Airtran 1999 Annual Report Download - page 36

excess of cost over the fair value of the net assets acquired has been recorded
as goodwill and is being amortized on a straight-line basis over 30 years.
The non-cash investing activity for the acquisition is as follows:
Fair value of assets acquired $ 45,709
Intangibles resulting from business acquisitions 58,029
Liabilities assumed (36,710)
Fair value of common stock and options issued (66,664)
Net cash paid for acquisition $ 364
The following data represents the combined unaudited operating results of the
Company on a pro forma basis as if the acquisition of Airways had occurred at the
beginning of the period presented. The pro forma information does not necessarily
reflect the results of operations as they would have been had the acquisition actually
taken place at that time, nor are they indicative of the results of future combined
operations. Adjustments include amounts of depreciation to reflect the fair market
value and economic lives of property and equipment and amortization of intangible
assets. In addition, adjustments were made to reflect the additional shares issued.
Unaudited Pro Forma
Year Ended December 31,
(In thousands, except per share data) 1997
Total operating revenues $ 303,669
Net loss (107,017)
Net loss per share:
basic and diluted (1.67)
3. Commitments and Contingencies
Of the numerous lawsuits that were filed against the Company seeking damages
attributable to those on Flight 592, there are two remaining cases proceeding in
state courts in Florida and Texas. As all claims are handled independently by the
Company’s insurance carrier, the Company cannot reasonably estimate the amount
of liability that may finally exist. As a result, no accruals for losses and the related
claim for recovery from the Company’s insurance carrier have been reflected in
the Company’s financial statements. The Company believes that the $750 million
coverage available with respect to these claims will be sufficient to cover all claims
arising from the accident. However, there can be no assurance that the total amount
of judgments and settlements will not exceed the amount of insurance available
therefor or that all damages awarded will be covered by insurance.
In November 1997, the Company filed a suit against SabreTech and its parent
corporation seeking to hold them responsible for the accident involving Flight 592.
On September 23, 1999, the Company settled its lawsuit against SabreTech and its
parent. The net proceeds of $19,640,000 from the settlement are included in other
revenue in the 1999 statement of operations.
Several stockholder class action suits were filed against the Company and certain of
its current and former executive officers and Directors. The suits were subsequently
consolidated into a single action. On December 31, 1998, the Company entered into
a Memorandum of Understanding to settle the consolidated lawsuit. Although the
Company denied that it violated any of its obligations under the federal securities
laws, it paid $2.5 million in cash and $2.5 million in common stock in the settlement
which was approved on October 28, 1999.