Balance Sheet

MoneyGram ended the quarter with assets in excess of payment service obligations of $266.1 million, and outstanding debt principal of $813.5 million. Interest expense was $17.7 million in the quarter, down $4.5 million from the prior year as a result of refinancing activities. Book income tax expense in the quarter was $9.6 million, with approximately $0.1 million in cash tax expenses.

Cash Flow

Free cash flow for the quarter was $24.6 million, down from the prior year driven by higher signing bonuses for strategic agent renewals, and the timing of capital expenditures offset by lower interest payments. For the nine months ended September 30, 2012, free cash flow was $91.5 million, up 8 percent from the prior year period. This was driven by strong money transfer results and lower interest payments offset by higher capital expenditures and signing bonuses.

Market Developments
  • Announced a new agreement with Walmart, extending our relationship through March 31, 2016. MoneyGram will continue to offer money transfer, bill payment and money order products at all Walmart stores in the U.S. and Puerto Rico.
  • Renewed and expanded our relationship with Advance America, a leading provider of consumer financial services with more than 2,400 retail locations.
  • Signed a new global agreement with PayPal that will enable consumers to easily access money in their digital wallets. PayPal’s 117 million active account holders will have the option to put cash in and take funds out of their PayPal accounts at MoneyGram locations. Consumers underserved by traditional banking institutions will be able to fund PayPal accounts giving them convenient access to e-commerce.
  • Entered into an agreement with Gemalto, integrating MoneyGram’s money transfer platform with Gemalto’s LinqUs mobile payment platform solution, allowing customers to send international transfers from a mobile phone to a MoneyGram location or receive transfers directly to their mobile wallet.
  • Grew self-service and new channel revenue by 40 percent, which represented 5 percent of money transfer revenue in the quarter.
  • Network expansion activities during the quarter:
    • Entered into a strategic relationship with Payment Center to provide services in the Russian retail sector, opening up to 10,000 retail locations during the next two years.
    • Activated an additional 1,500 locations in the Indian Subcontinent with Federal Bank, Muthoot Finance and more than 600 retail locations.
    • Signed three additional banks in Latin America adding 1,000 locations in this important market.
    • Doubled our network in South Africa through the signing of First National Bank, one of the largest banks in the country.
    • Increased our agent locations in Malaysia through the signing of CIMB Islamic Bank.

“We remain steadfastly focused on positioning MoneyGram as the leading value brand for consumers to send and receive funds. Through continued global expansion, the extension of key agents like Walmart and the addition of new relationships like PayPal we ensure that vital financial services are provided safely and reliably to consumers who are underserved by traditional financial institutions around the world,” Patsley added.

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