Bank of America 2003 Annual Report Download - page 56

108 BANK OF AMERICA 2003 BANK OF AMERICA 2003 109
The Corporation’s current income tax expense approximates the amounts payable for those years. Deferred income tax expense represents the
change in the deferred tax asset or liability and is discussed further on the following page.
A reconciliation of the expected federal income tax expense using the federal statutory tax rate of 35 percent to the Corporation’s actual
income tax expense and resulting effective tax rate for 2003, 2002 and 2001 follows:
2003 2002 2001
(Dollars in millions) Amount Percent Amount Percent Amount Percent
Expected federal income tax expense $5,551 35.0% $4,547 35.0% $3,541 35.0%
Increase (decrease) in taxes resulting from:
Tax-exempt income
(277) (1.8) (278) (2.1) (107) (1.1)
State tax expense, net of federal benefit 239 1.5 210 1.6 161 1.6
Goodwill amortization(1) 12 0.1 ––361 3.6
IRS tax settlement (84) (0.5) (488) (3.8) – –
Basis difference in subsidiary stock –– ––(418) (4.1)
Low income housing credits/other credits (212) (1.3) (222) (1.7) (146) (1.4)
Foreign tax differential (50) (0.3) (58) (0.4) (63) (0.6)
Other (128) (0.9) 31 0.2 (4) (0.1)
Total income tax expense $5,051 31.8% $3,742 28.8% $3,325 32.9%
(1) Goodwill amortization included in business exit costs was $164 in 2001.
The following table summarizes information about stock options outstanding at December 31, 2003:
Outstanding Options Options Exercisable
Number Weighted Number
Outstanding at Average Weighted Exercisable at Weighted
December 31, Remaining Average December 31, Average
Range of Exercise Prices 2003 Term Exercise Price 2003 Exercise Price
$10.00 - $30.00 2,011,744 1.3 years $24.26 2,011,744 $24.26
$30.01 - $46.50 2,347,238 2.5 years 36.17 2,347,238 36.17
$46.51 - $65.50 110,065,848 5.2 years 57.21 63,360,192 56.63
$65.51 - $99.00 45,740,860 7.3 years 74.12 16,174,012 81.30
Total 160,165,690 5.7 years $61.32 83,893,186 $60.04
Note 18 Income Taxes
The components of income tax expense for 2003, 2002 and 2001
were as follows:
(Dollars in millions) 2003 2002 2001
Current expense
Federal $4,642 $3,386 $ 3,154
State 412 451 218
Foreign 260 349 338
Total current expense 5,314 4,186 3,710
Deferred (benefit) expense
Federal (222) (270) (411)
State (45) (200) 29
Foreign 426 (3)
Total deferred (benefit) expense (263) (444) (385)
Total income tax expense(1) $5,051 $3,742 $ 3,325
(1) Does not reflect the deferred tax effects of unrealized gains and losses on available-for-sale debt
and marketable equity securities, foreign currency translation adjustments and derivatives that are
included in shareholders’ equity. As a result of these tax effects, shareholders’ equity increased
by $1,806 in 2003 and decreased by $1,090 and $59 in 2002 and 2001, respectively. Also,
does not reflect tax benefits associated with the Corporation’s employee stock plans which
increased shareholders’ equity by $443, $251 and $80 in 2003, 2002 and 2001, respectively.
The following tables present the status of all plans at December 31, 2003, 2002 and 2001, and changes during the years then ended:
2003 2002 2001
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Employee stock options Shares Price Shares Price Shares Price
Outstanding at January 1 205,723,650 $ 58.19 184,550,016 $55.19 178,572,021 $54.45
Granted 30,668,395 70.05 85,835,715 61.45 53,067,079 50.45
Exercised (66,245,921) 55.43 (49,058,178) 52.40 (28,198,630) 40.86
Forfeited (9,980,434) 62.82 (15,603,903) 58.74 (18,890,454) 56.32
Outstanding at December 31 160,165,690 61.32 205,723,650 58.19 184,550,016 55.19
Options exercisable at December 31 83,893,186 60.04 89,575,970 59.02 94,753,943 57.94
Weighted-average fair value of options granted during the year $13.54 $12.41 $10.36
2003 2002 2001
Weighted Weighted Weighted
Average Average Average
Grant Grant Grant
Restricted stock/unit awards Shares Price Shares Price Shares Price
Outstanding unvested grants at January 1 7,839,973 $ 60.73 6,591,746 $58.42 7,172,546 $63.37
Granted 4,446,859 69.37 4,766,377 61.13 3,844,384 51.21
Vested (3,848,788) 64.93 (3,381,873) 56.87 (4,223,770) 60.32
Canceled (352,771) 65.70 (136,277) 58.95 (201,414) 57.16
Outstanding unvested grants at December 31 8,085,273 $ 63.27 7,839,973 $60.73 6,591,746 $58.42
Barnett Employee Stock Option Plan
Under the Barnett Employee Stock Option Plan, ten-year options to
purchase a predetermined number of shares of the Corporation’s
common stock were granted to all associates below a specified exec-
utive grade level in 1997. All options are nonqualified and have an
exercise price equal to the fair market value on the grant date. All
options issued under this plan vested. In addition, the options con-
tinue to be exercisable following termination of employment under
certain circumstances. At December 31, 2003, approximately
100,000 options were outstanding under this plan.
Other Plans
Under the BankAmerica 1992 Management Stock Plan, ten-year
options to purchase shares of the Corporation’s common stock were
granted to certain key employees in 1997 and 1998. At December 31,
2003, all options were fully vested and approximately 7 million options
were outstanding under this plan. Additionally, 3 million shares of
restricted stock were granted to certain key employees in 1997 and
1998. At December 31, 2003 all shares were fully vested. No further
awards may be granted under this plan.
Under the BankAmerica Performance Equity Program, ten-year
options to purchase shares of the Corporation’s common stock were
granted to certain key employees in 1997 and 1998 in the form of
market price options and premium price options. All options issued
under this plan to certain persons who were employees as of the
merger date vested. At December 31, 2003, approximately 11 million
options were outstanding under this plan. No further awards may be
granted under this plan.
Additional stock option plans assumed in connection with vari-
ous acquisitions remain outstanding and are included in the following
tables. No further awards may be granted under these plans.