EX-99.1 5 d312486dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF UNITED

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 providing for a “merger of equals” business combination. 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 also expects in the future that it will merge Continental and United into one legal entity (the “Airlines Merger”). Once the Airlines Merger occurs, the financial statements of United and Continental will be combined for all periods presented from the date of the Merger at their historical cost, 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 combines the historical consolidated balance sheet of Continental and United as of December 31, 2011. The Unaudited Pro Forma Condensed Combined Statement of Operations of United for the year ended December 31, 2011 combines the historical consolidated statement of operations of Continental and United, for the year ended December 31, 2011.

The Unaudited Pro Forma Condensed Combined Financial Statements of United 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, 2011. The Unaudited Pro Forma Condensed Combined Financial Statements of United 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.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET OF UNITED

December 31, 2011

In millions

 

     Historical              
     Continental     United     Pro Forma
Adjustments		     Condensed
Combined Pro
Forma		  

ASSETS

         

Current assets:

         

Cash and cash equivalents

    $ 2,782      $ 3,458        $ 6,240   

Short-term investments

      1,241        275          1,516   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total unrestricted cash, cash equivalents and short-term investments

      4,023        3,733        —          7,756   

Restricted cash

      —          40          40   

Receivables, less allowance for doubtful accounts

      595        763          1,358   

Aircraft fuel, spare parts and supplies, less obsolescence allowance

      275        340          615   

Deferred income taxes

      267        348          615   

Receivables from related parties

      —          228        (11 )      217   

Prepaid expenses and other

      165        447        (10 )      602   
  

 

 

    

 

 

    

 

 

    

 

 

  
     5,325        5,899        (21 )      11,203   
  

 

 

    

 

 

    

 

 

    

 

 

  

Property and equipment, net

      7,348        9,070          16,418   

Other assets:

         

Goodwill

      4,523        —            4,523   

Intangibles, less accumulated amortization

      2,469        2,283        (2 )      4,750   

Restricted cash, cash equivalents and investments

      135        393          528   

Other, net

      364        600          964   
  

 

 

    

 

 

    

 

 

    

 

 

  
     7,491        3,276        (2 )      10,765   
  

 

 

    

 

 

    

 

 

    

 

 

  
   $ 20,164      $ 18,245      $ (23 )    $ 38,386   
  

 

 

    

 

 

    

 

 

    

 

 

  

LIABILITIES AND STOCKHOLDER’S EQUITY

         

Current liabilities:

         

Advance ticket sales

    $ 1,462      $ 1,652        $ 3,114   

Frequent flyer deferred revenue

      921        1,484          2,405   

Accounts payable

      894        1,109          2,003   

Accrued salaries and benefits

      521        988          1,509   

Current maturities of long-term debt

      571        615          1,186   

Current maturities of capital leases

      3        122          125   

Payables to related parties

      11        104        (11 )      104   

Other

      279        853        (10 )      1,122   
  

 

 

    

 

 

    

 

 

    

 

 

  
     4,662        6,927        (21 )      11,568   
  

 

 

    

 

 

    

 

 

    

 

 

  
        

Long-term debt

      4,957        5,130          10,087   

Long-term obligations under capital leases

      193        735          928   
        

Other liabilities and deferred credits:

         

Frequent flyer deferred revenue

      1,235        2,018          3,253   

Postretirement benefit liability

      292        2,115          2,407   

Pension liability

      1,770        92          1,862   

Advanced purchase of miles

      270        1,442          1,712   

Deferred income taxes

      820        707          1,527   

Lease fair value adjustment, net

      1,133        —            1,133   

Other

      507        983          1,490   
  

 

 

    

 

 

    

 

 

    

 

 

  
     6,027        7,357        —          13,384   
  

 

 

    

 

 

    

 

 

    

 

 

  

Stockholder’s equity:

         

Common stock

      —          —            —     

Additional capital invested

      4,148        3,432          7,580   

Retained earnings (deficit)

      474        (5,208 )      (2 )      (4,736 ) 

Accumulated other comprehensive loss

      (297 )      (128 )        (425 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
     4,325        (1,904 )      (2 )      2,419   
  

 

 

    

 

 

    

 

 

    

 

 

  
   $ 20,164      $ 18,245      $ (23 )    $ 38,386   
  

 

 

    

 

 

    

 

 

    

 

 

  

The accompanying notes are an integral part of the Unaudited Pro Forma Condensed Combined Financial Statements.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF UNITED

Year ended December 31, 2011

In millions

 

     Historical              
     Continental     United     Pro Forma
Adjustments		     Condensed
Combined Pro
Forma		  

Operating revenue:

         

Passenger—Mainline

    $ 11,816      $ 14,153      $ 6      $ 25,975   

Passenger—Regional

      2,601        3,935          6,536   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total passenger revenue

      14,417        18,088        6        32,511   

Cargo

      448        718          1,166   

Special revenue item

      19        88          107   

Other operating revenue

      1,291        2,261        (217 )      3,335   
  

 

 

    

 

 

    

 

 

    

 

 

  
     16,175        21,155        (211 )      37,119   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses:

         

Aircraft fuel

      5,294        7,080          12,374   

Salaries and related costs

      3,405        4,172        74        7,651   

Regional capacity purchase

      830        1,574          2,404   

Landing fees and other rent

      900        1,028          1,928   

Aircraft maintenance materials and outside repairs

      595        1,160        (11 )      1,744   

Depreciation and amortization

      626        921        (1 )      1,546   

Distribution expenses

      688        748          1,436   

Aircraft rent

      686        323          1,009   

Special charges

      159        433          592   

Other operating expenses

      2,042        2,829        (273 )      4,598   
  

 

 

    

 

 

    

 

 

    

 

 

  
     15,225        20,268        (211 )      35,282   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      950        887        —          1,837   

Nonoperating income (expense):

         

Interest expense

      (342 )      (595 )        (937 ) 

Interest capitalized

      17        15          32   

Interest income

      10        10          20   

Miscellaneous, net

      (72 )      (33 )        (105 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
     (387 )      (603 )      —          (990 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      563        284        —          847   

Income tax expense (benefit)

      (6 )      3          (3 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 569      $ 281      $ —        $ 850   
  

 

 

    

 

 

    

 

 

    

 

 

  

The accompanying notes are an integral part of the Unaudited Pro Forma Condensed Combined Financial Statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF UNITED

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 providing for a “merger of equals” business combination. 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 also expects in the future that it will merge Continental and United into one legal entity (the “Airlines Merger”). Once the Airlines Merger occurs, the financial statements of United and Continental will be combined for all periods presented from the date of the Merger at their historical cost, and there will no longer be a requirement to separately report the historical financial statements of Continental, and United will be considered the predecessor.

The Unaudited Pro Forma Condensed Combined Balance Sheet of United combines the historical consolidated balance sheet of Continental and United on December 31, 2011. The Unaudited Pro Forma Condensed Combined Statement of Operations of United for the year ended December 31, 2011 combines the historical consolidated statement of operations of Continental and United for the year ended December 31, 2011.

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.