US Airways 2005 Annual Report Download - page 128

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
provision, if US Airways elects to terminate its information technology service agreement with Sabre it will be required to pay Sabre an amount equal to the
gain multiplied by the ratio of the remaining months in the contract period over 180 months. The deferred gain from the 1999 exercise is amortized on a
straight-line basis over a contractually determined period ending December 2012. In February 2000, SHC declared a cash dividend resulting in a dilution
adjustment to the terms of the second tranche. The adjusted terms of the second tranche include stock options to acquire 3,406,914 shares of SHC Common
Stock at an exercise price of $23.78 subject to an $111.83 per share cap on the fair market value of the underlying common stock. These options are
exercisable during a ten-year period beginning January 2, 2003.
Under its fuel hedging program, AWA may enter into certain hedging transactions with approved counterparties for a period generally not exceeding
12 months. As of December 31, 2005, AWA had entered into costless collar transactions hedging approximately 20% of the Company's or 68% of AWA's
projected 2006 fuel requirements. The fair value of AWA's financial derivative instruments was a net asset of approximately $4 million and $0.2 million at
December 31, 2005 and 2004, respectively. For the period from September 27, 2005 through December 31, 2005, US Airways had no open fuel hedge
positions in place.
AWA is exposed to credit risks in the event any counterparty to a hedge transaction fails to meet its obligations. AWA does not anticipate such non-
performance as counterparties are selected based on credit ratings and exposure to any one counterparty is closely monitored.
(b) Fair values of financial instruments
Cash Equivalents, Short-term Investments and Receivables
The carrying amount of cash equivalents, short-term investments and receivables approximates fair value because of the short-term nature of these
instruments.
Cash equivalents and short-term investments as of December 31 are classified as follows (in millions):
Held-to-maturity securities: 2005 2004
Cash and cash equivalents:
Corporate notes $ 497 $ —
Cash and money market funds 628 147
U.S. government securities — 2
Total cash and cash equivalents $ 1,125 $ 149
Short-term investments:
Corporate notes $ 56 $ 69
U.S. government securities — —
Total short-term investments $ 56 $ 69
Total Held-to-maturity securities: $ 1,181 $ 218
Available-for-sale securities: 2005 2004
Short-term investments:
Auction rate securities $ 396 $ 58
Total short-term investments $ 396 $ 58
Total Available-for-sale securities $ 396 $ 58
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