NetSpend 2010 Annual Report Download - page 32

Table of Contents
adverse effect on our operations. Our success also depends on our ability to continue to attract, manage and retain other qualified management
and technical personnel as we grow, and we may be unable to attract, manage or retain such personnel. Due to the competitive nature of our
industry, we may also be vulnerable to successful attempts by our competitors to hire our employees.
We may not increase cardholder direct deposit participation and therefore may not achieve all of our strategic growth objectives.
Product features such as direct deposit loading onto reloadable prepaid debit cards have increased the attractiveness of such cards and
increased their utility to underbanked consumers. Because direct deposit active cardholders on average initiate more debit transactions and
generate more revenues for us than active cardholders without direct deposit, increasing cardholder adoption of direct deposit is an important
part of our strategy. We are devoting significant resources to the further development of our direct deposit programs, and our growth profile
depends on a resulting increase in direct deposit participation by our cardholders. Some of our existing contracts with our retail distributors
prohibit us from directly promoting direct deposit to their customers. It is possible that other distributors will in the future insist on similar
restrictions, which could limit our ability to grow direct deposit participation. If we are unable to increase direct deposit participation as
projected, we will be unable to meet our growth projections, and our business and results of operations will be adversely affected.
Business, political and economic factors may affect our operations, the manner in which we conduct our business and our rate of growth.
The U.S. economy has deteriorated significantly over the last three years and unemployment rates have risen. If economic conditions and
unemployment rates continue to deteriorate or do not improve, our target consumer base may be disproportionately affected due to the
generally lower incomes of the consumers of our products. In addition, a large proportion of our target customers work in industries that may
be disproportionately affected by a downturn in the U.S. economy. Stagnant economic growth and high unemployment are likely to negatively
affect our customers' ability to purchase new services from us and the use of our GPR cards to purchase good and services. The resulting
impact of such economic conditions on our customers and on consumer spending could have a material adverse effect on demand for our
services and on our business, financial condition and operating results.
We have engaged, and may engage in the future, in mergers, acquisitions or strategic transactions that could disrupt our business and
harm our financial condition.
We acquired Skylight Financial, Inc., or Skylight, in 2008 to add its employer distribution network to our retail distribution, direct-to-
consumer and online marketing efforts. We may in the future further expand our distribution channels, technology platform or other aspects of
our business through the acquisition of other businesses, assets or technologies. Any such transactions can entail risk, may require a
disproportionate amount of our management and financial resources, and may create operating and financial challenges, including:
• difficulty integrating the acquired technologies, services, products, operations and personnel of the acquired business;
• disruption to our existing business;
• increased regulatory and compliance requirements;
• negative impact on our cash and available credit lines for use in financing future growth and working capital;
• inability to achieve projected synergies;
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