US Airways 2006 Annual Report Download - page 96

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
principles in the United States of America. Therefore, the adoption of FSP No. AUG AIR-1 is not expected to have any material impact
on US Airways Group's consolidated financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108"). Due to diversity in practice among registrants,
SAB 108 expresses SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of
determining whether financial statement restatement is necessary. SAB 108 is effective for fiscal years ending after November 15, 2006.
The Company has adopted SAB 108 in the fourth quarter of 2006 and its adoption had no effect on the Company's consolidated financial
statements for the year ended December 31, 2006 or for any prior period presented.
In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement No. 109" ("FIN 48"), which clarifies the accounting for uncertainty in income taxes recognized in financial statements. FIN 48
requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained
by the taxing authority. US Airways Group will be required to adopt FIN 48 in the first quarter of fiscal year 2007. Management has
evaluated the requirements of FIN 48 and does not expect it to have a material impact on US Airways Group's consolidated financial
statements.
On November 10, 2005, the FASB issued FASB Staff Position No. FAS 123R-3, "Transition Election Related to Accounting for
Tax Effects of Share-Based Payment Awards." The Company elected to adopt the modified prospective method, which is the simplified
method provided in the FASB Staff Position for calculating the tax effects of stock-based compensation pursuant to SFAS 123R. The
modified prospective method was used to determine the beginning balance of the additional paid-in capital pool ("APIC pool") related to
the tax effects of employee stock-based compensation. Due to the Company's history of tax net operating losses, the Company had no
beginning balance in the APIC pool at the date of adoption of SFAS 123R on January 1, 2006.
The Company uses the "with-and-without" or "incremental" approach for determining the order in which tax benefits derived from
the share-based payment awards are utilized. Using the with-and-without approach, actual income taxes payable for the period are
compared to the amount of income taxes that would have been payable if there had been no share-based compensation expense for tax
purposes in excess of the compensation expense recognized for financial reporting purposes. As a result of this approach, tax net
operating loss carry forwards not related to share-based compensation are utilized before the current period's share-based compensation
deduction. As a result of this accounting treatment, the Company has a fully reserved deferred tax asset of approximately $25 million
related to tax net operating loss carry forwards related to deductions for excess tax benefits. The benefit of the valuation allowance
release related to these deductions will be recorded directly to equity as additional paid-in-capital when such benefits are realized.
2. New equity structure and conversion
Pursuant to US Airways Group's plan of reorganization, all securities of US Airways Group outstanding prior to September 27,
2005 were cancelled upon emergence from Chapter 11. In connection with the merger, US Airways Group adopted an Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws effective September 27, 2005. US Airways Group's authorized
capital stock, following the merger, consists of 200 million shares of common stock, par value $0.01 per share. Holders of the new
US Airways Group common stock are entitled to one vote per share on all matters submitted to a vote of common shareholders, except
that voting rights of non-U.S. citizens are limited to the extent that the shares of common stock held by such non-U.S. persons would
otherwise be entitled to more than 24.9% of the aggregate votes of all outstanding equity securities of US Airways Group.
In the merger, holders of America West Holdings Class A common stock received 0.5362 of a share of new US Airways Group
common stock for each share of America West Holdings Class A common stock they owned,
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