US Airways 2008 Annual Report Download - page 95

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
On January 1, 2008, the Company adopted the measurement date provisions of SFAS No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)." The measurement
date provisions require plan assets and obligations to be measured as of the employer's balance sheet date. The Company previously
measured its other postretirement benefit obligations as of September 30 each year. As a result of the adoption of the measurement date
provisions, the Company recorded a $2 million increase to its postretirement benefit liability and a $2 million increase to accumulated
deficit, representing the net periodic benefit cost for the period between the measurement date utilized in 2007 and the beginning of 2008.
The adoption of the measurement provisions of SFAS No. 158 had no effect on the Company's consolidated statements of operations.
In May 2008, the FASB issued FASB Staff Position ("FSP") Accounting Principles Board ("APB") 14-1, "Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)." FSP APB 14-1 applies
to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash
settlement of the conversion option. FSP APB 14-1 requires bifurcation of the instrument into a debt component that is initially recorded
at fair value and an equity component. The difference between the fair value of the debt component and the initial proceeds from issuance
of the instrument is recorded as a component of equity. The liability component of the debt instrument is accreted to par using the
effective yield method; accretion is reported as a component of interest expense. The equity component is not subsequently re-valued as
long as it continues to qualify for equity treatment. FSP APB 14-1 must be applied retrospectively to previously issued cash-settleable
convertible instruments as well as prospectively to newly issued instruments. FSP APB 14-1 is effective for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. The adoption of FSP APB 14-1 will result in increased non-cash
interest expense in future periods related to the Company's 7% senior convertible notes issued in 2005. Upon retrospective application in
2009, the adoption will also result in increases to 2005 through 2008 non-cash interest expense as well as non-cash losses on debt
extinguishment related to the partial conversion of certain notes to common stock in 2006. The Company does not believe the adoption of
FSP APB 14-1 will materially impact the Company's consolidated financial statements.
In October 2008, the FASB issued FSP FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That
Asset Is Not Active." FSP FAS 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides an example to
illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP
FAS 157-3 is effective upon issuance, including prior periods for which financial statements have not been issued. Revisions resulting
from a change in the valuation technique or its application should be accounted for as a change in accounting estimate following the
guidance in SFAS No. 154, "Accounting Changes and Error Corrections." FSP FAS 157-3 is effective October 10, 2008, and the
application of FSP FAS 157-3 had no impact on the Company's consolidated financial statements.
2. Special items, net
Special items, net as shown on the consolidated statements of operations include the following charges (credits) (in millions):
Year Ended December 31,
2008 2007 2006
Merger related transition expenses(a) $ 35 $ 99 $ 131
Asset impairment charges(b) 18 — —
Lease return costs and penalties(c) 14 — —
Severance charges(d) 9 — —
Airbus restructuring(e) — — (90)
Settlement of bankruptcy claims(f) — — (14)
Total $ 76 $ 99 $ 27
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