US Airways 2005 Annual Report Download - page 114

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
credit carryforwards. A valuation allowance is established, if necessary, for the amount of any tax benefits that, based on available evidence, are not expected
to be realized.
(h) Goodwill and other intangibles, net
At December 31, 2005, goodwill represents the cost in excess of the net amount assigned to assets acquired and liabilities assumed by America West
Holdings on September 27, 2005. Since that time, there have been no events or changes that would indicate an impairment to goodwill. The Company will
perform its next annual impairment test on October 1, 2006. The provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") require
that a two-step impairment test be performed on goodwill. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair
value of the reporting unit exceeds the carrying value of the net assets of the reporting unit, goodwill is not impaired and no further testing is required. If the
carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, then a second step must be performed in order to determine
the implied fair value of the goodwill and compare it to the carrying value of the goodwill. If the carrying value of goodwill exceeds its implied fair value,
then an impairment loss is recorded equal to the difference.
Other intangible assets consist primarily of trademark, international route authorities and airport take-off and landing slots and airport gates acquired in
connection with the merger. As of December 31, 2005, the Company has $56 million and $30 million of route authorities and trademarks on its balance
sheets, respectively. Route authorities and trademarks are classified as indefinite lived assets under SFAS 142. Indefinite-lived assets are not amortized but
instead are reviewed for impairment annually and more frequently if events or circumstances indicate that the asset may be impaired.
SFAS 142 requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual
values, and reviewed for impairments in accordance with SFAS 144. The following table provides information relating to the Company's intangible assets
subject to amortization as of December 31, 2005 (in millions):
Cost A/A
Airport take-off and landing slots $ 453 $ 4
Airport gate leasehold rights 52 4
Total $ 505 $ 8
A/A=Accumulated Amortization
The intangible assets subject to amortization generally are amortized over 25 years for airport take-off and landing slots and over the term of the lease for
airport gate leasehold rights on a straight-line basis and are included in depreciation and amortization on the statements of operations. For the year ended
December 31, 2005, the Company recorded amortization expense of $8 million related to its intangible assets. The Company expects to record annual
amortization expense of $29 million in 2006, $25 million in years 2007 through 2009 and $24 million in 2010 related to these intangible assets.
(i) Other assets, net
Other assets, net consist primarily of deposits held by vendors, unamortized debt issuance costs, long-term investments and leasehold interests in aircraft.
In connection with fresh-start reporting for US Airways, aircraft operating leases were adjusted to fair value and $101 million of assets were established for
leasehold interests in aircraft for aircraft leases with rental rates deemed to be below
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