INTL FCStone 2012 Annual Report Download - page 114
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Please find page 114 of the 2012 INTL FCStone 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.INTL FCSTONE INC.Form10K98
PART II
ITEM 8 Financial Statements and Supplementary Data
e valuation allowance for deferred tax assets as of September30,
2012 was $4.1 million. e net change in the total valuation
allowance for the year ended September30, 2012 was an increase
of $0.4 million. e valuation allowances as of September30,
2012 and 2011, respectively, were primarily related to state and
foreign net operating loss carryforwards that, in the judgment
of management, are not more likely than not to be realized. In
assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some or all of
the deferred tax assets will not be realized. Based on the level
of historical taxable income and projections for future taxable
income, management believes that it is more likely than not
that the Company will realize the tax bene t of the deferred
tax assets, net of the existing valuation allowance, in the future.
e total amount of undistributed earnings in the Company’s
foreign subsidiaries, for income tax purposes, was $130.7 million
and $75.7 million as of September30, 2012 and 2011, respectively.
It is the Company’s current intention to reinvest undistributed
earnings of its foreign subsidiaries in the foreign jurisdictions,
resulting in the inde nite postponement of the remittance of those
earnings. Accordingly, no provision has been made for foreign
withholding taxes or United States income taxes which may
become payable if undistributed earnings of foreign subsidiaries
were paid as dividends to the Company.
e Company recognizes the tax bene t from an uncertain tax
position only if it is more likely than not that the tax position will
be sustained on examination by the taxing authority, based upon
the technical merits of the position. e tax bene t recognized in
the nancial statements from such a position is measured based
on the largest bene t that has a greater than 50% likelihood of
being realized upon ultimate settlement.
A reconciliation of the beginning and ending amount of unrecognized tax bene ts is as follows:
(in millions)
Year Ended September30,
2012 2011 2010
Balance, beginning of year $ 0.9 $ — $ —
Gross increases for tax positions related to current year — — —
Gross increases for tax positions related to prior years — 0.9 —
Gross decreases for tax positions of prior years (0.1) — —
Settlements (0.1) — —
Lapse of statute of limitations (0.2) — —
Balance, end of year $ 0.5 $ 0.9 $ —
Included in the balance of uncertain tax benefits as of
September30, 2012, is $0.3 million of tax bene ts that, if
recognized, would a ect the e ective tax rate. While it is expected
that the amount of unrecognized tax bene ts will change in the
next twelve months, the Company does not expect this change
to have a material impact on the results of operations or the
nancial position of the Company.
Accrued interest and penalties are included within the related
tax liability line in the consolidated balance sheets. Accrued
interest, net of federal bene t, and penalties included in the
consolidated balance sheets as of September30, 2012 and 2011
was $0.2 million, respectively.
e Company recognizes accrued interest and penalties related
to income taxes as a component of income tax expense. During
2012, 2011 and 2010, the amount of interest, net of federal
bene t, and penalties recognized as a component of income
tax expense was $0.3 million, $0.2 million and nil, respectively.
e Company and its subsidiaries le income tax returns with
the U.S. federal jurisdiction and various state and foreign
jurisdictions. e Company has open tax years ranging from
September30, 2006 through September30, 2011 with various
taxing authorities. e Internal Revenue Service commenced an
examination of the U.S. income tax return of FCStone for its
scal year ended August31, 2009, which was prior to acquisition.
is examination was settled during 2012 with no adjustments.
FCStone is a wholly-owned subsidiary acquired on September30,
2009. Additionally, both INTL FCStone Inc. and FCStone are
under separate state examinations for various periods, ranging
from August31, 2006 through September30, 2009.