United Airlines 2007 Annual Report Download - page 62

intended to reduce volatility of amounts recorded in pension expense each year. Since the Company has elected not to apply the corridor approach, all gains and
losses in accumulated other comprehensive income are amortized and included in pension expense each year. At December 31, 2007 and 2006, the Company had
unrecognized actuarial gains of $254 million and $120 million, respectively, recorded in accumulated other comprehensive income for its other postretirement
benefit plans.
Valuation Allowance for Deferred Tax Assets. At December 31, 2007, United and UAL each had valuation allowances against their deferred tax assets of
approximately $1.8 billion. In accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, a valuation allowance is
required to be recorded when it is more likely than not that deferred tax assets will not be realized. Future realization depends on the existence of sufficient
taxable income within the carry forward period available under the tax law. Sources of future taxable income include future reversals of taxable temporary
differences, future taxable income exclusive of reversing taxable differences, taxable income in carry back years and tax planning strategies. These sources of
positive evidence of realizability must be weighed against negative evidence, such as cumulative losses in recent years. A recent history of losses would make
difficult a determination that a valuation allowance is not needed.
In forming a judgment about the future realization of our deferred tax assets, management considered both the positive and negative evidence of realizability
and gave significant weight to the negative evidence from our cumulative losses for recent years. Management will continue to assess this situation and make
appropriate adjustments to the valuation allowance based on its evaluation of the positive and negative evidence existing at that time. We are currently unable to
forecast when there will be sufficient positive evidence for us to reverse the remainder of the valuation allowances that we have recorded. Currently, any
reversals of valuation allowance would first reduce goodwill and then reduce intangible assets. See Note 2(p), "Summary of Significant Accounting
Policies—New Accounting Pronouncements," for information regarding the effect of changes to this method of accounting for valuation allowance reversals, if
any, on the Company's results of operations and financial condition after it is required to adopt SFAS 141R on January 1, 2009. See Note 6, "Income Taxes," in
the Combined Notes to Consolidated Financial Statements for additional information.
New Accounting Pronouncements. For detailed information, see Note 2(p), "Summary of Significant Accounting Policies—New Accounting
Pronouncements," in the Combined Notes to Consolidated Financial Statements.
Forward-Looking Information
Certain statements throughout Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report
are forward-looking and thus reflect the Company's current expectations and beliefs with respect to certain current and future events and financial performance.
Such forward-looking statements are and will be subject to many risks and uncertainties relating to United's operations and business environment that may cause
actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as "expects," "will," "plans,"
"anticipates," "indicates," "believes," "forecast," "guidance," "outlook" and similar expressions are intended to identify forward-looking statements.
Additionally, forward-looking statements include statements which do not relate solely to historical facts, such as statements which identify uncertainties or
trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties
cannot be predicted, guaranteed or assured. All forward-looking statements in this report are based upon information available to the Company on the date of this
report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events,
changed circumstances or otherwise.
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Source: UNITED AIR LINES INC, 10-K, February 29, 2008