Spirit Airlines 2011 Annual Report Download - page 103

Notes to Financial Statements—(Continued)
The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic
region as defined by the Department of Transportation (DOT) area are summarized below:
During 2011 , 2010 , and 2009 , no revenue from any one foreign country represented greater than 4% of the Company’s total passenger
revenue. The Company attributes operating revenues by geographic region based upon the origin and destination of each passenger flight
segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have
not been allocated.
On June 1, 2011, the Company raised $187.2 million of gross proceeds in the IPO from the sale of 15,600,000 shares of its common stock
at a price of $12.00 per share. The resulting proceeds to the Company were approximately $176.9 million after deducting underwriter
commissions. The Company retained $150.0 million of the net proceeds, after paying $20.6 million of debt, $450,000 to pay three unaffiliated
holders of its subordinated notes, and $6.1 million in direct costs of the offering. In accordance with a Recapitalization Agreement, all of the
principal and accrued and unpaid interest on outstanding notes, to the extent not repaid, totaling $279.2 million, as well as all of the Class A and
B preferred stock outstanding immediately prior to the offering along with accrued and unpaid dividends totaling $81.7 million, were exchanged
for 30,079,420 shares of common stock at a share price of $12.00 per share. Each share of Class B common stock was exchanged for one share
of common stock. In addition, interest expense was reduced by $0.4 million due to a write off of the unamortized portion of prepaid loan fees
and deferred interest.
The Company entered into a Tax Receivable Agreement (“TRA”) with the Company's Pre-IPO Stockholders (as defined in the TRA) that
became effective immediately prior to the consummation of the IPO. Under the TRA, the Company is obligated to pay to the Pre-IPO
Stockholders an amount equal to 90% of the cash savings in federal income tax realized by it by virtue of the use of the federal net operating
loss, deferred interest deductions and alternative minimum tax credits held by the Company as of March 31, 2011. Cash tax savings generally
will be computed by comparing actual federal income tax liability to the amount of such taxes that the Company would have been required to
pay had such Pre-IPO NOLs (as defined in the TRA) not been available. Upon consummation of the IPO and execution of the TRA the
Company recorded a liability with an offsetting reduction to additional paid in capital.
The term of the TRA will continue until the first to occur of (a) the full payment of all amounts required under the agreement with respect
to utilization or expiration of all of the Pre-IPO NOLs, (b) the end of the taxable year including the tenth anniversary of the IPO or (c) a change
in control of the Company. The amount and timing of payments under the TRA will depend upon a number of factors, including, but not limited
to, the amount and timing of taxable income generated in the future and any future limitations that may be imposed on the Company's ability to
use the Pre-
IPO NOLs. As of December 31, 2011, an estimated cash benefit of $36.5 million, or 90% of the total cash benefit from the full use of
the Pre-IPO NOLs, will be paid to our Pre-IPO Stockholders under the terms of the TRA.
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19.
Operating Segments and Related Disclosures
2011 2010 2009
(in millions)
DOT—domestic
$
900.1
$
625.0
$
557.7
DOT—Latin America
171.1
156.3
142.3
Total
$
1,071.2
$
781.3
$
700.0
20.
Initial Public Offering and Tax Receivable Agreement