US Airways 2005 Annual Report Download - page 228

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
("SFAS 148"). Accordingly, the fair value of all Predecessor Company stock option and warrant grants, as determined on the date of grant, were amortized as
compensation expense in the Statements of Operations over the vesting period. All stock options and warrants were cancelled upon emergence from the
second bankruptcy.
Prior to March 31, 2003, the Predecessor Company applied the provisions of APB 25. For the three months ended March 31, 2003, if US Airways had
applied the fair value based recognition provisions of SFAS 123, stock-based compensation expense would have been $1 million greater for the three months
ended March 31, 2003.
During the periods in which US Airways applied APB 25, US Airways used the Black-Scholes model to calculate pro forma based stock compensation
under SFAS 123. Weighted-average assumptions for the three months ended December 31, 2005 were stock volatility of 54.0%, a risk-free interest rate of
3.4%, expected stock based award lives of four years and no dividend yield. There were no stock based awards during the three months ended March 31,
2003. See Note 14 for more information on stock-based compensation.
(n) Maintenance and repair costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(o) Selling expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees and advertising and promotional expenses. Commissions,
credit card fees and computerized reservations system fees not yet recognized are included as a prepaid expense.
Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the three months ended December 31,
2005, the nine months ended September 30, 2005, the year ended December 31, 2004, the nine months ended December 31, 2003, and the three months ended
March 31, 2003 were $1 million, $14 million, $27 million, $15 million and $5 million, respectively.
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