United Airlines 2009 Annual Report Download - page 99

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Table of Contents
Annual Impairment Tests
United performed annual impairment reviews of its indefinite-lived intangible assets as of October 1, 2009 and 2008 and determined that no impairment
was indicated.
Goodwill
For purposes of testing goodwill in 2008, the Company estimated the fair value of the Mainline reporting unit (to which all goodwill is allocated) utilizing
several fair value measurement techniques, including two market estimates and one income estimate and using relevant data available through and as of May 31,
2008. The market approach is a valuation technique in which fair value is estimated based on observed prices in actual transactions and on asking prices for
similar assets. The income approach is a technique in which fair value is estimated based on the cash flows that an asset could be expected to generate over its
useful life, including residual value cash flows. These cash flows are discounted to their present value equivalents using a rate of return that accounts for the
relative risk of not realizing the estimated annual cash flows and for the time value of money.
Taking into consideration an equal weighting of the two market estimates and the income estimate, which has been the Company’s practice when
performing annual goodwill impairment tests, the indicated fair value of the Mainline reporting unit was less than its carrying value, and therefore, the Company
was required to perform additional goodwill impairment testing. For this testing, the Company determined the implied fair value of goodwill of the Mainline
reporting unit by allocating the fair value of the reporting unit to all the assets and liabilities of the Mainline reporting unit, including any recognized and
unrecognized intangible assets, as if the Mainline reporting unit had been acquired in a business combination and the fair value of the Mainline reporting unit was
the acquisition price. As a result of this testing, the Company determined that goodwill was completely impaired and therefore recorded an impairment charge
during the second quarter of 2008 to write-off the full value of goodwill.
Intangibles
The following table presents information about the Company’s intangible assets at December 31, 2009 and 2008, respectively:
(Dollars in millions)
Weighted
Average Life of
Assets
(in years)
2009 2008
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Amortized intangible assets
Airport slots and gates 9 $ 72 $ 37 $ 72 $ 30
Hubs 20 145 29 145 22
Patents 3 70 70 70 68
Mileage Plus database 7 521 221 521 179
Contracts 13 140 44 140 35
Other 7 12 7 13 5
Total 10 $ 960 $ 408 $ 961 $ 339
Unamortized intangible assets
Airport slots and gates $ 219 $ 237
Route authorities 1,146 1,146
Tradenames 538 688
Total $ 1,903 $ 2,071
95