Western Union 2012 Annual Report Download - page 117

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
112
(“WU 30-Day Letter”). Both the FDC 30-Day Letter and the WU 30-Day Letter propose tax adjustments affecting the Company,
some of which are agreed and some of which are unagreed. Both First Data and the Company filed their respective protests with
the IRS Appeals Division on November 28, 2012 related to the unagreed proposed adjustments. The Company believes its reserves
are adequate with respect to both the agreed and unagreed adjustments.
As of December 31, 2012, no provision had been made for United States federal and state income taxes on certain of the
Company's outside tax basis differences, which primarily relate to accumulated foreign earnings of approximately $4.4 billion,
which are expected to be reinvested outside the United States indefinitely. Upon distribution of those earnings to the United States
in the form of actual or constructive dividends, the Company would be subject to United States income taxes (subject to an
adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign countries. Such
taxes could be significant. Determination of this amount of unrecognized deferred United States tax liability is not practicable
because of the complexities associated with its hypothetical calculation.
Tax Allocation Agreement with First Data
The Company and First Data each are liable for taxes imposed on their respective businesses both prior to and after the Spin-
off. If such taxes have not been appropriately apportioned between First Data and the Company, subsequent adjustments may occur
that may impact the Company's financial condition or results of operations.
Also under the tax allocation agreement, with respect to taxes and other liabilities that result from a final determination that
is inconsistent with the anticipated tax consequences of the Spin-off (as set forth in the private letter ruling and relevant tax opinion)
(“Spin-off Related Taxes”), the Company will be liable to First Data for any such Spin-off Related Taxes attributable solely to
actions taken by or with respect to the Company. In addition, the Company will also be liable for half of any Spin-off Related
Taxes (i) that would not have been imposed but for the existence of both an action by the Company and an action by First Data or
(ii) where the Company and First Data each take actions that, standing alone, would have resulted in the imposition of such Spin-
off Related Taxes. The Company may be similarly liable if it breaches certain representations or covenants set forth in the tax
allocation agreement. If the Company is required to indemnify First Data for taxes incurred as a result of the Spin-off being taxable
to First Data, it likely would have a material adverse effect on the Company's business, financial condition and results of operations.
First Data generally will be liable for all Spin-off Related Taxes, other than those described above.
11. Employee Benefit Plans
Defined Contribution Plans
The Western Union Company Incentive Savings Plan (“401(k)”) covers eligible employees on the United States payroll of
the Company. Employees who make voluntary contributions to this plan receive up to a 4% Company matching contribution. All
matching contributions are immediately vested.
The Company administers more than 25 defined contribution plans in various countries globally on behalf of approximately
1,500 employee participants as of December 31, 2012. Such plans have vesting and employer contribution provisions that vary
by country.
In addition, the Company sponsors a non-qualified deferred compensation plan for a select group of highly compensated
United States employees. The plan provides tax-deferred contributions and the restoration of Company matching contributions
otherwise limited under the 401(k).
The aggregate amount charged to expense in connection with all of the above plans was $15.3 million, $12.8 million and
$12.0 million during the years ended December 31, 2012, 2011 and 2010, respectively.