NetSpend 2014 Annual Report Download - page 69

A reconciliation of the beginning and ending amount of unrecognized tax liabilities is as follows 1:
(in millions) Year Ended December 31, 2014
Beginning balance .............................................................. $2.7
Current activity:
Additions based on tax positions related to current year ............................. 0.9
Additions for tax positions of prior years .......................................... 3.5
Reductions for tax positions of prior years ......................................... (0.4)
Net, current activity ......................................................... 4.0
Ending balance ................................................................. $6.7
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 $0.3 million and $0.3 million as of December 31, 2014 and December 31, 2013, respectively. The
total amounts of unrecognized income tax benefits as of December 31, 2014 and December 31, 2013 that, if
recognized, would affect the effective tax rates are $6.5 million and $2.8 million (net of the federal benefit on
state tax issues), respectively, which includes interest and penalties of $0.2 million and $0.2 million, respectively.
Note 16 Commitments and Contingencies
LEASE COMMITMENTS: TSYS is obligated under noncancelable operating leases for computer equipment
and facilities.
The future minimum lease payments under noncancelable operating leases with remaining terms greater than
one year for the next five years and thereafter and in the aggregate as of December 31, 2014, are as follows:
(in thousands)
2015 ................................................................................. $118,321
2016 ................................................................................. 121,745
2017 ................................................................................. 62,741
2018 ................................................................................. 27,184
2019 ................................................................................. 22,693
Thereafter ............................................................................. 30,088
Total future minimum lease payments ...................................................... $382,772
The majority of computer equipment lease commitments come with a renewal option or an option to terminate
the lease. These lease commitments may be replaced with new leases which allow the Company to continually
update its computer equipment. Total rental expense under all operating leases in 2014, 2013 and 2012 was
$105.2 million, $93.4 million and $95.2 million, respectively.
CONTRACTUAL COMMITMENTS: In the normal course of its business, the Company maintains long-term
processing contracts with its clients. These processing contracts contain commitments, including, but not limited
to, minimum standards and time frames against which the Company’s performance is measured. In the event the
Company does not meet its contractual commitments with its clients, the Company may incur penalties and
certain clients may have the right to terminate their contracts with the Company. The Company does not believe
that it will fail to meet its contractual commitments to an extent that will result in a material adverse effect on its
financial position, results of operations or cash flows.
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