NetSpend 2012 Annual Report Download - page 59

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PRIVATE EQUITY INVESTMENTS: On May 31,
2011, the Company entered into a limited
partnership agreement in connection with its
agreement to invest in an Atlanta-based venture
capital fund focused exclusively on investing in
technology-enabled financial services companies.
Pursuant to the limited partnership agreement, the
Company has committed to invest up to $20 million
in the fund so long as its ownership interest in the
fund does not exceed 50%. At December 31, 2012,
the Company had made investments in the fund of
$4.6 million and recognized a gain of $898,000 due
to an increase in fair value.
NOTE 20 Income Taxes
The provision for income taxes includes income taxes
currently payable and those deferred because of
temporary differences between the financial statement
carrying amounts and tax bases of assets and liabilities.
The components of income tax expense included in the
Consolidated Statements of Income were as follows:
Years Ended December 31,
(in thousands) 2012 2011 2010
Current income tax
expense:
Federal ...........$ 98,153 83,518 98,802
State ............. 2,572 4,666 4,221
Foreign ........... 14,092 12,922 8,682
Total current income
tax expense ....... 114,817 101,106 111,705
Deferred income tax
expense (benefit):
Federal ........... 1,395 3,126 (2,970)
State ............. 411 61 (643)
Foreign ........... (1,521) (1,696) (2,004)
Total deferred income
tax expense
(benefit) .......... 285 1,491 (5,617)
Total income tax
expense ..........$115,102 102,597 106,088
Years Ended December 31,
(in thousands) 2012 2011 2010
Components of
income before
income tax
expense :
Domestic ..... $320,581 279,416 286,490
Foreign ...... 34,273 37,135 21,322
Total income
before income
tax expense .... $354,854 316,551 307,812
Income tax expense differed from the amounts
computed by applying the statutory U.S. federal
income tax rate of 35% to income before income
taxes, noncontrolling interest and equity in income of
equity investments as a result of the following:
Years Ended December 31,
(in thousands) 2012 2011 2010
Computed “expected”
income tax expense . . $124,199 110,793 107,734
Increase (decrease) in
income tax expense
resulting from:
International tax rate
differential ...... 2,781 1,831 (4,376)
State income tax
expense (benefit),
net of federal
income tax
effect ........... 2,143 3,164 2,326
Increase in valuation
allowance ....... 193 3,773 2,564
Tax credits ........ (3,762) (9,044) (2,824)
Deduction for
domestic
production
activities ........ (5,727) (5,524) —
Permanent
differences and
other, net ....... (4,725) (2,396) 664
Total income tax
expense ............$115,102 102,597 106,088
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