US Airways 2007 Annual Report Download - page 86

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
approximately $38 million. Proceeds from these new equity investments, including the option exercises, totaled approximately
$678 million. The new equity investors acquired an aggregate of approximately 44 million shares of common stock, including the shares
acquired upon exercise of their options.
3. Change in accounting policy for maintenance costs
As discussed in Note 1(p), AWA changed its accounting policy from the deferral method to the direct expense method during the
fourth quarter of 2005. The effect of this change in accounting for aircraft maintenance and repairs was recorded as a cumulative effect of
a change in accounting principle. The increase in the 2005 net loss of $202 million is the cumulative effect on retained earnings of the
adoption as of January 1, 2005. The cumulative effect of the change in accounting principle is not presented net of tax as any tax effects
resulting from the change have been immediately offset by the recording of a valuation allowance through the same financial statement
caption.
4. Earnings (loss) per common share
Basic earnings (loss) per common share ("EPS") is computed on the basis of the weighted average number of shares of common
stock outstanding during the period. Diluted EPS is computed on the basis of the weighted average number of shares of common stock
plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential
common shares include outstanding employee stock options, employee stock appreciation rights, employee restricted stock units,
warrants and convertible debt. The following table presents the computation of basic and diluted EPS (in millions, except share and per
share amounts):
Year Ended December 31,
2007 2006 2005
Basic earnings (loss) per share:
Income (loss) before cumulative effect of change in accounting principle $ 427 $ 303 $ (335)
Cumulative effect of change in accounting principle — 1 (202)
Net income (loss) $ 427 $ 304 $ (537)
Weighted average common shares outstanding (in thousands) 91,536 86,447 31,488
Basic earnings (loss) per share:
Before cumulative effect of change in accounting principle $ 4.66 $ 3.50 $ (10.65)
Cumulative effect of change in accounting principle — 0.01 (6.41)
Net earnings (loss) per share $ 4.66 $ 3.51 $ (17.06)
Diluted earnings (loss) per share:
Income (loss) before cumulative effect of change in accounting principle $ 427 $ 303 $ (335)
Cumulative effect of change in accounting principle — 1 (202)
Net income (loss) 427 304 (537)
Interest expense on 7.0% senior convertible notes 5 9 —
Income (loss) for purposes of computing diluted net income (loss) per share $ 432 $ 313 $ (537)
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