United Airlines 2012 Annual Report Download - page 62

Table of Contents
Actuarial gains or losses are triggered by changes in assumptions or experience that differ from the original assumptions. Under the applicable accounting
standards for postretirement welfare benefit plans, those gains and losses are not required to be recognized currently as other postretirement expense, but
instead may be deferred as part of accumulated other comprehensive income and amortized into expense over the average remaining service life of the covered
active employees. All gains and losses in accumulated other comprehensive income are amortized to expense over the remaining years of service of the covered
active employees. At December 31, 2012 and 2011, UAL had unrecognized actuarial gains/(losses) for postretirement welfare benefit plans of $(79) million
and $33 million, respectively, recorded in accumulated other comprehensive income.
Income Taxes
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including the reversals of deferred tax liabilities)
during the periods in which those deferred tax assets will become deductible. The Company’s management assesses available positive and negative evidence
regarding the realizability of its deferred tax assets and records a valuation allowance when it is more likely than not that deferred tax assets will not be realized.
To form a conclusion, management considers positive evidence in the form of reversing temporary differences, projections of future taxable income and tax
planning strategies, and negative evidence such as recent history of losses. Although the Company was no longer in a three-year cumulative loss position at the
end of 2012, management determined that the loss in 2012, the overall modest level of cumulative pretax income in the three years ended December 31, 2012 of
0.4% of total revenues in that period and the uncertainty associated with projecting future taxable income supported the conclusion that the valuation allowance
was still necessary on net deferred assets. As a result of the loss sustained in 2012 and the need to complete final integration activities that produce synergies
and overcome cost increases from new labor agreements, management’s position is that sufficient positive evidence to support a reversal of the remaining
valuation allowance does not exist and has retained a full valuation allowance on its deferred tax assets. Management will continue to evaluate future financial
performance, as well as the impacts of special charges on such performance, to determine whether such performance provides sufficient evidence to support
reversal of the valuation allowance.
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Certain statements throughout Item 7,  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 the Company’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, except as required by applicable law.
The Company’s actual results could differ materially from these forward-looking statements due to numerous factors including, without limitation, the
following: its ability to comply with the terms of its various financing arrangements; the costs and availability of financing; its ability to maintain adequate
liquidity; its ability to execute its operational plans; its ability to control its costs, including realizing benefits from its resource optimization efforts, cost
reduction initiatives and fleet replacement programs; its ability to utilize its net operating losses; its ability to attract and retain customers; demand for
transportation in the markets in which it operates; an outbreak of a disease that affects travel demand or travel behavior; demand for travel and the impact
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