United Airlines 2008 Annual Report Download - page 141

of debt in United’s financial statements, resulting in a decrease in paid in capital equal to the total
decrease in notes and interest receivable.
(19) Special Items
2008
See Note 3, “Asset Impairments and Intangible Assets,” for a discussion of the asset impairments
and other special charges recorded in 2008.
2007
SFO Municipal Bonds Security Interest. In the first quarter of 2007, the Company recorded a
$3 million benefit to operating income as a special item to reduce the Company’s recorded obligation for
the SFO municipal bonds to the amount considered probable of being allowed by the Bankruptcy Court.
LAX Municipal Bonds Security Interest. In the first and third quarters of 2007, the Company
recorded special items of $19 million and $8 million, respectively, as favorable adjustments to operating
income to adjust the Company’s recorded obligation for the LAX municipal bonds to the amount
considered probable of being allowed by the Bankruptcy Court. See Note 4, “Voluntary Reorganization
Under Chapter 11—Significant Matters Remaining to be Resolved in Chapter 11 Cases” for further
information related to the SFO and LAX litigation.
Change in Estimate. In the third quarter of 2007, the Company recorded a change in estimate of
$59 million for certain liabilities relating to bankruptcy administrative claims. This adjustment resulted
directly from the progression of the Company’s ongoing efforts to resolve certain bankruptcy
pre-confirmation contingencies. Therefore, the Company recorded a special operating revenue credit of
$45 million and a special operating expense credit of $14 million for these changes in estimate.
2006
SFO Municipal Bonds Security Interest. In October 2006, the Bankruptcy Court issued an order
declaring that the owners of certain municipal bonds, issued before the Petition Date to finance
construction of certain leasehold improvements at SFO, should be allowed a secured claim of
approximately $27 million, based upon the court-determined fair value of the Company’s underlying
leasehold. After the denial of post-trial motions, both parties have appealed to the District Court. In
accordance with SOP 90-7, as of the Effective Date, the Company recorded $60 million as its best
estimate of the probable security interest to be awarded in this unresolved litigation. In the third quarter
of 2006 the Company recorded a special item of $30 million benefit to operating income, to reduce the
Company’s recorded obligation for the SFO municipal bonds to the amount the Company estimated
liability at that time.
ALPA Non-Qualified Pension Plan. In the fourth quarter of 2006, the Company recorded a special
item of $24 million as a benefit to operating income to reduce the Company’s recorded obligation for
this matter. This adjustment was based on the receipt of a favorable court ruling in ongoing litigation
and the Company’s determination that it was probable the Company would not be required to satisfy
this obligation.
LAX Municipal Bonds Security Interest. In the fourth quarter of 2006, based on litigation
developments, the Company recorded a special item of $18 million as a charge to operating income to
adjust the Company’s recorded obligation for the LAX municipal bonds to the amount the Company
estimated was probable to be allowed by the Bankruptcy Court.
(20) Investments
In the fourth quarter of 2007, United, along with certain other major air carriers, sold its interests
in Aeronautical Radio, Inc. (“ARINC”) to Radio Acquisition Corp., an affiliate of The Carlyle Group.
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