Frontier Airlines 2005 Annual Report Download - page 104

Deferred tax assets include benefits expected to be realized from the utilization of alternative minimum tax credit
carryforwards of $457, which do not expire, and net operating loss carryforwards of $504,000, which begin expiring in 2022.
Approximately $450,000 net operating loss carryforwards are limited under Internal Revenue Code Section 382, and approximately
$23,000 is not expected to be realized prior to expiration.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in an arm's
length transaction between knowledgeable, willing parties. The fair value of long term debt is estimated based on discounting
expected cash flows at the rates currently offered to the Company for debt with similar remaining maturities. As of December 31,
2005 and 2004 respectively, the carrying value of long-term debt was greater than its fair value by approximately $95,302 and
$67,000. As of December 31, 2004, the fair value of the treasury locks was a liability of $4,012 based on quoted market values.
14. BENEFIT PLAN—401(k)
Republic has a defined contribution retirement plan covering substantially all eligible employees. The Company matches up
to 6.0% of eligible employees' wages. Employees are generally vested in matching contributions after three years of service with the
Company. Employees are also permitted to make pre-tax contributions of up to 90% (up to the annual Internal Revenue Code limit)
and after-tax contributions of up to 10% of their annual compensation. The Company's expense under this plan was $1,660, $1,128
and $540 for the years ended December 31, 2005, 2004 and 2003, respectively.
15. IMPAIRMENT LOSS AND ACCRUED AIRCRAFT RETURN COSTS
In connection with the Company’s plan to fly only regional jets under fixed fee code-share agreements and market conditions
for turboprop aircraft in the air transportation industry, impairment losses of $2,931 in 2003 were recorded to reduce the carrying
values of Saab 340 aircraft and related spare parts and supplies to estimated fair values. Estimated fair value of Saab 340 aircraft was
based on quotations from aircraft dealers, less selling costs. Net realizable value of spare parts and supplies was based on quotations
from aircraft parts manufacturers and dealers. In 2004, the Company recorded additional impairment losses of $416 on Saab 340
aircraft and related spare parts and supplies and $1,255 for intangible assets related to routes discontinued by US Airways.
Pursuant to the aircraft lease agreements, the Company is required to return Saab 340 aircraft to the lessor in specified
conditions. Based upon flight schedules and maintenance costs, return costs were estimated and accrued. Each year the Company
decreased the accrual for actual costs incurred and adjusted the accrual for its revised estimate of expected return costs. In December
2005, Shuttle America’s turboprop code-share agreement with United expired for the return of our Saab aircraft to the lessor. An
agreement was reached with the lessors that will release the Company of any further financial obligations upon return of the aircraft
resulting in a $4,218 reduction in the accrued liability.
The following table reflects impairment costs and accrued aircraft return costs for the year ended December 31, 2003, 2004 and 2005.
Description
of Charge
Reserve
at Jan. 1,
2003
2003 Provision
(Adjustment)
Charged to
Expense
2003
Payments
Reserve at
Dec. 31,
2003
2004 Provision
(Adjustment)
Charged to
Expense
2004
Payments
Reserve
at
Dec. 31,
2004
2004
Provision
(Adjustment)
Charged to
Expense
2005
Payments
Reserve at
Dec. 31,
2005
Aircraft
return costs:
Costs to
return
aircraft
5,706 (175) (278) 5,253 (230) (424) 4,599 $ (4,218)$ (381) —
Impairment
loss 2,931 1,671 —
Total $ 5,706 $ 2,756 $ (278)$ 5,253 $ 1,441 $ (424)$ 4,599 $ (4,218)$ (381)$ —
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Research℠