US Airways 2007 Annual Report Download - page 118

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Agreements with ALPA — US Airways Group and US Airways have a letter of agreement with the ALPA that provides that US
Airways' pilots designated by ALPA receive stock options to purchase 1.1 million shares of the Company's common stock. The first
tranche of 500,000 stock options was granted on January 31, 2006 with an exercise price of $33.65. The second tranche of 300,000 stock
options was granted on January 31, 2007 with an exercise price of $56.90. The third and final tranche of 300,000 stock options was
granted on January 31, 2008 with an exercise price of $12.29. The stock options granted to ALPA pilots do not reduce the shares
available for grant under any equity incentive plan. Any of these ALPA stock options that are forfeited or that expire without being
exercised will not become available for grant under any of the Company's plans.
The per share fair value of the ALPA pilot stock options and assumptions used for the January 31, 2007 and 2006 grants were as
follows:
January 31, January 31,
2007 2006
Per share fair value $ 18.02 $ 17.11
Risk free interest rate 4.9% 4.4%
Expected dividend yield — —
Contractual term 2.0 years 5.0 years
Volatility 53% 69.8%
As of December 31, 2007, there were no unrecognized compensation costs related to stock options granted to ALPA pilots as the
stock options were fully vested on the grant date. There were 25,029 and 315,390 stock options exercised during 2007 and 2006,
respectively, pursuant to this agreement. The total intrinsic value of options exercised during 2007 and 2006 was $0.6 million and
$5 million, respectively. Cash received from stock options exercised during the years ended December 31, 2007 and 2006 totaled
$1 million and $12 million, respectively. The tax benefit realized from stock options exercised during the years ended December 31, 2007
and 2006 was $0.2 million and $2 million, respectively. The Company recognized no tax expense for exercises with book expense
exceeding the tax deduction for 2007 and $0.5 million was recognized for 2006.
18. Valuation and qualifying accounts (in millions)
Balance at Balance
Beginning at End
Description of Period Additions Deductions of Period
Allowance for doubtful receivables:
Year ended December 31, 2007 $ 8 $ 9 $ 13 $ 4
Year ended December 31, 2006 $ 10 $ 7 $ 9 $ 8
Year ended December 31, 2005 $ 1 $ 12(a) $ 3 $ 10
Allowance for inventory obsolescence:
Year ended December 31, 2007 $ 30 $ 12 $ 2 $ 40
Year ended December 31, 2006 $ 24 $ 10 $ 4 $ 30
Year ended December 31, 2005 $ 15 $ 9 $ — $ 24
Valuation allowance on deferred tax asset, net:
Year ended December 31, 2007 $ 263 $ — $ 186 $ 77
Year ended December 31, 2006 $ 446 $ — $ 183 $ 263
Year ended December 31, 2005 $ 127 $ 976 $ 657 $ 446
(a) Allowance for doubtful receivables additions in the 2005 period include $8 million from the opening balance sheet of US Airways
at September 27, 2005.
116