Airtran 2004 Annual Report Download - page 35

35
2004 Annual Report
The change in our valuation allowance was approximately $1.3 million and $52.0 million during 2004 and 2003, respectively.
Prior to the Airways Corporation merger, Airways Corporation generated NOL carryforwards of $23.1 million. The use of preacquisition NOL
carryforwards is subject to limitations imposed by the Internal Revenue Code. We do not anticipate that these limitations will affect utilization of the
carryforwards prior to expiration. When realized, the tax benefit for those items will be applied to reduce goodwill related to the acquisition of Airways
Corporation. During 2004 and 2003, we utilized $0 and $5.9 million, respectively, of Airways Corporation’s NOL carryforwards, and reduced goodwill
in 2003 by the $2.3 million tax benefit of such utilization.
12. EMPLOYEE BENEFIT PLANS
Effective January 1, 1998, we consolidated our 401(k) plans (the Plan). All employees, except pilots, are eligible to participate in the consolidated
Plan, a defined contribution benefit plan that qualifies under Section 401(k) of the Internal Revenue Code. Participants may contribute up to 15
percent of their base salary to the Plan. Contributions to the Plan by Holdings are discretionary. The amount of our contributions to the Plan expensed
in 2004, 2003 and 2002 was approximately $0.3 million, $0.2 million and $0.2 million, respectively.
Effective in the third quarter of 2000, Airways agreed to fund, on behalf of our mechanics and inspectors, a monthly fixed contribution per eligible
employee to their union’s pension plan. In May of 2001, a similar agreement was made on behalf of our maintenance training instructors. During
2004, 2003 and 2002, we expensed approximately $0.4 million, $0.3 million and $0.3 million, respectively, related to these agreements. Beginning
in January 2002, additional agreements with our stores clerks and ground service equipment employees took effect that call for a monthly fixed
amount per eligible employee to be made to the union’s pension plan. During 2004, 2003 and 2002, the contributions to this plan were less than
$0.1 million. At the time these agreements take effect, the eligible employee may continue making contributions to the Plan, but there will be no
company match.
Effective August 1, 2001, the AirTran Airways Pilot Savings and Investment Plan (Pilot Savings Plan) was established. This plan is designed to qualify
under Section 401(k) of the Internal Revenue Code. Funds previously invested in the Plan, representing contributions made by and for pilots, were
moved to the Pilot Savings Plan during 2001. Eligible employees may contribute up to the IRS maximum allowed. We will not match pilot contributions
to this Pilot Savings Plan. Effective on August 1, 2001, we also established the Pilot-Only Defined Contribution Pension Plan (DC Plan) which qualifies
under Section 403(b) of the Internal Revenue Code. Company contributions were 7 percent of eligible gross wages during 2002, increasing to
8 percent, and 10.5 percent during 2003 and 2004, respectively. We expensed $8.2 million, $5.4 million and $3.3 million in contributions to the
DC Plan during the years ended 2004, 2003 and 2002, respectively.
Under our 1995 Employee Stock Purchase Plan, employees who complete 12 months of service are eligible to make periodic purchases of our common
stock at up to a 15 percent discount from the market value on the offering date. The Board of Directors determines the discount rate, which was
increased to 10 percent from 5 percent effective November 1, 2001. We are authorized to issue up to 4 million shares of common stock under this
plan. During 2004, 2003 and 2002, the employees purchased a total of 116,488, 117,125 and 196,424 shares, respectively, at an average price of
$9.84, $8.00 and $4.44 per share, respectively.
13. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is summarized as follows for the years ended December 31,
(in thousands): 2004 2003 2002
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITIES:
Cash paid for interest, net of amounts capitalized $14,832 $22,400 $ 26,135
Cash paid (received) for income taxes, net of amounts refunded 107 231 (1,328)
Non-cash financing and investing activities:
Purchase and sale/leaseback of aircraft —22,359 455,654
Gain on sale/leaseback of aircraft and payment of debt —3,000 46,000
Conversion of debt to equity —5,500 —
Acquisition of equipment for capital leases 15,513 — 703
Aircraft debt financing 57,500 ——