Avon 2000 Annual Report Download - page 28

6Income Taxes
Deferred tax assets (liabilities) resulting from temporary
differences in the recognition of income and expense for
tax and financial reporting purposes at December 31 con-
sisted of the following:
2000 1999
Deferred tax assets:
Postretirement benefits $ 80.7 $ 82.8
Accrued expenses and reserves 48.9 48.6
Special and non-recurring charges 2.4 7.2
Employee benefit plans 69.8 70.9
Foreign operating loss carryforwards 25.9 37.3
Capital loss carryforwards .2 10.0
Postemployment benefits 7.4 9.3
Revenue recognition 4.2 —
All other 30.6 27.0
Valuation allowance (25.4) (46.7)
Total deferred tax assets 244.7 246.4
Deferred tax liabilities:
Depreciation (43.1) (43.6)
Prepaid retirement plan costs (50.0) (54.9)
Capitalized interest (8.7) (9.7)
Unremitted foreign earnings (13.7) (17.7)
All other (27.2) (19.7)
Total deferred tax liabilities (142.7) (145.6)
Net deferred tax assets $ 102.0 $ 100.8
Deferred tax assets (liabilities) at December 31 were
classified as follows:
2000 1999
Deferred tax assets:
Prepaid expenses and other $ 86.0 $ 90.0
Other assets 66.1 52.2
Total deferred tax assets 152.1 142.2
Deferred tax liabilities:
Income taxes (18.8) (4.7)
Deferred income taxes (31.3) (36.7)
Total deferred tax liabilities (50.1) (41.4)
Net deferred tax assets $102.0 $100.8
The valuation allowance primarily represents
reserves for foreign operating loss and capital loss carry-
forwards. The basis used for recognition of deferred tax
assets included the profitability of the operations and
related deferred tax liabilities.
Income from continuing operations before taxes,
minority interest and cumulative effect of an accounting
change for the years ended December 31 was as follows:
2000 1999 1998
United States $172.0 $102.2 $ 74.2
Foreign 519.0 404.4 381.7
Tota l $691.0 $506.6 $455.9
The provision for income taxes for the years ended
December 31 was as follows:
2000 1999 1998
Federal:
Current $ (3.2) $ 48.4 $ 39.2
Deferred 11.1 (13.3) (10.4)
7.9 35.1 28.8
Foreign:
Current 183.8 167.5 153.7
Deferred —(4.5) .9
183.8 163.0 154.6
State and other:
Current 7.6 8.3 10.9
Deferred 2.4 (2.2) (3.5)
10. 0 6.1 7.4
Total $201.7 $204.2 $190.8
The effective tax rate for the years ended December 31
was as follows:
2000 1999 1998
Statutory federal rate 35.0% 35.0% 35.0%
State and local taxes,
net of federal tax benefit .5 .8 1.0
Tax-exempt operations (.2) (.3) .8
Taxes on foreign income,
including translation .3 4.2 4.6
Tax refund, net of taxes (5.8) ——
Other (.6) .6 .5
Effective tax rate 29.2% 40.3% 41.9%
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