US Airways 2008 Annual Report Download - page 123

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
Weighted
Average
Stock Weighted Remaining
Options Average Contractual Term Aggregate
and SARs Exercise Price (years) Intrinsic Value
(In millions)
2005 Equity Incentive Plan
Balance at December 31, 2005 1,973 $ 23.15
Granted 1,310 40.30
Exercised (701) 24.49
Forfeited (87) 30.34
Expired — —
Balance at December 31, 2006 2,495 $ 31.53
Granted 1,123 42.23
Exercised (92) 29.74
Forfeited (93) 35.00
Expired (63) 37.48
Balance at December 31, 2007 3,370 $ 34.96
Granted 1,959 9.11
Exercised (5) 8.84
Forfeited (200) 30.18
Expired (218) 32.76
Balance at December 31, 2008 4,906 $ 24.93 8.02 $ —
Vested or expected to vest at December 31, 2008 4,720 $ 25.28 7.96 $ —
Exercisable at December 31, 2008 2,100 $ 31.94 7.04 $ —
2008 Equity Incentive Plan
Balance at December 31, 2007 — $ —
Granted 2,389 6.64
Exercised — —
Forfeited (56) 6.70
Expired — —
Balance at December 31, 2008 2,333 $ 6.64 6.63 $ 3
Vested or expected to vest at December 31, 2008 2,104 $ 6.64 6.63 $ 2
Exercisable at December 31, 2008 5 $ 6.70 6.59 $ —
The fair value of stock options and SARs is determined at the grant date using a Black-Scholes option pricing model, which requires
several assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the stock
option or SAR at the time of grant. The dividend yield is assumed to be zero since the Company does not pay dividends and has no
current plans to do so in the future. The volatility is based on the historical volatility of the Company's common stock over a time period
equal to the expected term of the stock option or SAR. The expected life of stock options and SARs is based on the historical experience
of the Company.
The per share weighted-average grant-date fair value of stock options and SARs granted and the weighted-average assumptions
used for the years ended December 31, 2008, 2007 and 2006 were as follows:
Year Ended
December 31, December 31, December 31,
2008 2007 2006
Weighted average fair value $ 3.28 $ 16.57 $ 16.77
Risk free interest rate 2.5% 4.5% 4.8%
Expected dividend yield — — —
Expected life 3.0 years 3.0 years 2.9 years
Volatility 62% 52% 57%
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