NetSpend 2010 Annual Report Download - page 105

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Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2008, 2009 and 2010
NOTE 15: INCOME TAXES (Continued)
Included in the balance of unrecognized tax benefits at December 31, 2009 and 2010 are approximately $0.1 million and $0.3 million of
tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits at December 31,
2009 and 2010 are $0.1 million and $0.1 million, respectively, of tax benefits that, if recognized, would result in adjustments to other tax
accounts, primarily deferred taxes.
The Company's policy is to classify interest and penalties associated with these uncertain tax positions as a component of income tax
expense. The Company had accrued penalties and interest of approximately $0.1 million during each of the years ended December 31, 2008
and 2009 and approximately $0.1 million during the year ended December 31, 2010.
The Company is subject to taxation in the U.S. and various state jurisdictions. With few exceptions, the Company is no longer subject to
U.S. federal and state examinations for tax years before 2005.
NOTE 16: COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has commitments under operating lease agreements, principally a commitment for office space which extends through
November 2011. Where a lease contains an escalation clause or a concession such as a rent holiday, rent expense is recognized using the
straight-line method over the term of the lease. Equipment lease terms generally cover a one-year period and are subject to renewal. Rent
expense for the years ending December 31, 2008, 2009 and 2010 was $0.9 million, $1.5 million and $1.4 million, respectively.
At December 31, 2010, future minimum operating lease commitments under non-cancelable leases are as follows:
Service Agreements
The Company has agreements with various third-party vendors to provide card issuance services, card processing services, internet data
center services, and other consulting services. The remaining term of the agreements range from one to four years in length and require
monthly payments.
During the year ended December 31, 2010, the Company recorded a $0.8 million loss related to a contractual dispute with a vendor and
the Company amended its agreement with the vendor pursuant to which the parties agreed to commence winding down the relationship. The
$0.8 million loss is
98
(in thousands of dollars)
2011
$
1,100
2012
52
2013
8
2014
4
2015
3
Thereafter
—
Total minimum payments
$
1,167