American Express 2003 Annual Report Download - page 105

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The Company’s net deferred tax assets at December 31 were as follows:
(Millions) 2003 2002
Deferred tax assets $4,497 $4,486
Deferred tax liabilities 3,419 2,952
Net deferred tax assets $1,078 $1,534
Deferred tax assets for 2003 and 2002 are primarily related to reserves not yet deducted for tax purposes of $2.9 billion
and $2.8 billion, respectively; deferred cardmember fees of $290 million and $287 million, respectively; deferred com-
pensation of $255 million and $337 million, respectively; and deferred taxes related to net unrealized derivatives losses of
$229 million and $289 million, respectively. Deferred tax liabilities for 2003 and 2002 are mainly related to deferred acqui-
sition costs of $1.1 billion and $1.1 billion, respectively; depreciation and amortization of $801 million and $586 million,
respectively; deferred taxes related to net unrealized securities gains of $501 million and $592 million, respectively; deferred
taxes related to asset securitizations of $308 million and $233 million, respectively; and deferred taxes related to deferred
revenue of $210 million and $100 million, respectively.
The principal reasons that the aggregate income tax provision is different from that computed by using the U.S. statutory
rate of 35% are as follows:
(Millions) 2003 2002 2001
Combined tax at U.S. statutory rate $1,486 $ 1,304 $ 559
Changes in taxes resulting from:
Tax-preferred investments, including municipal bonds (240) (237) (247)
Tax-exempt element of dividend income (51) (34) (27)
Foreign income taxed at rates other than
U.S. statutory rate (54) (34) (27)
State and local income taxes 92 52 38
All other 14 5(11)
Income tax provision $1,247 $1,056 $ 285
Net income taxes paid by the Company during 2003, 2002 and 2001 were $1.2 billion, $0.9 billion and $0.5 billion, respec-
tively, 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 (benefit) provision of
($91 million), $415 million and $258 million for 2003, 2002 and 2001, respectively. The changes in net unrealized losses
on derivatives are presented net of tax provision (benefit) of $60 million, ($130 million) and ($159 million) for 2003, 2002
and 2001, respectively. Foreign currency translation adjustments are presented net of tax (benefit) of ($5 million), ($14 mil-
lion) and ($21 million) for 2003, 2002 and 2001, respectively. Minimum pension liability adjustment is presented net of tax
provision (benefit) of $18 million, $29 million and ($55 million) for 2003, 2002 and 2001, respectively.
(p.103_axp_ notes to consolidated financial statements)