NetSpend 2015 Annual Report Download - page 74

benefits totaled $0.7 million and $0.3 million as of December 31, 2015 and December 31, 2014, respectively. The
total amounts of unrecognized income tax benefits as of December 31, 2015 and December 31, 2014 that, if
recognized, would affect the effective tax rates are $13.2 million and $6.5 million (net of the federal benefit on
state tax issues), respectively, which includes interest and penalties of $0.5 million and $0.2 million, respectively.
Note 16 Commitments and Contingencies
LEASE COMMITMENTS: TSYS is obligated under noncancelable operating leases for computer equipment,
software 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, 2015, are as follows:
(in thousands)
2016 ................................................................................. $121,892
2017 ................................................................................. 117,137
2018 ................................................................................. 101,413
2019 ................................................................................. 99,426
2020 ................................................................................. 30,733
Thereafter ............................................................................. 22,716
Total future minimum lease payments ...................................................... $493,317
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 2015, 2014 and 2013 was
$124.8 million, $105.2 million and $93.4 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.
CONTINGENCIES:
Legal Proceedings — General
The Company is subject to various legal proceedings and claims and is also subject to information requests,
inquiries and investigations arising out of the ordinary conduct of its business. The Company establishes reserves
for litigation and similar matters when those matters present loss contingencies that TSYS determines to be both
probable and reasonably estimable in accordance with GAAP. In the opinion of management, based on current
knowledge and in part upon the advice of legal counsel, all matters not specifically discussed below are believed
to be adequately covered by insurance, or, if not covered, the possibility of losses from such matters are believed
to be remote or such matters are of such kind or involve such amounts that would not have a material adverse
effect on the financial position, results of operations or cash flows of the Company if disposed of unfavorably.
Telexfree Matter
ProPay, Inc. (“ProPay”), a subsidiary of the Company, has been named as one of a number of defendants
(including other merchant processors) in several purported class action lawsuits relating to the activities of
Telexfree, Inc. and its affiliates and principals. Telexfree is a former merchant customer of ProPay. With regard to
Telexfree, each purported class action lawsuit generally alleges that Telexfree engaged in an improper multi-tier
marketing scheme involving voice-over Internet protocol telephone services. The plaintiffs in each of the
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