American Express 2001 Annual Report Download - page 73

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axp_71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The company’s net deferred tax assets at December 31 were as follows:
(Millions) 2001 2000
Deferred tax assets $ 4,269 $ 3,500
Deferred tax liabilities 2,318 2,023
Net deferred tax assets $ 1,951 $ 1,477
Deferred tax assets for 2001 and 2000 are primarily related to reserves not yet deducted for tax purposes of $2.8 billion and
$1.9 billion, respectively; deferred Cardmember fees of $278 million and $254 million, respectively; deferred compensation
of $344 million and $370 million, respectively; and, for 2000, deferred taxes related to SFAS No. 115 of $71 million. Deferred tax
liabilities for 2001 and 2000 are mainly related to deferred acquisition costs of $1,025 million and $987 million, respectively; depre-
ciation and amortization of $413 million and $323 million,respectively; deferred taxes related to SFAS No. 140 (which superceded
SFAS No. 125) of $181 million and $111 million, respectively; and, for 2001, deferred taxes related to SFAS No. 115 of $172 million.
The principal reasons that the aggregate income tax provision is different from that computed by using the U.S. statutory rate of
35 percent are as follows:
(Millions) 2001 2000 1999
Combined tax at U.S. statutory rate $ 559 $ 1,368 $ 1,203
Changes in taxes resulting from:
Tax-preferred investments (247) (211) (171)
Tax-exempt element of dividend income (27) (26) (43)
Foreign income taxed at rates other than
U.S. statutory rate (27) (38) (35)
State and local income taxes 38 50 49
All other (11) (45) (40)
Income tax provision $ 285 $ 1,098 $ 963
Net income taxes paid by the company during 2001, 2000 and 1999 were $545 million, $858 million and $392 million, respectively,
and include estimated tax payments and cash settlements relating to prior tax years.
The items comprising comprehensive income in the Consolidated Statements of Shareholders’ Equity are presented net of income
tax provision (benefit). The changes in net unrealized securities gains are presented net of tax provision (benefit) of $258 million,
$81 million and $(473) million for 2001, 2000 and 1999, respectively. Net unrealized losses on derivatives are presented net of tax
(benefit) of $(159) million for 2001. Foreign currency translation adjustments are presented net of tax (benefit) provision of
$(21) million, $18 million and $3 million for 2001, 2000 and 1999,respectively. Minimum pension liability adjustment is presented
net of tax (benefit) of $(55) million for 2001.