First Data 2012 Annual Report Download - page 111

FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income tax payments, net of refunds received, of $70.1 million, $67.2 million and $100.5 million in 2012, 2011 and 2010,
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:
(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:
As of December 31, 2012 and 2011, the Company had recorded valuation allowances of $896.5 million and $744.6 million,
respectively, against federal, state and foreign net operating and capital losses, foreign tax credits and impairments. The increase to the
valuation allowance of $151.9 million in 2012 was primarily due to current year foreign and state net operating losses which may not
be utilized within the statute of limitations and foreign tax credits for which it is likely that no benefit will be realized in the future. 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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As of December 31,
(in millions) 2012 2011(a)
Deferred tax assets related to:
Reserves and other accrued expenses $ 543.5 $450.3
Pension obligations 47.9 44.2
Employee related liabilities 75.7 64.0
Deferred revenues 30.0 26.7
Unrealized securities and hedging (gain)/loss
—
42.2
Net operating losses and tax credit carryforwards 1,383.6 1,336.5
U.S. foreign tax credits on undistributed earnings 234.8 203.2
Foreign exchange (gain)/loss 48.5 61.5
Total deferred tax assets 2,364.0 2,228.6
Valuation allowance (896.5)(744.6)
Realizable deferred tax assets 1,467.5 1,484.0
Deferred tax liabilities related to:
Property, equipment and intangibles (1,206.0) (1,382.0)
Investment in affiliates and othe
r
(512.3)(532.7)
Unrealized securities and hedging (gain)/loss (0.6)
—
U.S. tax on foreign undistributed earnings (173.8)(145.9)
Total deferred tax liabilities (1,892.7)(2,060.6)
N
et deferred tax liabilities
$ (425.2) $ (576.6)
As of December 31,
(in millions) 2012 2011
Current deferred tax assets $ 73.9 $108.3
Long-term deferred tax assets 10.4 10.5
Long-term deferred tax liabilities (509.5)(695.4)
N
et deferred tax liabilities
$ (425.2) $(576.6)