Weighted-average exercise price, forfeited/expired (usd per share) |
17.74
|
|
Weighted average exercise price, options outstanding (usd per share), ending balance |
$ 17.51
|
$ 17.54
|
Additional Disclosures |
|
|
Weighted average remaining contractual term options outstanding (years) |
7 months 6 days
|
1 year 4 months 24 days
|
Aggregate intrinsic value, options outstanding |
$ 0.0
|
$ 0.0
|
X |
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Stock-Based Compensation - Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Equity Instruments Other than Options, Nonvested, Number of Shares |
|
|
Restricted stock units outstanding (shares), beginning balance |
4,104,547
|
|
Granted (shares) |
1,777,010
|
|
Vested and converted to shares (shares) |
(2,200,740)
|
|
Forfeited (shares) |
(7,302)
|
|
Restricted stock units outstanding (shares), ending balance |
3,673,515
|
4,104,547
|
Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value |
|
|
Restricted stock units outstanding (usd per share), beginning balance |
$ 3.82
|
|
Granted (usd per share) |
10.67
|
|
Vested and converted to shares (usd per share) |
4.63
|
|
Forfeited (usd per share) |
7.07
|
|
Restricted stock units outstanding (usd per share), ending balance |
$ 7.45
|
$ 3.82
|
Weighted average remaining contractual term options outstanding (years) |
9 months 10 days
|
10 months 9 days
|
Restricted stock units outstanding, aggregate intrinsic value |
$ 40.0
|
$ 32.4
|
Restricted stock units vested and outstanding (shares) |
174,827
|
|
Restricted stock units vested and outstanding (usd per share) |
$ 4.15
|
|
Restricted stock units vested and outstanding, aggregate intrinsic value |
$ 1.9
|
|
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Stock-Based Compensation - Additional Information (Detail) - USD ($)
|
12 Months Ended |
|
|
Dec. 31, 2022 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Mar. 31, 2016 |
May 01, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] |
|
|
|
|
|
|
Share-based compensation arrangement by share-based payment award, number of shares authorized |
|
|
|
|
12,925,000
|
15,425,000
|
Share-based compensation arrangement by share-based payment award, number of shares available for grant |
2,383,388
|
|
|
|
|
|
Unrecognized stock option expense |
$ 0
|
|
|
|
|
|
Unrecognized restricted stock unit expense |
$ 15,300,000
|
|
|
|
|
|
Remaining weighted-average vesting period (years) |
1 year 2 months 12 days
|
|
|
|
|
|
Stock Options |
|
|
|
|
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] |
|
|
|
|
|
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Share-based compensation arrangement by share-based payment award, expiration period |
|
10 years
|
10 years
|
10 years
|
|
|
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v3.22.4
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Income Taxes Income Taxes - Reconciliation of the Expected Federal Income Tax at Statutory Rates (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Income Tax Disclosure [Abstract] |
|
|
|
Effective income tax rate reconciliation at federal statutory income tax rate, amount |
$ 8.4
|
$ (9.2)
|
$ 1.3
|
Effective income tax rate reconciliation, state and local income taxes, amount |
(0.4)
|
(0.6)
|
(0.4)
|
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, amount |
(2.9)
|
1.7
|
12.0
|
Effective income tax rate reconciliation, foreign income tax rate differential, amount |
2.0
|
1.0
|
1.5
|
Effective income tax rate reconciliation, nondeductible expense, amount |
3.1
|
5.3
|
1.8
|
Effective income tax rate reconciliation, tax credit, amount |
(3.1)
|
(2.6)
|
(3.6)
|
Effective income tax rate reconciliation, tax contingency, amount |
(1.5)
|
(1.7)
|
2.4
|
Effective income tax rate reconciliation, nondeductible expense, share-based compensation cost, amount |
(0.7)
|
(0.3)
|
0.7
|
Effective income tax rate reconciliation Tax Cuts And Jobs Act transition tax on accumulated foreign earning |
0.0
|
0.0
|
(0.6)
|
Effective income tax rate reconciliation Tax Cuts And Jobs Act U.S. taxation of foreign earnings |
0.3
|
0.5
|
(1.1)
|
Effective income tax rate reconciliation, other reconciling items, amount |
0.4
|
0.2
|
0.0
|
Income tax expense (benefit) |
$ 5.6
|
$ (5.7)
|
$ 14.0
|
v3.22.4
Income Taxes Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2022 |
Dec. 31, 2021 |
Income Tax Disclosure [Abstract] |
|
|
Deferred tax assets, investments |
$ 50.2
|
$ 50.4
|
Deferred tax assets, operating loss carryforwards |
16.6
|
22.5
|
Deferred tax assets, tax credit carryforwards |
13.6
|
17.7
|
Deferred tax assets, tax deferred expense, compensation and benefits |
1.7
|
5.4
|
Deferred tax assets, tax deferred expense, reserves and accruals |
1.4
|
1.6
|
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals, Deferred Rent |
8.8
|
10.9
|
Deferred Tax Assets, Property, Plant and Equipment |
20.6
|
12.3
|
Deferred tax assets, other |
4.2
|
5.4
|
Deferred tax assets, valuation allowance |
(76.8)
|
(82.0)
|
Deferred tax assets, net of valuation allowance |
54.5
|
60.5
|
Deferred tax liabilities, property, plant and equipment |
(63.8)
|
(64.0)
|
Deferred Tax Liabilities, Leasing Arrangements |
(8.1)
|
(10.2)
|
Deferred tax liabilities, gross |
(71.9)
|
(74.2)
|
Deferred tax liabilities, net |
(17.4)
|
(13.7)
|
Deferred Tax Asset, Interest Carryforward |
$ 14.2
|
$ 16.3
|
X |
- DefinitionAmount, before allocation of valuation allowance, of deferred tax asset attributable to deductible interest carryforward.
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v3.22.4
Income Taxes - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended |
|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Income Tax Examination [Line Items] |
|
|
|
|
Accrued income taxes |
$ 7.2
|
$ 16.2
|
|
|
Income taxes receivable |
2.9
|
2.5
|
|
|
Income tax expense (benefit) |
5.6
|
(5.7)
|
$ 14.0
|
|
Deferred tax assets, net |
5.6
|
6.0
|
|
|
Liability for unrecognized tax benefits |
9.1
|
14.7
|
19.7
|
$ 18.2
|
Unrecognized tax benefits that if recognized could impact the effective tax rate |
9.1
|
14.7
|
19.7
|
|
Interest and penalties |
(4.6)
|
(2.0)
|
1.1
|
|
Income tax penalties and interest accrued |
2.8
|
7.4
|
|
|
Effective Income Tax Rate Reconciliation, Tax Credit, Amount |
$ 3.1
|
$ 2.6
|
3.6
|
|
Common stock, par value (usd per share) |
$ 0.01
|
$ 0.01
|
|
|
Deferred Tax Assets, Net of Valuation Allowance |
$ 54.5
|
$ 60.5
|
|
|
Effective income tax rate reconciliation, change in deferred tax assets valuation allowance, amount |
2.9
|
(1.7)
|
(12.0)
|
|
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount |
5.2
|
|
|
|
Income (loss) before income taxes |
39.8
|
(43.6)
|
$ 6.1
|
|
Deferred Tax Assets, Net Income (Loss) |
2.9
|
|
|
|
Deferred Tax Assets, Capital Loss Carryforwards |
0.9
|
|
|
|
Deferred Tax Assets, Other Comprehensive Loss |
1.4
|
|
|
|
Unrecognized Tax Benefits, Income Tax Penalties Accrued |
1.4
|
|
|
|
Unrecognized Tax Benefits, Income Tax Penalties Expense |
(3.2)
|
|
|
|
Internal Revenue Service (IRS) |
|
|
|
|
Income Tax Examination [Line Items] |
|
|
|
|
Unrecognized Tax Benefits, Interest on Income Taxes Expense |
(2.9)
|
|
|
|
Accounts Payable and Other Liabilities [Member] |
|
|
|
|
Income Tax Examination [Line Items] |
|
|
|
|
Deferred income tax liabilities, net |
$ 23.0
|
$ 19.7
|
|
|
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- DefinitionDeferred Tax Assets, Net Income (Loss)
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v3.22.4
Earnings per Common Share - Weighted-Average Common Shares Basic and Diluted (Details) - shares shares in Thousands |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] |
|
|
|
Basic |
96,400
|
89,700
|
77,800
|
Diluted |
100,100
|
89,700
|
77,800
|
Weighted Average Number of Shares, Restricted Stock |
3,700
|
0
|
0
|
Weighted Average Number Diluted Shares Outstanding Adjustment |
100,100
|
89,700
|
77,800
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Segment Information - Revenue by Segment (Detail) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Segment Reporting Information [Line Items] |
|
|
|
Revenues |
$ 1,310.1
|
$ 1,283.6
|
$ 1,217.2
|
Global Funds Transfer |
|
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|
Segment Reporting Information [Line Items] |
|
|
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Revenues |
1,225.9
|
1,228.8
|
1,150.9
|
Global Funds Transfer | Money Order Revenue |
|
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|
|
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Revenues |
1,190.3
|
1,189.2
|
1,104.7
|
Global Funds Transfer | Bill Payment Revenue |
|
|
|
Segment Reporting Information [Line Items] |
|
|
|
Revenues |
35.6
|
39.6
|
46.2
|
Financial Paper Products |
|
|
|
Segment Reporting Information [Line Items] |
|
|
|
Revenues |
84.2
|
54.8
|
66.3
|
Financial Paper Products | Money Order Revenue |
|
|
|
Segment Reporting Information [Line Items] |
|
|
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Revenues |
44.1
|
40.9
|
43.4
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Financial Paper Products | Official Check Revenue |
|
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|
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|
|
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Revenues |
$ 40.1
|
$ 13.9
|
$ 22.9
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v3.22.4
Revenue Recognition Revenue Recognition - Services & Products (Details) - USD ($) $ in Millions |
12 Months Ended |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Revenues |
$ 1,310.1
|
$ 1,283.6
|
$ 1,217.2
|
Investment revenue |
37.9
|
7.8
|
20.0
|
Other Revenue |
|
|
|
Revenues |
73.5
|
61.9
|
52.8
|
Total Revenue from Services and Products |
|
|
|
Revenues |
1,198.7
|
1,213.9
|
1,144.4
|
Global Funds Transfer |
|
|
|
Revenues |
1,225.9
|
1,228.8
|
1,150.9
|
Global Funds Transfer | Money Transfer Fee Revenue |
|
|
|
Revenues |
1,151.0
|
1,160.0
|
1,083.4
|
Global Funds Transfer | Bill Payment Services Fee Revenue |
|
|
|
Revenues |
35.6
|
40.5
|
46.2
|
Global Funds Transfer | Other Revenue |
|
|
|
Revenues |
39.3
|
28.3
|
21.3
|
Global Funds Transfer | Total Global Funds Transfer Fee and Other Revenue |
|
|
|
Revenues |
1,225.9
|
1,228.8
|
1,150.9
|
Financial Paper Products |
|
|
|
Revenues |
84.2
|
54.8
|
66.3
|
Financial Paper Products | Other Revenue |
|
|
|
Revenues |
34.2
|
33.6
|
31.6
|
Financial Paper Products | Money Order Fee Revenue |
|
|
|
Revenues |
5.4
|
6.3
|
7.3
|
Financial Paper Products | Official Check Outsourcing Services Fee Revenue |
|
|
|
Revenues |
6.7
|
7.1
|
7.4
|
Financial Paper Products | Total Financial Paper Products Fee and Other Revenue |
|
|
|
Revenues |
46.3
|
47.0
|
46.3
|
Services and Products Transferred at a Point in Time |
|
|
|
Revenues |
1,192.0
|
1,206.8
|
1,137.0
|
Products Transferred Over Time |
|
|
|
Revenues |
$ 6.7
|
$ 7.1
|
$ 7.4
|
X |
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