Attached files
| file | filename |
|---|---|
| EX-32.2 - EXHIBIT 32.2 - HAWAIIAN HOLDINGS INC | ex322q12017.htm |
| EX-32.1 - EXHIBIT 32.1 - HAWAIIAN HOLDINGS INC | ex321q12017.htm |
| EX-31.2 - EXHIBIT 31.2 - HAWAIIAN HOLDINGS INC | ex312q12017.htm |
| EX-31.1 - EXHIBIT 31.1 - HAWAIIAN HOLDINGS INC | ex311q12017.htm |
| EX-12 - EXHIBIT 12 - HAWAIIAN HOLDINGS INC | exhibit12q12017.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2017
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-31443
HAWAIIAN HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 71-0879698 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) | |
3375 Koapaka Street, Suite G-350 | ||
Honolulu, HI | 96819 | |
(Address of Principal Executive Offices) | (Zip Code) | |
(808) 835-3700
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) | Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes ý No
As of April 14, 2017, 53,636,630 shares of the registrant’s common stock were outstanding.
Hawaiian Holdings, Inc.
Form 10-Q
Quarterly Period ended March 31, 2017
Table of Contents
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Hawaiian Holdings, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Operating Revenue: | ||||||||
Passenger | $ | 537,590 | $ | 482,027 | ||||
Other | 76,595 | 69,153 | ||||||
Total | 614,185 | 551,180 | ||||||
Operating Expenses: | ||||||||
Wages and benefits | 151,053 | 128,561 | ||||||
Aircraft fuel, including taxes and delivery | 103,538 | 69,900 | ||||||
Maintenance, materials and repairs | 59,404 | 60,504 | ||||||
Aircraft and passenger servicing | 33,458 | 28,551 | ||||||
Commissions and other selling | 33,186 | 33,031 | ||||||
Aircraft rent | 33,135 | 29,388 | ||||||
Other rentals and landing fees | 28,336 | 24,434 | ||||||
Depreciation and amortization | 27,468 | 27,146 | ||||||
Purchased services | 26,637 | 22,732 | ||||||
Special items | 18,679 | — | ||||||
Other | 31,997 | 29,983 | ||||||
Total | 546,891 | 454,230 | ||||||
Operating Income | 67,294 | 96,950 | ||||||
Nonoperating Income (Expense): | ||||||||
Interest expense and amortization of debt discounts and issuance costs | (8,003 | ) | (11,004 | ) | ||||
Gains (losses) on fuel derivatives | (8,798 | ) | (2,065 | ) | ||||
Other components of net periodic benefit cost | (4,751 | ) | (5,082 | ) | ||||
Interest income | 1,152 | 844 | ||||||
Capitalized interest | 1,760 | 225 | ||||||
Loss on extinguishment of debt | — | (3,350 | ) | |||||
Other, net | 2,828 | 6,586 | ||||||
Total | (15,812 | ) | (13,846 | ) | ||||
Income Before Income Taxes | 51,482 | 83,104 | ||||||
Income tax expense | 14,570 | 31,638 | ||||||
Net Income | $ | 36,912 | $ | 51,466 | ||||
Net Income Per Share | ||||||||
Basic | $ | 0.69 | $ | 0.96 | ||||
Diluted | $ | 0.68 | $ | 0.95 | ||||
See accompanying Notes to Consolidated Financial Statements.
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Hawaiian Holdings, Inc.
Consolidated Statements of Comprehensive Income
(in thousands)
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Net Income | $ | 36,912 | $ | 51,466 | ||||
Other comprehensive loss, net: | ||||||||
Net change related to employee benefit plans, net of tax expense of $896 and $570 for 2017 and 2016, respectively | 1,468 | 927 | ||||||
Net change in derivative instruments, net of tax benefit of $4,325 and $5,007 for 2017 and 2016, respectively | (7,097 | ) | (8,228 | ) | ||||
Net change in available-for-sale investments, net of tax expense of $52 and $323 for 2017 and 2016, respectively | 86 | 532 | ||||||
Total other comprehensive loss | (5,543 | ) | (6,769 | ) | ||||
Total Comprehensive Income | $ | 31,369 | $ | 44,697 | ||||
See accompanying Notes to Consolidated Financial Statements.
4
Hawaiian Holdings, Inc.
Consolidated Balance Sheets
(in thousands, except shares)
March 31, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 466,789 | $ | 325,991 | ||||
Restricted cash | 1,000 | 5,000 | ||||||
Short-term investments | 273,700 | 284,075 | ||||||
Accounts receivable, net | 104,485 | 96,067 | ||||||
Spare parts and supplies, net | 18,622 | 20,363 | ||||||
Prepaid expenses and other | 49,443 | 66,740 | ||||||
Total | 914,039 | 798,236 | ||||||
Property and equipment, less accumulated depreciation and amortization of $480,614 and $454,231 as of March 31, 2017 and December 31, 2016, respectively | 1,679,150 | 1,654,567 | ||||||
Other Assets: | ||||||||
Long-term prepayments and other | 126,231 | 132,724 | ||||||
Intangible assets, less accumulated amortization of $20,672 and $20,337 as of March 31, 2017 and December 31, 2016, respectively | 16,076 | 16,411 | ||||||
Goodwill | 106,663 | 106,663 | ||||||
Total Assets | $ | 2,842,159 | $ | 2,708,601 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 124,260 | $ | 116,507 | ||||
Air traffic liability | 606,396 | 482,496 | ||||||
Other accrued liabilities | 176,900 | 172,214 | ||||||
Current maturities of long-term debt and capital lease obligations | 58,359 | 58,899 | ||||||
Total | 965,915 | 830,116 | ||||||
Long-Term Debt and Capital Lease Obligations | 477,169 | 497,908 | ||||||
Other Liabilities and Deferred Credits: | ||||||||
Accumulated pension and other postretirement benefit obligations | 355,074 | 355,968 | ||||||
Other liabilities and deferred credits | 171,232 | 173,613 | ||||||
Deferred tax liability, net | 167,056 | 170,543 | ||||||
Total | 693,362 | 700,124 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity: | ||||||||
Special preferred stock, $0.01 par value per share, three shares issued and outstanding as of March 31, 2017 and December 31, 2016 | — | — | ||||||
Common stock, $0.01 par value per share, 53,636,630 and 53,435,234 shares outstanding as of March 31, 2017 and December 31, 2016, respectively | 536 | 534 | ||||||
Capital in excess of par value | 121,155 | 127,266 | ||||||
Accumulated income | 693,058 | 656,146 | ||||||
Accumulated other comprehensive loss, net | (109,036 | ) | (103,493 | ) | ||||
Total | 705,713 | 680,453 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 2,842,159 | $ | 2,708,601 | ||||
See accompanying Notes to Consolidated Financial Statements.
5
Hawaiian Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Net cash provided by Operating Activities | $ | 208,949 | $ | 198,505 | ||||
Cash flows from Investing Activities: | ||||||||
Additions to property and equipment, including pre-delivery payments | (53,130 | ) | (30,017 | ) | ||||
Proceeds from purchase assignment and leaseback transactions | — | 31,851 | ||||||
Purchases of investments | (68,155 | ) | (54,748 | ) | ||||
Sales of investments | 78,301 | 53,320 | ||||||
Net cash provided by (used in) investing activities | (42,984 | ) | 406 | |||||
Cash flows from Financing Activities: | ||||||||
Repayments of long-term debt and capital lease obligations | (21,872 | ) | (82,303 | ) | ||||
Repurchases and redemptions of convertible notes | — | (1,426 | ) | |||||
Repurchases of common stock | — | (2,464 | ) | |||||
Other | (7,295 | ) | (5,307 | ) | ||||
Net cash used in financing activities | (29,167 | ) | (91,500 | ) | ||||
Net increase in cash and cash equivalents | 136,798 | 107,411 | ||||||
Cash, cash equivalents, and restricted cash - Beginning of Period | 330,991 | 286,502 | ||||||
Cash, cash equivalents, and restricted cash - End of Period | $ | 467,789 | $ | 393,913 | ||||
See accompanying Notes to Consolidated Financial Statements.
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Hawaiian Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
1. Business and Basis of Presentation
Hawaiian Holdings, Inc. (the Company or Holdings) is a holding company incorporated in the State of Delaware. The Company’s primary asset is its sole ownership of all issued and outstanding shares of common stock of Hawaiian Airlines, Inc. (Hawaiian). The accompanying unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (SEC). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements contain all adjustments, including normal recurring adjustments, necessary for the fair presentation of the Company’s results of operations and financial position for the periods presented. Due to seasonal fluctuations, among other factors common to the airline industry, the results of operations for the periods presented are not necessarily indicative of the results of operations to be expected for the entire year. The accompanying unaudited Consolidated Financial Statements should be read in conjunction with the financial statements and the notes of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
2. Significant Accounting Policies
Recently Adopted Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, requiring an employer to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. ASU 2017-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption only permitted in the first quarter of 2017. The Company early adopted this standard during the first quarter of 2017. The adoption of ASU 2017-07 resulted in a reclassification of $5.1 million from wages and benefits to other components of net periodic benefit cost on the Company's consolidated statement of operations for three months ended March 31, 2016.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, Restricted Cash, requiring restricted cash and restricted cash equivalents to be included with cash and cash equivalents on the statement of cash flows when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company early adopted this standard during the first quarter of 2017. Restricted cash is now included as a component of cash, cash equivalents, and restricted cash on the Company's condensed consolidated statement of cash flows. The inclusion of restricted cash increased the beginning balances of the condensed consolidated statement of cash flows by $5.0 million and the ending balances by $1.0 million and $5.0 million for the three months ended March 31, 2017 and 2016, respectively.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company early adopted this standard during the first quarter of 2017. The adoption of this guidance did not impact the Company's consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, requiring all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. ASU 2016-09 will also allow an employer to withhold more shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016. The Company adopted this standard during the first quarter of 2017. The primary impact of the adoption of the standard on the Company's consolidated financial statements was the recognition of excess tax benefits in the provision for income taxes rather than additional paid-in capital, which reduced income tax expense by $5.2 million for the three months ended March 31, 2017.
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Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, requiring a lessee to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018. ASU 2016-02 requires entities to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited. The Company is currently evaluating the effect that the provisions of ASU 2016-02 will have on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and allows for either full retrospective or modified retrospective adoption.
The Company is currently evaluating the overall effect that the provisions of ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has determined that the new standard, once effective, will affect frequent flyer, ticket breakage, and airline ticket change fee accounting. The standard will preclude the Company from applying the incremental cost method of accounting for free travel awards earned by passengers issued from the HawaiianMiles program through flight activity. The Company will instead be required to allocate consideration received between the ticket and miles earned by passengers and defer the value of the miles until redemption, resulting in a significant increase to the deferred revenue liability on the balance sheet. Passenger revenue is currently recognized for unflown tickets when tickets expire unused. Under the new standard, the Company expects to estimate tickets that will expire unused and recognize revenue at the ticketed flight date. Fees for changing itineraries are currently recognized when received. The Company expects to defer the recognition of these fees until the related transportation is provided. Amounts currently classified in other revenue (e.g. bag and other ancillary fees) will be reclassified to passenger revenue. These changes could have a significant impact on the Company's financial statements.
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3. Accumulated Other Comprehensive Income (Loss)
Reclassifications out of accumulated other comprehensive income (loss) by component is as follows:
Details about accumulated other comprehensive loss components | Three months ended March 31, | Affected line items in the statement where net income is presented | ||||||||
2017 | 2016 | |||||||||
(in thousands) | ||||||||||
Derivatives designated as hedging instruments under ASC 815 | ||||||||||
Foreign currency derivative gains, net | $ | (1,212 | ) | $ | (2,653 | ) | Passenger revenue | |||
Interest rate derivative gains | — | (291 | ) | Interest expense | ||||||
Total before tax | (1,212 | ) | (2,944 | ) | ||||||
Tax expense | 459 | 1,114 | ||||||||
Total, net of tax | $ | (753 | ) | $ | (1,830 | ) | ||||
Amortization of defined benefit plan items | ||||||||||
Actuarial loss | $ | 2,228 | $ | 1,915 | Other components of net periodic benefit cost | |||||
Prior service cost | 60 | 57 | Other components of net periodic benefit cost | |||||||
Total before tax | 2,288 | 1,972 | ||||||||
Tax benefit | (867 | ) | (746 | ) | ||||||
Total, net of tax | $ | 1,421 | $ | 1,226 | ||||||
Short-term investments | ||||||||||
Realized gain on sales of investments, net | $ | (8 | ) | $ | (3 | ) | Other nonoperating income | |||
Total before tax | (8 | ) | (3 | ) | ||||||
Tax expense | 3 | 1 | ||||||||
Total, net of tax | (5 | ) | $ | (2 | ) | |||||
Total reclassifications for the period | $ | 663 | $ | (606 | ) | |||||
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A rollforward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, 2017 and 2016 is as follows:
Three months ended March 31, 2017 | Interest Rate Derivatives | Foreign Currency Derivatives | Defined Benefit Plan Items | Short-Term Investments | Total | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Beginning balance | $ | — | $ | 7,071 | $ | (110,202 | ) | $ | (362 | ) | $ | (103,493 | ) | |||||||
Other comprehensive income (loss) before reclassifications, net of tax | — | (6,344 | ) | 47 | 91 | (6,206 | ) | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | — | (753 | ) | 1,421 | (5 | ) | 663 | |||||||||||||
Net current-period other comprehensive income (loss) | — | (7,097 | ) | 1,468 | 86 | (5,543 | ) | |||||||||||||
Ending balance | $ | — | $ | (26 | ) | $ | (108,734 | ) | $ | (276 | ) | $ | (109,036 | ) | ||||||
Three months ended March 31, 2016 | Interest Rate Derivatives | Foreign Currency Derivatives | Defined Benefit Plan Items | Short-Term Investments | Total | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Beginning balance | $ | 81 | $ | 4,879 | $ | (103,865 | ) | $ | (372 | ) | $ | (99,277 | ) | |||||||
Other comprehensive income (loss) before reclassifications, net of tax | (668 | ) | (5,730 | ) | (299 | ) | 534 | (6,163 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | (181 | ) | (1,649 | ) | 1,226 | (2 | ) | (606 | ) | |||||||||||
Net current-period other comprehensive income (loss) | (849 | ) | (7,379 | ) | 927 | 532 | (6,769 | ) | ||||||||||||
Ending balance | $ | (768 | ) | $ | (2,500 | ) | $ | (102,938 | ) | $ | 160 | $ | (106,046 | ) | ||||||
4. Earnings Per Share
Basic earnings per share, which excludes dilution, is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2017 and 2016, anti-dilutive shares excluded from the calculation of diluted earnings per share were not material.
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(in thousands, except for per share data) | ||||||||
Numerator: | ||||||||
Net Income | $ | 36,912 | $ | 51,466 | ||||
Denominator: | ||||||||
Weighted average common stock shares outstanding - Basic | 53,562 | 53,656 | ||||||
Assumed exercise of stock options and awards | 418 | 275 | ||||||
Assumed conversion of convertible note premium | — | 24 | ||||||
Weighted average common stock shares outstanding - Diluted | 53,980 | 53,955 | ||||||
Net Income Per Share | ||||||||
Basic | $ | 0.69 | $ | 0.96 | ||||
Diluted | $ | 0.68 | $ | 0.95 | ||||
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Stock Repurchase Program
In April 2015, the Company's Board of Directors approved a stock repurchase program under which the Company may repurchase up to $100 million of its outstanding common stock over a two-year period through the open market, established plans or privately negotiated transactions in accordance with all applicable securities laws, rules and regulations. The stock repurchase program is subject to modification or termination at any time. The Company had no stock repurchase activity during the three months ended March 31, 2017. As of March 31, 2017, the Company had $46.0 million remaining to spend under the stock repurchase program.
In April 2017, the Company's Board of Directors approved a modification to the stock repurchase program. Such modification extends the stock repurchase program through May 2019 and increases the current share authorization to $100 million of the Company's outstanding common stock.
5. Short-Term Investments
Debt securities that are not classified as cash equivalents are classified as available-for-sale investments and are stated at fair value. Realized gains and losses on sales of investments are reflected in nonoperating income (expense) in the unaudited consolidated statements of operations. Unrealized gains and losses on available-for-sale securities are reflected as a component of accumulated other comprehensive loss.
The following is a summary of short-term investments held as of March 31, 2017 and December 31, 2016:
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
March 31, 2017 | (in thousands) | |||||||||||||||
Corporate debt | $ | 174,885 | $ | 54 | $ | (285 | ) | $ | 174,654 | |||||||
U.S. government and agency debt | 49,120 | 10 | (131 | ) | 48,999 | |||||||||||
Municipal bonds | 23,537 | 9 | (59 | ) | 23,487 | |||||||||||
Other fixed income securities | 26,560 | — | — | 26,560 | ||||||||||||
Total short-term investments | $ | 274,102 | $ | 73 | $ | (475 | ) | $ | 273,700 | |||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
December 31, 2016 | (in thousands) | |||||||||||||||
Corporate debt | $ | 171,139 | $ | 84 | $ | (357 | ) | $ | 170,866 | |||||||
U.S. government and agency debt | 53,916 | 8 | (134 | ) | 53,790 | |||||||||||
Municipal bonds | 22,893 | 1 | (144 | ) | 22,750 | |||||||||||
Other fixed income securities | 36,670 | — | (1 | ) | 36,669 | |||||||||||
Total short-term investments | $ | 284,618 | $ | 93 | $ | (636 | ) | $ | 284,075 | |||||||
Contractual maturities of short-term investments as of March 31, 2017 are shown below.
Under 1 Year | 1 to 5 Years | Total | ||||||||||
(in thousands) | ||||||||||||
Corporate debt | $ | 73,640 | $ | 101,014 | $ | 174,654 | ||||||
U.S. government and agency debt | 17,924 | 31,075 | 48,999 | |||||||||
Municipal bonds | 7,042 | 16,445 | 23,487 | |||||||||
Other fixed income securities | 23,934 | 2,626 | 26,560 | |||||||||
Total short-term investments | $ | 122,540 | $ | 151,160 | $ | 273,700 | ||||||
The Company classifies investments as current assets as these securities are available for use in its current operations.
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6. Fair Value Measurements
ASC Topic 820, Fair Value Measurement (ASC 820) defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 — Observable inputs such as 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 for the assets or liabilities; and
Level 3 — Unobservable inputs for which there is little or no market data and that are significant to the fair value of the assets or liabilities.
The tables below present the Company’s financial assets and liabilities measured at fair value on a recurring basis:
Fair Value Measurements as of March 31, 2017 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
(in thousands) | ||||||||||||||||
Cash equivalents | $ | 259,654 | $ | 230,681 | $ | 28,973 | $ | — | ||||||||
Restricted cash | 1,000 | 1,000 | — | — | ||||||||||||
Short-term investments | 273,700 | — | 273,700 | — | ||||||||||||
Fuel derivative contracts: | ||||||||||||||||
Crude oil call options | 4,597 | — | 4,597 | — | ||||||||||||
Heating oil swaps | 876 | — | 876 | — | ||||||||||||
Foreign currency derivatives | 5,353 | — | 5,353 | — | ||||||||||||
Total assets measured at fair value | $ | 545,180 | $ | 231,681 | $ | 313,499 | $ | — | ||||||||
Fuel derivative contracts: | ||||||||||||||||
Heating oil swaps | $ | 146 | $ | — | $ | 146 | $ | — | ||||||||
Foreign currency derivatives | 5,443 | — | 5,443 | — | ||||||||||||
Total liabilities measured at fair value | $ | 5,589 | $ | — | $ | 5,589 | $ | — | ||||||||
Fair Value Measurements as of December 31, 2016 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
(in thousands) | ||||||||||||||||
Cash equivalents | $ | 123,120 | $ | 104,113 | $ | 19,007 | $ | — | ||||||||
Restricted cash | 5,000 | 5,000 | — | — | ||||||||||||
Short-term investments | 284,075 | — | 284,075 | — | ||||||||||||
Fuel derivative contracts: | ||||||||||||||||
Crude oil call options | 8,489 | — | 8,489 | — | ||||||||||||
Heating oil swaps | 6,601 | — | 6,601 | — | ||||||||||||
Foreign currency derivatives | 12,906 | — | 12,906 | — | ||||||||||||
Total assets measured at fair value | $ | 440,191 | $ | 109,113 | $ | 331,078 | $ | — | ||||||||
Foreign currency derivatives | 1,469 | — | 1,469 | — | ||||||||||||
Total liabilities measured at fair value | $ | 1,469 | $ | — | $ | 1,469 | $ | — | ||||||||
Cash equivalents. The Company's level 1 cash equivalents consist of money market securities and the level 2 cash equivalents consist of U.S. agency bonds, mutual funds, and commercial paper. The instruments classified as level 2 are valued using quoted prices for similar assets in active markets.
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Restricted cash. The Company’s restricted cash consists of cash held as collateral by institutions that process our credit card transactions for advanced ticket sales, which is valued similarly to the money market securities held as cash equivalents.
Short-term investments. Short-term investments include U.S. and foreign government notes and bonds, U.S. agency bonds, variable-rate corporate bonds, asset backed securities, foreign and domestic corporate bonds, municipal bonds, and commercial paper. These instruments are valued using quoted prices for similar assets in active markets or other observable inputs.
Fuel derivative contracts. The Company’s fuel derivative contracts consist of heating oil swaps and crude oil call options which are not traded on a public exchange. The fair value of these instruments are determined based on inputs available or derived from public markets including contractual terms, market prices, yield curves, and measures of volatility among others.
Foreign currency derivatives. The Company’s foreign currency derivatives consist of Japanese Yen and Australian Dollar forward contracts and are valued based primarily on data available or derived from public markets.
The table below presents the Company’s debt (excluding obligations under capital leases) measured at fair value:
Fair Value of Debt | ||||||||||||||||||||||||||||||||||||||
March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||||||||||||||||||||||||||
Amount | Total | Level 1 | Level 2 | Level 3 | Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||
$ | 463,068 | $ | 466,147 | $ | — | $ | — | $ | 466,147 | $ | 481,874 | $ | 484,734 | $ | — | $ | — | $ | 484,734 | |||||||||||||||||||
The fair value estimates of the Company’s debt were based on the discounted amount of future cash flows using the Company’s current incremental rate of borrowing for similar instruments.
The carrying amounts of cash, other receivables, and accounts payable approximate fair value due to the short-term nature of these financial instruments.
7. Financial Derivative Instruments
The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in global fuel prices and foreign currencies.
Fuel Risk Management
The Company’s operations are inherently dependent upon the price and availability of aircraft fuel. To manage economic risks associated with fluctuations in aircraft fuel prices, the Company periodically enters into derivative financial instruments. During the three months ended March 31, 2017, the Company primarily used heating oil swaps and crude oil call options to hedge its aircraft fuel expense. These derivative instruments were not designated as hedges under ASC Topic 815, Derivatives and Hedging (ASC 815), for hedge accounting treatment. As a result, any changes in fair value of these derivative instruments are adjusted through other nonoperating income (expense) in the period of change.
The following table reflects the amount of realized and unrealized gains and losses recorded as nonoperating income (expense) in the unaudited Consolidated Statements of Operations.
Three months ended March 31, | ||||||||
Fuel derivative contracts | 2017 | 2016 | ||||||
(in thousands) | ||||||||
Gains (losses) realized at settlement | $ | 2,589 | $ | (19,025 | ) | |||
Reversal of prior period unrealized amounts | (7,947 | ) | 17,810 | |||||
Unrealized losses that will settle in future periods | (3,440 | ) | (850 | ) | ||||
Losses on fuel derivatives recorded as Nonoperating Income (expense) | $ | (8,798 | ) | $ | (2,065 | ) | ||
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Foreign Currency Exchange Rate Risk Management
The Company is subject to foreign currency exchange rate risk due to revenues and expenses denominated in foreign currencies, with the primary exposures being the Japanese Yen and Australian Dollar. To manage exchange rate risk, the Company executes its international revenue and expense transactions in the same foreign currency to the extent practicable.
The Company enters into foreign currency forward contracts to further manage the effects of fluctuating exchange rates. The effective portion of the gain or loss of designated cash flow hedges is reported as a component of accumulated other comprehensive income (AOCI) and reclassified into earnings in the same period in which the related sales are recognized as passenger revenue. The effective portion of the foreign currency forward contracts represents the change in fair value of the hedge that offsets the change in the fair value of the hedged item. To the extent the change in the fair value of the hedge does not perfectly offset the change in the fair value of the hedged item, the ineffective portion of the hedge is immediately recognized as nonoperating income (expense). Foreign currency forward contracts that are not designated as cash flow hedges are recorded at fair value, and any changes in fair value are recognized as other nonoperating income (expense) in the period of change.
The Company believes that its foreign currency forward contracts that are designated as cash flow hedges will continue to be effective in offsetting changes in cash flow attributable to the hedged risk. The Company expects to reclassify a net loss of approximately $0.4 million into earnings over the next 12 months from AOCI based on the values at March 31, 2017.
The following tables present the gross fair value of asset and liability derivatives that are designated as hedging instruments under ASC 815 and derivatives that are not designated as hedging instruments under ASC 815, as well as the net derivative positions and location of the asset and liability balances within the unaudited Consolidated Balance Sheets.
Derivative position as of March 31, 2017
Balance Sheet Location | Notional Amount | Final Maturity Date | Gross fair value of assets | Gross fair value of (liabilities) | Net derivative position | ||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Derivatives designated as hedges | |||||||||||||||
Foreign currency derivatives | Other accrued liabilities | 16,327,950 Japanese Yen 43,378 Australian Dollars | March 2018 | 4,064 | (4,820 | ) | (756 | ) | |||||||
Long-term prepayments and other | 4,752,925 Japanese Yen 7,104 Australian Dollars | March 2019 | 1,284 | (498 | ) | 786 | |||||||||
Derivatives not designated as hedges | |||||||||||||||
Foreign currency derivatives | Other accrued liabilities | 882,350 Japanese Yen 1,928 Australian Dollars | June 2017 | 5 | (125 | ) | (120 | ) | |||||||
Fuel derivative contracts | Prepaid expenses and other | 89,754 gallons | March 2018 | 5,473 | (146 | ) | 5,327 | ||||||||
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Derivative position as of December 31, 2016
Balance Sheet Location | Notional Amount | Final Maturity Date | Gross fair value of assets | Gross fair value of (liabilities) | Net derivative position | ||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Derivatives designated as hedges | |||||||||||||||
Foreign currency derivatives | Prepaid expenses and other | 16,121,500 Japanese Yen 41,917 Australian Dollars | December 2017 | 9,803 | (1,349 | ) | 8,454 | ||||||||
Long-term prepayments and other | 4,371,900 Japanese Yen 8,434 Australian Dollars | December 2018 | 2,632 | (59 | ) | 2,573 | |||||||||
Derivatives not designated as hedges | |||||||||||||||
Foreign currency derivatives | Prepaid expenses and other | 879,050 Japanese Yen 5,802 Australian Dollars | March 2017 | 471 | (61 | ) | 410 | ||||||||
Fuel derivative contracts | Prepaid expenses and other | 17,850 gallons | December 2017 | 15,090 | — | 15,090 | |||||||||
The following table reflects the impact of cash flow hedges designated for hedge accounting treatment and their location within the unaudited Consolidated Statements of Comprehensive Income.
(Gain) loss recognized in AOCI on derivatives (effective portion) | (Gain) loss reclassified from AOCI into income (effective portion) | (Gain) loss recognized in nonoperating (income) expense (ineffective portion) | ||||||||||||||||||||||
Three months ended March 31, | Three months ended March 31, | Three months ended March 31, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Foreign currency derivatives | $ | 10,210 | $ | 9,217 | $ | (1,212 | ) | $ | (2,653 | ) | $ | — | $ | — | ||||||||||
Interest rate derivatives | — | 923 | — | (291 | ) | — | — | |||||||||||||||||
Risk and Collateral
Financial derivative instruments expose the Company to possible credit loss in the event the counterparties fail to meet their obligations. To manage such credit risks, the Company (1) selects its counterparties based on past experience and credit ratings, (2) limits its exposure to any single counterparty, and (3) regularly monitors the market position and credit rating of each counterparty. Credit risk is deemed to have a minimal impact on the fair value of the derivative instruments as cash collateral would be provided by the counterparties based on the current market exposure of the derivative.
ASC 815 requires a reporting entity to elect a policy of whether to offset rights to reclaim cash collateral or obligations to return cash collateral against derivative assets and liabilities executed with the same counterparty under a master netting agreement, or present such amounts on a gross basis. The Company’s accounting policy is to present its derivative assets and liabilities on a net basis, including any collateral posted with the counterparty. The Company had no collateral posted with counterparties as of March 31, 2017 and December 31, 2016.
The Company is also subject to market risk in the event these financial instruments become less valuable in the market. However, changes in the fair value of the derivative instruments will generally offset the change in the fair value of the hedged item, limiting the Company’s overall exposure.
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8. Debt
As of March 31, 2017, the expected maturities of long-term debt for the remainder of 2017 and the next four years, and thereafter, were as follows (in thousands):
Remaining months in 2017 | $ | 29,996 | |
2018 | 48,244 | ||
2019 | 72,927 | ||
2020 | 21,413 | ||
2021 | 49,060 | ||
Thereafter | 241,428 | ||
$ | 463,068 | ||
9. Leases
The Company leases aircraft, engines, and other assets under long-term lease arrangements. Other leased assets include real property, airport and terminal facilities, maintenance facilities, and general offices. Certain leases include escalation clauses and renewal options. When lease renewals are considered to be reasonably assured, the rental payments that will be due during the renewal periods are included in the determination of rent expense over the life of the lease.
As of March 31, 2017, the scheduled future minimum rental payments under operating leases with non-cancellable basic terms of more than one year were as follows:
Aircraft | Other | ||||||
(in thousands) | |||||||
Remaining in 2017 | $ | 89,912 | $ | 4,119 | |||
2018 | 118,017 | 7,137 | |||||
2019 | 117,872 | 6,849 | |||||
2020 | 97,717 | 6,682 | |||||
2021 | 64,730 | 6,760 | |||||
Thereafter | 222,227 | 107,751 | |||||
$ | 710,475 | $ | 139,298 | ||||
10. Employee Benefit Plans
The components of net periodic benefit cost for the Company’s defined benefit and other postretirement plans included the following:
Three months ended March 31, | ||||||||
Components of Net Period Benefit Cost | 2017 | 2016 | ||||||
(in thousands) | ||||||||
Service cost | $ | 3,813 | $ | 3,713 | ||||
Other cost: | ||||||||
Interest cost | 7,259 | 7,582 | ||||||
Expected return on plan assets | (4,796 | ) | (4,472 | ) | ||||
Recognized net actuarial loss | 2,287 | 1,973 | ||||||
Total other components of the net periodic benefit cost | 4,750 | 5,083 | ||||||
Net periodic benefit cost | $ | 8,563 | $ | 8,796 | ||||
The Company contributed $6.4 million and $0.3 million to its defined benefit and other postretirement plans during the three months ended March 31, 2017 and 2016, respectively.
On March 24, 2017, the Company announced the ratification of a 63-month contract amendment with its pilots as represented by the Air Line Pilots Association (ALPA). As further discussed in Note 12, during the three months ended March 31, 2017, the Company accrued a one-time payment to reduce the future 401K employer contribution for certain pilot groups, which is not
16
recoverable once paid. In the second half of 2017, the Company currently estimates to make a one-time cash payment between $100 million and $110 million to settle a portion of its outstanding other post-retirement plan obligation with its pilots. The Company currently estimates to also incur a financial charge between $10 million and $15 million related to the settlement when it occurs.
11. Commitments and Contingent Liabilities
Commitments
As of March 31, 2017, the Company had the following capital commitments consisting of firm aircraft and engine orders and purchase rights:
Aircraft Type | Firm Orders | Purchase Rights | Expected Delivery Dates | |||||
A330-200 aircraft | 1 | — | In 2017 | |||||
A321neo aircraft | 16 | 9 | Between 2017 and 2020 | |||||
A330-800neo aircraft | 6 | 6 | Between 2019 and 2021 | |||||
Pratt & Whitney spare engines: | ||||||||
A321neo spare engines | 3 | 2 | Between 2017 and 2019 | |||||
Rolls-Royce spare engines: | ||||||||
A330-800neo spare engines | 2 | 2 | Between 2019 and 2026 | |||||
The Company has operating commitments with a third-party to provide aircraft maintenance services which require fixed payments as well as variable payments based on flight hours for its Airbus fleet through 2027. The Company also has operating commitments with third-party service providers for IT, accounting services, and a capacity purchase agreement through 2024.
Committed capital and operating expenditures include escalation amounts based on estimates. The gross committed expenditures and committed payments for those deliveries as of March 31, 2017 are detailed below:
Capital | Operating | Total Committed Expenditures | ||||||||||
(in thousands) | ||||||||||||
Remaining in 2017 | $ | 204,880 | $ | 59,351 | $ | 264,231 | ||||||
2018 | 409,234 | 64,378 | 473,612 | |||||||||
2019 | 489,159 | 58,683 | 547,842 | |||||||||
2020 | 236,380 | 57,316 | 293,696 | |||||||||
2021 | 165,643 | 54,974 | 220,617 | |||||||||
Thereafter | 129,870 | 390,870 | 520,740 | |||||||||
$ | 1,635,166 | $ | 685,572 | $ | 2,320,738 | |||||||
Litigation and Contingencies
The Company is subject to legal proceedings arising in the normal course of its operations. Management does not anticipate that the disposition of any currently pending proceeding will have a material effect on the Company’s operations, business or financial condition.
General Guarantees and Indemnifications
In the normal course of business, the Company enters into numerous aircraft financing and real estate leasing arrangements that have various guarantees included in the contract. It is common in such lease transactions for the lessee to agree to indemnify the lessor and other related third-parties for tort liabilities that arise out of or relate to the lessee’s use of the leased aircraft or occupancy of the leased premises. In some cases, this indemnity extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by their gross negligence or willful misconduct. Additionally, the lessee typically indemnifies such parties for any environmental liability that arises out of or relates to its use of the real estate leased premises. The Company believes that it is insured (subject to deductibles) for most tort liabilities and related indemnities described above with respect to the aircraft and real estate that it leases. The Company cannot estimate the potential amount of future payments, if any, under the foregoing indemnities and agreements.
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Credit Card Holdback
Under the Company’s bank-issued credit card processing agreements, certain proceeds from advance ticket sales may be held back to serve as collateral to cover any possible chargebacks or other disputed charges that may occur. These holdbacks, which are included in restricted cash in the Company’s unaudited Consolidated Balance Sheets, totaled $1.0 million at March 31, 2017 and $5.0 million at December 31, 2016.
In the event of a material adverse change in the Company's business, the holdback could increase to an amount up to 100% of the applicable credit card air traffic liability, which would also cause an increase in the level of restricted cash. If the Company is unable to obtain a waiver of, or otherwise mitigate the increase in the restriction of cash, it could have a material adverse impact on the Company.
12. Special Items
In February 2017, the Company reached a tentative agreement with ALPA, covering the Company's pilots. In March 2017, Company received notice from ALPA that the agreement was ratified by its members. The agreement is effective April 1, 2017 and has a term of 63-months. The contract includes (amongst other various benefits) a pay adjustment and ratification bonus computed based on previous service. During the three months ended March 31, 2017, the Company accrued $18.7 million related to (1) a one-time payment to reduce the future 401K employer contribution for certain pilot groups, which is not recoverable once paid, and (2) a one-time true up of the pilot vacation accrual at the new negotiated contract rates.
13. Supplemental Cash Flow Information
Non-cash investing and financing activities for the three months ended March 31, 2017 and 2016 were as follows:
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
(in thousands) | |||||||
Investing and Financing Activities Not Affecting Cash: | |||||||
Property and equipment acquired through a capital lease | $ | — | $ | 9,104 | |||
14. Condensed Consolidating Financial Information
The following condensed consolidating financial information is presented in accordance with Regulation S-X paragraph 210.3-10 because, in connection with the issuance by two pass-through trusts formed by Hawaiian (which is also referred to in this Note 14 as Subsidiary Issuer / Guarantor) of pass-through certificates, the Company (which is also referred to in this Note 14 as Parent Issuer / Guarantor) is fully and unconditionally guaranteeing the payment obligations of Hawaiian, which is a 100% owned subsidiary of the Company, under equipment notes issued by Hawaiian to purchase new aircraft.
Condensed consolidating financial statements are presented in the following tables:
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Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
Three months ended March 31, 2017
Parent Issuer / Guarantor | Subsidiary Issuer / Guarantor | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating Revenue | $ | — | $ | 612,543 | $ | 1,746 | $ | (104 | ) | $ | 614,185 | |||||||||
Operating Expenses: | ||||||||||||||||||||
Wages and benefits | — | 151,053 | — | — | 151,053 | |||||||||||||||
Aircraft fuel, including taxes and delivery | — | 103,538 | — | — | 103,538 | |||||||||||||||
Maintenance materials and repairs | — | 57,293 | 2,111 | — | 59,404 | |||||||||||||||
Aircraft and passenger servicing | — | 33,458 | — | — | 33,458 | |||||||||||||||
Commissions and other selling | 6 | 33,207 | 19 | (46 | ) | 33,186 | ||||||||||||||
Aircraft rent | — | 33,135 | — | — | 33,135 | |||||||||||||||
Other rentals and landing fees | — | 28,336 | — | — | 28,336 | |||||||||||||||
Depreciation and amortization | — | 26,517 | 951 | — | 27,468 | |||||||||||||||
Purchased services | 106 | 26,354 | 192 | (15 | ) | 26,637 | ||||||||||||||
Special charges | — | 18,679 | — | — | 18,679 | |||||||||||||||
Other | 1,152 | 30,453 | 435 | (43 | ) | 31,997 | ||||||||||||||
Total | 1,264 | 542,023 | 3,708 | (104 | ) | 546,891 | ||||||||||||||
Operating Income (Loss) | (1,264 | ) | 70,520 | (1,962 | ) | — | 67,294 | |||||||||||||
Nonoperating Income (Expense): | ||||||||||||||||||||
Undistributed net income of subsidiaries | 37,002 | — | — | (37,002 | ) | — | ||||||||||||||
Interest expense and amortization of debt discounts and issuance costs | — | (8,003 | ) | — | — | (8,003 | ) | |||||||||||||
Other components of net periodic pension cost | — | (4,751 | ) | — | — | (4,751 | ) | |||||||||||||
Interest income | 70 | 1,082 | — | — | 1,152 | |||||||||||||||
Capitalized interest | — | 1,760 | — | — | 1,760 | |||||||||||||||
Losses on fuel derivatives | — | (8,798 | ) | — | — | (8,798 | ) | |||||||||||||
Other, net | — | 2,828 | — | — | 2,828 | |||||||||||||||
Total | 37,072 | (15,882 | ) | — | (37,002 | ) | (15,812 | ) | ||||||||||||
Income (Loss) Before Income Taxes | 35,808 | 54,638 | (1,962 | ) | (37,002 | ) | 51,482 | |||||||||||||
Income tax expense (benefit) | (1,104 | ) | 15,674 | — | — | 14,570 | ||||||||||||||
Net Income (Loss) | $ | 36,912 | $ | 38,964 | $ | (1,962 | ) | $ | (37,002 | ) | $ | 36,912 | ||||||||
Comprehensive Income (Loss) | $ | 31,369 | $ | 33,421 | $ | (1,962 | ) | $ | (31,459 | ) | $ | 31,369 | ||||||||
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Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
Three months ended March 31, 2016
Parent Issuer / Guarantor | Subsidiary Issuer / Guarantor | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating Revenue | $ | — | $ | 550,134 | $ | 1,163 | $ | (117 | ) | $ | 551,180 | |||||||||
Operating Expenses: | ||||||||||||||||||||
Aircraft fuel, including taxes and delivery | — | 69,900 | — | — | 69,900 | |||||||||||||||
Wages and benefits | — | 128,561 | — | — | 128,561 | |||||||||||||||
Aircraft rent | — | 29,388 | — | — | 29,388 | |||||||||||||||
Maintenance materials and repairs | — | 59,100 | 1,404 | — | 60,504 | |||||||||||||||
Aircraft and passenger servicing | — | 28,551 | — | — | 28,551 | |||||||||||||||
Commissions and other selling | 1 | 33,052 | 16 | (38 | ) | 33,031 | ||||||||||||||
Depreciation and amortization | — | 26,399 | 747 | — | 27,146 | |||||||||||||||
Other rentals and landing fees | — | 24,434 | — | — | 24,434 | |||||||||||||||
Purchased services | 35 | 22,640 | 72 | (15 | ) | 22,732 | ||||||||||||||
Other | 1,326 | 28,596 | 125 | (64 | ) | 29,983 | ||||||||||||||
Total | 1,362 | 450,621 | 2,364 | (117 | ) | 454,230 | ||||||||||||||
Operating Income (Loss) | (1,362 | ) | 99,513 | (1,201 | ) | — | 96,950 | |||||||||||||
Nonoperating Income (Expense): | ||||||||||||||||||||
Undistributed net income of subsidiaries | 51,816 | — | — | (51,816 | ) | — | ||||||||||||||
Interest expense and amortization of debt discounts and issuance costs | 117 | (11,121 | ) | — | — | (11,004 | ) | |||||||||||||
Other components of net periodic pension cost | — | (5,082 | ) | — | — | (5,082 | ) | |||||||||||||
Interest income | 59 | 785 | — | — | 844 | |||||||||||||||
Capitalized interest | — | 225 | — | — | 225 | |||||||||||||||
Losses on fuel derivatives | — | (2,065 | ) | — | — | (2,065 | ) | |||||||||||||
Loss on extinguishment of debt | — | (3,350 | ) | — | — | (3,350 | ) | |||||||||||||
Other, net | — | 6,586 | — | — | 6,586 | |||||||||||||||
Total | 51,992 | (14,022 | ) | — | (51,816 | ) | (13,846 | ) | ||||||||||||
Income (Loss) Before Income Taxes | 50,630 | 85,491 | (1,201 | ) | (51,816 | ) | 83,104 | |||||||||||||
Income tax expense (benefit) | (836 | ) | 32,474 | — | — | 31,638 | ||||||||||||||
Net Income (Loss) | $ | 51,466 | $ | 53,017 | $ | (1,201 | ) | $ | (51,816 | ) | $ | 51,466 | ||||||||
Comprehensive Income (Loss) | $ | 44,697 | $ | 46,248 | $ | (1,201 | ) | $ | (45,047 | ) | $ | 44,697 | ||||||||
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Condensed Consolidating Balance Sheets
March 31, 2017
Parent Issuer / Guarantor | Subsidiary Issuer / Guarantor | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 68,070 | $ | 391,405 | $ | 7,314 | $ | — | $ | 466,789 | ||||||||||
Restricted cash | — | 1,000 | — | — | 1,000 | |||||||||||||||
Short-term investments | — | 273,700 | — | 273,700 | ||||||||||||||||
Accounts receivable, net | 28 | 103,073 | 1,693 | (309 | ) | 104,485 | ||||||||||||||
Spare parts and supplies, net | — | 18,622 | — | — | 18,622 | |||||||||||||||
Prepaid expenses and other | 106 | 49,072 | 265 | — | 49,443 | |||||||||||||||
Total | 68,204 | 836,872 | 9,272 | (309 | ) | 914,039 | ||||||||||||||
Property and equipment at cost | — | 2,089,033 | 70,731 | — | 2,159,764 | |||||||||||||||
Less accumulated depreciation and amortization | — | (471,416 | ) | (9,198 | ) | — | (480,614 | ) | ||||||||||||
Property and equipment, net | — | 1,617,617 | 61,533 | — | 1,679,150 | |||||||||||||||
Long-term prepayments and other | — | 126,231 | — | — | 126,231 | |||||||||||||||
Deferred tax assets, net | 29,861 | — | — | (29,861 | ) | — | ||||||||||||||
Goodwill and other intangible assets, net | — | 121,237 | 1,502 | — | 122,739 | |||||||||||||||
Intercompany receivable | — | 290,111 | — | (290,111 | ) | — | ||||||||||||||
Investment in consolidated subsidiaries | 887,587 | — | — | (887,587 | ) | — | ||||||||||||||
TOTAL ASSETS | $ | 985,652 | $ | 2,992,068 | $ | 72,307 | $ | (1,207,868 | ) | $ | 2,842,159 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||