United Airlines 2007 Annual Report Download - page 48

Other Income (Expense).
2007 compared to 2006
The following table illustrates the year-over-year dollar and percentage changes in other income (expense).
Successor Combined Successor Predecessor
(Dollars in millions)
Year Ended
December 31,
2007
Period
Ended
December 31,
2006(a)
Period from
February 1 to
December 31,
2006
Period from
January 1 to
January 31,
2006
Favorable
(Unfavorable)
%
Change
UAL
Other income (expense):
Interest expense $ (661) $ (770) $ (728) $ (42) $ 109 14
Interest income 257 249 243 6 8 3
Interest capitalized 19 15 15 — 4 27
Gain on sale of investment 41 — — — 41 —
Miscellaneous, net 2 14 14 — (12) (86)
$ (342) $ (492) $ (456) $ (36) $ 150 30
United
Other income (expense):
Interest expense $ (660) $ (771) $ (729) $ (42) $ 111 14
Interest income 260 256 250 6 4 2
Interest capitalized 19 15 15 — 4 27
Gain on sale of investment 41 — — — 41 —
Miscellaneous, net 1 11 11 — (10) (91)
$ (339) $ (489) $ (453) $ (36) $ 150 31
(a)
The combined period includes the results for one month ended January 31, 2006 (Predecessor Company) and eleven months ended December 31, 2006
(Successor Company).
UAL interest expense decreased $109 million, or 14%, in 2007 as compared to 2006. The decrease was due to the February and December 2007
amendments and prepayments of the credit facility, which lowered United's interest rate on these obligations and reduced the total obligations outstanding by
approximately $1.5 billion. Repayments of scheduled maturities of debt obligations and other debt refinancings, which are discussed in "Liquidity and Capital
Resources," below, also reduced interest expense. The 2007 period also included a $22 million reduction in interest expense due to the recognition of a gain on
debt extinguishment. These benefits were offset by interest expense of $17 million for expensing previously capitalized debt issuance costs that were associated
with the February 2007 prepayment of the credit facility, and $6 million for financing costs incurred in connection with the February amendment of the credit
facility. The $500 million Amended Credit Facility prepayment in December 2007 increased interest expense by a net of $4 million from expensing $6 million of
previously capitalized credit facility costs and recording a gain of $2 million to recognize previously deferred interest rate swap gains.
UAL interest income increased $8 million, or 3%, year-over-year. Interest income increased due to the classification of $6 million of interest income as
reorganization items in the January 2006 predecessor period in accordance with SOP 90-7.
The $41 million gain on sale of investment resulted from the Company's sale of its 21.1% interest in ARINC.
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Source: UNITED AIR LINES INC, 10-K, February 29, 2008