Western Union 2013 Annual Report Download - page 171

2013 FORM 10-K
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Selling, general and administrative
Selling, general and administrative expenses ("SG&A") increased for the year ended December 31, 2013 compared to the
prior year due to increased compliance program costs, including costs related to our amended settlement agreement with the State
of Arizona (see "Enhanced Regulatory Compliance" described above), investments in our strategic initiatives, lower compensation
expenses in 2012, and costs associated with our productivity and cost savings initiatives, partially offset by decreased TGBP
integration costs, savings from our productivity and cost-savings initiatives, decreased marketing expenses, and the strengthening
of the United States dollar compared to most other foreign currencies, which resulted in a positive impact on the translation of our
expenses.
SG&A increased for the year ended December 31, 2012 compared to the prior year primarily due to increased expenses
resulting from the acquisitions of TGBP, Finint and Costa, including integration costs, investments in our strategic initiatives and
compliance program costs, and costs associated with the productivity and cost-savings initiatives implemented in the fourth quarter
of 2012, partially offset by the strengthening of the United States dollar compared to most other foreign currencies, which resulted
in a positive impact on the translation of our expenses, the restructuring costs incurred in 2011, which did not recur in 2012, and
decreased compensation expenses.
Total other expense, net
Total other expense, net increased during the year ended December 31, 2013 compared to the prior year due to increased
interest expense related to higher average debt balances outstanding. Additionally, total other expense, net increased due to other
gains recognized in 2012 that did not occur in 2013.
Total other expense, net increased during the year ended December 31, 2012 compared to the prior year primarily due to the
prior year gains of $20.5 million and $29.4 million in connection with the remeasurement of our former equity interests in Finint
and Costa, respectively, to fair value, associated with these acquisitions. Additionally, during the prior year we recognized a $20.8
million net gain on foreign currency forward contracts entered into in order to reduce the economic variability related to the cash
amounts used to fund acquisitions of businesses with purchase prices denominated in foreign currencies, primarily for the TGBP
acquisition.
Income taxes
Our effective tax rates on pre-tax income were 13.9%, 12.2% and 8.6% for the years ended December 31, 2013, 2012 and
2011, respectively. The increase in our effective tax rate for the year ended December 31, 2013 compared to 2012 is primarily due
to the combined effect of various discrete items, partially offset by an increasing proportion of profits that were foreign-derived
in 2013, and generally taxed at lower rates than our combined federal and state tax rates in the United States. The increase in our
effective tax rate for the year ended December 31, 2012 compared to 2011 is primarily due to the impact of an agreement with the
IRS related to audits of previous years ("IRS Agreement"), which resulted in a tax benefit of $204.7 million related to the adjustment
of reserves associated with this matter during 2011, partially offset by benefits from favorable tax settlements in 2012 and higher
taxes associated with the Finint and Costa remeasurement gains during 2011.