US Airways 2006 Annual Report Download - page 193

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
gain realized on the eventual sale of Sabre stock from the exercise of the second tranche of options will be subject to the same clawback
provisions as the first tranche.
In 2004 US Airways utilized fixed price swap agreements and other similar instruments to manage its exposure related to jet fuel
price changes. For the year ended December 31, 2004, US Airways recognized gains of approximately $130 million related to its fuel
hedging activities. These recognized gains were primarily included in aircraft fuel and related taxes on the statements of operations. As of
December 31, 2006 and 2005, US Airways had no open fuel hedge positions in place. At December 31, 2004, US Airways had
$22 million of unrealized gains related to previously liquidated fuel hedge positions. During the nine months ended September 30, 2005,
US Airways realized $17 million of the gain as a reduction to aircraft fuel expense. The remaining $5 million was recognized as a gain in
reorganization items, net as part of fresh-start reporting.
(b) Fair Value of Financial Instruments
Cash Equivalents and Short-term Investments
Cash equivalents and short-term investments as of December 31 are classified as follows (in millions):
2006 2005
Cash and cash equivalents:
Corporate notes $ 330 $ 179
Cash and money market funds 137 283
Total cash and cash equivalents $ 467 $ 462
2006 2005
Short-term investments:
Available-for-sale securities:
Auction rate securities $ 744 132
Total available-for-sale securities $ 744 $ 132
The carrying amount of cash equivalents approximates fair value because of the short-term nature of these investments. The
carrying values of available-for-sale securities approximate fair value. There were no unrealized gains or losses on these investments for
the years ended December 31, 2006, 2005 and 2004 due to the frequent resetting of interest rates on the auction rate securities.. Gross
proceeds from sales of available-for-sale securities for the years ended December 31, 2006, 2005 and 2004 were $189 million,
$62 million and zero, respectively.
US Airways had no long-term investments in debt securities as of December 31, 2006 and December 31, 2005.
Long-term Debt
At December 31, 2006 and 2005, the fair value of long-term debt was approximately $1.25 billion and $1.97 billion, respectively.
US Airways' variable rate long-term debt with a carrying value of $336 million and $1.13 billion at December 31, 2006 and 2005,
respectively, approximates fair value because these borrowings have variable interest rate terms that approximate market interest rates for
similar debt instruments. The fair value of US Airways' other long-term debt is determined based on quoted market prices, if available, or
market prices for comparable debt instruments.
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