Spirit Airlines 2013 Annual Report Download - page 81

Notes to Financial Statements—(Continued)
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commitments with third parties for seven aircraft deliveries from Airbus, scheduled for delivery in 2014 and for the five aircraft
to be leased directly from a third party. The Company does not have financing commitments in place for the remaining 105
Airbus firm aircraft orders scheduled for delivery between 2014 and 2021.
Litigation
The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews
that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits,
proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position,
liquidity or results of operations.
Employees
The Company has three union-represented employee groups that together represent approximately 59% of all employees
at December 31, 2013 and 54% of all employees at December 31, 2012. The table below sets forth the Company's employee
groups and status of the collective bargaining agreements as of December 31, 2013.
Employee Groups Representative Amendable Date Percentage of Workforce
Pilots Air Line Pilots Association, International (ALPA) August 2015 24%
Flight Attendants Association of Flight Attendants (AFA-CWA) August 2007 34%
Dispatchers Transport Workers Union (TWU) August 2018 1%
In December 2013, with the help of the National Mediation Board (NMB), the Company reached a tentative agreement
for a five-year contract with the Company's flight attendants. The tentative agreement was subject to ratification by the flight
attendant membership. On February 7, 2014, the Company was notified that the flight attendants voted to not ratify the
tentative agreement. The Company will continue to work together with the AFA and the NMB with a goal of reaching a
mutually beneficial agreement.
The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and
qualified dependent medical claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but
not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is
calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $2.1 million and $1.9
million, for health care claims as of December 31, 2013, and 2012, respectively.
Other
The Company is contractually obligated to pay the following minimum guaranteed payments to the provider of its
reservation system as of December 31, 2013: $3.9 million in 2014, $3.9 million in 2015, $3.9 million in 2016, $3.9 million in
2017, $2.6 million in 2018 and $0.0 million in 2019 and thereafter.
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. In accordance with the TRA, the Company
paid $27.2 million, including $0.3 million of applicable interest, in the second quarter of 2012. As of December 31, 2013, the
Company has $5.6 million accrued related to the TRA and $0.2 million of applicable interest. See Note 18.
16. Fair Value Measurements
Under ASC 820, Fair Value Measurements and Disclosures, disclosures are required about how fair value is determined
for assets and liabilities, and a hierarchy for which these assets and liabilities must be grouped is established, based on
significant levels of inputs, as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of
the assets or liabilities.