United Airlines 2007 Annual Report Download - page 97
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UAL Corporation and Subsidiary Companies
Combined Notes to Consolidated Financial Statements (Continued)
(1) Voluntary Reorganization Under Chapter 11 (Continued)
Adjustments of Preconfirmation Contingencies. The Company recorded its best estimates for certain preconfirmation contingent liabilities that were not
resolved at the Effective Date. In accordance with AICPA Practice Bulletin 11, Accounting for Preconfirmation Contingencies in Fresh-Start Reporting,
("Practice Bulletin 11"), the Company has recorded the impact of revisions to these estimates in current results of operations as discussed in the "Claims
Resolution Process" section above and in Note 20, "Special Items."
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation—UAL is a holding company whose principal subsidiary is United. The Company's consolidated financial statements include the
accounts of its majority-owned affiliates. All significant intercompany transactions are eliminated. Certain prior year amounts have been reclassified to conform
to the current year's presentation.
Upon emergence from its Chapter 11 proceedings, the Company adopted fresh-start reporting in accordance with SOP 90-7 as of February 1, 2006. The
Company's emergence from reorganization resulted in a new reporting entity with no retained earnings or accumulated deficit as of February 1, 2006.
Accordingly, the Company's consolidated financial statements for periods before February 1, 2006 are not comparable to consolidated financial statements
presented on or after February 1, 2006.
(b) Reclassifications—In 2007, UAL and United changed their classification of certain distribution-related costs, previously included in purchased services
and commissions, to classify these costs as distribution expenses in the Statements of Consolidated Operations. Prior to 2007, "Commissions" were reported as a
separate expense item and credit card transaction fees and global distribution systems ("GDS") transaction expenses were part of the "Purchased services" line
item. The distribution expenses previously reported for the month of January 2006, the eleven months ended December 31, 2006 and the year ended
December 31, 2005 were reclassified to provide a comparable presentation with results for the year ended December 31, 2007. Amounts originally reported in
the Company's 2006 Annual Report on Form 10-K as "Commissions" and amounts reported as part of "Purchased services"
89
Source: UNITED AIR LINES INC, 10-K, February 29, 2008