NetSpend 2011 Annual Report Download - page 105
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Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2011, 2010 and 2009
NOTE 16: INCOME TAXES (Continued)
included in the balance of unrecognized tax benefits as of both December 31, 2011 and 2010 are $0.1 million 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, 2011,
2010 and 2009.
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 or state examinations for tax years before 2005.
NOTE 17: COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company has commitments under operating lease agreements, principally for office space, that extend through May 2017. When 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, 2011, 2010 and 2009 was $1.5 million, $1.4 million and $1.5 million, respectively.
As of December 31, 2011, future minimum operating lease commitments under non-cancelable leases were as follows:
Service Agreements
The Company has agreements with various third-party vendors and the members of the Company's distribution network to provide card
issuance services, network transaction services, internet data center services and other consulting services. The Company generally makes
payments under these agreements on a monthly basis. The remaining term of these agreements generally range from one to four years.
During the year ended December 31, 2010, the Company recorded a $0.8 million loss related to a contractual dispute with an Issuing Bank
and the Company amended its agreement with the Issuing Bank pursuant to which the parties agreed to commence winding down the
relationship. The $0.8 million loss is included in settlement gains and other losses on the Consolidated Statement of
96
(in thousands of dollars)
2012
$
938
2013
1,375
2014
1,361
2015
1,429
2016
1,479
Thereafter
483
Total minimum payments
$
7,065