Whirlpool 2002 Annual Report Download - page 32

2002 Annual Report 61 Notes to Consolidated Financial Statements
60
Details of the restructuring liability balance and full year restructuring and related activity for 2002 and 2001 are as follows:
Beginning Charge Ending
Millions of dollars Balance to Earnings Cash Paid Non-cash Translation Acquisitions Balance
2002
Restructuring
Termination costs $ 73 $ 92 $ (60) $ –$ 4 $ 7 $ 116
Non-employee exit costs 4 9 (7) –––6
Related charges
Miscellaneous buildings – 5 – (5) –––
Inventory – 1 – (1) –––
Miscellaneous equipment –16 –(16) –––
Various cash costs –38 (38) ––––
Total $ 77 $ 161 $ (105) $ (22) $ 4 $ 7 $ 122
2001
Restructuring
Termination costs $ 5 $ 134 $ (64) $ –$(2)$ –$73
Non-employee exit costs –16 (12) –––4
Related charges
Miscellaneous buildings –12 –(12) –––
Inventory – 7 – (7) –––
Miscellaneous equipment –25 –(25) –––
Various cash costs –18 (18) ––––
Total $ 5 $ 212 $ (94) $ (44) $ (2) $ –$77
>14 PRODUCT RECALLS
In September 2001, the company announced a voluntary recall of 1.8 million microwave hood combination units sold under
the Whirlpool, KitchenAid, and Sears Kenmore brands. The company recognized a product recall pre-tax charge of $300
million ($184 million after tax) during the third quarter of 2001 and recorded this charge as a separate component of
operating profit. During the fourth quarter of 2001 this liability was reduced by $79 million ($48 million after tax) due to
the development of a more efficient service repair procedure, which enabled faster repairs and reduced costs. During 2002,
the company incurred additional charges of approximately $9 million ($6 million after tax) for costs related to this recall.
In January of 2002, the company announced a voluntary recall of approximately 1.4 million dehumidifier units sold
under the Whirlpool, ComfortAire, and Sears Kenmore brands. The company recognized a product recall pre-tax
charge of $74 million ($45 million after tax) during the fourth quarter of 2001 and recorded this charge as a separate
component of operating profit.
>15 INCOME TAXES
Income tax expense from continuing operations are as follows:
Year ended December 31 – Millions of dollars 2002 2001 2000
Current:
Federal $ 101 $ 201 $ 149
State and local (6) 14 14
Foreign 109 34 34
204 249 197
Deferred:
Federal 47 (121) 26
State and local 3 (21) 3
Foreign (61) (64) (26)
(11) (206) 3
Total income tax expense $ 193 $ 43 $ 200
Domestic and foreign earnings (loss) from continuing operations before income taxes and other items are as follows:
Year ended December 31 – Millions of dollars 2002 2001 2000
Domestic $ 485 $ 204 $ 479
Foreign 10 (111) 98
Total earnings from continuing operations before taxes and other items $ 495 $ 93 $ 577
Earnings before income taxes and other items, including discontinued operations (refer to Note 5), were $427 million, $58 million
and $577 million for 2002, 2001 and 2000, respectively.
Reconciliations between tax expense at the U.S. federal statutory income tax rate of 35% and the consolidated effective
income tax rate for earnings before income taxes and other items from continuing operations are as follows:
Year ended December 31 – Millions of dollars 2002 2001 2000
Income tax expense computed at U.S. federal statutory rate $ 173 $ 33 $ 202
State and local taxes, net of federal tax benefit 3 (4) 5
Nondeductible expenses 6 7 (1)
Nondeductible goodwill amortization –66
Excess foreign taxes 411 1
Foreign dividends and subpart F income 7 13 13
Foreign government tax incentive (15) (22) (21)
Foreign tax credits (19) (9) (10)
Deductible interest on capital (8) (18) (5)
Foreign withholding taxes 13 6 5
Valuation allowances 36 16 1
Other items, net (7) 4 4
Income tax expense $ 193 $ 43 $ 200
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities used for financial reporting purposes and the amounts used for income tax purposes.