Green Dot 2010 Annual Report Download - page 12

Download and view the complete annual report

Please find page 12 of the 2010 Green Dot annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 107

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107

Retail Distributors. Our prepaid financial services are sold in approximately 55,000 retail store
locations, including those of major national mass merchandisers, national and regional drug store and
convenience store chains, and national and regional supermarket chains. Our retail distributors include:
Type of Distributor Representative Distributors
Mass merchandise retailers . . Walmart, Kmart, Meijer
Drug store retailers . . . . . . . . Walgreens, CVS, Rite-Aid, Duane Reade
Convenience store retailers . . 7-Eleven, The Pantry (Kangaroo Express), Circle K
Supermarket retailers . . . . . . . Kroger
Other . . . . . . . . . . . . . . . . . . . RadioShack
Most of these retailers have been our distributors for several years and all have contracts with us,
subject to termination rights, which expire at various dates from 2011 to 2015. In general, our agreements
with our retail distributors give us the right to provide Green Dot-branded and/or co-branded GPR cards
and reload services in their retail locations and require us to share with them by way of commissions the
revenues generated by sales of these cards and reload services. We and the retail distributor generally
also agree to certain marketing arrangements, such as promotions and advertising. Our operating
revenues derived from products and services sold at the store locations of Walmart and our three other
largest retail distributors, as a group, represented the following percentages of our total operating
revenues: approximately 63% and 20%, respectively, for the year ended December 31, 2010, 66%
and 23%, respectively, for the five months ended December 31, 2009, 56% and 27%, respectively, for the
year ended July 31, 2009, and 39% and 41%, respectively, for the year ended July 31, 2008. In fiscal 2008,
operating revenues derived from products and services sold at the store locations of Walgreens, CVS and
Rite Aid represented 17%, 13% and 11%, respectively, of our total operating revenues. In addition, such
sales at store locations of Walgreens represented 11% of our total operating revenues in fiscal 2009.
Our Relationship with Walmart. Walmart is our largest retail distributor. We have been the exclusive
provider of GPR cards sold at Walmart since Walmart initiated its Walmart MoneyCard program in 2007. In
October 2006, we entered into agreements with Walmart and GE Money Bank (the card issuing bank),
which set forth the terms and conditions of our relationship with Walmart. Pursuant to the terms of these
agreements, Green Dot designs and delivers the Walmart MoneyCard product and provides all ongoing
program support, including network IT, regulatory and legal compliance, website functionality, customer
service and loss management. Walmart displays and sells the cards and GE Money Bank serves as the
issuer of the cards and holds the associated FDIC-insured deposits. All Walmart MoneyCard products are
reloadable exclusively on the Green Dot Network.
In May 2010, the term of the agreement among Green Dot, Walmart and GE Money Bank was
extended through May 2015. The parties also agreed to various other changes to the terms of the
agreement. In particular, the sales commission percentages that we pay to Walmart for the Walmart
MoneyCard program increased significantly. Walmart has the right to terminate this agreement prior to its
expiration or renewal, but subject to notice periods of varying lengths, for a number of specified reasons,
including;
• a change by GE Money Bank in its card operating procedures that Walmart reasonably believes will
have a material adverse effect on Walmart’s operations;
• our or GE Money Bank’s inability or unwillingness to agree to program-related pricing changes
proposed by Walmart;
• our inability or unwillingness to make Walmart MoneyCards reloadable outside of our reload
network in the event that our reload network does not meet particular size requirements in the
future;
• in the event Walmart reasonably believes that it is reasonably possible, after the parties have
explored and been unable to agree on any alternatives, that the Federal Reserve Board may
determine that Walmart exercises a controlling influence over our management or policies;
3