Frontier Airlines 2010 Annual Report Download - page 124
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16. INTEGRATION COSTS
As a result of the Company's acquisitions of Midwest and Frontier during 2009, the Company has aligned its operations to integrate
the business models. These integration costs were all incurred as part of our branded segment and classified as the following: aircraft return
costs, workforce integration, impairment to trade names. Costs are presented in the table below:
Integration Costs
Aircraft return
costs
Severance and
Integration
costs
Impairment
charges Total
Accrual balances as of December 31, 2008 $
—
$
—
$
—
$
—
Severance and integration
—
7,038
—
7,038
Other impairment and charges
—
—
6,800 6,800
Total expense
—
7,038 6,800 13,838
Cash paid
—
(5,791 )
—
$ (5,791 )
Non-cash expense
—
—
(6,800 ) (6,800 )
Accrual balances as of December 31, 2009
—
1,247
—
1,247
Severance and integration
—
15,537
—
15,537
Other impairment and charges 38,753
—
11,473 50,226
Total expense 38,753 15,537 11,473 65,763
Cash paid (22,814 ) (15,939 )
—
(38,753 )
Non-cash expense (13,819 )
—
(11,473 ) (25,292 )
Accrual balances as of December 31, 2010 $ 2,120 $ 845 $
—
$ 2,965
Aircraft return costs include the expenses to restore the Airbus A318 and Bombardier Q400 aircraft to the agreed upon return
condition per the contract, lease termination costs, and maintenance deposits that were forfeited. These costs are recorded in other operating
expenses. Severance and integration expenses are a result of the integration of certain back office functions, as well as system and vendor
consolidations and are recorded in other operating expenses. The impairment charges are due to the write-off of certain trade names and other
assets and are recorded in other impairment charges. The accrual balance for the costs listed above are recored in accrued liabilities in the
consolidated balance sheets as of December 31, 2010 and 2009.
The Company expects to pay approximately $3.0 million during 2011 and 2012, as a result of severance and integration costs,
aircraft return costs, and a few other miscellaneous items.
77