US Airways 2007 Annual Report Download - page 77

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
reached final single labor agreements covering the flight crew training instructors and the flight simulator engineers, each represented by
the Transport Workers Union.
(b) Basis of Presentation
The merger was accounted for as a reverse acquisition using the purchase method of accounting. Although the merger was
structured such that America West Holdings became a wholly owned subsidiary of US Airways Group, America West Holdings was
treated as the acquiring company for accounting purposes under Statement of Financial Accounting Standards ("SFAS") No. 141
"Business Combinations," due to the following factors: (1) America West Holdings' stockholders received the larger share of the
Company's common stock in the merger in comparison to the unsecured creditors of US Airways; (2) America West Holdings received a
larger number of designees to the board of directors; and (3) America West Holdings' Chairman and Chief Executive Officer prior to the
merger became the Chairman and Chief Executive Officer of the combined company. As a result of the reverse acquisition, the 2005
consolidated statement of operations presented herein includes the results of America West Holdings for the period from January 1, 2005
through September 26, 2005 and consolidated results of US Airways Group for the period from September 27, 2005 through
December 31, 2005.
The accompanying consolidated financial statements include the accounts of US Airways Group and its wholly owned subsidiaries.
US Airways Group has the ability to move funds freely between its operating subsidiaries to support operations. These transfers are
recognized as intercompany transactions. All significant intercompany accounts and transactions have been eliminated.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The principal areas of judgment relate to passenger revenue
recognition, impairment of goodwill, impairment of long-lived and intangible assets and the frequent traveler program.
(c) Cash Equivalents
Cash equivalents consist primarily of cash in money market securities of various banks, highly liquid debt instruments, commercial
paper and asset-backed securities of various financial institutions and securities backed by the U.S. government. All highly liquid
investments purchased within three months of maturity are classified as cash equivalents. Cash equivalents are stated at cost, which
approximates fair value due to the highly liquid nature and short maturities of the underlying securities.
(d) Investments in Marketable Securities
All other highly liquid investments with original maturities greater than three months but less than one year are classified as current
investments in marketable securities. Investments in marketable securities classified as noncurrent assets on the Company's balance sheet
represent investments expected to be converted to cash after 12 months. Debt securities, other than auction rate securities, are classified
as held to maturity in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115").
Held to maturity investments are carried at amortized cost. Investments in auction rate securities are classified as available for sale. See
Note 6(c) for more information on the Company's investments in marketable securities.
(e) Restricted Cash
Restricted cash includes deposits in trust accounts primarily to fund certain taxes and fees and collateralize letters of credit and
workers' compensation claims, deposits securing certain letters of credit and surety bonds and
75