Frontier Airlines 2010 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2010 Frontier Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 169

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169

money market accounts or held by credit card processors directly. These contracts with the processors require a holdback of funds equal
to a certain percentage of the air traffic liability associated with the estimated amount of bankcard transactions. The Company also
maintains restricted amounts for satisfying debt and lease payments due within the next year and certificates of deposit that secure certain
letters of credit issued for workers' compensation claim reserves and certain airport authorities. Restricted cash is carried at cost, which
management believes approximates fair value. Restricted cash consisted of the following as of December 31, 2010 and 2009:
December 31,
(amounts in 000's) 2010 2009
Funds held for holdback of customer sales $ 99,150 $ 159,704
Funds held for cash supported letters of credit and deposits on charter flights 31,789 31,811
Other 8,165 1,185
Total $ 139,104 $ 192,700
Receivables primarily consist of amounts due from credit card companies and customers of our aircraft maintenance and cargo
transportation services. We provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on
historical write-offs and other specific analyses. Bad debt expense and write-offs were not material for the years ended December 31,
2010, 2009 and 2008.
Inventories consist of spare parts and supplies, which are charged to expense as they are used in operations. Inventories are
valued at the lower of cost or net realizable value using either the average cost for the fixed-fee segment and first-in, first-out methods for
the branded segment. An allowance for obsolescence is provided to reduce inventory to estimated net realizable value. As of
December 31, 2010 and 2009, this reserve was $8.1 million and $5.8 million, respectively.
Prepaid Expenses and Other Current Assets consist of prepaid expenses, primarily fuel, deposits, facility and engine rent, and
commissions, and other current assets, primarily the fair value of derivative contracts. Passenger traffic commissions are expensed when
the transportation is provided and the related revenue is recognized.
54