premiums and accretion of discounts to maturity. Such amortization or accretion is included in interest income. Realized gains and losses on sales of securities are determined using the specific identification method. In April of 2002, the FASB issued SFAS No. 145,  Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections (“SFAS 145”). SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking- Fund Requirements . This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. SFAS 145 became effective and was adopted by the Company in May of 2002 and did not have an impact on the consolidated earnings or financial position of the Company. In August 2001, the FASB issued SFAS No. 144,  Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 supersedes SFAS No. 121,  Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (“SFAS 121”), but retains the requirements of SFAS 121 to test long-lived assets for impairment and removes goodwill from its scope. In addition, the changes presented in SFAS 144 require that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. Under SFAS 144, discontinued operations are no longer measured on a net realizable value basis, and future operating losses are no longer recognized before they occur. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after December 15, 2001. The implementation of SFAS 144 did not have a material impact on the consolidated earnings or financial position of the Company. In June 2001, the FASB issued SFAS No. 141,  Business Combinations  (“SFAS 141”), effective for business combinations initiated after June 30, 2001, and SFAS No. 142,  Goodwill and Other Intangible Assets (“SFAS 142”), effective for fiscal years beginning after December 15, 2001. Under SFAS 141, the pooling of interests method of accounting for business combinations is eliminated. Under SFAS 142, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the pronouncement. Other intangible assets will continue to be amortized over their useful lives. Under the transitional provisions of SFAS 142, the Company identified its reporting units and performed the first of the required impairment tests of net goodwill and indefinite-lived intangible assets during 2002. The testing resulted in no impairment losses to any recorded goodwill of the Company. Cash and cash equivalents includes cash and due from banks, federal funds sold and resale agreements and interest-bearing deposits at other banks. Cash paid for interest for the years ended December 31, 2002, 2001 and 2000 was $1.4 billion, $1.1 billion and $.8 billion, respectively. Cash paid for income taxes for the years ended December 31, 2002, 2001 and 2000 was $585.8 million, $70.8 million and $237.2 million, respectively. The Company classifies all debt securities as securities available for sale. These securities are stated at fair value, with the unrealized gains and losses, net of tax, reported as a component of cumulative other comprehensive income. The amortized cost of debt securities is adjusted for amortization of 53 Loan securitization involves the sale, generally to a trust or other special purpose entity, of a pool of loan receivables and is accomplished primarily through the public and private issuance of asset-backed securities by the special purpose entity. The Company removes loan receivables from the consolidated balance sheet for those asset securitizations that qualify as sales in accordance with SFAS 140. The trusts are qualifying special purpose entities as defined by SFAS 140. For those asset securitizations that qualify as sales in accordance with SFAS 140, the trusts to which the loans were sold are not subsidiaries of the Company, and are not included in the Company’s consolidated financial statements in accordance with GAAP. Gains on securitization transactions, fair value adjustments and servicing and other income on the Company’s securitizations are included in servicing and securitizations non-interest income in the consolidated statements of income and amounts due from the trusts are included in accounts receivable from securitizations on the consolidated balance sheets. Annual membership fees and direct loan origination costs are deferred and amortized over one year on a straight-line basis. Direct loan origination costs consist of both internal and external costs associated with the origination of a loan. Deferred fees (net of deferred costs of $45.2 million and $55.1 million in 2002 and 2001, respectively) were $325.9 million and $291.6 million as of December 31, 2002 and 2001, respectively.  Interchange income is a fee paid by a merchant bank to the card-issuing bank through the interchange network. Interchange fees are set by MasterCard International Inc. and Visa U.S.A. Inc. and are based on cardholder purchase volumes. The Company recognizes interchange income as earned. The Company offers to its customers certain rewards programs based on purchase volumes. The provision for the cost of the rewards programs is based upon points awarded in the current year which are ultimately expected to be redeemed by program members and the current average cost per point of redemption. The cost of these rewards programs is deducted from interchange income. The cost of the rewards programs related to securitized loans is deducted from servicing and securitizations income. The Company recognizes earned finance charges and fee income on loans according to the contractual provisions of the credit agreements. When, based on historic performance of the portfolio, payment in full of finance charge and fee income is not expected, the estimated uncollectible portion is not accrued as income. As discussed below, the 2002 change in recoveries estimate resulted in an $82.7 million reduction of finance charges and fees deemed uncollectible for the year ended December 31, 2002. Amounts collected on previously charged-off accounts related to finance charges and fees are recognized as income. Costs to recover previously charged-off accounts are recorded as collection expense in non-interest expenses. REVENUE RECOGNITION LOAN SECURITIZATIONS CASH AND CASH EQUIVALENTS SECURITIES AVAILABLE FOR SALE