EX-99.1 28 d436512dex991.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Unaudited Pro Forma Condensed Combined Financial Information

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL

INFORMATION OF UNITED AND CONTINENTAL

On May 2, 2010, UAL Corporation, Continental Airlines, Inc. (“Continental”) and JT Merger Sub Inc., a wholly-owned subsidiary of UAL Corporation, entered into an Agreement and Plan of Merger. On October 1, 2010, JT Merger Sub Inc. merged with and into Continental, with Continental surviving as a wholly-owned subsidiary of UAL Corporation (the “Merger”). Upon closing of the Merger, UAL Corporation became the parent company of both United Air Lines, Inc. (“United”) and Continental and UAL Corporation’s name was changed to United Continental Holdings, Inc. (“UAL” or the “Company”).

The Company plans to merge United Air Lines, Inc. and Continental Airlines, Inc. into one legal entity (the “Airlines Merger”) in 2013. Once this legal merger occurs, the financial statements of United and Continental will be combined at their historical cost for all periods presented beginning on October 1, 2010, the date on which Continental became a wholly-owned subsidiary of UAL, and there will no longer be a requirement to separately report the historical financial statements of Continental.

The Unaudited Pro Forma Condensed Combined Balance Sheet of United and Continental combines the historical consolidated balance sheet of Continental and United as of December 31, 2012. The Unaudited Pro Forma Condensed Combined Statement of Operations of United and Continental for the year ended December 31, 2012 combines the historical consolidated statement of operations of Continental and United.

The Unaudited Pro Forma Condensed Combined Financial Statements of United and Continental were prepared by combining the historical financial information of both Continental and United. Pro forma statements that give effect to a business combination to be accounted for as a reorganization of entities under common control combine the historical financial statements of combining entities.

These Unaudited Pro Forma Condensed Combined Financial Statements have been developed from and should be read in conjunction with the consolidated financial statements of Continental and United contained in their respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2012. The Unaudited Pro Forma Condensed Combined Financial Statements of United and Continental are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of Continental or United would have been had the Airlines Merger occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET OF

UNITED AND CONTINENTAL

December 31, 2012

In millions

 

                                                                                   
    Historical              
    Continental     United     Pro Forma
Adjustments		     Condensed
Combined
Pro Forma		  

ASSETS

        

Current assets:

        

Cash and cash equivalents

    $ 1,999        $ 2,766        $ —        $ 4,765    

Short-term investments

     1,447         326         —         1,773    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Total unrestricted cash, cash equivalents and short-term investments

     3,446         3,092         —         6,538    

Restricted cash

     —         65         —         65    

Receivables, less allowance for doubtful accounts

     144         1,194         —         1,338    

Aircraft fuel, spare parts and supplies, less obsolescence allowance

     293         402         —         695    

Deferred income taxes

     274         272         —         546    

Receivables from related parties

     1         2,767         (2,542)        226    

Prepaid expenses and other

     147         700         (5)        842    
 

 

 

    

 

 

    

 

 

    

 

 

  
    4,305         8,492         (2,547)        10,250    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Property and equipment, net

     8,346         8,946         —         17,292    
       

Other assets:

        

Goodwill

     4,523         —         —         4,523    

Intangibles, less accumulated amortization

     2,371         2,228         (3)        4,596    

Receivables from related parties

     —         270         (270)        —    

Restricted cash, cash equivalents and investments

     110         272         —         382    

Other, net

     458         594         —         1,052    
 

 

 

    

 

 

    

 

 

    

 

 

  
    7,462         3,364         (273)        10,553    
 

 

 

    

 

 

    

 

 

    

 

 

  
   $ 20,113        $ 20,802        $ (2,820)       $ 38,095    
 

 

 

    

 

 

    

 

 

    

 

 

  

(continued on the next page)

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET OF UNITED AND CONTINENTAL

December 31, 2012

In millions

 

                                                                                                   
    Historical              
    Continental     United     Pro Forma
Adjustments		     Condensed
Combined
Pro Forma		  

LIABILITIES AND STOCKHOLDER’S EQUITY

        

Current liabilities:

        

  Advance ticket sales

    $ 39        $ 3,321        $ —        $ 3,360    

  Frequent flyer deferred revenue

     —         2,364         —         2,364    

  Accounts payable

     798         1,518         —         2,316    

  Accrued salaries and benefits

     559         1,204         —         1,763    

  Current maturities of long-term debt

     722         1,090         —         1,812    

  Current maturities of capital leases

     3         119         —         122    

  Payables to related parties

     2,542         75         (2,542)        75    

  Other

     210         935         (5)        1,140    
 

 

 

    

 

 

    

 

 

    

 

 

  
    4,873         10,626         (2,547)        12,952    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Long-term debt

     5,753         4,285         —         10,038    

Long-term obligations under capital leases

     174         618         —         792    
       

Other liabilities and deferred credits:

        

  Frequent flyer deferred revenue

     —         2,756         —         2,756    

  Postretirement benefit liability

     230         2,384         —         2,614    

  Pension liability

     2,303         97         —         2,400    

  Advanced purchase of miles

     —         1,537         —         1,537    

  Deferred income taxes

     822         648         —         1,470    

  Payables to related parties

     270         —         (270)        —    

  Lease fair value adjustment, net

     881         —         —         881    

  Other

     460         1,035         —         1,495    
 

 

 

    

 

 

    

 

 

    

 

 

  
    4,966         8,457         (270)        13,153    
 

 

 

    

 

 

    

 

 

    

 

 

  
       

Stockholder’s equity:

        

  Common stock

     —         —         —         —    

  Additional capital invested

     4,167         3,444         —         7,611    

  Retained earnings (deficit)

     1,001         (6,396)        (3)        (5,398)   

  Accumulated other comprehensive loss

     (821)        (232)        —         (1,053)   
 

 

 

    

 

 

    

 

 

    

 

 

  
    4,347         (3,184)        (3)        1,160    
 

 

 

    

 

 

    

 

 

    

 

 

  
       
 

 

 

    

 

 

    

 

 

    

 

 

  
   $ 20,113        $ 20,802        $ (2,820)       $ 38,095    
 

 

 

    

 

 

    

 

 

    

 

 

  

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF UNITED AND CONTINENTAL

Year ended December 31, 2012

In millions

 

                                                                                                           
     Historical                
     Continental      United      Pro Forma
Adjustments		      Condensed
Combined
Pro Forma		  

Operating revenue:

            

Passenger-Mainline

     $ 12,081         $ 13,723         $ —         $ 25,804    

Passenger-Regional

      2,910          3,869          —          6,779    
  

 

 

     

 

 

     

 

 

     

 

 

  

Total passenger revenue

      14,991          17,592          —          32,583    

Cargo

      353          665          —          1,018    

Other operating revenue

      1,631          2,704          (776)         3,559    
  

 

 

     

 

 

     

 

 

     

 

 

  
     16,975          20,961          (776)         37,160    
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Operating expenses:

            

Aircraft fuel

      5,709          7,430          —          13,139    

Salaries and related costs

      3,559          4,234          153          7,946    

Regional capacity purchase

      963          1,507          —          2,470    

Landing fees and other rent

      902          1,030          (2)         1,930    

Aircraft maintenance materials and outside repairs

      654          1,163          (58)         1,759    

Depreciation and amortization

      592          930          —          1,522    

Distribution expenses

      668          684          —          1,352    

Aircraft rent

      680          313          —          993    

Special charges

      339          984          —          1,323    

Other operating expenses

      2,155          3,390          (869)         4,676    
  

 

 

     

 

 

     

 

 

     

 

 

  
     16,221          21,665          (776)         37,110    
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Operating income (loss)

      754          (704)         —          50    

Nonoperating income (expense):

            

Interest expense

      (326)         (496)         —          (822)   

Interest capitalized

      22          15          —          37    

Interest income

      15          8          —          23    

Miscellaneous, net

      57          (2)         —          55    
  

 

 

     

 

 

     

 

 

     

 

 

  
     (232)         (475)         —          (707)   
  

 

 

     

 

 

     

 

 

     

 

 

  
           

Income (loss) before income taxes

      522          (1,179)         —          (657)   

Income tax expense (benefit)

      (5)         9          —          4    
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income (loss)

     $ 527         $ (1,188)        $ —         $ (661)   
  

 

 

     

 

 

     

 

 

     

 

 

  

Exhibit 99.1

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF UNITED AND CONTINENTAL

Note 1. Basis of Presentation

On May 2, 2010, UAL Corporation, Continental Airlines, Inc. (“Continental”) and JT Merger Sub Inc., a wholly-owned subsidiary of UAL Corporation, entered into an Agreement and Plan of Merger. On October 1, 2010, JT Merger Sub Inc. merged with and into Continental, with Continental surviving as a wholly-owned subsidiary of UAL Corporation (the “Merger”). Upon closing of the Merger, UAL Corporation became the parent company of both United Air Lines, Inc. (“United”) and Continental and UAL Corporation’s name was changed to United Continental Holdings, Inc. (“UAL” or the “Company”).

The Company plans to merge United Air Lines, Inc. and Continental Airlines, Inc. into one legal entity (the “Airlines Merger”) in 2013. Once this legal merger occurs, the financial statements of United and Continental will be combined at their historical cost for all periods presented beginning on October 1, 2010, the date on which Continental became a wholly-owned subsidiary of UAL, and there will no longer be a requirement to separately report the historical financial statements of Continental.

The Unaudited Pro Forma Condensed Combined Balance Sheet of United and Continental combines the historical consolidated balance sheet of Continental and United on December 31, 2012. The Unaudited Pro Forma Condensed Combined Statement of Operations of United and Continental for the year ended December 31, 2012 combines the historical consolidated statement of operations of Continental and United for the year ended December 31, 2012.

The Unaudited Pro Forma Condensed Combined Financial Statements were prepared by combining the historical financial information of both Continental and United. Pro forma statements that give effect to a business combination to be accounted for as a reorganization of entities under common control generally only combine the historical financial statements of combining entities.

Note 2. Pro Forma Adjustments

The Unaudited Pro Forma Condensed Combined Financial Statements of United primarily reflect the elimination of transactions and account balances between Continental and United.