MoneyGram International Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K (Mark One)þAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2017.¨Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition periodfrom to .Commission File Number: 001-31950MONEYGRAM INTERNATIONAL, INC.(Exact name of registrant as specified in its charter)Delaware 16-1690064(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.)2828 N. Harwood St., 15th FloorDallas, Texas 75201(Zip Code)(Address of principal executive offices) Registrant’s telephone number, including area code(214) 999-7552Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon stock, $0.01 par value The NASDAQ Stock Market LLCSecurities 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 þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No þIndicate 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 preceding12 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 past90 days. Yes þ No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes þ No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þIndicate 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. Seethe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer ¨Non-accelerated filer ¨Accelerated filer þSmaller reporting company¨(Do not check if a 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 financingaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þThe aggregate market value of voting and nonvoting common stock held by non-affiliates of the registrant, computed by reference to the last sales price as reported on theNASDAQ Stock Market LLC as of June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, was $499.5 million.55,460,583 shares of common stock were outstanding as of March 8, 2018.DOCUMENTS INCORPORATED BY REFERENCECertain information required by Part III of this report is incorporated by reference from the registrant’s proxy statement for the 2018 Annual Meeting of Stockholders. Table of ContentsTABLE OF CONTENTS PagePART I.Item 1.Business3 Overview3 Our Segments4 Global Funds Transfer Segment4 Financial Paper Products Segment6 Regulation6 Clearing and Cash Management Bank Relationships9 Intellectual Property9 Employees10 Executive Officers of the Registrant10 Available Information11Item 1A.Risk Factors11Item 1B.Unresolved Staff Comments22Item 2.Properties22Item 3.Legal Proceedings22Item 4.Mine Safety Disclosures23 PART II.Item 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities24Item 6.Selected Financial Data26Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations27Item 7A.Quantitative and Qualitative Disclosures about Market Risk45Item 8.Financial Statements and Supplementary Data49Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure50Item 9A.Controls and Procedures50Item 9B.Other Information50 PART III.Item 10.Directors, Executive Officers and Corporate Governance51Item 11.Executive Compensation51Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters51Item 13.Certain Relationships and Related Transactions, and Director Independence51Item 14.Principal Accounting Fees and Services51 PART IV.Item 15.Exhibits and Financial Statement Schedules51Item 16.Form 10-K Summary58Signatures592Table of ContentsPART IItem 1. BUSINESS OverviewMoneyGram International, Inc. (together with our subsidiaries, “MoneyGram,” the “Company,” “we,” “us” and “our”) is a global provider of innovativemoney transfer services and is recognized worldwide as a financial connection to friends and family. Whether online, through a mobile device, at a kiosk orin a local store, we connect consumers in any way that is convenient for them. We also provide bill payment services, issue money orders and process officialchecks in select markets. Our primary customers are persons who may not be fully served by other financial institutions, which we refer to as unbanked orunderbanked consumers. Unbanked consumers do not have a relationship with a traditional financial institution. Underbanked consumers are not fully servedby traditional financial institutions. The World Bank, a key source of industry analysis for cross-border remittance data, estimates that 2 billion adults areunbanked, based on 2017 global data. As an alternative financial services provider, we provide these consumers with essential services to help them meet thefinancial demands of their daily lives. Many of our customers utilize traditional banking services but prefer to use our services based on convenience, qualityof our service, trust of our brand, cost or to make urgent payments or transfers.Our offerings include money transfers, bill payment services, money order services and official check processing. Our money transfer services are our primaryrevenue driver. Our services are offered in approximately 350,000 locations in more than 200 countries and territories and are primarily operated by third-party businesses ("agents"), but also include Company-operated retail locations. We also offer Digital solutions such as moneygram.com, mobile solutions,account deposit and kiosk-based services. We have one primary customer care center in Warsaw, Poland, with regional support centers providing ancillaryservices and additional call center services in various countries. We provide call center services 24 hours per day, 365 days per year and provide customerservice in dozens of languages.The MoneyGram® brand is recognized throughout the world. We use various trademarks and service marks in our business, including, but not limited, toMoneyGram, the Globe design logo, MoneyGram Bringing You Closer, MoneyGram MyWay, MoneyGram MobilePass, MoneyGram Kameleon,ExpressPayment, Send It. Pay It. Load It., Moneygrado, FormFree, AgentWorks, Agent-Connect, Delta, DeltaWorks, PowerTransact and PrimeLink, some ofwhich are registered in the United States and other countries. This document also contains trademarks and service marks of other businesses that are theproperty of their respective holders and are used herein solely for identification purposes. We have omitted the ® and TM designations, as applicable, for thetrademarks we reference.We conduct our business primarily through our wholly-owned subsidiary, MoneyGram Payment Systems, Inc. ("MPSI"), under the MoneyGram brand. TheCompany was incorporated in Delaware on December 18, 2003 in connection with the June 30, 2004 spin-off from our former parent company, ViadCorporation. Through the Company's predecessors, we have been in operation for over 70 years.The Company utilizes specific terms related to our business throughout this document, including the following:Corridor — With regard to a money transfer transaction, the originating "send" location and the designated "receive" location are referred to as a corridor.Corridor mix — The relative impact of increases or decreases in money transfer transaction volume in each corridor versus the comparative prior period.Face value — The principal amount of each completed transaction, excluding any fees related to the transaction.Foreign currency — The impact of foreign currency exchange rate fluctuations on our financial results is typically calculated as the difference betweencurrent period activity translated using the current period’s currency exchange rates and the comparable prior-year period’s currency exchange rates. We usethis method to calculate the impact of changes in foreign currency exchange rates on revenues, commissions and other operating expenses for all countrieswhere the functional currency is not the U.S. dollar.Termination of Merger AgreementAs previously disclosed, on January 26, 2017, the Company entered into an Agreement and Plan of Merger (as amended by the First Amendment to theAgreement and Plan of Merger, dated April 15, 2017, the “Merger Agreement”) with Alipay (UK) Limited, a United Kingdom limited company (“Alipay”),Matrix Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Alipay (“Merger Sub”), and, solely for purposes of certain specifiedprovisions of the Merger Agreement, Alipay (Hong Kong) Holding Limited, a Hong Kong limited company, providing for the merger of Merger Sub with andinto the Company, with the Company surviving as a wholly owned subsidiary of Alipay (the “Merger”).3Table of ContentsThe closing of the Merger was subject to certain conditions, including clearance by the Committee on Foreign Investment in the United States (“CFIUS”)under the Defense Production Act of 1950, as amended. The parties to the Merger Agreement were advised that CFIUS clearance of the Merger would not beforthcoming. After further discussion between the parties, they determined to cease efforts to seek CFIUS approval and entered into a Termination Agreement,dated January 2, 2018 (the “Termination Agreement”), pursuant to which they mutually terminated the Merger Agreement, with Alipay paying the Companya termination fee of $30.0 million. The parties also agreed to release each other from certain claims and liabilities arising out of or relating to the MergerAgreement or the transactions contemplated thereby.In addition, pursuant to the Termination Agreement, the Company and Alipay agreed to work collaboratively to explore and develop non-exclusive strategicinitiatives to bring together their capabilities in the remittance and digital payments markets to provide their respective customers with user-friendly, rapid-response and low-cost money transfer services into China, India, the Philippines and other markets.Our SegmentsWe manage our business primarily through two reporting segments: Global Funds Transfer and Financial Paper Products. The following table presents thecomponents of our consolidated revenue associated with our reporting segments for the years ended December 31: 2017 2016 2015Global Funds Transfer Money transfer89% 89% 89%Bill payment5% 6% 7%Financial Paper Products Money order3% 3% 3%Official check3% 2% 1%Total revenue100% 100% 100%See Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 14 — Segment Information of theNotes to the Consolidated Financial Statements for additional financial information about our segments and geographic areas.During 2017, 2016 and 2015, our 10 largest agents accounted for 34%, 36% and 37%, respectively, of total revenue and 35%, 37% and 39%, respectively, ofGlobal Funds Transfer segment revenue. Wal-Mart Stores, Inc. (“Walmart”) is our only agent that accounts for more than 10% of our total revenue. In 2017,2016 and 2015, Walmart accounted for 17%, 18% and 19%, respectively, of total revenue. Walmart accounted for 18% of Global Funds Transfer revenue in2017 and 19% of Global Funds Transfer segment revenue in each of 2016 and 2015.Global Funds Transfer SegmentThe Global Funds Transfer segment is our primary revenue driver, providing money transfer services and bill payment services primarily to unbanked andunderbanked consumers. We utilize a variety of proprietary point-of-sale platforms, including AgentConnect, which is integrated into an agent’s point-of-sale system, DeltaWorks and Delta T3, which are separate software and stand-alone device platforms, and moneygram.com.We continue to focus on the growth of our Global Funds Transfer segment outside of the U.S. During 2017 and 2016 sends originated outside of the U.S.generated 47% each year and 46% in 2015, of our total Company revenue, and 50%, 49% and 48% for 2017, 2016 and 2015, respectively, of our total GlobalFunds Transfer segment revenue. In 2017, our Global Funds Transfer segment had total revenue of $1.5 billion.Money Transfer — We earn our money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads onmoney transfer transactions involving different “send” and “receive” currencies. We have corridor pricing capabilities that provide us flexibility whenestablishing consumer fees and foreign exchange rates for our money transfer services, which allow us to remain competitive in all locations. In a cash-to-cashmoney 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 apercentage of the fee charged to the consumer. When a money transfer transaction is initiated at a MoneyGram-owned store, staging kiosk or via our onlineplatform, typically only the receiving agent 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. Thecurrency choice typically consists of local currency, U.S. dollars and/or euros. These capabilities allow consumers to know the amount that will be receivedin the selected currency.4Table of ContentsThe majority of our remittances constitute transactions in which cash is collected by one of our agents and funds are available for pick-up at another agentlocation. Typically, the designated recipient may receive the transferred funds within 10 minutes at any MoneyGram agent location. In select countries, thedesignated recipient may also receive the transferred funds via a deposit to the recipient’s bank account, mobile phone account or prepaid card. Through ouronline product offerings, consumers can remit funds from a bank account, credit card or debit card.We offer a variety of services to provide the best consumer experience possible at our agent locations. We offer transaction-staging kiosks at select agentlocations around the world. Our MoneyGram MobilePass product allows customers to stage a transaction on a mobile device or online and pay for thetransaction at one of MoneyGram's thousands of locations across the U.S. Through our FormFree service, consumers are directed via phone to one of ourcustomer care centers where a representative collects transaction information and enters it directly into our central data processing system.In 2017, we offered our money transfer services on the internet via our moneygram.com service in the U.S., United Kingdom and Germany and throughaffiliate websites. Through moneygram.com, consumers have the ability to send money from the convenience of their home or internet-enabled mobiledevice to any of our agent locations worldwide or to a recipient's bank account through a debit or credit card or, in certain cases, funding with a U.S. checkingaccount. Money transfer transactions through moneygram.com grew 24% and revenue grew 25% in 2017 over the prior year.We also offer our money transfer services via virtual agents allowing our consumers to send international transfers conveniently from a website or theirmobile phone in 27 countries. We continue to expand our money transfer services to consumers through the addition of transaction-staging kiosks, ATMs,prepaid cards and direct-to-bank account products in various markets around the world.As of December 31, 2017, our money transfer agent network had approximately 350,000 locations. Our agent network includes agents such as internationalpost offices, formal and alternative financial institutions as well as large and small retailers. Additionally, we have Company-operated retail locations in theU.S. and Western Europe. Some of our agents outside the U.S. manage sub-agents. We refer to these agents as super-agents. Although these sub-agents areunder contract with these super-agents, the sub-agent locations typically have access to similar technology and services as our other agent locations. Many ofour agents have multiple locations, a large number of which operate in locations that are open outside of traditional banking hours, including nights andweekends. Our agents know the markets they serve and they work with our sales and marketing teams to develop business plans for their markets. This mayinclude contributing financial resources to, or otherwise supporting, our efforts to market MoneyGram's services.Bill Payment Services — We earn our bill payment revenues primarily from fees charged to consumers for each transaction completed. Our primary billpayment service offering is our ExpressPayment service, which we offer at substantially all of our money transfer agent and Company-operated locations inthe 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 anagent location, company-operated locations or through moneygram.com with a credit or debit card. We offer consumers same-day and two or three daypayment service options; the service option is dependent upon our agreement with the biller. We offer payment options to over 13,500 billers in keyindustries, including the ability to allow the consumer to load or reload funds to nearly 500 prepaid debit card programs. These industries include the creditcard, mortgage, auto finance, telecommunications, corrections, health care, utilities, property management, prepaid card and collections industries.Marketing — We have global marketing and product management teams located in multiple geographical regions. We employ a strategy of developingproducts and marketing campaigns that are global, yet can be tailored to address our consumer base and local needs. A key component of our marketingefforts is our global branding. 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, targeted marketing campaigns, seasonal campaigns and sponsorships.Sales — Our sales teams are organized by geographic area, product and delivery channel. We have dedicated teams that focus on developing our agent andbiller 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 andoverall network strength with a goal of providing the optimal agent and consumer experience.Competition — The market for money transfer and bill payment services continues to be very competitive and the World Bank estimates that in 2018 cross-border remittances will be over $600 billion. We generally compete for money transfer agents on the basis of value, service, quality, technical andoperational differences, price, commission and marketing efforts. We compete for money transfer consumers on the basis of trust, convenience, availability ofoutlets, price, technology and brand recognition.5Table of ContentsOur competitors include a small number of large money transfer and bill payment providers, financial institutions, banks and a large number of small nichemoney transfer service providers that serve select regions. Our largest competitor in the money transfer industry is The Western Union Company ("WesternUnion"), which also competes with our bill payment services and money order businesses. In 2014, Walmart launched a white label money transfer service, aprogram operated by a competitor of MoneyGram that allows consumers to transfer money between Walmart U.S. store locations. We will encounterincreasing competition as new technologies emerge that allow consumers to send and receive money through a variety of channels, but we continue to be aninnovator in the industry by diversifying our core money transfer business through new channels, such as online, mobile solutions, kiosk and other digitalofferings.Seasonality — A larger share of our annual money transfer revenues traditionally occurs in the third and fourth quarters as a result of major global holidaysfalling during or around this period.Financial Paper Products SegmentOur Financial Paper Products segment provides money orders to consumers through our agents and financial institutions located throughout the U.S. andPuerto Rico and provides official check outsourcing services for financial institutions across the U.S.In 2017, our Financial Paper Products segment generated revenues of $94.0 million from fee and other revenue and investment revenue. We earn revenuefrom the investment of funds underlying outstanding official checks and money orders. We refer to our cash and cash equivalents, settlement cash and cashequivalents, interest-bearing investments and available-for-sale investments collectively as our “investment portfolio.” Our investment portfolio primarilyconsists of low risk, highly liquid, short-term U.S. government securities and bank deposits that produce a low rate of return.Money Orders — Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by chargingper item and other fees, as well as from the investment of funds underlying outstanding money orders, which generally remain outstanding for approximatelysix 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 theU.S. As of December 31, 2017, we issued money orders through our network of over 17,500 agents and financial institution locations in the U.S. and PuertoRico.Official Check Outsourcing Services — Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also useofficial checks to pay their own obligations. Similar to money orders, we generate revenue from our official check outsourcing services through U.S. banksand credit unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks, which generally remainoutstanding for approximately four days. As of December 31, 2017, we provided official check outsourcing services through approximately 800 financialinstitutions at approximately 5,600 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 socialmedia, point of sale materials, signage at our agent locations and targeted marketing campaigns. Official checks are financial institution branded, andtherefore, 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 financialinstitution networks to enhance the reach of our official check and money order products. Our agent and financial institution requirements vary dependingupon the type of outlet or location, and our sales teams continue to improve and strengthen these relationships with a goal of providing the optimal consumerexperience 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 moneyorder providers. Our largest competitors in the money order industry are Western Union and the U.S. Postal Service. We generally compete for money orderagents on the basis of value, service, quality, technical and operational differences, price, commission and marketing efforts. We compete for money orderconsumers 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 competeagainst a financial institution’s desire to perform these processes in-house with support from these types of organizations. We compete for official checkcustomers on the basis of value, service, quality, technical and operational differences, price and commission.RegulationCompliance 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 lawsand regulations of the U.S. and other countries, including anti-money laundering laws and regulations; financial services regulations; currency controlregulations; anti-bribery laws; regulations of the U.S. Treasury Department’s Office of Foreign Assets Control ("OFAC"); money transfer and paymentinstrument 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 tocomply with any applicable laws and regulations could result in restrictions on our ability to provide our products and services,6Table of Contentsas well as the potential imposition of civil fines and possibly criminal penalties. See “Risk Factors” section in Item 1A for additional discussion regardingpotential impacts of failure to comply. We continually monitor and enhance our global compliance programs in light of the most recent legal and regulatorychanges.Deferred Prosecution Agreement — In November 2012, we announced that a settlement was reached with the U.S. Attorney's Office for the Middle District ofPennsylvania (the "MDPA") and the U.S. Department of Justice ("U.S. DOJ") relating to the previously disclosed investigation of transactions involvingcertain of our U.S. and Canadian agents, as well as fraud complaint data and the consumer anti-fraud program, during the period from 2003 to early 2009. Inconnection with this settlement, we entered into a five-year deferred prosecution agreement (the "DPA") with the MDPA and U.S. DOJ dated November 8,2012. Under the DPA, we agreed to a forfeiture of $100.0 million that is available as restitution to victims of the consumer fraud scams perpetrated throughMoneyGram agents. Also under the DPA, we have agreed, among other things, to retain an independent compliance monitor for a period of five years and inthe first quarter of 2013, Aaron Marcu, a litigation partner with Freshfields Bruckhaus Deringer, LLP in New York and head of its global financial institutionslitigation group, was selected as our independent compliance monitor. We have received five annual reports from the compliance monitor, and we continueto make investments in various areas related to our compliance systems and operations in order to comply with the requirements contained in the DPA andrecommendations of the compliance monitor.On November 1, 2017, the Company agreed to a stipulation with the MDPA and the DOJ (the “Government”) that the term of the Company’s DPA beextended for 90 days to February 6, 2018. On January 31, 2018, the Company agreed with the Government that the term of the DPA be extended for anadditional 45 days to March 23, 2018. The purpose of the extension is to provide the Company and the Government additional time to discuss whether theCompany is in compliance with the DPA. There can be no assurance that the Company and the Government will continue to be able to negotiate a mutuallysatisfactory outcome during such 45 day period (or any further short-term extension of the DPA) or that such outcome will not include a further extension ofthe DPA, financial penalties or additional restrictions on the Company, including a monitorship period beyond the current monitorship that ends on April 30,2018. Furthermore, there can be no assurance that the Government will not seek any other remedy, including criminal prosecution and financial penalties, inlieu of an extension of the DPA and monitorship.The Company has recorded an $85.0 million accrual in connection with a possible resolution of this matter, based on the facts and circumstances known atthe time. However, the Company is unable to reasonably estimate the ultimate loss and no assurance can be given that future costs and payments made inconnection with this matter will not exceed the amount currently recorded or that the government will not also seek to impose non-monetary remedies orpenalties. See “Risk Factors — We face possible uncertainties relating to compliance with and the impact of the deferred prosecution agreement enteredinto with the U.S. federal government” for additional information.Anti-Money Laundering Compliance — Our services are subject to U.S. anti-money laundering laws and regulations, including the Bank Secrecy Act, asamended by the USA PATRIOT Act of 2001, as well as state laws and regulations and the anti-money laundering laws and regulations in many of thecountries 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;•screening of transactions against government watch-lists, including but not limited to, the watch-list maintained by OFAC;•prohibition of transactions in, to or from certain countries, governments, individuals and entities;•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 requireaggregation over multiple transactions;•consumer information gathering and reporting requirements;•consumer disclosure requirements, including language requirements and foreign currency restrictions;•notification requirements as to the identity of contracting agents, governmental approval of contracting agents or requirements and limitations oncontract 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 aforeign 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-moneylaundering regulations and implement policies and procedures in light of the most current legal requirements.7Table of ContentsWe 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 acompliance officer; (iii) ongoing employee training and (iv) an independent review function. We have developed an anti-money laundering training manualavailable 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 andonline training as part of our agent compliance training program and engage in various agent oversight activities. We have also adopted a global compliancepolicy 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 tolegal obligations and authorizations, the Company makes information available to certain U.S. federal and state, as well as certain foreign, governmentagencies when required by law. In recent years, the Company has experienced an increase in data sharing requests by these agencies, particularly inconnection with efforts to prevent money laundering or terrorist financing or reduce the risk of consumer fraud. In certain cases, the Company is also requiredby government agencies to deny transactions that may be related to persons suspected of money laundering, terrorist financing or other illegal activities, andas a result the Company may inadvertently deny transactions from customers who are making legal money transfers, which could lead to liability orreputational damage. Responding to these agency requests may result in increased operational costs.Money Transfer and Payment Instrument Licensing — In most countries, either we or our agents are required to obtain licenses or to register with agovernment 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 andGuam require us to be licensed to conduct business within their jurisdictions. Our primary overseas operating subsidiary, MoneyGram International Ltd., is alicensed payment institution under the Payment Services Regulations adopted in the United Kingdom pursuant to the European Union Payment ServicesDirective ("PSD"). As a result of the United Kingdom’s planned exit from the European Union, we have obtained authorization as a payment institution fromthe National Bank of Belgium for the conduct of our business in the European Union following the United Kingdom’s departure. In 2016, the PSD wasamended by a revised Payment Services Directive (“PSD2”), which was implemented in the national law of the member states during or prior to January 2018.Among other changes, the PSD2 has increased the supervisory powers granted to member states with respect to activities performed by us and our agents inthe European Union. We are also subject to increasingly significant licensing or other regulatory requirements in various other jurisdictions. Licensingrequirements may include minimum net worth, provision of surety bonds or letters of credit, compliance with operational procedures, agent oversight and themaintenance of reserves or “permissible investments” in an amount equivalent to outstanding payment obligations, as defined by our various regulators. Thetypes of securities that are considered “permissible investments” vary across jurisdictions, but generally include cash and cash equivalents, U.S. governmentsecurities and other highly rated debt instruments. Many regulators require us to file reports on a quarterly or more frequent basis to verify our compliancewith their requirements. Many regulators also subject us to periodic examinations and require us and our agents to comply with anti-money laundering andother 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 thatwe track certain information on all of our payment instruments and money transfers and, if they are unclaimed at the end of an applicable statutoryabandonment period, that we remit the proceeds of the unclaimed property to the appropriate jurisdiction. Statutory abandonment periods for paymentinstruments and money transfers range from three to seven years. Certain foreign jurisdictions also have unclaimed property laws. These laws are evolvingand are frequently unclear and inconsistent among various jurisdictions, making compliance challenging. We have an ongoing program designed to complywith 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 aresubject to various federal privacy laws, including the Gramm-Leach-Bliley Act, which requires that financial institutions provide consumers with privacynotices and have in place policies and procedures regarding the safeguarding of personal information. We are also subject to privacy and data breach laws ofvarious 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 theU.S. laws and impose more stringent duties on companies or penalties for non-compliance. For example, the General Data Protection Regulation in theEuropean Union, effective May 2018, will impose a higher standard of personal data protection with significant penalties for non-compliance for companiesoperating in the European Union or doing business with European Union residents. In addition, government surveillance laws and data localization laws areevolving to address increased and changing threats and risks. All of these laws are continuing to develop and may be inconsistent from jurisdiction tojurisdiction.8Table of ContentsDodd-Frank Act — The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") was signed into law in 2010. The Dodd-FrankAct imposes additional regulatory requirements and creates additional regulatory oversight over us. The Dodd-Frank Act created a Bureau of ConsumerFinancial Protection (the "CFPB") which issues and enforces consumer protection initiatives governing financial products and services, including moneytransfer services, in the U.S. The CFPB’s Remittance Transfer Rule became effective on October 28, 2013. Its requirements include: a disclosure requirementto 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 “largerparticipant” in the market for international money transfers, we are subject to direct examination and supervision by the CFPB. We have modified oursystems and consumer disclosures in light of the requirements of the Remittance Transfer Rule. In addition, under the Dodd-Frank Act, it is unlawful for anyprovider of consumer financial products or services to engage in unfair, deceptive or abusive acts or practices. The CFPB has substantial rule making andenforcement authority to prevent unfair, deceptive or abusive acts or practices in connection with any transaction with a consumer for a financial product orservice.Foreign Exchange Regulation — Our money transfer services are subject to foreign currency exchange statutes of the U.S., as well as similar state laws andthe laws of certain other countries in which we operate. Certain of these statutes require registration or licensure and reporting. Others may impose currencyexchange restrictions with which we must comply.Regulation of Prepaid Cards — We sell our MoneyGram-branded prepaid card in the U.S., in addition to loading prepaid cards of other card issuers throughour ExpressPayment offering. Our prepaid cards and related loading services may be subject to federal and state laws and regulations, including laws relatedto consumer protection, licensing, unclaimed property, anti-money laundering and the payment of wages. Certain of these federal and state statutes prohibitor limit fees and expiration dates on and/or require specific consumer disclosures related to certain categories of prepaid cards. We continually monitor ourprepaid cards and related loading services in light of developments in such statutes and regulations.Anti-Bribery Regulation — We are subject to regulations imposed by the Foreign Corrupt Practices Act (the "FCPA") in the U.S., the U.K. Bribery Act andsimilar anti-bribery laws in other jurisdictions. We are subject to recordkeeping and other requirements imposed upon companies related to compliance withthese laws. We maintain a compliance program designed to comply with applicable anti-bribery laws and regulations.Clearing and Cash Management Bank RelationshipsOur 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 globalcurrencies and maintain a network of settlement accounts to facilitate the funding of money transfers and foreign exchange trades to ensure that funds arereceived on a timely basis. Our relationships with the clearing, trading and cash management banks are critical to an efficient and reliable global fundingnetwork.In the U.S., we have agreements with six active clearing banks that provide clearing and processing functions for official checks, money orders and other draftinstruments. We employ four banks to clear our official checks and three banks to clear our retail money orders. We believe that this network of banksprovides 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 throughdomestic and international wire transfer networks. There are a limited number of banks that have the capabilities that are broad enough in scope to handle ourvolume and complexity. Consequently, we employ banks whose market is not limited to their own country or region, and have extensive systems capabilitiesand branch networks that can support settlement needs that are often unique to different countries around the world. In 2013, we activated our participationin the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") network for international wire transfers, which improves access to all banksin the world while lowering the cost of these funds transfers.Intellectual PropertyThe 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 inwhich we do business. We maintain a portfolio of other trademarks that are material to our Company, which were previously discussed 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 ourproprietary 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 ourintellectual property to the extent such intellectual property can be protected.9Table of ContentsWe own various patents related to our money order and money transfer technologies which have given us competitive advantages in the marketplace. Wealso have patent applications pending in the U.S. that relate to our money transfer, money order and bill payment technologies and business methods. Weanticipate that these applications, if granted, could give us continued competitive advantages in the marketplace.EmployeesAs of December 31, 2017, we had 1,180 full-time employees in the U.S. and 1,756 full-time employees outside of the U.S. In addition, we engageindependent contractors to support various aspects of our business. None of our employees in the U.S. are represented by a labor union.Executive Officers of the RegistrantW. Alexander Holmes, age 43, 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 since February 2014 and Executive VicePresident and Chief Financial Officer since March 2012. He joined the Company in 2009 as Senior Vice President for Corporate Strategy and InvestorRelations. 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’sBenelux region from its offices in Amsterdam.Lawrence Angelilli, age 62, has served as Chief Financial Officer, since January 2016. Prior to that, Mr. Angelilli served as Senior Vice President, CorporateFinance and Treasurer since 2014. He joined the Company in August 2011 as Senior Vice President and Treasurer. From 2009 to 2010, Mr. Angelilli servedas Director of Underwriting at Hudson Advisors, a global asset management company affiliated with Lone Star Funds, a global private equity fund. From1998 to 2009, he was Senior Vice President of Finance at Centex Corporation, a publicly traded homebuilder and mortgage originator.Joann L. Chatfield, age 52, has served as Chief Marketing Officer since May 2017. Ms. Chatfield joined MoneyGram in May 2011 and has held various roleswithin the Company, including Director of Marketing, U.S. and Canada, Vice President, Global Marketing Services and Head of Marketing for North andSouth America. Prior to joining MoneyGram, Ms. Chatfield held various management roles at Texans Credit Union and MCI, Inc. Ms. Chatfield has over 20years of leadership experience in marketing, brand management, product marketing as well as vendor and sponsorship management.Kamila K. Chytil, age 38, has served as Chief Global Operations Officer since May 2016. Ms. Chytil joined the Company in May 2015 as Senior VicePresident of key partnerships and payments. From 2011 to May 2015, Ms. Chytil was Senior Vice President and General Manager of retail payments atFidelity National Information Services, Inc., a global provider of financial technology solutions, where she was responsible for e-commerce, check cashingand retail payments. From 2004 to 2011, Ms. Chytil held various other management roles at Fidelity National Information Services, overseeing analytics, riskmanagement, and operations.Laura Gardiner, age 50, has been Chief Human Resources and Communications Officer since February 2017. She joined the Company in April of 2012 as aSenior Director of Human Resources and from 2014 to January 2017 served as Vice President of Human Resources. From 2010 to 2012, Ms. Gardiner servedas Director of Human Resources with Western Union, a global financial services company. From 2008 to 2009, Ms. Gardiner served as Vice President ofHuman Resources with Pronerve LLC, a neurophysiologic monitoring service company. Ms. Gardiner has over 20 years of experience in human resources andbusiness roles in a variety of industries.Francis Aaron Henry, age 52, has served as General Counsel and Corporate Secretary since August 2012 and previously served as interim General Counselfrom July 2012 to August 2012. He joined the Company in January 2011 as Senior Vice President, Assistant General Counsel, Global Regulatory and PrivacyOfficer. From 2008 to 2011, Mr. Henry was Assistant General Counsel at Western Union and from 2004 to 2008, he was Senior Counsel at Western Union.Grant A. Lines, age 53, has served as Chief Revenue Officer since January 2018. Prior to that, he served as Chief Revenue Officer, Africa, Middle East, AsiaPacific, Russia and CIS from February 2015 until January 2018. Mr. Lines previously served the Company as Executive Vice President, Asia-Pacific, SouthAsia and Middle East from February 2014 to February 2015. Prior to that, Mr. Lines served the Company as Senior Vice President, Asia-Pacific, South Asiaand Middle East from February 2013 to February 2014. Prior to that, Mr. Lines served as General Manager of Black Label Solutions, a leading developer andsupplier of computerized retail point of sale systems, from May 2011 to December 2012. He served as Managing Director of First Data Corporation’s ANZbusiness, a global payment processing company, from September 2008 to February 2011. Prior to that, Mr. Lines held various positions in the industry.10Table of ContentsAndres Villareal, age 53, has been Chief Compliance Officer since March 2016. He joined the Company in April 2015 as Senior Vice President and DeputyChief Compliance Officer. From 2004 to April 2015, Mr. Villareal held various positions at Citigroup, a leading global bank, including Global Head ofCompliance for Citi Commercial Bank and Chief Compliance Officer for Citi Assurance Services, a captive insurance company. Mr. Villareal has over 27years of experience in various compliance, legal and business roles in a variety of industries, including financial services, banking and insurance.John D. Stoneham, age 39, has been Corporate Controller and Principal Accounting Officer since October 2015. Mr. Stoneham previously served as VicePresident and Interim Controller since August 2015. From December 2012 to July 2015, Mr. Stoneham served in various accounting roles at the Company.Prior to December 2012, Mr. Stoneham was the Corporate Controller for Cinsay, Inc., a software provider. From January 2011 to December 2011, he was theSEC Reporting Manager at Archipelago Learning, a software-as-a-service provider of education products. Mr. Stoneham is a Certified Public Accountant andbegan his career at KPMG LLP, an accounting and financial advisory services firm.Available InformationOur website address is corporate.moneygram.com. The information on our website is not part of this Annual Report on Form 10-K. We make our reports onForms 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 InvestorRelations section of our website (ir.moneygram.com) as soon as reasonably practicable after they are filed with or furnished to the Securities and ExchangeCommission (the "SEC"). Any materials filed with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE., Washington DC20549. Information on the operation of the Public Reference Room can be found by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains aninternet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which maybe found at www.sec.gov.Item 1A. RISK FACTORSVarious risks and uncertainties could affect our business. Any of the risks described below or elsewhere in this Annual Report on Form 10-K or our otherfilings with the SEC could have a material impact on our business, prospects, financial condition or results of operations.RISK FACTORSRisks Related to Our Business and IndustryWe face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations could beadversely 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 moreestablished customer bases and substantially greater financial, marketing and other resources than we have. Money transfer, bill payment and money orderservices compete in a concentrated industry, with a small number of large competitors and a large number of small, niche competitors. Our money transferproducts 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 brandrecognition, customer service, reliability, distribution network and options, price, speed and convenience. Distribution channels such as online, accountbased and mobile solutions continue to evolve and impact the competitive environment for money transfers. The electronic bill payment services within ourGlobal Funds Transfer segment compete in a highly fragmented consumer-to-business payment industry. Our official check business competes primarily withfinancial institutions that have developed internal processing capabilities or services similar to ours and do not outsource official check services. Financialinstitutions 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 ourproducts and services do not offer competitive features and functionalities, we may lose customers to our competitors, which could adversely affect ourbusiness, financial condition and results of operations. In addition, if we fail to price our services appropriately relative to our competitors, consumers maynot use our services, which could adversely affect our business, financial condition and results of operations. For example, transaction volume where we faceintense competition could be adversely affected by increasing 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 likelycontinue to implement price adjustments from time to time in response to competition and other factors. If we reduce prices in order to more effectivelycompete, such reductions could adversely affect our financial condition and results of operations in the short term and may also adversely affect our financialcondition and results of operations in the long term if transaction volumes do not increase sufficiently.11Table of ContentsIf we lose key agents, our business with key agents is reduced or we are unable to maintain our agent network under terms consistent with those currentlyin place, 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 directlyinvolved. 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 ofreasons, including competition from other money transfer providers, an agent’s dissatisfaction with its relationship with us or the revenue earned from therelationship, 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 unrelatedto our relationship with them, including increased competition in their business, 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 financialconcessions or may not agree to enter into exclusive arrangements, which could increase competitive pressure. The inability to maintain our agent contractson terms consistent with those already in place, including in respect of exclusivity rights, could adversely affect our business, financial condition and resultsof 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 2017 and 2016, our ten largest agents accounted for 34% and 36%, respectively, of our total revenue. Our largest agent, Walmart, accounted for 17%and 18% of our total revenue in 2017 and 2016, respectively. The current term of our contract with Walmart expires on February 1, 2019. If our contracts withour key agents, including Walmart, are not renewed or are terminated, or are renewed but on less favorable terms, or if such agents generate fewer transactionsor reduce their locations, our business, financial condition and results of operations could be adversely affected. In addition, the introduction of competitiveproducts by Walmart or our other key agents, including competing white label products, could reduce our business with those key agents and intensifyindustry competition, which could adversely affect our business, financial condition and results of operations.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 wemake more of our services available over the internet and other digital media, we subject ourselves to new types of consumer fraud risk because requirementsrelating to consumer authentication are more complex with internet services. Certain former agents have also engaged in fraud against consumers, andexisting agents could engage in fraud against consumers. We use a variety of tools to protect against fraud; however, these tools may not always besuccessful. Allegations of fraud may result in fines, settlements, litigation expenses and reputational damage.The industry is under increasing scrutiny from federal, state and local regulators in the United States and regulatory agencies in many countries in connectionwith the potential for consumer fraud. If consumer fraud levels involving our services were to rise, it could lead to regulatory intervention and reputationaland financial damage. This, in turn, could lead to government enforcement actions and investigations, reduce the use and acceptance of our services orincrease our compliance costs and thereby have a material adverse impact on our business, financial condition and results of operations.MoneyGram and our agents are subject to numerous U.S. and international laws and regulations. Failure to comply with these laws and regulations couldresult in material settlements, fines or penalties, and changes in these laws or regulations could result in increased operating costs or reduced demand forour products or services, all of which may adversely affect our business, financial condition and results of operations.We operate in a highly regulated environment, and our business is subject to a wide range of laws and regulations that vary from jurisdiction to jurisdiction.We are also subject to oversight by various governmental agencies, both in the U.S. and abroad. In light of the current conditions in the global financialmarkets and economy, lawmakers and regulators in the U.S. in particular have increased their focus on the regulation of the financial services industry. Newor modified regulations and increased oversight may have unforeseen or unintended adverse effects on the financial services industry, which could affect ourbusiness and operations.Our business is subject to a variety of regulations aimed at preventing money laundering and terrorism. We are subject to U.S. federal anti-money launderinglaws, including the Bank Secrecy Act and the requirements of OFAC, which prohibit us from transmitting money to specified countries or to or fromprohibited individuals. Additionally, we are subject to anti-money laundering laws in many other countries in which we operate, particularly in the EuropeanUnion. 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 constantly evolving, and maybe unclear and inconsistent across various jurisdictions, making compliance challenging. Subsequent legislation, regulation, litigation, court rulings or otherevents 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 subjectto reporting, recordkeeping and anti-money laundering provisions in the U.S. as well as many other jurisdictions. During 2017, there were significantregulatory reviews and actions taken by U.S. and other regulators and law enforcement agencies against banks, Money Services Businesses and otherfinancial institutions related to money laundering, and12Table of Contentsthe trend appears to be greater scrutiny by regulators of potential money laundering activity through financial institutions. We are also subject to regulatoryoversight and enforcement by the U.S. Department of the Treasury Financial Crimes Enforcement Network ("FinCEN"). Any determination that we haveviolated the 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, systemicrisk, capital adequacy, deposit insurance assessments, consumer financial protection, interchange fees, derivatives, lending limits, thrift charters and changesamong the bank regulatory agencies. The Dodd-Frank Act requires enforcement by various governmental agencies, including the CFPB. Money transmitterssuch as the Company are subject to direct supervision by the CFPB and are required to provide additional consumer information and disclosures, adopt errorresolution standards and adjust refund procedures for international transactions originating in the U.S. in a manner consistent with the Remittance TransferRule (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 weare found to have violated the Dodd-Frank Act’s prohibition against unfair, deceptive or abusive acts or practices. The CFPB’s authority to changeregulations adopted in the past by other regulators could increase our compliance costs and litigation exposure. We may also be liable for failure of ouragents to comply with the Dodd-Frank Act. The legislation and implementation of regulations associated with the Dodd-Frank Act have increased our costsof 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 thescope and nature of our global operations, we experience a higher risk associated with the FCPA and similar anti-bribery laws than many other companies.We are subject to recordkeeping and other requirements imposed upon companies related to compliance with these laws. In 2017, there have been significantregulatory reviews and actions taken by the United States and other regulators related to anti-bribery laws, and the trend appears to be greater scrutiny onpayments to, and relationships with, foreign entities and individuals.We are also subject to the European Union’s Payment Services Directive (“PSD”), which governs the regulatory regime for payment services in the EuropeanUnion, and similar regulatory or licensing requirements in other jurisdictions. The PSD and other international regulatory or licensing requirements mayimpose potential 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 PSDor such other requirements, we could be subject to fines or penalties or revocation of our licenses, which could adversely impact our business, financialcondition and results of operations. Additionally, the U.S. and other countries periodically consider initiatives designed to lower costs of internationalremittances which, if implemented, may adversely impact our business, financial condition and results of operations.In addition, we are subject to escheatment laws in the United States and certain foreign jurisdictions in which we conduct business. These laws are evolvingand are frequently unclear and inconsistent among various jurisdictions, making compliance challenging. We have an ongoing program designed to complywith escheatment laws as they apply to our business. In the United States, we are subject to the laws of various states which from time to time takeinconsistent or conflicting positions regarding the requirements to escheat property to a particular state. Certain foreign jurisdictions do not haveescheatment provisions which apply to our transactions. In these jurisdictions where there is not a requirement to escheat, and when, by utilizing historicaldata we determine that the likelihood is remote that the item will be paid out, we record a reduction to our payment service obligation and recognize anequivalent amount as a component of fee and other revenue.Any violation by us of the laws and regulations set forth above could lead to significant fines or penalties and could limit our ability to conduct business insome jurisdictions. In some cases, we could be liable for the failure of our agents or their subagents to comply with laws, which could have an adverse effecton our business, financial condition and results of operations. As a result, the risk of adverse regulatory action against the Company because of actions of itsagents or subagents and the cost to monitor our agents and subagents has increased. In addition to these fines and penalties, a failure by us or our agents tocomply with applicable laws and regulations also could seriously damage our reputation and result in diminished revenue and profit and increase ouroperating costs and could result in, among other things, revocation of required licenses or registrations, loss of approved status, termination of contracts withbanks or retail representatives, administrative enforcement actions and fines, class action lawsuits, cease and desist orders and civil and criminal liability. Theoccurrence of one or more of these events could have a material adverse effect on our business, financial condition and results of operations.In certain cases, regulations may provide administrative discretion regarding enforcement. As a result, regulations may be applied inconsistently across theindustry, which could result in additional costs for the Company that may not be required to be incurred by some of its competitors. If the Company wererequired to maintain a price higher than its competitors to reflect its regulatory costs, this could harm its ability to compete effectively, which could adverselyaffect its business, financial condition and results of operations. In addition, changes in laws, regulations or other industry practices and standards, orinterpretations of legal or regulatory requirements, may reduce the market for or value of our products or services or render our products or services lessprofitable or obsolete. For example, policy makers may impose heightened customer due diligence requirements or other restrictions13Table of Contentsor fees on remittances. Changes in the laws affecting the kinds of entities that are permitted to act as money transfer agents (such as changes in requirementsfor capitalization or ownership) could adversely affect our ability to distribute certain of our services and the cost of providing such services. Many of ouragents are in the check cashing industry. Any regulatory action that negatively impacts check cashers could also cause this portion of our agent base todecline. If onerous regulatory requirements were imposed on our agents, the requirements could lead to a loss of agents, which, in turn, could lead to a loss ofretail business.Litigation or investigations involving us or our agents 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 bepredicted.Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financialcondition and results of operations. There may also be adverse publicity associated with lawsuits and investigations that could decrease agent and consumeracceptance of our services. Additionally, our business has been in the past, and may be in the future, the subject of class action lawsuits, regulatory actionsand investigations and other general litigation. The outcome of class action lawsuits, regulatory actions and investigations and other litigation is difficult toassess 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 orregulatory agencies in these lawsuits, actions or investigations may seek recovery of very large or indeterminate amounts, and the magnitude of these actionsmay remain unknown for substantial periods of time. The cost to defend or settle future lawsuits or investigations may be significant. In addition, improperactivities, lawsuits or investigations involving our agents may adversely impact our business operations or reputation even if we are not directly involved.We face possible uncertainties relating to compliance with and the extension and impact of the deferred prosecution agreement entered into with the U.S.federal government.In November 2012, we announced that we had entered into a five-year DPA with the MDPA/U.S. DOJ relating to the period from 2003 to early 2009. Pursuantto the DPA, the MDPA/U.S. DOJ filed a two-count criminal Information in the U.S. District Court for the Middle District of Pennsylvania. Under the DPA, theCompany has agreed, among other things, to retain an independent compliance monitor (the “Compliance Monitor”) for a period of five years. On November1, 2017, the Company agreed to a stipulation with the Government that the term of the Company’s DPA be extended for 90 days to February 6, 2018. OnJanuary 31, 2018, the Company agreed with the Government that the term of the DPA be extended for an additional 45 days to March 23, 2018. The purposeof the extension is to provide the Company and the Government additional time to discuss whether the Company is in compliance with the DPA. There canbe no assurance that the Company and the Government will be able to negotiate a mutually satisfactory outcome during such 45 day period (or during anyfurther short-term extension of the DPA) or that such outcome will not include a further extension of the DPA, financial penalties or additional restrictions onthe Company, including a monitorship period beyond the current monitorship that ends on April 30, 2018. The terms of any agreement with the Governmentcould impose significant additional costs upon the Company related to compliance and other required terms, which could have an adverse impact on theCompany's operations. Furthermore, there can be no assurance that the Government will not seek any other remedy, including criminal prosecution andfinancial penalties, in lieu of an extension of the DPA and the monitorship. A prosecution of the Company by the Government or the imposition ofsignificant financial penalties could lead to a severe material adverse effect upon the Company’s ability to conduct its business. Furthermore, neither the DPAnor any agreement with the MDPA/U.S. DOJ would resolve any inquiries from other governmental agencies, which could result in additional costs, expensesand fines.The Company has recorded an $85.0 million accrual in connection with a possible resolution of this matter, based on the facts and circumstances known atthe time. However, the Company is unable to reasonably estimate the ultimate loss and no assurance can be given that future costs and payments made inconnection with this matter will not exceed the amount currently recorded or that the government will not also seek to impose non-monetary remedies orpenalties.Current and proposed data privacy and cybersecurity laws and regulations could adversely affect our business, financial condition and results ofoperations.We are subject to requirements relating to data privacy and cybersecurity under U.S. federal, state and foreign laws. For example, the United States FederalTrade Commission 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 ProtectionRegulation in the European Union, effective May 2018, will impose 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. If we are unable to meet such requirements, wemay be subject to significant fines or penalties. Furthermore, certain industry groups require us to adhere to privacy requirements in14Table of Contentsaddition to federal, state and foreign laws, and certain of our business relationships depend upon our compliance with these requirements. As the number ofcountries enacting privacy and related laws increases and the scope of these laws and enforcement efforts expands, we will increasingly become subject tonew and varying requirements. Failure to comply with existing or future data privacy and cybersecurity laws, regulations and requirements, including byreason 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. Theseconsequences could materially adversely affect our business, financial condition and results of operations.In addition, in connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legalobligations and authorizations, the Company makes information available to certain United States federal and state, as well as certain foreign, governmentagencies. In recent years, the Company has experienced increasing data sharing requests by these agencies, particularly in connection with efforts to preventterrorist financing or reduce the risk of identity theft. During the same period, there has also been increased public attention to the corporate use anddisclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information security and consumerprivacy. These regulatory goals may conflict, and the law in these areas is not consistent or settled. While we believe that we are compliant with ourregulatory 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 adverseeffect on our business, financial condition and results of operations.If we fail to successfully develop and timely introduce new and enhanced products and services or if we make substantial investments in an unsuccessfulnew 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 moneytransfer, bill payment, money order, official check and related services that keep pace with competitive introductions, technological changes and thedemands and preferences of our agents, financial institution customers and consumers. If alternative payment mechanisms become widely substituted for ourcurrent 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 newtechnologies and services or to implement infrastructure changes to further our strategic objectives, strengthen our existing businesses and remaincompetitive. Such investments and strategic alliances, however, are inherently risky, and we cannot guarantee that such investments or strategic alliances willbe successful. If such investments and strategic alliances are not successful, they could have a material adverse effect on our business, financial condition andresults of operations.Our substantial debt service obligations, significant debt covenant requirements and our credit rating could impair our access to capital and financialcondition and adversely affect our ability to operate and grow our business.We have substantial interest expense on our debt, and our ratings are below “investment grade.” This requires that we access capital markets that are subjectto higher volatility than those that support higher rated companies. Since a significant portion of our cash flow from operations is dedicated to debt service, areduction in cash flow could result in an event of default, or significantly restrict our access to capital. Our ratings below investment grade also create thepotential for a cost of capital that is higher than other companies with which we compete. Further, our debt is subject to floating interest rates. Interest ratesare highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and otherfactors beyond our control. A significant increase in interest rates could have an adverse effect on our financial position and results of operations.We are also subject to capital requirements imposed by various regulatory bodies throughout the world. We may need access to external capital to supportthese regulatory requirements in order to maintain our licenses and our ability to earn revenue in these jurisdictions. An interruption of our access to capitalcould impair our ability to conduct business if our regulatory capital falls below requirements.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 industriessuch as construction, energy, manufacturing and retail that tend to be cyclical and more significantly impacted by weak economic conditions than otherindustries. This may result in reduced job opportunities for our customers in the U.S. or other countries that are important to our business, which couldadversely affect our business, financial condition and results of operations. For example, sustained weakness in the price of oil could adversely affecteconomic conditions and lead to reduced job opportunities in certain regions that constitute a significant portion of our total money transfer volume, whichcould result in a decrease in our transaction volume. In addition, increases in employment opportunities may lag other elements of any economic recovery.15Table of ContentsOur 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 oflocations or hours of operation, or cease doing business altogether. Our billers may have fewer consumers making payments to them, particularly billers inthose industries that may be more affected by an economic downturn such as the automobile, mortgage and retail industries.If economic conditions were to deteriorate in a market important to our business, our revenue, financial condition and results of operations could beadversely impacted. Additionally, if our consumer transactions decline due to deteriorating economic conditions, we may be unable to timely and effectivelyreduce our operating costs or take other actions in response, which 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. Ourability 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 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 detrimentalto 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 legalenforcement 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 foreign currency 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 thevalue of our revenues denominated in foreign currencies. In addition, we maintain significant foreign currency balances that are subject to volatility, andcould result in losses due to a devaluation of the U.S. dollar. See “Enterprise Risk Management-Foreign Currency Risk” in Item 7A of this Annual Report onForm 10-K for more information.We conduct money transfer transactions through agents in some regions that are politically volatile, which could increase our cost of operating in thoseregions.We conduct money transfer transactions through agents in some regions that are politically volatile, which could increase our cost of operating in thoseregions. For example, it is possible that our money transfer services or other products could be used in contravention of applicable law or regulations. Suchcircumstances could result in increased compliance costs, regulatory inquiries, suspension or revocation of required licenses or registrations, seizure orforfeiture of assets and the imposition of civil and criminal fees and penalties, or other restrictions on our business operations. In addition to monetary fines orpenalties that we could incur, we could be subject to reputational harm that could have a material adverse effect on our business, financial condition andresults of operations.We have submitted a Voluntary Self-Disclosure to OFAC that could result in penalties from OFAC, which could have a material adverse impact on ourbusiness or financial condition.We have policies and procedures designed to prevent transactions that are subject to economic and trade sanctions programs administered by OFAC and bycertain foreign jurisdictions that prohibit or restrict transactions to or from (or dealings with or involving) certain countries, their governments, and in certaincircumstances, their nationals, as well as with certain individuals and entities such as narcotics traffickers, terrorists and terrorist organizations. If suchpolicies and procedures are not effective in preventing such transactions, we may violate sanctions programs, which could have a material adverse impact onour business.16Table of ContentsIn 2015, we initiated an internal investigation to identify payments processed by the Company that were violations of OFAC sanctions regulations. Wenotified OFAC of the internal investigation, which was conducted in conjunction with the Company's outside counsel. On March 28, 2017, we filed aVoluntary Self-Disclosure with OFAC regarding the findings of our internal investigation. OFAC is currently reviewing the results of the Company’sinvestigation. OFAC has broad discretion to assess potential violations and impose penalties. At this time, it is not possible to determine the outcome of thismatter, or the significance, if any, to our business, financial condition or operations, and we cannot predict when OFAC will conclude their review of ourVoluntary Self-Disclosure. Adverse findings or penalties imposed by OFAC could have a material adverse impact on our business or financial condition.Major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions, couldadversely 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 paymentinstruments, pay money transfers and make related settlements to agents. Any resulting need to access other sources of liquidity or short-term borrowingwould increase our costs. Any delay or inability to settle our payment instruments, pay money transfers or make related settlements with our agentscould 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 tothe recovery of a significant portion of our investment portfolio. A substantial portion of our cash, cash equivalents and interest-bearing deposits areeither 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 banks participating in ourRevolving Credit Facility were unable or unwilling to fulfill its lending commitment to us, our short-term liquidity and ability to engage in corporatetransactions, 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 pursueour growth strategy and fund key strategic initiatives, such as product development and acquisitions.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 capitaland 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 ofoperations.We rely on domestic and international banks for international cash management, electronic funds transfer and wire transfer services to pay money transfersand 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, moneyorder and money transfer businesses. The inability on our part to maintain existing or establish new banking relationships sufficient to enable us to conductour official check, money order and money transfer businesses could adversely affect our business, financial condition and results of operations. There can beno 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 oflocal banks to provide us with these services or implement alternative cash management procedures, which may result in increased costs. Relying on localbanks in each country in which we do business could alter the complexity of our treasury operations, degrade the level of automation, visibility and servicewe 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 theamount of time it takes to concentrate agent remittances and to deliver agent payables, potentially adversely impacting our cash flow, working capital needsand 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 thatMoney Service Businesses, as a class, are high risk businesses. In addition, the creation of anti-money laundering laws has created concern and awarenessamong banks of the negative implications of aiding and abetting money laundering activity. As a result, banks may choose not to provide banking servicesto Money Services Businesses in certain regions due to the risk of additional regulatory scrutiny and the cost of building and maintaining additionalcompliance functions. In addition, certain foreign banks have been forced to terminate relationships with Money Services Businesses by U.S. correspondentbanks. 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 theirexposure to Money Services Businesses and not as a result of any concern related to the Company’s17Table of Contentscompliance 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 particularregion, which could adversely affect 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 in the field of cryptography orother events or developments, including improper acts by third parties, may result in a compromise or breach of the security measures we use to protect oursystems. We obtain, transmit and store confidential consumer, employer and agent information in connection with certain of our services. These activities aresubject to laws and regulations in the U.S. and other jurisdictions. The requirements imposed by these laws and regulations, which often differ materiallyamong the many jurisdictions, are designed to protect the privacy of personal information and to prevent that information from being inappropriatelydisclosed. Any security breaches in our computer networks, databases or facilities could lead to the inappropriate use or disclosure of personal information,which could harm our business and reputation, adversely affect consumers’ confidence in our or our agents' business, cause inquiries and fines or penaltiesfrom regulatory or governmental authorities, cause a loss of consumers, subject us to lawsuits and subject us to potential financial losses. In addition, we maybe required to expend significant capital and other resources to protect against these security breaches or to alleviate problems caused by these breaches. Ouragents and third-party independent contractors may also experience security breaches involving the storage and transmission of our data as well as the abilityto initiate unauthorized transactions. If users gain improper access to our, our agents' or our third-party independent contractors' computer networks ordatabases, they may be able to steal, publish, delete or modify confidential customer information or generate unauthorized money transfers. Such a breachcould expose us to monetary liability, losses and legal proceedings, lead to reputational harm, cause a disruption in our operations, or make our consumersand agents less confident in our services, which could have a material adverse effect on our business, financial condition and results of operations.Because our business is particularly dependent on the efficient and uninterrupted operation of our information technology, computer network systems anddata 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. Ourbusiness involves the movement of large sums of money and the management of data necessary to do so. The success of our business particularly dependsupon the efficient and error-free handling of transactions and data. We rely on the ability of our employees and our internal systems and processes to processthese 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 eventimpacting 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 disasterrecovery plans and redundant computer systems, may not be successful. We may also experience problems other than system failures, including softwaredefects, development delays and installation difficulties, which would harm our business and reputation and expose us to potential liability and increasedoperating expenses. In addition, any work stoppages or other labor actions by employees who support our systems or perform any of our major functionscould adversely affect our business. Certain of our agent contracts, including our contract with Walmart, contain service level standards pertaining to theoperation 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 systemdowntime exceeding agreed upon service levels. If we experience significant system interruptions or system failures, our business interruption insurance maynot 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 offernew services, is dependent on our information technology systems. If we are unable to effectively manage the technology associated with our business, wecould experience increased costs, reductions in system availability and loss of agents or consumers. Any failure of our systems in scalability, reliability andfunctionality could adversely impact 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. and foreign, state and local governments consider legislation that could increase our effective tax rates. If changes to applicabletax laws are enacted that significantly increase our corporate 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 reviewand audit by taxing authorities. An unfavorable outcome in a tax review or audit could result in higher tax expense, including interest and penalties, whichcould adversely affect our financial condition, results of operations18Table of Contentsand cash flows. We establish reserves for material known tax exposures; however, there can be no assurance that an actual taxation event would not exceedour reserves.Recently enacted changes to the U.S. federal tax laws could adversely affect our business, financial condition and results of operations.On December 22, 2017, the legislation commonly known as the “Tax Cuts and Jobs Act” (the “TCJA”), which significantly revises the Internal RevenueCode of 1986, as amended, was enacted. The TCJA, among other things, contains significant changes to the U.S. corporate tax laws, including a permanentreduction of the corporate income tax rate, a limitation on the deductibility of business interest expense, limitation of the deduction for certain net operatinglosses to 80% of current year taxable income, an indefinite net operating loss carryforward, immediate deductions for new investments in certain businessassets instead of deductions for depreciation expense over time, modification or repeal of many business deductions and credits (including certain foreign taxcredits), a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a modified territorial system (retaining certain existingrules and containing new rules designed to include in the U.S. income tax base certain income generated in non-U.S. territories whether or not that incomehas been repatriated to the U.S.), a minimum taxing system related to payments deemed to erode the U.S. tax base, and a one-time tax on accumulatedoffshore earnings held in cash and illiquid assets (with the latter taxed at a lower rate). We continue to examine the impact the TCJA may have on us, and itcould 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 greatereconomic opportunities or a more stable political environment. A significant portion of money transfer transactions are initiated by immigrants or refugeessending money back to their native countries. Changes in immigration laws that discourage international migration and political or other events (such as war,terrorism or health emergencies) that make it more difficult for individuals to migrate or work abroad could adversely affect our money transfer remittancevolume or growth rate. Sustained weakness in global economic conditions could reduce economic opportunities for migrant workers and result in reduced ordisrupted international migration patterns. Reduced or disrupted international migration patterns, particularly in the U.S. or Europe, are likely to reducemoney 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.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 andservices to consumers at their business locations. Our agents receive the proceeds from the sale of our payment instruments and money transfers, and we mustthen collect these funds from the agents. If an agent becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit payment instruments ormoney 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 fundsfor a period of time before remitting them to us. As of December 31, 2017, we had credit exposure to our agents of $549.0 million in the aggregate spreadacross 14,344 agents.Financial institutions, which are utilized to conduct business for our Financial Paper Products segment, issue official checks and money orders and remit to usthe 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, 2017, wehad credit exposure for official checks and money orders conducted by financial institutions of $293.7 million in the aggregate spread across 923 financialinstitutions.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 thatthe models and approaches we use to assess and monitor the creditworthiness of our agents and these financial institutions will be sufficiently predictive, andwe may be unable to detect and take steps to timely mitigate an increased credit risk.In the event of an agent bankruptcy, we would generally be in the position of creditor, possibly with limited or no security, and we would therefore be at riskof a reduced recovery. We are not insured against credit losses, except in circumstances of agent theft or fraud. Significant credit losses could have a materialadverse effect on our business, financial condition and results of operations.19Table of ContentsIf we are unable to adequately protect our brand and the intellectual property rights related to our existing and any new or enhanced products andservices, 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 businesswould 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 theintellectual property rights related to our products and services. We also investigate the intellectual property rights of third parties to prevent ourinfringement of those rights. We may be subject to third-party claims alleging that we infringe their intellectual property rights or have misappropriated otherproprietary rights. We may be required to spend resources to defend such claims or to protect and police our own rights. Some of our intellectual propertyrights may not be protected by intellectual property laws, particularly in foreign jurisdictions. The loss of our intellectual property protection, the inability tosecure 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 highdemand. In addition, legal or enforcement actions against compliance and other personnel in the money transfer industry may affect our ability to attract andretain key employees. The lack of management continuity or the loss of one or more members of our executive management team could harm our businessand future development.The operation of retail locations and acquisition or start-up of businesses create risks and may adversely affect our business, financial condition andresults of operations.We have Company-operated retail locations for the sale of our products and services. We may be subject to additional laws and regulations that are triggeredby our ownership of retail locations and our employment of individuals who staff our retail locations. There are also certain risks inherent in operating anyretail location, including theft, personal injury and property damage and long-term lease obligations.We may, from time to time, acquire or start-up businesses both inside and outside of the U.S. The acquisition and integration of businesses involve a numberof risks. Such risks include, among others:•risks in connection with acquisitions and start-ups and potential expenses that could be incurred in connection therewith;•risks related to the integration of new businesses, including integrating facilities, personnel, financial systems, accounting systems, distribution,operations and general operating procedures;•the diversion of capital and management’s attention from our core business;•the impact on our financial condition and results of operations due to the timing of the new business or the failure of the new business to meet operatingexpectations; and•the assumption of unknown liabilities relating to the new business.Risks associated with acquiring or starting new businesses could result in increased costs and other operating inefficiencies, which could have an adverseeffect on our business, financial condition and results of operations.Any restructuring activities and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect ourbusiness operations.We have undertaken and may in the future undertake various restructuring activities and cost reduction initiatives in an effort to better align ourorganizational structure and costs with our strategy. These activities and initiatives can be substantial in scope and they can involve large expenditures. Suchactivities could result in significant disruptions to our operations, including adversely affecting the timeliness of product releases, the successfulimplementation and completion of our strategic objectives and the results of our operations. If we do not fully realize or maintain the anticipated benefits ofany 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 ourbusiness.We are required to certify and report on our compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual managementassessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm addressingthe 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 controlsover financial reporting in accordance with Section 404. In order to achieve effective internal controls, we may need to enhance our accounting20Table of Contentssystems or processes, which could increase our cost of doing business. Any failure to achieve and maintain an effective internal control environment couldhave a material adverse effect on our business.Risks Related to Ownership of Our StockTHL owns a substantial percentage of our common stock, and its interests may differ from the interests of our other common stockholders.As of December 31, 2017, Thomas H. Lee Partners, L.P. (“THL”) held 43.8% of our outstanding common shares and 37.6% of our outstanding shares on afully-converted basis (if all of the outstanding shares of the Series D Participating Convertible Preferred (the "D Stock") were converted to common shares),excluding treasury shares held by the Company. The combined ownership percentage of THL and affiliates of Goldman Sachs & Co. (“Goldman Sachs” and,collectively with THL, the “Investors”) on a fully-converted basis was 51.7% as of December 31, 2017. Additionally our charter provides that as long as theInvestors have a right to designate directors to our Board of Directors pursuant to the Amended and Restated Purchase Agreement, dated as of March 17,2008, among the Company and the several Investor parties named therein, THL has the right to designate two to four directors (such directors, the "THLRepresentatives"), who each have equal votes and who together have a total number of votes equal to the number of directors as is proportionate to thecommon stock ownership (on an as-converted basis) of the Investors (rounded to the nearest whole number), unlike the other members of our Board ofDirectors who have only one vote each. THL has appointed two of the nine members of our Board of Directors, each THL Representative currently hasmultiple votes, and the THL Representatives together currently hold a majority of the votes of our Board of Directors.We cannot provide assurance that the interests of THL will coincide with the interests of other holders of our common stock and THL’s substantial controlover us could result in harm to the market price of our common stock by delaying, deferring or preventing a change in control of our company; impeding amerger, consolidation, takeover or other business combination involving our company; or entrenching our management and Board of Directors.We have a significant number of salable common shares and D Stock held by the Investors relative to our outstanding common shares.As of December 31, 2017, there were 54.2 million outstanding common shares, excluding treasury shares (or 63.1 million common shares if the outstanding DStock were converted into common shares). As of December 31, 2017, THL held approximately 23.7 million shares of our common stock and Goldman Sachsheld approximately 71,282 shares of D Stock, which are convertible into approximately 8.9 million shares of our common stock. Sales of a substantialnumber of common shares, or the perception that significant sales could occur (particularly if sales are concentrated in time or amount), may depress thetrading price of our common 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 apremium 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 Delawarelaw 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 stockholderswould receive an attractive value for their shares or if a significant number of our stockholders believed such a proposed transaction to be in their bestinterests. As a result, stockholders who desire to participate in such a transaction may not have the opportunity to do so.Our bylaws designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings thatmay be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors,officers or employees.Our bylaws provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to thefullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any actionasserting a claim of breach of a fiduciary duty owed by any of our directors, officers or employees to us or our stockholders, (iii) any action asserting a claimarising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim against us that is governed by the internalaffairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes withus or our directors, officers or employees, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find theseprovisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additionalcosts associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.21Table of ContentsOur Board of Directors has the power to issue series of preferred stock and to designate the rights and preferences of those series, which could adverselyaffect 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 votingpower, 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. Thesefactors include the perceived prospects or actual operating results of our business; changes in estimates of our operating results by analysts, investors or ourmanagement; our actual operating results relative to such estimates or expectations; actions or announcements by us or our competitors; litigation andjudicial decisions; legislative or regulatory actions; and changes in general economic or market conditions. In addition, the stock market in general has fromtime to time experienced extreme price and volume fluctuations. These market fluctuations could reduce the market price of our common stock for reasonsunrelated to our operating performance.Item 1B. UNRESOLVED STAFF COMMENTSNone.Item 2. PROPERTIESOur leased corporate offices are located in Dallas, TX. We have a number of offices leased in more than 30 countries and territories around the worldincluding, but not limited to: U.S., United Kingdom, Poland and United Arab Emirates. These offices provide operational, sales and marketing support andare used by both our Global Funds Transfer Segment and our Financial Paper Products Segment. We believe that our properties are sufficient to meet ourcurrent and projected needs. We periodically review our facility requirements and may acquire new facilities, or modify, consolidate, dispose of or subletexisting facilities, based on business needs.Item 3. LEGAL PROCEEDINGSThe matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting lossesbecome probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation matters.Litigation Commenced Against the Company:The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company's business. Management doesnot believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results ofoperations and cash flows.Government Investigations:OFAC — In 2015, we initiated an internal investigation to identify any payments processed by the Company that were violations of the U.S. Department ofthe Treasury's OFAC sanctions regulations. We notified OFAC of the ongoing internal investigation, which was conducted in conjunction with theCompany's outside counsel. On March 28, 2017, we filed a Voluntary Self-Disclosure with OFAC regarding the findings of our internal investigation. OFACis currently reviewing the results of the Company’s investigation. At this time, it is not possible to determine the outcome of this matter, or the significance, ifany, to our business, financial condition or results of operations, and we cannot predict when OFAC will conclude their review of our Voluntary Self-Disclosure.Deferred Prosecution Agreement — In November 2012, we announced that a settlement was reached with the MDPA and the U.S. DOJ relating to thepreviously disclosed investigation of transactions involving certain of our U.S. and Canadian agents, as well as fraud complaint data and the consumer anti-fraud program, during the period from 2003 to early 2009. In connection with this settlement, we entered into the DPA with the MDPA and U.S. DOJ datedNovember 8, 2012. On November 1, 2017, the Company agreed to a stipulation with the Government that the term of the Company’s DPA be extended for 90 days to February 6,2018. On January 31, 2018, the Company agreed with the Government that the term of the DPA be22Table of Contentsextended for an additional 45 days to March 23, 2018. The purpose of the extension is to provide the Company and the Government additional time todiscuss whether the Company is in compliance with the DPA. There can be no assurance that the Company and the Government will continue to be able tonegotiate a mutually satisfactory outcome during such 45 day period (or any further short-term extension of the DPA) or that such outcome will not include afurther extension of the DPA, financial penalties or additional restrictions on the Company, including a monitorship period beyond the current monitorshipthat ends on April 30, 2018. Furthermore, there can be no assurance that the Government will not seek any other remedy, including criminal prosecution andfinancial penalties, in lieu of an extension of the DPA and monitorship.As a result, in the fourth quarter of 2017, the Company recorded an $85.0 million accrual in connection with a possible resolution of this matter, based on thefacts and circumstances known at the time. However, the Company is unable to reasonably estimate the ultimate loss and no assurance can be given thatfuture costs and payments made in connection with this matter will not exceed the amount currently recorded or that the government will not also seek toimpose non-monetary remedies or penalties.Other Matters — The Company is involved in various other government inquiries and other matters that arise from time to time. Management does notbelieve that any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations and cash flows.Actions Commenced by the Company:Tax Litigation — The IRS completed its examination of the Company’s consolidated income tax returns through 2013 and issued Notices of Deficiency for2005-2007 and 2009 and an Examination Report for 2008. The Notices of Deficiency and Examination Report disallow, among other items,approximately $900.0 million of ordinary deductions on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, theCompany filed petitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively. In 2013, the Company reached apartial settlement with the IRS allowing ordinary loss treatment on $186.9 million of deductions in dispute. In January 2015, the U.S. Tax Court granted theIRS's motion for summary judgment upholding the remaining adjustments in the Notices of Deficiency. During 2015, the Company made payments to theIRS of $61.0 million for federal tax payments and associated interest related to the matter. The Company believes that it has substantive tax law arguments infavor of its position. The Company filed a notice of appeal with the U.S. Tax Court on July 27, 2015 for an appeal to the U.S. Court of Appeals for the FifthCircuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, and on November 15, 2016, the Fifth Circuit vacated the Tax Court’s decision andremanded the case to the Tax Court for further proceedings. The Company filed a motion for summary judgment in the Tax Court on May 31, 2017. OnAugust 23, 2017, the IRS filed a motion for summary judgment and its response to the Company’s motion for summary judgment. Pending the outcome of theappeal, the Company may be required to file amended state returns and make additional cash payments of up to $18.7 million on amounts that havepreviously been accrued.See Note 13 — Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional disclosure.Item 4. MINE SAFETY DISCLOSURESNot applicable.23Table of ContentsPART II Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESOur common stock is traded on the NASDAQ Stock Market LLC under the symbol “MGI.” As of March 8, 2018, there were 7,867 stockholders of record ofour common stock.The high and low sales prices for our common stock for the periods presented were as follows for the respective periods: 2017 2016Fiscal QuarterHigh Low High LowFirst$17.13 $11.26 $7.09 $4.68Second$17.92 $15.88 $7.37 $5.81Third$17.48 $15.28 $8.33 $6.29Fourth$16.27 $12.40 $12.72 $5.83Our Board of Directors has authorized the repurchase of a total of 12,000,000 common shares, as announced in our press releases issued on November 18,2004, August 18, 2005 and May 9, 2007. The repurchase authorization is effective until such time as the Company has repurchased 12,000,000 commonshares. The Company may consider repurchasing shares which would be subject to limitations in our debt agreements. Common stock tendered to theCompany in connection with the exercise of stock options or vesting of restricted stock is not considered repurchased shares under the terms of therepurchase authorization. As of December 31, 2017, the Company had repurchased 9,842,509 common shares under the terms of the repurchase authorizationand has remaining authorization to repurchase up to 2,157,491 shares. During the three months ended December 31, 2017, the Company did not repurchaseany common shares.The terms of our debt agreements place significant limitations on the amount of restricted payments we may make, including dividends on our common stockand repurchases of our capital stock. Subject to certain customary conditions, we may (i) make restricted payments in an aggregate amount not to exceed$50.0 million (without regard to a pro forma leverage ratio calculation), (ii) make restricted payments up to a formulaic amount determined based onincremental build-up of our consolidated net income in future periods (subject to compliance with maximum pro forma leverage ratio calculation) and (iii)repurchase capital stock from THL and Goldman Sachs in a remaining aggregate amount up to $170.0 million. As a result, our ability to declare or paydividends or distributions to the stockholders of the Company’s common stock is materially limited at this time. No dividends were paid on our commonstock in 2017 or 2016.STOCKHOLDER RETURN PERFORMANCEThe Company's peer group consists of companies that are in the money remittance and payment industries, along with companies that effectively capture ourcompetitive landscape given the products and services that we provide. The peer group is comprised of the following companies: Euronet Worldwide Inc.,Fiserv, Inc., MasterCard, Inc., Paypal Holdings, Inc., Visa, Inc. and The Western Union Company.24Table of ContentsThe following graph compares the cumulative total return from December 31, 2012 to December 31, 2017 for our common stock, our peer group index ofpayment services companies and the S&P 500 Index. The graph assumes the investment of $100 in each of our common stock, our peer group and the S&P500 Index on December 31, 2012, and the reinvestment of all dividends as and when distributed. The graph is furnished and shall not be deemed “filed” withthe 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 intoany 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 12/31/2012 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: 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017MoneyGram International, Inc.100.00 156.36 68.40 47.18 88.86 99.17S&P 500100.00 132.39 150.51 152.59 170.84 208.14Peer Group100.00 156.03 175.00 205.36 217.05 323.7125Table of ContentsItem 6. SELECTED FINANCIAL DATAThe information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and our Consolidated Financial Statements and Notes thereto. The following table presents our selected consolidated financial data for the yearsended December 31:(Amounts in millions, except per share and location data)2017 2016 2015 2014(1) 2013 (1)Operating Results Revenue Global Funds Transfer segment$1,508.1 $1,553.7 $1,465.8 $1,470.1 $1,475.0Financial Paper Products segment94.0 75.6 73.3 80.3 84.0Other— 1.1 — — 0.6Total revenue$1,602.1 $1,630.4 $1,539.1 $1,550.4 $1,559.6 Net (loss) income$(29.8) $15.9 $(77.7) $71.6 $52.0 Net (loss) income per common share: Basic$(0.47) $0.26 $(1.25) $1.10 $0.73Diluted$(0.47) $0.24 $(1.25) $1.09 $0.72Financial Position Cash and cash equivalents $190.0 $157.2 $164.5 $250.6 $318.8Total assets$4,772.5 $4,597.4 $4,505.2 $4,628.3 $4,775.8Long-term debt$908.1 $915.2 $942.6 $949.6 $831.8Stockholders’ deficit$(245.3) $(215.6) $(229.5) $(189.0) $(82.8)(1) Selected financial data for the years ended December 31, 2014 and 2013 has been corrected to reflect the adjustments related to the errors described in Note 15 — Immaterial ErrorCorrection of the Notes to the Consolidated Financial Statements. The correction of the error decreased net income by $0.5 million and $0.4 million and diluted net income percommon share by $0.01 for the years ended December 31, 2014 and 2013, respectively. Stockholders' deficit increased by $6.3 million and $5.8 million as of December 31, 2014 and2013, respectively.26Table of ContentsItem 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion should be read in conjunction with our Consolidated Financial Statements and related Notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated due to various factors discussedbelow under “Cautionary Statements Regarding Forward-Looking Statements” and under the caption “Risk Factors” in Part 1, Item 1A of this AnnualReport on Form 10-K.The comparisons presented in this discussion refer to the same period in the prior year, unless otherwise noted. This discussion is organized in the followingsections:•Overview•Results of Operations•Liquidity and Capital Resources•Critical Accounting Policies and Estimates•Cautionary Statements Regarding Forward-Looking StatementsOVERVIEWMoneyGram is a global provider of innovative money transfer services and is recognized worldwide as a financial connection to friends and family. Whetheronline, through a mobile device, at a kiosk or in a local store, we connect consumers in any way that is convenient for them. We also provide bill paymentservices, issue money orders and process official checks in the U.S. and in select countries and territories. We primarily offer services through third-partyagents, including retail chains, independent retailers, post offices and financial institutions. We also have Company-operated retail locations in the U.S. andWestern Europe. Additionally, we offer Digital solutions, which include moneygram.com, mobile solutions, account deposit and kiosk-based services.We manage our revenue and related commissions expense through two reporting segments: Global Funds Transfer and Financial Paper Products. The GlobalFunds Transfer segment provides global money transfer services in approximately 350,000 agent locations in more than 200 countries and territories. Ourglobal money transfer services are our primary revenue driver, accounting for 89% of total revenue for the year ended December 31, 2017. The Global FundsTransfer segment also provides bill payment services to consumers through substantially all of our money transfer agent and Company-operated locations inthe U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through our Digital solutions. The FinancialPaper Products 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. Corporate expenses that are not related to our segments' performance are excludedfrom operating income for Global Funds Transfer and Financial Paper Products segments.Business EnvironmentThroughout 2017, worldwide political and economic conditions remained highly variable, as evidenced by both economic growth and challenges in keymarkets, low currency reserves, currency controls in certain countries and a volatile immigration environment. Also, there is continued political unrest andeconomic weakness in parts of the Middle East and Africa that contributed to the volatility. Given the global reach and extent of the current economicconditions, the growth of money transfer volumes and the average face value of money transfers continued to be highly variable by corridor and country.We generally compete for money transfer consumers on the basis of trust, convenience, price, technology and brand recognition. The market for moneytransfer services remains very competitive, consisting of a few large competitors and a large number of small, niche competitors. In addition to thecompetitive environment, global compliance requirements are becoming increasingly more complex, which has been affecting our top line growth. Wecontinue to enhance our compliance tools to comply with various government and other regulatory programs around the globe. We also introduced self-imposed compliance measures to further protect our customers and the integrity of our network.We continue to make progress on our journey toward becoming a digitally-enabled, customer-centric organization despite competition from newtechnologies that allow consumers to send and receive money in a variety of ways. We believe that our continued investment in innovative products andservices, particularly Digital solutions, such as the global expansion of moneygram.com, mobile solutions and account deposit services, positions theCompany to accelerate our digital transformation and diversify our product and service offerings to meet consumers' needs. Digital solutions revenue for2017 was $211.6 million, or 14% of money transfer revenue and increased by 9% from $194.1 million in 2016. Moneygram.com, which represents 42% ofDigital solutions revenue for 2017, grew by $17.7 million or 25% over 2016.27Table of ContentsAnticipated TrendsThis discussion of trends expected to impact our business in 2018 is based on information presently available and reflects certain assumptions, includingassumptions regarding future economic conditions. Differences in actual economic conditions compared with our assumptions could have a material impacton our results. See “Cautionary Statements Regarding Forward-Looking Statements” and Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-Kfor additional factors that could cause results to differ materially from those contemplated by the following forward-looking statements.We continue to see increased opportunities to capitalize on growth and expansion both geographically and through product and service offerings. However,economic and political instability, which can result in currency volatility, liquidity pressure on central banks and pressure on labor markets in certaincountries, may continue to impact our business in 2018. Additionally, pricing pressure continues to negatively impact our growth in the U.S. to U.S. channel,along with economic issues in the Middle East and Africa, which have restricted our ability to transact in certain markets.The June 23, 2016 referendum by British voters to exit the European Union (referred to as Brexit), which was followed by Britain providing official notice toleave the European Union in March of 2017, introduced additional uncertainty in global markets and currency exchange rates. We are currently unable todetermine the long term impact that Brexit will have on us, as any impact will depend, in part, on the outcome of tariff, trade, regulatory and othernegotiations.For our Financial Paper Products segment, we expect the decline in overall paper-based transactions to continue primarily due to continued migration bycustomers to other payment methods. Our investment revenue, which consists primarily of interest income generated through the investment of cash balancesreceived from the sale of our Financial Paper Products, is dependent on the interest rate environment. The Company would see a positive impact on itsinvestment revenue if interest rates continue to rise.The TCJA, which was signed into law on December 22, 2017, makes significant changes to the taxation of U.S. business entities. These changes include apermanent reduction to the federal corporate income tax rate and changes in the deductibility of interest on corporate debt obligations, among others. TheCompany continues to analyze the various components of the TCJA and its impact on our consolidated financial statements. As such, the provisionalamounts recorded as of December 31, 2017 related to the estimated impact resulting from the re-measurement of our deferred tax assets and liabilities and theestimated charge for the one-time tax on our deferred foreign earnings could change. See "Income Taxes" section further below and Note 12 — Income Taxesof the Notes to the Consolidated Financial Statements for additional disclosure.We continue to see a trend among state, federal and international regulators toward enhanced scrutiny of anti-money laundering compliance programs, aswell as consumer fraud prevention and education. Compliance with laws and regulations is a highly complex and integral part of our day-to-day operations;thus we have continued to increase our compliance personnel headcount and make investments in our compliance-related technology and infrastructure. Forthe year ended December 31, 2017, the Company has invested $28.0 million in its compliance enhancement program, which includes $18.4 million ofcapital expenditures and $9.6 million of expenses incurred.In the first quarter of 2013, a compliance monitor was selected pursuant to a requirement of our settlement with the MDPA and U.S. DOJ. We have receivedfive annual reports from the compliance monitor and we continue to make investments in our compliance systems and operations as part of our complianceenhancement program. We incurred $16.0 million of expense directly related to the compliance monitor for the year ended December 31, 2017.Financial Measures and Key MetricsThis Annual Report on Form 10-K includes financial information prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP")as well as certain non-GAAP financial measures that we use to assess our overall performance.GAAP Measures — We utilize certain financial measures prepared in accordance with GAAP to assess the Company's overall performance. These measuresinclude, but are not limited to: fee and other revenue, fee and other commissions expense, fee and other revenue less commissions, operating income andoperating margin. Due to our regulatory capital requirements, we deem certain assets as settlement assets. Settlement assets represent funds received or to bereceived from agents for unsettled money transfers, money orders and customer payments. Settlement assets include settlement cash and cash equivalents,receivables, net, interest-bearing investments and available-for-sale investments. See Note 2 — Summary of Significant Accounting Policies of the Notes tothe Consolidated Financial Statements for additional disclosure.Non-GAAP Measures — Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows thatexcludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance withGAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance withGAAP. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on anysingle financial measure. While we believe that these metrics enhance investors' understanding of our business, these metrics are not necessarily28Table of Contentscomparable with similarly named metrics of other companies. 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 orprincipal 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 signingbonuses) — Adjusted Free Cash Flow does not reflect cash payments related to the adjustment of certain significant items in Adjusted EBITDA.Constant Currency — Constant currency metrics assume that amounts denominated in foreign currencies are translated to the U.S. dollar at rates consistentwith those in the prior year.The Company utilizes specific terms related to our business throughout this document, including the following:Corridor — With regard to a money transfer transaction, the originating "send" location and the designated "receive" location are referred to as a corridor.Corridor mix — The relative impact of increases or decreases in money transfer transaction volume in each corridor versus the comparative prior period.Face value — The principal amount of each completed transaction, excluding any fees related to the transaction.Foreign currency — The impact of foreign currency exchange rate fluctuations on our financial results is typically calculated as the difference betweencurrent period activity translated using the current period’s currency exchange rates and the comparable prior-year period’s currency exchange rates. We usethis method to calculate the impact of changes in foreign currency exchange rates on revenues, commissions and other operating expenses for all countrieswhere the functional currency is not the U.S. dollar.RESULTS OF OPERATIONSThe following table is a summary of the results of operations for the years ended December 31:(Amounts in millions, except percentages)2017 2016 2015 2017 vs 2016 2016 vs 2015 2017 vs 2016 2016 vs 2015Revenue Fee and other revenue$1,560.9 $1,612.4 $1,527.0 $(51.5) $85.4 (3)% 6 %Investment revenue41.2 18.0 12.1 23.2 5.9 NM 49 %Total revenue1,602.1 1,630.4 1,539.1 (28.3) 91.3 (2)% 6 %Expenses Fee and other commissions expense763.5 793.1 759.8 (29.6) 33.3 (4)% 4 %Investment commissions expense8.7 2.5 0.8 6.2 1.7 NM NMTotal commissions expense772.2 795.6 760.6 (23.4) 35.0 (3)% 5 %Compensation and benefits277.7 295.7 310.4 (18.0) (14.7) (6)% (5)%Transaction and operations support402.3 309.5 324.8 92.8 (15.3) 30 % (5)%Occupancy, equipment and supplies66.1 61.9 62.3 4.2 (0.4) 7 % (1)%Depreciation and amortization75.1 79.9 66.1 (4.8) 13.8 (6)% 21 %Total operating expenses1,593.4 1,542.6 1,524.2 50.8 18.4 3 % 1 %Operating income8.7 87.8 14.9 (79.1) 72.9 (90)% NMOther expenses Interest expense45.3 45.0 45.3 0.3 (0.3) 1 % (1)%Debt extinguishment costs— 0.3 — (0.3) 0.3 NM NMTotal other expenses (income), net45.3 45.3 45.3 — — — % — %(Loss) income before income taxes(36.6) 42.5 (30.4) (79.1) 72.9 NM NMIncome tax (benefit) expense(6.8) 26.6 47.3 (33.4) (20.7) NM (44)%Net (loss) income$(29.8) $15.9 $(77.7) $(45.7) $93.6 NM NMNM = Not meaningful 29Table of ContentsGlobal Funds Transfer Fee and Other RevenueFee and other revenue consists of transaction fees, foreign exchange revenue and other revenue. The Company earns money transfer revenues primarily fromconsumer transaction fees on its money transfer and bill payment services and the management of currency exchange spreads involving different "send" and"receive" countries. Other revenue in the Global Funds Transfer segment primarily consists of breakage revenue on money transfer transactions where thelikelihood of payment is remote and there is no requirement for remitting balances to government agencies under unclaimed property laws.The following discussion provides a summary of fee and other revenue for the Global Funds Transfer segment for the years ended December 31. Investmentrevenue is not included in the analysis below. For further detail, see "Investment Revenue Analysis" below.(Amounts in millions, except percentages)2017 2016 2015 2017 vs 2016 2016 vs 2015Money transfer fee and other revenue$1,421.8 $1,456.2 $1,366.9 (2)% 7 %Bill payment fee and other revenue86.3 97.5 98.7 (11)% (1)%Global Funds Transfer fee and other revenue$1,508.1 $1,553.7 $1,465.6 (3)% 6 %Fee and other commissions expense$762.2 $791.9 $759.5 (4)% 4 %Money Transfer Fee and Other Revenue The following table details the changes in money transfer fee and other revenue from the respective prior year for the years ended December 31:(Amounts in millions)2017 2016Prior year ended$1,456.2 $1,366.9Change resulting from: Corridor mix(41.1) 24.2Money transfer volume17.2 74.1Average face value per transaction and pricing(15.5) 11.1Impact from changes in exchange rates1.7 (16.2)Other3.3 (3.9)Current year ended$1,421.8 $1,456.2In 2017, the decrease in money transfer fee and other revenue was primarily driven by a negative change in corridor mix and a decrease in the average facevalue per transaction and pricing, partially offset by increased Non-U.S. and U.S. outbound money transfer volume discussed further below.In 2016, the increase in money transfer fee and other revenue was primarily driven by increased Non-U.S. and U.S. outbound money transfer volumediscussed further below and a positive change in corridor mix, partially offset by the stronger U.S. dollar compared to prior year.The following table displays year-over-year money transfer fee and other revenue growth by geographic channel (the region originating the transaction) forthe years ended December 31: 2017 vs 2016 2016 vs 2015Total money transfer fee and other revenue(2)% 7%U.S. Outbound1% 9%Non-U.S.(2)% 8%U.S. to U.S.(16)% (7)%30Table of ContentsMoney Transfer TransactionsThe following table displays the percentage distribution of total money transfer transactions by geographic channel (the region originating the transaction)for the years ended December 31: 2017 2016 2015U.S. Outbound44% 43% 43%Non-U.S.44% 43% 40%U.S. to U.S.12% 14% 17%The following table displays year over year money transfer transaction growth by geographic channel (the region originating the transaction) for the yearsended December 31: 2017 vs 2016 2016 vs 2015Total transactions1% 5%U.S. Outbound2% 8%Non-U.S.6% 11%U.S. to U.S.(14)% (13)%During 2017, total money transfer fee and other revenue declined by 2% and total money transfer transactions grew by 1%. The U.S. Outbound channelgenerated 1% revenue growth for the year ended December 31, 2017 and 2% transaction growth for the same period. The revenue and transaction growth wasprimarily driven by sends to Latin America. The U.S. Outbound channel accounted for 44% of our total money transfer transactions for 2017.During 2017, money transfer fee for the Non-U.S. channel and other revenue declined by 2% and transactions grew by 6% for the same period. Thetransaction growth was primarily driven by sends from Latin America, Middle East and Europe partially offset by a decrease in revenue caused bygeopolitical and economic challenges in parts of Africa. The Non-U.S. channel accounted for 44% of total money transfer transactions for the year endedDecember 31, 2017.For the year ended December 31, 2017, the U.S. to U.S. channel money transfer fee and other revenue declined by 16% and transactions declined by 14% forthe same period. The decline was primarily due to lower transaction volume. The U.S. to U.S. channel accounted for 12% of total money transfer transactionsfor 2017.During 2016, total money transfer fee and other revenue grew by 7% and total money transfer transactions grew by 5%. The U.S. Outbound channel generated9% revenue growth for the year ended December 31, 2016 and 8% transaction growth for the same period. The revenue and transaction growth was primarilydriven by sends to Latin America, Africa and Asia Pacific and was partially offset by the discontinuation of our full-service kiosk offerings. The U.S.Outbound channel accounted for 43% of our total money transfer transactions for 2016.During 2016, the Non-U.S. channel money transfer fee and other revenue grew by 8% and transactions grew by 11% for the same period. The revenue andtransaction growth was primarily driven by sends from Europe, partially offset by lower transaction volume caused by geopolitical and economic challengesin parts of Africa. The Non-U.S. channel accounted for 43% of total money transfer transactions for the year ended December 31, 2016.For the year ended December 31, 2016, the U.S. to U.S. channel money transfer fee and other revenue declined by 7% and transactions declined by 13% forthe same period. The decline was primarily due to lower volume of transactions under $200. The U.S. to U.S. channel accounted for 14% of total moneytransfer transactions for 2016.Bill Payment Fee and Other RevenueIn 2017 and 2016, bill payment fee and other revenue decreased by $11.2 million or 11% and $1.2 million or 1%, respectively, due to lower transactionsresulting from shifts in industry mix. For the years ended December 31, 2017 and 2016, bill payment transactions decreased by 12% and 3%, respectively.Global Funds Transfer Fee and Other Commissions ExpenseThe Company incurs fee commissions and foreign exchange commissions primarily on our Global Funds Transfer products. In a money transfer transaction,both the agent initiating the transaction and the receiving agent earn a fee commission that is generally a fixed fee or is based on a percentage of the feecharged to the consumer. The agent initiating the transaction and the receiving agent also earn foreign exchange commissions, which are generally based ona percentage of currency exchange spreads. In a bill payment transaction, the agent initiating the transaction receives a commission and, in limitedcircumstances, the biller will generally earn a commission that is based on a percentage of the fee charged to the consumer. Other commissions expenseincludes the amortization of capitalized agent signing bonus payments.31Table of ContentsThe following table details the changes in fee and other commissions for the Global Funds Transfer segment from the respective prior year for the years endedDecember 31:(Amounts in millions)2017 2016Prior year ended$791.9 $759.5Change resulting from: Money transfer revenue(17.4) 50.9 Bill payment revenue and commission rates(6.6) (0.1) Money transfer corridor and agent mix(3.7) (5.0) Signing bonuses(1.9) (5.0) Impact from changes in exchange rates(0.1) (8.4)Current year ended$762.2 $791.9For the year ended December 31, 2017, fee and other commissions expense decreased $29.7 million or 4%. The decrease in commissions expense wasprimarily driven by decreases in money transfer revenue, bill payment revenue and commissions rates and money transfer corridor and agentmix. Commissions expense as a percentage of fee and other revenue was 51% in both 2017 and 2016.For the year ended December 31, 2016, fee and other commissions expense increased $32.4 million or 4%. The increase in commissions expense wasprimarily driven by the increase in money transfer revenue, as a result of an increase in money transfer volume and an increase in average price pertransaction, partially offset by changes in money transfer corridor and agent mix, the impact from a stronger U.S. dollar compared to prior year and a decreasein signing bonus amortization. Commissions expense as a percentage of fee and other revenue declined to 51% in 2016 from 52% in 2015.Financial Paper Products Fee and Other Revenue and Fee and Other Commissions ExpenseFee and other revenue consists of transaction fees and other revenue. Transaction fees are earned on money order and official check transactions. Otherrevenue primarily consists of processing fees, service charges on aged outstanding money orders and money order dispenser fees. We generally do not paycommissions to agents on the sale of money orders, except, in certain limited circumstances, for large agents where we may pay a commission based on totalmoney order transactions or outstanding balance.The following discussion provides a summary of fee and other revenue and fee and other commissions expense for the Financial Paper Product segment forthe years ended December 31. Investment revenue and investment commissions expense are not included in the analysis below. For further detail, see"Investment Revenue Analysis" below.(Amounts in millions, except percentages)2017 2016 2015 2017 vs 2016 2016 vs 2015Money order fee and other revenue$42.5 $45.4 $47.6 (6)% (5)%Official check fee and other revenue10.4 12.2 13.8 (15)% (12)%Financial Paper Product fee and other revenue$52.9 $57.6 $61.4 (8)% (6)%Fee and other commissions expense$1.3 $1.2 $0.3 8 % NMMoney order fee and other revenue decreased in 2017 and 2016 due to transaction declines of 6% and 7%, respectively, attributed primarily to the migrationof consumers to other payment methods. Similarly, official check fee and other revenue decreased due to transaction declines of 3% and 8% in 2017 and2016, respectively.Investment Revenue AnalysisThe following discussion provides a summary of the Company's investment revenue and investment commissions expense for the years ended December 31:(Amounts in millions, except percentages)2017 2016 2015 2017 vs 2016 2016 vs 2015Investment revenue$41.2 $18.0 $12.1 NM 49%Investment commissions expense (1)8.7 2.5 0.8 NM NM (1)Investment commissions expense consists of amounts paid to financial institution customers based on short-term interest rate indices times the average outstanding cash balances ofofficial checks sold by the financial institution.32Table of ContentsInvestment RevenueInvestment revenue consists primarily of interest income generated through the investment of cash balances received from the sale of official checks andmoney orders. These cash balances are available to us for investment until the payment instrument is cleared. Investment revenue varies depending on thelevel of investment balances and the yield on our investments.Investment revenue in 2017 increased $23.2 million, when compared to 2016, due to the redemption of an asset-backed security as well as higher yieldsearned on investment balances. In 2017, investment commissions expense increased due to the change in interest rates. See Note 4 — Investment Portfolio ofthe Notes to the Consolidated Financial Statements for additional information on the redemption.Investment revenue in 2016 increased $5.9 million, or 49%, when compared to 2015 primarily due to higher yields earned on investment balances. In 2016investment commissions expense increased due to the change in interest rates.Operating ExpensesThe following table is a summary of the operating expenses, excluding commissions expense, for the years ended December 31: 2017 2016 2015(Amounts in millions, except percentages)Dollars Percent of TotalRevenue Dollars Percent of TotalRevenue Dollars Percent of TotalRevenueCompensation and benefits$277.7 17% $295.7 18% $310.4 20%Transaction and operations support402.3 25% 309.5 19% 324.8 21%Occupancy, equipment and supplies66.1 4% 61.9 4% 62.3 4%Depreciation and amortization75.1 5% 79.9 5% 66.1 4%Total operating expenses$821.2 51% $747.0 46% $763.6 50%In 2017, total operating expenses as a percentage of total revenue increased when compared to 2016, due to an $85.0 million accrual related to the DPA.In 2016, total operating expenses as a percentage of total revenue was 46% compared to 50% in 2015. The decrease was mainly due to an increase in totalrevenue, lower expense related to the 2014 Global Transformation Program and a decrease in pension expense, partially offset by an increase in outsourcing,independent contractor and consultant costs, depreciation and amortization and net salaries, related payroll taxes and cash incentive compensation, all ofwhich are discussed in more detail below.Compensation and BenefitsCompensation and benefits include salaries and benefits, management incentive programs, related payroll taxes and other employee related costs. Thefollowing table is a summary of the change in compensation and benefits from the respective prior year for the years ended December 31:(Amounts in millions)2017 2016Prior year ended$295.7 $310.4Change resulting from: Net salaries, related payroll taxes and cash incentive compensation(11.7) 12.7Severance and related costs(6.0) 7.0Employee stock-based compensation(3.4) (1.7)Impact from changes in exchange rates2.3 (2.1)Pension(1.3) (19.7)Reorganization and restructuring— (10.3)Other2.1 (0.6)Current year ended$277.7 $295.7In 2017, compensation and benefits decreased by $18.0 million due to the decrease in net salaries, related payroll taxes and cash incentive compensationprimarily driven by lower headcount, a decrease in severance and related costs and lower employee stock-based compensation expense. These decreases werepartially offset by the changes in exchange rates due to a weaker U.S. dollar.33Table of ContentsIn 2016, compensation and benefits decreased by $14.7 million due to the decrease in pension expense primarily as a result of a pension settlement chargerecorded in 2015 from a voluntary pension buyout, the conclusion of the 2014 Global Transformation Program reorganization and restructuring activities,impact from changes in exchange rates due to a stronger U.S. dollar and lower employee stock-based compensation expense. These decreases were partiallyoffset by an increase in net salaries, related payroll taxes and cash incentive compensation primarily driven by higher headcount and also offset by anincrease in severance and related costs.Transaction and Operations SupportTransaction and operations support primarily includes marketing, professional fees and other outside services, telecommunications, agent support costs,including forms related to our products, non-compensation employee costs, including training, travel and relocation costs, bank charges and the impact offoreign exchange rate movements on our monetary transactions, assets and liabilities denominated in a currency other than the U.S. dollar.The following table is a summary of the change in transaction and operations support from the respective prior year for the years ended December 31:(Amounts in millions)2017 2016Prior year ended$309.5 $324.8Change resulting from: Legal expenses94.2 (2.2)Net realized foreign exchange gains10.7 (6.8)Outsourcing, independent contractor and consultant costs(9.2) 19.2Marketing costs(8.4) 5.8Direct monitor costs6.9 (2.4)Provision for loss(4.9) (8.1)Bank Charges4.2 2.1Compliance enhancement program(2.1) (13.0)Impact from changes in exchange rates1.0 (1.0)Reorganization and restructuring— (7.8)Other0.4 (1.1)Current year ended$402.3 $309.5In 2017, transaction and operations support increased by $92.8 million primarily due to an increase in legal expenses driven by the $85.0 million accrualrelated to the DPA discussed in more detail in Note 13 — Commitments and Contingencies of the Notes to the Consolidated Financial Statements, and costsincurred in connection with the terminated merger with Ant Financial. Additional factors contributing to the increase include: the change in net realizedforeign exchange gains, direct monitor costs and bank charges from fees on foreign exchange trades. The increase was partially offset by decreases inoutsourcing, independent contractor and consultant costs and marketing costs and a reduction in our provision for loss.In 2016, transaction and operations support decreased by $15.3 million primarily due to the decline in expenses related to the compliance enhancementprogram and the completion of the 2014 Global Transformation Program reorganization and restructuring activities, a reduction in our provision for loss dueto reduced moneygram.com fraud losses and decreased net realized foreign exchange gains related to the favorable execution of the purchase of certaincurrencies, which traded outside of their historical norms in the first half of 2016. The decrease was partially offset by an increase in costs for outsourcing,independent contractor and consultant costs as a result of continued investment in our compliance systems and call centers and an increase in marketingcosts.Occupancy, Equipment and SuppliesOccupancy, equipment and supplies expense include facilities rent and maintenance costs, software and equipment maintenance costs, freight and deliverycosts and supplies.In 2017, occupancy, equipment and supplies expense increased $4.2 million when compared to 2016 as a result of an increase in equipment maintenancecosts.In 2016, occupancy, equipment and supplies remained relatively flat when compared to 2015.34Table of ContentsDepreciation and AmortizationDepreciation and amortization includes depreciation on computer hardware and software, agent signage, point of sale equipment, capitalized softwaredevelopment costs, office furniture, equipment and leasehold improvements and amortization of intangible assets.In 2017, depreciation and amortization decreased $4.8 million, or 6%, when compared to 2016, as a result of higher costs during the first half of 2016 fromthe accelerated depreciation expense on our non-core point of sale equipment that was early retired.In 2016, depreciation and amortization increased $13.8 million, or 21%, when compared to 2015, primarily driven by accelerated depreciation expense onnon-core assets and depreciation expense on computer hardware and software asset additions related to the compliance enhancement program.Other Expenses, NetInterest expense in 2017 remained relatively flat when compared to 2016.Interest expense in 2016 remained relatively flat when compared to 2015. The Company incurred debt extinguishment costs of $0.3 million in 2016 inconnection with additional debt principal payments and a debt repurchase made during the year.Income TaxesThe following table represents our provision for income taxes and effective tax rate for the years ended December 31:(Amounts in millions, except percentages) 2017 2016 2015Provision for income taxes $(6.8) $26.6 $47.3Effective tax rate 18.6% 62.6% (155.6)%In 2017, the Company recognized a tax benefit of $6.8 million on a pre-tax loss of $36.6 million. The most significant items impacting the effective tax ratewere the tax impacts of TCJA, discussed below, and the tax impact of an accrual related to the DPA as further discussed in Note 13 — Commitments andContingencies of the Notes to the Consolidated Financial Statements. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21%under the TCJA, the Company revalued its ending net deferred tax liabilities as of December 31, 2017 and recognized a provisional $19.8 million tax benefitin the Company’s consolidated statement of income for the year ended December 31, 2017. Additionally, the Company recognized a provisional net $3.0million tax benefit for the remeasurement of previously recorded deferred tax assets and liabilities primarily associated with historical earnings in its foreignsubsidiaries. See Note 12 — Income Taxes of the Notes to the Consolidated Financial Statements for additional disclosure regarding potential impacts fromthe TCJA and the other items impacting the Company's effective tax rate.Our provision for income taxes decreased from 2015 to 2016, primarily as a result of an IRS tax court decision received in 2015 partially offset by a separateIRS settlement in 2016. The effective tax rate increase in 2016 is not meaningful to compare to 2015 due to the operating loss in 2015. SeeNote 12 — Income Taxes and Note 13 — Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional disclosure.Our provision for income taxes is volatile and could be affected by changes in the valuation of our deferred tax assets and liabilities, changes in tax laws andregulations, ultimate settlements of the IRS matter referred to above and examinations by tax authorities. We continue to examine the impact the TCJA mayhave on us, which could adversely affect our business, financial condition and results of operations.We are regularly examined by tax authorities both domestically and internationally. We assess the likelihood of adverse outcomes and believe that adequateamounts have been reserved for adjustments that may result from these examinations. Given the inherent uncertainties in these examinations, the ultimateamount and timing of adjustments cannot be assured.35Table of ContentsOperating Income and Operating MarginThe following table provides a summary overview of operating income and operating margin for the years ended December 31:(Amounts in millions, except percentages)2017 2016 2015Operating income: Global Funds Transfer$4.9 $95.8 $31.7Financial Paper Products31.8 18.5 17.9Total segment operating income36.7 114.3 49.6Other(28.0) (26.5) (34.7)Total operating income$8.7 $87.8 $14.9 Total operating margin0.5% 5.4% 1.0%Global Funds Transfer0.3% 6.2% 2.2%Financial Paper Products33.8% 24.5% 24.4%2017 Compared to 2016In 2017, the Global Funds Transfer segment operating income and operating margin decreased due to the decline in money transfer fee and other revenue andan $85.0 million accrual related to the DPA discussed in more detail in Note 13 — Commitments and Contingencies of the Notes to the ConsolidatedFinancial Statements, partially offset by the decrease in operating expenses as a result of various cost saving initiatives throughout the year. The FinancialPaper Products segment operating income and operating margin increased when compared to 2016, due to higher segment revenues from the redemption ofan asset-backed security described in Note 4 — Investment Portfolio of the Notes to the Consolidated Financial Statements. The increase in "Other" operatinglosses was primarily driven by costs incurred in connection with the terminated merger with Ant Financial in 2017, partially offset by lower severance andrelated costs.2016 Compared to 2015During 2016, the Company experienced an increase in total operating income and operating margin when compared to 2015, primarily due to increase inmoney transfer fee and other revenue of $89.3 million. Additionally, total operating expenses as a percent of total revenue decreased due to the lowerexpenses related to the 2014 Global Transformation Program and the reduction in pension expense, partially offset by an increase in outsourcing,independent contractor and consultant costs, depreciation and amortization and net salaries, related payroll taxes and cash incentive compensation, aspreviously discussed."Other" operating losses decreased from 2015 to 2016 primarily due to the decrease in pension expense as a result of a pension settlement charge recorded in2015 from a voluntary pension buyout.EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and Constant CurrencyWe believe that EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization), Adjusted EBITDA(EBITDA adjusted for certain significant items), Adjusted Free Cash Flow (Adjusted EBITDA less cash interest, cash taxes, cash payments for capitalexpenditures and cash payments for agent signing bonuses) and constant currency measures (which assume that amounts denominated in foreign currenciesare translated to the U.S. dollar at rates consistent with those in the prior year) provide useful information to investors because they are indicators of thestrength and performance of our ongoing business operations. These calculations are commonly used as a basis for investors, analysts and other interestedparties to evaluate and compare the operating performance and value of companies within our industry. In addition, our debt agreements require compliancewith financial measures similar to Adjusted EBITDA. EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency are financial andperformance measures used by management in reviewing results of operations, forecasting, allocating resources and establishing employee incentiveprograms. We also present Adjusted EBITDA growth, constant currency adjusted, which provides information to investors regarding MoneyGram'sperformance without the effect of foreign currency exchange rate fluctuations year-over-year.Although we believe that EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency measures enhance investors' understanding of ourbusiness and performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for the accompanying GAAP financialmeasures. These metrics are not necessarily comparable with similarly named metrics of other companies.36Table of ContentsThe following table is a reconciliation of our non-GAAP financial measures to the related GAAP financial measures for the years ended December 31:(Amounts in millions) 2017 2016 2015(Loss) income before income taxes $(36.6) $42.5 $(30.4)Interest expense 45.3 45.0 45.3Depreciation and amortization 75.1 79.9 66.1Amortization of agent signing bonuses 51.9 54.0 60.4EBITDA 135.7 221.4 141.4Significant items impacting EBITDA: Legal and contingent matters(1) 85.9 2.3 1.7Direct monitor costs 16.0 9.1 11.5Stock-based, contingent and incentive compensation 14.5 19.0 26.9Costs incurred in connection with the terminated merger with Ant Financial(2) 12.7 — —Compliance enhancement program 9.6 10.3 26.5Severance and related costs 1.5 1.9 —Reorganization and restructuring costs — — 20.0Pension settlement charge — — 13.8Adjusted EBITDA $275.9 $264.0 $241.8 Adjusted EBITDA growth, as reported5% Adjusted EBITDA growth, constant currency adjusted5% Adjusted EBITDA $275.9 $264.0 $241.8Cash payments for interest (41.9) (41.6) (42.1)Cash payments for taxes, net of refunds (5.0) (9.5) (64.4)Payments related to IRS tax matter — — 61.0Cash payments for capital expenditures (83.6) (82.8) (109.9)Cash payments for agent signing bonuses (40.3) (34.0) (87.3)Adjusted Free Cash Flow $105.1 $96.1 $(0.9)(1) 2017 consists primarily of an $85.0 million accrual related to the DPA net of a one-time insurance settlement of $1.3 million.(2) Costs include, but are not limited to, legal, investment banking and consultant fees and other one-time integration planning costs.2017 Compared to 2016The Company generated EBITDA of $135.7 million and $221.4 million and Adjusted EBITDA of $275.9 million and $264.0 million for the years endedDecember 31, 2017 and 2016, respectively. Adjusted EBITDA increased when compared to the same period in 2016, primarily due to a decrease in totaloperating expenses driven by a decrease in net salaries, related payroll taxes and cash incentive compensation, outsourcing, independent contractor andconsultant costs and marketing costs. EBITDA decreased primarily due to an $85.0 million accrual related to the DPA discussed in more detail in Note 13 —Commitments and Contingencies of the Notes to the Consolidated Financial Statements when compared to 2016.For 2017, Adjusted Free Cash Flow increased by $9.0 million. The increase was a result of increase in Adjusted EBITDA, decreases in payments for net cashtaxes, partially offset by increases in agent signing bonuses.2016 Compared to 2015For 2016, the Company generated EBITDA of $221.4 million and adjusted EBITDA of $264.0 million. When compared to 2015, Adjusted EBITDA increased$22.2 million. The increase in Adjusted EBITDA was primarily driven by an increase in money transfer fee and other revenue and a decrease in the pensionexpense. The increase in EBITDA was driven by the same factors that impacted Adjusted EBITDA and lower expense related to the 2014 GlobalTransformation Program.For 2016, Adjusted Free Cash Flow increased by $97.0 million. The increase was a result of increase in Adjusted EBITDA, decreases in payments for capitalexpenditures and agent signing bonuses.See "Results of Operations" and "Analysis of Cash Flows" sections for additional information regarding these changes.37Table of ContentsLIQUIDITY AND CAPITAL RESOURCESWe have various resources available for purposes of managing liquidity and capital needs, including our investment portfolio, credit facilities and letters ofcredit. We refer to our cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and available-for-sale investmentscollectively 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 ObligationsThe following table shows the components of the Company's cash and cash equivalents and settlement assets as of December 31:(Amounts in millions)2017 2016Cash and cash equivalents$190.0 $157.2 Settlement assets: Settlement cash and cash equivalents1,469.9 1,365.0Receivables, net1,125.8 999.4Interest-bearing investments1,154.2 1,252.1Available-for-sale investments7.0 17.8 3,756.9 3,634.3Payment service obligations$(3,756.9) $(3,634.3)Our primary sources of liquidity include cash flows generated by the sale of our payment instruments, our cash and cash equivalent and interest-bearinginvestment balances, proceeds from our investment portfolio and credit capacity under our credit facilities. Our primary operating liquidity needs are relatedto 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. Onaverage, 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 andrelated fees and commissions with our end consumers and agents. This pattern of cash flows allows us to settle our payment service obligations throughongoing cash generation rather than liquidating investments or utilizing our revolving credit facility. We have historically generated, and expect to continuegenerating, sufficient cash flows from daily operations to fund ongoing operational needs.We seek to maintain funding capacity beyond our daily operating needs to provide a cushion through the normal fluctuations in our payment serviceobligations, as well as to provide working capital for the operational and growth requirements of our business. We believe we have sufficient liquid assetsand funding capacity to operate and grow our business for the next 12 months. Should our liquidity needs exceed our operating cash flows, we believe thatexternal financing sources, including availability under our credit facilities, will be sufficient to meet our anticipated funding requirements.Cash and Cash Equivalents and Interest-bearing InvestmentsTo ensure we maintain adequate liquidity to meet our operating needs at all times, we keep a significant portion of our investment portfolio in cash and cashequivalents and interest-bearing investments at financial institutions rated A- or better by two of the following three rating agencies: Moody’s InvestorService ("Moody's"), Standard & Poor's ("S&P") and Fitch Ratings, Inc. ("Fitch"); and in AAA rated U.S. government money market funds. If the ratingagencies have split ratings, the Company uses the lower of the highest two out of three ratings across the agencies for disclosure purposes. If the institutionhas only two ratings, the Company uses the lower of the two ratings for disclosure purposes. As of December 31, 2017, cash and cash equivalents (includingunrestricted and settlement cash and cash equivalents) and interest-bearing investments totaled $2.8 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 andcertificates of deposit with maturities of up to 24 months.Available-for-sale InvestmentsOur investment portfolio includes $7.0 million of available-for-sale investments as of December 31, 2017. U.S. government agency residential mortgage-backed securities compose $5.6 million of our available-for-sale investments, while asset-backed and other securities compose the remaining $1.4 million.38Table of ContentsClearing and Cash Management BanksWe collect and disburse money through a network of clearing and cash management banks. The relationships with these banks are a critical component of ourability to maintain our global active funding requirements on a timely basis. We have agreements with six active clearing banks that provide clearing andprocessing functions for official checks, money orders and other draft instruments. We have four active official check clearing banks, which provide sufficientcapacity for our official check business. We rely on three active banks to clear our retail money orders and believe that these banks provide sufficientcapacity for that business. We also maintain relationships with a variety of domestic and international cash management banks for electronic funds transferand wire transfer services used in the movement of consumer funds and agent settlements.Credit FacilitiesOn March 28, 2013, we entered into the 2013 Credit Agreement with BOA, as administrative agent, the financial institutions party thereto as lenders and theother agents party thereto. The 2013 Credit Agreement provided for (i) a senior secured five-year Revolving Credit Facility up to an aggregate principalamount of $125.0 million and (ii) a senior secured seven-year term loan facility of $850.0 million (“Term Credit Facility”). The Revolving Credit Facilityincludes a sub-facility that permits the Company to request the issuance of letters of credit up to an aggregate amount of $50.0 million, with borrowingsavailable for general corporate purposes and which would reduce the amount available under the Revolving Credit Facility.On April 2, 2014, we entered into the Incremental Agreement with BOA, as administrative agent, and various lenders, which provided for (i) a tranche underthe Term Credit Facility in an aggregate principal amount of $130.0 million, (ii) an increase in the aggregate revolving loan commitments under the 2013Credit Agreement from $125.0 million to $150.0 million, and (iii) certain other amendments to the 2013 Credit Agreement.On December 12, 2016, the Company entered into Amendment No. 2 to the 2013 Credit Agreement (the "2016 Amendment") with BOA and various lenders.The 2016 Amendment includes, but is not limited to, decreasing the aggregate revolving credit commitments from $150.0 million to $125.0 million fromDecember 12, 2016 to March 27, 2018 (the remainder of the original Revolving Credit Facility term), and increasing the maximum secured leverage ratio,effective the first quarter of 2017. The 2016 Amendment also extends the maturity date of the revolving credit commitments of the extending lenders, whichrepresent commitments of $85.8 million in the aggregate, from March 28, 2018 to September 28, 2019.The following table is a summary of the Company's outstanding debt balance as of December 31: December 31, 2017 December 31, 2016(Amounts in millions, except percentages)Effective InterestRate Effective InterestRate Senior secured credit facility due 20204.94% $914.2 4.25% $924.0Unamortized debt issuance costs and debt discount (6.1) (8.8)Total debt, net $908.1 $915.2As of December 31, 2017, the Company had no outstanding letters of credit or borrowings under the Revolving Credit Facility, leaving $125.0 million ofborrowing capacity thereunder. The Company's effective interest rate on senior secured borrowings increased from 4.25% as of December 31, 2016 to 4.94%as of December 31, 2017 due to an increase in the Eurodollar rate.The 2013 Credit Agreement contains various financial and non-financial covenants. We continuously monitor our compliance with our debt covenants. AtDecember 31, 2017, the Company was in compliance with its financial covenants. See Note 8 — Debt of the Notes to the Consolidated Financial Statementsfor additional disclosure related to the Company's credit facilities and financial covenants.Credit RatingsAs of December 31, 2017, our credit ratings from Moody’s and S&P were B1 with a stable outlook and B+ with a stable outlook, respectively. Our creditfacilities, regulatory capital requirements and other obligations will not be impacted by a future change in our credit ratings.39Table of ContentsRegulatory Capital Requirements and Contractual ObligationsRegulatory Capital RequirementsWe have capital requirements relating to government regulations in the U.S. and other countries where we operate. Such regulations typically require us tomaintain certain assets in a defined ratio to our payment service obligations. Through our wholly-owned subsidiary and licensed entity, MPSI, we areregulated 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 tothe 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 wemaintain a total pool of liquid assets sufficient to meet the regulatory and contractual requirements, we are able to withdraw, deposit or sell our individualliquid assets at will, without prior notice, penalty or limitations. We were in compliance with all state capital requirements as of December 31, 2017.We are also subject to regulatory capital requirements in various countries outside of the U.S., which typically result in a requirement to either prefund agentsettlements or hold minimum required levels of cash or guarantees within the applicable country. The amounts can fluctuate based on our level of activityand is likely to increase over time as our business expands internationally. Assets used to meet these regulatory requirements support our payment serviceobligations and are not available to satisfy other liquidity needs. As of December 31, 2017, we had $83.5 million of prefunds and cash designated to meetregulatory capital requirements and such amounts are included in "Settlement assets" on the Consolidated Balance Sheet.We were in compliance with all regulatory capital requirements as of December 31, 2017. We believe that our liquidity and capital resources will remainsufficient to ensure ongoing compliance with all regulatory capital requirements.Contractual ObligationsThe following table includes aggregated information about the Company’s contractual obligations that impact our liquidity and capital needs. The tableincludes information about payments due under specified contractual obligations, aggregated by type of contractual obligation as of December 31, 2017: Payments due by period(Amounts in millions)Total Less than1 year 1-3 years 3-5 years More than5 yearsDebt, including interest payments$1,025.4 $57.5 $967.9 $— $—Non-cancellable leases65.0 16.3 27.5 16.5 4.7Signing bonuses34.0 28.0 6.0 — —Marketing59.1 22.3 25.2 9.8 1.8Total contractual cash obligations$1,183.5 $124.1 $1,026.6 $26.3 $6.5Our Consolidated Balance Sheet at December 31, 2017 includes $914.2 million of debt, netted with unamortized debt issuance costs and debt discount of$6.1 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 31,2017, and assuming no prepayments of principal. Non-cancellable leases include operating leases for buildings, vehicles and equipment and other leases.Signing bonuses are payments to certain agents and financial institution customers as an incentive to enter into long-term contracts. Marketing representscontractual marketing obligations with certain agents, billers and corporate sponsorships. We have other commitments as described further below that are notincluded in this table as the timing and/or amount of payments are difficult to estimate.We have a funded, noncontributory defined benefit pension plan ("Pension Plan") that is frozen to both future benefit accruals and new participants. It is ourpolicy to fund at least the minimum required contribution each year plus additional discretionary amounts as available and necessary to minimize expensesof the plan. We made contributions of $8.0 million to the Pension Plan during 2017. Although the Company has no minimum required contribution for thePension Plan in 2018, we expect to contribute $8.0 million to the Pension Plan in 2018.The Company has certain unfunded defined benefit plans: supplemental executive retirement plans (“SERPs”), which are unfunded non-qualified definedbenefit pension plans providing postretirement income to their participants; and a postretirement plan ("Postretirement Benefits") that provides medical andlife insurance for its participants. These plans require payments over extended periods of time. The Company will continue to make contributions to theSERPs and the Postretirement Benefits to the extent benefits are paid. Aggregate benefits paid for the unfunded plans are expected to be $7.0 million in 2018.40Table of ContentsAs discussed in Note 13 — Commitments and Contingencies of the Notes to the Consolidated Financial Statements, the IRS completed its examination of theCompany’s consolidated income tax returns through 2013 and issued Notices of Deficiency for 2005-2007 and 2009 and an Examination Report for 2008.The Notices of Deficiency and Examination Report disallow, among other items, approximately $900.0 million of ordinary deductions on securities losses inthe 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007 and2009 Notices of Deficiency, respectively. In 2013, the Company reached a partial settlement with the IRS allowing ordinary loss treatment on $186.9million of deductions in dispute. In January 2015, the U.S. Tax Court granted the IRS's motion for summary judgment upholding the remaining adjustmentsin the Notices of Deficiency. During 2015, the Company made payments to the IRS of $61.0 million for federal tax payments and associated interest relatedto the matter. The Company believes that it has substantive tax law arguments in favor of its position. The Company filed a notice of appeal with the U.S. TaxCourt on July 27, 2015 for an appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, andon November 15, 2016, the Fifth Circuit vacated the Tax Court’s decision and remanded the case to the Tax Court for further proceedings. The Companyfiled a motion for summary judgment in the Tax Court on May 31, 2017. On August 23, 2017, the IRS filed a motion for summary judgment and its responseto the Company’s motion for summary judgment. Pending the outcome of the appeal, the Company may be required to file amended state returns and makeadditional cash payments of up to $18.7 million on amounts that have previously been accrued.In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commission guarantees for a specified period of timeat a contractually specified amount. Under the guarantees, the Company will pay to the agent the difference between the contractually specified minimumcommission and the actual commissions earned by the agent. As of December 31, 2017, the minimum commission guarantees had a maximum payment of$2.1 million over a weighted average remaining term of 0.6 years. The maximum payment is calculated as the contractually guaranteed minimumcommission times the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder ofits contract. As of December 31, 2017, the liability for minimum commission guarantees was $1.2 million. Minimum commission guarantees are not reflectedin the table above.The Company has agreements with certain co-investors to provide funds related to investments in limited partnership interests. As of December 31, 2017, thetotal amount of unfunded commitments related to these agreements was $0.3 million.Analysis of Cash Flows(Amounts in millions)2017 2016 2015 2017 vs 2016 2016 vs 2015Net cash provided by operating activities$132.5 $120.9 $34.1 $11.6 $86.8Net cash used in investing activities(83.6) (82.8) (109.5) (0.8) 26.7Net cash used in financing activities(16.1) (45.4) (10.7) 29.3 (34.7)Net change in cash and cash equivalents$32.8 $(7.3) $(86.1) $40.1 $78.8Cash Flows from Operating ActivitiesDuring 2017, cash provided by operating activities increased due to a decrease in cash taxes, net and reduction in expenditures for working capital items. Theincrease was partially offset by an increase in signing bonus payments of $6.3 million driven by the timing of agent expansion and retention efforts.During 2016, cash provided by operating activities increased due to an increase in net income and a decrease in signing bonus payments of $53.3million driven by the timing of agent expansion and retention efforts. This increase was partially offset by increased payments for employee performancebonuses and a payment of $13.0 million related to the State Civil Investigative Demands matter in March 2016.Cash Flows from Investing ActivitiesItems impacting net cash used in investing activities in 2017, 2016 and 2015 were primarily from capital expenditures of $83.6 million, $82.8 million and$109.9 million, respectively. Capital expenditures remained relatively flat when compared to 2016.Cash Flows from Financing ActivitiesIn 2017, items impacting net cash used in financing activities were $9.8 million of principal payments on debt and payments to tax authorities for stock-based compensation of $8.0 million. In 2016, items impacting net cash used in financing activities were $30.3 million of principal payments on debt, whichincluded additional principal payments totaling $20.0 million made on the Term Credit Facility in the fourth quarter of 2016, stock repurchases of $11.7million and payments to tax authorities for stock-based compensation of $2.7 million. In 2015, items impacting net cash used in financing activities were$9.8 million principal payments on debt, payments to tax authorities for stock-based compensation of $0.5 million and $0.4 million of stock repurchases.41Table of ContentsStockholders’ DeficitStockholders’ Deficit — The Company is authorized to repurchase up to 12,000,000 shares of our common stock. As of December 31, 2017, we hadrepurchased a total of 9,842,509 shares of our common stock under this authorization and have remaining authorization to purchase up to 2,157,491 shares.Under the terms of our outstanding credit facilities, we are restricted in our ability to pay dividends on our common stock. No dividends were paid on ourcommon stock in 2017, and we do not anticipate declaring any dividends on our common stock during 2018.Off-Balance Sheet ArrangementsNone.Critical Accounting Policies and EstimatesThe preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts and related disclosuresin 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 GAAP. Our significant accounting policies arediscussed in Note 2 — Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements.Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results ofoperations, and that require management to make estimates that are difficult, subjective or complex. Based on these criteria, management has identified anddiscussed with the Audit Committee the following critical accounting policies and estimates, including the methodology and disclosures related to thoseestimates.Goodwill — We have two reporting units: Global Funds Transfer and Financial Paper Products. Our Global Funds Transfer reporting unit is the only reportingunit that carries goodwill. We evaluate goodwill for impairment annually as of October 1, or more frequently upon occurrence of certain events. When testinggoodwill 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 carryingvalue 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 uncertaintiesimpacting 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 isgreater than the carrying value, we perform a quantitative analysis. In a quantitative testing, the fair value of a reporting unit is determined based on adiscounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make variousassumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates arebased 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 equitybalances, adjusted for current market conditions and investor expectations of return on our equity. If the fair value of a reporting unit exceeds its carryingamount, 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 thereporting 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 2017, 2016 or 2015. The carrying value of goodwill assigned to the Global Funds Transfer reportingunit at December 31, 2017 was $442.2 million. By analyzing the qualitative factors discussed above, we determined that a quantitative impairment analysiswas not needed. As of October 1, 2017, the Global Funds Transfer reporting unit carrying value remained relatively unchanged when compared to the prioryear. Additionally, as of the 2017 test date, the Company's market price more than doubled when compared to the prior year test date and there were nosignificant changes to the reporting unit's cash flows and growth rates. As such, we concluded that the Global Funds Transfer reporting unit's fair value wassubstantially in excess of the reporting unit's carrying value.As of December 31, 2017, there were no qualitative factors that indicated that the fair value of the reporting unit is less than the carrying value.Pension — Through the Company's Pension Plan and SERPs, collectively referred to as our “Pension," we provide defined benefit pension plan coverage tocertain of our employees and certain employees of Viad Corporation, our former parent. Our pension obligations under these plans are measured as ofDecember 31, the measurement date. Pension benefit obligations and the related expense are based upon actuarial projections using assumptions regardingmortality, discount rates, 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 thediscount rate and expected return on plan assets, require significant judgment and could have a material impact on the measurement of our pensionobligation.42Table of ContentsIn order to estimate the interest cost components of net periodic benefit expense for its Pension and Postretirement Benefits, the Company utilizes a full yieldcurve approach by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to their underlying projectedcash 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 currentinterest 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 investmentguidelines. The expected return on Pension Plan assets is based on our historical market experience, our asset allocations and our expectations for long-termrates of return. We also consider peer data and historical returns to assess the reasonableness and appropriateness of our assumption. Our Pension Plan assetallocations are reviewed periodically and are based upon plan funded ratio, an evaluation of market conditions, tolerance for risk and cash requirements forbenefit payments.Lower discount rates increase the Pension and Postretirement Benefits obligation and subsequent year pension expense, while higher discount rates decreasethe Pension and Postretirement Benefits obligation and subsequent year pension expense. Decreasing the discount rate by 50 basis points would haveincreased the 2017 Pension and Postretirement Benefits net periodic benefit expense by $0.3 million. If the discount rate increased by 50 basis points, thePension and Postretirement Benefits net periodic benefit expense would have decreased by $0.2 million. Decreasing the expected rate of return by 50 basispoints would have increased the 2017 Pension Plan net periodic benefit expense by $0.6 million and increasing the expected rate of return by 50 basis pointswould have decreased the 2017 Pension Plan net periodic benefit expense by $0.6 million.Income Taxes, Tax Contingencies — We are subject to income taxes in the U.S. and various foreign jurisdictions. In determining taxable income, income orloss before taxes is adjusted for differences between local tax laws and GAAP.We file tax returns in multiple states within the U.S. and various countries. Generally, our tax filings are subject to audit by tax authorities for three to fiveyears 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 examinationsfor years prior to 2012. The U.S. federal income tax filings are subject to audit for fiscal years 2014 through 2017.The benefits of tax positions are recorded in the income statement 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.Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxingjurisdiction could have an impact on the amount of income taxes that we provide during any given year. The determination of taxable income in anyjurisdiction 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 ofoperations. Actual tax amounts may be materially different from amounts accrued based upon the results of audits due to different interpretations by the taxauthorities than those of the Company. While we believe that our reserves are adequate to cover reasonably expected tax risks, an unfavorable tax settlementgenerally requires the use of cash and an increase in the amount of income tax expense that we recognize. A favorable tax settlement generally requires adecrease 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 totemporary differences that exist between the financial statement carrying value of assets and liabilities and their respective tax basis, and operating loss andtax credit carry-forwards on a taxing jurisdiction basis. We measure deferred tax assets and liabilities using enacted statutory tax rates that will apply in theyears in which we expect the temporary differences to be recovered or paid.The carrying amount of deferred tax assets must be reduced through a valuation allowance if it is more-likely-than-not that the deferred tax asset will not berealized. 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 avaluation allowance is released.In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood that the deferred tax assets will berealized. Our assessment of whether a valuation allowance is required or should be adjusted requires judgment and is completed on a taxing jurisdictionbasis. We consider, among other matters: the nature, frequency and severity of any cumulative financial reporting losses; the ability to carry back losses toprior years; future reversals of existing taxable temporary differences; tax planning strategies and projections of future taxable income. We also consider ourbest estimate of the outcome of any on-going examinations based on the technical merits of the position, historical procedures and case law, among otheritems.43Table of ContentsAs of December 31, 2017, we have recorded a valuation allowance of $75.9 million against deferred tax assets of $133.6 million. The valuation allowanceprimarily relates to basis differences in revalued investments, capital losses and certain foreign tax loss carryovers. While we believe that the basis forestimating our valuation allowance is appropriate, changes in our current estimates due to unanticipated events, or other factors, could have a material effecton our financial condition and results of operations.The Company has not completed its accounting for the income tax effects of the TCJA. Where the Company has been able to make reasonable estimates ofthe effects, the Company has recorded provisional amounts in accordance with SEC Staff Accounting Bulletin No. 118. Where the Company has not yet beenable to make reasonable estimates of the impact of certain elements, the Company has not recorded any amounts related to those elements and has continuedaccounting for them in accordance with ASC 740 on the basis of the tax laws in effect immediately prior to the enactment of the TCJA.The TCJA reduces the U.S. federal corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. While the accounting is incomplete,the Company has made a reasonable estimate and recorded a provisional decrease to net U.S. deferred tax liabilities of $19.8 million with a correspondingincrease to deferred tax benefit. Based on further analysis of the estimates and additional guidance on the application of the law, it is anticipated thatrevisions may occur throughout the allowable measurement period.Transition Tax on unrepatriated foreign earnings: The Transition Tax on unrepatriated foreign earnings is a tax on previously untaxed accumulated andcurrent earnings and profits ("E&P") of the Company's foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine,among other factors, the amount of post-1986 E&P of its foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. TheCompany made a reasonable estimate of the Transition Tax and has recorded a provisional Transition Tax expense. After the utilization of foreign tax creditsrelated to undistributed foreign subsidiary E&P and other existing foreign tax credits, the Company expects a net zero liability associated with the deemedmandatory repatriation. The Company is continuing to gather additional information to more precisely compute the amount of the Transition Tax tocomplete its calculation of E&P as well as the final determination of non-U.S. income taxes paid.Due to the complexity of the new tax laws around global intangible low taxed income (“GILTI”), the Company is continuing to evaluate how the income taxprovision will be accounted for under the U.S. generally accepted accounting principles wherein companies are allowed to make an accounting policyelection of either (i) account for GILTI as a component of tax expense in the period in which the Company is subject to the rules (the “period cost method”),or (ii) account for GILTI in the Company’s measurement of deferred taxes (the “deferred method”). Currently, the Company has not elected a method and willonly do so after its completion of the analysis of the GILTI provisions.Recent Accounting DevelopmentsRecent accounting developments are set forth in Note 2 — Summary of Significant Accounting Policies of the Notes to the Consolidated FinancialStatements.CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K and the documents incorporated by reference herein may contain forward-looking statements within the meaning of thePrivate Securities Litigation Reform Act of 1995, 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,” “would,” "goals" and othersimilar expressions are intended to identify some of the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of1995 and are included, along with this statement, for purposes of complying with the safe harbor provisions of the Act. These forward-looking statementsinvolve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, therisks and uncertainties described in Part I, Item 1A under the caption "Risk Factors" of this Annual Report. These forward-looking statements speak only as ofthe date they are made, and MoneyGram undertakes no obligation to publicly update or revise any forward-looking statements for any reason, whether as aresult of new information, future events or otherwise, except as required by federal securities law. These forward-looking statements are based onmanagement’s current expectations, beliefs and assumptions and are subject to certain risks, uncertainties and changes in circumstances due to a number offactors. These factors include, but are not limited to:•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 ourlargest agent, Walmart, through its introduction of competing white label money transfer products or otherwise;•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;44Table of Contents•litigation and regulatory proceedings involving us or our agents, which could result in material settlements, fines or penalties, revocation of requiredlicenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;•possible uncertainties relating to compliance with and the impact of the DPA;•current and proposed regulations addressing consumer privacy and data use and security;•our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services orinfrastructure changes;•our substantial debt service obligations, significant debt covenant requirements and credit rating and our ability to maintain sufficient capital;•continued weakness in economic conditions, in both the U.S. and global markets;•our ability to manage risks associated with our international sales and operations;•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 tocertain OFAC restrictions;•major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;•the ability of us and our agents to maintain adequate banking relationships;•a security or privacy breach in systems, networks or databases on which we rely;•disruptions to our computer systems and data centers and our ability to effectively operate and adapt our technology;•changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;•a significant change, material slow down or complete disruption of international migration patterns;•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 attract and retain key employees;•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 ourbusiness;•our ability to maintain effective internal controls;•our capital structure and the special voting rights provided to the THL Representatives on our Board of Directors; and•the risks and uncertainties described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” sections of this Annual Report on Form 10-K, as well as any additional risk factors that may be described in our other filings with the SECfrom time to time.Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKEnterprise Risk ManagementRisk is an inherent part of any business. Our most prominent risk exposures are credit, interest rate and foreign currency exchange. See Part 1, Item 1A “RiskFactors” of this Annual Report on Form 10-K for a description of the principal risks to our business. Appropriately managing risk is important to the successof 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 riskmanagement 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 foreign currency practices and strategies.The Board receives periodic reports regarding each of these areas and approves significant changes to policy and strategy. The Asset/Liability Committeecomposed of senior management, routinely reviews investment and risk management strategies and results. The Credit Committee, composed of seniormanagement, routinely reviews credit exposure to our agents.45Table of ContentsThe following is a discussion of the risks we have deemed most critical to our business and the strategies we use to manage and mitigate such risks. Whilecontaining forward-looking statements related to risks and uncertainties, this discussion and related analyses are not predictions of future events. Our actualresults could differ materially from those anticipated due to various factors discussed under “Cautionary Statements Regarding Forward-LookingStatements” and under “Risk Factors” in Part 1, Item 1A of this Annual Report on Form 10-K.Credit RiskCredit risk, or the potential risk that we may not collect amounts owed to us, affects our business primarily through receivables, investments and derivativefinancial 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 underthe 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 afew 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, 2017, the Company’s investment portfolio of $2.8 billion was primarily comprised 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-bearinginvestments consisting of time deposits and certificates of deposit. Based on investment policy restrictions, investments are limited to those rated A- or betterby 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 highesttwo 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 fordisclosure 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 ourforeign currency transactions and conduct cash transfers on our behalf for the purpose of clearing our payment instruments and related agent receivables andagent 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 unlimitedlines 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 willhonor the obligations of its agencies if the agencies are unable to do so themselves.46Table of ContentsThe following table is a detailed summary of our investment portfolio as of December 31, 2017:(Amounts in millions, except percentages and financial institutions)Number ofFinancialInstitutions(1) Amount Percent ofInvestmentPortfolioCash held on-hand at owned retail locationsN/A $0.4 —%Cash equivalents collateralized by securities issued by U.S. government agencies3 9.2 —%Available-for-sale investments issued by U.S. government agenciesN/A 5.6 —%Cash, cash equivalents and interest-bearing investments at institutions rated AAA(2)1 30.2 1%Cash, cash equivalents and interest-bearing investments at institutions rated AA5 696.7 25%Cash, cash equivalents and interest-bearing investments at institutions rated A12 1,455.1 52%Cash, cash equivalents and interest-bearing investments at institutions rated BBB1 1.7 —%Cash, cash equivalents and interest-bearing investments at institutions rated below BBB3 54.2 2%Asset-backed and other securitiesN/A 1.4 —%Investment portfolio held within the U.S.25 2,254.5 80%Cash held on-hand at owned retail locationsN/A 24.6 1%Cash, cash equivalents and interest-bearing investments held at institutions rated AA5 60.1 2%Cash, cash equivalents and interest-bearing investments at institutions rated A17 417.7 15%Cash, cash equivalents and interest-bearing investments at institutions rated below A50 64.2 2%Investment portfolio held outside the U.S.72 566.6 20%Total investment portfolio $2,821.1 100%(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, 2017, all but $1.4 million of the investment portfolio is invested in cash, cash equivalents, interest-bearing investments and investmentsissued or collateralized by U.S. government agencies. Approximately 99% of the portfolio is invested in cash, cash equivalents and interest-bearinginvestments, with 80% of our total investment portfolio invested at financial institutions located within the U.S.Receivables — We have credit exposure to receivables from our agents through the money transfer, bill payment and money order settlement process. Thesereceivables originate from independent agents who collect funds from consumers who are transferring money or buying money orders, and agents whoreceive proceeds from us in anticipation of payment to the recipients of money transfers. Agents typically have from one to three days to remit the funds, withlonger remittance schedules granted to certain agents on a limited basis. The Company has a credit risk management function that conducts the underwritingof credit on new agents as well as conducting credit surveillance on all agents 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 performs a collection function. For the year endedDecember 31, 2017, our annual credit losses from agents, as a percentage of total fee and other revenue, was 1%. As of December 31, 2017, we had creditexposure to our agents of $549.0 million in the aggregate spread across 14,344 agents, of which three agents, individually, owed us in excess of $15.0million.In addition, we are exposed to credit risk directly from consumer transactions particularly through our Digital solutions, where transactions are originatedthrough means other than cash, and therefore are subject to credit card chargebacks, insufficient funds or other collection impediments, such as fraud. As theDigital solutions become a greater proportion of our money transfer business, these losses may increase.We also have credit exposure to receivables from our financial institution customers for business conducted by the Financial Paper Products segment.Financial institutions will collect proceeds for official checks and money orders and remit those proceeds to us. We actively monitor the credit risk associatedwith 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-bankfinancial institution customer. As of December 31, 2017, we had a credit exposure to our official check and money order financial institution customers of$293.7 million in the aggregate spread across 923 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 haverequired 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 arenot at risk in a disruption or collapse of a counterparty financial institution, the delay in accessing our assets could adversely affect our liquidity andpotentially our earnings depending upon the severity of the delay and corrective actions we may need to take.47Table of ContentsWhile the extent of credit risk may vary by product, the process for mitigating risk is similar. We assess the creditworthiness of each potential agent beforeaccepting them into our distribution network. This underwriting process includes not only a determination of whether to accept a new agent, but also theremittance schedule and volume of transactions that the agent will be allowed to perform in a given timeframe. We actively monitor the credit risk of ourexisting agents by conducting periodic financial reviews and cash flow analyses of our agents that average high volumes of transactions and monitoringremittance 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 offunds were to deteriorate, it would alter our pattern of cash flows and could require us to liquidate investments or utilize our Revolving Credit Facility tosettle payment service obligations. To manage this risk, we closely monitor the remittance patterns of our agents and financial institution customers and actquickly if we detect deterioration or alteration in remittance timing or patterns. If deemed appropriate, we have the ability to immediately deactivate anagent’s equipment at any time, thereby preventing the initiation or issuance of further money transfers and money orders.Credit risk management is complemented through functionality within our point-of-sale system, which can enforce credit limits on a real-time basis. Thesystem also permits us to remotely disable an agent’s terminals and cause a cessation of transactions.Derivative Financial Instruments — Credit risk related to our derivative financial instruments relates to the risk that we are unable to collect amounts owedto us by the counterparties to our derivative agreements. Our derivative financial instruments are used to manage exposures to fluctuations in foreigncurrency exchange rates. If the counterparties to any of our derivative financial instruments were to default on payments, it could result in a delay orinterruption of payments to our agents. We manage credit risk related to derivative financial instruments by entering into agreements with only major banksand regularly monitoring the credit ratings of these banks. See Note 5 — Derivative Financial Instruments of the Notes to the Consolidated FinancialStatements for additional disclosure.Interest Rate RiskInterest rate risk represents the risk that our operating results are negatively impacted, and our investment portfolio declines in value, due to changes ininterest 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 thevalue of these securities would decline such that we would have a material adverse change in our operating results. As of December 31, 2017, the Companyheld $208.1 million, or 7%, of the investment portfolio in fixed rate investments.Our operating results are impacted by interest rate risk through our net investment margin, which is investment revenue less investment commissionsexpense. 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 ofinvestments have minimal risk of declines in fair value from changes in interest rates. Our commissions paid to financial institution customers are determinedusing a variable rate based primarily on the federal funds effective rate and are reset daily. Accordingly, both our investment revenue and our investmentcommissions 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 2013 Credit Agreement. The Company may elect aninterest rate for its debt under the 2013 Credit Agreement at each reset period based on the BOA prime bank rate or the Eurodollar rate. The interest rateelection may be made individually for the Term Credit Facility and each draw under the Revolving Credit Facility. The interest rate will be either the“alternate base rate” (calculated in part based on the BOA prime rate) plus either 200 or 225 basis points (depending on the Company's secured leverage ratioor total leverage ratio, as applicable, at such time) or the Eurodollar rate plus either 300 or 325 basis points (depending on the Company's secured leverageratio or total leverage ratio, as applicable, at such time). In connection with the initial funding under the 2013 Credit Agreement, the Company elected theEurodollar rate as its primary interest basis. Under the terms of the 2013 Credit Agreement, the minimum interest rate applicable to Eurodollar borrowingsunder the Term Credit Facility is 100 basis points plus the applicable margins previously referred to in this paragraph. Accordingly, any increases in interestrates will adversely affect interest expense.The tables below incorporate substantially all of our interest rate sensitive assets and assumptions that reflect changes in all interest rates pertaining to thebalance sheet. The “ramp” analysis assumes that interest rates change in even increments over the next 12 months. The “shock” analysis assumes interestrates change immediately and remain at the changed level for the next twelve months. Components of our pre-tax income (loss) that are interest rate sensitiveinclude “Investment revenue,” “Investment commissions expense” and “Interest expense.” In the current interest rate environment where rates have beenhistorically low, our risk associated with interest rates is not material. A moderately rising interest rate environment would be generally beneficial to theCompany because variable rate assets exceed our variable rate liabilities, and certain of our variable rate liabilities will not react to increases in interest ratesuntil those rates exceed the floor set for the index rate on the corresponding debt.48Table of ContentsThe following table summarizes the changes to affected components of the income statement under various ramp scenarios as of December 31, 2017: Basis Point Change in Interest Rates Down Down Down Up Up Up(Amounts in millions)200 100 50 50 100 200Investment revenue$(20.5) $(12.3) $(6.2) $6.2 $12.3 $24.7Investment commissions expense10.0 6.4 3.4 (3.5) (7.0) (14.1)Interest expense4.5 3.5 1.9 (1.9) (3.7) (7.4)Change in pretax income$(6.0) $(2.4) $(0.9) $0.8 $1.6 $3.2The following table summarizes the changes to affected components of the income statement under various shock scenarios as of December 31, 2017: Basis Point Change in Interest Rates Down Down Down Up Up Up(Amounts in millions)200 100 50 50 100 200Investment revenue$(30.6) $(22.8) $(11.6) $11.6 $23.1 $46.3Investment commissions expense12.8 10.3 5.7 (6.1) (12.0) (24.2)Interest expense4.8 4.8 3.4 (3.4) (6.9) (13.7)Change in pretax income$(13.0) $(7.7) $(2.5) $2.1 $4.2 $8.4Foreign Currency RiskWe are exposed to foreign currency risk in the ordinary course of business as we offer our products and services through a network of agents and financialinstitutions with locations in more than 200 countries and territories. By policy, we do not speculate in foreign currencies; all currency trades relate tounderlying transactional exposures.Our primary source of foreign exchange risk is transactional risk. This risk is predominantly incurred in the money transfer business in which funds arefrequently transferred cross-border and we settle with agents in multiple currencies. Although this risk is somewhat limited due to the fact that thesetransactions 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, Mexicanpeso, British pound and Indian rupee. The tenor of forward contracts is typically less than 30 days.Realized and unrealized gains or losses on transactional currency and any associated revaluation of balance sheet exposures are recorded in “Transaction andoperations support” in the Consolidated Statements of Operations. The fair market value of any open forward contracts at period end are recorded in “Otherassets” or "Accounts payable and other liabilities" in the Consolidated Balance Sheets. The net effect of changes in foreign exchange rates and the relatedforward contracts for the year ended December 31, 2017 was a gain of $7.5 million.Additional foreign currency risk is generated from fluctuations in the U.S. dollar value of future foreign currency-denominated earnings. In 2017, fluctuationsin the euro exchange rate (net of transactional hedging activities) resulted in a net increase to our operating income of $1.6 million.In 2017, 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 2017, operating income would have increased/decreased approximately $14.0 million for the year. There areinherent limitations in this sensitivity analysis, primarily due to the assumption that foreign exchange rate movements are linear and instantaneous, that theunhedged exposure is static and that we would not hedge any additional exposure. As a result, the analysis is unable to reflect the potential effects of morecomplex 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 company results. These translation adjustments are recorded in "Accumulated othercomprehensive loss" on the Consolidated Balance Sheets.Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAThe information called for by Item 8 is found in a separate section of this Annual Report on Form 10-K starting on pages F-1. See the “Index to FinancialStatements” on page F-1.49Table of ContentsItem 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.Item 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresDisclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under theSecurities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in theSEC’s rules and forms. Disclosure controls and procedures are designed, without limitation, to ensure that information required to be disclosed in companyreports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer andChief 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 ofthe Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls andprocedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that, as of December 31, 2017, the Company’s disclosure controls and procedures were effective.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 quarterended December 31, 2017 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 ReportingManagement’s annual report on internal control over financial reporting is provided on page F-2 of this Annual Report on Form 10-K. The attestation reportof the Company’s independent registered public accounting firm, KPMG LLP, regarding the Company’s internal control over financial reporting is providedon page F-3 of this Annual Report on Form 10-K.Item 9B. OTHER INFORMATIONNone.50Table of ContentsPART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information called for by this Item is contained in Item 1 of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant”and in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, and is incorporated herein by reference.All of our employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performingsimilar functions, also referred to as the Principal Officers, are subject to our Code of Conduct. Our directors are also subject to our Code of Conduct. Thesedocuments are posted on our website at corporate.moneygram.com in the Investor Relations section, and are available in print free of charge to anystockholder who requests them at the address set forth in Item 1 – Available Information of this Annual Report on Form 10-K. We will disclose anyamendments to, or waivers of, our Code of Conduct for directors or Principal Officers on our website. The information on our website is not part of thisAnnual Report on Form 10-K.Item 11. EXECUTIVE COMPENSATIONThe information called for by this Item is contained in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, and is incorporatedherein by reference.Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER. MATTERS The information called for by this Item is contained in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, and is incorporatedherein by reference.Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information called for by this Item is contained in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, and is incorporatedherein by reference.Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information called for by this Item is contained in our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, and is incorporatedherein by reference.PART IVItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a) (1)The financial statements listed in the “Index to Financial Statements” are filed as part of this Annual Report on Form 10-K. (2)All financial statement schedules are omitted because they are not applicable or the required information is included in the ConsolidatedFinancial Statements or notes thereto listed in the “Index to Financial Statements.” (3)Exhibits are filed with this Annual Report on 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 AnnualReports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934under Commission File No. 1-31950.51Table of ContentsEXHIBIT INDEX ExhibitNumber Description2.1 Separation and Distribution Agreement, dated as of June 30, 2004, by and among Viad Corporation, MoneyGram International, Inc., MGIMerger Sub, Inc. and Travelers Express Company, Inc. (Incorporated by reference from Exhibit 2.1 to Registrant’s Quarterly Report onForm 10-Q filed on August 13, 2004).2.2 Recapitalization Agreement, dated as of March 7, 2011, among MoneyGram International, Inc., certain affiliates and co-investors ofThomas H. Lee Partners, L.P. and Goldman, Sachs & Co. and certain of its affiliates (Incorporated by reference from Exhibit 2.1 toRegistrant’s Current Report on Form 8-K filed March 9, 2011).2.3 Amendment No. 1 to Recapitalization Agreement, dated as of May 4, 2011, among MoneyGram International, Inc., certain affiliates and co-investors of Thomas H. Lee Partners, L.P. and Goldman, Sachs & Co. and certain of its affiliates (Incorporated by reference from Exhibit 2.1to Registrant’s Current Report on Form 8-K filed May 6, 2011).2.4 Agreement and Plan of Merger, dated January 26, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, MatrixAcquisition Corp. and, solely for purposes of certain specified provisions thereof, Alipay (Hong Kong) Holding Limited (Incorporated byreference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed January 26, 2017).2.5 First Amendment to the Agreement and Plan of Merger, dated April 15, 2017, by and among MoneyGram International, Inc., Alipay (UK)Limited, Matrix Acquisition Corp. and Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’sCurrent Report on Form 8-K filed April 17, 2017).2.6 Termination Agreement, dated as of January 2, 2018, by and among MoneyGram International, Inc., Alipay (UK) Limited, MatrixAcquisition Corp. and Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Reporton Form 8-K filed January 2, 2018).3.1 Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated June 28, 2004 (Incorporated by reference fromExhibit 3.1 to Registrant’s Annual Report on Form 10-K filed on March 15, 2010).3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 12, 2009(Incorporated by reference from Exhibit 3.1 to Registrant’s Annual Report on Form 10-K filed March 15, 2010).3.3 Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 18, 2011(Incorporated by reference from Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed May 23, 2011).3.4 Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated November 14,2011 (Incorporated by reference from Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed November 14, 2011).3.5 Amended and Restated Bylaws of MoneyGram International, Inc., dated October 28, 2015 (Incorporated by reference from Exhibit 3.5 toRegistrant’s Quarterly Report on Form 10-Q filed on November 2, 2015).3.6 Amendment to the Amended and Restated Bylaws of MoneyGram International, Inc., dated March 2, 2016 (Incorporated by reference fromExhibit 3.6 to Registrant's Annual Report on Form 10-K filed on March 2, 2016).3.7 Amended and Restated Certificate of Designations, Preferences and Rights of Series D Participating Convertible Preferred Stock ofMoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.2 to Registrant’s Current Report on Form 8-K filed May 23, 2011).4.1 Form of Specimen Certificate for MoneyGram Common Stock (Incorporated by reference from Exhibit 4.1 to Amendment No. 4 toRegistrant’s Form 10 filed on June 14, 2004).4.2 Registration Rights Agreement, dated as of March 25, 2008, by and among the several Investor parties named therein and MoneyGramInternational, Inc. (Incorporated by reference from Exhibit 4.5 to Registrant’s Current Report on Form 8-K filed on March 28, 2008).4.3 Amendment No. 1 to Registration Rights Agreement, dated as of May 18, 2011, by and among MoneyGram International, Inc., certainaffiliates and co-investors of Thomas H. Lee Partners, L.P., and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference fromExhibit 4.1 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.1 Employee Benefits Agreement, dated as of June 30, 2004, by and among Viad Corporation, MoneyGram International, Inc. and TravelersExpress Company, Inc. (Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed on August 13,2004).10.2 Tax Sharing Agreement, dated as of June 30, 2004, by and between Viad Corporation and MoneyGram International, Inc. (Incorporated byreference from Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed on August 13, 2004).†10.3 MoneyGram International, Inc. 2004 Omnibus Incentive Plan, as amended February 17, 2005 (Incorporated by reference from Exhibit 99.1to Registrant’s Current Report on Form 8-K filed on February 23, 2005).52Table of Contents†10.4 Form of Amended and Restated Non-Employee Director Indemnification Agreement between MoneyGram International, Inc. and Non-Employee Directors of MoneyGram International, Inc. (Incorporated by reference from Exhibit 10.02 to Registrant’s Current Report onForm 8-K filed on February 13, 2009).†10.5 Form of Employee Director Indemnification Agreement between MoneyGram International, Inc. and Employee Directors of MoneyGramInternational, Inc. (Incorporated by reference from Exhibit 10.03 to Registrant’s Current Report on Form 8-K filed on February 13, 2009).†10.6 MoneyGram International, Inc. Performance Bonus Plan, as amended and restated February 17, 2010 (formerly known as the MoneyGramInternational, Inc. Management and Line of Business Incentive Plan) (Incorporated by reference from Exhibit 10.02 to Registrant’s CurrentReport on Form 8-K filed on February 22, 2010).†10.7 Deferred Compensation Plan for Directors of Viad Corp, as amended August 19, 2004 (Incorporated by reference from Exhibit 10.1 toRegistrant’s Quarterly Report on Form 10-Q filed on November 12, 2004).†10.8 First Amendment of the Amended and Restated MoneyGram International, Inc. Executive Severance Plan (Tier II) (Incorporated byreference from Exhibit 10.21 to Registrant’s Current Report on Form 8-K filed on March 28, 2008).†10.9 MoneyGram Supplemental Pension Plan, as amended and restated December 28, 2007 (Incorporated by reference from Exhibit 99.01 toRegistrant’s Current Report on Form 8-K filed on January 4, 2008).†10.10 First Amendment of MoneyGram Supplemental Pension Plan (Incorporated by reference from Exhibit 10.28 to Amendment No. 1 toRegistrant’s Annual Report on Form 10-K/A filed on August 9, 2010).†10.11 Description of MoneyGram International, Inc. Director’s Charitable Matching Program (Incorporated by reference from Exhibit 10.13 toRegistrant’s Quarterly Report on Form 10-Q filed on August 13, 2004).†10.12 Viad Corporation Director’s Charitable Award Program (Incorporated by reference from Exhibit 10.14 to Amendment No. 3 to Registrant’sForm 10 filed on June 3, 2004).10.13 Amended and Restated Purchase Agreement, dated as of March 17, 2008, among MoneyGram International, Inc. and the several Investorparties named therein (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on March 18, 2008).10.14 Subscription Agreement, dated as of March 25, 2008, by and between MoneyGram International, Inc. and The Goldman Sachs Group, Inc.(Incorporated by reference from Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed on March 28, 2008).†10.15 Form of MoneyGram International, Inc. 2004 Omnibus Incentive Plan Restricted Stock Agreement, as amended February 16, 2005(Incorporated by reference from Exhibit 99.5 to Registrant’s Current Report on Form 8-K filed on February 23, 2005).†10.16 Form of MoneyGram International, Inc. 2004 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, as amended February 16,2005 (Incorporated by reference from Exhibit 99.6 to Registrant’s Current Report on Form 8-K filed on February 23, 2005).†10.17 Form of MoneyGram International, Inc. 2004 Omnibus Incentive Plan Non-Qualified Stock Option Agreement for Directors as adoptedFebruary 16, 2005 (Incorporated by reference from Exhibit 99.7 to Registrant’s Current Report on Form 8-K filed on February 23, 2005).†10.18 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Restricted Stock Agreement, effective June 30, 2005 (Incorporatedby reference from Exhibit 99.2 to Registrant’s Current Report on Form 8-K filed on July 5, 2005).†10.19 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Restricted Stock Agreement, effective August 17, 2005 (US Version)(Incorporated by reference from Exhibit 99.7 to Registrant’s Current Report on Form 8-K filed on August 23, 2005).†10.20 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Restricted Stock Agreement, effective August 17, 2005 (UK Version)(Incorporated by reference from Exhibit 99.9 to Registrant’s Current Report on Form 8-K filed on August 23, 2005).†10.21 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective August 17, 2005(US Version) (Incorporated by reference from Exhibit 99.6 to Registrant’s Current Report on Form 8-K filed on August 23, 2005).†10.22 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective August 17, 2005(UK Version) (Incorporated by reference from Exhibit 99.8 to Registrant’s Current Report on Form 8-K filed on August 23, 2005).†10.23 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective February 15, 2006(US version) (Incorporated by reference from Exhibit 10.41 to Registrant’s Annual Report on Form 10-K filed on March 1, 2006).†10.24 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective February 15, 2006(UK Version) (Incorporated by reference from Exhibit 10.42 to Registrant’s Annual Report on Form 10-K filed on March 1, 2006).53Table of Contents†10.25 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective May 8, 2007(Incorporated by reference from Exhibit 99.04 to Registrant’s Current Report on Form 8-K filed on May 14, 2007).†10.26 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective August 11, 2009(version 1) (Incorporated by reference from Exhibit 10.8 to Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2009).†10.27 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement, effective August 11, 2009(version 2) (Incorporated by reference from Exhibit 10.9 to Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2009).†10.28 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement for Directors, effectiveAugust 17, 2005 (Incorporated by reference from Exhibit 99.4 to Registrant’s Current Report on Form 8-K filed on August 23, 2005).†10.29 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement for Directors, effectiveFebruary 15, 2006 (Incorporated by reference from Exhibit 10.43 to Registrant’s Annual Report on Form 10-K filed on March 1, 2006).†10.30 Non-Qualified Stock Option Agreement, dated January 21, 2009, between MoneyGram International, Inc. and Pamela H. Patsley(Incorporated by reference from Exhibit 10.02 to Registrant’s Current Report on Form 8-K filed on January 22, 2009).†10.31 Non-Qualified Stock Option Agreement, dated May 12, 2009, between MoneyGram International, Inc. and Pamela H. Patsley (Incorporatedby reference from Exhibit 10.02 to Registrant’s Current Report on Form 8-K filed on May 18, 2009).†10.32 Non-Qualified Stock Option Agreement, dated August 31, 2009, between MoneyGram International, Inc. and Pamela H. Patsley(Incorporated by reference from Exhibit 10.01 to Registrant’s Current Report on Form 8-K filed on September 4, 2009).†10.33 Amendment to Non-Qualified Stock Option Agreements, dated August 31, 2009, between MoneyGram International, Inc. and Pamela H.Patsley (Incorporated by reference from Exhibit 10.03 to Registrant’s Current Report on Form 8-K filed on September 4, 2009).†10.34 MoneyGram International, Inc. Performance Unit Incentive Plan, as amended and restated May 9, 2007 (Incorporated by reference fromExhibit 99.02 to Registrant’s Current Report on Form 8-K filed on May 14, 2007).†10.35 Form of MoneyGram International, Inc. Executive Compensation Trust Agreement (Incorporated by reference from Exhibit 99.01 toRegistrant’s Current Report on Form 8-K filed on November 22, 2005).†10.36 First Amendment to the MoneyGram International, Inc. Executive Compensation Trust Agreement (Incorporated by reference fromExhibit 99.01 to Registrant’s Current Report on Form 8-K filed on August 22, 2006).†10.37 The MoneyGram International, Inc. Outside Directors’ Deferred Compensation Trust, dated January 5, 2005 (Incorporated by reference fromExhibit 99.05 to Registrant’s Current Report on Form 8-K filed on November 22, 2005).†10.38 Form of Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (Incorporated by reference fromExhibit 10.27 to Registrant’s Quarterly Report on Form 10-Q filed on May 12, 2008).†10.39 MoneyGram International, Inc. Severance Plan, restated effective February 17, 2010 (Incorporated by reference from Exhibit 10.03 toRegistrant’s Current Report on Form 8-K/A filed November 22, 2010).†10.40 Form of MoneyGram International, Inc. Restricted Stock Unit Award Agreement (Incorporated by reference from Exhibit 10.11 toRegistrant’s Quarterly Report on Form 10-Q filed August 9, 2010).†10.41 MoneyGram International, Inc. Deferred Compensation Plan, as amended and restated February 16, 2011 (Incorporated by reference fromExhibit 10.01 to Registrant’s Current Report on Form 8-K filed February 23, 2011).10.42 Consent Agreement, dated as of March 7, 2011, among MoneyGram Payment Systems Worldwide, Inc., MoneyGram International, Inc. andcertain of its subsidiaries and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference from Exhibit 10.1 to Registrant’sCurrent Report on Form 8-K filed March 9, 2011).†10.43 MoneyGram International, Inc. 2005 Omnibus Incentive Plan, as amended and restated May 8, 2015 (Incorporated by reference fromExhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 14, 2015).+10.44 Amended and Restated Credit Agreement, dated as of March 28, 2013, by and among MoneyGram International, Inc., Bank of America,N.A., as administrative agent, the financial institutions party thereto as lenders and the other agents party thereto (Incorporated by referencefrom Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2013).10.45 Guaranty, dated as of May 18, 2011, among MoneyGram International, Inc., MoneyGram Payment Systems, Inc., MoneyGram of New YorkLLC, and Bank of America, N.A., as administrative agent (Incorporated by reference from Exhibit 10.2 to Registrant’s Current Report onForm 8-K filed May 23, 2011).54Table of Contents10.46 Pledge Agreement, dated as of May 18, 2011, among MoneyGram International, Inc., MoneyGram Payment Systems Worldwide, Inc.,MoneyGram Payment Systems, Inc., MoneyGram of New York LLC, and Bank of America, N.A., as collateral agent (Incorporated byreference from Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.47 Security Agreement, dated as of May 18, 2011, among MoneyGram International, Inc., MoneyGram Payment Systems Worldwide, Inc.,MoneyGram Payment Systems, Inc., MoneyGram of New York LLC, and Bank of America, N.A., as collateral agent (Incorporated byreference from Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.48 Intercreditor Agreement, dated as of May 18, 2011, among MoneyGram Payment Systems Worldwide, Inc., the First Priority Secured Partiesas defined therein, the Secord Priority Secured Parties as defined therein, and Deutsche Bank Trust Company Americas, as Trustee andCollateral Agent (Incorporated by reference from Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.49 Patent Security Agreement, dated as of May 18, 2011, between MoneyGram International, Inc. and Bank of America, N.A., as CollateralAgent (Incorporated by reference from Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.50 Patent Security Agreement, dated as of May 18, 2011, between MoneyGram Payment Systems, Inc. and Bank of America, N.A., as CollateralAgent (Incorporated by reference from Exhibit 10.7 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.51 Trademark Security Agreement, dated as of May 18, 2011, between MoneyGram International, Inc. and Bank of America, N.A., as CollateralAgent (Incorporated by reference from Exhibit 10.8 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.52 Trademark Security Agreement, dated as of May 18, 2011, between MoneyGram Payment Systems, Inc. and Bank of America, N.A., asCollateral Agent (Incorporated by reference from Exhibit 10.9 to Registrant’s Current Report on Form 8-K filed May 23, 2011).10.53 Copyright Security Agreement, dated as of May 18, 2011, between MoneyGram International, Inc. and Bank of America, N.A., as CollateralAgent (Incorporated by reference from Exhibit 10.10 to Registrant’s Current Report on Form 8-K filed May 23, 2011).+10.54 First Incremental Amendment and Joinder Agreement, dated April 2, 2014, by and among MoneyGram International, Inc., as borrower,MoneyGram Payment Systems Worldwide, Inc., MoneyGram Payment Systems, Inc., and MoneyGram of New York LLC, Bank of America,N.A., as administrative agent, and the financial institutions party thereto as Lenders (Incorporated by reference from Exhibit 10.2 toRegistrant's Quarterly Report on Form 10-Q filed May 2, 2014).10.55 Consent Agreement, dated as of August 12, 2011, by and among MoneyGram Payment Systems Worldwide, Inc., MoneyGram International,Inc. and certain of its subsidiaries, and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference From Exhibit 10.2 toRegistrant’s Quarterly Report on Form 10-Q filed November 3, 2011).10.56 Consent Agreement, dated as of August 12, 2011, by and among MoneyGram International, Inc., and certain affiliates and co-investors ofThomas H. Lee Partners, L.P. and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference From Exhibit 10.3 to Registrant’sQuarterly Report on Form 10-Q filed November 3, 2011).10.57 Consent Agreement, dated as of October 24, 2011, by and among MoneyGram Payment Systems Worldwide, Inc., MoneyGramInternational, Inc. and certain of its subsidiaries, and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference from Exhibit10.85 to Registrant’s Annual Report on Form 10-K filed on March 9, 2012).10.58 Consent Agreement, dated as of November 15, 2011, by and among MoneyGram International, Inc., and certain affiliates and co-investorsof Thomas H. Lee Partners, L.P. and affiliates of Goldman, Sachs & Co. (Incorporated by reference from Exhibit 10.3 to Registrant’s CurrentReport on Form 8-K filed November 16, 2011).10.59 Consent Agreement, dated as of November 17, 2011, by and among MoneyGram Payment Systems Worldwide, Inc., MoneyGramInternational, Inc. and certain of its subsidiaries and certain affiliates of Goldman, Sachs & Co. (Incorporated by reference from Exhibit 4.1to Registrant’s Current Report on Form 8-K filed November 18, 2011).†10.60 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Performance Restricted Stock Unit Award Agreement(Incorporated by reference from Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed November 23, 2011).†10.61 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Stock Option Agreement (Incorporated by reference fromExhibit 99.2 to Registrant’s Current Report on Form 8-K filed November 23, 2011).†10.62 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Stock Appreciation Right Agreement (Incorporated byreference from Exhibit 10.92 to Registrant’s Annual Report on Form 10-K filed March 9, 2012).†10.63 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Performance Restricted Stock Unit Award Agreement (ForParticipants in France) (Incorporated by reference from Exhibit 10.93 to Registrant’s Annual Report on Form 10-K filed March 9, 2012).55Table of Contents†10.64 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Stock Option Agreement (For Optionees in France) (Incorporated byreference from Exhibit 10.94 to Registrant’s Annual Report on Form 10-K filed March 9, 2012).*†10.65 Form of Executive Severance Agreement.10.66 Stipulation and Agreement of Compromise and Settlement, dated as of July 19, 2012, by and among the plaintiffs and class representativesparty thereto, MoneyGram International, Inc., Thomas H. Lee Partners, L.P., The Goldman Sachs Group, Inc. and certain individualdefendants party thereto (Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed November 9,2012).10.67 Supplemental Agreement Regarding Settlement, dated as of July 20, 2012, by and among MoneyGram International, Inc., Thomas H. LeePartners, L.P., The Goldman Sachs Group, Inc., certain individual defendants party thereto, and Federal Insurance Company (Incorporatedby reference from Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed November 9, 2012).+10.68 Amended and Restated Master Trust Agreement dated January 29, 2016 by and between MoneyGram Payment Systems, Inc. and Wal-MartStores, Inc. (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed February 1, 2016).+10.69 Amendment No. 1 to Amended and Restated Master Trust Agreement, dated August 26, 2016 by and between MoneyGram PaymentSystems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filedOctober 31, 2016).+10.70 Amendment No. 2 to Amended and Restated Master Trust Agreement, dated October 25, 2016 by and between MoneyGram PaymentSystems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.75 to Registrant’s Annual Report on Form 10-K filedMarch 16, 2017)”10.71 Amendment No. 4 to Amended and Restated Master Trust Agreement, dated January 25, 2017 by and between MoneyGram PaymentSystems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.11 to Registrant’s Quarterly Report on Form 10-Q filedMay 5, 2017)10.72 Amendment No. 5 to Amended and Restated Master Trust Agreement, dated January 1, 2017 by and between MoneyGram PaymentSystems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.12 to Registrant’s Quarterly Report on Form 10-Q filedMay 5, 2017)10.73 Amendment No. 6 to Amended and Restated Master Trust Agreement, dated February 20, 2017 by and between MoneyGram PaymentSystems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.13 to Registrant’s Quarterly Report on Form 10-Q filedMay 5, 2017)10.74 Amendment No. 1 to the Co-Branded MTaas Website Addendum to the Amended and Restated Master Trust Agreement, dated February 22,2017 by and between MoneyGram Payment Systems, Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.14 toRegistrant’s Quarterly Report on Form 10-Q filed May 5, 2017)10.75 Amendment No. 7 to Amended and Restated Master Trust Agreement, dated July 28, 2017 by and between MoneyGram Payment Systems,Inc. and Wal-Mart Stores, Inc. (Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed November2, 2017)*10.76 Non-Employee Director Compensation Arrangements, revised to be effective January 1, 2017.10.77 Note Purchase Agreement, dated as of March 27, 2013, by and among MoneyGram Payment Systems Worldwide, Inc., GSMP V OnshoreUS, Ltd., GSMP V Offshore US, Ltd. and GSMP V Institutional US, Ltd. (Incorporated by reference from Exhibit 10.1 to Registrant's CurrentReport on Form 8-K filed March 28, 2013).10.78 Stock Repurchase Agreement, dated March 26, 2014, by and among the Company and the THL Selling Stockholders (Incorporated byreference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed March 31, 2014).†10.79 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Performance Restricted Stock Unit Award Agreement(Incorporated by reference from Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2013).†10.80 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Stock Option Agreement (Incorporated by reference fromExhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2013).†10.81 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Stock Option Agreement (For Optionees in France) (Incorporated byreference from Exhibit 10.9 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2013).†10.82 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2015 Global Time-Based Restricted Stock Unit Award Agreement(Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed May 4, 2015).†10.83 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2015 Global Performance-Based Restricted Stock Unit AwardAgreement (Incorporated by reference from Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed May 4, 2015).56Table of Contents†10.84 2015 Global Time-Based Restricted Stock Unit Award Agreement, dated February 25, 2015, between MoneyGram International, Inc. andPamela H. Patsley (Incorporated by reference from Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed May 4, 2015).†10.85 2015 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 25, 2015, between MoneyGram International, Inc.and Pamela H. Patsley (Incorporated by reference from Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed May 4, 2015).†10.86 Employment Agreement, dated July 30, 2015, by and between MoneyGram International, Inc. and Pamela H. Patsley (Incorporated byreference from Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed July 31, 2015).†10.87 Amendment No. 1 to Employment Agreement, dated as of December 27, 2017, by and between MoneyGram International, Inc. and PamelaH. Patsley (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed December 28, 2017).†10.88 Employment Agreement, dated July 30, 2015, by and between MoneyGram International, Inc. and W. Alexander Holmes (Incorporated byreference from Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed July 31, 2015).†10.89 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2016 Global Time-Based Restricted Stock Unit Award (Incorporatedby reference from Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.90 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2016 Global Performance-Based Restricted Stock Unit Award(Incorporated by reference from Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.91 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2016 Global Performance-Based Cash Award Agreement(Incorporated by reference from Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.92 2016 Global Time-Based Restricted Stock Unit Award Agreement, dated February 23, 2016, between MoneyGram International, Inc. andPamela H. Patsley (Incorporated by reference from Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.93 2016 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 23, 2016, between MoneyGram International, Inc.and Pamela H. Patsley (Incorporated by reference from Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.94 2016 Global Performance-Based Cash Award Agreement, dated February 23, 2016, between MoneyGram International, Inc. and Pamela H.Patsley (Incorporated by reference from Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.95 2016 Global Time-Based Restricted Stock Unit Award Agreement, dated February 23, 2016, between MoneyGram International, Inc. andW. Alexander Holmes (Incorporated by reference from Exhibit 10.8 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.96 2016 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 23, 2016, between MoneyGram International, Inc.and W. Alexander Holmes (Incorporated by reference from Exhibit 10.9 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).†10.97 2016 Global Performance-Based Cash Award Agreement, dated February 23, 2016, between MoneyGram International, Inc. and W.Alexander Holmes (Incorporated by reference from Exhibit 10.10 to Registrant’s Quarterly Report on Form 10-Q filed May 3, 2016).10.98 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Time-Based Restricted Stock Unit Award Agreement(Incorporated by reference from Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.99 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Performance-Based Restricted Stock Unit AwardAgreement (Incorporated by reference from Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.100 Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Performance-Based Cash Award Agreement(Incorporated by reference from Exhibit 10.3 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.101 2017 Time-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and Pamela H.Patsley (Incorporated by reference from Exhibit 10.4 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.102 2017 Performance-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. andPamela H. Patsley (Incorporated by reference from Exhibit 10.5 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.103 2017 Performance-Based Cash Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and Pamela H. Patsley(Incorporated by reference from Exhibit 10.6 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.104 2017 Time-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W.Alexander Holmes (Incorporated by reference from Exhibit 10.7 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).57Table of Contents10.105 2017 Performance-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W.Alexander Holmes (Incorporated by reference from Exhibit 10.8 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).10.106 2017 Performance-Based Cash Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W. AlexanderHolmes (Incorporated by reference from Exhibit 10.9 to Registrant’s Quarterly Report on Form 10-Q filed May 5, 2017).+10.107 Amendment No. 2 to Amended and Restated Credit Agreement, dated December 12, 2016, relating to Amended and Restated CreditAgreement dated March 28, 2013 between MoneyGram International, Inc., the lenders from time to time party thereto and Bank of America,N.A. as Administrative Agent (Incorporated by reference from Exhibit 10.107 to Registrant’s Annual Report on Form 10-K filed March 16,2017).10.108 Amendment No. 3 to Amended and Restated Credit Agreement, dated December 30, 2016, relating to Amended and Restated CreditAgreement dated March 28, 2013 between MoneyGram International, Inc., the lenders from time to time party thereto and Bank of America,N.A. as Administrative Agent (Incorporated by reference from Exhibit 10.108 to Registrant’s Annual Report on Form 10-K filed March 16,2017).*21 Subsidiaries of the Registrant*23.1 Consent of KPMG LLP*23.2 Consent of Deloitte & Touche LLP*24 Power of Attorney*31.1 Section 302 Certification of Chief Executive Officer*31.2 Section 302 Certification of Chief Financial Officer*32.1 Section 906 Certification of Chief Executive Officer*32.2 Section 906 Certification of Chief Financial Officer*101 The following financial statements, formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets as ofDecember 31, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and2015; (iii) Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016 and 2015; (iv)Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; (v) Consolidated Statements ofStockholders’ Deficit as of December 31, 2017, 2016 and 2015, and (vi) Notes to the Consolidated Financial Statements.* Filed herewith.† Indicates management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.+ Confidential information has been omitted from this Exhibit and has been filed separately with the SEC pursuant to a confidential treatmentrequest under Rule 24b-2.Item 16. FORM 10-K SUMMARYNone.58Table of ContentsSIGNATURESPursuant 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 itsbehalf by the undersigned, thereunto duly authorized. MoneyGram International, Inc. (Registrant) Date:March 16, 2018 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 registrantand in the capacities and on the dates indicated. /s/ W. Alexander Holmes Chairman and ChiefExecutive Officer(Principal Executive Officer) March 16, 2018W. Alexander Holmes /s/ Lawrence Angelilli Chief Financial Officer(Principal Financial Officer) March 16, 2018Lawrence Angelilli /s/ John D. Stoneham Corporate Controller(Principal Accounting Officer) March 16, 2018John D. Stoneham Directors J. Coley Clark Seth W. Lawry Victor W. Dahir Ganesh B. Rao Antonio O. Garza W. Bruce Turner Peggy Vaughan Michael Rafferty By: /s/ F. Aaron Henry March 16, 2018 F. Aaron Henry Attorney-in-fact 59Table of ContentsMoneyGram International, Inc.Annual Report on Form 10-KItems 8 and 15(a)Index to Financial Statements Management’s Responsibility StatementF-2Reports of Independent Registered Public Accounting FirmF-3Consolidated Balance Sheets as of December 31, 2017 and 2016F-6Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015F-7Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2017, 2016 and 2015F-8Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015F-9Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2017, 2016 and 2015F-10Notes to the Consolidated Financial StatementsF-11Note 1 — Description of the Business and Basis of PresentationF-11Note 2 — Summary of Significant Accounting PoliciesF-12Note 3 — Fair Value MeasurementF-17Note 4 — Investment PortfolioF-19Note 5 — Derivative Financial InstrumentsF-21Note 6 — Property and EquipmentF-22Note 7 — Goodwill and Intangible AssetsF-22Note 8 — DebtF-23Note 9 — Pension and Other BenefitsF-25Note 10 — Stockholders' DeficitF-30Note 11 — Stock-Based CompensationF-32Note 12 — Income TaxesF-34Note 13 — Commitments and ContingenciesF-37Note 14 — Segment InformationF-40Note 15 — Immaterial Error CorrectionF-41Note 16 — Quarterly Financial Data (Unaudited)F-43Note 17 — Condensed Consolidating Financial StatementsF-44F-1Table of ContentsManagement’s Responsibility StatementThe management of MoneyGram International, Inc. is responsible for the integrity, objectivity and accuracy of the consolidated financial statements of theCompany. The consolidated financial statements are prepared by the Company in accordance with accounting principles generally accepted in the UnitedStates of America using, where appropriate, management’s best estimates and judgments. The financial information presented throughout the Annual Reportis 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 providereasonable assurance that the books and records reflect the transactions of the Company and that assets are protected against loss from unauthorized use ordisposition. Such a system is maintained through accounting policies and procedures administered by trained Company personnel and updated on acontinuing basis to ensure their adequacy to meet the changing requirements of our business. The Company requires that all of its affairs, as reflected by theactions of its employees, be conducted according to the highest standards of personal and business conduct. This responsibility is reflected in our Code ofEthics.To test compliance with the Company’s system of internal controls and procedures over financial reporting, the Company carries out an extensive auditprogram. This program includes a review for compliance with written policies and procedures and a comprehensive review of the adequacy and effectivenessof the internal control system. Although control procedures are designed and tested, it must be recognized that there are limits inherent in all systems ofinternal control and, therefore, errors and irregularities may nevertheless occur. Also, estimates and judgments are required to assess and balance the relativecost and expected benefits of the controls. Projection of any evaluation of effectiveness to future periods are subject to the risk that controls may becomeinadequate 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 directors, meets quarterly with management, internal audit and theindependent registered public accounting firm to discuss internal accounting control, auditing and financial reporting matters, as well as to determine thatthe respective parties are properly discharging their responsibilities. Both our independent registered public accounting firm and internal auditors have hadand 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, 2017. In making this assessment,management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission. Based on our assessment and those criteria, management believes that the Company designed and maintained effective internalcontrol over financial reporting as of December 31, 2017.The Company’s independent registered public accounting firm, KPMG LLP, has been engaged to audit our financial statements included in this AnnualReport on Form 10-K and the effectiveness of the Company’s system of internal control over financial reporting as of December 31, 2017. Their attestationreport regarding the Company’s internal control over financial reporting is included on page F-3 of this Annual Report on Form 10-K.F-2Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of DirectorsMoneyGram International, Inc.:Opinion on Internal Control Over Financial ReportingWe have audited MoneyGram International, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based oncriteria 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, 2017, based on criteriaestablished 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 consolidatedbalance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income (loss), cashflows, and stockholders’ deficit for the years ended December 31, 2017 and 2016, and the related notes, and our report dated March 16, 2018 expressed anunqualified opinion on those consolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Responsibility Statement. Our responsibility is to express an opinionon the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are requiredto be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securitiesand 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 reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe 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 ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ KPMG LLPDallas, TexasMarch 16, 2018F-3Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and Board of DirectorsMoneyGram International, Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of MoneyGram International, Inc. and subsidiaries (the Company) as of December 31, 2017and 2016, the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders’ deficit for the years endedDecember 31, 2017 and 2016, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operationsand its cash flows for the years ended December 31, 2017 and 2016, 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’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2018 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission 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 reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLPWe have served as the Company's auditor since 2016.Dallas, TexasMarch 16, 2018F-4Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders ofMoneyGram International, Inc.Dallas, TexasWe have audited the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and stockholders' deficit of MoneyGramInternational, Inc. and subsidiaries (the "Company") for the year ended December 31, 2015. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovide a reasonable basis for our opinion.In our opinion, such 2015 consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of MoneyGramInternational, Inc. and subsidiaries for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States ofAmerica./s/ DELOITTE & TOUCHE LLPDallas, TexasMarch 2, 2016 (March 16, 2017 as to the effects of the 2016 immaterial error correction related to foreign exchange revenue disclosed in Note 15 to theconsolidated financial statements; March 16, 2018 as to the effects of the 2017 immaterial error correction related to the pension plan disclosed in Note 15 tothe consolidated financial statements and the adoption of ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, discussed in Note 2 to the consolidated financial statements)F-5Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONSOLIDATED BALANCE SHEETS AT DECEMBER 31,2017 2016(Amounts in millions, except share data) ASSETS Cash and cash equivalents$190.0 $157.2Settlement assets3,756.9 3,634.3Property and equipment, net214.9 201.0Goodwill442.2 442.2Other assets168.5 162.7Total assets$4,772.5 $4,597.4LIABILITIES Payment service obligations$3,756.9 $3,634.3Debt, net908.1 915.2Pension and other postretirement benefits97.3 99.0Accounts payable and other liabilities255.5 164.5Total liabilities5,017.8 4,813.0COMMITMENTS AND CONTINGENCIES (NOTE 13) STOCKHOLDERS’ DEFICIT Participating convertible preferred stock - series D, $0.01 par value, 200,000 shares authorized, 71,282 issued atDecember 31, 2017 and December 31, 2016183.9 183.9Common stock, $0.01 par value, 162,500,000 shares authorized, 58,823,567 shares issued at December 31, 2017 andDecember 31, 20160.6 0.6Additional paid-in capital1,034.8 1,020.3Retained loss(1,336.1) (1,252.6)Accumulated other comprehensive loss(63.0) (56.1)Treasury stock: 4,585,223 and 6,058,856 shares at December 31, 2017 and December 31, 2016, respectively(65.5) (111.7)Total stockholders’ deficit(245.3) (215.6)Total liabilities and stockholders’ deficit$4,772.5 $4,597.4See Notes to the Consolidated Financial StatementsF-6Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,2017 2016 2015(Amounts in millions, except per share data) REVENUE Fee and other revenue$1,560.9 $1,612.4 $1,527.0Investment revenue41.2 18.0 12.1Total revenue1,602.1 1,630.4 1,539.1EXPENSES Fee and other commissions expense763.5 793.1 759.8Investment commissions expense8.7 2.5 0.8Total commissions expense772.2 795.6 760.6Compensation and benefits277.7 295.7 310.4Transaction and operations support402.3 309.5 324.8Occupancy, equipment and supplies66.1 61.9 62.3Depreciation and amortization75.1 79.9 66.1Total operating expenses1,593.4 1,542.6 1,524.2OPERATING INCOME8.7 87.8 14.9Other expenses Interest expense45.3 45.0 45.3Debt extinguishment costs— 0.3 —Total other expenses, net45.3 45.3 45.3(Loss) income before income taxes(36.6) 42.5 (30.4)Income tax (benefit) expense(6.8) 26.6 47.3NET (LOSS) INCOME$(29.8) $15.9 $(77.7) (LOSS) EARNINGS PER COMMON SHARE Basic$(0.47) $0.26 $(1.25)Diluted$(0.47) $0.24 $(1.25) Weighted-average outstanding common shares and equivalents used in computing (loss) earnings pershare Basic62.9 62.3 62.1Diluted62.9 65.9 62.1See Notes to the Consolidated Financial StatementsF-7Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME FOR THE YEAR ENDED DECEMBER 31,2017 2016 2015(Amounts in millions) NET (LOSS) INCOME$(29.8) $15.9 $(77.7)OTHER COMPREHENSIVE (LOSS) INCOME Net change in unrealized holding gains on available-for-sale securities arising during the period, net oftax benefit of $0.0, $0.1 and $0.0 for the years ended December 31, 2017, 2016 and 2015, respectively3.6 (0.3) (0.1)Net reclassification adjustment for net realized gains included in net earnings, net of tax expense of $0.0for the years ended December 31, 2017, 2016 and 2015, respectively(12.2) — —Net change in pension liability due to amortization of prior service credit and net actuarial loss, net oftax benefit of $1.6, $2.0 and $3.1 for the years ended December 31, 2017, 2016 and 2015, respectively2.8 3.5 5.2Valuation adjustment for pension and postretirement benefits, net of tax (benefit) expense of ($4.5),($1.2) and $7.1 for the years ended December 31, 2017, 2016 and 2015, respectively(10.6) (2.1) 12.5Pension settlement charge, net of tax benefit of $0.0, $0.0 and $5.4 for the years ended December 31,2017, 2016 and 2015, respectively— — 9.3Unrealized foreign currency translation adjustments, net of tax (expense) benefit of ($8.0), $1.3 and $4.6for the years ended December 31, 2017, 2016 and 2015, respectively9.5 (6.4) (8.1)Other comprehensive (loss) income(6.9) (5.3) 18.8COMPREHENSIVE (LOSS) INCOME$(36.7) $10.6 $(58.9)See Notes to the Consolidated Financial StatementsF-8Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2017 2016 2015(Amounts in millions) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(29.8) $15.9 $(77.7)Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 75.1 79.9 66.1Signing bonus amortization 51.9 54.0 60.4Deferred income tax (benefit) expense (4.9) 7.3 25.1Gain on redemption of asset-backed security (12.2) — —Amortization of debt discount and debt issuance costs 3.2 3.7 2.8Non-cash compensation and pension expense 20.4 25.1 46.6Signing bonus payments (40.3) (34.0) (87.3)Change in other assets (4.6) 1.0 27.2Change in accounts payable and other liabilities 70.3 (31.8) (28.6)Other non-cash items, net 3.4 (0.2) (0.5)Net cash provided by operating activities 132.5 120.9 34.1CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (83.6) (82.8) (109.9)Proceeds from disposal of assets — — 0.4Net cash used in investing activities (83.6) (82.8) (109.5)CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt (9.8) (30.3) (9.8)Stock repurchases — (11.7) (0.4)Contingent consideration payment — (0.7) —Payments to tax authorities for stock-based compensation (8.0) (2.7) (0.5)Proceeds from exercise of stock options and other 1.7 — —Net cash used in financing activities (16.1) (45.4) (10.7)NET CHANGE IN CASH AND CASH EQUIVALENTS 32.8 (7.3) (86.1)CASH AND CASH EQUIVALENTS—Beginning of year 157.2 164.5 250.6CASH AND CASH EQUIVALENTS—End of year $190.0 $157.2 $164.5Supplemental cash flow information: Cash payments for interest $41.9 $41.6 $42.1Cash payments for taxes, net of refunds $5.0 $9.5 $64.4See Notes to the Consolidated Financial StatementsF-9Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT(Amounts in millions)PreferredStock CommonStock AdditionalPaid-InCapital RetainedLoss AccumulatedOtherComprehensiveLoss TreasuryStock TotalJanuary 1, 2015$183.9 $0.6 $982.8 $(1,144.6) $(67.1) $(138.3) $(182.7)Prior period pension adjustment— — — (3.8) (2.5) — (6.3)Net loss— — — (77.7) — — (77.7)Stock-based compensation activity— — 19.6 (5.3) — 4.5 18.8Stock repurchase— — — — — (0.4) (0.4)Other comprehensive income— — — — 18.8 — 18.8December 31, 2015183.9 0.6 1,002.4 (1,231.4) (50.8) (134.2) (229.5)Net income— — — 15.9 — — 15.9Stock-based compensation activity— — 17.9 (37.1) — 34.2 15.0Stock repurchase— — — — — (11.7) (11.7)Other comprehensive loss— — — — (5.3) — (5.3)December 31, 2016183.9 0.6 1,020.3 (1,252.6) (56.1) (111.7) (215.6)Net loss— — — (29.8) — — (29.8)Stock-based compensation activity— — 14.5 (53.7) — 46.2 7.0Other comprehensive loss— — — — (6.9) — (6.9)December 31, 2017$183.9 $0.6 $1,034.8 $(1,336.1) $(63.0) $(65.5) $(245.3)See Notes to the Consolidated Financial StatementsF-10Table of ContentsMONEYGRAM INTERNATIONAL, INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNote 1 — Description of the Business and Basis of PresentationReferences 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: Global Funds Transfer and Financial Paper Products. TheGlobal Funds Transfer segment provides global money transfer services and bill payment services to consumers. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. We also offer Digital solutions such asmoneygram.com, mobile solutions, account deposit and kiosk-based services. Additionally, we have Company-operated retail locations in the U.S. andWestern Europe. The Financial Paper Products segment provides official check outsourcing services and money orders through financial institutions andagent locations.Basis of Presentation — The accompanying consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accountingprinciples in the United States of America (“GAAP”). The Consolidated Balance Sheets are unclassified due to the timing uncertainty surrounding thepayment of settlement obligations.Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect thereported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations and other factorsand assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis and arerevised 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 financialinstitutions and structured investments within the investment portfolio. Working in cooperation with certain financial institutions, the Company historicallyestablished separate consolidated SPEs that provided these financial institutions with additional assurance of its ability to clear their official checks. TheCompany maintains control of the assets of the SPEs and receives all investment revenue generated by the assets. The Company remains liable to satisfy theobligations of the SPEs, both contractually and by operation of the Uniform Commercial Code, as issuer and drawer of the official checks. As the Company isthe primary beneficiary and bears the primary burden of any losses, the SPEs are consolidated in the consolidated financial statements. The assets of the SPEsare recorded in the Consolidated Balance Sheets in a manner consistent with the assets of the Company based on the nature of the asset. Accordingly, theobligations have been recorded in the Consolidated Balance Sheets under “Payment service obligations.” The investment revenue generated by the assets ofthe SPEs is allocated to the Financial Paper Products segment in the Consolidated Statements of Operations. As of December 31, 2017, the Company hadonly one SPE remaining with settlement assets equal to the payment service obligations of $0.8 million. As of December 31, 2016, the Company's SPEs hadsettlement assets equal to payment service obligations of $1.7 million.Merger Agreement — On January 26, 2017, MoneyGram International, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan ofMerger (as amended by the First Amendment to the Agreement and Plan of Merger, dated April 15, 2017, the “Merger Agreement”) with Alipay (UK) Limited,a United Kingdom limited company (“Alipay”), Matrix Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Alipay (“Merger Sub”),and, solely for purposes of certain specified provisions of the Merger Agreement, Alipay (Hong Kong) Holding Limited, a Hong Kong limited company,providing for the merger of Merger Sub with and into the Company, with the Company surviving as a wholly owned subsidiary of Alipay (the “Merger”). Theclosing of the Merger was subject to certain conditions, including clearance by the Committee on Foreign Investment in the United States (“CFIUS”) underthe Defense Production Act of 1950, as amended. On January 2, 2018, the parties to the Merger Agreement have been advised that CFIUS clearance of theMerger will not be forthcoming, and after further discussion between the parties, they determined to cease efforts to seek CFIUS approval and entered into aTermination Agreement (the “Termination Agreement”). Pursuant to the Termination Agreement, Alipay paid the Company a termination fee of $30.0million on January 3, 2018. The parties have agreed to release each other from certain claims and liabilities arising out of or relating to the Merger Agreementor the transactions contemplated thereby.F-11Table of ContentsNote 2 — Summary of Significant Accounting PoliciesCash and cash equivalents — The Company defines cash and cash equivalents and settlement cash and cash equivalents as cash on hand and all highlyliquid debt instruments with original maturities of three months or less at the purchase date.Settlement assets and payment service obligations — Settlement assets represent funds received or to be received from agents for unsettled money transfers,money orders and consumer payments. The Company records corresponding payment service obligations relating to amounts payable under money transfers,money orders and consumer payment service arrangements. 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 tocover clearings of official check payment instruments, remittances and clearing adjustments; amounts owed to agents for funds paid to consumers on behalfof the Company; commissions owed to financial institution customers and agents for instruments sold; amounts owed to investment brokers for purchasedsecurities and unclaimed instruments owed to various states. These obligations are recognized by the Company at the time the underlying transaction occurs.The Company’s primary licensed entities are MoneyGram Payment Systems, Inc. (“MPSI”) and MoneyGram International Limited, which enable us to offerour 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 requirethe Company to maintain a pool of assets with an investment rating bearing one of the three highest grades as defined by a nationally recognized ratingagency (“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 casesexcludes 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 allcases is substantially lower than the Company’s payment service obligations as disclosed in the Consolidated Balance Sheets as the Company is notregulated by state agencies for payment service obligations resulting from outstanding cashier’s checks or for amounts payable to agents and brokers.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 amountequivalent 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 theCompany required to deposit specific assets into a trust, escrow or other special account. Rather, the Company must maintain a pool of liquid assets sufficientto comply with the requirements. No third party places limitations, legal or otherwise, on the Company regarding the use of its individual liquid assets. TheCompany 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 poolof 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 regulatoryrequirements as of December 31, 2017.The following table summarizes the amount of Settlement assets and Payment service obligations as of December 31:(Amounts in millions)2017 2016Settlement assets: Settlement cash and cash equivalents$1,469.9 $1,365.0Receivables, net1,125.8 999.4Interest-bearing investments1,154.2 1,252.1Available-for-sale investments7.0 17.8 3,756.9 3,634.3Payment service obligations$(3,756.9) $(3,634.3)Receivables, net (included in settlement assets) — The Company has receivables due from financial institutions and agents for payment instruments sold andamounts advanced by the Company to certain agents for operational and local regulatory purposes. These receivables are outstanding from the day of the saleof the payment instrument until the financial institution or agent remits the funds to the Company. The Company provides an allowance for the portion of thereceivable estimated to become uncollectible based on its history of collection experience, known collection issues, such as agent suspensions andbankruptcies, 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 to three days after theF-12Table of Contentssale 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)2017 2016 2015Beginning balance$11.8 $9.2 $10.7Provision8.0 12.9 20.4Write-offs, net of recoveries(13.2) (10.3) (21.9)Ending balance$6.6 $11.8 $9.2Investments (included in settlement assets) — The Company classifies securities as interest-bearing or available-for-sale. The Company has no securitiesclassified 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 theclearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities arerecorded at fair value, with the net after-tax unrealized gain or loss recorded in "Accumulated other comprehensive loss" in the stockholders' deficit section ofthe Consolidated Balance Sheets. Realized gains and losses and other-than-temporary impairments are recorded in the Consolidated Statements of Operationsunder "Net securities gains."Interest income on residential mortgage-backed securities for which risk of credit loss is deemed remote is recorded utilizing the level yield method. Changesin estimated cash flows, both positive and negative, are accounted for with retrospective changes to the carrying value of investments in order to maintain alevel yield over the life of the investment. Interest income on residential mortgage-backed securities for which risk of credit loss is not deemed remote isrecorded under the prospective method as adjustments of yield.The Company applies the cost recovery method of accounting for interest to some of the investments within the available-for-sale portfolio. The costrecovery method accounts for interest on a cash basis and deems any interest payments received as a recovery of principal, which reduces the book value ofthe related security. When the book value of the related security is reduced to zero, interest payments are then recognized as investment income upon receipt.The Company applies the cost recovery method of accounting as it believes it is probable that the Company will not recover all, or substantially all, of itsprincipal investment and interest for its asset-backed and other securities given the sustained deterioration in the investment and securities market, thecollapse of many asset-backed securities and the low levels to which the securities have been written down.Securities with gross unrealized losses as of the balance sheet date are subject to a process for identifying other-than-temporary impairments. Securities thatthe Company deems to be other-than-temporarily impaired are written down to fair value in the period the impairment occurs. The assessment of whether suchimpairment has occurred is based on management’s evaluation of the underlying reasons for the decline in fair value on an individual security basis. TheCompany considers a wide range of factors about the security and uses its best judgment in evaluating the cause of the decline in the estimated fair value ofthe security and the prospects for recovery. The Company considers an investment to be other-than-temporarily impaired when it is deemed probable that theCompany will not receive all of the cash flows contractually stipulated for the investment, or whether it is more likely than not that we will sell an investmentbefore recovery of its amortized cost basis. The Company evaluates all residential mortgage-backed and other asset-backed investments for impairment.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 fairvalue through a permanent reduction to its amortized cost. Securities gains and losses are recognized upon the sale, call or maturity of securities using thespecific 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-bearinginvestments and payment service obligations approximate fair value. The carrying value of debt is stated at amortized cost; however, for disclosure purposesthe fair value is estimated. See Note 3 — Fair Value Measurement for information regarding the principles and processes used to estimate the fair value offinancial instruments.Derivative Financial Instruments — The Company recognizes derivative financial instruments in the Consolidated Balance Sheets at fair value. Theaccounting for changes in the fair value is recognized through the “Transaction and operations support” line in the Consolidated Statements of Operations inthe period of change. See Note 5 — Derivative Financial Instruments for additional disclosure.F-13Table of ContentsProperty and Equipment — Property and equipment includes computer hardware, computer software, signage, equipment at agent locations, office furnitureand equipment and leasehold improvements, and is stated at cost net of accumulated depreciation and amortization. Property and equipment is depreciatedand amortized using a straight-line method over the useful life or term of the lease or license. The cost and related accumulated depreciation and amortizationof assets sold or disposed of are removed from the financial statements, with the resulting gain or loss, if any, recognized in “Occupancy, equipment andsupplies” in the Consolidated Statements of Operations. See Note 6 — Property and Equipment for additional disclosure. The following table summarizes theestimated useful lives by major asset category:Type of AssetUseful LifeComputer hardware3 yearsComputer software5 - 7 yearsSignage3 yearsEquipment at agent locations3 - 7 yearsOffice furniture and equipment7 yearsLeasehold improvements10 yearsTenant allowances for leasehold improvements are capitalized as leasehold improvements upon completion of the improvement and amortized over theshorter of the remaining term of the lease or 10 years.Computer software includes acquired and internally developed software. For the years ended December 31, 2017 and 2016, software development costs of$43.9 million and $43.7 million, respectively, were capitalized. At December 31, 2017 and 2016, there were $115.2 million and $101.1 million, respectively,of unamortized software development costs included in property and equipment.Property and equipment are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable bycomparing the carrying value of the assets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined toexist 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 combinationsand 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 ofacquisition. In the year following the period in which identified intangible assets become fully amortized, the fully amortized balances are removed from thegross asset and accumulated amortization amounts. Goodwill is not amortized, but is instead subject to impairment testing. Intangible assets with finite livesare amortized using a straight-line method over their respective useful lives as follows:Type of Intangible AssetUseful LifeContractual and customer relationships3-15 yearsNon-compete agreements3-5 yearsDeveloped technology5-7 yearsThe Company evaluates its goodwill for impairment annually as of October 1 of each year or more frequently if impairment indicators arise in accordancewith Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other.” When testing goodwill for impairment, the Company mayelect 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 itsestimated fair value. During a qualitative analysis, the Company considers the impact of any changes to the following factors: macroeconomic, industry andmarket factors, cost factors, and changes in overall financial performance, as well as any other relevant events and uncertainties impacting a reporting unit. Ifthe qualitative assessment does not conclude that it is more likely than not that the estimated value of the reporting unit is greater than the carrying value, theCompany performs a quantitative analysis. In a quantitative testing, the carrying value of the reporting unit is compared to its estimated fair value. If the fairvalue 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, 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. Intangible assets with finite lives are tested forimpairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable by comparing the carrying value of theassets to the estimated future undiscounted cash flows to be generated by the asset. If an impairment is determined to exist for intangible assets, the carryingvalue of the asset is reduced to the estimated fair value.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 inF-14Table of Contentsthe 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 in “Fee and othercommissions expense” in the Consolidated Statements of Operations. The carrying values of the signing bonuses are reviewed whenever events or changes incircumstances 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 financialstatement 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 thetemporary differences to be recovered or paid. The Company's ability to realize deferred tax assets depends on the ability to generate sufficient taxableincome within the carry-back or carry-forward periods provided for in the tax law. The Company establishes valuation allowances for its deferred tax assetsbased on a more-likely-than-not threshold. To the extent management believes that recovery is not likely, a valuation allowance is established in the periodin which the determination is made.The liability for unrecognized tax benefits is recorded as a non-cash item in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. TheCompany records interest and penalties for unrecognized tax benefits in “Income tax expense” in the Consolidated Statements of Operations. See Note 12 —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 10 —Stockholders’ Deficit for additional disclosure.Foreign Currency Translation — The Company converts assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at thebalance sheet dates and records the translation adjustments in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets. Incomestatements of foreign operations are translated from the operation’s functional currency to U.S. dollar equivalents at the average exchange rate for the month.Foreign currency exchange transaction gains and losses are reported in “Transaction and operations support” in the Consolidated Statements of Operations.Revenue Recognition — The Company earns revenue primarily through service fees charged to consumers and through its investing activity. A description ofthese revenues and revenue recognition policies is as follows:•Fee and other revenue consists of transaction fees, service revenue, foreign exchange revenue and other revenue.•Transaction fees consist primarily of fees earned on money transfer, money order, bill payment and official check transactions. The moneytransfer transaction fees vary based on the principal value of the transaction and the locations in which these money transfers originate andto which they are sent. The official check, money order and bill payment transaction fees are fixed fees charged on a per item basis.Transaction fees are recognized at the time of the transaction or sale of the product and are presented on a gross basis.•Foreign exchange revenue is earned from the management of currency exchange spreads on money transfer transactions involving different“send” and “receive” currencies. Currency exchange spread is the difference between the exchange rate set by the Company to theconsumer and the rate at which the Company or its agents are able to acquire currency. Foreign exchange revenue is recognized at the timethe exchange in funds occurs and is presented on a gross basis.•Other revenue primarily consists of service charges on aged outstanding money orders and money order dispenser fees. Additionally, forunclaimed payment instruments and money transfers, we recognize breakage income when the likelihood of consumer pick-up becomesremote based on historical experience and there is no requirement for remitting balances to government agencies under unclaimed propertylaws.•Investment revenue is earned from the investment of funds generated from the sale of payment instruments, primarily official checks and moneyorders, and consists of interest income, dividend income, income received on our cost recovery securities and amortization of premiums anddiscounts.Fee and Other Commissions Expense — The Company incurs fee commissions primarily related to our Global Funds Transfer services. In a money transfertransaction, 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 percentageof the fee charged to the consumer. The agent initiating the transaction and the receiving agent also earn foreign exchange commissions, which are generallybased on a percentage of the foreign exchange spread. In a bill payment transaction, the agent initiating the transaction receives a commission that isgenerally based on a percentage of the fee charged to the consumer and, in limited circumstances, the biller receives a commission that is based on apercentage of the fee charged to the consumer. The Company generally does not pay commissions to agents on the sale of money orders, except, in certainlimited circumstances, for large agents where we may pay a fixed commission based on total money order transactions. Other commissions expense includesthe amortization of capitalized agent signing bonus payments.F-15Table of ContentsInvestment Commissions Expense — Investment commissions expense consists of amounts paid to financial institution customers based on short-term interestrate indices times the average outstanding cash balances of official checks sold by the financial institution. Investment commissions are recognized eachmonth based on the average outstanding balances of each financial institution customer and their contractual variable rate for that month.Marketing and Advertising Expense — Marketing and advertising costs are expensed as incurred or at the time the advertising first takes place and arerecorded in the “Transaction and operations support” line in the Consolidated Statements of Operations. Marketing and advertising expense was $57.2million, $65.1 million and $59.4 million for 2017, 2016 and 2015, respectively.Stock-Based Compensation — Stock-based compensation awards are measured at fair value at the date of grant and expensed over their vesting or serviceperiods. The expense, net of estimated forfeitures, is recognized using the straight-line method and is recorded in “Compensation and benefits” in theConsolidated Statements of Operations. The Company accounts for modifications to its share-based payment awards in accordance with the provisions ofASC Topic 718, "Compensation - Stock Compensation." Incremental compensation cost is measured as the excess, if any, of the fair value of the modifiedaward 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 thatdate, and is recognized as compensation cost on the date of modification (for vested awards) or over the remaining vesting or service period (for unvestedawards). Any unrecognized compensation cost remaining from the original award is recognized over the vesting period of the modified award. See Note 11 —Stock-Based Compensation for additional disclosure of the Company’s stock-based compensation.Earnings Per Share — For all periods in which it is outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") is included in theweighted-average number of common shares outstanding utilized to calculate basic earnings per common share because the D Stock is deemed a commonstock equivalent. Diluted earnings per common share reflects the potential dilution that could result if securities or incremental shares arising out of theCompany’s stock-based compensation plans were exercised or converted into common stock. Diluted earnings per common share assumes the exercise ofstock options using the treasury stock method.The following table is a reconciliation of the weighted-average amounts used in calculating (loss) earnings per share for the period ended December 31:(Amounts in millions)2017 2016 2015Basic common shares outstanding62.9 62.3 62.1Shares related to restricted stock units— 3.6 —Diluted common shares outstanding62.9 65.9 62.1Potential common shares are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potentialcommon shares are anti-dilutive in periods of net loss available to common stockholders. Stock options are anti-dilutive when the exercise price of theseinstruments is greater than the average market price of the Company’s common stock for the period. The following table summarizes the weighted-averagepotential common shares excluded from diluted (loss) income per common share as their effect would be anti-dilutive or their performance conditions are notmet for the years ended December 31:(Amounts in millions)2017 2016 2015Shares related to stock options1.7 2.7 3.4Shares related to restricted stock units3.2 — 3.8Shares excluded from the computation4.9 2.7 7.2Recent Accounting Pronouncements and Related Developments — In May 2014, the Financial Accounting Standards Board (the "FASB") issued AccountingStandards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance sets forth a five-step revenue recognition modelwhich replaces the current revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognitionguidance and requires more detailed disclosures. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:•ASU 2016-08 (Issued March 2016) — Principal versus Agent Consideration (Reporting Revenue Gross versus Net)•ASU 2016-10 (Issued April 2016) — Identifying Performance Obligations and Licensing•ASU 2016-12 (Issued May 2016) — Narrow-Scope Improvements and Practical Expedients•ASU 2016-20 (Issued December 2016) — Technical Corrections and Improvements to Topic 606, Revenue from Contracts with CustomersThese ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but notbefore interim and annual reporting periods beginning after December 15, 2016. The Company isF-16Table of Contentsnot early adopting these standards and will use the cumulative effect transition method upon adoption. Based on our evaluation for money transfer and billpayment services provided by the Global Funds Transfer segment, the Company has determined that each of these services includes only one performanceobligation to the customer. For the Company's money transfer service, the performance obligation is to collect the consumer's money and make fundsavailable for payment, generally on the same day, to a designated recipient in the currency requested. For the Company's bill payment service, theperformance obligation is to collect the consumer's money and transfer the funds to the designated institution, generally on the same day. The satisfaction ofthese performance obligations occurs at a point in time, which is not a change from how we currently recognize revenue. For the money orders and officialchecks products, the Company will continue to recognize revenue on a monthly basis depending on the volume of products sold. As such, the adoption ofthis standard will not have an impact on the Company’s consolidated financial statements and a minimal impact on our internal controls over financialreporting. Based on the disclosure requirements of ASC 606, upon adoption, we expect to provide expanded disclosures relating to our revenue recognitionpolicies and how these relate to our revenue-generating contractual performance obligations. Management is finalizing its disclosure requirements of thisstandard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires organizations to recognize lease assets and lease liabilities onthe balance sheet and to disclose key information about leasing arrangements. The classification criteria for distinguishing between finance leases andoperating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leaseguidance. The FASB retained the distinction between finance leases and operating leases, leaving the effect of leases in the statement of comprehensiveincome and the statement of cash flows largely unchanged from previous GAAP. ASU 2016-02 mandates a modified retrospective transition method and iseffective for fiscal years beginning after December 15, 2018. Early adoption of the amendment is permitted but the Company will not be early adopting thisstandard. The Company's leases consist primarily of operating leases for buildings, equipment and vehicles. The impact of this ASU on the Company’sconsolidated financial statements is still being evaluated but, due to the nature of the Company's leases, management believes that this standard will not havea material impact on the Consolidated Statement of Operations.In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting. This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-basedcompensation and the financial statement presentation of excess tax benefits or deficiencies. Under the new ASU, companies are allowed to withhold up tothe employees' maximum statutory tax rates in the applicable jurisdictions without resulting in liability classification. Further, the ASU requires that cashpayments to tax authorities in connection with shares withheld to meet statutory tax withholding requirements be presented as a financing activity in thestatement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 in the first quarterof 2017. Prior to the adoption of ASU 2016-09, the Company presented cash payments to tax authorities in connection with shares withheld to meet statutorytax withholdings requirements as an operating activity in its statement of cash flows. Upon adoption of this ASU, the presentation of these payments wasreclassified to a financing activity and prior period Consolidated Statements of Cash Flows have been updated to reflect this change.In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) - Intra- Entity Transfers of Assets Other Than Inventory. This standard requiresthat an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.Consequently, the amendments in this standard eliminate the exception for an intra-entity transfer of an asset other than inventory. ASU 2016-16 is effectivefor public companies for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reportingperiods. The Company will not be early adopting this standard but, upon adoption, will use the modified retrospective approach. The modified retrospectiveapproach will result in a reclassification of a net deferred charge of approximately $1.3 million from “Other assets” to “Retained loss” on the ConsolidatedBalance Sheets, with a partial offset, which the Company is in the process of finalizing, for the establishment of remaining net deferred tax assets in eachrespective jurisdiction.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 itsconsolidated financial statements.Note 3 — Fair Value MeasurementFair 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 betweenmarket participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to thevaluation of an asset or liability as of the measurement date. Under the hierarchy, the highest priority is given to unadjusted quoted prices in active marketsfor identical assets or liabilities (Level 1), followed by observable inputs (Level 2) and unobservable inputs (Level 3). A financial instrument’s level withinthe 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’svaluation methodologies used to estimate the fair value for assets and liabilities:F-17Table of ContentsAssets 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 obtainedfrom an independent pricing service. As market quotes are generally not readily available or accessible for these specific securities, the pricingservice measures fair value through the use of pricing models utilizing reported market quotes adjusted for observable inputs, such as market pricesfor comparable securities, spreads, prepayment speeds, yield curves and delinquency rates. Accordingly, these securities are classified as Level 2financial instruments.For asset-backed and other securities, which include investments in limited partnerships, market quotes are generally not available. The Companyutilizes 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 onmarket observable and unobservable data. The observable inputs include quotes for comparable securities, yield curves, default indices, interestrates, historical prepayment speeds and delinquency rates. These pricing models also apply an inactive market adjustment as a significantunobservable 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 foreign currency exchange riskarising from the Company’s assets and liabilities denominated in foreign 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 arereadily observable. Accordingly, the Company has classified its forward contracts as Level 2 financial instruments. See Note 5 — DerivativeFinancial Instruments for additional disclosure on the Company's forward contracts.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 TotalDecember 31, 2017 Financial assets: Available-for-sale investments: Residential mortgage-backed securities$5.6 $— $5.6Asset-backed and other securities— 1.4 1.4Forward contracts0.2 — 0.2Total financial assets$5.8 $1.4 $7.2Financial liabilities: Forward contracts$1.0 $— $1.0 December 31, 2016 Financial assets: Available-for-sale investments: Residential mortgage-backed securities$7.2 $— $7.2Asset-backed and other securities— 10.6 10.6Forward contracts2.4 — 2.4Total financial assets$9.6 $10.6 $20.2Financial liabilities: Forward contracts$0.1 $— $0.1F-18Table of ContentsThe 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)2017 2016 2015Beginning balance$10.6 $11.6 $12.6Principal paydowns(0.8) (1.2) (0.9)Change in unrealized gains3.8 0.3 (0.1)Net realized gains(12.2) (0.1) —Ending balance$1.4 $10.6 $11.6Assets and liabilities that are disclosed at fair value — Debt and interest-bearing investments are carried at amortized cost; however, the Company estimatesthe fair value of debt for disclosure purposes. The fair value of debt is estimated using an observable market quotation (Level 2). The following table is asummary of the Company's fair value and carrying value of debt as of December 31: Fair Value Carrying Value(Amounts in millions)2017 2016 2017 2016Senior secured credit facility$910.8 $912.5 $914.2 $924.0The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment serviceobligations approximate fair value as of December 31, 2017 and 2016.The Company records the investments in its defined benefit pension plan ("Pension Plan") trust at fair value. The majority of the Pension Plan’s investmentsare 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 marketvalues of the underlying assets. See Note 9 — 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 relateprimarily to the Company’s property and equipment, goodwill and other intangible assets, which are re-measured only in the event of an impairment. Noimpairments of property and equipment, goodwill and other intangible assets were recorded during 2017, 2016 and 2015.Fair value re-measurements are normally based on significant unobservable inputs (Level 3). Tangible and intangible asset fair values are derived usingaccepted valuation methodologies. If it is determined an impairment has occurred, the carrying value of the asset is reduced to fair value with a correspondingcharge to the "Other expenses" line in the Consolidated Statements of Operations.Note 4 — Investment PortfolioThe 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)2017 2016Cash$1,654.5 $1,514.5Money market securities5.4 7.7Cash and cash equivalents (1)1,659.9 1,522.2Interest-bearing investments1,154.2 1,252.1Available-for-sale investments7.0 17.8Total investment portfolio$2,821.1 $2,792.1(1) For purposes of the disclosure of the investment portfolio as a whole, the cash and cash equivalents balance includes settlement cash and cash equivalents.Cash and Cash Equivalents — Cash and cash equivalents consist of interest-bearing deposit accounts, non-interest bearing transaction accounts and moneymarket securities. The Company’s money market securities are invested in two funds, each of which is AAA rated and consists of U.S. Treasury bills, notes orother obligations issued or guaranteed by the U.S. government and its agencies, as well as repurchase agreements secured by such instruments.F-19Table of ContentsInterest-bearing Investments — Interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months, and areissued from financial institutions rated A- or better as of December 31, 2017.Available-for-sale Investments — Available-for-sale investments consist of residential mortgage-backed securities and asset-backed and other securities. Thefollowing table is a summary of the amortized cost and fair value of available-for-sale investments:(Amounts in millions)AmortizedCost GrossUnrealizedGains FairValueDecember 31, 2017 Residential mortgage-backed securities$5.2 $0.4 $5.6Asset-backed and other securities0.2 1.2 1.4Total$5.4 $1.6 $7.0 December 31, 2016 Residential mortgage-backed securities$6.6 $0.6 $7.2Asset-backed and other securities1.0 9.6 10.6Total$7.6 $10.2 $17.8As of December 31, 2017 and 2016, 80% and 40%, 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 toreceive full par value upon maturity or pay-down, as well as all interest payments. Included in asset-backed and other securities are collateralized debtobligations backed primarily by high-grade debt, mezzanine equity tranches of collateralized debt obligations and home equity loans, along with privateequity investments, as summarized in Note 3 — Fair Value Measurement.Gains and Losses — For the twelve months ended December 31, 2017, the Company recognized $12.2 million of investment income from the redemption atpar value of $12.7 million of a previously impaired asset-backed security in "Investment revenue" on the Consolidated Statement of Operations. Prior to theredemption, the security had $0.5 million in book value with $7.9 million in unrealized gains. As of December 31, 2017 and 2016, net unrealized gains, netof tax of $2.2 million and $10.8 million, respectively, were included in the Consolidated Balance Sheets in “Accumulated other comprehensive loss.” TheCompany had nominal unrealized losses in its available-for-sale portfolio as of December 31, 2017 and no unrealized losses in its available-for-sale portfolioas of December 31, 2016. For 2017, 2016, and 2015 the Company had no net realized losses and no other-than-temporary impairments.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 acrossthe 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 aMoody’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 thefollowing ratings as of December 31: 2017 2016(Amounts in millions, except percentages)Number ofSecurities FairValue Percent ofInvestments Number ofSecurities FairValue Percent ofInvestmentsInvestment grade11 $5.6 80% 12 $7.2 40%Below investment grade38 1.4 20% 40 10.6 60%Total49 $7.0 100% 52 $17.8 100%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 ofDecember 31, 2017 and 2016, respectively.Contractual Maturities — Actual maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations, sometimeswithout call or prepayment penalties. Maturities of residential mortgage-backed and asset-backed and other securities depend on the repaymentcharacteristics 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 theportfolio for which the various pricing sources were used is as follows as of December 31, 2017 and 2016: 93% and 95% used a third-party pricing serviceand 7% and 5% used broker quotes, respectively.F-20Table of ContentsNote 5 — Derivative Financial InstrumentsThe Company uses forward contracts to manage its foreign currency needs and foreign currency exchange risk arising from its assets and liabilitiesdenominated in foreign currencies. While these contracts may mitigate certain foreign currency risk, they are not designated as hedges for accountingpurposes. These contracts will result in gains and losses which are reported in the "Transaction and operations support" line item in the ConsolidatedStatements of Operations. The Company also reports gains and losses from the spread differential between the rate set for its transactions and the actual costof currency at the time the Company buys or sells in the open market. The “Transaction and operations support” line in the Consolidated Statements ofOperations and the "Net cash provided by operating activities" line in the Consolidated Statements of Cash Flows include the following gains related toassets and liabilities denominated in foreign currencies, for the years ended December 31:(Amounts in millions)2017 2016 2015Net realized foreign currency gain (loss)$21.0 $(5.4) $(21.3)Net (loss) gain from the related forward contracts(13.5) 23.6 32.7Net gains from foreign currency transactions and related forward contracts$7.5 $18.2 $11.4As of December 31, 2017 and 2016, the Company had $311.5 million and $294.5 million, respectively, of outstanding notional amounts relating to itsforeign currency forward contracts. As of December 31, 2017 and 2016, the Company reflects the following fair values of derivative forward contractinstruments in its Consolidated Balance Sheets: Gross Amount ofRecognized Assets Gross Amount of Offset Net Amount of Assets Presentedin the Consolidated BalanceSheets(Amounts in millions)Balance Sheet Location 2017 2016 2017 2016 2017 2016Forward contractsOther assets $0.4 $2.6 $(0.2) $(0.2) $0.2 $2.4 Gross Amount ofRecognized Liabilities Gross Amount of Offset Net Amount of LiabilitiesPresented in the ConsolidatedBalance Sheets(Amounts in millions)Balance Sheet Location 2017 2016 2017 2016 2017 2016Forward contractsAccounts payable and other liabilities $1.2 $0.3 $(0.2) $(0.2) $1.0 $0.1The Company's forward contracts are primarily executed with counterparties governed by International Swaps and Derivatives Association agreements thatgenerally include standard netting arrangements. Asset and liability positions from forward contracts and all other foreign exchange transactions with thesame counterparty are net settled upon maturity.The Company is exposed to credit loss in the event of non-performance by counterparties to its derivative contracts. The Company actively monitors itsexposure to credit risk through the use of credit approvals and credit limits, and by selecting major international banks and financial institutions ascounterparties. Collateral generally is not required of the counterparties or of the Company. In the unlikely event the counterparty fails to meet thecontractual terms of the derivative contract, the Company’s risk is limited to the fair value of the instrument. The Company has not had any historicalinstances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.F-21Table of ContentsNote 6 — Property and EquipmentThe following table is a summary of "Property and equipment, net" as of December 31:(Amounts in millions)2017 2016Computer hardware and software$432.1 $373.3Signage71.3 85.0Equipment at agent locations59.1 60.5Office furniture and equipment29.6 28.0Leasehold improvements28.6 24.7Total property and equipment620.7 571.5Accumulated depreciation and amortization(405.8) (370.5)Total property and equipment, net$214.9 $201.0Depreciation and amortization expense for property and equipment for 2017, 2016 and 2015 was $73.0 million, $76.9 million, and $63.4 million,respectively.At December 31, 2017 and 2016, the Company had $5.1 million and $3.8 million, respectively, in accrued purchases of property and equipment included in“Accounts payable and other liabilities” in the Consolidated Balance Sheets.During 2017 and 2015, the Company had nominal losses related to disposal of its property and equipment. During 2016, the Company recognized a loss of$0.2 million on disposal of signage and equipment at agent locations. The losses were recorded in the “Occupancy, equipment and supplies” line in theConsolidated Statements of Operations.Note 7 — Goodwill and Intangible AssetsGoodwill — The Company's goodwill balance was $442.2 million as of December 31, 2017 and 2016, and all relates to the Global Funds Transfer segment.The Company performed an annual assessment of goodwill during the fourth quarter of 2017, 2016 and 2015. No impairments of goodwill were recorded in2017, 2016 and 2015.The following table is a summary of the gross goodwill balances and accumulated impairments as of December 31: 2017 2016(Amounts in millions)Gross Goodwill AccumulatedImpairments Gross Goodwill AccumulatedImpairmentsGlobal Funds Transfer$445.4 $(3.2) $445.4 $(3.2)Intangibles — The following table is a summary of intangible assets included in “Other assets” in the Consolidated Balance Sheets as of December 31: 2017 2016(Amounts in millions)GrossCarryingValue AccumulatedAmortization NetCarryingValue GrossCarryingValue AccumulatedAmortization NetCarryingValueContractual and customer relationships$10.7 $(7.8) $2.9 $11.1 $(6.3) $4.8Non-compete agreements1.0 (0.9) 0.1 1.5 (1.2) 0.3Developed technology0.6 (0.3) 0.3 1.1 (0.7) 0.4Total intangible assets$12.3 $(9.0) $3.3 $13.7 $(8.2) $5.5Intangible asset amortization expense for 2017, 2016 and 2015 was $2.1 million, $3.0 million and $2.7 million, respectively. The estimated future intangibleasset amortization expense is $1.5 million, $0.5 million, $0.5 million, $0.5 million and $0.3 million for 2018, 2019, 2020, 2021 and 2022, respectively.F-22Table of ContentsNote 8 — DebtThe following is a summary of the Company's outstanding debt as of December 31: December 31, 2017 December 31, 2016(Amounts in millions, except percentages)Effective InterestRate Effective InterestRate Senior secured credit facility due 20204.94% $914.2 4.25% $924.0Unamortized debt issuance costs and debt discount (6.1) (8.8)Total debt, net $908.1 $915.22013 Credit Agreement — On March 28, 2013, the Company, as borrower, entered into an Amended and Restated Credit Agreement (the "2013 CreditAgreement") with Bank of America, N.A. ("BOA"), as administrative agent, the financial institutions party thereto as lenders and the other agents partythereto. The 2013 Credit Agreement provides for (i) a senior secured five-year revolving credit facility up to an aggregate principal amount of $125.0 million(the "Revolving Credit Facility") and (ii) a senior secured seven-year term loan facility of $850.0 million (the "Term Credit Facility"). The Revolving CreditFacility includes a sub-facility that permits the Company to request the issuance of letters of credit up to an aggregate amount of $50.0 million, withborrowings available for general corporate purposes.On April 2, 2014, the Company, as borrower, entered into a First Incremental Amendment and Joinder Agreement (the "Incremental Agreement") with BOA, asadministrative agent, and various lenders. The Incremental Agreement provided for (a) a tranche under the Term Credit Facility in an aggregate principalamount of $130.0 million (the "Tranche B-1 Term Loan Facility") to be made available to the Company under the 2013 Credit Agreement, (b) an increase inthe Revolving Credit Facility under the 2013 Credit Agreement from $125.0 million to $150.0 million and (c) certain other amendments to the 2013 CreditAgreement including, without limitation, (i) amendments to certain of the conditions precedent with respect to these incremental borrowings, (ii) an increasein the maximum secured leverage ratio with which the Company is required to comply as of the last day of each fiscal quarter, and (iii) amendments to permitthe Company to borrow up to $300.0 million under the Term Credit Facility for share repurchases exclusively from affiliates of Thomas H. Lee Partners L.P.("THL") and Goldman, Sachs & Co. ("Goldman Sachs"). The Company borrowed $130.0 million under the Tranche B-1 Term Loan Facility on April 2, 2014,and the proceeds were used to fund a portion of the share repurchases from THL reducing the remaining limit for such purchases to $170.0 million.On December 12, 2016, the Company entered into Amendment No. 2 to the 2013 Credit Agreement, dated December 12, 2016 (the "2016 Amendment"), withBOA, as administrative agent, and various lenders. The 2016 Amendment includes, but is not limited to, decreasing the aggregate Revolving Credit Facilityfrom $150.0 million to $125.0 million from December 12, 2016 to March 27, 2018 (the remainder of the original Revolving Credit Facility term) andincreasing the maximum secured leverage ratio, effective the first quarter of 2017. The 2016 Amendment also extended the maturity date of the revolvingcredit commitments of the extending lenders, which represent commitments of $85.8 million in the aggregate, from March 28, 2018 to September 28, 2019.This 2016 Amendment was accounted for as a modification of debt in accordance with ASC Topic 470, “Debt.”The 2013 Credit Agreement is secured by substantially all of the non-financial assets of the Company and its material domestic subsidiaries that guaranteethe payment and performance of the Company’s obligations under the 2013 Credit Agreement.The Company may elect an interest rate under the 2013 Credit Agreement at each reset period based on the BOA prime bank rate or the Eurodollar rate. Theinterest rate election may be made individually for the Term Credit Facility and each draw under the Revolving Credit Facility. The interest rate will be eitherthe “alternate base rate” (calculated in part based on the BOA prime rate) plus either 200 or 225 basis points (depending on the Company's secured leverageratio or total leverage ratio, as applicable, at such time) or the Eurodollar rate plus either 300 or 325 basis points (depending on the Company's securedleverage ratio or total leverage ratio, as applicable, at such time). For the years ended December 31, 2017, 2016 and 2015, the Eurodollar rate was theeffectively elected primary interest basis. Under the terms of the 2013 Credit Agreement, the minimum interest rate applicable to Eurodollar borrowings underthe Term Credit Facility is 100 basis points plus the applicable margins previously referred to in this paragraph. The Company's effective interest rate on thesenior secured borrowings increased from 4.25% at December 31, 2016 to 4.94% at December 31, 2017 due to an increase in the Eurodollar rate.Fees on the daily unused availability under the Revolving Credit Facility are 50 basis points. As of December 31, 2017, the Company had no outstandingletters of credit and no borrowings under the Revolving Credit Facility, leaving $125.0 million of availability thereunder.F-23Table of ContentsDebt Covenants and Other Restrictions — Borrowings under the 2013 Credit Agreement are subject to various limitations that restrict the Company’s abilityto: incur additional indebtedness; create or incur additional liens; effect mergers and consolidations; make certain acquisitions or investments; sell assets orsubsidiary stock; pay dividends and other restricted payments; and effect loans, advances and certain other transactions with affiliates. In addition, theRevolving Credit Facility has covenants that place limitations on the use of proceeds from borrowings under the facility.The terms of our debt agreements place significant limitations on the amount of restricted payments we may make, including dividends on our common stockand our repurchase of our capital stock. Subject to certain customary conditions, we may (i) make restricted payments in an aggregate amount not to exceed$50.0 million (without regard to a pro forma leverage ratio calculation), (ii) make restricted payments up to a formulaic amount determined based on anincremental build-up of our consolidated net income in future periods (subject to compliance with a maximum pro forma leverage ratio calculation) and (iii)repurchase capital stock from THL and Goldman Sachs in a remaining aggregate amount up to $170.0 million as discussed above.The 2013 Credit Agreement contains various financial and non-financial covenants. A violation of these covenants could negatively impact the Company'sliquidity by restricting the Company's ability to borrow under the Revolving Credit Facility and/or causing acceleration of amounts due under the creditfacilities. The financial covenants in the 2013 Credit Agreement measure leverage, interest coverage and liquidity. Leverage is measured through a seniorsecured debt ratio calculated as consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation and amortization), adjustedfor certain items such as net securities gains, stock-based compensation expense, certain legal settlements and asset impairments, among other items, alsoreferred to as adjusted EBITDA. This measure is similar, but not identical, to Adjusted EBITDA (EBITDA adjusted for certain significant items) as discussedin Note 11 — Stock-Based Compensation. Interest coverage is calculated as adjusted EBITDA to net cash interest expense.The Company's assets in excess of payment service obligations used for the asset coverage calculation, which is equal to total cash and cash equivalents andsettlement assets less payment service obligations, are $190.0 million and $157.2 million as of December 31, 2017 and December 31, 2016, respectively.The 2013 Credit Agreement also has quarterly financial covenants to maintain the following interest coverage and secured leverage ratios: Interest CoverageMinimum Ratio Secured LeverageNot to ExceedJanuary 1, 2017 through December 31, 20172.25:1 4.250:1January 1, 2018 through June 30, 20182.25:1 4.000:1July 1, 2018 through December 31, 20182.25:1 3.750:1January 1, 2019 through maturity2.25:1 3.500:1At December 31, 2017, the Company was in compliance with its financial covenants: our interest coverage ratio was 6.56 to 1.00 and our secured leverageratio was 3.308 to 1.00. We continuously monitor our compliance with our debt covenants.Debt Issuance Costs —The Company presents debt issuance costs as a direct deduction from the carrying amount of the related indebtedness and amortizesthese costs over the term of the related debt liability using the effective interest method. Amortization is recorded in “Interest expense” on the ConsolidatedStatements of Operations.The Company records debt issuance costs for its Revolving Credit Facility in Other assets on its Consolidated Balance Sheets and related amortization isrecorded in "Interest expense" on the Consolidated Statements of Operations. The unamortized costs associated with the Revolving Credit Facility were $0.7million and $1.2 million as of December 31, 2017 and 2016, respectively.Debt Discount — The Company records debt discount as a deduction from the carrying amount of the related indebtedness on its Consolidated BalanceSheets with the respective debt discount amortization recorded in “Interest expense." In 2017 and 2015, the Company had no write-offs of debt discount andin 2016 the Company had nominal write-offs.Debt Extinguishment Costs — There were no debt extinguishment costs recognized in 2017 or 2015. In 2016, the Company recognized debt extinguishmentcosts of $0.3 million in connection with the Term Credit Facility principal payments and debt repurchase discussed above which are recorded in "Debtextinguishment costs" on the Consolidated Statements of Operations.Interest Paid in Cash — The Company paid $41.9 million, $41.6 million and $42.1 million of interest in 2017, 2016 and 2015, respectively.Maturities — At December 31, 2017, debt totaling $892.1 million will mature in 2020, while debt principal totaling $22.1 million will be paid quarterly inincrements of approximately $2.5 million through 2020. Any borrowings under the Revolving Credit Facility will mature in 2019.F-24Table of ContentsNote 9 — Pension and Other BenefitsPension Benefits — The Company's Pension Plan is a frozen, non-contributory funded plan under which no new service or compensation credits are accruedby the plan participants. Cash accumulation accounts continue to be credited with interest credits until participants withdraw their money from the PensionPlan. It is the Company’s policy to fund at least the minimum required contribution each year plus additional discretionary amounts as available andnecessary to minimize expenses of the plan.Supplemental Executive Retirement Plans — The Company has obligations under various supplemental executive retirement plans (“SERPs”), which areunfunded non-qualified defined benefit pension plans providing postretirement income to their participants. As of December 31, 2017, all benefit accrualsunder 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 theCompany’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 providesmedical 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 thisplan amendment, the Company no longer receives the Medicare retiree drug subsidy. The Company’s funding policy is to make contributions to thePostretirement 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 asummary of the weighted-average actuarial assumptions used in calculating net periodic benefit expense (income) and the benefit obligation for the yearsended and as of December 31: Pension Plan SERPs Postretirement Benefits 2017 2016 2015 2017 2016 2015 2017 2016 2015Net periodic benefit expense (income): Discount rate for benefit obligation4.05% 4.31% 4.15% 4.11% 4.32% 4.78% 4.30% 4.53% 4.82%Discount rate for interest cost3.36% 3.45% 4.15% 3.31% 3.32% 4.78% 3.38% 3.43% 4.82%Expected return on plan assets4.52% 4.66% 4.74% — — — — — —Rate of compensation increase— — — 5.75% 5.75% 5.75% — — —Medical trend rate: Pre-65 initial healthcare cost trend rate— — — — — — 7.00% 6.50% 6.50%Post-65 initial healthcare cost trend rate— — — — — — 8.25% 7.75% 6.25%Pre and post-65 ultimate healthcare cost trendrate— — — — — — 4.50% 4.50% 4.50%Year ultimate healthcare cost trend rate isreached for pre/post-65, respectively— — — — — — 2024/2025 2024 2023Benefit obligation: Discount rate3.58% 4.05% 4.31% 3.65% 4.11% 4.32% 3.72% 4.30% 4.53%Rate of compensation increase— — — 5.75% 5.75% 5.75% — — —Medical trend rate: Pre-65 initial healthcare cost trend rate— — — — — — 7.75% 7.00% 6.50%Post-65 initial healthcare cost trend rate— — — — — — 7.75% 8.25% 7.75%Pre and post-65 ultimate healthcare cost trendrate— — — — — — 4.50% 4.50% 4.50%Year ultimate healthcare cost trend rate isreached for pre/post-65, respectively— — — — — — 2025/2027 2024/2025 2024The Company utilizes a building-block approach in determining the long-term expected rate of return on plan assets. The expected return on plan assets iscalculated 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 historicalrelationships between equity securities and fixed income securities are preserved consistent with the widely accepted capital market principle that assets withhigher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capitalmarket assumptions are determined. The long-term portfolio return also takes proper consideration of diversification and rebalancing. Peer data and historicalreturns are reviewed for reasonableness and appropriateness.F-25Table of ContentsActuarial gains and losses are amortized using the corridor approach, by amortizing the balance exceeding 10% of the greater of the benefit obligation or thefair value of plan assets. The amortization period is primarily based on the average remaining service life of plan participants for the Pension and the averageremaining expected life of plan participants for the Postretirement Benefits. The Company estimated the interest cost components utilizing a full yield curveapproach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligationto 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 maximizethe long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded statusand corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income securities. Furthermore, equity securitiesare diversified across large and small capitalized securities and international securities. Other assets, such as real estate and high yield bonds, are used tofurther diversify equity allocations. Fixed income securities are primarily invested in a mix of investment grade corporate bonds, government bonds, and asmaller allocation to non-investment grade debt. The Company uses a strategy to determine the allocation of return-seeking assets driven by the PensionPlan’s funded ratio. Investment risk is measured and monitored on an ongoing basis, including quarterly investment portfolio reviews and periodic liabilitymeasurements.The Company records its pension assets at fair value as described in Note 3 — Fair Value Measurement. The following is a description of the Pension Plan’sinvestments 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 valueestablished for each fund at each valuation date. The unit value of a collective investment fund is calculated by dividing the fund's net assetvalue on the calculation date by the number of units of the fund that are outstanding on the calculation date, which is derived from observablepurchase and redemption activity in the collective investment fund. The Company's common/collective trusts are categorized in Level 2 to theextent that they are readily redeemable at their net asset value. The Company changed the presentation of its common/collective trusts pensionassets as of December 31, 2016 to match the December 31, 2017 presentation.•Real estate — The Pension Plan trust holds an investment in a real estate development project that the Company considers to be a Level 3 assetfor valuation purposes because it requires the use of unobservable inputs in its fair value measurement. The fair value of this investmentrepresents the estimated fair value of the plan’s related ownership percentage in the project based upon an appraisal of the underlying realproperty as of each balance sheet date. The fund investment strategy for this asset is long-term capital appreciation.F-26Table of ContentsThe following table is a summary of the Pension Plan’s financial assets recorded at fair value, by hierarchy level:(Amounts in millions) Level 2 Level 3 TotalDecember 31, 2017 Common/collective trusts Short-term investment fund $3.3 $— $3.3Equity securities: Large cap 14.7 — 14.7Small cap 3.4 — 3.4International 10.1 — 10.1Fixed income securities 82.2 — 82.2Real estate — 5.5 5.5Total investments in the fair value hierarchy $113.7 $5.5 $119.2December 31, 2016 Common/collective trusts Short-term investment fund $2.0 $— $2.0Equity securities: Large cap 15.9 — 15.9Small cap 3.9 — 3.9International 9.3 — 9.3Fixed income securities 75.5 — 75.5Real estate — 5.6 5.6Total investments in the fair value hierarchy $106.6 $5.6 $112.2The Company does not have participant redemption restrictions for its common/collective trust investments. The following table sets forth additionaldisclosures for the Pension Plans assets fair value estimated using net asset value per share:(Amounts in millions) Fair Value Redemptions Frequency (ifcurrently eligible) Redemption Notice PeriodDecember 31, 2017 $113.7 Daily 15 Days December 31, 2016 $106.6 Daily 15 DaysPlan Financial Information — Net periodic benefit expense (income) for the Pension and Postretirement Benefits recorded in the Consolidated Statements ofOperations in "Compensation and benefits" includes the following components for the years ended December 31: Pension Postretirement Benefits(Amounts in millions)2017 2016 2015 2017 2016 2015Settlement charge$— $— $14.7 $— $— $—Interest cost6.6 7.0 9.8 — — —Expected return on plan assets(5.1) (5.3) (5.8) — — —Amortization of net actuarial loss4.6 5.8 8.7 0.1 0.2 0.2Amortization of prior service cost (credit)0.1 0.1 — (0.4) (0.6) (0.6)Net periodic benefit expense (income)$6.2 $7.6 $27.4 $(0.3) $(0.4) $(0.4)F-27Table of ContentsThe following tables are a summary of the amounts recognized in other comprehensive (loss) income and net periodic benefit expense (income) for the yearsended December 31:(Amounts in millions)Pension PostretirementBenefits2017 Net actuarial loss$15.3 $—Amortization of net actuarial loss(4.6) (0.1)Amortization of prior service (cost) credit(0.1) 0.4Total recognized in other comprehensive (income) loss$10.6 $0.3Total recognized in net periodic benefit expense (income)6.2 (0.3)Total recognized in other comprehensive (income) loss and net periodic benefit expense (income)$16.8 $—2016 Net actuarial loss (gain)$3.5 $(0.1)Amortization of net actuarial loss(5.8) (0.2)Amortization of prior service credit(0.1) 0.6Total recognized in other comprehensive (income) loss$(2.4) $0.3Total recognized in net periodic benefit expense (income)7.6 (0.4)Total recognized in other comprehensive (income) loss and net periodic benefit expense (income)$5.2 $(0.1)2015 Settlement charge$(14.7) $—Net actuarial gain(19.3) (0.3)Amortization of net actuarial loss(8.7) (0.2)Amortization of prior service credit— 0.6Total recognized in other comprehensive loss$(42.7) $0.1Total recognized in net periodic benefit expense (income)27.4 (0.4)Total recognized in other comprehensive loss and net periodic benefit expense (income)$(15.3) $(0.3)The estimated net actuarial loss and prior service (cost) credit for the Pension that will be amortized from “Accumulated other comprehensive loss” into “Netperiodic benefit expense (income)” during 2018 is $7.9 million ($6.1 million net of tax) and $0.1 million, respectively. The estimated net actuarial loss andprior service credit for the Postretirement Benefits that will be amortized from “Accumulated other comprehensive loss” into “Net periodic benefit expense(income)” during 2018 is $0.1 million ($0.1 million net of tax). There is no estimated prior service credit amortization during 2018 for the PostretirementBenefits.The following tables are a summary of the benefit obligation and plan assets, changes to the benefit obligation and plan assets, and the unfunded status of thePension and Postretirement Benefits as of and for the years ended December 31: Pension Postretirement Benefits(Amounts in millions)2017 2016 2017 2016Change in benefit obligation: Benefit obligation at the beginning of the year$210.4 $213.8 $0.8 $1.0Interest cost6.6 7.0 — —Actuarial loss (gain)19.1 4.6 — (0.1)Benefits paid(20.3) (15.0) (0.1) (0.1)Benefit obligation at the end of the year$215.8 $210.4 $0.7 $0.8 Change in plan assets: Fair value of plan assets at the beginning of the year$112.2 $107.9 $— $—Actual return on plan assets8.8 6.1 — —Employer contributions18.5 13.2 0.1 0.1Benefits paid(20.3) (15.0) (0.1) (0.1)Fair value of plan assets at the end of the year$119.2 $112.2 $— $—Unfunded status at the end of the year$96.6 $98.2 $0.7 $0.8F-28Table of ContentsIn October 2017, the Society of Actuaries issued updated mortality projection scales. The Company adopted the updated mortality projection scales on itsmeasurement date, which decreased the Pension Plan benefit obligation. In December 2017, the Company reevaluated the population of its SERP participantsand determined the white-collar adjusted mortality table provided by the Society of Actuaries to be a better estimate for participants in the plan. Accordingly,the change in estimate resulted in an increase to the SERPs unfunded status. The unfunded status of the Pension Plan was $22.7 million and $27.7 million atDecember 31, 2017 and 2016, respectively, and the unfunded status of the SERPs was $73.9 million and $70.5 million at December 31, 2017 and 2016,respectively.The following table summarizes the components recognized in the Consolidated Balance Sheets relating to the Pension and Postretirement Benefits as ofDecember 31: Pension Postretirement Benefits Total(Amounts in millions)2017 2016 2017 2016 2017 2016Pension and other postretirement benefits liability$96.6 $98.2 $0.7 $0.8 $97.3 $99.0Accumulated other comprehensive loss: Net actuarial loss, net of tax$54.1 $46.5 $0.5 $0.5 $54.6 $47.0Prior service cost (credit), net of tax0.2 0.2 — (0.2) 0.2 —Total$54.3 $46.7 $0.5 $0.3 $54.8 $47.0The following table summarizes the benefit obligation and accumulated benefit obligation for the Pension Plan, SERPs and Postretirement Benefits fair valueof plan assets as of December 31: Pension Plan SERPs Postretirement Benefits(Amounts in millions)2017 2016 2017 2016 2017 2016Benefit obligation$141.9 $139.9 $73.9 $70.5 $0.7 $0.8Accumulated benefit obligation141.9 139.9 73.8 70.2 — —Fair value of plan assets119.2 112.2 — — — —The following table summarizes the estimated future benefit payments for the Pension and Postretirement Benefits for the years ended December 31:(Amounts in millions)2018 2019 2020 2021 2022 2023-2027Pension$29.5 $15.1 $15.0 $14.7 $14.3 $64.1Postretirement Benefits0.1 0.1 0.1 — — 0.2Although the Company has no minimum required contribution for the Pension Plan in 2018, we expect to contribute $8.0 million to the Pension Plan in2018. The Company will continue to make contributions to the SERPs and the Postretirement Benefits to the extent benefits are paid. Aggregate benefitspaid for the unfunded plans are expected to be $7.0 million in 2018.Employee Savings Plan — The Company has an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, asamended. Contributions to, and costs of, the 401(k) defined contribution plan totaled $4.8 million, $5.1 million and $4.4 million in 2017, 2016 and 2015,respectively.International Benefit Plans — The Company’s international subsidiaries have certain defined contribution benefit plans. Contributions to, and costs relatedto, international plans were $2.8 million, $2.0 million and $1.7 million for 2017, 2016 and 2015, respectively.F-29Table of ContentsNote 10 — Stockholders' DeficitCommon Stock — The Company’s Amended and Restated Certificate of Incorporation, as amended, provides for the issuance of up to 162,500,000 shares ofcommon 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 itsstockholders. The holders of common stock have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisionsapplicable 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 onapplicable laws and the Company’s financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directorsmay 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 theCompany’s 2013 Credit Agreement. No dividends were paid in 2017, 2016 or 2015.Preferred Stock — The Company’s Amended and Restated Certificate of Incorporation provides for the issuance of up to 7,000,000 shares of preferred stockthat 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 theCompany’s Board of Directors, including, without limitation, voting rights, dividend rights, conversion rights, redemption privileges and liquidationpreferences.Series D Participating Convertible Preferred Stock — In 2011, the Company issued 173,189 shares of D Stock to Goldman Sachs. Each share of D Stock hasa liquidation preference of $0.01 and is convertible into 125 shares of common stock by a stockholder other than Goldman Sachs which receives such sharesby means of (i) a widespread public distribution, (ii) a transfer to an underwriter for the purpose of conducting a widespread public distribution, (iii) a transferin which no transferee (or group of associated transferees) would receive 2% or more of any class of voting securities of the Company, or (iv) a transfer to atransferee that would control more than 50% of the voting securities of the Company without any transfer from such transferor or its affiliates as applicable(each of (i) — (iv), a “Widely Dispersed Offering”). The D Stock is non-voting while held by Goldman Sachs or any holder which receives such shares by anymeans other than a Widely Dispersed Offering (a “non-voting holder”). Holders of D Stock other than Goldman Sachs and non-voting holders vote as a singleclass with the holders of the common stock on an as-converted basis. The D Stock also participates in any dividends declared on the common stock on an as-converted basis.Treasury Stock — The Board of Directors has authorized the repurchase of a total of 12,000,000 shares. As of December 31, 2017, the Company hasrepurchased 9,842,509 shares of common stock under this authorization and has remaining authorization to repurchase up to 2,157,491 shares.The following table is a summary of the Company’s authorized, issued and outstanding stock as of December 31: D Stock Common Stock TreasuryStock(Shares in thousands)Authorized Issued Outstanding Authorized Issued Outstanding January 1, 2015200 71 71 162,500 58,824 53,090 (5,734)Stock repurchase— — — — — (49) (49)Release for restricted stock units— — — — — 171 171December 31, 2015200 71 71 162,500 58,824 53,212 (5,612)Stock repurchase— — — — — (1,565) (1,565)Release for restricted stock units— — — — — 1,118 1,118December 31, 2016200 71 71 162,500 58,824 52,765 (6,059)Release for restricted stock units and stock optionsexercised — — — — — 1,474 1,474December 31, 2017200 71 71 162,500 58,824 54,239 (4,585)Participation Agreement between the Investors and Wal-Mart Stores, Inc. — THL and Goldman Sachs (collectively, the "Investors") have a ParticipationAgreement with Wal-Mart Stores, Inc. (“Walmart”), under which the Investors are obligated to pay Walmart certain percentages of any accumulated cashpayments received by the Investors in excess of the Investors’ original investment in the Company. While the Company is not a party to, and has noobligations to Walmart or additional obligations to the Investors under, the Participation Agreement, the Company must recognize the ParticipationAgreement in its consolidated financial statements as the Company indirectly benefits from the agreement. Any future payments by the Investors to Walmartmay result in an expense that could be material to the Company’s financial position or results of operations, but would have no impact on the Company’scash flows. As liquidity events are dependent on many external factors and uncertainties, the Company does not consider a liquidity event to be probable atthis time for any Investors, and has not recognized any further liability or expense related to the Participation Agreement. F-30Table of ContentsAccumulated Other Comprehensive Loss — The following table details the components of “Accumulated other comprehensive loss” as of December 31:(Amounts in millions)2017 2016Net unrealized gains on securities classified as available-for-sale, net of tax$2.2 $10.8Cumulative foreign currency translation adjustments, net of tax(10.4) (19.9)Pension and Postretirement Benefits adjustments, net of tax(54.8) (47.0)Accumulated other comprehensive loss$(63.0) $(56.1) The following table is a summary of the changes to "Accumulated other comprehensive loss" by component during 2017, 2016 and 2015:(Amounts in millions)Net unrealized gains onsecurities classified asavailable-for-sale, net of tax Cumulative foreign currencytranslation adjustments, netof tax Pension and PostretirementBenefits adjustments, net oftax TotalJanuary 1, 2015$11.2 $(5.4) $(75.4) $(69.6)Other comprehensive income (loss)before amortization1.3 (8.1) 12.5 5.7Amounts reclassified from accumulatedother comprehensive loss(1.4) — 14.5 13.1Net current period other comprehensive(loss) income(0.1) (8.1) 27.0 18.8January 1, 201611.1 (13.5) (48.4) (50.8)Other comprehensive loss beforeamortization— (6.4) (2.1) (8.5)Amounts reclassified from accumulatedother comprehensive loss(0.3) — 3.5 3.2Net current period other comprehensive(loss) income(0.3) (6.4) 1.4 (5.3)December 31, 201610.8 (19.9) (47.0) (56.1)Other comprehensive income (loss)before reclassification3.6 9.5 (10.6) 2.5Amounts reclassified from accumulatedother comprehensive loss(12.2) — 2.8 (9.4)Net current period other comprehensive(loss) income(8.6) 9.5 (7.8) (6.9)December 31, 2017$2.2 $(10.4) $(54.8) $(63.0)F-31Table of ContentsThe following table is a summary of the significant amounts reclassified out of each component of "Accumulated other comprehensive loss" during the yearsended December 31:(Amounts in millions)2017 2016 2015Statement of Operations LocationChange in net unrealized gains on securities classified asavailable-for-sale, before tax$(12.2) $(0.4) $(1.4)"Investment revenue"Tax expense (benefit)— 0.1 — Total, net of tax$(12.2) $(0.3) $(1.4) Pension and Postretirement Benefits adjustments: Amortization of prior service credit$(0.3) $(0.5) $(0.6)"Compensation and benefits"Amortization of net actuarial loss4.7 6.0 8.9"Compensation and benefits"Settlement charge— — 14.7"Compensation and benefits"Total before tax4.4 5.5 23.0 Tax benefit, net(1.6) (2.0) (8.5) Total, net of tax$2.8 $3.5 $14.5 Total reclassified for the period, net of tax$(9.4) $3.2 $13.1 Note 11 — Stock-Based CompensationThe MoneyGram International, Inc. 2005 Omnibus Incentive Plan (“2005 Plan”) provides for the granting of equity-based compensation awards, includingstock options, stock appreciation rights, restricted stock units and restricted stock awards (collectively, “share-based awards”) to officers, employees anddirectors. In May 2015, the Company's stockholders approved an amendment and restatement of the 2005 Plan increasing the aggregate number of shares thatmay be issued from 12,925,000 to 15,425,000 shares. As of December 31, 2017, the Company has remaining authorization to issue future grants of up to3,050,592 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 theCompany’s financial statements. Stock-based compensation is recognized only for those options and restricted stock units expected to vest, with forfeituresestimated at the date of grant and evaluated and adjusted periodically to reflect the Company’s historical experience and future expectations. Any change inthe forfeiture assumption will be accounted for as a change in estimate, with the cumulative effect of the change on periods previously reported beingreflected in the financial statements of the period in which the change is made.The following table is a summary of the Company's stock-based compensation expense for the years ended December 31:(Amounts in millions)2017 2016 2015Expense recognized related to stock options$0.5 $2.8 $4.6Expense recognized related to restricted stock units14.0 15.1 15.0Stock-based compensation expense$14.5 $17.9 $19.6Stock Options —Option awards are granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Alloutstanding stock options contain certain forfeiture and non-compete provisions.There were no options granted in 2017, 2016 or 2015. All options granted in 2014, 2013 and 2012 have a term of 10 years. Prior to the fourth quarter of 2011,options issued were either time based, vesting over a four-year period, or performance based, vesting over a five-year period. All options issued after thefourth 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 theremaining options granted in 2014 vesting over a three-year period, in an equal number of shares each year.F-32Table of ContentsThe following table is a summary of the Company’s stock option activity for the year ended December 31, 2017: Shares Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm AggregateIntrinsicValue($000,000)Options outstanding at December 31, 20162,485,461 $18.02 4.0 years $—Exercised(112,297) 14.44 Forfeited/Expired(353,314) 20.85 Options outstanding at December 31, 20172,019,850 $17.72 2.8 years $0.6Vested or expected to vest at December 31, 20172,019,844 $17.72 2.8 years $0.6Options exercisable at December 31, 20172,015,249 $17.72 2.8 years $0.6The following table is a summary of the Company's stock option compensation information during the years ended December 31:(Amounts in millions)2017 2016 2015Intrinsic value of options exercised$0.3 $— $—Cash received from option exercises$1.6 $— $—As of December 31, 2017, the Company had no unrecognized stock option expense related to outstanding options.Restricted Stock Units — In February 2017, the Company issued time-based and performance-based restricted stock units. The time-based restricted stockunits vest in three equal installments on each anniversary of the grant date. The performance-based restricted stock units are subject to performanceconditions that must be satisfied. If such performance conditions are satisfied at the conclusion of a one-year performance period, the performance-basedrestricted stock units will vest in three equal installments on each anniversary of the grant date. With respect to the performance-based restricted stock units,up to 50% of such awards become eligible to vest over such three year period if a target level of Adjusted EBITDA is achieved for the year endedDecember 31, 2017. Adjusted EBITDA is EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonusamortization) adjusted for certain significant items. The other 50% of the performance-based restricted stock units become eligible to vest over such threeyear period if a target level of revenue is achieved for the year ended December 31, 2017. The performance-based restricted stock units have a threshold levelof performance for each of the target levels. Achievement of the threshold level will result in vesting of 50% of the target levels discussed above. The numberof performance-based restricted stock units that will vest for performance achievement between the threshold and target will be determined based on astraight-line interpolation. No performance-based restricted stock units will vest for performance achievement below the thresholds.During 2016, the Company issued time-based and performance-based restricted stock units. The time-based restricted stock units vest in three equalinstallments on each anniversary of the grant date. The performance-based restricted stock units are subject to performance conditions that must be satisfied.If such performance conditions are satisfied at the conclusion of a one-year performance period, the performance-based restricted stock units will vest in threeequal installments on each anniversary of the grant date. With respect to the performance-based restricted stock units, up to 50% of such awards becomeeligible to vest over such three year period if a target level of Adjusted EBITDA is achieved for the year ended December 31, 2016. Adjusted EBITDA isEBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization) adjusted for certain significant items.The other 50% of the performance-based restricted stock units become eligible to vest over such three year period if a target level of Digital revenue isachieved for the year ended December 31, 2016. The performance-based restricted stock units have a threshold level of performance for each of the targetlevels. Achievement of the threshold level will result in vesting of 50% of the target levels discussed above. The number of performance-based restrictedstock units that will vest for performance achievement between the threshold and target will be determined based on a straight-line interpolation. Noperformance-based restricted stock units will vest for performance achievement below the thresholds.During 2015, the Company issued performance-based restricted stock units, which are subject to a one-year performance period, based on annual AdjustedEBITDA and Digital revenue for the fiscal year 2015. Under the terms of the restricted stock units agreement granted in 2015, the number of restricted stockunits that will vest is determined based on the extent to which the performance goals are achieved. Under the terms of the grant, 50% of the restricted stockunits granted will vest for threshold performance and 100% of the restricted stock units granted will vest for the achievement of the annual Adjusted EBITDAand Digital revenue at target. Upon achievement of the performance goal, each award vests ratably over a three-year period from the grant date. The numberof restricted stock units that will vest for performance achievement between the performance threshold and target will be determined based on a straight-lineinterpolation. No restricted stock units will vest for performance achievement below the threshold.F-33Table of ContentsFor purposes of determining the fair value of restricted stock units and performance-based restricted stock units, the fair value is calculated based on the stockprice 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. As of December 31, 2017, the Companybelieves it is probable that it will achieve the performance goals between the threshold and target levels for the 2017 restricted stock units. For grants toemployees, expense is recognized in the “Compensation and benefits” line and expense for grants to Directors is recorded in the “Transaction and operationssupport” 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 for the year ended December 31, 2017: TotalShares WeightedAveragePrice Weighted-AverageRemainingContractual Term AggregateIntrinsic Value($000,000)Restricted stock units outstanding at December 31, 20164,630,038 $7.68 0.9 years $54.7Granted1,361,986 12.87 Vested and converted to shares(2,040,682) 7.61 Forfeited(684,430) 12.98 Restricted stock units outstanding at December 31, 20173,266,912 $8.78 0.7 years $43.1Restricted stock units vested and outstanding at December 31, 201732,680 $6.12 $0.4The following table is a summary of the Company's restricted stock and restricted stock unit compensation information for the years ended December 31:(Amounts in millions)2017 2016 2015Fair value of restricted stock units vested during the year$15.5 $15.9 $6.3As of December 31, 2017, the Company’s outstanding restricted stock units had unrecognized compensation expense of $13.7 million with a remainingweighted-average vesting period of 1.2 years. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presentedusing the Company’s current estimate of achievement of performance goals.Note 12 — Income TaxesThe following table is a summary of the components of income (loss) before income taxes for the years ended December 31:(Amounts in millions)2017 2016 2015U.S.$(64.1) $28.7 $(46.5)Foreign27.5 13.8 16.1(Loss) income before income taxes$(36.6) $42.5 $(30.4)F-34Table of ContentsForeign income consists of income and losses from the Company’s international subsidiaries. Most of the Company’s wholly-owned subsidiaries recognizerevenue based solely on services agreements with the primary U.S. operating subsidiary. The following table is a summary of the income tax expense for theyears ended December 31:(Amounts in millions)2017 2016 2015Current: Federal$(14.7) $5.2 $17.7State1.6 1.8 (0.5)Foreign11.2 12.3 5.0Current income tax expense(1.9) 19.3 22.2Deferred: Federal(4.5) 4.0 21.3State0.1 1.3 (0.8)Foreign(0.5) 2.0 4.6Deferred income tax (benefit) expense(4.9) 7.3 25.1Income tax (benefit) expense$(6.8) $26.6 $47.3As of December 31, 2017, the Company had a tax payable of $35.4 million recorded in “Accounts payable and other liabilities” and a tax receivable of $25.7million recorded in the “Other assets” on the Consolidated Balance Sheets. As of December 31, 2016, the Company had a tax payable of $27.7 millionrecorded in “Accounts payable and other liabilities” and a tax receivable of $4.7 million recorded in the "Other assets" on the Consolidated Balance Sheets.The following table is a reconciliation of the expected federal income tax (benefit) expense at statutory rates to the actual income tax expense for the yearsended in December 31: (Amounts in millions)2017 2016 2015Income tax expense (benefit) at statutory federal income tax rate$(12.8) $14.9 $(10.7)Tax effect of: State income tax, net of federal income tax effect0.2 0.6 (0.6)Valuation allowance(3.8) (0.8) (1.0)International taxes(3.0) (1.4) 1.1Net permanent difference30.2 0.6 1.2Change in tax reserve1.9 9.1 (8.8)Stock-based compensation(1.5) 3.8 3.4Estimated impact from the TCJA(22.8) — —Deferred charge amortization4.0 — —Effect of U.S. Tax Court decision— — 64.4Other0.8 (0.2) (1.7)Income tax (benefit) expense$(6.8) $26.6 $47.3In 2017, the Company recognized a tax benefit of $6.8 million on pre-tax loss of $36.6 million, primarily due to recently enacted tax legislation commonlyreferred to as the Tax Cuts and Jobs Act (the "TCJA") as discussed in more detail below and an accrual related to the five-year deferred prosecution agreement(the "DPA") as further discussed in Note 13 — Commitments and Contingencies.In 2016, the Company recognized a tax expense of $26.6 million on pre-tax income of $42.5 million, primarily due to a tax settlement reached with theInternal Revenue Service ("IRS") on the matter discussed below and the reversal of tax benefits on share-based compensation. In 2015, the Company recognized a tax expense of $47.3 million on pre-tax loss of $30.4 million, primarily resulting from the decision of the U.S. Tax Courtduring the first quarter of 2015 related to the IRS matter discussed in more detail below.On December 22, 2017, the President of the United States signed into law the TCJA. The TCJA, among other things, contains significant changes to U.S.corporate tax laws, including a permanent reduction of the corporate income tax rate, a limitation on the deductibility of business interest expense, limitationof the deduction for certain net operating losses to 80% of current year taxable income, an indefinite net operating loss carryforward, immediate deductionsfor new investments in certain business assets instead of deductions for depreciation expense over time, modification or repeal of many business deductionsand credits (includingF-35Table of Contentscertain foreign tax credits), a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a modified territorial system(retaining certain existing rules and containing new rules designed to include in the U.S. income tax base certain income generated in non-U.S. territorieswhether or not that income has been repatriated to the U.S.), a minimum taxing system related to payments deemed to erode the U.S. tax base, and a one-timetax on accumulated offshore earnings held in cash and illiquid assets (with the latter taxed at a lower rate). We continue to examine the impact the TCJA mayhave on the Company, which could adversely affect our business, financial condition and results of operations.Although the Company does not consider its earnings in its foreign entities to be permanently reinvested, the deferred tax liability associated with theunremitted earnings of its foreign entities was revised under the TCJA by a one-time deemed mandatory repatriation of post-1986 undistributed foreignsubsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company made a reasonable estimate for the one-time deemedmandatory repatriation and has recorded a provisional expense related its foreign E&P. The Company had an estimated $101.6 million of undistributedforeign E&P subject to the deemed mandatory repatriation. After the utilization of foreign tax credits related to undistributed foreign subsidiary E&P andother existing foreign tax credits, the Company expects a net zero liability associated with the deemed mandatory repatriation. As of December 31, 2016, aU.S. deferred tax liability of $5.2 million was recognized for the unremitted earnings of its foreign entities. However, the Company was able to makereasonable estimates of certain effects and, therefore, has recorded provisional amounts as follows:•As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the TCJA, the Company revalued its ending net deferredtax liabilities at December 31, 2017 and recognized a provisional $19.8 million tax benefit in the Company’s consolidated statement of income forthe year ended December 31, 2017.•The Company recognized a provisional net $3.0 million tax benefit for the remeasurement of previously recorded deferred tax assets and liabilitiesprimarily associated with historical earnings in its foreign subsidiaries.•Subsequent to the enactment of the TCJA, the Company must make an accounting policy election to account for the tax effects of global intangiblelow-tax income either as a component of income tax expense in the period the tax arises, or as a component of deferred taxes on the relatedinvestments in foreign subsidiaries. The Company is currently evaluating these provisions of the TCJA and the related implications and has notfinalized its accounting policy election. The Company will finalize its accounting policy election in 2018.The following table is a summary of the Company’s deferred tax assets and liabilities as of December 31: (Amounts in millions)2017 2016Deferred tax assets: Basis difference in revalued investments$61.6 $101.6Tax loss carryovers22.3 34.3Tax credit carryovers18.0 39.2Postretirement benefits and other employee benefits17.1 34.0Bad debt and other reserves1.4 4.2Other13.2 8.8Valuation allowance(75.9) (124.2)Total deferred tax assets57.7 97.9Deferred tax liability: Depreciation and amortization and other(62.7) (100.8)Total deferred tax liability(62.7) (100.8)Net deferred tax liability$(5.0) $(2.9)As of December 31, 2017, net deferred tax asset positions of $8.1 million were included in “Other assets” and net deferred tax liability positions of $13.1million were included in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. As of December 31, 2016, net deferred tax assetpositions of $4.4 million were reflected in "Other assets" and net deferred tax liability positions of $7.3 million were included in "Accounts payable and otherliabilities" in the Consolidated Balance Sheets. The valuation allowance as of December 31, 2017 and December 31, 2016 relates primarily to basisdifferences in revalued investments, capital loss carryovers and, to a smaller extent, certain foreign tax loss carryovers.F-36Table of ContentsThe following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected) and credit carry-forwards as ofDecember 31, 2017: (Amounts in millions)ExpirationDate AmountU.S. capital loss carry-forwards2018 - 2022 $44.2U.S. net operating loss carry-forwards2022 - 2037 $13.8U.S. tax credit carry-forwards2024 - 2037 $18.0U.S. federal minimum tax credit carry-forwardsIndefinite $17.8The IRS completed its examination of the Company’s consolidated income tax returns for the tax years 2011 through 2013 and issued a Revenue AgentReport (“RAR”) in the first quarter of 2015 that included disallowing $100.0 million of deductions related to payments the Company made to the U.S.Department of Justice ("U.S. DOJ") pursuant to the Deferred Prosecution Agreement. In April 2016, the Company entered into a settlement agreement with theIRS allowing a deduction of $39.3 million. As of December 31, 2016, the Company had fully settled this matter with $21.2 million of existing deferred taxassets and $0.5 million of cash after recognizing an additional $7.7 million of Income tax expense for the year ended December 31, 2016. The state taxliabilities related to the federal settlement have yet to be settled due to the pending implications of the security losses under litigation.Unrecognized tax benefits are recorded in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. The following table is areconciliation of unrecognized tax benefits for the years ended December 31:(Amounts in millions)2017 2016 2015Beginning balance$24.2 $30.5 $31.7Additions based on tax positions related to prior years0.3 11.2 8.3Additions based on tax positions related to current year3.4 4.6 0.2Settlements with cash or attributes— (21.4) —Foreign currency translation0.8 — —Reductions for tax positions of prior years and other— (0.7) (9.7)Ending balance$28.7 $24.2 $30.5As of December 31, 2017, 2016 and 2015, the liability for unrecognized tax benefits was $28.7 million, $24.2 million and $30.5 million, respectively,exclusive of interest and penalties. For 2017 and 2016, the net amount of unrecognized tax benefits that if recognized could impact the effective tax rate was$17.3 million and $16.7 million, respectively. For 2015, all of the unrecognized tax benefits could impact the effective tax rate if recognized. The increasesin 2017 were related to a foreign tax position consistent with 2016. The Company accrues interest and penalties for unrecognized tax benefits through“Income tax expense” in the Consolidated Statements of Operations. The Company recorded $2.5 million, $2.4 million and $1.9 million in interest andpenalties in its Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and2016, the Company had a total of $8.9 million and $6.4 million, respectively, accrued for interest and penalties within "Accounts payable and otherliabilities." As a result of the Company's litigation related to its securities losses previously discussed, it is possible that there could be a significant decreaseto the total amount of unrecognized tax benefits over the next 12 months. However, as of December 31, 2017, it is not possible to reasonably estimate theexpected change to the total amount of unrecognized tax positions over the next 12 months.Note 13 — Commitments and ContingenciesLeases — The Company has various non-cancelable operating leases for buildings, equipment and vehicles and other leases that terminate through 2026.Certain of these leases contain rent holidays and rent escalation clauses based on pre-determined annual rate increases. The Company recognizes rentexpense under the straight-line method over the term of the lease. Any difference between the straight-line rent amounts and amounts payable under theleases are recorded as deferred rent in “Accounts payable and other liabilities” in the Consolidated Balance Sheets. Cash or lease incentives received undercertain leases are recorded as deferred rent when the incentive is received and amortized as a reduction to rent over the term of the lease using the straight-linemethod. Incentives received relating to tenant improvements are recognized as a reduction of rent expense under the straight-line method over the term of thelease. Tenant improvements are capitalized as leasehold improvements and depreciated over the shorter of the remaining term of the lease or 10 years. Thedeferred rent relating to these incentives was an asset of $0.2 million as of December 31, 2017 and 2016.F-37Table of ContentsThe following table is a summary of rent expense under our leases for the years ended December 31:(Amounts in millions)2017 2016 2015Rent expense$16.6 $16.4 $17.8Sublease agreements(0.3) — (1.0)Rent expense under leases$16.3 $16.4 $16.8The following table is a summary of the future minimum rental payments for all non-cancelable leases with an initial term of more than one year atDecember 31, 2017:(Amounts in millions)Future Minimum LeasePayments2018$16.3201914.7202012.8202110.220226.3Thereafter4.7Total$65.0Letters of Credit — At December 31, 2017, the Company had no outstanding letters of credit. These letters of credit would reduce the amount available underthe Revolving Credit Facility.Minimum Commission Guarantees — In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commissionguarantees for a specified period of time at a contractually specified amount. Under the guarantees, the Company will pay to the agent the difference betweenthe contractually specified minimum commission and the actual commissions earned by the agent. Expenses related to the guarantee are recognized in the“Fee and other commissions expense” line in the Consolidated Statements of Operations.As of December 31, 2017, the liability for minimum commission guarantees was $1.2 million and the maximum amount that could be paid under theminimum commission guarantees was $2.1 million over a weighted-average remaining term of 0.6 years. The maximum payment is calculated as thecontractually guaranteed minimum commission multiplied by the remaining term of the contract and, therefore, assumes that the agent generates no moneytransfer transactions during the remainder of its contract. However, under the terms of certain agent contracts, the Company may terminate the contract if theprojected or actual volume of transactions falls beneath a contractually specified amount. The Company made no payments on minimum commissionguarantees in 2017 and paid $2.4 million or 80% of the estimated maximum payment in 2016.Other Commitments — The Company has agreements with certain co-investors to provide funds related to investments in limited partnership interests. As ofDecember 31, 2017, the total amount of unfunded commitments related to these agreements was $0.3 million.Legal Proceedings — The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these mattersas any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigationmatters. In relation to various legal matters, including those described below, the Company had $0.5 million and $1.2 million of liability recorded in the“Accounts payable and other liabilities” line in the Consolidated Balance Sheets as of December 31, 2017 and 2016, respectively. A charge of $0.9 millionand $2.4 million were recorded in the “Transaction and operations support” line in the Consolidated Statements of Operations during 2017 and 2015,respectively, for legal proceedings. A credit of $0.6 million was recorded in the "Transaction and operations support" line in the Consolidated Statements ofOperations during 2016 due to the reversal of certain legal settlement accruals.Litigation Commenced Against the Company:The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company's business. Management doesnot believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results ofoperations and cash flows.F-38Table of ContentsGovernment InvestigationsOFAC — In 2015, we initiated an internal investigation to identify any payments processed by the Company that were violations of the U.S. Department ofthe Treasury's Office of Foreign Assets Control ("OFAC") sanctions regulations. We notified OFAC of the internal investigation, which was conducted inconjunction with the Company's outside counsel. On March 28, 2017, we filed a Voluntary Self-Disclosure with OFAC regarding the findings of our internalinvestigation. OFAC is currently reviewing the results of the Company’s investigation. At this time, it is not possible to determine the outcome of this matter,or the significance, if any, to our business, financial condition, or operations, and we cannot predict when OFAC will conclude their review of our VoluntarySelf-Disclosure.Deferred Prosecution Agreement — In November 2012, we announced that a settlement was reached with the U.S. Attorney's Office for the Middle District ofPennsylvania (the "MDPA") and the U.S. Department of Justice ("U.S. DOJ") relating to the previously disclosed investigation of transactions involvingcertain of our U.S. and Canadian agents, as well as fraud complaint data and the consumer anti-fraud program, during the period from 2003 to early 2009. Inconnection with this settlement, we entered into a DPA with the MDPA and U.S. DOJ dated November 8, 2012. On November 1, 2017, the Company agreed to a stipulation with the MDPA and the DOJ (collectively, the “Government”) that the term of the Company’sDPA be extended for 90 days to February 6, 2018. On January 31, 2018, the Company agreed with the Government that the term of the DPA be extended foran additional 45 days to March 23, 2018. The purpose of the extension is to provide the Company and the Government additional time to discuss whetherthe Company is in compliance with the DPA. There can be no assurance that the Company and the Government will continue to be able to negotiate amutually satisfactory outcome during such 45 day period (or any further short-term extension of the DPA) or that such outcome will not include a furtherextension of the DPA, financial penalties or additional restrictions on the Company, including a monitorship period beyond the current monitorship thatends on April 30, 2018. Furthermore, there can be no assurance that the Government will not seek any other remedy, including criminal prosecution andfinancial penalties, in lieu of an extension of the DPA and monitorship.The Company has recorded an $85.0 million accrual in connection with a possible resolution of this matter, based on the facts and circumstances known atthe time. However, the Company is unable to reasonably estimate the ultimate loss and no assurance can be given that future costs and payments made inconnection with this matter will not exceed the amount currently recorded or that the government will not also seek to impose non-monetary remedies orpenalties.Other Matters — The Company is involved in various other government inquiries and other matters that arise from time to time. Management does notbelieve that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results ofoperations and cash flows.Actions Commenced by the Company:Tax Litigation — The IRS completed its examination of the Company’s consolidated income tax returns through 2013 and issued Notices of Deficiency for2005-2007 and 2009, and an Examination Report for 2008. The Notices of Deficiency and Examination Report disallow, among other items, approximately$900.0 million of ordinary deductions on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filedpetitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively. In 2013, the Company reached a partial settlementwith the IRS allowing ordinary loss treatment on $186.9 million of deductions in dispute. In January 2015, the U.S. Tax Court granted the IRS's motion forsummary judgment upholding the remaining adjustments in the Notices of Deficiency. The Company filed a notice of appeal with the U.S. Tax Court on July27, 2015 for an appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, and on November15, 2016, the Fifth Circuit vacated the Tax Court's decision and remanded the case to the Tax Court for further proceedings. The Company filed a motion forsummary judgment in the Tax Court on May 31, 2017. On August 23, 2017, the IRS filed a motion for summary judgment and its response to the Company’smotion for summary judgment.The January 2015 Tax Court decision was a change in facts which warranted reassessment of the Company's uncertain tax position. Although the Companybelieves that it has substantive tax law arguments in favor of its position and has appealed the ruling, the reassessment resulted in the Company determiningthat it is no longer more likely than not that its existing position will be sustained. Accordingly, the Company re-characterized certain deductions relating tosecurities losses to be capital in nature, rather than ordinary. The Company recorded a full valuation allowance against these losses in the quarter endedMarch 31, 2015. This change increased "Income tax expense" in the Consolidated Statements of Operations in the quarter ended March 31, 2015 by $63.7million. During 2015, the Company made payments to the IRS of $61.0 million for federal tax payments and associated interest related to the matter. TheNovember 2016 Fifth Circuit decision to remand the case back to the U.S. Tax Court does not change the Company’s current assessment regarding thelikelihood that these deductions will be sustained. Accordingly, no change in the valuation allowance was made as of December 31, 2017. Pending theoutcome of the Tax Court proceeding, the Company may be required to file amended state returns and make additional cash payments of up to $18.7 millionon amounts that have previously been accrued.F-39Table of ContentsNote 14 — Segment InformationThe Company’s reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. TheCompany has two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global moneytransfer services in more than 200 countries and territories. The Global Funds Transfer segment also provides bill payment services to consumers throughsubstantially all of our money transfer agent and Company-operated locations in the U.S., Canada and Puerto Rico, at certain agent locations in selectCaribbean and European countries and through Digital solutions. The Financial Paper Products segment provides money orders to consumers through retailand financial institutions located in the U.S. and Puerto Rico, and provides official check services to financial institutions in the U.S. Walmart is our onlyagent, for both the Global Funds Transfer segment and the Financial Paper Products segment, that accounts for more than 10% of total revenue. In 2017, 2016and 2015, Walmart accounted for 17%, 18% and 19% of total revenue, respectively.The Company's Chief Operating Decision Maker reviews segment operating income and segment operating margin to assess segment performance andallocate resources. Segment accounting policies are the same as those described in Note 2 — Summary of Significant Accounting Policies. Investmentrevenue is allocated to each segment based on the average investable balances generated by that segment’s sale of payment instruments during the period.All operating expenses that have not been classified in the above segments are reported as "Other." These unallocated expenses in 2017 include $10.8million of legal expenses, Pension and Postretirement Benefits net periodic benefit expense of $5.9 million, outsourcing, independent contractor andconsultant costs of $4.5 million, depreciation and amortization expense of $1.1 million and other net corporate costs of $5.7 million. Unallocated expensesin 2016 include $2.6 million of legal expenses, severance and related costs of $4.7 million, Pension and Postretirement Benefits net periodic benefit expenseof $7.2 million and other net corporate costs of $12.0 million. Unallocated expenses in 2015 include $5.2 million of legal expenses, Pension andPostretirement Benefits net periodic benefit expense of $27.0 million and other net corporate costs of $2.5 million.The following table is a summary of the total revenue by segment for the years ended December 31:(Amounts in millions)2017 2016 2015Global Funds Transfer revenue Money transfer revenue$1,421.8 $1,456.2 $1,367.1Bill payment revenue86.3 97.5 98.7Total Global Funds Transfer revenue1,508.1 1,553.7 1,465.8Financial Paper Products revenue Money order revenue55.0 50.8 51.0Official check revenue39.0 24.8 22.3Total Financial Paper Products revenue94.0 75.6 73.3Other revenue— 1.1 —Total revenue$1,602.1 $1,630.4 $1,539.1The following table is a summary of the operating income by segment and detail of the (loss) income before income taxes for the years ended December 31: (Amounts in millions)2017 2016 2015Global Funds Transfer operating income$4.9 $95.8 $31.7Financial Paper Products operating income31.8 18.5 17.9Total segment operating income36.7 114.3 49.6Other operating loss(28.0) (26.5) (34.7)Total operating income8.7 87.8 14.9Interest expense45.3 45.0 45.3Debt extinguishment costs— 0.3 —(Loss) income before income taxes$(36.6) $42.5 $(30.4)F-40Table of ContentsThe following table is a summary of depreciation and amortization expense by segment for the years ended December 31:(Amounts in millions)2017 2016 2015Global Funds Transfer$66.5 $71.8 $60.4Financial Paper Products7.5 7.4 5.5Other1.1 0.7 0.2Total depreciation and amortization$75.1 $79.9 $66.1The following table is a summary of capital expenditures by segment for the years ended December 31:(Amounts in millions)2017 2016 2015Global Funds Transfer$76.4 $68.2 $70.1Financial Paper Products8.5 10.9 30.3Total capital expenditures$84.9 $79.1 $100.4Total assets by segment - Settlement assets, as defined in Note 2 - Summary of Significant Accounting Policies, are allocated based on the correspondingpayment service obligations that are specifically identified to each reporting segment. Property and equipment is specifically identified to both reportingsegments with the exception of certain software, most of which is jointly used and allocated to each segment. There is an immaterial amount of software usedfor corporate purposes. The net carrying value of goodwill and intangibles all relates to the Global Funds Transfer segment as further summarized in Note 7 -Goodwill and Intangible Assets. While the derivatives portfolio is also managed on a consolidated level, each derivative instrument is utilized in a mannerthat can be identified to the Global Funds Transfer segment. All assets that are not specifically identified or allocated to each reporting segment are reportedas "Other.” These assets primarily include reported cash and cash equivalents, which are the assets in excess of payment service obligations as furtherdiscussed in Note 8 - Debt, and various other corporate assets. The following table sets forth assets by segment as of December 31:(Amounts in millions)2017 2016Global Funds Transfer$2,333.4 $2,213.9Financial Paper Products2,229.4 2,198.3Other209.7 185.2Total assets$4,772.5 $4,597.4Revenue by geographic area — International revenues are defined as revenues generated from money transfer and bill payment transactions originating in acountry other than the U.S. There are no individual countries, other than the U.S., that exceed 10% of total revenues for the years ended December 31, 2017,2016 and 2015. The following table details total revenue by major geographic area for the years ended December 31:(Amounts in millions)2017 2016 2015U.S.$854.0 $865.8 $829.7International748.1 764.6 709.4Total revenue$1,602.1 $1,630.4 $1,539.1Note 15 — Immaterial Error Correction2017 Immaterial Error CorrectionSubsequent to the issuance of the Company’s 2016 financial statements, the Company’s management determined that there was an immaterial error withrespect to the Pension Plan. Specifically, the error related to the calculation of the Company’s prior years' pension obligation. Accordingly, the prior periodamounts within the consolidated financial statements and corresponding footnotes have been revised to reflect the correct balances. The adjustment has noimpact to "Total liabilities and stockholders' deficit" on the Consolidated Balance Sheets as of December 31, 2016 and “Net cash provided by operatingactivities” on the Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015.F-41Table of ContentsThe effects of the correction on the consolidated financial statements for the years ended December 31, 2016 and 2015 are as follows: December 31, 2016 (Amounts in millions, except per share data) As PreviouslyReported Correction As Corrected CONSOLIDATED BALANCE SHEET Pension and other postretirement benefits $87.6 $11.4 $99.0 Accounts payable and other liabilities 168.7 (4.2) 164.5 Total liabilities $4,805.8 $7.2 $4,813.0 December 31, 2016 December 31, 2015CONSOLIDATED STATEMENTS OFSTOCKHOLDERS’ DEFICIT As PreviouslyReported Correction As Corrected As PreviouslyReported Correction As CorrectedRetained loss $(1,247.6) $(5.0) $(1,252.6) $(1,226.8) $(4.6) $(1,231.4)Accumulated other comprehensive loss (53.9) (2.2) (56.1) (48.7) (2.1) (50.8)Total stockholders’ deficit $(208.4) $(7.2) $(215.6) $(222.8) $(6.7) $(229.5) CONSOLIDATED STATEMENTS OFOPERATIONS Compensation and benefits $295.1 $0.6 $295.7 $309.1 $1.3 $310.4Total operating expenses 1,542.0 0.6 1,542.6 1,522.9 1.3 1,524.2Operating income 88.4 (0.6) 87.8 16.2 (1.3) 14.9Income tax expense 26.8 (0.2) 26.6 47.8 (0.5) 47.3Net income (loss) $16.3 $(0.4) $15.9 $(76.9) $(0.8) $(77.7) EARNINGS (LOSS) PER COMMON SHARE Basic $0.26 $— $0.26 $(1.24) $(0.01) $(1.25)Diluted $0.25 $(0.01) $0.24 $(1.24) $(0.01) $(1.25) CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME (LOSS) Net change in pension liability due toamortization of prior service credit and netactuarial loss, net of tax $3.4 $0.1 $3.5 $5.0 $0.2 $5.2Valuation adjustment for pension andpostretirement benefits, net of tax (1.9) (0.2) (2.1) 12.7 (0.2) 12.5Pension settlement charge, net of tax — — — 8.9 0.4 9.3Other comprehensive (loss) income $(5.2) $(0.1) $(5.3) $18.4 $0.4 $18.8 CONSOLIDATED STATEMENTS OF CASHFLOWS Non-cash compensation and pension expense $24.5 $0.6 $25.1 $45.3 $1.3 $46.6Provision for deferred income taxes $7.5 $(0.2) $7.3 $25.6 $(0.5) $25.12016 Immaterial Error CorrectionPrior to the issuance of the Company’s 2016 financial statements, the Company's management determined that there was an immaterial error in the historicalpresentation of the foreign exchange revenue on a net basis. As a result, in 2016, fee and other revenue and Fee and other commissions expense for the yearsended 2015 and 2014 were restated from the amounts previously reported to correct the presentation of foreign exchange revenue from a net presentation to agross presentation in our Consolidated Statements of Operations. The correction was an increase in previously reported Fee and other revenue and Fee andother commissions expense. This correction had no impact on our Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income (Loss),Consolidated Statements of Cash Flows or Consolidated Statements of Stockholders' Deficit. ForF-42Table of Contentsthe effects of the correction on the Company’s financial statements, refer to the Consolidated Financial Statements and Notes in the Company's AnnualReport on Form 10-K for the year ended December 31, 2016.Note 16 — Quarterly Financial Data (Unaudited)The following tables are the summation of quarterly (loss) earnings per common share and may not equate to the calculation for the full year as quarterlycalculations are performed on a discrete basis. The quarterly financial information for 2016 has been immaterially restated, where applicable. See Note 15 —Immaterial Error Correction for more information on the restatement.2017 Fiscal Quarters:(Amounts in millions, except per share data)First Second Third Fourth(1)Total revenue$386.1 $410.0 $397.8 $408.2Total operating expenses364.0 390.2 374.5 464.7Operating income22.1 19.8 23.3 (56.5)Total other expenses, net10.8 11.2 11.6 11.7Income (loss) before income taxes$11.3 $8.6 $11.7 $(68.2)Net income (loss)$8.8 $6.2 $7.7 $(52.5)Earnings (loss) per common share Basic$0.14 $0.10 $0.12 $(0.83)Diluted$0.13 $0.09 $0.12 $(0.83)(1) In the fourth quarter of 2017, total operating expenses was impacted by an $85.0 million accrual related to the DPA.2016 Fiscal Quarters:(Amounts inmillions, exceptper share data)First Second Third Fourth As PreviouslyReported Correction As Corrected As PreviouslyReported Correction AsCorrected As PreviouslyReported Correction AsCorrected As PreviouslyReported Correction AsCorrectedTotal revenue$387.1 $— $387.1 $414.3 $— $414.3 $412.8 $— $412.8 $416.2 $— $416.2Total operatingexpenses364.0 0.1 364.1 398.1 0.2 398.3 386.6 0.1 386.7 393.3 0.2 393.5Operatingincome(loss)23.1 (0.1) 23.0 16.2 (0.2) 16.0 26.2 (0.1) 26.1 22.9 (0.2) 22.7Total otherexpenses, net11.3 — 11.3 11.2 — 11.2 11.3 — 11.3 11.5 — 11.5(Loss)incomebeforeincometaxes$11.8 $(0.1) $11.7 $5.0 $(0.2) $4.8 $14.9 $(0.1) $14.8 $11.4 $(0.2) $11.2Net (loss)income$(4.2) $(0.1) $(4.3) $3.1 $(0.1) $3.0 $10.2 $(0.1) $10.1 $7.2 $(0.1) $7.1(Loss) earningsper commonshare Basic$(0.07) $— $(0.07) $0.05 $— $0.05 $0.16 $— $0.16 $0.12 $(0.01) $0.11Diluted$(0.07) $— $(0.07) $0.05 $— $0.05 $0.15 $— $0.15 $0.11 $— $0.11F-43Table of ContentsNote 17 — Condensed Consolidating Financial StatementsIn the event the Company offers debt securities pursuant to an effective registration statement on Form S-3, these debt securities may be guaranteed by certainof its subsidiaries. Accordingly, the Company is providing condensed consolidating financial information in accordance with Securities and ExchangeCommission Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. If theCompany issues debt securities, the following 100 percent directly or indirectly owned subsidiaries could fully and unconditionally guarantee the debtsecurities on a joint and several basis: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; and MoneyGram of New YorkLLC (collectively, the “Guarantors”).The following information represents Condensed Consolidating Balance Sheets as of December 31, 2017 and 2016, along with Condensed ConsolidatingStatements of Operations and Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015. The condensed consolidating financialinformation presents financial information in separate columns for MoneyGram International, Inc. on a Parent-only basis carrying its investment insubsidiaries under the equity method; Guarantors on a combined basis, carrying investments in subsidiaries that are not expected to guarantee the debt(collectively, the “Non-Guarantors”) under the equity method; Non-Guarantors on a combined basis; and eliminating entries. The eliminating entriesprimarily reflect intercompany transactions, such as accounts receivable and payable, fee revenue and commissions expense and the elimination of equityinvestments and income in subsidiaries.F-44Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING BALANCE SHEETFOR THE YEAR ENDED DECEMBER 31, 2017(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedASSETS Cash and cash equivalents$1.7 $9.6 $178.7 $— $190.0Settlement assets— 3,491.4 265.5 — 3,756.9Property and equipment, net— 199.1 15.8 — 214.9Goodwill— 315.4 126.8 — 442.2Other assets49.5 110.3 200.9 (192.2) 168.5Equity investments in subsidiaries813.8 132.4 — (946.2) —Intercompany receivables— 546.9 — (546.9) —Total assets$865.0 $4,805.1 $787.7 $(1,685.3) $4,772.5LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Payment service obligations$— $3,491.4 $265.5 $— $3,756.9Debt, net908.1 — — — 908.1Pension and other postretirement benefits— 97.3 — — 97.3Accounts payable and other liabilities— 402.6 50.9 (198.0) 255.5Intercompany liabilities208.0 — 338.9 (546.9) —Total liabilities1,116.1 3,991.3 655.3 (744.9) 5,017.8Total stockholders’ (deficit) equity(251.1) 813.8 132.4 (940.4) (245.3)Total liabilities and stockholders’ (deficit) equity$865.0 $4,805.1 $787.7 $(1,685.3) $4,772.5F-45Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOMEFOR THE YEAR ENDED DECEMBER 31, 2017(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedREVENUE Fee and other revenue$— $1,293.3 $700.6 $(433.0) $1,560.9Investment revenue— 40.2 1.0 — 41.2Total revenue— 1,333.5 701.6 (433.0) 1,602.1EXPENSES Fee and other commissions expense— 556.6 454.6 (247.7) 763.5Investment commissions expense— 8.7 — — 8.7Total commissions expense— 565.3 454.6 (247.7) 772.2Compensation and benefits— 178.4 99.3 — 277.7Transaction and operations support1.7 494.8 88.2 (182.4) 402.3Occupancy, equipment and supplies— 50.0 16.1 — 66.1Depreciation and amortization— 66.6 28.6 (20.1) 75.1Total operating expenses1.7 1,355.1 686.8 (450.2) 1,593.4OPERATING (LOSS) INCOME(1.7) (21.6) 14.8 17.2 8.7Other expenses Interest expense45.3 — — — 45.3Other— (11.4) — 11.4 —Total other expenses45.3 (11.4) — 11.4 45.3(Loss) income before income taxes(47.0) (10.2) 14.8 5.8 (36.6)Income tax (benefit) expense(16.3) 5.5 4.0 — (6.8)(Loss) income after income taxes(30.7) (15.7) 10.8 5.8 (29.8)Equity income in subsidiaries(4.9) 10.8 — (5.9) —NET INCOME(35.6) (4.9) 10.8 (0.1) (29.8)TOTAL OTHER COMPREHENSIVE (LOSS) INCOME(6.7) (6.9) 24.7 (18.0) (6.9)COMPREHENSIVE (LOSS) INCOME$(42.3) $(11.8) $35.5 $(18.1) $(36.7)F-46Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2017(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedNET CASH (USED IN) PROVIDED BY OPERATINGACTIVITIES$(43.8) $449.3 $(273.0) $— $132.5CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment— (76.7) (6.9) — (83.6)Intercompany investments— (40.0) 356.7 (316.7) —Dividend from subsidiary guarantors52.0 — — (52.0) —Capital contributions to non-guarantors— (33.5) — 33.5 —Net cash provided by (used in) investing activities52.0 (150.2) 349.8 (335.2) (83.6)CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt(9.8) — — — (9.8)Proceeds from exercise of stock options and other1.7 — — — 1.7Dividend to parent— (52.0) — 52.0 —Intercompany financings1.6 (358.3) 40.0 316.7 —Payments to tax authorities for stock-based compensation— (8.0) — — (8.0)Capital contributions from subsidiary guarantors— — 33.5 (33.5) —Net cash (used in) provided by financing activities(6.5) (418.3) 73.5 335.2 (16.1)NET CHANGE IN CASH AND CASH EQUIVALENTS1.7 (119.2) 150.3 — 32.8CASH AND CASH EQUIVALENTS—Beginning of year— 128.8 28.4 — 157.2CASH AND CASH EQUIVALENTS—End of year$1.7 $9.6 $178.7 $— $190.0F-47Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING BALANCE SHEETFOR THE YEAR ENDED DECEMBER 31, 2016 (Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedASSETS Cash and cash equivalents$— $128.8 $28.4 $— $157.2Settlement assets— 3,504.7 129.6 — 3,634.3Property and equipment, net— 184.3 16.7 — 201.0Goodwill— 315.3 126.9 — 442.2Other assets36.0 146.0 39.4 (58.7) 162.7Equity investments in subsidiaries879.1 232.3 — (1,111.4) —Intercompany receivables— 155.1 51.3 (206.4) —Total assets$915.1 $4,666.5 $392.3 $(1,376.5) $4,597.4LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Payment service obligations$— $3,525.4 $108.9 $— $3,634.3Debt, net915.2 — — — 915.2Pension and other postretirement benefits— 99.0 — — 99.0Accounts payable and other liabilities1.9 170.2 51.1 (58.7) 164.5Intercompany liabilities206.4 — — (206.4) —Total liabilities1,123.5 3,794.6 160.0 (265.1) 4,813.0Total stockholders’ (deficit) equity(208.4) 871.9 232.3 (1,111.4) (215.6)Total liabilities and stockholders’ (deficit) equity$915.1 $4,666.5 $392.3 $(1,376.5) $4,597.4F-48Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)FOR THE YEAR ENDED DECEMBER 31, 2016 (Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedREVENUE Fee and other revenue$— $1,569.7 $417.9 $(375.2) $1,612.4Investment revenue— 18.0 — — 18.0Total revenue— 1,587.7 417.9 (375.2) 1,630.4EXPENSES Fee and other commissions expense— 770.7 219.7 (197.3) 793.1Investment commissions expense— 2.5 — — 2.5Total commissions expense— 773.2 219.7 (197.3) 795.6Compensation and benefits— 196.6 99.1 — 295.7Transaction and operations support2.0 427.3 58.1 (177.9) 309.5Occupancy, equipment and supplies— 45.7 16.2 — 61.9Depreciation and amortization— 67.4 12.5 — 79.9Total operating expenses2.0 1,510.2 405.6 (375.2) 1,542.6OPERATING (LOSS) INCOME(2.0) 77.5 12.3 — 87.8Other expenses Interest expense45.0 — — — 45.0Debt extinguishment costs0.3 — — — 0.3Total other expenses45.3 — — — 45.3(Loss) income before income taxes(47.3) 77.5 12.3 — 42.5Income tax (benefit) expense(16.5) 46.2 (3.1) — 26.6(Loss) income after income taxes(30.8) 31.3 15.4 — 15.9Equity income in subsidiaries47.1 15.4 — (62.5) —NET INCOME16.3 46.7 15.4 (62.5) 15.9TOTAL OTHER COMPREHENSIVE LOSS(5.3) (5.3) (34.3) 39.6 (5.3)COMPREHENSIVE INCOME (LOSS)$11.0 $41.4 $(18.9) $(22.9) $10.6F-49Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2016(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedNET CASH (USED IN) PROVIDED BY OPERATINGACTIVITIES$(43.4) $142.7 $21.6 $— $120.9CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment— (74.0) (8.8) — (82.8)Intercompany investments— (12.6) (58.7) 71.3 —Dividend from subsidiary guarantors70.7 — — (70.7) —Capital contributions to non-guarantors— (0.1) — 0.1 —Net cash provided by (used in) investing activities70.7 (86.7) (67.5) 0.7 (82.8)CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on debt(30.3) — — — (30.3)Stock repurchases(11.7) — — — (11.7)Dividend to parent— (70.7) — 70.7 —Intercompany financings12.6 58.7 — (71.3) —Contingent consideration payment— (0.7) ——— (0.7)Payments to tax authorities for stock-based compensation— (2.7) — — (2.7)Capital contributions from subsidiary guarantors— — 0.1 (0.1) —Net cash (used in) provided by financing activities(29.4) (15.4) 0.1 (0.7) (45.4)NET CHANGE IN CASH AND CASH EQUIVALENTS(2.1) 40.6 (45.8) — (7.3)CASH AND CASH EQUIVALENTS—Beginning of year2.1 88.2 74.2 — 164.5CASH AND CASH EQUIVALENTS—End of year$— $128.8 $28.4 $— $157.2F-50Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSSFOR THE YEAR ENDED DECEMBER 31, 2015(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedREVENUE Fee and other revenue$— $1,492.1 $419.8 $(384.9) $1,527.0Investment revenue— 12.0 0.1 — 12.1Total revenue— 1,504.1 419.9 (384.9) 1,539.1EXPENSES Fee and other commissions expense— 737.2 225.9 (203.3) 759.8Investment commissions expense— 0.8 — — 0.8Total commissions expense— 738.0 225.9 (203.3) 760.6Compensation and benefits— 213.0 97.4 — 310.4Transaction and operations support1.4 451.3 53.8 (181.7) 324.8Occupancy, equipment and supplies— 54.7 18.1 (10.5) 62.3Depreciation and amortization— 53.5 12.6 — 66.1Total operating expenses1.4 1,510.5 407.8 (395.5) 1,524.2OPERATING (LOSS) INCOME(1.4) (6.4) 12.1 10.6 14.9Other expenses (income) Interest expense45.3 — — — 45.3Other income— — (10.6) 10.6 —Total other expenses (income), net45.3 — (10.6) 10.6 45.3(Loss) income before income taxes(46.7) (6.4) 22.7 — (30.4)Income tax (benefit) expense(16.4) 55.8 7.9 — 47.3(Loss) income after income taxes(30.3) (62.2) 14.8 — (77.7)Equity (loss) income in subsidiaries(46.6) 14.8 — 31.8 —NET (LOSS) INCOME(76.9) (47.4) 14.8 31.8 (77.7)TOTAL OTHER COMPREHENSIVE INCOME (LOSS)18.8 12.2 (20.4) 8.2 18.8COMPREHENSIVE LOSS$(58.1) $(35.2) $(5.6) $40.0 $(58.9)F-51Table of ContentsMONEYGRAM INTERNATIONAL, INC.CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2015(Amounts in millions)Parent SubsidiaryGuarantors Non-Guarantors Eliminations ConsolidatedNET CASH (USED IN) PROVIDED BY OPERATINGACTIVITIES$(65.7) $150.1 $(50.3) $— $34.1CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment— (96.5) (13.4) — (109.9)Proceeds from disposal of assets— 0.4 — — 0.4Intercompany investments28.3 21.0 — (49.3) —Dividend from subsidiary guarantors47.6 — — (47.6) —Capital contributions to non-guarantors— (2.4) — 2.4 —Net cash provided by (used in) by investing activities75.9 (77.5) (13.4) (94.5) (109.5)CASH FLOWS FROM FINANCING ACTIVITIES: Principle payments on debt(9.8) — — — (9.8)Stock repurchases(0.4) — — — (0.4)Intercompany financings— (28.3) (21.0) 49.3 —Dividend to parent— (47.6) — 47.6 —Payments to tax authorities for stock-based compensation— (0.5) — — (0.5)Capital contributions from subsidiary guarantors— — 2.4 (2.4) —Net cash used in financing activities(10.2) (76.4) (18.6) 94.5 (10.7)NET CHANGE IN CASH AND CASH EQUIVALENTS— (3.8) (82.3) — (86.1)CASH AND CASH EQUIVALENTS—Beginning of year2.1 92.0 156.5 — 250.6CASH AND CASH EQUIVALENTS—End of year$2.1 $88.2 $74.2 $— $164.5F-52FORM AMENDED AND RESTATED SEVERANCE AGREEMENTTHIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”), dated as of [_________] (the“Effective Date”), is made by and between MoneyGram International, Inc., a Delaware corporation (together with its parentcompanies, direct and indirect subsidiaries, successors and permitted assigns under this Agreement, the “Company”) and[___________] (“Executive”) and amends the Amended and Restated Severance Agreement, dated [_________], 2018, by andbetween the Company and Executive.WHEREAS, the Company employs Executive as its [______________];WHEREAS, Executive’s employment with the Company is at-will;WHEREAS, the Company and Executive previously entered into a Severance Agreement, which was subsequently amendedand restated (as amended and restated, the “Original Agreement”);WHEREAS, the Company and Executive desire to amend the Original Agreement in certain respects and to accordingly enterinto this Agreement to amend and replace the Original Agreement in its entirety as set forth herein, effective as of the Effective Date;andWHEREAS, the Company desires to provide Executive additional protections in the event of certain terminations within thetwenty-four (24)-month period following the consummation of a Change in Control (as defined below).NOW, THEREFORE, in consideration of the promises and mutual covenants herein and for other good and valuableconsideration, the receipt and sufficiency of which is mutually acknowledged, the parties agree as follows:1.Definitions.a. “Cause” shall mean (A) Executive’s willful refusal to carry out, in all material respects, the reasonable and lawfuldirections of the person or persons to whom the Executive reports or the Board that are within Executive’s control and consistent withExecutive’s status with the Company and his or her duties and responsibilities hereunder (except for a failure that is attributable toExecutive’s illness, injury or Disability) for a period of 10 days following written notice by the Company to Executive of such failure,(B) fraud or material dishonesty in the performance of Executive’s duties hereunder, (C) an act or acts on Executive’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 materialviolation of federal or state securities laws, (D) an indictment of Executive for a felony under the laws of the United States or any statethereof, (E) Executive’s willful misconduct or gross negligence in connection with Executive’s duties which could reasonably beexpected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in goodfaith by the Board, (F) Executive’s material breach of the Company’s Code of Ethics, Always Honest policy or any other code ofconduct in effect from time to time to the extent applicable to Executive, and which breach could reasonably be expected to have amaterial adverse effect on the Company as determined in good faith by the Board, or (G) Executive’s breach of the Employee TradeSecret, Confidential Information and Post-Employment Restriction Agreement which breach has an adverse effect on the Company.b. “Change in Control” shall mean (A) a sale, transfer or other conveyance or disposition, in any single transactionor series of transactions, of all or substantially all of theUS 5164320Company’s assets, (B) 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 Securities Exchange Act of 1934 (the “ExchangeAct”)), or (C) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in eachcase in clauses (B) and (C) above, under circumstances in which the holders of the voting power of the outstanding securities of theCompany, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold lessthan 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, and, for the avoidance of doubt, a sale or other transfer or series of transfers of all or any portion of thesecurities of the Company held by the investors and their affiliates and related parties shall not constitute a Change in Control unlesssuch sale or transfer or series of transfers results in an entity or group (as defined in the Exchange Act) other than the investors andtheir affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.c. “Disability” shall exist if Executive becomes physically or mentally incapacitated and is therefore unable for aperiod of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period toperform Executive’s duties. Any question as to the existence of the Disability of Executive as to which Executive and the Companycannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company.If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those twophysicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to theCompany and Executive shall be final and conclusive for all purposes of this Agreement.d. “Good Reason” shall mean (A) a material reduction in the Participant’s position or responsibilities, excluding forthis purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction in the Participant’s basesalary or target bonus opportunity, if any, except in connection with an across-the-board reduction of not more than 10% applicable tosimilarly situated employees of the Company, or (C) the reassignment, without the Participant’s consent, of the Participant’s place ofwork to a location more than 50 miles from the Participant’s place of work on the Effective Date; provided that none of the eventsdescribed in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Participant shall have given written noticeto the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following theoccurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’sreceipt of such notice.2. At-Will Employment. Executive’s employment is at-will and may be terminated by either Executive or Company at anytime and for any reason.3. Termination by the Company without Cause. If at any time on or after the first anniversary of the date Executive first becamean employee of the Company Executive’s employment is terminated by the Company without Cause (other than by reason of death orDisability), Executive shall be entitled to receive the following payments, each of which shall at all2times be made so as to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended:a. Salary Severance. A sum equal to Executive’s then current monthly base salary multiplied by twelve, which,subject to Section 6 hereof, shall be payable in equal monthly installments on the last day of each month over the twelve month periodfollowing the date of termination of employment and in accordance with the Company’s normal payroll practices in effect as of thedate of Executive’s termination of employment; andb. Bonus Severance. Provided that the Company actually achieves the performance goals for the applicableperformance period necessary for participants in the Company’s Performance Bonus Plan or any successor plan (the “Bonus Plan”) toreceive cash bonuses pursuant to the Bonus Plan with respect to such performance period and that such cash bonuses are actually paid,a sum equal to a pro rata portion (based on the period between the beginning of the applicable performance period and the date oftermination of Executive’s employment) of Executive’s cash bonus (up to Executive’s cash bonus at target level) under the Bonus Planpayable for the year in which the termination of employment occurs, which, subject to Section 6 hereof, shall be paid in a lump sumpayable when such cash bonus under the Bonus Plan is regularly paid to other Bonus Plan participants for such year, and whichamount shall in no event exceed a pro rata portion of Executive’s annual target incentive opportunity for such year under the BonusPlan.4. Termination without Cause or for Good Reason following a Change in Control. Notwithstanding anything to the contraryherein, if, within the 24-month period commencing on and immediately following the consummation of a Change in Control,Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or by Executive forGood Reason, Executive shall be entitled to receive the following payments, each of which shall at all times be made so as to satisfythe requirements of Section 409A of the Internal Revenue Code of 1986, as amended:a. Salary Severance. A sum equal to Executive’s then current monthly base salary multiplied by twelve, which,subject to Section 6 hereof, shall be payable in equal monthly installments on the last day of each month over the twelve month periodfollowing the date of termination of employment and in accordance with the Company’s normal payroll practices in effect as of thedate of Executive’s termination of employment;b. Bonus Severance. Provided that the Company actually achieves the performance goals for the applicableperformance period necessary for participants in the Bonus Plan to receive cash bonuses pursuant to the Bonus Plan with respect tosuch performance period and that such cash bonuses are actually paid, a sum equal to a pro rata portion (based on the period betweenthe beginning of the applicable performance period and the date of termination of Executive’s employment) of Executive’s cash bonus(up to Executive’s cash bonus at target level) under the Bonus Plan payable for the year in which the termination of employmentoccurs, which, subject to Section 6 hereof, shall be paid in a lump sum payable when such cash bonus under the Bonus Plan isregularly paid to other Bonus Plan participants for such year, and which amount shall in no event exceed a pro rata portion ofExecutive’s annual target incentive opportunity for such year under the Bonus Plan;c. Incentive Awards. Each restricted stock unit award and long-term performance-based cash award (including anyreplacement or continuation awards or awards into3which any such awards are converted into upon or otherwise in connection with the Change in Control) held by Executive on the dateof termination shall become immediately vested in full on the date of termination (at 100% of the applicable target level, in the case ofany award then subject to performance-based vesting criteria if termination occurs on or prior to the last day of the performanceperiod). 5. Miscellaneous.a. Acknowledgement. Executive acknowledges and agrees that Executive shall not be entitled to any payment orother benefit pursuant to this Agreement in the event Company terminates Executive’s employment for Cause or, other than asprovided in Section 4 hereof, in the event Executive resigns his or her employment for any reason or in the event of Executive’s deathor Disability. For the avoidance of doubt, in the event Executive’s employment is terminated under the circumstances described inSection 4, Executive shall be entitled to receive the greater of the payments and benefits provided under Section 4 or under Section 3(but shall not be entitled to receive payments and benefits under both provisions).b. Release. Executive acknowledges and agrees that as a condition precedent to receiving any payments pursuant tothis Amended and Restated Severance Agreement, Executive shall have executed, within twenty-one (21) days, or if required for aneffective release, forty-five (45) days, following Executive’s termination of employment, a waiver and release substantially in the formattached hereto as Exhibit A and the applicable revocation period set forth in such release shall have expired.c. No Duplication. Executive acknowledges and agrees that Executive shall not be entitled to receive any separationpayments under any other Company severance or similar policies.d. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State ofTexas, without regard to conflicts of laws principles thereof, to the extent Texas laws are not preempted by the Employee RetirementIncome Security Act of 1974.e. Severance Pay Plan Statement. Subject to Section 6 hereof, this Agreement shall be administered and interpreted inaccordance with the MoneyGram International, Inc. Severance Pay Plan Statement.f. Entire Agreement/Amendments. This Agreement and the other agreements, plans and documents referenced hereincontain the entire understanding of the parties with respect to the provision of any severance rights, payments or benefits by Companyto Executive. Without limiting the scope of the preceding sentence, this Agreement shall supersede and replace the OriginalAgreement, and the Original Agreement is hereby null and void and of no further force and effect. If any provision of any agreement,plan, program, policy, arrangement or other written document between or relating to the Company and Executive conflicts with anyprovision of this Agreement, the provision of this Agreement shall control and prevail. This Agreement may not be altered, modified,or amended except by written instrument signed by the parties hereto.g. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasionshall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to thatterm or any other term of this Agreement.4h. Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid,illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall notbe affected thereby.i. Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination ofExecutive’s employment to the extent necessary to preserve such rights and obligations.j. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees.k. Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreementshall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it hasbeen mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forthbelow in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith,except that notice of change of address shall be effective only upon receipt.If to the Company:MoneyGram International, Inc.2828 N. Harwood, 15th FloorDallas, Texas 75201Attention: Chairman of the Human Resources and Nominating Committee of the BoardIf to Executive:To the most recent address of Executive set forth in the personnel records of the Company.l. Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such federal,state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.m. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the sameeffect as if the signatures thereto and hereto were upon the same instrument.6. Code Section 409A.a. The parties agree that this Agreement shall be interpreted to comply with or be exempt from Section 409A of theInternal Revenue Code of 1986 and the regulations and guidance promulgated thereunder to the extent applicable (collectively “CodeSection 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoidingtaxes or penalties under Code Section 409A. In no event whatsoever will the Company be liable for any additional tax, interest orpenalties that may be imposed on Executive under Code Section 409A or any damages for failing to comply with Code Section 409A.b. A termination of employment shall not be deemed to have occurred for purposes of any provision of thisAgreement providing for the payment of any amounts or benefits subject to Code Section 409A upon or following a termination ofemployment unless such5termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision ofthis Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” IfExecutive is deemed on the date of termination to be a “specified employee” within the meaning of that term under CodeSection 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is otherwise considered deferredcompensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made orprovided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separationfrom service” of Executive, and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, allpayments and benefits delayed pursuant to this Section 6(b) shall be paid or reimbursed to Executive in a lump sum, and any remainingpayments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified forthem herein.c. Notwithstanding anything to the contrary contained in this Agreement, all reimbursements for costs and expensesunder this Agreement shall be paid in no event later than the end of the calendar year following the calendar year in which Executiveincurs such expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits,except as permitted by Code Section 409A, (i) all such expenses or reimbursements shall be made in any event on or prior to the lastday of the taxable year following the taxable year in which such expenses were incurred by Executive, (ii) the right to reimbursementor in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible forreimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kindbenefits to be provided in any other taxable year, provided, however, that the foregoing clause (iii) shall not be violated with regard toexpenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limitrelated to the period the arrangement is in effect.d. For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to thisAgreement shall be treated as a right to receive a series of separate and distinct payments.[SIGNATURE PAGE FOLLOWS]6IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.MONEYGRAM INTERNATIONAL, INC.By: ____________________________Title: ____________________________EXECUTIVESignature: ________________________[SIGNATURE PAGE TO THE AMENDED AND RESTATED SEVERANCE AGREEMENTBETWEEN THE ABOVE-REFERENCED PARTIES]7Exhibit ARELEASE This RELEASE (“Release”) is dated as of __________between MoneyGram International, Inc., a Delaware corporation(together with its parent companies, direct and indirect subsidiaries, successors and assigns, the “Company”), and[_____________________] (“Executive”).WHEREAS, the Company and Executive previously entered into the Amended and Restated Severance Agreement dated[________], 20[__] (the “Severance Agreement”); andWHEREAS, Executive’s employment with the Company (has been) (will be) terminated effective [_____________]; andWHEREAS, pursuant to the Severance Agreement, Executive is entitled to certain compensation and benefits upon suchtermination, contingent upon the execution of this Release;NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the SeveranceAgreement, to which Executive understands and acknowledges he or she may not otherwise be entitled without executing this Release,the Company and Executive agree as follows:1. Executive, on his or her own behalf and on behalf of his or her heirs, estate and beneficiaries, hereby releases and foreverdischarges the Company, its parent companies, predecessors, successors, affiliates, subsidiaries, related companies, shareholders, andtheir respective members, managers, partners, employees, officers, agents, and directors (individually a “Released Party” andcollectively the “Released Parties”) from the following: a.All claims arising out of or relating to Executive’s employment with the Company and/or Executive’s separation fromthat employment. b.All claims arising out of or relating to the statements, actions, or omissions of the Released Parties. c.All claims for any alleged unlawful discrimination, harassment, retaliation or reprisal, or other alleged unlawfulpractices arising under any federal, state, or local statute, ordinance, or regulation, including without limitation, claimsunder Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, asamended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993; theEqual Pay Act of 1963; the Worker Adjustment and Retraining Notification Act; the Employee Retirement IncomeSecurity Act of 1974; the Fair Credit Reporting Act; the Minnesota Human Rights Act, any other federal, state or localanti-discrimination acts, state wage payment statutes and non-interference or non-retaliation statutes.8 d.All claims for alleged wrongful discharge; breach of contract; breach of implied contract; failure to keep any promise;breach of a covenant of good faith and fair dealing; breach of fiduciary duty; promissory estoppel; Executive’s activities, if any, as a “whistleblower”; defamation;infliction of emotional distress; fraud; misrepresentation; negligence; harassment; retaliation or reprisal; constructivedischarge; assault; battery; false imprisonment; invasion of privacy; interference with contractual or businessrelationships; any other wrongful employment practices; and violation of any other principle of common law. e.All claims for compensation of any kind, including without limitation, commission payments, bonus payments,vacation pay, expense reimbursements, reimbursement for health and welfare benefits, and perquisites. f.All claims for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for allegedpersonal injury, liquidated damages, and punitive damages. g.All claims for attorneys’ fees, costs, and interest.2. The Company acknowledges and agrees that Executive does not release any claims that the law does not allow to bewaived by private agreement.3. Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by himor her to exist may subsequently be discovered, it is his or her intention to fully settle and release all claims he or she may have againstthe Company and the persons and entities described above, whether known, unknown or suspected.4. Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse tore-employ Executive, in each case without liability of Executive or the Company.5. Executive reaffirms his or her agreement to the Employee Trade Secret, Confidential Information and Post-EmploymentRestriction Agreement to which Executive is a party.6. Executive acknowledges that he or she has been provided at least twenty-one (21) days to review the Release and has beenadvised to review it with an attorney of his or her choice and at his or her own expense. In the event Executive elects to sign thisRelease Agreement prior to this twenty-one (21) day period, he or she agrees that it is a knowing and voluntary waiver of his or herright to wait the full twenty-one (21) days. Executive further understands that he or she has fifteen (15) days after the signing hereof torevoke it by so notifying the Company in writing, such notice to be received by [_______________] within the fifteen (15) dayperiod. Executive further acknowledges that he or she has carefully read this Release, knows and understands its contents and itsbinding legal effect. Executive acknowledges that by signing this Release, he or she does so of his or her own free will and act and thatit is his or her intention that he or she be legally bound by its terms. Executive acknowledges that in deciding whether to sign thisRelease, he or she has not relied upon any statements made by the Company or its agents. Executive further acknowledges that he orshe has not relied on any legal, tax or accounting advice from the Company or its agents in deciding whether to sign this Release.97. This Release shall be construed and enforced in accordance with, and governed by, the laws of the State of Minnesota,without regard to principles of conflict of laws. If any clause of this Release should ever be determined to be unenforceable, it is agreedthat this will not affect the enforceability of any other clause or the remainder of this Release.10IN WITNESS WHEREOF, the parties have executed this Release on the date first above written. MONEYGRAM INTERNATIONAL, INC. By: ____________________________Name: ____________________________Title: ____________________________ 11Exhibit 10.76MoneyGram International, Inc. Non-Employee Director Compensation ArrangementsRevised to be effective as of January 1, 2017The following compensation program is available to non-employee directors of MoneyGram International, Inc.1 Retainers and Fees for Non-Employee Directors2 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 equalinstallments on the first business day following March 31, June 30, September 30, December 31 (each a “Payable Date”).The Chair of the Audit committee shall receive an additional $20,000 in cash per year of Chairmanship; payment will be made in arrears in four equalinstallments on each Payable Date.The Chair of the Human Resources and Nominating committee shall receive an additional $20,000 in cash per year of Chairmanship; payment will be madein arrears in four equal installments on each Payable Date.The Chair of the Compliance and Ethics committee shall receive an additional $20,000 in cash per year of Chairmanship; payment will be made in arrears infour 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.Non-employee directors are also reimbursed for their expenses for each Board or committee meeting attended. To the extent that any taxable reimbursementsare provided, they shall be made or provided in accordance with Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder.3 Equity Awards for Non-Employee Directors (effective as of the 2017 annual meeting)Under the MoneyGram International, Inc. 2005 Omnibus Incentive Plan, as amended, each non-employee director, at the annual meeting in May, shallreceive a restricted stock unit (“RSU”) covering shares of common stock the fair market value of which shall be equal to $125,000, as determined by the pershare 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. RSUsawarded under this program shall be payable in shares.4 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 Boardmembership prior to the completion of the one year vesting period, then such director’s RSU shall be forfeited in whole. Notwithstanding the foregoing, adirector’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 thestandard Restricted Stock Unit Award Agreement approved for use under the MoneyGram International, Inc. 2005 Omnibus Incentive Plan) so long as thedirector remains on the Board through the date immediately prior to the change in control; or (ii) the director ceases Board membership due to death ordisability.5 Proration of Retainer and Equity AwardsWith 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.Amendment or TerminationThe Board may amend, alter, suspend, discontinue or terminate this program at any time.Active Subsidiaries of MoneyGram International, Inc. as of December 31, 2017 EntityJurisdiction1MoneyGram International, Inc.Delaware, USA2MoneyGram Payment Systems Worldwide, Inc.Delaware, USA3MoneyGram Payment Systems, Inc.Delaware, USA4Ferrum TrustDelaware, USA5MoneyGram International Payment Systems, Inc.Delaware, USA6MoneyGram Payment Systems Canada, Inc.British Columbia, Canada7Travelers Express Company (P.R.), Inc.Puerto Rico8MoneyGram Mexico S.A. de C.V.Mexico9MoneyGram of New York LLCDelaware10MoneyGram International Holdings LimitedUnited Kingdom11MoneyGram International LimitedUnited Kingdom12MIL Overseas LimitedUnited Kingdom13MoneyGram Payment Systems Spain S.A.Spain14MoneyGram Payment Systems Italy S.r.l.Italy15MoneyGram Payment Systems Belgium N.V.Belgium16MoneyGram Payment Systems Netherlands B.V.Netherlands17MPS France S.A.France18MoneyGram Overseas (Pty) LimitedSouth Africa19MIL Overseas Nigeria LimitedNigeria20MoneyGram India Private LimitedIndia21MoneyGram International Pte. Ltd.Singapore22Money Globe Payment Institution S.A.Greece23MoneyGram Payment Systems Brasil LTDABrazil24MoneyGram Payment Systems Greece S.A.Greece25MoneyGram Payment Systems Ireland LimitedIreland26MoneyGram Payment Systems Malaysia Sdn. BhdMalaysia27MoneyGram Payment Systems Poland sp. ZooPoland28MoneyGram Payment Systems South Africa Proprietary LimitedSouth Africa29MTI Money Transfer LimitedUnited Kingdom30PT MoneyGram Payment Systems IndonesiaIndonesia31MONEYGRAM TURKEY ÖDEME HÝZMETLERÝ ANONÝM ÞÝRKETÝTurkey32MoneyGram Consulting (Shanghai) Co. Ltd.China33MPSG Holdings LimitedUnited Kingdom34MPSG International LimitedUnited Arab Emirates35MPSG LimitedUnited Kingdom36MoneyGram Payment Services GmbHSwitzerland37MoneyGram International B.V.Netherlands38MoneyGram International SASFrance39MoneyGram International SPRLBelgium40MoneyGram Payment Systems Nevada, LLCDelaware, USA41MoneyGram Payment Systems Hong Kong LimitedHong KongConsent of Independent Registered Public Accounting FirmThe Board of DirectorsMoneyGram International, Inc.:We consent to the incorporation by reference in the registration statements No. 333‑204934, No. 333‑190257, No. 333‑176567, No. 333-159709,No. 333‑125122, and No. 333‑116976 on Form S-8 of MoneyGram International, Inc. of our reports dated March 16, 2018, with respect to the consolidatedbalance sheets of MoneyGram International, Inc. and subsidiaries (the Company) as of December 31, 2017 and 2016, and the related consolidated statementsof operations, comprehensive income (loss), cash flows, and stockholders’ deficit for the years ended December 31, 2017 and 2016, and the related notes(collectively, the consolidated financial statements), and the effectiveness of internal control over financial reporting as of December 31, 2017, which reportsappear in the December 31, 2017 annual report on Form 10‑K of the Company./s/ KPMG LLPDallas, TexasMarch 16, 2018CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement No. 333-176567, No. 333-159709, No. 333-125122, No. 333-116976, No. 333-190257 and No. 333-204934 on Form S-8 of our reports dated March 2, 2016 (March 16, 2017 as to the effects of the 2016 immaterial error correction relatedto foreign exchange revenue disclosed in Note 15 to the consolidated financial statements; March 16, 2018 as to the effects of the 2017 immaterial errorcorrection related to the pension plan disclosed in Note 15 to the consolidated financial statements and the adoption of ASU 2016-09, Compensation-StockCompensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, discussed in Note 2 to the consolidated financial statements)relating to the consolidated financial statements of MoneyGram International, Inc. and subsidiaries appearing in this Annual Report on Form 10-K ofMoneyGram International, Inc. for the year ended December 31, 2017./s/ DELOITTE & TOUCHE LLPDallas, TexasMarch 16, 2018Exhibit 24POWER OF ATTORNEYKNOW ALL BY THESE PRESENTS, that each director whose signature appears below constitutes and appoints Francis Aaron Henry and Paul Beck,and each of them severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in hisor 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 endedDecember 31, 2017, and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, withthe Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform eachand 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 inperson, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or her substitutes or substitute, may lawfully do orcause to be done by virtue hereof./s/ J. Coley Clark 3/16/2018J. Coley Clark /s/ Victor W. Dahir 3/16/2018Victor W. Dahir /s/ Antonio O. Garza 3/16/2018Antonio O. Garza /s/ Seth W. Lawry 3/16/2018Seth W. Lawry /s/ Ganesh B. Rao 3/16/2018Ganesh B. Rao /s/ Michael P. Rafferty 3/16/2018Michael P. Rafferty /s/ W. Bruce Turner 3/16/2018W. Bruce Turner /s/ Peggy Vaughan 3/16/2018Peggy Vaughan Exhibit 31.1Certification Pursuant to Section 302 of theSarbanes-Oxley Act of 2002I, 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, 2017;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect tothe period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 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 underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade 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 bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation 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 ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date:March 16, 2018 /s/ W. Alexander Holmes W. Alexander Holmes Chairman and Chief Executive Officer (Principal Executive Officer)Exhibit 31.2Certification Pursuant to Section 302 of theSarbanes-Oxley Act of 2002I, Lawrence Angelilli, certify that:1.I have reviewed this Annual Report on Form 10-K of MoneyGram International, Inc. for the fiscal year ended December 31, 2017;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect tothe period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented inthis report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 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 underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, ismade 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 bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation 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 ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing theequivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date:March 16, 2018 /s/ Lawrence Angelilli Lawrence Angelilli Chief Financial Officer (Principal Financial Officer)Exhibit 32.1Certification Pursuant to 18 U.S.C. §1350,as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report on Form 10-K (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended December 31,2017, as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Chairman and Chief Executive Officer of theCompany, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)or 78o(d)); and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company. Date:March 16, 2018 /s/ W. Alexander Holmes W. Alexander Holmes Chairman and Chief Executive Officer (Principal Executive Officer)Exhibit 32.2Certification Pursuant to 18 U.S.C. §1350,as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report on Form 10-K (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended December 31,2017, as filed with the Securities and Exchange Commission on the date hereof I, Lawrence Angelilli, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)or 78o(d)); and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company. Date:March 16, 2018 /s/ Lawrence Angelilli Lawrence Angelilli Chief Financial Officer (Principal Financial Officer)

Continue reading text version or see original annual report in PDF format above