Eric Dutcher - Pamela H. Patsley - Executive Chairman, Chief Executive Officer, Chairman of Special Committee and Member of Special Sub-Committee W.

Alexander Holmes - Chief Financial Officer, Chief Operating Officer and Executive Vice President

Robert P. Napoli - William Blair & Company L.L.C., Research Division Sara Gubins - BofA Merrill Lynch, Research Division Michael J.

Grondahl - Piper Jaffray Companies, Research Division Smittipon Srethapramote - Morgan Stanley, Research Division Tien-tsin Huang - JP Morgan Chase & Co, Research Division Kevin D. McVeigh - Macquarie Research Douglas Greiner - JMP Securities LLC, Research Division John J.

Rowan - Sidoti & Company, Inc.

Thank you, Lisa. Good afternoon, everyone, and welcome to our fourth quarter and full year 2014 earnings call.

With me today are Pam Patsley, Chairman and Chief Executive Officer; and Alex Holmes, Chief Financial Officer and Chief Operating Officer. Our earnings release and accompanying slides are on our website at moneygram.com.

Please note that today's call is being recorded, and some of the information you will hear contains forward-looking statements. Actual results or trends could differ materially from our forecasts or expectations.

For more information, please refer to the risk factors discussed in our Form 10-K for 2013 and our Forms 10-Q filed in 2014. MoneyGram assumes no obligation to update any forward-looking statements.

Our presentation also includes certain non-GAAP financial measures in an effort to provide additional information to investors. All non-GAAP measures have been reconciled to the related GAAP measures in accordance with SEC rules.

You will find reconciliation tables within our earnings release issued this afternoon and in the Form 8-K submitted to the SEC. Now I will turn the call over to Pam.

Great. Thank you.

Good afternoon, everyone. It's clear that our 2014 financial performance was impacted by significant competitive action in the U.S.-to-U.S.

corridor, but this quarter appears to be expanding, and we are positioned well to benefit with our pricing initiative. Our new low prices are repositioning MoneyGram's U.S.-to-U.S.

business, and we're pleased with the results thus far. By working closely with our agents and communicating our compelling message, we are regaining customers and attracting new consumers to MoneyGram.

Our cross-border money transfer business provides a solid foundation for growth, and we saw an acceleration in our non-U.S. business in the fourth quarter.

All that leads to the key point, which is that MoneyGram anticipates returning to double-digit growth in the fourth quarter of 2015. Now this time last year, we announced a 3-year global transformation program to increase MoneyGram's competitiveness and position us for the future.

As a reminder, the program has 3 pillars: Growing self-service channels; two, enhancing compliance platforms; and three, restructuring to reduce our cost base. Over the course of the year, we invested significantly in our suite of innovative products and services, especially in self-service solution.

We are executing well on this strategy as we delivered revenue growth of 35% for the year. Now 9% of our money transfer revenue comes from the self-service channel.

In 2014, we also invested nearly $50 million in our compliance enhancement program. This is over and above our normal day-to-day compliance spend to implement market-leading systems and processes as well as increased agent oversight.

We've made great progress on the implementation of our broad restructuring program with the opening of our global business center in Poland. Over 400 employees are now working in this facility, and we expect to have over 500 employees or 20% of our global workforce in this location later in 2015.

We're very pleased with the quality of leadership and talent we've been able to attract in Warsaw. This large restructuring program will yield long-term benefits for the company, and we now project $20 million of annual pretax savings exiting 2015, which is at the top end of our savings estimate.

Now let's discuss the money transfer business. Total money transfer transactions decreased 2%, while revenue decreased 10% on a reported basis, an 8% on a constant currency basis.

Excluding U.S.-to-U.S. transactions originated at Walmart, money transfer transactions increased 12%, accelerating from the third quarter.

Money transfer revenue grew 2% or 5% on a constant currency basis, also excluding revenue originated from U.S.-to-U.S. at Walmart.

We ended the quarter with 350,000 locations worldwide, which was a net addition of 3,000 locations in the quarter or 4% compared to last year. This growth is the result of managing the network to remove underperforming locations and add locations in markets where we are still underrepresented such as Eastern Europe, Southeast Asia and the Middle East.

In the fourth quarter, we launched a nationwide multichannel marketing campaign to promote our new low prices in the U.S.-to-U.S. market.

The campaign is producing good results throughout our agent network and driving a change in our business mix. Within Walmart, the new pricing has better positioned the MoneyGram product, and we've seen a reduction in the rate of decline in all bands above $50.

We've also seen an increase in principal per transaction. We have worked closely with Walmart to explain the differences in the products to consumers, and collectively, we've improved our ability to communicate the consumer value proposition of the MoneyGram brand and service.

In the fourth quarter, total Walmart revenue represented 19% of total company revenue. Outside Walmart, we also have seen a benefit from our new low pricing.

And the bands where we introduced lower prices, we've seen a return to strong transaction growth, and the average principal sent per transaction has increased. Our U.S.-to-U.S.

business represented 18% of total money transfer transactions and 14% of money transfer revenue in the quarter. Our U.S.

outbound remittance business continued to shine, posting its 13th consecutive quarter of double-digit growth. Transactions grew 14% and revenue grew 13%.

U.S. outbound represented 43% of total money transfer transactions and 36% of money transfer revenue in the fourth quarter.

In the U.S.-to-Mexico corridor, our 14% transaction growth continued to outpace Banco de México's reported remittance data. Our market share gains were driven by our strong retail partners in the U.S.

and our 17,000 payout locations in Mexico. U.S.

outbound sends to Africa also continued to grow, supported by our now more than 25,000 locations across the continent. During the quarter, non-U.S.

transaction growth was 12%, and constant currency revenue growth was 3%, both accelerating sequentially from the third quarter. It's great to see this improvement as non-U.S.

sends now represent 39% of money transfer transactions and 50% of money transfer revenue. The difference between transaction growth and constant currency revenue growth came from corridor mix, lower face value per transaction and geopolitical and economic constraints.

Pricing actions represented about 2 points of the difference in the quarter. The Middle East region had another strong quarter with substantial increases in transactions to Southeast Asia, Africa and within the Middle East.

During the quarter, we signed the largest agent network in Oman, and that's UAE Exchange. Declining commodity prices around the globe has dampened some of the rapid growth we weren't experiencing in a few markets in the Middle East, Russia and Africa.

However, our network expansion in these regions is still yielding transaction growth despite the macroeconomic situation. That said, for 2015, we're keeping a close eye on commodity prices and the impact of the strengthening dollar.

We are optimistic, but macroeconomic volatility can impact cross-border remittances, particularly if unemployment increases. Our agent network in Eastern Europe and Southeast Asia expanded again this quarter.

We signed new agreements with the leading bank in the Ukraine; with Land Bank in the Philippines, a bank with good rural coverage there; and with BDO in Macau. We also renewed agent relationships such as SBI in Japan, BCEL bank in Laos, and Ping An Bank in China.

We saw strong growth from the U.K., Saudi Arabia and Brazil, partially offset by countries still struggling with weak economies like France and Italy and by declines in Angola due to continued currency constraints from the central bank. The accelerating transaction growth in our non-U.S.

sends is a result of solid execution on targeted opportunities, and I was pleased to see non-U.S. sends return to double-digit growth.

Looking now at self-service. We, again, had excellent performance as transactions grew 42% while revenue grew 32%.

11% of our money transfer transactions and 9% of our money transfer revenue came from self-service in the quarter. We're clearly making significant progress on our goal to have 15% to 20% of money transfer revenue from self-service in 2017.

Our MoneyGram Online channel, which represents the largest portion of self-service, posted 23% transaction growth and 17% revenue growth. We once again added about 160,000 new active customers in the quarter and had good volume from repeat customers.

U.S. and Europe outbound were especially strong in the quarter.

We're investing significantly in this platform and look forward to rolling out our upgraded MoneyGram Online service later this year. During the quarter, we launched our new account deposit service to India.

The service allows consumers to transfer funds to all major banks in India in as little as 3 hours. With the addition of India to our account deposit services, consumers can now send money via MoneyGram directly to bank accounts in the 4 largest receive markets in the world: India, China, Mexico and the Philippines.

We also continue to see rapid growth in our account deposit service into the M-Pesa mobile wallet. This service has been especially popular for self-service sends for MoneyGram Online, both in the U.S.

and Europe as well as sends from one of our other mobile wallet partners, Ooredoo, in Qatar. Our kiosk-based solutions had another quarter of rapid growth.

The rollout with CVS has been very successful. We deployed over 1,000 kiosks at CVS locations in 2014, and we've deployed hundreds more already this year.

At the CVS locations where the kiosks are already deployed, we are seeing a nice increase in transactions for both money transfer and bill pay. Also in the quarter, we launched services in Ukraine with Privatbank through ATMs and full-service kiosks.

This bank has over 2,500 locations and 12,500 self-service terminals at which consumers can now send and receive MoneyGram transfers. We're already seeing good growth from this rollout.

I'm excited about our industry-leading kiosk offering. We believe we have the broadest suite of self-service solutions in the market today, enabling MoneyGram consumers to conduct both cash and noncash transactions with new technology that reduces or eliminates teller involvement.

This is a key differentiator for consumers and agents alike. So we provided updates on a couple legal matters in our earnings release.

Last month, the U.S. Tax Court granted the Internal Revenue Services motion for summary judgment in the company's previously disclosed litigation matter disallowing ordinary tax treatment on certain securities losses.

MoneyGram believes that it has substantive tax law arguments in favor of its position that were not considered in the ruling. The company expects to appeal the decision.

The court decision warranted that we reassess our FIN 48 accounting position with respect to this matter. Based on this reassessment, we'll record an estimated $70 million tax expense in the first quarter, and we'll make a cash payment of approximately $60 million in the second half of 2015.

As you may know, we're required to make the payment in order to initiate an appeal. As disclosed in our previous filings, the company received civil investigative demands in 2010 from a group of 9 state attorneys general who initiated an investigation into whether the company took adequate steps to prevent consumer fraud.

No claims have been filed against MoneyGram in connection with this investigation, and MoneyGram has denied any wrongful conduct. We're in active discussions and accrued an $11 million liability in the fourth quarter to resolve this matter.

I'd be remiss if I didn't take this opportunity to speak on behalf of all MoneyGram employees. We are working tirelessly to be the industry leader in compliance, often going above and beyond.

I'm so proud of the leadership MoneyGram has exhibited in consumer education. Through our own initiative, we formed the Scam Awareness Alliance, and in 2014, we garnered 30,000 television public service announcement placements worth $6.5 million.

In addition, we meet with hundreds of government agencies regulators, banks and legislators each year to ensure we're educating them about the industry and working in partnership with them to deliver this critically important service. Hundreds of millions of unbanked consumers around the world rely on MoneyGram and other providers of money transfer as their access to financial services.

With that, I'll turn it over to Alex for a more detailed financial review.

Thanks, Pam. Total revenue for the quarter was $349.6 million.

Money transfer revenue was $305.7 million, a decline of 10% on a reported basis, partially due to the translation impact of a stronger dollar. On a constant currency basis, money transfer revenue declined 8%.

Investment revenue was $2.9 million, down from the prior year due to lower interest rates. For the full year, total revenue was $1.45 billion, and money transfer revenue was $1.27 billion, both of which declined 1% on a reported and constant currency basis.

Investment revenue was $16.5 million. Fourth quarter net income was $10.5 million, yielding earnings per share of $0.17.

Diluted shares outstanding for the quarter were 62.7 million. During the quarter, we used excess cash of $7.6 million to repurchase 872,000 shares, which represents just over 1% of shares outstanding.

For the full year, MoneyGram repurchased over 13% of our shares outstanding. Fourth quarter adjusted EBITDA was $59.2 million, and adjusted EBITDA margin was 16.9%.

Full year adjusted EBITDA was $277.2 million, down 6% on a reported basis and 8% on a constant currency basis as compared to the prior year, primarily due to the decline in the U.S.-to-U.S. corridor.

Full year adjusted EBITDA margin was 19.1%, down only 90 basis points compared to last year despite the decreased revenue. This was a result of solid expense management by our team while still investing in the future of our business through products and services as well as other back-office infrastructure projects.

Total fourth quarter commissioned as a percent of revenue were essentially flat at 45.6%. Total reported noncommissioned operating expense for the quarter increased $25.7 million over the prior year, driven primarily by increased investments in our global transformation program.

On an adjusted basis, total noncommissioned operating expense increased only $600,000, which is phenomenal work by the entire team to reduce discretionary expenses during the fourth quarter. Compensation and benefit costs were $61.4 million in the quarter, a decrease of $5.4 million on a reported basis due to a net reversal of stock-based compensation expense associated with performance-based stock awards, partially offset by increased cost for global transformation activities.

On an adjusted basis, compensation and benefit costs decreased $3.3 million, which was partially helped by lower incentive-based compensation expense as compared to the prior year. In 2015, we anticipate stock-based compensation expense to be approximately $20 million.

Fourth quarter transaction and operations support costs were $101.9 million, which included $10.6 million of expense related to global transformation activities and $1.9 million of direct monitor costs. On an adjusted basis, transaction and operations support costs only increased about $1.3 million, which is especially impressive given that it included an incremental $4.6 million of marketing expense over the prior year related to the launch of our new low U.S.-to-U.S.

pricing. In 2015, we anticipate marketing as a percent of revenue to be approximately 4.5% with some seasonal variations throughout the year.

Book income tax benefit for the quarter was $2 million, largely due to lower pretax income and the tax treatment of the security gains that we recorded in the quarter. Cash taxes were $1.5 million.

As Pam mentioned, we are excited about the tremendous progress we've made on our global transformation program initiatives. In the fourth quarter, we incurred total cash outlays of $12.1 million as part of our compliance enhancement program.

For the full year, we incurred total cash outlays of $49 million. Total estimated cash outlays for the compliance enhancement program remain unchanged at $80 million to $90 million for the 2014 through 2016 time period.

This project remains a top priority for the company, and while it is quite complex, we continue to make steady progress. As we previously announced, we anticipated spending $30 million to $40 million for the reorganization and restructuring program in order to achieve annualized pretax cost savings of $15 million to $20 million, exiting 2015.

We now anticipate cash outlays of $40 million, with estimated annualized pretax cost savings of $20 million both at the top end of our range. For the full year 2014, the company incurred $30.5 million of expense for the reorganization and restructuring program.

We continue to work hard to identify further restructuring opportunities that will allow us to leverage our new Poland facility and decrease our operating cost. We will continue to update you on our progress.

Adjusted free cash flow for the quarter was negative $35.1 million. While the business generated $59.2 million in adjusted EBITDA, much of that cash was utilized for signing bonuses, capital expenditures and investments in the global transformation program.

In the quarter, agent signing bonuses were $61 million, while capital expenditures were $21.1 million. Full year adjusted free cash flow was $50 million.

In addition, we recovered $23 million from security settlements in the quarter and $45.4 million for the full year. While these are not included in our adjusted free cash flow calculation, they certainly enhance our cash position.

In 2015, we anticipate incurring $90 million to $100 million of capital expenditures, inclusive of investments in the global transformation program. We also anticipate signing bonuses of $65 million to $80 million, which will fluctuate based on a variety of opportunities in 2015.

As noted in our press release, we have adopted a new balance sheet presentation which provides greater clarity to investors and aligns us better with industry practices. Assets held to meet payment service obligations are now shown as settlement assets.

Assets in excess of payment service obligations are now shown as cash and cash equivalents. We ended the quarter with cash and cash equivalents of $250.6 million, and outstanding debt principal at the end of the quarter was $964.1 million.

Fourth quarter Global Funds Transfer segment revenue was $330.6 million. Bill payment transactions were up 2% compared to the prior year, with revenue down 2%.

The segment reported operating income of $9 million and an operating margin of 2.7%. On an adjusted basis, operating margin was 7.5% in the quarter, down from the prior year due primarily to lower revenue and the margin impact from the U.S.-to-U.S.

business. In the Financial Paper Product segment, total revenue was $19 million in the fourth quarter.

Operating income was $6.4 million, up from $5.9 million in the fourth quarter of 2013. Operating margin was 33.7%, and adjusted operating margin was 38.9%.

In 2015, we anticipate investment revenue to decline about $5 million as a result of onetime gains in the first quarter of 2014 related to our legacy portfolio. For the full year 2015, the company estimates constant currency revenue to be approximately flat as a result of the impact of the white-label competitive product introduced in the second quarter of 2014 and the company's new low U.S.-to-U.S.

pricing launched in the fourth quarter of 2014. On a reported basis, the strengthening dollar is anticipated to have a 3% negative translation impact on reported results.

For constant currency adjusted EBITDA, the company is estimating a decline of approximately 8% to 12% for the full year 2015, primarily due to the loss of margin attributable to our U.S.-to-U.S. business.

Considering the timing of the introduction of the competitive white-label products and the new low pricing introduced in 2014, we anticipate that our 2015 results for both revenue and adjusted EBITDA will be lower in the first half of the year and improve to double-digit constant currency growth in the fourth quarter. To that end, it's important to keep in mind that we have another 4 months of grow over remaining related to the Walmart white-label product, which we anticipate will impact revenue by about $50 million.

In addition, we estimate that our price cuts implemented in the fourth quarter of 2014 will further impact revenue by about $40 million over the first 10 months of 2015. In the first quarter, we therefore expect that revenue less commissions will see an impact of approximately $20 million related to these items.

That said, we are pleased with the repositioning of our U.S.-to-U.S. business and the improvement that we are seeing.

When you combine that with the continued strength of our U.S. outbound business and the accelerating growth of our non-U.S.

send business, we are excited about returning to double-digit constant currency growth in the fourth quarter. And I'll turn it back to Pam.

Great. Thanks, Alex.

With January now closed, I'm please to share that we had a good month. We're tracking right where we want to be and are seeing several positive indicators, including continued improved results from our new pricing.

It's a good start to the year. The entire MoneyGram team is energized and focused on executing well.

Whether it is in our targeted growth opportunities by geography or channels or products or in our compliance and back-office services or through stewarding our assets to optimize for future growth, we are in an exciting and growing industry and in over 200 countries. Thus, we face a wide variety of issues on a daily basis.

While we are proactively managing these dynamics, we remain focused on increasing our business by advocating for our industry and, most importantly, our millions of consumers around the world who rely on MoneyGram and other formal channels to transfer money and pay bills for life's essentials. By maintaining a consumer-centric framework, we will continue to build the value of MoneyGram.

2015 will be a transitional year for the company as we complete the repositioning of our U.S.-to-U.S. corridor and continue our investments in self-service products, marketing, agent productivity and global consumer acquisition strategies.

The money transfer industry and the need for our services are growing, and we're attracting new consumers to our brand through the addition of physical and virtual outlets. We expect the company to return to double-digit constant currency revenue and EBITDA growth beginning in the fourth quarter.

Thank you, as always, for your interest in MoneyGram. We'll be participating in several investor conferences in March and then again in May.

We look forward to seeing many of you there. I will now turn it over to the operator for question-and-answer.

Two questions. First, I guess, Pam, the target that you laid out there, double-digit revenue and EBITDA growth in the fourth quarter of '15, what gives you the confidence to make that statement?

And would you expect double-digit top line revenue and EBITDA growth then to carry through into 2015?

Yes. Well, there's always changing dynamics, but from where we sit today, Bob, and what we know and the plans, that's what gives us the confidence.

We know what we're executing on. And so from -- that's where that comes from.

As far as continuing in, I mean, that is our goal, to be a double-digit kind of company, but we're not giving 2016 guidance today.

And then just on the pricing front. I mean, have you -- what kind of transaction growth have you seen out of the non-Walmart locations, given the price cut?

And has your decline stopped at Walmart at this point? Or do you still expect to see further declines at Walmart?

Well, it depends on the brands -- or the bands, if you will, excuse me. So I would say, overall, [indiscernible] I can't say that we're seeing a stop of the decline, but I think it's about a change in the rate.

And then outside of Walmart, we have seen really good momentum. And we kind of look at it blended all together.

And we feel very good about the actions we took, about the alignment with our agents and the message to consumers.

The flat revenue on a constant currency basis in 2015, could you talk through what the assumptions are around transactions versus pricing?

Yes, that's a good question, I think. When you think about -- obviously, the largest driver of flat is obviously the declines in revenue that we're looking at from the U.S.-to-U.S.

business and kind of the repositioning of that business. I mean, we laid out kind of the $50 million related to the -- just to the grow over and then, obviously, the $40 million associated with the pricing that we're putting in.

I think for the last question a little bit, we're performing to our intended goal with respect to the price changes, and so we're performing well from that perspective. But growing through that will be -- will obviously have an impact on the growth rate.

When you look at transactions, those will start to come back through in the U.S.-to-U.S. business throughout the year.

I think we've seen that, the improvement, kind of on a week-over-week basis. Last week was a very good week for us.

And when you look at the U.S. outbound business, it will remain -- we imagine it will continue its strong performance.

And then when you look at the non-U.S. business, we saw that slowdown in the third, we saw some reacceleration and that will keep moving forward.

But there'll be some -- certainly, transaction growth will be higher as there's some mix in the revenue. What we saw in the fourth quarter was obviously some impacts from face values on transactions, particularly in places like Europe.

We have some challenges still in some countries like Angola, which are -- have some currency issues going on and along with some commodity prices moving things about. So when you look at that, we'll certainly see some good transaction momentum throughout the year, and the revenue will trail behind that just a bit.

But again, as we look out to the latter half of the year, it looks very strong.

I think, Sara, I might just add specific to the notion of just pricing, excepting U.S.-to-U.S., putting that aside. I think we've given a lot of detail on that, and clearly, there is "pricing."

But in U.S. outbound and non-U.S.

sends, I think we're sticking with our kind of 1 to 2 points of pricing that hits us. We have no significant pricing initiative.

However, mix will continue to change that. And so transactions and revenue, as you grow faster and lower principal, lower RPT countries or whatever, but just pricing per se, outside of U.S.-to-U.S, it's the same as what we've been saying, about 1 to 2.

Great. And then just last, could you talk about how we should think about agent commission expense for 2015?

Yes. I think on a rate basis, it's going to be relatively stable.

It may go up and down a little bit. Part of it will be how the mix comes out with Walmart on some of the U.S.-to-U.S.

business, which could add some fluctuation to the numbers. But certainly, from a reported perspective, you're going to see that increase in amortization of signing bonuses flowing through.

So on a blended rate, it'll look like an increase throughout the year. I think the number, what are we thinking, Eric, that it'll increase about $3 million, $4 million a quarter just from the signing bonus amortization.

Yes. With the agent signing commission, can you talk a little bit about the renewal terms that you get just kind of directionally the pressure on those if that exists?

We have had, really, over the last 15, 18 months a good series of key renewals around the globe with large agents. And so I think you've already seen kind of the impact in terms of commission, and it just hasn't been a huge impact.

We go for kind of longer-term contracts. We say 3 to 7, but they're, for the most part, around 5.

And there just aren't a lot of significant variances in some of the firms.

Okay. Just moving to the buyback a little bit.

Free cash flow was, as you pointed out, negative in the quarter, and it looks like it will be weak in 2015. What's sort of your thinking behind the 900,000 shares?

Is there a governor on that? Or how should we think about that going forward?

Well, we have the authorization on the number of shares. And I think, Mike, the best way to think about it is we're going to continue to be opportunistic and we're going to balance kind of being in the market for share buyback against other opportunities.

I guess, the authorization is really for 3.7 million. So we think it's one way to return money to shareholders.

So it seems like your -- the growth in agent locations has been decelerating over the past -- noticeably, over the past 2 years. You noted that this has been partially due to weeding out nonproductive locations this past year.

But can you give us some sense in terms of how that trend is expected to progress in 2015?

Yes. We have never given guidance on agent locations.

We have very -- we have an active sales force all around the world in mature markets and in new markets looking for the right agents. And I think, Smitty, that's really the key, looking for the right agents, getting agent productivity.

And so we will continue to add to our network. I think the other aspect, and there were a couple places I think it came up in our prepared remarks where we say we're acquiring new consumers, whether that's through physical or virtual outlets.

And when we think about 16-plus million mobile phones that can now really catch a MoneyGram transaction in Kenya or every bank account in the 4 largest receive countries. Those are de facto an outlet.

I'm pretty sure you all don't want us to start counting those. So we're not going to add that into our agent network.

But the business is going to continue to evolve. I am, in no way, diminishing the importance of our physical presence.

And I think you all have heard me say before, I love our position that we start with that strong, robust agent location network across the world. And the ability to then add and move to the virtual world, call it bricks to clicks, I think, is the right way to go.

So -- and again, agent network growth total count will always continue to fluctuate based on different kinds of quote "cleanout efforts" and then large networks that come on all at one fell swoop or in 1 quarter.

Got it. And maybe just following on that line of questioning.

MoneyGram Online growth decelerated in Q4 to 23% from 34% in Q3. Can you talk about the reasons that may have led to the deceleration of the growth?

And again, just maybe you should talk about what you expect to see it in the online business in 2015.

I'll take the latter half first and that is we expect to continue to grow. And particularly, after we've allowed our new solution, we think that growth can accelerate later in 2015.

I would say we had some tougher comps, perhaps, toward the end of this year. I think we kind of looked very critically at certain validation things.

But there's no question the team is -- we're building the team and very, very focused. When we look to other results, I think we all feel very, very good about what we did in 2014 and where we're headed in 2015.

I'll ask Alex. You want to add any more color or specifics?

Well, I think you touched on it, Pam, but just a little more color on some of the back-office activities. I mean, I would say that, arguably, as we look at kind of overhauling that business and reformatting, we're looking at a lot of back-office operations in different ways that we can service customers.

And from time to time, we turn the dials maybe too far one direction or the other. And so we had a little bit of slowdown that I think we caused ourselves as we worked through some operations and some tuning.

But from a market perspective, we feel really good about it. I think you look at the active new customers added in these types of specifics, and the need for the product is there and the growth looks great.

So we're really excited about it and continue to reposition that.

Just, I guess, wanted to clarify first on the EBITDA side. I think you missed the bottom end of the range by $1 million or so.

What were the factors there that drove that?

Yes. I think on the expense side, we did a real nice job.

I think it was primarily related to a little bit lower revenue growth in the non-U.S. markets.

I think in particular, I'd probably call out a country like Angola where we saw a pretty big slowdown. Then we also saw some weaker principal per transaction, so the amount that's impacting a little bit of our FX revenue and some of the fee revenues associated with that.

So other than that, I think we were right where we wanted to be for the quarter.

I would say it's what -- I'll just add, kind of in a big bucket perspective, Tien-tsin, I'd say it's kind of on -- it was definitely on the top line, and it was some of those key pockets that have been talked about so much over the last few days of this industry, Russia being another one, if you will.

Okay. So FX, just to be clear, FX wasn't significant enough as a call-out just from a translation standpoint?

Just the translation of dollar itself, I mean, not enough to drive that number. Certainly, on a reported basis, it impacted translation back.

But on constant currency, it certainly impacted that [ph].

Okay. Yes, I didn't know if there's a disproportionate profit impact.

Okay, fine. And then just on the cash side, what's the U.S.

cash portion of the $250 million? And I guess we'll have to take out $60 million as well, right, from that to adjust for the IRS payout?

Yes. As you know, Tien-tsin, we -- most of our cash is domiciled in the U.S.

Yes, no, it's all repatriated at this point.

Okay, so it's all clear. Okay, good.

And then just lastly, just on the signing bonuses. Is 5% to 6% of revenue kind of a new normal?

Yes. It's a great question.

It certainly was a bit of an uptick. We have -- there's a couple of anomalies in there.

I'm not going to make excuses. But we did end up renewing a relatively large agent for an extended period of time and ended up with, I guess, a relatively higher signing bonus than we had initially anticipated.

But we got a much longer contract, which is exciting. I'd say that outside of that, we have some pretty good opportunities that we're anticipating going after this year and the rest of it.

Yes, I think we're probably ticking up little above the normal, and I think your map is probably pretty close.

And just to be clear on that, Alex, is it mostly -- is it biased towards renewals or more for new agent signings?

Certainly, the large payments have been more renewals than new signings. But I think that the number of little small ones here and there and some opportunistic ones certainly are takeaways or add of non-sellers.

But those are certainly not at the outsized number from a size of signing bonus.

Thanks. And just to follow on, I had previously said kind of 3 to 7 years and 5.

Actually, we have gotten a couple key renewals that really put us in a good position now for 8 years. So it's hard to factor that in, too, just on a year paid basis.

This is actually Kevin. I apologize.

Pam, I wonder if -- if I heard you right, it sounds like there's another $50 million or so runoff from Walmart and then $40 million from price cuts. Does that all occur over the next 4 months?

Or is it $50 million in the next 4 months for Walmart and then the $40 million over the course of 2015?

The latter is correct. And I will even give you a little more precision.

The $40 million is over 10 months, so January through October.

Got it. Got it.

Okay. It's helpful.

And then in terms of does the guidance factor in -- obviously, Western Union talked about maybe some pricing adjustments as well. Does your guidance factor in a tougher pricing environment as a result of that as well?

I mean, if you're referring specifically to U.S.-to-U.S. market, no.

I mean, I think that when we put our model together, obviously, we took a look at where we thought we could perform, how we thought we could recover business within Walmart and grow outside and always, I think, all along figured at some point Western Union was going to have to take their prices down. And so I think any impact there should be factored in.

Okay. And then just any thoughts, Alex, on how you're thinking about free cash flow for '15?

Does $80 million, $85 million sound about right?

Yes, I don't know that we're giving specific guidance on free cash flow. We typically guide to revenue and EBITDA.

Yes. I mean, just from a outside view, I mean, from a lot of perspective, with kind of the exception of where we want to get to in the fourth quarter, I think a lot of 2015 is going to look like 2014 when we have a lot to do on the compliance program, certainly some investments we're still making in all of the activities around self-service and then the large signing bonuses.

So I think when you factor those pieces in, it's definitely going to be tough on cash. We feel good about those investments, we feel good about where we are and we're pushing ahead.

So...

Question. Was the lower face values in the non-U.S.

money transfer business at all broad-based this quarter? Was it just sort of concentrated?

And I think you mentioned Angola.

No. I think you're mixing 2 concepts, really.

The lower face and the non-U.S. send is what we talk about corridor mix, and that impacted the wider delta between transaction growth and revenue growth.

The Angola is -- that did have a higher face, it was shrinking so that helped drive that. But also, we had very strong growth in, say, the Middle East where the average base is also lower.

So it's a little bit the positive where there was growth. The one country that went away all kind of came together to lower face and provide for a wider delta between transaction growth and revenue growth.

Does that help?

Just kind of talking about the price cuts. I mean, U.S.-to-U.S.

transactions are down 37% year-over-year in the third quarter. Now they're down 40%.

I'm just -- from a 10,000-foot view, are you getting the traction that you wanted with the price cuts? And are there any thoughts about moving down to match your competitors' pricings to be maybe stem that tide?

No, I mean, I guess, I'll start off to answer the question by simply saying that as we've -- I think your question is an interesting one. As we've moved into the third quarter, we talked a lot about kind of the declines in October.

And we continue to see some pressure into November as we changed the prices. I mean, it took a little bit of time to get the message out there.

But if I look at the -- particularly look at Walmart and look at kinds of the rates of decline that we were seeing inside of Walmart in our October baseline, pretty much across the board, with the exception of the 0 to 50 band, we have seen nice improvement, pretty much every week since we changed those prices. I think a little bit to that point though, we used -- 50 used -- 0 to 50 used to be a bigger percentage of our business.

And so as we shifted up in the bands a little bit, we've seen an improvement. We talked about on the call -- excuse me, Pam talked about on the call an improvement in face value.

So as we've shifted up a little bit, we may see fewer transactions but then a little more on the revenue side. So I think when you look at the U.S.-to-U.S.

sends, the revenue declined 15% versus 34%, including the price cuts. So I think we're feeling good about that.

When you look outside of Walmart, I think the -- it's interesting. We put the price cuts in, we saw a little more pressure on the business, again, for those first couple of weeks in November and then we saw the business starting to turn around.

So I don't feel like we need to change our prices at all. And I think that the...

I think we have the right price for our brand and for the proposition. And I think Walmart agrees and understands that and likes it, as do the rest of our agents.

There's a lot of seasonality in the money transfer business. Holidays, tax refund payments, all kinds of things drive seasonality.

Particularly, for the U.S.-to-U.S. corridor, this is always kind of a high time of year, which people may not actually understand but driven by a lot of tax refund payments and other things like that.

And in fact, while we've seen continued improvement each and every week, we have the strongest week ever last week since we implemented our new prices in the U.S.-to-U.S. corridor.

Okay. And then just a couple of other items.

When -- in your prepared remarks, you talked about the transaction and operations support costs only being up 1% or something. I just want to make sure I understood that because it was obviously a big jump in that line item.

Then also just lastly, what's an appropriate tax rate to use going forward?

Yes, that's an easy one, 41%. Although I will say that for 2015, we really don't anticipate having any cash taxes for 2015 either.

But I -- we suggest a book tax rate of around 41%. When you look at transaction and ops support costs, we can follow up on you.

My comment was on the -- on an adjusted basis. Clearly, on a reported basis, transaction and ops support cost was up.

It included expense for the Angola transformation program and for some direct monitor costs, but we're happy to kind of take you through the details later.

Yes, and we've laid it out on the slides on the website as well.

Oh yes. Great point, Eric, yes.

Thanks very much, everyone. And I know we're going to be speaking with many of you now or in the morning.

So look forward to it and appreciate your interest as always.