United Airlines 2010 Annual Report Download - page 122

The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits related to
UAL’s uncertain tax positions (in millions):
2010 2009 2008
Balance at January 1, ....................................................... $ 16 $ 20 $ 35
Increase due to Continental’s uncertain tax positions at the Merger closing date ..... 6 — —
Increase in unrecognized tax benefits as a result of tax positions taken during the
current period ....................................................... 10 1 1
Decrease in unrecognized tax benefits as a result of tax positions taken during a prior
period .............................................................. — (5) (11)
Decrease in unrecognized tax benefits relating to settlements with taxing
authorities .......................................................... — — (5)
Balance at December 31, ..................................................... $ 32 $ 16 $ 20
UAL’s federal income tax returns for tax years after 2002 remain subject to examination by the Internal
Revenue Service (“IRS”) and state taxing jurisdictions. The IRS commenced an examination of UAL’s U.S.
income tax returns for 2007 through 2009 in the fourth quarter of 2010. As of December 31, 2010, the IRS had
not proposed any adjustments to UAL’s returns. Continental’s federal income tax returns for tax years after 2001
remain subject to examination by the IRS and state taxing jurisdictions.
As a result of the Merger, beginning October 1, 2010, Continental and its domestic consolidated subsidiaries
joined the UAL consolidated tax return filing group, which also includes United and its domestic consolidated
subsidiaries. Consolidated current and deferred tax expense was allocated to each of United and Continental
using a method that treats each entity as though it had filed a separate tax return. Under the Company’s tax
sharing agreement, tax liabilities of group members are settled in cash. Group members are compensated for their
losses and other tax benefits only if they would be able to use those losses and tax benefits on a separate return
basis. At December 31, 2010, there were no tax-related balances due to or from Continental; and there was
approximately $13 million due from United to UAL in respect of state tax liabilities.
NOTE 9—PENSION AND OTHER POSTRETIREMENT PLANS
The following summarizes the significant pension and other postretirement plans of United and Continental:
Pension Plans
Continental maintains two primary defined benefit pension plans, one covering pilot employees and another
covering substantially all of its U.S. non-pilot employees other than Continental Micronesia and Chelsea Food
Services employees. Each of these plans provide benefits based on a combination of years of benefit accruals
service and an employee’s final average compensation. Additional benefit accruals were frozen under the plan
covering Continental’s pilot employees during 2005, at which time any existing accrued benefits for pilots were
preserved in such plan. Benefit accruals for Continental’s non-pilot employees under its other primary defined
benefit pension plan continue.
United maintains a frozen defined benefit pension plan for a small number of former employees. United and
Continental maintain additional defined benefit pension plans, which cover certain international employees.
Other Postretirement Plans
United and Continental maintain postretirement medical programs which provide medical benefits to certain
retirees and eligible dependents, as well as certain life insurance benefits to certain retirees participating in
United’s plan. Benefits provided are subject to applicable contributions, co-payments, deductibles and other
limits as described in the specific plan documentation.
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