First Data 2009 Annual Report Download - page 246

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)
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. Net deferred tax assets and liabilities are
included in deferred income taxes on the combined balance sheets. The components of the Company’s deferred
tax items consist of the following at December 31, (in thousands):
2007 2006
Deferred tax assets related to:
Accrued expenses and reserves ................................. $ 187 $ 185
Accrued pension benefits ...................................... 1,419 1,293
Other employee benefits ....................................... 4,803 3,920
Tax attribute carryforwards .................................... 651 620
Other ...................................................... 117 14
Total deferred tax assets ........................................... 7,177 6,032
Valuation allowance .......................................... (651) (620)
Realizable deferred tax assets ....................................... 6,526 5,412
Deferred tax liabilities related to:
Depreciation and amortization .................................. (37,119) (33,257)
Net deferred tax liabilities ......................................... $(30,593) $(27,845)
As of December 31, 2007 and 2006, the Company had recorded a valuation allowance of $651 thousand and
$620 thousand respectively, against U.S. capital loss carryforwards. It is more likely than not that the tax benefit
of those capital losses will not be recognized due to statutory limitations.
Income tax payments of $72.3 million in 2007 are less than current expense primarily due to the benefit of
deferral due to tax fiscal year and tax benefits associated with the exercise of stock options. Net income tax
payments of $58.2 million in 2006 are less than current expense primarily due to refunds received from prior
years, the benefit of deferral due to tax fiscal year and tax benefits associated with the exercise of stock options.
Income tax payments of $51.8 million in 2005 are less than current expense primarily due to tax benefits
associated with the exercise of stock options and the benefit of deferral due to tax fiscal year.
NOTE 13—SEGMENT REPORTING
Operating segments are defined by SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, as components of an enterprise about which separate financial information is available that
is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and
in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company classifies its
business into two reporting segments for financial reporting purposes consisting of its U.S. and Canadian
operations.
The business segments measurements provided to, and evaluated by, the Company’s CODM are computed
in accordance with the accounting policies described in Note 2.
The Company’s U.S. operations process electronic payments of credit, debit, fleet, and stored value card
transactions primarily for merchants throughout North America.
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