US Bank 2003 Annual Report Download - page 98

may give rise to differing interpretations of these complex amount of any additional tax liabilities that may result from
laws, regulations and methods. Due to the nature of the these examinations, if any, will not have a material adverse
examination process, it generally takes years before these effect on the financial condition, results of operations or
examinations are completed and matters are resolved. At cash flows of the Company.
December 31, 2003, the Company is in various stages of Deferred income tax assets and liabilities reflect the tax
the examination process for federal tax return matters of effect of temporary differences between the carrying
U.S. Bancorp for periods dating back to 1995 and other amounts of assets and liabilities for financial reporting
predecessor entities dating back to 1997. In addition, purposes and the amounts used for the same items for
examinations by various state taxing authorities date back income tax reporting purposes.
to 1997. At year-end, the Company believes the aggregate
The components of the Company’s net deferred tax liability as of December 31 were:
(Dollars in Millions) 2003 2002
Deferred tax assets
Allowance for credit losses ***************************************************************************** $ 977.6 $ 961.0
Stock compensation *********************************************************************************** 318.2 334.7
Federal AMT credits and capital losses ****************************************************************** 59.1 48.6
Pension and postretirement benefits ********************************************************************* 58.8 62.8
Deferred fees ***************************************************************************************** 29.9 (70.6)
State and federal operating loss carryforwards ************************************************************ 21.2 34.9
Real estate and other asset basis differences************************************************************* 7.0 39.1
Other deferred tax assets, net ************************************************************************** 209.2 487.4
Gross deferred tax assets *************************************************************************** 1,681.0 1,897.9
Deferred tax liabilities
Leasing activities ************************************************************************************** (2,509.6) (2,292.2)
Accrued severance, pension and retirement benefits******************************************************* (297.5) (65.0)
Accelerated depreciation ******************************************************************************* (142.3) (104.4)
Securities available-for-sale and financial instruments ****************************************************** (31.2) (478.8)
Other investment basis differences ********************************************************************** (19.5) (37.2)
Other deferred tax liabilities, net************************************************************************* (236.3) (248.7)
Gross deferred tax liabilities ************************************************************************* (3,236.4) (3,226.3)
Valuation allowance ************************************************************************************ (1.0) (1.0)
Net deferred tax liability *************************************************************************** $(1,556.4) $(1,329.4)
The Company has established a valuation allowance to institutions would be recaptured if an entity ceases to
offset deferred tax assets related to state net operating loss qualify as a bank for federal income tax purposes. The base
carryforwards which are expected to expire unused. The year reserves of thrift institutions also remain subject to
Company has approximately $252 million of state net income tax penalty provisions that, in general, require
operating loss carryforwards, which expire at various times recapture upon certain stock redemptions of, and excess
through 2022. distributions to, stockholders. At December 31, 2003,
Certain events covered by Internal Revenue Code retained earnings included approximately $101.8 million of
section 593(e), which was not repealed, will trigger a base year reserves for which no deferred federal income tax
recapture of base year reserves of acquired thrift liability has been recognized.
institutions. The base year reserves of acquired thrift
Derivative Instruments
In the ordinary course of business, the Company enters into and liability management purposes and customer-related
derivative transactions to manage its interest rate and derivative positions, see Table 17 ‘‘Derivative Positions,’’
prepayment risk and to accommodate the business included in Management’s Discussion and Analysis, which
requirements of its customers. The Company does not enter is incorporated by reference into these Notes to
into derivative transactions for speculative purposes. Refer Consolidated Financial Statements.
to Note 1 ‘‘Significant Accounting Policies’’ in the Notes to
ASSET AND LIABILITY MANAGEMENT POSITIONS
Consolidated Financial Statements for a discussion of the
Company’s accounting policies for derivative instruments. Cash Flow Hedges The Company had $21.2 billion of
For information related to derivative positions held for asset designated cash flow hedges at December 31, 2003. These
96 U.S. Bancorp
Note 21