UPS 2013 Annual Report Download - page 115
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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
103
Our effective tax rate increased to 34.5% in 2013, compared with 17.1% in 2012, primarily due to an increase in total
pre-tax income and the decrease in U.S. Federal and state tax credits relative to total pre-tax income. The impact of these
factors was partially offset by a portion of the gain from liquidating a foreign subsidiary in early 2013 not being taxable (see
note 15).
Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations, which is effective through
December 31, 2017 and may be extended through December 31, 2022 if additional requirements are satisfied. The tax
incentive is conditional upon our meeting specific employment and investment thresholds. The impact of this tax incentive
decreased non-U.S. tax expense by $20 million ($0.02 per share) and $22 million ($0.02 per share) for 2013 and 2012,
respectively.
Deferred tax liabilities and assets are comprised of the following at December 31 (in millions):
2013 2012
Property, plant and equipment $ (3,613) $ (3,624)
Goodwill and intangible assets (1,116)(1,035)
Other (651)(617)
Deferred tax liabilities (5,380)(5,276)
Pension and postretirement benefits 3,086 4,608
Loss and credit carryforwards (non-U.S. and state) 279 258
Insurance reserves 765 737
Vacation pay accrual 224 209
Stock compensation 70 159
Other 709 708
Deferred tax assets 5,133 6,679
Deferred tax assets valuation allowance (251)(220)
Deferred tax asset (net of valuation allowance) 4,882 6,459
Net deferred tax asset (liability) $ (498) $ 1,183
Amounts recognized in the consolidated balance sheets:
Current deferred tax assets $ 684 $ 583
Current deferred tax liabilities (included in other current liabilities) (48)(36)
Non-current deferred tax assets 110 684
Non-current deferred tax liabilities (1,244)(48)
Net deferred tax asset (liability) $ (498) $ 1,183
The valuation allowance increased by $31, $15 and $2 million during the years ended December 31, 2013, 2012 and
2011, respectively.
We have U.S. state and local operating loss and credit carryforwards as follows (in millions):
2013 2012
U.S. state and local operating loss carryforwards $ 546 $ 608
U.S. state and local credit carryforwards $ 42 $ 61
The operating loss carryforwards expire at varying dates through 2033. The state credits can be carried forward for
periods ranging from three years to indefinitely.