US Airways 2006 Annual Report Download - page 181

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
Cargo Revenue
Cargo revenue is recognized when shipping services for mail and other cargo are provided.
Other Revenue
Other revenue includes excess baggage charges, ticket change and service fees, commissions earned on tickets sold for flights on
other airlines, sales of tour packages by the US Airways Vacations division and the marketing component earned from selling mileage
credits to partners, as discussed in Note 1(j) "Frequent Traveler Programs".
(n) Stock-based Compensation
Upon emergence from the first bankruptcy in March 2003, the Predecessor Company adopted the fair value method of recording
stock-based employee compensation contained in SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123") and
accounted for this change in accounting principle using the "prospective method" as described by SFAS No. 148, "Accounting for Stock-
Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123" ("SFAS 148"). Accordingly, the fair
values 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.
Effective with the emergence from bankruptcy and merger with America West Holdings, US Airways applied the provisions of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations to account for awards of stock-based compensation granted to employees. 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
December 31, 2005.
Effective January 1, 2006, US Airways adopted SFAS No. 123R, "Share-Based Payment" ("SFAS 123R"), using the modified
prospective transition method. Under the modified prospective transition method, compensation cost is recognized in the financial
statements beginning with the effective date based on the requirements of SFAS 123R for all share-based payments granted after that
date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Results for
prior periods are not restated using the modified prospective transition method.
(o) Maintenance and Repair Costs
Maintenance and repair costs for owned and leased flight equipment are charged to operating expense as incurred.
(p) Selling expenses
Selling expenses include commissions, credit card fees, computerized reservations systems fees and advertising and promotional
expenses. Advertising and promotional expenses are expensed when incurred. Advertising and promotional expenses for the year ended
December 31, 2006, the three months ended December 31, 2005, the nine months ended September 30, 2005, and the year ended
December 31, 2004 were $7 million, $1 million, $14 million, and $27 million, respectively.
(q) Express Expenses
Expenses associated with US Airways' former MidAtlantic division, US Airways Group's wholly owned regional airlines and
affiliate regional airlines operating as US Airways Express have been classified as "Express
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