Alaska Airlines and Horizon Air 2009 Annual Report Download - page 169

NOTE 4. NEW PILOT CONTRACT TRANSITION COSTS AND RESTRUCTURING CHARGES
New Pilot Contract Transition Costs
On May 19, 2009, Alaska announced that its
pilots, represented by the Air Line Pilots
Association, ratified a new four-year contract.
Among other items, the contract has a provision
that allows for pilots to receive, at retirement, a
cash payment equal to 25% of their accrued sick
leave balance multiplied by their hourly rate. The
transition expense associated with establishing
this sick-leave payout program was $15.5
million. Pilots also received a one-time cash
bonus following ratification of the contract of
$20.3 million in the aggregate. These items have
been combined and reported as “New pilot
contract transition costs” in the consolidated
statements of operations.
Restructuring Charges
In 2008, Alaska announced reductions in work
force among union and non-union employees and
recorded a $12.9 million charge representing the
severance payments and estimated medical
coverage obligation for the affected employees.
The following table displays the activity and
balance of the severance and related cost
components of the Company’s restructuring
accrual as of and for the years ended
December 31, 2009, 2008 and 2007 (in
millions):
Accrual for Severance
and Related Costs 2009 2008 2007
Balance at beginning of
year ................ $ 7.2 $ 0.7 $ 19.9
Restructuring charges and
adjustments ......... —12.9 —
Cash payments ......... (7.2) (6.4) (19.2)
Balance at end of year . . . $— $ 7.2 $ 0.7
NOTE 5. MARKETABLE SECURITIES
All of the Company’s marketable securities are
classified as available-for-sale. The securities are
carried at fair value, with the unrealized gains
and losses reported in shareholders’ equity
under the caption “accumulated other
comprehensive loss” (AOCL). Realized gains and
losses are included in other nonoperating
income (expense) in the consolidated
statements of operations.
The cost of securities sold is based on the
specific identification method. Interest and
dividends on marketable securities are included
in interest income in the consolidated
statements of operations.
The Company’s overall investment strategy has a
primary goal of maintaining and securing its
investment principal. The Company’s investment
portfolio is managed by well-known financial
institutions and continually reviewed to ensure
that the investments are aligned with the
Company’s documented strategy.
Marketable securities consisted of the following
at December 31 (in millions):
2009 2008
Cost:
U.S. government securities . . . $ 376.7 $329.1
Asset-backed obligations ..... 215.4 198.0
Other corporate obligations . . . 421.8 263.7
$1,013.9 $790.8
Fair value:
U.S. government securities . . . $ 381.2 $342.8
Asset-backed obligations ..... 214.7 187.7
Other corporate obligations . . . 432.0 263.8
$1,027.9 $794.3
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ŠForm 10-K