Green Dot 2012 Annual Report Download - page 94

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
84
Note 18—Commitments and Contingencies (continued)
In the event we terminate our processing services agreement for convenience, we are required to pay a single
lump sum equal to any minimum payments remaining on the date of termination.
We have retained outside regulatory counsel to survey and monitor the laws of all 50 states to identify state laws
or regulations that apply to prepaid debit cards and other stored value products. Many state laws do not specifically
address stored value products and what, if any, legal or regulatory requirements (including licensing) apply to the sale
of these products. We have obtained money transmitter licenses (or similar such licenses) where applicable, based
on advice of counsel or when we have been requested to do so. If we were found to be in violation of any laws and
regulations governing banking, money transmitters, electronic fund transfers, or money laundering in the United States
or abroad, we could be subject to penalties or could be forced to change our business practices.
In the ordinary course of business, we are a party to various legal proceedings. We review these actions on an
ongoing basis to determine whether it is probable that a loss has occurred and use that information when making
accrual and disclosure decisions. We have not established reserves or possible ranges of losses related to these
proceedings because, at this time in the proceedings, the matters do not relate to a probable loss and/or the amounts
are not reasonably estimable.
From time to time we enter into contracts containing provisions that contingently require us to indemnify various
parties against claims from third parties. These contracts primarily relate to: (i) contracts with our card issuing banks,
under which we are responsible to them for any unrecovered overdrafts on cardholders’ accounts; (ii) certain real
estate leases, under which we may be required to indemnify property owners for environmental and other liabilities,
and other claims arising from our use of the premises; (iii) certain agreements with our officers, directors, and employees,
under which we may be required to indemnify these persons for liabilities arising out of their relationship with us; and
(iv) contracts under which we may be required to indemnify our retail distributors, suppliers, vendors and other parties
with whom we have contracts against third-party claims that our products infringe a patent, copyright, or other intellectual
property right claims arising from our acts, omissions, or violation of law.
Generally, a maximum obligation under these contracts is not explicitly stated. Because the obligated amounts
associated with these types of agreements are not explicitly stated, the overall maximum amount of the obligation
cannot be reasonably estimated. With the exception of overdrafts on cardholders’ accounts, historically, we have not
been required to make payments under these and similar contingent obligations, and no liabilities have been recorded
for these obligations in our consolidated balance sheets.
Note 19—Significant Customer Concentration
A credit concentration may exist if customers are involved in similar industries, economic sectors, and geographic
regions. Our retail distributors operate in similar economic sectors but diverse domestic geographic regions. The loss
of a significant retail distributor could have a material adverse effect upon our card sales, profitability, and revenue
growth.
Revenues derived from our products sold at our four largest retail distributors represented the following percentages
of our total operating revenues:
Year Ended December 31,
2012 2011 2010
Walmart 64% 61% 63%
Three other largest retail distributors, as a group 20% 20% 20%
Excluding stock-based retailer incentive compensation of $8.3 million, $17.3 million and $13.4 million for the years
ended December 31, 2012, 2011 and 2010, respectively, revenues derived from our products sold at our four largest
retail distributors represented the following percentages of our total operating revenues:
Year Ended December 31,
2012 2011 2010
Walmart 65% 62% 64%
Three other largest retail distributors, as a group 20% 19% 18%