65 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (thousands of dollars unless otherwise indicated) NOTE 13–-OTHER EXPENSE–-NET Included in the Other expense - net caption of the Statements of Consolidated Income are the following: 2004 2003 2002 Dividend and royalty income.............................. $(2,498) $(2,877) $(3,341) Net expense of financing and investing activities...... 7,140  9,071  7,284  Provisions for environmental matters (see Note 9) ........ 13,953  10,237  8,609  Net expense of exit or disposal activities  (see Note 6) ...................... 37 14 262  Foreign currency exchange losses - net ........................ 1,699  1,460  8,435  Other income ...................... (4,458) (1,429) (4,154) Other expense ...................... 1,992  2,155  4,376  $17,865  $18,631  $21,471  The net expense of financing and investing activities included the net realized gains or losses from disposing of fixed assets, the net gain or loss relating to the change in the Company’s investment in certain long-term asset funds and certain foreign entities, fees related to debt issuance and financing services and in 2003 and 2002, the net pretax expense associated with the Company’s invest- ment in broad-based corporate owned life insurance. Foreign currency exchange losses - net included for- eign currency transaction gains and losses and realized and unrealized gains and losses from foreign currency option and forward contracts. The Company had no foreign currency option or forward contracts outstand- ing at December 31, 2004. All foreign currency option and forward contracts outstanding at December 31, 2003 and 2002 had maturity dates of less than twelve months and were undesignated hedges with changes in fair value being recognized in earnings in accordance with SFAS No. 133. These derivative instrument values were included in either Other current assets or Other accruals and were immaterial at December 31, 2003  and 2002. Other income included items of revenue and other gains that were unrelated to the primary business pur- pose of the Company. Each individual item of other income was immaterial; no single category of items exceeded $1,000. Other expense included expense items and losses that were unrelated to revenues associated with the primary business purpose of the Company. Each individual item of other expense was immaterial; no single category of items exceeded $1,000. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using the enacted tax rates and laws that are currently in effect. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2004, 2003  and 2002 were as follows: Netted against the Company’s other deferred tax assets were valuation reserves of $14,930, $17,643 and $14,459 at December 31, 2004, 2003 and 2002, respec- tively, resulting from the uncertainty as to the realiza- tion of the tax benefits from certain foreign net operating losses and certain other foreign assets. Significant components of the provisions for income taxes were as follows: NOTE 14—INCOME TAXES 2004 2003 2002 Deferred tax assets: Dispositions, environmental  and other  similar items.......... $ 51,859  $ 47,941  $ 48,452 Other items (each less than 5 percent of total assets) ...... 110,955  105,660  138,515 Total deferred  tax assets .......... $ 162,814  $ 153,601  $ 186,967 Deferred tax liabilities: Depreciation and amortization.......... $ 75,573  $ 49,634  $ 29,082 Deferred employee benefit items.......... 59,892  61,981  63,165 Total deferred  tax liabilities ...... $ 135,465  $ 111,615  $ 92,247 2004 2003 2002 Current: Federal .................. $ 126,199 $ 129,146 $ 138,541 Foreign.................. 17,994  5,719  9,549 State and local ...... 24,242  16,131  16,410 Total current...... 168,435  150,996  164,500 Deferred: Federal .................. 18,001  32,299  20,770 Foreign.................. (3,312) 3,554  (1,498) State and local ...... 2,538  4,019  2,691 Total deferred .... 17,227  39,872  21,963 Total provisions for income taxes .. $ 185,662  $ 190,868  $ 186,463