Spirit Airlines 2013 Annual Report Download - page 69

Notes to Financial Statements—(Continued)
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Initial Public Offering Costs
In June 2011, the Company issued and sold 15,600,000 shares of common stock in its initial public offering (IPO). The
Company incurred contract termination costs and fees of $2.3 million in connection with the IPO during the year ended
December 31, 2011, which included $1.8 million paid to Indigo to terminate its professional services agreement with the
Company, and $0.5 million paid to three individual, unaffiliated holders of the Company’s subordinated notes.
4. Letters of Credit
In connection with agreements with certain airports, the Company is required to post letters of credit, which totaled $0.2
million as of both December 31, 2013 and 2012. The issuing banks require that the Company deposit funds at those banks to
cover the amounts that could be drawn under the letters of credit. These funds are generally invested in money market accounts
and are classified as long-term assets within other long-term assets. Additionally, as of December 31, 2013, the Company had a
$25.1 million unsecured standby letter of credit facility, representing an off balance-sheet commitment, of which $10.4 million
had been drawn upon for issued letters of credit to airports and insurance underwriters.
5. Credit Card Processing Arrangements
The Company has agreements with organizations that process credit card transactions arising from the purchase of air
travel, baggage charges and other ancillary services by customers. As it is standard in the airline industry, the Company's
contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other
collateral, which the Company records as restricted cash, when future air travel and other future services are purchased via
credit card transactions. The required holdback is the percentage of the Company's overall credit card sales that its credit card
processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.
During 2011, the Company amended its processing agreements with all of its processors. Prior to the amendments, the
credit card processors required the Company to maintain cash collateral equal to approximately 100% of the Company's air
traffic liability. The amendments were approved in light of the Company's improved balance sheet as a result of the IPO, the
related recapitalization and the elimination of the holdback held by the credit card processors, effectively eliminating the
Company's restricted cash balance, provided that the Company continues to satisfy certain liquidity and other financial
covenants. Failure to meet these covenants would provide the processors the right to reinstate a holdback, resulting in a
commensurate reduction of unrestricted cash. As of December 31, 2013 and 2012, the Company continued to be in compliance
with its credit card processing agreements, and the processors were holding back $0 of remittances.
The maximum potential exposure to cash holdbacks by the Company's credit card processors, based upon advance ticket
sales and $9 Fare Club memberships as of December 31, 2013 and 2012, was $188.6 million and $144.8 million, respectively.
6. Accrued Liabilities
Accrued liabilities included in other current liabilities as of December 31, 2013 and 2012 consist of the following:
As of December 31,
2013 2012
(in thousands)
Aircraft maintenance $ 36,165 $ 22,319
Federal excise and other passenger taxes and fees payable 26,979 23,401
Salaries and wages 26,174 21,057
Airport expenses 17,109 16,024
Fuel 13,819 11,219
Aircraft and facility rent 7,993 8,020
Tax receivable agreement 5,643 7,987
Other 11,380 11,287
Other current liabilities $ 145,262 $ 121,314
7. Common Stock and Preferred Stock
The Company’s amended and restated certificate of incorporation dated June 1, 2011, authorizes the Company to issue up
to 240,000,000 shares of common stock, $0.0001 par value per share, 50,000,000 shares of non-voting common stock, $0.0001