Goldman Sachs 2003 Annual Report Download - page 98

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Notes to Consolidated Financial Statements
96 GOLDMAN SACHS 2003 ANNUAL REPORT
note 13
INCOME TAXES
The components of the net tax expense reflected in the consolidated statements of earnings are set forth below:
YEAR ENDED NOVEMBER
(IN MILLIONS) 2003 2002 2001
Current taxes
U.S. federal $ 680 $ 543 $ 781
State and local 115 35 64
Non-U.S. 552 331 489
Total current tax expense 1,347 909 1,334
Deferred taxes
U.S. federal 22 7 (9)
State and local 27 102 95
Non-U.S. 44 121 (34)
Total deferred tax expense/(benefit) 93 230 52
Net tax expense $1,440 $1,139 $1,386
Deferred income taxes reflect the net tax effects of tempo-
rary differences between the financial reporting and tax
bases of assets and liabilities. These temporary differences
result in taxable or deductible amounts in future years and
are measured using the tax rates and laws that will be in
effect when such differences are expected to reverse.
Significant components of the firm’s deferred tax assets and liabilities are set forth below:
AS OF NOVEMBER
(IN MILLIONS) 2003 2002
Deferred tax assets
Compensation and benefits $1,301 $1,415
Unrealized losses 177 173
Other, net 156 185
1,634 1,773
Valuation allowance(1) (18) (17)
Total deferred tax assets 1,616 1,756
Deferred tax liabilities
Depreciation and amortization 196 207
Total deferred tax liabilities 196 207
Net deferred tax assets $1,420 $1,549
(1) Relates primarily to the ability to utilize certain state and local and foreign tax credits.
The weighted average fair value of options granted during fiscal 2003, fiscal 2002 and fiscal 2001 was $31.31 per
option, $27.38 per option and $30.82 per option, respectively. Fair value was estimated as of the grant date based on
a binomial option-pricing model using the following weighted average assumptions:
YEAR ENDED NOVEMBER
2003 2002 2001
Risk-free interest rate 3.4% 3.5% 5.2%
Expected volatility 35.0 35.0 35.0
Dividend yield 1.0 0.6 0.5
Expected life 5 years 5 years 7 years