US Airways 2005 Annual Report Download - page 233

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
US Airways' equity value of $1 million was determined based on an allocation of the purchase price to each of US Airways Group's subsidiaries' fair
values of assets and liabilities. The remaining equity of $116 million was assigned to US Airways Group and its other subsidiaries. In connection with
US Airways emergence from bankruptcy, significant prepetition liabilities were discharged. The surviving liabilities and the assets acquired in the merger are
shown at estimated fair value. Liabilities assumed reflects the discharge of $1.24 billion of liabilities for postretirement benefits, $868 million of liabilities
related to the termination of US Airways' defined benefit pension plans and $75 million of liabilities related to trade accounts payable and other liabilities.
Most of these obligations were only entitled to receive such distributions of cash and common stock as provided for under the Plan of Reorganization. The
surviving liabilities and the assets acquired in the merger are shown at estimated fair value. US Airways used an outside appraisal firm to assist in determining
the fair value of long-lived tangible and identifiable intangible assets. Significant assets and liabilities adjusted to fair market value include expendable spare
parts and supplies, property and equipment, airport take-off and landing slots, aircraft leases, deferred revenue and continuing debt obligations. The foregoing
estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the control of US Airways. Accordingly, there can be
no assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially.
In accordance with SFAS 141, the allocation of equity values is subject to adjustment within one year after the date of acquisition when additional
information on asset and liability valuations becomes available. US Airways expects that there may be further adjustments including those related to the
allocation of the purchase price among US Airways and the other acquired subsidiaries of US Airways Group and fair value adjustments for assets and
liabilities such as 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 4 Special Items for
discussion of amounts expensed for severance and benefits in the fourth quarter of 2005.
The excess of the reorganization value over tangible assets and identifiable intangible assets and liabilities has been reflected as goodwill on the balance
sheet of December 31, 2005. The net assets acquired and liabilities assumed in connection with the merger and initial allocation of purchase price to
US Airways are as follows (in millions):
Current assets $ 922
Property and equipment 2,271
Other intangible assets 548
Other assets 778
Goodwill 732
Liabilities assumed (5,250)
$ 1
227