Green Dot 2011 Annual Report Download - page 48

Download and view the complete annual report

Please find page 48 of the 2011 Green Dot annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

38
Income Tax Expense
The following table presents a breakdown of our effective tax rate among federal, state and other:
Years Ended December 31,
2011 2010
U.S. federal statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0% 35.0%
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 3.8
Change in state apportionment method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(4.6)
Non-deductible offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —2.4
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 2.7
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0% 39.3%
Our income tax expense increased by $4.5 million to $31.9 million in the year ended December 31, 2011 from the
comparable period in 2010, and our effective tax rate decreased 1.3 percentage points from 39.3% to 38.0%. Certain
enacted California tax law changes, which became effective January 1, 2011 and allowed us to continue to apply the
alternative apportionment method we used to allocate income to California in 2009 and 2010, lowered the income we
apportion to California from the comparable period in 2010, resulting in a lower effective state tax rate in 2011. The
year ended December 31, 2010 was impacted by several discrete items. The California Franchise Tax Board, or FTB,
approved a retroactive application of the alternative apportionment method to our income tax returns filed for the five
months ended December 31, 2009 and the year ended July 31, 2009. We recognized this tax benefit in the year ended
December 31, 2010. This tax benefit was partially offset by non-deductible expenses related to our initial public offering
recognized in the year ended December 31, 2010.
Comparison of Twelve Months Ended December 31, 2010 and 2009
Operating Revenues
The following table presents a breakdown of our operating revenues among card revenues and other fees, cash
transfer revenues and interchange revenues as well as contra-revenue items:
Twelve Months Ended December 31,
2010 2009
Amount
% of Total
Operating
Revenues Amount
% of Total
Operating
Revenues
(in thousands, except percentages)
Operating revenues:
Card revenues and other fees . . . . . . . . . . . . . . . . . . . . . . $ 167,375 46.0% $ 123,790 47.9%
Cash transfer revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,502 27.9 68,515 26.5
Interchange revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,380 29.8 66,205 25.6
Stock-based retailer incentive compensation . . . . . . . . . . (13,369) (3.7) ——
Total operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 363,888 100.0% $ 258,510 100.0%
Card Revenues and Other Fees — Card revenues and other fees totaled $167.4 million for the year ended
December 31, 2010, an increase of $43.6 million, or 35%, from the comparable period in 2009. The increase was
primarily the result of period-over-period growth of 47% in the number of GPR cards activated and 26% in the number
of active cards in our portfolio. This growth was driven by a variety of factors including growth in the number of our
cards sold through our established distribution channels and expansion through our online distribution channel and
the launch of new retailers like 7-Eleven. Additionally, the fee reductions and new product features that we launched
in July 2009 helped us attract significant numbers of new users of our Green Dot branded products. These fee reductions
also contributed to the decline in card revenues and other fees as a percentage of total operating revenues.
Cash Transfer Revenues — Cash transfer revenues totaled $101.5 million for the year ended December 31, 2010,
an increase of $33.0 million, or 48%, from the comparable period in 2009. The increase was primarily the result of
period-over-period growth of 53% in the number of cash transfers sold, partially offset by a shift in our mix of retail
distributors toward Walmart. The increase in cash transfer volume was driven both by growth in our active card base
and growth in cash transfer volume from third-party programs participating in our network.