NetSpend 2010 Annual Report Download - page 108

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Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2008, 2009 and 2010
NOTE 16: COMMITMENTS AND CONTINGENCIES (Continued)
portfolio of patents. In July 2010, the Company and RAKTL reached an agreement on the matter. In accordance with the agreement, the
Company paid RAKTL a total of $3.5 million in exchange for the Company's release from potential infringement liability related to the
Company's possible use of RAKTL patents. As part of the agreement, the Company also acquired a non-exclusive license related to certain
pending RAKTL patents. The $3.5 million loss was recorded in settlement gains and other losses on the Consolidated Statement of Operations
for the year ended December 31, 2010.
Recoveries
In 2009, the Company, in conjunction with two of its issuing banks, identified approximately $10.6 million of excess funds related to
several years of chargebacks and fee-related recoveries from card associations, much of which the Company had previously written off in its
loss reserves. The Company had previously recorded receivables of approximately $1.6 million associated with these items. As a result, the
Company recorded a $9.0 million settlement gain in its Consolidated Statement of Operations for the year ended December 31, 2009, the
period in which the chargebacks and fee-related recoveries were settled.
Other
In the normal course of business, the Company is at times subject to pending and threatened legal actions and proceedings. Management
believes that the outcomes of such actions or proceedings will not have a material effect on the Company's financial position, results of
operations, cash flows or liquidity.
NOTE 17: EMPLOYEE BENEFIT PLAN
The Company has established a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. This plan covers
substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual
compensation, not to exceed a federally specified maximum, on a pre-tax basis. The Company may contribute to the program by matching
funds based on a percentage of the employee's contribution, and is also permitted to make a profit-sharing contribution as determined annually
at the discretion of the board of directors. For the years ending December 31, 2008, 2009 and 2010, the 401(k) match made by the Company
was approximately $0.5 million, $0.7 million and $0.8 million, respectively. No profit-sharing contributions were made during 2008, 2009 or
2010.
In 2009, the Company established a deferred compensation plan under which certain employees have the option to defer a portion of their
compensation. As of December 31, 2009 and 2010, the Company's liability with regard to the deferred compensation plan was less than
$0.1 million.
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