US Airways 2009 Annual Report Download - page 42

Table of Contents
cash charge to write off all of the goodwill created by the merger of US Airways Group and America West Holdings in September 2005.
Our 2008 results were also impacted by recognition of the following items:
• $496 million of net unrealized losses resulting from the application of mark-to-market accounting for changes in the fair value of
fuel hedging instruments, offset by $140 million of net realized gains on settled fuel hedge transactions;
• $76 million of net special charges consisting of $35 million of merger-related transition expenses, $18 million in non-cash charges
related to the decline in fair value of certain spare parts associated with our Boeing 737 aircraft fleet and, as a result of our
capacity reductions, $14 million in aircraft costs and $9 million in severance charges; and
• $214 million in other-than-temporary non-cash impairment charges for our investments in auction rate securities as well as
$7 million in write offs of debt discount and debt issuance costs in connection with the refinancing of certain aircraft equipment
notes and certain loan prepayments, offset by $8 million in gains on forgiveness of debt, all included in nonoperating expense, net.
In 2007, we realized operating income of $533 million and income before income taxes of $430 million. Our 2007 results were
impacted by recognition of the following items:
• $187 million of net unrealized gains resulting from the application of mark-to-market accounting for changes in the fair value of
fuel hedging instruments as well as $58 million of net realized gains on settled fuel hedge transactions;
• $99 million of net special charges due to merger-related transition expenses;
• a $99 million charge for an increase to long-term disability obligations for US Airways' pilots as a result of a change in the FAA-
mandated retirement age for pilots from 60 to 65;
• $7 million in tax credits due to an IRS rule change allowing us to recover certain fuel usage tax amounts for years 2003-2006,
$9 million of insurance settlement proceeds related to business interruption and property damages incurred as a result of Hurricane
Katrina in 2005 and a $5 million Piedmont pilot pension curtailment gain related to the FAA-mandated pilot retirement age change
discussed above. These gains were offset in part by $5 million in charges related to reduced flying from Pittsburgh; and
• an $18 million write off of debt issuance costs in connection with the refinancing of the $1.25 billion GE loan in March 2007 and
$10 million in other-than-temporary non-cash impairment charges for our investments in auction rate securities, offset by a
$17 million gain recognized on the sale of stock in ARINC Incorporated, all included in nonoperating expense, net.
We reported a loss in 2009, which increased our NOLs. As of December 31, 2009, we have approximately $2.13 billion of gross NOLs
to reduce future federal taxable income. All of our NOLs are available to reduce federal taxable income in the calendar year 2010. The
NOLs expire during the years 2022 through 2029.
Our net deferred tax assets, which include $2.06 billion of the NOLs, have been subject to a full valuation allowance. We also have
approximately $90 million of tax-effected state NOLs at December 31, 2009. At December 31, 2009, the federal and state valuation
allowance is $546 million and $77 million, respectively, all of which will reduce future tax expense when recognized.
For the year ended December 31, 2009, we recorded a tax benefit of $38 million. Of this amount, $21 million was due to a non-cash
income tax benefit related to gains recorded within other comprehensive income. In addition, we recorded a $14 million tax benefit
related to a legislation change allowing us to carry back 100% of 2008 AMT net operating losses, resulting in the recovery of AMT
amounts paid in prior years. We also recognized a $3 million tax benefit related to the reversal of the deferred tax liability associated with
the indefinite lived intangible assets that were impaired during 2009.
For the year ended December 31, 2008, we reported a loss, which increased our NOLs, and we did not record a tax provision.
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