Note  1 -- Summary of Significant Accounting Policies Note  2 -- Accounting Changes Note  3 -- Special Charges Note  4 -- Segment Information Note  5 -- Leases Note  6 -- Supplementary Income Statement Information Note  7 -- Provision for Income Taxes Note  8 -- Earnings Per Share Note  9 -- Supplementary Balance Sheet Information Note 10 -- Property, Plant and Equipment - Net Note 11 -- Deferred Income Taxes Note 12 -- Goodwill Note 13 -- Other Intangible Assets Note 14 -- Debt Note 15 -- Financial Instruments Note 16 -- Shareholder's Equity Note 17 -- Preferred Stock Note 18 -- Incentive Plans and Stock Options Note 19 -- Retirement Programs Note 20 -- Commitments and Contingencies Note 21 -- Quarterly Data (Unaudited)
 

NOTE 11. DEFERRED INCOME TAXES
Net deferred tax liabilities are comprised of the following:

(Millions of dollars)
DECEMBER 31,	2003	2002
DEFERRED TAX LIABILITIES
Fixed assets	$765	$724
State and local	12	11
Other	25	18
Total deferred tax liabilities	802	753
DEFERRED TAX ASSETS
Benefit plans and related	157	164
Inventory	14	13
Alternative minimum tax and other credits	92	69
Carryforwards — gross	234	244
Minimum pension liability	53	58
Other	118	99
	668	647
Less: Valuation allowances	(99)	(124)
Total deferred tax assets	569	523
Net deferred tax liabilities	$233	$ 230
Recorded as:
Current deferred tax assets (Note 9)	$   66	$   63
Long-term deferred tax liabilities (Note 9)	299	293
Net deferred tax liabilities	$233	$230

The valuation allowances decreased $25 million in 2003 primarily relating to the utilization of domestic capital losses (See Notes 7 and 12) and other tax credit carryforward activity. At December 31, 2003, Praxair has $234 million of deferred tax assets relating to net operating loss and other tax credit carryforwards (primarily foreign). Approximately $78 million expires through 2011. The remaining carryforwards will never expire but are subject to annual usage limitations. A valuation allowance of $99 million has been established related to these carryforwards.