Spirit Airlines 2011 Annual Report Download - page 99

Notes to Financial Statements—(Continued)
At December 31, 2011 and 2010 , deferred taxes consisted of the following:
In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the
deferred tax assets would be realized. In evaluating the Company's ability to utilize its deferred tax assets, it considered all available evidence,
both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis.
As of December 31, 2009, the Company provided a valuation allowance of $65.2 million because the Company was unable to demonstrate
that its deferred tax assets would be fully utilized against future earnings. The net change in the total valuation allowance for the year ended
December 31, 2009 was a decrease of $22.8 million.
As of December 31, 2010, based on the expectation of future taxable income, the availability of reversing deferred tax liabilities, combined
with achieving sustained profitability, management determined that all of the Company's deferred tax assets would be realized in taxable years
after 2010. Based on this determination the Company eliminated its valuation allowance, which resulted in a reduction to the valuation
allowance of $65.2 million , the recognition of a deferred tax benefit of $52.8 million , and a total income tax benefit of $52.3 million for the
period ending December 31, 2010.
At December 31, 2011, the Company had available for federal income tax purposes an alternative minimum tax credit carryforward of
approximately $3.2 million, which is available for an indefinite period and net operating loss carryforwards for federal income tax purposes of
$16.3 million , which will begin to expire in 2027. In addition, the Company had state net operating loss carryforwards of approximately $9.1
million which could be used to offset future state taxable income. State net operating losses begin to expire in 2013.
The Company's NOL carryforwards as of December 31, 2011, include approximately $3.7 million that are attributed to the exercise of
nonqualified stock options and the vesting of restricted stock since ASC 718 was adopted. In accordance with ASC 718, excess tax benefits are
recognized in the financial statements upon actual realization of the related tax benefit. At December 31, 2011, the Company's excess tax benefit
of approximately $3.7 million was not recognized and will not be recognized until such deductions are utilized to reduce taxes payable. On
February 20, 2004, the Company experienced an ownership change, as defined under Section 382 of the Internal Revenue Code, which creates
an annual limitation on the
88
December 31,
2011 2010
(in thousands)
Deferred tax assets:
Net operating loss
$
6,234
$
41,228
Deferred gain
1,440
4,163
Deferred revenue
5,985
6,628
Federal tax credits
3,176
1,310
Nondeductible accruals
5,452
6,682
Other
306
275
Gross deferred tax assets
22,593
60,286
Valuation allowance
—
—
Deferred tax assets, net
22,593
60,286
Deferred tax liabilities:
Capitalized interest
(2,041
)
(1,735
)
Fuel hedging
(115
)
(1,430
)
Accrued engine maintenance
(10,232
)
(1,296
)
Property, plant, and equipment
(1,575
)
(3,014
)
Gross deferred tax liabilities
(13,963
)
(7,475
)
Net deferred tax assets
$
8,630
$
52,811
Deferred taxes included within:
Assets:
Other current assets
$
20,738
$
51,492
Other long-term assets
—
1,319
Liabilities:
Other long-term liabilities
(12,108
)
—