US Airways 2006 Annual Report Download - page 128

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
again become available for issuance under the 2005 Incentive Plan. If any shares subject to a stock award are not delivered to a
participant because those shares are withheld for the payment of taxes or the stock award is exercised through a reduction of shares
subject to the stock award (i.e., "net exercised"), the number of shares that are not delivered will remain available for issuance under the
2005 Incentive Plan. If the exercise price of any stock award is satisfied by tendering shares of US Airways Group common stock held by
the participant, then the number of shares so tendered (whether by actual tender or by attestation of ownership) will remain available for
issuance under the 2005 Incentive Plan. Shares of US Airways Group common stock subject to stock awards issued in substitution for
previously outstanding awards assumed in connection with a merger, consolidation or similar transaction will not reduce the number of
shares available for issuance under the 2005 Incentive Plan.
The Company's net income for the year ended December 31, 2006 includes $35 million of compensation costs related to share-
based payments. Compensation expense of $4 million, calculated using the provisions of APB 25, was recorded for stock appreciation
rights and restricted stock units granted to employees of US Airways Group in the fourth quarter of 2005. Upon adoption of SFAS 123R,
the Company recorded a cumulative benefit from the accounting change of $1 million, which reflects the impact of estimating future
forfeitures for previously recognized compensation expense. Pursuant to APB 25, stock compensation expense was not reduced for
estimated future forfeitures, but instead was reversed upon actual forfeiture. No income tax effect related to share-based payments or
cumulative effect has been recorded as the effects have been immediately offset by the recording of a valuation allowance through the
same financial statement caption.
Restricted Stock Unit Awards — As of December 31, 2006, the Company has outstanding restricted stock unit awards ("RSUs")
with service conditions (vesting periods) and RSUs with service and performance conditions (vesting periods and obtaining a combined
operating certificate for AWA and US Airways). SFAS 123R requires that the grant-date fair value of RSUs be equal to the market price
of the share on the date of grant if vesting is based on a service or a performance condition. The grant-date fair value of RSU awards that
are subject to both a service and a performance condition are being expensed over the vesting period, as the performance condition is
considered probable and the vesting periods of the awards are longer than the period allowed to meet the performance condition. Vesting
periods for RSU awards range from two to four years. RSUs are classified as equity awards.
There were no RSUs granted during 2004. Restricted stock unit award activity for the years ending December 31, 2006 and 2005 is
as follows (shares in thousands):
Weighted
Number of Average Grant-
2005 Equity Incentive Plan Shares Date Fair Value
Nonvested balance at December 31, 2004 — $ —
Granted 696 26.15
Vested and released — —
Forfeited (9) 24.68
Nonvested balances at December 31, 2005 687 $ 26.17
Granted 254 38.55
Vested and released (75) 42.38
Forfeited (52) 24.85
Nonvested balance at December 31, 2006 814 $ 28.63
As of December 31, 2006, there was $12 million of total unrecognized compensation costs related to RSUs. These costs are
expected to be recognized over a weighted average period of 1.1 years. The total fair value of restricted stock awards vested during 2006
was $3 million. No restricted stock vested during 2005 or 2004.
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