United Airlines 2010 Annual Report Download - page 99
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Expenses Related to the Merger
The merger-related and integration expenses have been and are expected to be significant. While the
Company has assumed that a certain level of expenses would be incurred, there are many factors that could affect
the total amount or the timing of these expenses, and many of the expenses that will be incurred are, by their
nature, difficult to estimate. These expenses could, particularly in the near term, exceed the financial benefits that
the Company expects to achieve from the Merger and could result in the Company taking significant charges
against earnings. For the year ended December 31, 2010, UAL and United incurred merger-related costs of $564
million and $363 million, respectively; Continental Successor and Continental Predecessor incurred merger-
related costs of $201 million and $29 million, respectively, in the 2010 Successor and Predecessor periods. These
costs are classified within merger-related costs and special charges in the consolidated statement of operations.
See Note 21 for additional information related to merger costs.
Tax Matters
UAL Corporation and Continental each experienced an “ownership change” as defined in Section 382 of the
Internal Revenue Code of 1986, as amended, as a result of the Merger. However, the Company currently expects
that these ownership changes will not significantly limit its ability to use its net operating loss and alternative
minimum tax credit carryforwards in the carryforward period. See Note 8 for additional information related to
tax matters.
Fair Value of Consideration Transferred
(In millions, except per share data)
Outstanding shares of Continental common stock exchanged ................................... 141
Exchange ratio ....................................................................... 1.05
Shares of UAL common stock issued ..................................................... 148
Price per share (closing market price of UAL common stock on acquisition date) .................. $23.66
Fair value of UAL shares issued ......................................................... $3,501
Fair value of UAL options issued in exchange for Continental options and equity component of
Continental convertible securities ...................................................... 235
Purchase price ....................................................................... $3,736
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