Document 2jYoByd72RyOyxnYZ8peD9nzN

I OPTIONS FOR COMMON SHARES Options have been granted to certain employees, under various plans, to purchase the Company's Common Shares at prices equal to fair market value as of date of grant. These options expire ten years from date of grant. A summary of stock option activity follows: 1994 1993 Average price per share Shares Average price per share Shares Outstanding, January 1 Granted Exercised Canceled Outstanding, December 31 S31.53 57.71 28.12 46.42 $37.94 3.433.850 959.390 (348.720) (45.361) 3.999.159 $28.81 39.34 27.28 32.52 $31.53 3.368.670 831.730 (657.353) (109.197) 3.433,850 Shares exercisable January 1 December 31 Shares reserved for future grants January 1 December 31 2,401,683 2.839,095 2,133.630 1.218,477 2.334.758 2.401.683 2,856.882 2,133.630 INCOME TAXES Income before income taxes for the yean ended December 31 follows (in millions): United States Outside the United States 1994 $396 92 $488 1993 $214 48 $262 1992 $147 34 $181 Income taxes for the years ended December 31 follows (in millions): Current United Slates Federal ' State and local Outside the United States Deferred United States Increase in statutory tax rate Other Federal State and local Outside the United Slates Operating loss carryforwards Reduction of valuation allowance for deferred tax assets Increase in statutory tax rate Other 1994 1993 1992 $ 81 15 44 140 $108 7 30 145 $ 42 5 20 67 (5) 24 (50) (14) 1 (2) (1) (S) (7) (III (3) (2) 3 15 $155 (5) (1) 7 (63) $ 82 (26) S 41 Significant components of current and long-term deferred income taxes at December 31 follow (in millions): Accruals and other adjustments Employee benefits Inventory Restructuring Depreciation and amortization Other Operating loss carryforwards Valuation allowance Other items Current assets 1994 Long-term assets Long-term liabilities $ 54 15 20 46 16 $151 $228 13 (142) 7 78 (29) 3 $158 $ (4) (17) l 9 $<U) Accruals and other adjustments Employee benefits Inventory Restructuring Depreciation and amortization Other Operating loss carryforwards Valuation allowance Other items Current assets 1993 Long-term assets Long-term liabilities $ 44 15 15 38 15 $127 $209 13 (140) 5 50 (15) (10) $112 $ (4) (15) 2 7 $(10) At December 31,1994, certain subsidiaries outside the United States had tax loss carryforwards and tax credit carryovers (in millions) aggregating $162 and $15, respectively. Carryforwards of $92 million have no expiration dates and the balance expire at various dates from 1995 through 2005. The tax credit carryovers expire at various dates from 1995 through 1999. Reconciliations of income taxes at the United States Federal statutory rate to the effective income tax rate for the years ended December 31 follow (in millions): Income taxes at the United States statutory rate State and local income taxes Adjustment of worldwide tat liabilities Possessions credit related to Puerto Rican operations Reduction of valuation allowance for deferred tax assets Adjustment of deferred income taxes for change in statutory rates Effective tax rate differential on earnings of consolidated subsidiaries and associate companies outside the United States Other - net 1994 Amount Rate 1993 Rate 1992 Rate $171 14 35.0% 35.0% 34.0% 2.8 1.5 .9 7 1.6 1.4 (6.0) (26) (5.2) (3) (.6) (2.1) (2) (4) (2.3) (6) $155 (1.3) 31.9% .1 (2.1) 31.5% (3.9) (2.2) 22.8% 29