NetSpend 2012 Annual Report Download - page 61

Company is subject to examinations by these taxing
authorities unless statutory examination periods
lapse. TSYS is no longer subject to U.S. federal
income tax examinations for years before 2008 and
with few exceptions, the Company is no longer
subject to income tax examinations from state and
local or foreign tax authorities for years before 2005.
There are currently federal income tax examinations
in progress for the years 2008 and 2009. Additionally,
a number of tax examinations are in progress by the
relevant state tax authorities. Although TSYS is
unable to determine the ultimate outcome of these
examinations, TSYS believes that its liability for
uncertain tax positions relating to these jurisdictions
for such years is adequate.
TSYS adopted the provisions of ASC 740 on
January 1, 2007 which prescribes a recognition
threshold and measurement attribute for the financial
statement recognition, measurement and disclosure
of a tax position taken or expected to be taken in a
tax return. During the year ended December 31,
2012, TSYS increased its liability for prior year
uncertain income tax positions as a discrete item by a
net amount of approximately $1.9 million (net of the
federal tax effect). This increase resulted from tax
positions taken on amended returns for the years
2008 and 2009. The Company is not able to
reasonably estimate the amount by which the liability
will increase or decrease over time; however, at this
time, the Company does not expect any significant
changes related to these obligations within the next
twelve months.
A reconciliation of the beginning and ending amount
of unrecognized tax liabilities is as follows (1):
(in millions)
Year Ended
December 31,
2012
Beginning balance ................ $ 5.7
Current activity:
Additions based on tax positions
related to current year ......... 1.4
Additions for tax positions of prior
years ........................ 2.0
Reductions for tax positions of prior
years ........................ (0.1)
Settlements .................... —
Net, current activity ........... 3.3
Ending balance ................... $ 9.0
(1) Unrecognized state tax liabilities are not adjusted for
the federal tax impact.
TSYS recognizes potential interest and penalties
related to the underpayment of income taxes as
income tax expense in the Consolidated Statements
of Income. Gross accrued interest and penalties on
unrecognized tax benefits totaled $0.9 million and
$0.6 million as of December 31, 2012 and
December 31, 2011, respectively. The total amounts
of unrecognized income tax benefits as of
December 31, 2012 and December 31, 2011 that, if
recognized, would affect the effective tax rates are
$8.8 million and $5.4 million (net of the federal
benefit on state tax issues), respectively, which
includes interest and penalties of $0.7 million and
$0.5 million, respectively.
NOTE 21 Employee Benefit Plans
The Company provides benefits to its employees by
offering employees participation in certain defined
contribution plans. The employee benefit plans
through which TSYS provided benefits to its
employees during 2012 are described as follows:
TSYS RETIREMENT SAVINGS PLAN: Beginning in
2010, all qualified plans maintained by TSYS were
combined into a single plan, the Retirement Savings
Plan, which is designed to reward all team members
of TSYS U.S.—based companies with a uniform
employer contribution. The terms of the plan provide
for the Company to match 100% of the employee
contribution up to 4% of eligible compensation. The
Company can make discretionary contributions up to
another 4% based upon business conditions.
The Company’s contributions to the plan charged to
expense for the years ended December 31 are as
follows:
(in thousands) 2012 2011 2010
TSYS Retirement
Savings Plan . . . $13,421 15,951 15,430
STOCK PURCHASE PLAN: The Company
maintains a stock purchase plan for employees and
previously maintained a stock purchase plan for
directors. The Company contributes 15% of
employee contributions and contributed 15%
director voluntary contributions. The funds are used
to purchase presently issued and outstanding shares
of TSYS common stock on the open market at fair
market value for the benefit of participants. The
Director Stock Purchase Plan was terminated on
November 30, 2011. The Company’s contributions to
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