Western Union 2010 Annual Report Download - page 103

The Company’s provision for income taxes consisted of the following components (in millions):
2010 2009 2008
Year Ended December 31,
Current:
Federal .......................................................................................... $ 103.6 $ 235.8 $ 219.6
State and local ............................................................................... 30.1 26.0 34.5
Foreign.......................................................................................... 73.0 41.8 49.7
Total current taxes................................................................................. 206.7 303.6 303.8
Deferred:
Federal .......................................................................................... 28.6 (18.5) 15.2
State and local ............................................................................... 9.7 2.0 (4.2)
Foreign .......................................................................................... (9.7) (4.4) 4.9
Total deferred taxes ............................................................................... 28.6 (20.9) 15.9
$ 235.3 $ 282.7 $ 319.7
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences
between the book and tax bases of the Company’s assets and liabilities. The following table outlines the principal
components of deferred tax items (in millions):
2010 2009
December 31,
Deferred tax assets related to:
Reserves, accrued expenses and employee-related items ...................................... $ 61.6 $ 91.0
Pension obligations ........................................................................................... 38.7 43.5
Deferred revenue .............................................................................................. 3.6 3.6
Other ............................................................................................................... 20.5 10.7
Total deferred tax assets ........................................................................................... 124.4 148.8
Deferred tax liabilities related to:
Intangibles, property and equipment ................................................................... 411.8 416.7
Other ............................................................................................................... 2.5 1.0
Total deferred tax liabilities ...................................................................................... 414.3 417.7
Net deferred tax liability .......................................................................................... $ 289.9 $ 268.9
Uncertain Tax Positions
The Company has established contingency reserves for material, known tax exposures, including potential tax
audit adjustments with respect to its international operations, which were restructured in 2003. The Company’s tax
reserves reflect management’s judgment as to the resolution of the issues involved if subject to judicial review.
While the Company believes its reserves are adequate to cover reasonably expected tax risks, there can be no
assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not
exceed its related reserve. With respect to these reserves, the Company’s income tax expense would include (i) any
changes in tax reserves arising from material changes during the period in the facts and circumstances (i.e., new
information) surrounding a tax issue and (ii) any difference from the Company’s tax position as recorded in the
financial statements and the final resolution of a tax issue during the period.
Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the
amounts otherwise recognized in the Company’s financial statements, and are reflected in “Income taxes payable”
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