US Airways 2007 Annual Report Download - page 161

Table of Contents
US Airways, Inc.
Notes to Consolidated Financial Statements — (Continued)
became the lesser of the original rate or 10% of eligible compensation. Expenses for this plan were $31 million, $42 million, $10 million
and $32 million for the year ended December 31, 2007, 2006, the three months ended December 31, 2005 and the nine months ended
September 30, 2005, respectively.
Effective January 1, 2005, America West Holdings amended its defined contribution plan, requiring AWA to make a non-elective
discretionary employer contribution equal to 7% of the annual compensation for each pilot covered under the collective bargaining
agreement between AWA and the Air Line Pilots Association (as defined in the plan and subject to statutory annual maximums).
Effective January 1, 2006, the non-elective discretionary employer contribution was increased to 10% of each pilot's annual
compensation. These non-elective discretionary employer contributions replace the existing AWA company match under the 401(k)
defined contribution plan for pilots. The AWA company match continues for all other eligible covered employees under the plan. AWA's
contribution expense to this plan totaled $19 million, $19 million and $3 million for 2007, 2006, and the three months ended
December 31, 2005, respectively.
(c) Postemployment Benefits
US Airways provides certain postemployment benefits to its employees. These benefits include disability-related and workers'
compensation benefits for certain employees. US Airways accrues for the cost of such benefit expenses once an appropriate triggering
event has occurred. In 2007, US Airways recorded a $99 million charge to increase long-term disability obligations for US Airways'
pilots as a result of a change in the FAA mandated retirement age for pilots from 60 to 65.
(d) Profit Sharing Plans
Most non-executive employees of US Airways Group are eligible to participate in the 2005 Profit Sharing Plan, an annual bonus
program, which was established subsequent to the merger. Annual bonus awards are paid from a profit-sharing pool equal to (i) ten
percent of the annual profits of US Airways Group (excluding unusual items) for pre-tax profit margins up to ten percent, plus (ii) 15% of
the annual profits of US Airways Group (excluding unusual items) for pre-tax profit margins greater than ten percent. Awards are paid as
a lump sum no later than March 15 after the end of each fiscal year. The profit-sharing pool is shared among eligible employee groups in
proportion to each group's share of overall cost savings achieved through US Airways' 2005 transformation plan; however, the
represented pilots' and flight attendants' portions of the pool will not be less than 36% and 14.5%, respectively. An employee's share of
the pool is based on the ratio that the employee's compensation bears to the respective employee group's aggregate compensation. US
Airways recorded $49 million and $59 million for profit sharing in 2007 and 2006, respectively, which is recorded in salaries and related
costs.
7. Income taxes
US Airways accounts for income taxes according to the provisions in SFAS No. 109, "Accounting for Income Taxes." US Airways
and its wholly owned subsidiaries are part of the US Airways Group consolidated income tax return.
The reorganization of US Airways Group and merger with America West Holdings on September 27, 2005 resulted in a statutory
"ownership change" as defined for purposes of Section 382 of the Internal Revenue Code. When a company undergoes such an
ownership change, Section 382 limits the company's future ability to utilize any net operating losses, or NOL, generated before the
ownership change and certain subsequently recognized "built-in" losses and deductions, if any, existing as of the date of the ownership
change. As a result of the merger, a significant portion of US Airways Group's common stock was beneficially owned by a small number
of equity investors. Due to sales by some of these investors and purchases by other investors since the merger, an "ownership change"
occurred in February of 2007 for US Airways Group, as that term is defined in Section 382 of the Internal Revenue Code. Accordingly,
US Airways' annual use of its NOL that existed as of the date of the ownership change is limited.
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