UPS 2011 Annual Report Download - page 124

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):
2011 2010
Property, plant and equipment ......................................... $3,607 $3,335
Goodwill and intangible assets ......................................... 951 853
Other ............................................................. 554 562
Gross deferred tax liabilities ........................................... 5,112 4,750
Pension and postretirement benefits ..................................... 2,106 1,864
Loss and credit carryforwards (non-U.S. and state) ......................... 259 295
Insurance reserves ................................................... 696 655
Vacation pay accrual ................................................. 208 191
Stock compensation .................................................. 211 242
Other ............................................................. 635 568
Gross deferred tax assets .............................................. 4,115 3,815
Deferred tax assets valuation allowance .................................. (205) (207)
Net deferred tax asset ................................................ 3,910 3,608
Net deferred tax liability .............................................. $1,202 $1,142
Amounts recognized in the consolidated balance sheets:
Current deferred tax assets ............................................ $ 611 $ 659
Current deferred tax liabilities (included in other current liabilities) ............ $ 31 $ 28
Non-current deferred tax assets (included in other non-current assets) .......... $ 118 $ 97
Non-current deferred tax liabilities ...................................... $1,900 $1,870
The valuation allowance changed by $2, $30, and $(120) million during the years ended December 31,
2011, 2010 and 2009, respectively.
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
2011 2010
U.S. state and local operating loss carryforwards ............................ $859 $1,088
U.S. state and local credit carryforwards ................................... $ 77 $ 74
The operating loss carryforwards expire at varying dates through 2031. 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 $788 million as of December 31, 2011, 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 foreign subsidiaries amounted to approximately $3.161 billion at December 31,
2011. Those earnings are considered to be indefinitely reinvested and, accordingly, no deferred income taxes
have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would
be subject to income taxes and withholding taxes payable in various jurisdictions, which could potentially be
offset by foreign tax credits. Determination of the amount of unrecognized deferred income tax liability is not
practicable because of the complexities associated with its hypothetical calculation.
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