UPS 2008 Annual Report Download - page 100

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
2008 2007
Property, plant and equipment ......................................... $3,047 $2,864
Goodwill and intangible assets ......................................... 694 636
Pension plans ....................................................... — 693
Other ............................................................. 352 355
Gross deferred tax liabilities ........................................... 4,093 4,548
Other postretirement benefits .......................................... 944 890
Pension plans ....................................................... 1,425 —
Loss and credit carryforwards (non-U.S. and state) ......................... 264 189
Insurance reserves ................................................... 617 606
Vacation pay accrual ................................................. 192 185
Stock compensation .................................................. 214 165
Other ............................................................. 534 574
Gross deferred tax assets .............................................. 4,190 2,609
Deferred tax assets valuation allowance .................................. (117) (56)
Net deferred tax assets ................................................ 4,073 2,553
Net deferred tax liability .............................................. $ 20 $1,995
Amounts recognized in the balance sheet:
Current deferred tax asset ............................................. $ 494 $ 606
Non-current deferred tax asset ......................................... $ 74 $ 19
Non-current deferred tax liabilities ...................................... $ 588 $2,620
The valuation allowance changed by $(61), $(13), and $11 million during the years ended December 31,
2008, 2007 and 2006, respectively.
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
2008 2007
U.S. state and local operating loss carryforwards ........................... $1,320 $1,773
U.S. state and local credit carryforwards ................................. $ 74 $ 68
The operating loss carryforwards expire at varying dates through 2028. The state credits can be carried
forward for periods ranging from three years to indefinitely.
We also have non-U.S. loss carryforwards of approximately $605 million as of December 31, 2008, the
majority of which may be carried forward indefinitely. As indicated in the table above, we have established a
valuation allowance for certain non-U.S. and state loss carryforwards, due to the uncertainty resulting from a lack
of previous taxable income within the applicable tax jurisdictions.
Undistributed earnings of our non-U.S. subsidiaries amounted to approximately $1.842 billion at
December 31, 2008. Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. federal
or state deferred income taxes have been provided thereon. Upon distribution of those earnings in the form of
dividends or otherwise, we would be subject to U.S. income taxes and withholding taxes payable in various
non-U.S. jurisdictions, which could potentially be offset by foreign tax credits. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its
hypothetical calculation.
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