Notes to Consolidated Financial Statements

(Continued)

Note 13.
Pre-tax Earnings and Provision for Income Taxes:

Pre-tax earnings and provision for income taxes consisted of the following for the years ended December 31, 2003, 2002 and 2001:

(in millions)			2003			2002		2001
	Pre-tax earnings:
	United States		$  8,201			$12,179		$  9,105
	Outside United States		6,559			5,919		5,179
	Total pre-tax earnings		$14,760			$18,098		$14,284
	Provision for income taxes:
	United States federal:
	Current		$  1,970			$  2,633		$  2,722
	Deferred		742			1,493		570
			2,712			4,126		3,292
	State and local		383			459		484
	Total United States		3,095			4,585		3,776
	Outside United States:
	Current		1,814			1,747		1,516
	Deferred		242			92		115
	Total outside United States		2,056			1,839		1,631
	Total provision for income taxes		$  5,151			$  6,424		$  5,407

At December 31, 2003, applicable United States federal income taxes and foreign withholding taxes have not been provided on approximately $8.6 billion of accumulated earnings of foreign subsidiaries that are expected to be permanently reinvested. It is not practical to estimate the amount of additional taxes that might be payable on such undistributed earnings.

The effective income tax rate on pre-tax earnings differed from the U.S. federal statutory rate for the following reasons for the years ended December 31, 2003, 2002 and 2001:

 

			2003			2002		2001
	U.S federal statutory rate		35.0%			35.0%		35.0%
	Increase (decrease) resulting from:
	State and local income taxes,
	net of federal tax benefit		1.3			1.7		2.3
	Goodwill amortization							2.3
	Other (including reversal of
	taxes no longer required)		(1.4)			(1.2)		(1.7)
	Effective tax rate		34.9%			35.5%		37.9%

The effective tax rate impact of state and local income taxes in 2003 reflects reversals of $74 million of state tax liabilities, net of federal tax benefit, that are no longer needed due to published rulings during 2003.

The tax effects of temporary differences that gave rise to consumer products deferred income tax assets and liabilities consisted of the following at December 31, 2003 and 2002:

(in millions)			2003			2002
	Deferred income tax assets:
	Accrued postretirement and
	postemployment benefits		$1,392			$1,291
	Settlement charges		1,240			1,066
	Other		415			733
	Total deferred income tax assets		3,047			3,090
	Deferred income tax liabilities:
	Trade names		(3,839)			(3,839)
	Unremitted earnings		(862)			(651)
	Property, plant and equipment		(2,275)			(2,158)
	Prepaid pension costs		(1,199)			(660)
	Total deferred income tax liabilities		(8,175)			(7,308)
	Net deferred income tax liabilities		$(5,128)			$(4,218)

Financial services deferred income tax liabilities are primarily attributable to temporary differences relating to net investments in finance leases.