MoneyGram International Inc. (MGI, Financial) filed Quarterly Report for the period ended 2009-06-30.
MoneyGram International Inc. is a leading global payment services company and S&P MidCap company. The company\'s major products and services include global money transfers money orders and payment processing solutions for financial institutions and retail customers. MoneyGram International Inc. has a market cap of $189 million; its shares were traded at around $2.29 with a P/E ratio of 38.2 and P/S ratio of 0.2.
Fee commissions expense consists primarily of fees paid to our third-party agents for the money transfer service. We generally do not pay fee commissions on our money order products. Fee commissions expense for the three and six months ended June 30, 2009, decreased $7.3 million and $6.0 million, respectively, from 2008 due to the decline in the Euro exchange rate and lower average commission rates from lower average face values per transaction and corridor mix, partially offset by money transfer transaction volume growth. The decline in the Euro exchange rate, net of hedging activities, reduced commissions expense by $5.0 million and $9.6 million during the three and six months ended June 30, 2009, respectively, while lower average commission rates reduced commissions expense by $2.4 million and $2.8 million, respectively. Transaction volume growth resulted in incremental commissions expense of $1.6 million and $6.9 million for the three and six months ended June 30, 2009, respectively.
Net securities gains for the three and six months ended June 30, 2009 reflect a $6.8 million and $10.6 million, respectively, valuation gain from put options related to trading investments, offset by $4.8 million and $6.4 million of unrealized losses on our trading investments from continued deterioration in the markets. In addition, the call of a trading investment in the second quarter resulted in a $3.1 million gain in the three and six months ended June 30, 2009. Other-than-temporary impairments on our other asset-backed securities was $0.8 million and $2.9 million for the three and six months ended June 30, 2009. See Note 5 Investment Portfolio of the Notes to Consolidated Financial Statements for further discussion.
During the first quarter of 2008, we completed the realignment of our investment portfolio, resulting in the sale of securities with a fair value of $3.2 billion (after other-than-temporary impairment charges) at December 31, 2007 for proceeds of $2.9 billion and a net realized loss of $256.3 million. This net realized loss was the result of further deterioration in the markets during the first quarter of 2008 and the short timeframe over which securities were sold. Proceeds from the sales were reinvested in cash and cash equivalents. During the three and six months ended June 30, 2008, we recognized other-than-temporary impairment charges of $9.1 million and $54.4 million, respectively, on our available-for-sale securities and unrealized losses of $21.2 million and $26.9 million, respectively, on our trading investments as the result of further deterioration in the market and the accumulation of ratings downgrades.
Compensation and benefits Compensation and benefits includes salaries and benefits, management incentive programs and other employee related costs. Compensation and benefits decreased $20.5 million, or 30 percent, and $21.2 million, or 18 percent, for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008. Severance costs were $18.6 million and $15.2 million lower in the three and six months ended June 30, 2009 as the same periods in 2008 included severance related to the Companys former Chief Executive Officer. In addition, incentive compensation was $3.0 million and $6.3 million lower in the three and six months ended June 30, 2009, respectively, as annual incentives were accrued at a lower tier than in 2008 and the discretionary profit sharing plan was suspended for 2009. Partially offsetting these expense reductions is a $1.5 million and $0.3 million increase in stock-based compensation during the three and six months ended June 30, 2009. Stock-based compensation increased from the issuance of stock options to executives, partially offset by lower expense from historical grants due to the normal vesting of the awards. In addition, stock-based compensation expense in 2008 reflected a $0.6 million benefit from the forfeiture of restricted stock upon the termination of executives. The decline in the Euro exchange rate, which is reflected in each of the amounts discussed above, decreased compensation and benefits expense by approximately $1.5 million and $2.8 million for the three and six months ended June 30, 2009, respectively, compared to 2008.
Transaction and operations support Transaction and operations support expenses include marketing costs, professional fees and other outside service costs, telecommunications and forms expense related to our products. Transaction and operations support costs increased $19.8 million, or 39 percent, and $12.3 million, or 12 percent, for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008. In the second quarter of 2009, we recorded a $12.0 million accrual related to the potential resolution of ongoing discussions with the staff of the Federal Trade Commission (FTC). Our provision for loss increased $9.0 million and $9.7 million for the three and six months ended June 30, 2009, respectively, primarily related to the closure of an international agent. In addition, we recor
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MoneyGram International Inc. is a leading global payment services company and S&P MidCap company. The company\'s major products and services include global money transfers money orders and payment processing solutions for financial institutions and retail customers. MoneyGram International Inc. has a market cap of $189 million; its shares were traded at around $2.29 with a P/E ratio of 38.2 and P/S ratio of 0.2.
Highlight of Business Operations:
Fee and other revenue consists of fees on money transfer (including bill payment), money orders and official check. For the three and six months ended June 30, 2009, fee and other revenue remained relatively flat from 2008 as the decline in the Euro exchange rate and lower average fees were offset by money transfer volume growth. Money transfer average fees decreased from lower face values per transaction and corridor mix. Money transfer transaction volume increased 1 percent and 3 percent for the three and six months ended June 30, 2009, respectively, compared to 2008. Money transfer (including bill payment) volume growth slowed in the second quarter of 2009, reflecting continued slowing economic conditions and a growing volume base. The decline in the Euro exchange rate, net of hedging activities, reduced revenue by $8.5 million and $15.1 million during the three and six months ended June 30, 2009, respectively, while lower average fees reduced revenue by $4.0 million and $5.7 million, respectively. Transaction volume growth resulted in incremental revenue of $7.7 million and $21.5 million for the three and six months ended June 30, 2009, respectively. See Table 6 Global Funds Transfer Segment for further information regarding money transfer revenue and transaction volume.Fee commissions expense consists primarily of fees paid to our third-party agents for the money transfer service. We generally do not pay fee commissions on our money order products. Fee commissions expense for the three and six months ended June 30, 2009, decreased $7.3 million and $6.0 million, respectively, from 2008 due to the decline in the Euro exchange rate and lower average commission rates from lower average face values per transaction and corridor mix, partially offset by money transfer transaction volume growth. The decline in the Euro exchange rate, net of hedging activities, reduced commissions expense by $5.0 million and $9.6 million during the three and six months ended June 30, 2009, respectively, while lower average commission rates reduced commissions expense by $2.4 million and $2.8 million, respectively. Transaction volume growth resulted in incremental commissions expense of $1.6 million and $6.9 million for the three and six months ended June 30, 2009, respectively.
Net securities gains for the three and six months ended June 30, 2009 reflect a $6.8 million and $10.6 million, respectively, valuation gain from put options related to trading investments, offset by $4.8 million and $6.4 million of unrealized losses on our trading investments from continued deterioration in the markets. In addition, the call of a trading investment in the second quarter resulted in a $3.1 million gain in the three and six months ended June 30, 2009. Other-than-temporary impairments on our other asset-backed securities was $0.8 million and $2.9 million for the three and six months ended June 30, 2009. See Note 5 Investment Portfolio of the Notes to Consolidated Financial Statements for further discussion.
During the first quarter of 2008, we completed the realignment of our investment portfolio, resulting in the sale of securities with a fair value of $3.2 billion (after other-than-temporary impairment charges) at December 31, 2007 for proceeds of $2.9 billion and a net realized loss of $256.3 million. This net realized loss was the result of further deterioration in the markets during the first quarter of 2008 and the short timeframe over which securities were sold. Proceeds from the sales were reinvested in cash and cash equivalents. During the three and six months ended June 30, 2008, we recognized other-than-temporary impairment charges of $9.1 million and $54.4 million, respectively, on our available-for-sale securities and unrealized losses of $21.2 million and $26.9 million, respectively, on our trading investments as the result of further deterioration in the market and the accumulation of ratings downgrades.
Compensation and benefits Compensation and benefits includes salaries and benefits, management incentive programs and other employee related costs. Compensation and benefits decreased $20.5 million, or 30 percent, and $21.2 million, or 18 percent, for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008. Severance costs were $18.6 million and $15.2 million lower in the three and six months ended June 30, 2009 as the same periods in 2008 included severance related to the Companys former Chief Executive Officer. In addition, incentive compensation was $3.0 million and $6.3 million lower in the three and six months ended June 30, 2009, respectively, as annual incentives were accrued at a lower tier than in 2008 and the discretionary profit sharing plan was suspended for 2009. Partially offsetting these expense reductions is a $1.5 million and $0.3 million increase in stock-based compensation during the three and six months ended June 30, 2009. Stock-based compensation increased from the issuance of stock options to executives, partially offset by lower expense from historical grants due to the normal vesting of the awards. In addition, stock-based compensation expense in 2008 reflected a $0.6 million benefit from the forfeiture of restricted stock upon the termination of executives. The decline in the Euro exchange rate, which is reflected in each of the amounts discussed above, decreased compensation and benefits expense by approximately $1.5 million and $2.8 million for the three and six months ended June 30, 2009, respectively, compared to 2008.
Transaction and operations support Transaction and operations support expenses include marketing costs, professional fees and other outside service costs, telecommunications and forms expense related to our products. Transaction and operations support costs increased $19.8 million, or 39 percent, and $12.3 million, or 12 percent, for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008. In the second quarter of 2009, we recorded a $12.0 million accrual related to the potential resolution of ongoing discussions with the staff of the Federal Trade Commission (FTC). Our provision for loss increased $9.0 million and $9.7 million for the three and six months ended June 30, 2009, respectively, primarily related to the closure of an international agent. In addition, we recor
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