First Data 2009 Annual Report Download - page 231

Chase Paymentech
NOTES TO COMBINED FINANCIAL STATEMENTS
For the years ended December 31, 2007 and 2006 and
the year ended December 31, 2005 (unaudited) (Continued)
BOPS. The financial position, results of operations, changes in owners’ equity and cash flows for all periods
presented subsequent to October 1, 2005 reflect the operations of Chase Paymentech—U.S. in its current form.
Canadian Operations
Chase Paymentech Solutions (Chase Paymentech—Canada or the Company’s Canadian operations),
formerly Paymentech Canada, is a joint venture beneficially owned by FDC and JPMorgan Chase and comprises
the Company’s entire Canadian operations. Each of the partners in the joint venture holds partnership interests
which are of a single class and have the same rights and privileges.
Business
The Company engages in the electronic payment processing industry for businesses accepting credit, debit,
fleet, and stored value card payments, as well as alternative methods of payment via point-of-sale, internet,
catalog and recurring billings. The Company provides these services for transactions that originate throughout
the world for financial institutions, sales agents and the Company’s direct merchants, which are primarily located
in North America.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying combined financial statements are presented in conformity with accounting principles
generally accepted in the United States of America (U.S. GAAP). All intercompany profits, accounts, and
transactions have been eliminated.
Unaudited Financial Information
The unaudited combined financial statements for the year ended December 31, 2005 have been prepared in
accordance with U.S. GAAP. These financial statements were prepared on the same basis as the combined
financial statements as of December 31, 2007 and 2006 and for the years then ended, and in the opinion of
management, reflect all adjustments and accruals considered necessary to fairly present the Company’s combined
results of operations, changes in owners’ equity and cash flows.
Reclassifications
Certain activities related to the Company’s investments have been reclassified in the Company’s combined
statements of cash flows in order to present gross cash flows from purchases, sales and maturities of investments
in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. As a result, cash flows from operating activities and investing
activities differ from previously filed documents, which presented these activities on a net basis. Certain
eliminations of the Company’s intercompany activities have been reclassified to each of the appropriate
components of owners’ equity in the Company’s combined statements of changes in owners’ equity. Although
these reclassifications do not affect owners’ equity in total, the components of owners’ equity differ from
previously filed documents, which presented these eliminations separately. These reclassifications did not impact
the combined balance sheets and statements of income and comprehensive income. The Company’s deferred
contract incentives have been reclassified from current to non-current assets and certain liabilities, primarily
related to the Company’s deferred compensation, long-term incentive, and pension benefit plans, have been
reclassified from current to non-current liabilities in the Company’s combined balance sheets. The change in
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