GE 2008 Annual Report Download - page 70

68 ge 2008 annual report
notes to consolidated financial statements
Note 7.
Provision for Income Taxes
(In millions) 2008 2007 2006
GE
Current tax expense $ 3,844 $2,230 $1,849
Deferred tax expense (benefit) from
temporary differences (417) 564 703
3,427 2,794 2,552
GECS
Current tax expense (benefit) (1,508) 1,268 456
Deferred tax expense (benefit) from
temporary differences (867) 93 936
(2,375) 1,361 1,392
CONSOLIDATED
Current tax expense 2,336 3,498 2,305
Deferred tax expense (benefit) from
temporary differences (1,284) 657 1,639
Total $ 1,052 $4,155 $3,944
GE and GECS file a consolidated U.S. federal income tax return.
The GECS provision for current tax expense includes its effect on
the consolidated return. The effect of GECS on the consolidated
liability is settled in cash as GE tax payments are due.
Consolidated U.S. earnings from continuing operations
before income taxes were $2,259 million in 2008, $8,449 million
in 2007 and $10,154 million in 2006. The corresponding amounts
for non-U.S.-based operations were $16,882 million in 2008,
$18,163 million in 2007 and $13,134 million in 2006.
Consolidated current tax expense includes amounts applicable
to U.S. federal income taxes of a benefit of $723 million in 2008,
and expenses of $64 million and $530 million in 2007 and 2006,
respectively, and amounts applicable to non-U.S. jurisdictions of
$3,060 million, $3,042 million and $1,549 million in 2008, 2007
and 2006, respectively. Consolidated deferred taxes related to
U.S. federal income taxes were a benefit of $827 million in 2008
and expenses of $776 million and $1,529 million in 2007 and
2006, respectively.
Deferred income tax balances reflect the effects of temporary
differences between the carrying amounts of assets and liabilities
and their tax bases, as well as from net operating loss and tax
credit carryforwards, and are stated at enacted tax rates expected
to be in effect when taxes are actually paid or recovered. Deferred
income tax assets represent amounts available to reduce income
taxes payable on taxable income in future years. We evaluate
the recoverability of these future tax deductions and credits by
assessing the adequacy of future expected taxable income from
all sources, including reversal of taxable temporary differences,
forecasted operating earnings and available tax planning strate-
gies. To the extent we do not consider it more likely than not
that a deferred tax asset will be recovered, a valuation allowance
is established. See Note 21.
In 2009, we estimate that we will amortize $323 million of prior
service cost and $377 million of net actuarial loss for the princi-
pal pension plans from shareowners’ equity into pension cost.
For other pension plans, the estimated prior service cost and
net actuarial loss to be amortized over the next fiscal year are
$10 million and $125 million, respectively. Comparable amortized
amounts in 2008, respectively, were $321 million and $237 million
for principal pension plans and $11 million and $79 million for
other pension plans.
ESTIMATED FUTURE BENEFIT PAYMENTS
2014–
(In millions) 2009 2010 2011 2012 2013 2018
Principal
pension plans $2,725 $2,800 $2,850 $2,925 $2,950 $16,050
Other
pension plans 345 350 360 370 375 2,105
Postretirement Benefit Plans
2008 COST OF POSTRETIREMENT BENEFIT PLANS AND CHANGES IN EQUITY
OTHER THAN TRANSACTIONS WITH SHAREOWNERS
Total Retiree Principal Other
postretirement benefit pension pension
(In millions) benefit plans plans plans plans
Cost of postretirement
benefit plans $ 2,182 $ 1,569 $ 244 $ 369
Changes in equity other
than transactions with
shareowners
Net actuarial loss (gain) —
current year $22,094 $ (734) $21,658 $1,170
Prior service cost —
current year 16 — — 16
Prior service cost
amortization (1,005) (673) (321) (11)
Net actuarial gain
(loss) amortization (267) 49 (237) (79)
Total changes in
equity other than
transactions with
shareowners 20,838 (1,358) 21,100 1,096
Cost of postretirement
benefit plans and
changes in equity other
than transactions with
shareowners $23,020 $ 211 $21,344 $1,465