Proctor and Gamble 2002 Annual Report Download - page 45

43The Procter & Gamble Company and Subsidiaries
Realization of certain deferred tax assets is dependent upon generating
sufficient taxable income in the appropriate jurisdiction prior to
expiration of the carryforward periods. Although realization is not
assured, management believes it is more likely than not the deferred tax
assets net of applicable valuation allowances will be realized.
Deferred income tax assets and liabilities are comprised of the
following:
Net operating losses and other tax credit carryforwards were $1,211
and $1,220 as of June 30, 2002 and 2001, respectively. If unused,
$711 will expire between 2003 and 2012. The remainder, totaling $500
at June 30, 2002, may be carried forward indefinitely.
Note 12 Commitments and Contingencies
The Company’s business creates a need to enter into commitments with
suppliers that could affect liquidity and capital resources. These
commitments do not create immediate liabilities for the Company.
The Company has purchase commitments for materials, supplies and
property, plant and equipment incidental to the ordinary conduct of
business. In the aggregate, such commitments are not in excess of
current market prices. Additionally, the Company normally commits to
some level of marketing related expenditures that extend beyond the
fiscal year. These marketing related commitments are necessary in order
to maintain a normal course of business and the risk associated with
them is limited. It is not expected that these commitments will have a
material effect on the Company’s financial condition.
At various points from 2007 to 2017, the minority partner in a
subsidiary that holds most of the Company’s China operations has the
right to exercise a put option to require the Company to purchase from
half to all of its outstanding 20% interest at a price not greater than
fair market value. The impact of this put option is dependent on factors
that can change prior to its exercise. Given the put price cannot exceed
fair market value and the Company’s current liquidity, the Company
does not believe that exercise of the put would materially impact its re-
sults of operations or financial condition.
The Company leases certain property and equipment for varying periods
under operating leases. Future minimum rental payments with terms in
excess of one year total approximately $500.
The Company is subject to various lawsuits and claims with respect to
matters such as governmental regulations, income taxes and other
actions arising out of the normal course of business. The Company is
also subject to contingencies pursuant to environmental laws and
regulations that in the future may require the Company to take action
to correct the effects on the environment of prior manufacturing and
waste disposal practices. Accrued environmental liabilities for
remediation and closure costs were $39 and $43 at June 30, 2002 and
2001, respectively. In management’s opinion, such accruals are
appropriate based on existing facts and circumstances. Current year
expenditures were not material.
While considerable uncertainty exists, in the opinion of management
and Company counsel, the ultimate liabilities resulting from such
lawsuits and claims would not materially affect the Company’s financial
statements.
June 30
2002
Total Deferred Tax Assets
Other postretirement benefits
Loss and other carryforwards
Other
Valuation allowances
Total Deferred Tax Liabilities
Fixed assets
Other
Notes to Consolidated Financial Statements
Millions of dollars except per share amounts
$109
454
742
(106)
1,199
(1,110)
(495)
(1,605)
$196
516
350
(104)
958
(1,093)
(362)
(1,455)
2001