Spirit Airlines 2014 Annual Report Download - page 83

Download and view the complete annual report

Please find page 83 of the 2014 Spirit Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 99

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99

Notes to Financial Statements—(Continued)
83
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, 2014 and 2013, the significant components of the Company's deferred taxes consisted of the
following:
December 31,
2014 2013
(in thousands)
Deferred tax assets:
Net operating loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 252 $ 188
Accrued rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,872
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 6,241
Nondeductible accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,239 6,702
Deferred manufacturing credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 848 3,309
Unrealized gains/losses on derivatives. . . . . . . . . . . . . . . . . . . . . . . . . . 1,865 —
Accrued maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,073 1,225
Equity compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,514 2,687
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661 16
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,862 22,240
Deferred tax liabilities:
Capitalized interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568 736
Deferred gain and losses on leases, net . . . . . . . . . . . . . . . . . . . . . . . . . 2,349 1,882
Accrued rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,560 —
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,681 —
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,369 6,384
Accrued engine maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,702 45,911
Deferred tax liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,229 54,913
Net deferred tax assets (liabilities) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (66,367) $ (32,673)
Deferred taxes included within:
Assets:
Current deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,643 $ 16,243
Liabilities:
Noncurrent deferred tax liabilities, net. . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,010 $ 48,916
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
2014 will not be necessary.
The Company has fully utilized its federal NOL carryforwards and AMT credit carryforwards as of December 31, 2012.
At December 31, 2014, the Company has state net operating loss carryforwards of approximately $2.7 million which can be
used to offset future state taxable income. State net operating losses begin to expire in 2017.
Excess tax benefits are only 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 2014,
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.
The Company recorded a current foreign tax credit of $1.2 million against its 2014 federal income tax liability which was
fully utilized during the year. During 2014, the Company amended its 2005 through 2012 U.S. federal income tax returns to
credit foreign taxes of $1.4 million against U.S. income taxes previously paid.