US Airways 2007 Annual Report Download - page 111

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
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 5 for discussion of amounts expensed for severance and benefits in the fourth quarter of 2005 and 2006.
Adjustments made in the year ended December 31, 2007 and 2006 to previously recorded fair values are as follows (in millions):
Goodwill reported as of September 27, 2005 $ 732
Utilization of pre-merger NOL (85)
Materials and supplies, net 40
Accounts receivable (22)
Other assets (22)
Other accrued expenses (12)
Property and equipment 6
Long-term debt (6)
Accrued compensation and vacation (4)
Non current employee benefits and other 4
Accrued taxes (2)
Accounts payable (1)
Other intangibles, net 1
Goodwill reported as of December 31, 2006 629
Utilization of pre-merger NOL 7
Goodwill reported as of December 31, 2007 $ 622
The 2007 adjustment to goodwill is related to the utilization of pre-merger NOL generated by US Airways prior to the merger. In
accordance with SFAS No. 109, the associated decrease in the valuation allowance reduced goodwill. Adjustments in 2006 resulted as
further refinement of information became available on assets and liabilities that existed as of the acquisition date. 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. Significant adjustments included an adjustment for the utilization of pre-
merger NOL generated by US Airways prior to the merger; an adjustment to accounts receivable to reflect credits due from Republic
related to pre-merger aircraft lease assumptions; adjustments to materials and supplies for the refinement of fair market value information
available at the time of the acquisition; adjustments to other assets for the application of pre-merger airport operating expense and rent
credits and a fair market value adjustment to an investment; and adjustments to other accrued expenses to refine estimates for remaining
pending bankruptcy claim matters.
(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, 2005. 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.
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