Frontier Airlines 2007 Annual Report Download - page 85

The following table reconciles the Company’s tax liability for uncertain tax positions for the year ended December 31, 2007:
2007
Balance at January 1, $ 3,515
Additions based on tax positions taken in current year 894
Additions for tax positions taken in prior years −
Reductions for tax positions of prior years −
Settlements with tax authorities −
Balance at December 31, $ 4,409
Deferred tax assets include benefits expected to be realized from the utilization of alternative minimum tax credit
carryforwards of $759, which do not expire, and net operating loss carryforwards totaling $449,000, which begin expiring in 2022.
Approximately $396,000 of the 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, and therefore, a valuation allowance has been recorded of
$8,119.
12. 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,
2007 and 2006 respectively, the carrying value of long-term debt was greater than its fair value by approximately $136,800 and
$112,200.
13. BENEFIT PLAN—401(k)
Republic has a defined contribution retirement plan covering substantially all eligible employees. The Company matches up
to 6% 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 $2,941, $2,266,
and $1,660 for the years ended December 31, 2007, 2006 and 2005, respectively.
14. IMPAIRMENT LOSS AND ACCRUED AIRCRAFT RETURN COSTS
Pursuant to the aircraft lease agreements, the Company was 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 thus allowing for the return of our Saab aircraft to the
lessor. An agreement was reached with the lessors that released the Company of any further financial obligations upon return of the
aircraft resulting in a $4,218 reduction in the accrued liability. In 2006, we recorded a gain of $2,050 relating to the disposition of
Saab aircraft and spare parts.
The following table reflects impairment costs and accrued aircraft return costs for the years ended December 31, 2005 and 2006.
Description
of Charge
Reserve at
Jan 1, 2005
2005 Provision
(Adjustment)
Charged
To Expense
2005
Payments
Reserve at
Dec. 31,
2005
2006 Provision
(Adjustment)
Charged to
Expense
Aircraft return costs:
Costs to return aircraft $ 4,599 $ (4,218) $ (381) $ — $
Gain on disposition of Saab
aircraft and spare parts (2,050)
Total $ 4,599 $ (4,218) $ (381) $ — $ (2,050)
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 21, 2008 Powered by Morningstar® Document Research℠