Western Union 2013 Annual Report Download - page 227

2013 FORM 10-K
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
117
10. Income Taxes
The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions):
Year Ended December 31,
2013 2012 2011
Components of pre-tax income:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (28.4) $ 94.8 $ 423.9
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955.3 1,074.0 850.7
$ 926.9 $ 1,168.8 $ 1,274.6
For the years ended December 31, 2013, 2012 and 2011, 103%, 92% and 67% of the Company's pre-tax income was derived
from foreign sources, respectively. For the year ended December 31, 2011, domestic pre-tax income and foreign pre-tax income
were affected by the pre-tax impact of the Company's agreement with the United States Internal Revenue Service ("IRS Agreement")
resolving substantially all of the issues related to the Company's restructuring of its international operations in 2003.
The provision for income taxes was as follows (in millions):
Year Ended December 31,
2013 2012 2011
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 88.3 $ 92.5 $ 78.1
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.7)(14.8) 4.5
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43.9 65.2 26.6
$ 128.5 $ 142.9 $ 109.2
Domestic taxes have been incurred on certain pre-tax income amounts that were generated by the Company's foreign operations.
Accordingly, the percentage obtained by dividing the total federal, state and local tax provision by the domestic pre-tax income,
all as shown in the preceding tables, may be higher than the statutory tax rates in the United States.
The Company's effective tax rates differed from statutory rates as follows:
Year Ended December 31,
2013 2012 2011
Federal statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0 % 35.0 % 35.0 %
State income taxes, net of federal income tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 % 0.6 % 2.0 %
Foreign rate differential, net of U.S. tax paid on foreign earnings (9.2%, 5.1% and 1.2%,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (22.9)% (22.5)% (14.0)%
IRS Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — % (16.1)%
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 % (0.9)% 1.7 %
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 % 12.2 % 8.6 %