US Airways 2005 Annual Report Download - page 157

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
include expendable spare parts and supplies, property and equipment, airport take-off and landing slots, aircraft leases, deferred revenue and continuing debt
obligations.
In accordance with SFAS 141, the allocation of equity values is subject to adjustment for up to one year after the date of acquisition when additional
information on asset and liability valuations becomes available. The Company expects that there may be further adjustments to recorded fair values including
those related to its air traffic liability, tax liabilities, and accrued expenses. Accrued expenses may change based on identification of final fees and costs
associated with US Airways Group's emergence from bankruptcy, resolution of disputed claims and completion of the Chapter 11 cases. In connection with
the merger, primarily due to the relocation of the corporate headquarters from Arlington, Virginia to Tempe, Arizona, US Airways accrued in purchase
accounting $24 million of severance and benefits related to planned reductions in force for its non union employees. The Company expects to incur additional
severance and benefits for reductions in force related to the merger, however, due to requirements for continued service during the integration period, these
severance and benefits will not be an adjustment to the purchase price allocation but will be expensed in future periods. See Note 7 for discussion of amounts
expensed for severance and benefits in the fourth quarter of 2005.
Adjustments made in the fourth quarter of 2005 to recorded fair values reported as of September 30, 2005 are as follows (in millions):
Goodwill reported as of September 30, 2005 $ 584
Property and equipment 23
Other assets 23
Air traffic liability 11
Other accrued expenses 49
Deferred gains and credits 50
Postretirement benefits other than pensions (10)
Employee benefit liabilities and other 2
Goodwill reported as of December 31, 2005 $ 732
Adjustments to other assets and deferred gains and credits primarily represent fair market value adjustments for above and below market aircraft leases.
Adjustments to Other accrued expenses primarily represent fair market value adjustments to the acquired frequent traveler liability and identified pre-
acquisition liabilities for return conditions liabilities and related power by the hour program penalties associated with the return of certain aircraft, and a
retroactive TSA assessment received in the fourth quarter.
(b) Pro forma information
The following information is presented assuming the merger and the conversion of America West Holdings' Class A and Class B common stock had been
completed as of January 1, 2004. The pro forma consolidated results of operations include purchase accounting adjustments, such as fair market value
adjustments of the assets and liabilities of US Airways Group, adjustments to reflect the disposition of prepetition liabilities upon US Airways Group's
emergence from bankruptcy, and adjustments to conform certain accounting policies of US Airways Group and America West Holdings, together with related
income tax effects. Certain other transactions critical to US Airways Group's emergence from bankruptcy and the completion of the merger that became
effective either before, at or immediately following the merger have also been reflected in the pro forma financial information. These transactions include the
new equity investments, the comprehensive agreements with GECC, the comprehensive agreement with Airbus, the restructuring of the ATSB Loans, and the
restructuring of the credit card partner and credit card 151