Spirit Airlines 2013 Annual Report Download - page 79

Notes to Financial Statements—(Continued)
79
The Company accounts for income taxes using the asset and liability method. Deferred taxes are recorded based on
differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit
carryforwards. At December 31, 2013 and 2012, the significant components of the Company's deferred taxes consisted of the
following:
December 31,
2013 2012
(in thousands)
Deferred tax assets:
Net operating loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 188 $ 83
Deferred loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,428 —
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,241 5,829
Nondeductible accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,734 6,744
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,767 1,073
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,358 13,729
Deferred tax liabilities:
Capitalized interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 736 1,125
Deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 364
Fuel hedging. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 97
Accrued engine maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,911 29,497
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,384 3,271
Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,031 34,354
Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (32,673) $ (20,625)
Deferred taxes included within:
Assets:
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,243 $ 12,591
Liabilities:
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,916 $ 33,216
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. Management does not believe that the realization of deferred tax assets is in jeopardy and thus a valuation allowance for
2013 will not be necessary.
During 2013, the Company filed an amended 2009 income tax return in order to correct its net operating loss
carryforward (NOL) as of December 31, 2009. See Note 18. The amendment of the 2009 tax return resulted in a decrease to the
Company's NOL of $7.9 million as of December 31, 2009. In addition, during the preparation of its 2012 tax return, the
Company uncovered certain adjustments relating to the NOL carryforward balance as of December 31, 2011. These
adjustments resulted in an increase to the NOL carryforward of $3.7 million. The net decrease to the NOL carryforwards of
$4.2 million changed the NOL carryforwards as of December 31, 2011 from $20.8 million, as previously reported in 2012 and
2011, to $16.6 million. At December 31, 2011, the Company had available for federal income tax purposes an alternative
minimum tax (AMT) credit carryforward of $3.2 million and federal NOL carryforwards of $16.6 million which were fully
utilized against federal taxable income during 2012. As of December 31, 2013 and 2012, the Company did not have any NOLs
or AMT credits to utilize against federal taxable income. As of December 31, 2013, the Company had approximately $4.7
million of State NOLs which can be used to offset future state taxable income. State net operating losses begin to expire in
2017.
Excess tax benefits are recognized in the financial statements upon actual realization of the related tax benefit which
occurred in 2012 upon utilization of the remaining NOLs and AMT credit carryforwards during the year. During 2013, the
Company recognized a windfall tax benefit of $1.9 million which was recorded as a reduction to income tax payable and a
corresponding entry to additional paid in capital.