US Airways 2005 Annual Report Download - page 125

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Year Ended December 31,
2005 2004 2003
Diluted earnings (loss) per share:
Earnings (loss) before cumulative effect of change in accounting principle $ (10.65) $ (5.99) $ 3.07
Cumulative effect of change in accounting principle (6.41) — —
Earnings (loss) per share $ (17.06) $ (5.99) $ 3.07
For the year ended December 31, 2005, 2,656,804 stock options are not included in the computation of diluted EPS because the option exercise prices
were greater than the average market price of common stock for the period. Options to acquire 930,976 common shares are not included in the computation of
diluted EPS because of the antidilutive effect on EPS. In addition, 3,021,908 warrants issued in conjunction with the AWA ATSB Loan and related
transactions are not included in the computation of diluted EPS because of the antidilutive effect on EPS. In addition, 1,506,141 incremental shares from
assumed conversion of the 7% senior convertible notes, 3,860,289 incremental shares from assumed conversion of the 7.5% senior convertible notes and
3,042,555 incremental shares from assumed conversion of the 7.25% senior exchangeable notes are not included in the computation of diluted EPS because of
the antidilutive effect on EPS.
For the year ended December 31, 2004, 2,165,168 stock options and 3,033,108 warrants issued in conjunction with the AWA ATSB Loan and related
transactions 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. In addition, 3,339,535 shares issuable upon conversion of the 7.25% senior exchangeable notes due 2023 and 3,586,275 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.
For the year ended December 31, 2003, 2,168,146 stock options and 4,706,756 warrants issued in conjunction with the AWA ATSB Loan and related
transactions 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. In November 2004, the Emerging Issues Task Force ("EITF") of the FASB reached a consensus on EITF 04-08, "The Effect of
Contingently Convertible Instruments on Diluted Earnings per Share," which requires that issuers of convertible securities with contingent conversion features
use the "if-converted" method to calculate reported EPS irrespective of the contingent conversion trigger being met. As approved by the FASB, this change is
effective for years ending after December 15, 2004. The Company applied this methodology in the accompanying consolidated statement of operations. The
impact of using the "if-converted" method for the Company's 7.25% senior exchangeable notes is antidilutive for the years ended December 31, 2004 and
2002. For the year ended December 31, 2003, the inclusion of the 7.25% senior exchangeable notes reduced diluted EPS by $0.06 from $3.13 to $3.07.
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