First Data 2013 Annual Report Download - page 111

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Income tax payments, net of refunds received, of $92.6 million in 2013 were greater than current expense primarily as a result of cash payments
relating to prior years and expected refunds of cash taxes paid. Income tax payments, net of refunds received, of $70.1 million and $67.2 million in 2012 and
2011, respectively, were greater than current expense primarily as a result of the decreased liability for unrecognized tax benefits reducing current expense.
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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be
realized. Deferred tax assets are included in both “Other current assets” and “Other long-term assets” in the Company’s Consolidated Balance Sheets. Deferred
tax liabilities are included in “Deferred long-term tax liabilities” in the Company’s Consolidated Balance Sheets. The following table outlines the principal
components of deferred tax items:
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  
Deferred tax assets related to:
Reserves and other accrued expenses $315.3 $ 543.5
Pension obligations 13.1 47.9
Employee related liabilities 99.7 75.7
Deferred revenues 32.6 30.0
Net operating losses and tax credit carryforwards 2,003.3 1,600.7
U.S. foreign tax credits on undistributed earnings 274.4 234.8
Foreign exchange (gain)/loss 68.6 48.5
Total deferred tax assets 2,807.0 2,581.1
Valuation allowance (1,454.5) (1,113.6)
Realizable deferred tax assets 1,352.5 1,467.5
Deferred tax liabilities related to:
Property, equipment and intangibles (1,233.0)(1,206.0)
Investment in affiliates and other (426.1)(512.3)
Unrealized securities and hedging (gain)/loss (1.3)(0.6)
U.S. tax on foreign undistributed earnings (139.6) (173.8)
Total deferred tax liabilities (1,800.0)(1,892.7)
Net deferred tax liabilities $(447.5)$(425.2)
(a) Certain amounts have been reclassified to conform to current year presentation.
The Company’s deferred tax assets and liabilities were included in the Consolidated Balance Sheets as follows:
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  
Current deferred tax assets $103.5 $ 73.9
Current deferred tax liabilities (0.8) —
Long-term deferred tax assets 2.8 10.4
Long-term deferred tax liabilities (553.0)(509.5)
Net deferred tax liabilities $(447.5)$(425.2)
As of December 31, 2013 and 2012, the Company had recorded valuation allowances of $1,454.5 million and $1,113.6 million, respectively, against
its net deferred tax assets. The increase to the valuation allowance of $340.9 million in 2013 was primarily due to current year federal, state and foreign net
operating losses which may not be utilized within the statute of limitations. In determining the necessary amount of valuation allowance, the Company has
considered a tax planning strategy related to its investments in affiliates. Implementation of this strategy would result in the immediate reversal of temporary
differences associated with the excess of book basis over tax basis in the investments.
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