United Airlines 2007 Annual Report Download - page 50

classification of most interest income in 2005 as a component of reorganization expense in accordance with SOP 90-7. In 2005, the Company recorded
$40 million of fuel hedge gains which did not qualify for hedge accounting in non-operating income, while in 2006 the $26 million net realized and unrealized
loss from economic fuel hedges was recognized in aircraft fuel expense.
See Note 1, "Voluntary Reorganization Under Chapter 11—Financial Statement Presentation," in the Combined Notes to Consolidated Financial Statements
for information on Reorganization items, net recognized in January 2006 and during the year ended December 31, 2005.
Liquidity and Capital Resources
The following table provides a summary of UAL's and United's cash position at December 31, 2007 and 2006, and net cash provided (used) by operating,
financing and investing activities for the year ended December 31, 2007, the eleven month period ended December 31, 2006 and the one month period ended
January 31, 2006.
UAL United
December 31, December 31,
(In millions) 2007 2006 2007 2006
Cash, short-term investments & restricted cash $ 4,310 $ 4,991 $ 4,220 $ 4,896
Restricted cash included in total cash 756 847 722 809
Successor Combined Successor Predecessor
Year Ended
December 31,
2007
Twelve Months
Ended
December 31,
2006(a)
Period from
February 1 to
December 31,
2006
Period from
January 1 to
January 31,
2006
UAL
Net cash provided by operating activities $ 2,134 $ 1,562 $ 1,401 $ 161
Net cash provided (used) by investing activities (2,560) (250) (12) (238)
Net cash provided (used) by financing activities (2,147) 782 812 (30)
United
Net cash provided by operating activities $ 2,127 $ 1,588 $ 1,425 $ 163
Net cash provided (used) by investing activities (2,533) (293) (55) (238)
Net cash provided (used) by financing activities (2,134) 783 813 (30)
(a)
The combined period includes the results for the one month period ended January 31, 2006 (Predecessor) and the eleven month period ended
December 31, 2006 (Successor).
The Company's significant cash and short-term investment position represents a source of liquidity. The Company believes that it should have sufficient
liquidity to fund its operating and capital cash requirements for 2008 through cash and cash equivalents, short-term investments, cash generated from operations,
and general corporate financings. The change in cash from 2005 to 2007 is explained below. Restricted cash primarily represents cash collateral to secure
workers' compensation obligations, security deposits for airport leases and reserves with institutions that process our credit card ticket sales. We may be required
to post significant additional cash collateral to meet such obligations in the future.
Liquidity. UAL 's total of cash and cash equivalents, restricted cash and short-term investments was $4.3 billion and $5.0 billion at December 31, 2007
and 2006, respectively, including restricted cash of $756 million and $847 million, respectively. The Company used its strong operating cash flows to reduce its
debt balances by approximately $1.5 billion through its credit facility prepayments of $972 million in February 2007 and $500 million in December 2007. The
Amended Credit Facility
49
Source: UNITED AIR LINES INC, 10-K, February 29, 2008