US Airways 2004 Annual Report Download - page 70

Table of Contents
AMERICA WEST HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
For the year ended December 31, 2002, 22,074 stock options and 2,794,399 warrants issued in conjunction with the government guaranteed loan and
related transactions are not included in the computation of diluted EPS because of the antidilutive effect on EPS. In addition, 7,292,706 stock options and
19,742,601 warrants are not included in the computation of diluted EPS because the option and warrant exercise prices were greater than the average market
price of common stock for the period. The shares issuable upon conversion of the 7.5% convertible senior notes are not included in the computation of diluted
EPS because of the antidilutive effect on EPS.
14. Supplemental Information to Consolidated Statements of Cash Flows
Supplemental disclosure of cash flow information and non-cash investing and financing activities were as follows:
Year Ended December 31,
2004 2003 2002
(in thousands)
Non-cash transactions:
Reclassification of investments in debt securities to short-term $ 25,730 $ 29,058 $ —
Issuance of convertible notes — — 67,902
Cancellation of convertible notes — (660) (8,279)
Cancellation of 10.75% senior unsecured notes related to sale of NLG investment — (10,370) —
Issuance of warrants — — 35,383
Exercise of warrants (2) (17) —
Equipment acquired through capital leases — — 17,753
Equipment acquired with issuance of notes payable — — 64,163
Notes payable issued for equipment purchase deposits 17,500 5,250 10,500
Notes payable canceled under the aircraft purchase agreement (7,000) (7,000) (10,500)
Payment in kind notes issued, net of returns 9,033 8,972 7,756
Acquisition of shares due to loan default 1,700 — —
Cash transactions:
Interest paid, net of amounts capitalized 23,841 17,201 25,942
Income taxes paid (refunded) 1,118 (3,605) (63,353)
15. Related Party Transactions
As part of AWA's reorganization in 1994, Continental Airlines and AWA entered into an alliance agreement that included code sharing arrangements,
reciprocal frequent flyer programs and ground handling operations. In March 2002, AWA received notice from Continental of its intention to terminate the
code sharing and frequent flyer agreements between the two airlines, effective April 26, 2002. Two of Continental's directors are managing partners of Texas
Pacific Group, which, through TPG Advisors, Inc., effectively controls the voting power of Holdings. AWA paid Continental approximately $13.4 million,
$17.3 million and $25.5 million and also received approximately $4.1 million, $5.0 million and $15.9 million in 2004, 2003 and 2002, respectively, from
Continental pursuant to these agreements.
Texas Pacific Group agreed to reimburse the Company approximately $2.5 million for expenses incurred by the Company on its behalf. As a result, the
Company recorded this as a receivable as of December 31, 2004. Subsequent to December 31, 2004, the Company received $1.3 million in such
reimbursement and expects to receive an additional $1.2 million in 2005.
16. Quarterly Financial Data (Unaudited)
The 2004 and 2003 unaudited quarterly financial data has been restated to reflect the accounting for fuel hedging derivative instruments pursuant to
management's determination that the Company did not qualify for hedge accounting under SFAS No. 133. In addition, the restated amounts also reflect
corrections to properly reflect the fair value of open derivative instruments at each quarter end. See Note 2, "Restatement of Previously Reported Amounts."
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