Frontier Airlines 2010 Annual Report Download - page 91

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Net Income (Loss) per Common Share is based on the weighted average number of shares outstanding during the period. The
following is a reconciliation of the diluted net income (loss) per common share computations (amounts in thousands):
For the Years Ended December 31,
2010 2009 2008
Net income (loss) of the Company $(13,846 ) $ 39,655 $ 84,580
Reduction in interest expense from convertible note (net of tax)
—
517
—
Net income (loss) of the Company for diluted net income (loss) per common share
calculation $(13,846 ) $ 40,172 $ 84,580
Weighted-average common shares outstanding for basic net income (loss) per common
share 35,976 34,599 34,855
Effect of dilutive convertible note
—
1,041
—
Effect of dilutive employee stock options and warrants
—
59 94
Adjusted weighted-average common shares outstanding and assumed conversions for
diluted net income (loss) per common share 35,976 35,699 34,949
Employee stock options of 5.3 million, 4.2 million, and 3.5 million were not included in the calculation of diluted net income (loss)
per common share due to their anti-dilutive impact for the years ended December 31, 2010, 2009, and 2008, respectively. The convertible
note has a $22.3 million face value and is convertible in whole or in part, at the option of the holder, for up to 2.2 million shares of the
Company’ s common stock.
Fair Value of Financial Instruments—The carrying amounts reported in the consolidated balance sheets for cash and cash
equivalents, restricted cash, receivables, and accounts payable approximate fair values because of their immediate or short-term maturity
of these financial instruments.
Segment Information—Historically, the Company has always considered its operations as one operating and reportable segment,
fixed-fee services. During 2009, the Company acquired Frontier, Midwest, and Mokulele, and the Company reassessed the number of
segments of the Company and determined that the Company has three reportable operating segments: fixed-fee service, branded
passenger service, and other. Additional information about segment reporting is presented in Note 17.
New Accounting Standards—In October 2009, the FASB issued ASU No. 2009-13 pertaining to multiple-deliverable revenue
arrangements. The new guidance will affect accounting and reporting for companies that enter into multiple-deliverable revenue
arrangements with their customers when those arrangements are within the scope of Accounting Standards Codification (ASC) 605-25
Revenue Recognition – Multiple Element Arrangements. The new guidance will eliminate the residual method of allocation and require
that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price
method. The new guidance will be effective for the Company prospectively for revenue arrangements entered into or materially modified
on or after January 1, 2011, with early adoption permitted. We have not early-adopted the guidance and are currently evaluating the
impact that ASU No. 2009-13 will have on our consolidated financial statements.
In January 2010, the FASB issued an amendment to the Fair Value Measurements and Disclosures topic of the ASC. This
amendment requires disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and
settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about
inputs and valuation techniques used to measure fair value. This amendment is effective for periods beginning after December 15, 2009,
except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements, which will be effective for fiscal
years beginning after December 15, 2010. Accordingly, the Company has adopted this amendment on January 1, 2010 by adding additional
disclosures, except for the additional Level 3 requirements which will be adopted in fiscal year 2011.
In February 2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and
Disclosure Requirements, which revised the general standards of accounting for and disclosure of events that occur after the balance sheet