Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies Note 2 - Segment Information Note 3 - Earnings Per Share Note 4 - Employee and Retiree Benefits Note 5 - Investments Held by VEBA Trust Note 6 - Former Natural Resource Operations Note 7 - Costs Associated With Exit Activities Note 8 - Property and Equipment Note 9 - Impairment of Long-Lived Assets Note 10 - Other Assets Note 11 - Accrued Liabilities Note 12 - Other Liabilities Note 13 - Long-Term Debt Note 14 - Accounts Receivable and Asset Securitization Note 15 - Operating Leases Note 16 - Equity-Based Compensation Plans Note 17 - Capital Stock Note 18 - Income Taxes Note 19 - Supplemental Cash Flow Information Note 20 - Other Operating Income, Net Note 21 - Other Nonoperating Income (Expense), Net Note 22 - Risk Management Note 23 - Other Commitments and Contingencies Note 24 - Selected Quarterly Financial Data (unaudited)

Note 18 - Income Taxes

The provision (benefit) for income taxes from continuing operations consists of the following:

The U.S. federal current income tax provisions on continuing operations in 2002 and 2001 are offset by U.S federal current tax benefits included in the loss from discontinued operations.

The tax benefit for compensation expense related to the exercise of certain employee stock options for tax purposes in excess of compensation expense for financial reporting purposes is recognized as an adjustment to shareholders’ equity.

The components of the net deferred tax asset are as follows:

The valuation allowances relate to deferred tax assets in certain state and non-U.S. jurisdictions. Based on the Company’s historical and expected future taxable earnings, management believes it is more likely than not that the Company will realize the benefit of the existing deferred tax assets, net of valuation allowances, at December 31, 2003.

The following table accounts for the difference between the actual tax provision from continuing operations and the amounts obtained by applying the statutory U.S. federal income tax rate of 35% in 2003, 2002 and 2001 to the income from continuing operations before income taxes.

The Company’s income tax provision in 2003 includes $22.0 million of expense related to fourth quarter adjustments to valuation allowances for certain state and foreign deferred tax assets, net of the federal benefit of recording valuation allowances on state deferred tax assets. The valuation allowances were required due to the Company’s assessment that these assets did not meet the more-likely-than-not recognition criteria of SFAS No. 109.

Adjustments were made to the Company’s deferred tax assets and liabilities in 2003 based on an analysis completed in 2003. In 2003 and 2002, the Company also reversed contingency accruals related to favorable settlements of issues relating primarily to the Company’s U.S. federal tax returns.

As of December 31, 2003, the Company has not recorded U.S. federal deferred income taxes on $224.3 million of undistributed earnings of its foreign subsidiaries and equity affiliates. It is expected that these earnings will either be permanently reinvested in operations outside the U.S. or, if repatriated, will be substantially offset by tax credits. If the earnings were remitted to the U.S. and no credits were available, additional U.S. tax expense of $78.5 million would ultimately be recognized.

The Company’s U.S. entities file a consolidated U.S. federal income tax return.

As of December 31, 2003, the Company had $63.3 million of alternative minimum tax credits available to offset future U.S. federal income taxes and, under current tax law, the carryforward period for these credits is unlimited.

The tax benefit of net operating loss carryforwards as of December 31, 2003 was $53.2 million and related to U.S. federal and various state and foreign taxing jurisdictions. The gross amount of the net operating losses was $250.6 million as of December 31, 2003. The expiration periods primarily range from 5 years to an unlimited period.

The Company and its subsidiaries are subject to tax examinations in various U.S. and foreign jurisdictions. While it is difficult to predict the final outcome of the various issues that arise during an examination, the Company believes that it has adequately provided for all contingent income tax liabilities and interest.