Frontier Airlines 2008 Annual Report Download - page 71

The Company recognizes lease revenue for subleases of six E145 aircraft subleased to an airline in Mexico under operating
leases which expire in 2013 and 2015. In addition, the Company recognizes license revenue from US Airways for commuter slots that
were purchased by the Company in 2005 and were utilized by US Airways through 2006 for the New York LaGuardia commuter
slots, and through 2016 for the Ronald Reagan Washington National commuter slots. Revenues from subleases and the commuter slots
are recognized when earned over time and included in other operating revenue.
The Company records any tax assessed by a governmental authority that is directly imposed on a revenue-producing
transaction between the Company and its customers on a net basis. These taxes are currently not material to the Company’s
consolidated financial statements.
Warrants—Warrants issued to non-employees and Partners are accounted for at fair value on the measurement date as
deferred charges and credits to stockholders’ equity. Warrants surrendered in a non-monetary transaction are recorded at fair value on
the measurement date as reductions to deferred charges and stockholders’ equity. The deferred charges for warrants were amortized as
a reduction of regional airline services revenue over the terms of the code-share agreements.
In March 2007, the Company amended its agreements with Delta and in return for these amended terms, Delta agreed to
surrender its warrants for 3,435,000 shares of the Company’s common stock, and the Company was granted a pre-petitioned,
unsecured, general claim in the amount of $91,000 in Delta's Chapter 11 bankruptcy case. In April 2007, the Company sold the
$91,000 pre-petition claim to a third party for $44,590 in cash. As a result of the Delta amendment, the Company recorded deferred
revenue of $44,590, which represented the net realizable value of the pre-petition claim on the approval date by the Bankruptcy Court.
In addition, the Company recorded deferred revenue on the surrender of the warrants from Delta of $42,735, which was net of the
previously recorded unamortized deferred charge of $6,369. Stockholders' equity was reduced by $32,892, net of tax, resulting from
the surrender of the warrants and their retirement. The deferred revenue for the proceeds of the pre-petition claim and the gain on the
surrender of the warrants totaling $87,325 will be amortized as an adjustment to revenue over the term of the agreements with Delta.
Net Income per Common Share is based on the weighted average number of shares outstanding during the period.
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Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, March 16, 2009 Powered by Morningstar® Document Research℠