United Airlines 2008 Annual Report Download - page 104

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However, the provisions of SFAS 157 were applied to the determination of the fair value of financial
assets and financial liabilities that were part of the SFAS 142 Step Two goodwill fair value determination.
The carrying value of the Company’s intangible assets or tangible long-lived assets as of Decem-
ber 31, 2008 may decrease in future periods as a result of factors such as decreased demand for aircraft,
decreases in revenues, fuel price volatility and adverse economic conditions, among others.
Intangibles
The following table presents information about the intangible assets, including goodwill, at
December 31, 2008 and 2007, respectively:
(Dollars in millions)
Weighted
Average Life of
Assets
(in years)
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
2008 2007
Amortized intangible assets
Airport slots and gates ..... 9 $ 72 $ 30 $ 72 $ 22
Hubs................... 20 145 22 145 14
Patents................. 3 70 68 70 45
Mileage Plus database ..... 7 521 179 521 137
Contracts ............... 13 140 35 216 101
Other.................. 7 13 5 18 5
10 $ 961 $339 $1,042 $324
Unamortized intangible assets
Goodwill................ $ — $2,280
Airport slots and gates ..... 237 255
Route authorities ......... 1,146 1,146
Tradenames ............. 688 752
$2,071 $4,433
During 2008, the Company wrote off its entire goodwill balance as discussed above. The Company
initially recorded goodwill of $2,756 million upon its exit from bankruptcy. Unamortized intangible
assets, other than goodwill, decreased by $82 million during 2008 as a result of a $64 million impairment
of codeshare agreements and the Company’s tradenames and an $18 million decrease in airport slots
and gates related to the sale of assets. During the year ended December 31, 2007, goodwill decreased by
$423 million due to a $414 million reduction of the valuation allowance for the deferred tax assets
established at fresh-start, $6 million due to the adoption of FIN 48 and $3 million due to a change in
estimate of tax accruals existing at the Effective Date.
Total amortization expense recognized was $92 million and $155 million for the years ended
December 31, 2008 and 2007, $169 million for the eleven month period ended December 31, 2006 and
$1 million for the one month period ended January 31, 2006. The Company expects to record
amortization expense of $69 million, $63 million, $58 million, $55 million and $52 million for 2009, 2010,
2011, 2012 and 2013, respectively.
(4) Voluntary Reorganization Under Chapter 11
Bankruptcy Considerations. The following discussion provides general background information
regarding the Company’s Chapter 11 cases and is not intended to be an exhaustive summary.
On December 9, 2002 (the “Petition Date”), UAL, United and 26 direct and indirect wholly-owned
subsidiaries (collectively, the “Debtors”) filed voluntary petitions to reorganize their businesses under
104