0001362468-21-000012 | 10-K | XBRL Viewer

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Cover Page - USD ($) $ in Billions	12 Months Ended
Cover Page - USD ($) $ in Billions	Dec. 31, 2020	Feb. 12, 2021	Jun. 30, 2020
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	001-33166
Entity Registrant Name	Allegiant Travel Co
Entity Central Index Key	0001362468
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	20-4745737
Entity Address, Address Line One	1201 North Town Center Drive
Entity Address, City or Town	Las Vegas,
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89144
City Area Code	702
Local Phone Number	851-7300
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	ALGT
Security Exchange Name	NASDAQ
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Public Float			$ 1.4
Entity Common Stock, Shares Outstanding		16,415,957
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Documents Incorporated by Reference	Portions of the Proxy Statement to be used in connection with the solicitation of proxies to be voted at the registrant’s annual meeting to be held on June 23, 2021, and to be filed with the Commission subsequent to the date hereof, are incorporated by reference into Part III of this Report on Form 10-K.
Entity Emerging Growth Company	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$ 152,764	$ 121,888
Restricted cash	17,555	14,897
Short-term investments	532,477	335,928
Accounts receivable	192,215	25,516
Expendable parts, supplies and fuel, net of reserve of $4,323 and $2,748	24,006	28,375
Prepaid expenses and other current assets	24,616	35,617
TOTAL CURRENT ASSETS	943,633	562,221
Property and equipment (including $187,166 and $195,796 from VIEs, Note 7), net of accumulated depreciation of $598,546 and $484,510	2,050,311	2,236,808
Long-term investments	0	15,542
Deferred major maintenance, net of accumulated amortization of $57,022 and $34,423	127,463	129,654
Operating lease right-of-use assets, net	115,911	22,081
Deposits and other assets	21,607	44,497
TOTAL ASSETS:	3,258,925	3,010,803
CURRENT LIABILITIES
Accounts payable	34,197	27,667
Accrued liabilities	116,093	159,031
Current operating lease liabilities	14,313	2,662
Air traffic liability	307,508	249,950
Current maturities of long-term debt and finance lease obligations (including $17,610 and $17,327 from VIEs, Note 7), net of related costs of $7,527 and $5,694	217,234	173,274
TOTAL CURRENT LIABILITIES	689,345	612,584
LONG-TERM DEBT AND OTHER NONCURRENT LIABILITIES
Long-term debt and finance lease obligations (including $135,683 and $159,324 from VIEs, Note 7), net of current maturities and related costs of $15,926 and $17,930	1,441,777	1,248,579
Deferred income taxes	301,763	232,520
Noncurrent operating lease liabilities	102,289	21,290
Other noncurrent liabilities	24,388	12,279
TOTAL LIABILITIES:	2,559,562	2,127,252
SHAREHOLDERS' EQUITY
Common stock, par value $.001, 100,000,000 shares authorized; 23,097,737 and 22,835,715 shares issued; 16,405,565 and 16,303,262 shares outstanding in 2020 and 2019 respectively	23	23
Treasury shares, at cost, 6,692,172 and 6,532,453 shares in 2020 and 2019, respectively	(646,008)	(617,579)
Additional paid in capital	329,753	289,933
Accumulated other comprehensive gain (loss), net	(27)	98
Retained earnings	1,015,622	1,211,076
TOTAL EQUITY:	699,363	883,551
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$ 3,258,925	$ 3,010,803

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Expendable parts, supplies and fuel, net of reserve of $4,323 and $2,748	$ 4,323	$ 2,748
Property and equipment (including $187,166 and $195,796 from VIEs, Note 7), net of accumulated depreciation of $598,546 and $484,510	598,546	484,510
PP&E from VIEs	3,258,925	3,010,803
Deferred major maintenance, net of accumulated amortization of $57,022 and $34,423	57,022	34,423
Current maturities of long-term debt and finance lease obligations (including $17,610 and $17,327 from VIEs, Note 7), net of related costs of $7,527 and $5,694	7,527	5,694
Current maturities of notes payable, from VIEs	689,345	612,584
Long-term debt and finance lease obligations (including $135,683 and $159,324 from VIEs, Note 7), net of current maturities and related costs of $15,926 and $17,930	$ 15,926	$ 17,930
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	23,097,737	22,835,715
Common stock, shares outstanding	16,405,565	16,303,262
Treasury stock, shares	6,692,172	6,532,453
Current maturities of notes payable, from VIEs	$ 689,345	$ 612,584
Variable Interest Entity, Primary Beneficiary [Member]
Statement of Financial Position [Abstract]
PP&E from VIEs	187,166	195,796
Current maturities of notes payable, from VIEs	17,610	17,327
Long-term debt from VIEs	135,683	159,324
Long-term debt from VIEs	135,683	159,324
Current maturities of notes payable, from VIEs	$ 17,610	$ 17,327

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
OPERATING REVENUES:
Passenger	$ 902,187	$ 1,682,955	$ 1,533,701
Third party products
Third party products	46,482	70,012	58,060
Fixed fee contract	26,865	65,057	50,286
Other	14,539	22,941	25,400
Total operating revenues	990,073	1,840,965	1,667,447
OPERATING EXPENSES:
Aircraft fuel	221,827	427,827	445,814
Salary and benefits	377,825	450,448	413,892
Station operations	144,771	171,420	161,019
Depreciation and amortization	176,267	155,852	129,351
Maintenance and repairs	63,895	91,713	99,015
Sales and marketing	43,517	78,910	73,514
Aircraft lease rentals	9,828	0	868
Other	79,277	100,845	100,515
CARES Act grant recognition	(152,448)	0	0
Special charges	306,299	0	0
Total operating expenses	1,271,058	1,477,015	1,423,988
OPERATING INCOME (LOSS)	(280,985)	363,950	243,459
OTHER (INCOME) EXPENSES:
Interest expense	(60,493)	(76,801)	(56,116)
Interest income	(5,509)	(12,523)	(9,226)
Capitalized interest	(4,067)	(4,472)	(2,354)
Loss on extinguishment of debt	1,222	3,677	0
Special charges	26,632	0	0
Other, net	1,311	780	395
Total other expenses	80,082	62,703	44,141
INCOME (LOSS) BEFORE INCOME TAXES	(361,067)	301,247	199,318
INCOME TAX PROVISION (BENEFIT)	(176,974)	69,130	37,516
NET INCOME (LOSS)	$ (184,093)	$ 232,117	$ 161,802
Earnings (loss) per share to common shareholders:
Basic	$ (11.53)	$ 14.27	$ 10.02
Diluted	$ (11.53)	$ 14.26	$ 10.00
Shares used for computation:
Basic	15,992	16,027	15,941
Diluted	15,992	16,041	15,967
Cash dividends declared per share:	$ 0.70	$ 2.80	$ 2.80

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Comprehensive Income [Abstract]
NET INCOME (LOSS)	$ (184,093)	$ 232,117	$ 161,802
Other comprehensive income (loss):
Change in available for sale securities, net of tax	(178)	750	(1,153)
Foreign currency translation adjustments	53	9	177
Change in derivatives, net of tax	0	0	3,155
Total other comprehensive income (loss)	(125)	759	2,179
TOTAL COMPREHENSIVE INCOME	$ (184,218)	$ 232,876	$ 163,981

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

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- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

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Consolidated Statements of Stockholders' Equity Statement - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock
TOTAL EQUITY	$ 553,311		$ 23	$ 253,840	$ (2,840)	$ 907,943		$ 605,655
Common stock, shares issued			16,066,000
Exercises of stock options and stock-settled SARs (Shares)			107,000
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	17,095			17,095
Stock Repurchased During Period, Shares			(23,000)
Treasury Stock, Value, Acquired, Cost Method	$ (3,650)							(3,650)
Stock Issued During Period, Shares, Employee Stock Purchase Plans	33,300		33,000
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 4,268							4,268
Dividends, Cash	(45,247)					(45,247)
Unrealized gain on short-term investments, net of tax	2,742				2,179	563
Net Income	161,802					161,802
TOTAL EQUITY	690,321		$ 23	270,935	(661)	1,025,061		605,037
Common stock, shares issued			16,183,000
Exercises of stock options and stock-settled SARs (Shares)			213,000
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	18,998			18,998
Stock Repurchased During Period, Shares			(132,000)
Treasury Stock, Value, Acquired, Cost Method	$ (18,569)							(18,569)
Stock Issued During Period, Shares, Employee Stock Purchase Plans	38,464		39,000
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 6,027							6,027
Dividends, Cash	(45,552)					(45,552)
Unrealized gain on short-term investments, net of tax	759				759
Net Income	232,117					232,117
TOTAL EQUITY	$ 883,551	$ (550)	$ 23	289,933	98	1,211,076	$ (550)	617,579
Common stock, shares issued	16,303,262		16,303,000
Exercises of stock options and stock-settled SARs (Shares)			262,000
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	$ 38,445			38,445
Stock Repurchased During Period, Shares			(217,000)
Treasury Stock, Value, Acquired, Cost Method	$ (33,773)							(33,773)
Stock Issued During Period, Shares, Employee Stock Purchase Plans	56,866		57,000
Stock Issued During Period, Value, Employee Stock Purchase Plan	$ 5,344							5,344
Dividends, Cash	(11,361)					(11,361)
Unrealized gain on short-term investments, net of tax	(125)				(125)
Net Income	(184,093)					(184,093)
Adjustments to Additional Paid in Capital, Warrant Issued	1,375			1,375
TOTAL EQUITY	$ 699,363		$ 23	$ 329,753	$ (27)	$ 1,015,622		$ 646,008
Common stock, shares issued	16,405,565		16,405,000

Consolidated Statements of Stockholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]
Cash dividends (per Share)	$ 0.70	$ 2.80	$ 2.80

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
OPERATING ACTIVITIES:
Net income (loss)	$ (184,093,000)	$ 232,117,000	$ 161,802,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	176,267,000	155,852,000	129,351,000
(Gain)/loss on aircraft and other equipment disposals	(1,811,000)	(8,475,000)	2,360,000
Special charges	292,790,000	0	0
Share-based compensation expense	19,287,000	18,226,000	15,098,000
Deferred income taxes	69,344,000	68,466,000	38,222,000
Other adjustments	19,136,000	5,521,000	4,541,000
Changes in certain assets and liabilities:
Accounts receivable	4,390,000	10,498,000	35,624,000
Tax receivable	(164,585,000)	0	0
Prepaid expenses	10,224,000	(5,483,000)	(5,191,000)
Accounts payable	7,016,000	(2,103,000)	8,633,000
Accrued liabilities	(26,386,000)	21,331,000	12,005,000
Air traffic liability	57,558,000	37,720,000	7,931,000
Deferred major maintenance	40,352,000	81,133,000	49,622,000
Other assets/liabilities	(4,163,000)	(10,327,000)	(4,142,000)
Net cash provided by operating activities	234,622,000	442,210,000	356,612,000
INVESTING ACTIVITIES:
Purchase of investment securities	(686,600,000)	(436,237,000)	(371,461,000)
Proceeds from maturity and sale of investment securities	504,600,000	454,813,000	436,581,000
Purchase of property and equipment, including capitalized interest	(281,159,000)	(506,845,000)	(334,774,000)
Proceeds from sale-leaseback transactions	87,580,000	0	0
Other investing activities	9,888,000	11,806,000	677,000
Net cash used in investing activities	(365,691,000)	(476,463,000)	(268,977,000)
FINANCING ACTIVITIES:
Cash dividends paid to shareholders(1)	(11,361,000)	(45,552,000)	(45,247,000)
Proceeds from the issuance of debt	427,987,000	874,936,000	211,225,000
Repurchase of common stock	(33,773,000)	(18,569,000)	(3,650,000)
Principal payments on debt and finance lease obligations	(217,766,000)	(705,763,000)	(232,227,000)
Debt issuance costs	(7,203,000)	(33,333,000)	(1,666,000)
Other financing activities	6,719,000	3,408,000	9,202,000
Net cash provided by (used in) financing activities	164,603,000	75,127,000	(62,363,000)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	33,534,000	40,874,000	25,272,000
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	136,785,000	95,911,000	70,639,000
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	170,319,000	136,785,000	95,911,000
CASH PAYMENTS/(RECEIPTS) FOR:
Interest paid, net of amount capitalized	48,002,000	65,152,000	52,323,000
Income tax refunds	(95,229,000)	(2,157,000)	(41,610,000)
Right-of-use (ROU) assets acquired	115,082,000	2,510,000	0
Property capitalized under operating leases	19,294,000	25,830,000	0
Flight equipment acquired under finance leases	$ 27,765,000	$ 0	$ 127,625,000

Organization and Business of Company (Notes)	12 Months Ended
Organization and Business of Company (Notes)	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business of Company	Organization and Business of Company Allegiant Travel Company (the “Company”) is a leisure travel company focused on providing travel services and products to residents of under-served cities in the United States. The Company operates a low-cost, low utilization passenger airline which sells air transportation both on a stand-alone basis and bundled with the sale of ancillary air-related and third party services and products. The Company also provides air transportation under fixed fee flying arrangements, generates other ancillary revenues, and operates non-airline related entities which include the development of Sunseeker Resort and related golf course, and Teesnap golf course management solution. Previously, the Company also operated Allegiant Nonstop family entertainment centers. Scheduled service and fixed fee air transportation services have similar operating margins, economic characteristics, and production processes (check-in, baggage handling and flight services) which target the same class of customers, and are subject to the same regulatory environment. As a result, the Company believes its airline activities operate under one reportable segment and does not separately track expenses for scheduled service and fixed fee air transportation services. The Company's non-airline related entities represent separate reportable segments and include Sunseeker Resort, and other non-airline activities. Refer to Note 16 for additional information.

Unusual or Infrequently Occurring Items

12 Months Ended

Dec. 31, 2020

Unusual or Infrequent Items, or Both [Abstract]

Unusual or Infrequent Items, or Both, Disclosure

Impact of the COVID-19 Pandemic

The rapid spread of COVID-19 and the related government restrictions, social distancing measures, and consumer fears have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings throughout the airline industry. Starting in March 2020, the Company experienced a severe reduction in air travel, which continued through the remainder of 2020. Demand in the foreseeable future will continue to be affected by fluctuations in COVID-19 cases, hospitalizations, deaths, treatment efficacy and the effectiveness and availability of vaccines. The Company is continuously reevaluating flight schedules and adjusting capacity based on demand trends.

The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in March 2020, providing support for the airline industry and other businesses and individuals.

On April 20, 2020, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Agreement (the “PSPA”) with the U.S. Department of the Treasury ("Treasury") for an award Allegiant Air would receive under the CARES Act. Allegiant Air received a total of $176.9 million under the PSPA during 2020. The proceeds of the award were used exclusively for wages, salaries and benefits during the second and third quarters of 2020, in accordance with the agreement.

The $176.9 million received under the PSPA during the second and third quarters of 2020 includes direct grants of $153.8 million, a $23.1 million loan, and warrants to purchase 27,681 shares of the Company's common stock with a fair value of $1.4 million, as further discussed below.

In consideration for the grant, Allegiant Air issued to Treasury a low-interest rate, senior unsecured term promissory note (the “PSP Note”) which will mature 10 years after issuance. The principal amount of the PSP Note is $23.1 million. The PSP Note is guaranteed by the Company and is prepayable at any time at par (see Note 7).

Also in consideration for the grant, the Company issued warrants (the “PSP Warrants”) to Treasury to purchase 27,681 shares of common stock of the Company at a price of $83.33 per share (based on the closing price of the Company’s common stock on The Nasdaq Global Select Market on April 9, 2020). The PSP Warrants expire five years after issuance, and will be exercisable either through net share settlement or cash, at the Company’s option. The PSP Warrants include customary anti-dilution provisions, do not have any voting rights and are freely transferable, with registration rights.

As indicated above, the Company made significant progress on strengthening its liquidity through efforts including suspending all stock buybacks and dividends; temporarily reducing executives salaries by 50 percent and temporarily foregoing cash compensation of Board members; enacting a hiring freeze and offering voluntary leave; eliminating cash bonuses; suspending all non-essential capital expenditures including, but not limited to, Sunseeker Resorts, Teesnap and Allegiant Nonstop family entertainment centers; and extending payment terms and renegotiating contracts with vendors.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the "Payroll Support Program Extension") was signed into law. This Payroll Support Program Extension provides an additional $15.0 billion in support to the airline industry. See Note 18 - Subsequent Events.

Given the above actions and the Company's assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, the Company expects to meet its cash obligations as well as remain in compliance with the debt covenants in its existing financing agreements for the next 12

months based on its current level of unrestricted cash and short-term investments, its anticipated access to liquidity, and projected cash flows from operations.

Special Charges

The effects of COVID-19 triggered an impairment review, and non-cash impairment charges were recognized during the year ended December 31, 2020 (see Note 17 - Impairment for additional detail). The Company also identified expenses that were unique and specific to COVID-19. The impairment charges and other expenses that resulted from the effects of COVID-19 are recorded as special charges within both operating and non-operating expenses during the twelve months ended December 31, 2020. See the table below for a summary of operating and non-operating special charges recorded by segment during the year ended December 31, 2020.


(in thousands)	Airline		Sunseeker Resort		Other non-airline		Total




Year Ended December 31, 2020
Operating	$	141,713	$	137,994	$	26,592	$	306,299
Non-operating	—		26,632		—		26,632
Total special charges	$	141,713	$	164,626	$	26,592	$	332,931

Additional detail for the $332.9 million total special charges (operating and non-operating) for the year ended December 31, 2020 appears below:

Operating

–$161.6 million in impairment charges

–Includes Airline - $5.0 million; Sunseeker Resort - $128.9 million; Kingsway - $1.1 million; Other non-airline $26.6 million

–$98.0 million adjustment resulting from the accelerated retirements of eight airframes and five engines, loss on sale leaseback transactions of eight aircraft, and write-offs of other aircraft related assets

–$35.1 million adjustment for additional salary and benefits expense in relation to the elimination of positions as well as other non-recurring compensation expense associated with the acceleration of certain existing stock awards

–Includes Airline - $32.1 million; Sunseeker Resort - $2.9 million

–$5.0 million related to suspension of construction at Sunseeker Resort

–$6.6 million write-down on various non-aircraft assets and other various expenses

Non-operating

–$26.6 million which includes termination fees and debt issuance costs related to the termination of the loan agreement with Sixth Street Partners (formerly TSSP).

Restructuring and Related Activities Disclosure

Special Charges


(in thousands)	Airline		Sunseeker Resort		Other non-airline		Total




Year Ended December 31, 2020
Operating	$	141,713	$	137,994	$	26,592	$	306,299
Non-operating	—		26,632		—		26,632
Total special charges	$	141,713	$	164,626	$	26,592	$	332,931

Additional detail for the $332.9 million total special charges (operating and non-operating) for the year ended December 31, 2020 appears below:

Operating

–$161.6 million in impairment charges

–Includes Airline - $5.0 million; Sunseeker Resort - $128.9 million; Kingsway - $1.1 million; Other non-airline $26.6 million

–Includes Airline - $32.1 million; Sunseeker Resort - $2.9 million

–$5.0 million related to suspension of construction at Sunseeker Resort

–$6.6 million write-down on various non-aircraft assets and other various expenses

Non-operating

–$26.6 million which includes termination fees and debt issuance costs related to the termination of the loan agreement with Sixth Street Partners (formerly TSSP).

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Allegiant Travel Company and its majority-owned operating subsidiaries. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method. All intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from these estimates.

The Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), (the "New Lease Standard") effective January 1, 2019 using the modified retrospective transition approach. Under this method, the cumulative effect adjustment to the opening balance of retained earnings was recognized at the adoption date. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption on January 1, 2019. See Recent Accounting Pronouncements below for further information.

The Company adopted Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) effective January 1, 2020. The standard requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities. The Company adopted this accounting standard prospectively as of January 1, 2020 and it did not have a significant impact on its consolidated financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include investments and interest bearing instruments with maturities of three months or less at the balance sheet date. Such investments are carried at cost which approximates fair value.

Restricted Cash

Restricted cash represents escrowed funds under fixed fee contracts, and cash collateral held against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties.

Accounts Receivable

Accounts receivable are carried at face amount which approximates fair value. In addition to income tax receivables, the accounts receivable consist primarily of amounts due from credit card companies associated with the sale of tickets for future travel. These receivables are short-term and generally settle within a few days of sale. There are also receivables related to commission amounts due from Enterprise Holdings Inc. based on terms in the rental car provider agreement and amounts due related to fixed fee charter agreements. If deemed necessary, the Company records charges to its allowance for doubtful accounts for amounts not expected to be collected, for which the balance was immaterial for all years presented. The Company also had outstanding receivables from a third party as of December 31, 2020 and 2019, of which $10.9 million and $11.4 million, respectively, was due more than one year after the balance sheet date and is classified with the Company's other assets.

Short-term and Long-term Investments

The Company’s investments in marketable securities are classified as available-for-sale and are reported at fair value with the net unrealized gain or (loss) reported as a component of accumulated other comprehensive income (loss) in shareholders’ equity. For investments in an unrealized loss position, the Company determines whether a credit loss exists by considering information about the collectability of the instrument and current market conditions. There have been no credit losses. Investment securities with original maturities of three months or less are classified as cash equivalents. Investment securities with original maturities greater than three months are classified as either short-term investments or long-term investments based on the maturity date in relation to the balance sheet date. Short-term investments have a maturity date less than or equal to one year from the balance sheet date, and long-term investments have a maturity date greater than one year from the balance sheet date. As of December 31, 2019, the Company’s long-term investments consisted of corporate debt securities, federal agency debt securities, US Treasury Bonds, and municipal debt securities with contractual maturities of less than 24 months.

The amortized cost of investment securities sold is determined by the specific identification method with any realized gains or losses reflected in other (income) expense. The Company had minimal realized losses during the years ended December 31, 2020, 2019, and 2018. The Company believes unrealized losses related to debt securities are not other-than-temporary and does not intend to sell these securities prior to amortized cost recoverability.

The Company attempts to minimize its concentration risk with regard to its cash, cash equivalents, and investment portfolio. This is accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the amount invested in any individual security, commercial paper, or money market fund.

Expendable Parts, Supplies and Fuel, Net

Expendable parts, supplies and fuel inventories are valued at cost using the first-in, first-out method. Such inventories are charged to expense as they are used in operations. An obsolescence allowance for expendable parts and supplies is based on salvage values and the average remaining useful life of the Airbus fleet. The obsolescence allowance for expendable parts and supplies was $4.3 million and $2.7 million at December 31, 2020 and 2019, respectively. Rotable aircraft parts inventories are included in property and equipment.

Operating Lease Right-of-Use Asset and Liability

The Company determines if an arrangement is a lease at inception and has lease agreements for aircraft, office facilities, office equipment, certain airport and terminal facilities, and other space and assets with non-cancelable lease terms. Certain real estate and property leases, aircraft leases, and various other operating leases are measured on the balance sheet with a lease liability and right-of-use ("ROU") asset. Airport terminal leases mostly include variable lease payments outside of those based on a fixed index, and are therefore excluded from consideration.

ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is calculated using the incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available.

Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by the New Lease Standard. Lease payments do not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components.

Lease terms include options to extend when it is reasonably certain that the option will be exercised. Leases with a term of 12 months or less are not recorded on the balance sheet. Additionally, lease and non-lease components are accounted for as a single lease component for real estate agreements.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives less any estimated salvage value. Property under finance leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed on the basis of the Company’s incremental borrowing rate, and depreciation is recorded on a straight-line basis and is included within depreciation and amortization expense. The estimated useful lives of the principal asset classes are shown below.


Aircraft, engines and related rotable parts			10-25 years



Buildings and leasehold improvements			10-25 years
Equipment			3-10 years
Computer hardware and software			3-10 years

In estimating the useful lives and residual values of aircraft, the Company primarily relies upon actual experience with the same or similar aircraft types, current and projected future market information, and recommendations from other industry sources. Subsequent revisions to these estimates could be caused by changing market prices of the Company’s aircraft, changes in utilization of the aircraft, and other fleet events. These estimates are evaluated each reporting period and adjusted if necessary. Changes in the estimate for useful lives or residual values of the Company’s property and equipment could result in changes in depreciation expense.

Interest is capitalized using the Company’s weighted average borrowing rate and depreciated over the estimated useful life of the related asset(s) acquired/developed. Capitalized interest for the years ended December 31, 2020, 2019 and 2018 was $4.1 million, $4.5 million and $2.4 million, respectively.

Software Capitalization

The Company capitalizes certain internal and external costs related to the acquisition and development of computer software during the application development stage of projects. The Company amortizes these capitalized costs using the straight-line method over the estimated useful life of the software, which typically ranges from three to ten years. The Company had unamortized computer software development costs of $42.3 million and $55.7 million as of December 31, 2020 and 2019, respectively. Amortization expense related to computer software was $9.6 million, $12.2 million and $14.1 million for the years ended December 31, 2020, 2019 and 2018, respectively. Costs incurred during the preliminary and post-implementation stages are expensed as incurred.

Aircraft Maintenance and Repair Costs

The Company accounts for all non-major maintenance and repair costs incurred for its Airbus fleet under the direct expense method. Under this method, maintenance and repair costs for aircraft are charged to operating expenses as incurred. Maintenance and repair costs includes all parts, materials, and line maintenance activities required to maintain the Company's fleet.

The Company accounts for major maintenance costs of its Airbus airframes and the related CFM engines using the deferral method. Under this method, the Company capitalizes the cost of major maintenance events, which are amortized as a component of depreciation and amortization expense, over the estimated period until the next scheduled major maintenance event. During 2020 and 2019, the Company capitalized $12.8 million and $64.1 million of major maintenance costs for engines with associated amortization expense of $17.6 million and $11.1 million, respectively. During 2020 and 2019, the Company capitalized $22.6 million and $18.4 million of major maintenance costs for airframes with associated amortization expense of $19.9 million and $14.9 million, respectively.

Until the full retirement of the MD-80 aircraft in November 2018, the Company accounted for major maintenance costs of the MD-80 airframes and JT8D-219 engines, as well as all non-major maintenance and repair costs incurred for the MD-80 fleet, under the direct expense method.

Measurement of Impairment of Long-Lived Assets

The Company records impairment losses on long-lived assets used in operations, consisting principally of property and equipment, when events or changes in circumstances indicate, in management’s judgment, that the assets might be impaired, and the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets. In making these determinations, the Company utilizes certain assumptions, including, but not limited to: (i) estimated fair value of the assets; and (ii) estimated future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service for which the asset will be used in operations, and estimated salvage values.

For the year ended December 31, 2020, the Company recorded a $161.6 million impairment as a result of COVID-19. The impairment is more fully discussed in Note 17.

For the years ended December 31, 2019 and 2018, the Company did not incur any impairment losses.

Revenue Recognition

Passenger revenue

Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-branded Allegiant World Mastercard® credit card.

Scheduled service revenue consists of ticket revenue generated from nonstop flights in the Company’s route network, recognized either when the transportation is provided or when the itinerary expires unused. Nonrefundable scheduled itineraries expire on the date of the intended flight, unless the date is extended by notification from the customer in advance. Itineraries sold for transportation not yet used, as well as unexpired credits, are included in air traffic liability.

Ancillary air-related charges include various unbundled services and products related to the flight such as baggage fees, the use of the Company’s website to purchase scheduled service transportation, advance seat assignments, and other services. Revenues from air-related charges are recognized when the transportation is provided. If a customer cancels a flight, a voucher may be issued for a future flight, at which time the associated revenue is recognized. Additionally, the Company estimates the value of vouchers that will expire unused and recognizes such revenue at the time of issuance.

Various taxes and fees, assessed on the sale of tickets to customers, are collected by the Company serving as an agent, and remitted to taxing authorities. These taxes and fees are not included as revenue in the Company’s consolidated statements of income and are recorded as a liability until remitted to the appropriate taxing authority.

Revenue from travel point redemptions from the co-branded credit card are described in the Affinity Credit Card Program section below.

Third party products revenue

Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars and ticket attractions, as well as marketing revenue associated with the co-branded credit card. Revenue from the sale of third party products is recognized at the time the product is utilized, such as the time a purchased hotel room is occupied. The Company follows accounting standards for determining the amount of revenue to be recognized for each element of a bundled sale involving third party products in addition to airfare. Revenue from the sale of third party products is recorded net of amounts paid to wholesale providers, travel agent commissions, and transaction costs.

Pursuant to the co-brand arrangement with Bank of America, the Company has various performance obligations which are collectively referred to as the marketing component. These obligations consist of use of the Company’s brand and access to its member lists, and certain other advertising and marketing elements. The marketing component is recorded as third party products revenue in the period in which points are awarded to the credit card holders.

Fixed fee contract revenue

Fixed fee contract revenue consists of agreements to provide charter service on a year-round and ad hoc basis. Fixed fee contract revenue is recognized when the transportation is provided.

Other revenue

Other revenue is generated from non-airline activities as well as leasing aircraft and engines. Lease revenue is recognized ratably over the lease term.

Affinity Credit Card Program

The Allegiant World Mastercard® is issued by Bank of America through which arrangement points are sold and consideration is received under an agreement that was amended in 2020 and expires in 2029. Under this arrangement, the Company identified the following deliverables: travel points to be awarded (the travel component), use of the Company’s brand and access to its

member lists, and certain other advertising and marketing elements (collectively the marketing component). Each of these deliverables is accounted for separately and allocation of the consideration from the agreement is determined based on the relative selling price of each deliverable. The Company applied a level of management judgment and estimation in determining the best estimate of selling price for each deliverable by considering multiple inputs and methods including, but not limited to, the redemption value of points awarded, discounted cash flows, brand value, volume discounts, published selling prices, number of points to be awarded and number of points expected to be redeemed.

Revenue from the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed by cardholders and transportation is provided. Revenue from the marketing component is considered earned in the period in which points are sold and is therefore recognized into third party products revenue in the same period.

Advertising Costs

Advertising costs are charged to expense in the period incurred. Advertising expense was $12.4 million, $29.1 million and $28.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. In 2019, the Company entered into a naming rights agreement with the Raiders of the National Football League for the professional football stadium in Las Vegas which opened in 2020. Prepayments and other associated advertising expenses began in mid-2020 and will continue through the term of this agreement.

Earnings per Share

Basic and diluted earnings per share are computed pursuant to the two-class method as opposed to the treasury method. Under the two-class method, the Company attributes net income to two classes, common stock and unvested restricted stock awards. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating securities because they receive non-forfeitable rights to cash dividends at the same rate as common stock.

Diluted net income per share is calculated using the more dilutive of two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs as described below:

1.Assume vesting of restricted stock using the treasury stock method.

2.Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method.

For the years ended December 31, 2019 and 2018, the second method above was used in the computation because it was more dilutive than the first method. Given the loss position in 2020, both methods yield the same result. The following table sets forth the computation of net income (loss) per share on a basic and diluted basis for the periods indicated:


	Year ended December 31,
(in thousands, except per share data)	2020		2019		2018
Basic:
Net income (loss)	$	(184,093)	$	232,117	$	161,802
Less net income (loss) allocated to participating securities	(236)		(3,413)		(2,106)
Net income (loss) attributable to common stock	$	(184,329)	$	228,704	$	159,696
Earnings (loss) per share, basic	$	(11.53)	$	14.27	$	10.02
Weighted-average shares outstanding	15,992		16,027		15,941
Diluted:
Net income (loss)	$	(184,093)	$	232,117	$	161,802
Less net income (loss) allocated to participating securities	(236)		(3,410)		(2,104)
Net income (loss) attributable to common stock	$	(184,329)	$	228,707	$	159,698
Earnings (loss) per share, diluted	$	(11.53)	$	14.26	$	10.00
Weighted-average shares outstanding	15,992		16,027		15,941
Dilutive effect of stock options and restricted stock	—		51		53
Adjusted weighted-average shares outstanding under treasury stock method	15,992		16,078		15,994
Participating securities excluded under two-class method	—		(37)		(27)
Adjusted weighted-average shares outstanding under two-class method	15,992		16,041		15,967

Stock awards outstanding of 24,004, 19,928, and 77,037 shares (not in thousands) as of December 31, 2020, 2019, and 2018, respectively, were excluded from the computation of diluted earnings per share as they were antidilutive.

Share-Based Compensation

The Company accounts for share-based compensation in accordance with accounting standards which require the compensation cost related to share-based payment transactions be recognized in the Company’s consolidated statements of income. The share-based cost is measured based on grant date fair value. The Company’s share-based employee compensation plan is more fully discussed in Note 13.

Income Taxes

The Company recognizes deferred income taxes based on the asset and liability method required by accounting standards. Deferred tax assets and liabilities are determined based on the timing differences between book basis for financial reporting purposes and tax basis of the asset and liability and measured using the enacted tax rates and provisions of the enacted tax law. A valuation allowance for deferred tax assets is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company determines the net non-current deferred tax assets or liabilities separately for federal, state, foreign and other local jurisdictions.

The Company’s income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax authorities in the jurisdictions where the Company operates. The Company assesses potentially unfavorable outcomes of such examinations based on the criteria set forth in uncertain tax position accounting standards. The accounting standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

Accounting standards for income taxes utilize a two-step approach for evaluating tax positions. Recognition (Step I) occurs when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon examination. Measurement (Step II) is only addressed if the position is deemed to be more likely than not to be sustained. Under Step II, the tax benefit is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

The tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period they meet the “more likely than not” standard. If it is subsequently determined that a previously recognized tax position no longer meets the “more likely than not” standard, it is required that the tax position be derecognized. As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes.

Recent Accounting Pronouncements

In February 2016, the FASB issued the New Lease Standard. This standard requires leases, other than short-term, to be recognized on the balance sheet as a liability and a corresponding ROU asset.

This standard was effective for interim and annual reporting periods beginning after December 15, 2018 and the Company adopted the New Lease Standard as of January 1, 2019. The Company also elected the package of practical expedients, which among other things, does not require reassessment of lease classification.

The Company adopted the New Lease Standard using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11, "Targeted Improvements - Leases (Topic 842)." Under this method, the cumulative effect adjustment to the opening balance of retained earnings was recognized at the adoption date. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption on January 1, 2019.

The Company's consolidated balance sheet was affected by this standard, but the consolidated statements of income and cash flows were not significantly impacted. The most significant change to the consolidated balance sheet upon adoption on January 1, 2019 related to the recognition of new right-of-use (ROU) assets of $18.0 million and operating liabilities of $19.1 million. The Company's accounting for finance leases remains substantially unchanged. See Note 7 for more information on the impact of this standard.

On June 16, 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The standard requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities. The Company adopted this accounting standard prospectively as of January 1, 2020, and it did not have a significant impact on its consolidated financial statements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard is intended to simplify various aspects related to accounting for income taxes and is effective for fiscal years

beginning after December 15, 2020, including interim periods therein, and early adoption is permitted. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740. The Company plans to adopt ASU 2019-12 in the first quarter of 2021 and its adoption is not expected to have a material effect on the Company's consolidated financial statements.

Revenue Recognition

12 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Passenger revenue

Passenger revenue is the most significant category in our reported operating revenues, as outlined below:


	Year Ended December 31,
(in thousands)	2020		2019		2018
Scheduled service	$	435,668	$	897,631	$	898,653
Ancillary air-related charges	453,545		770,206		621,939
Co-brand redemptions	12,974		15,118		13,109
Total passenger revenue	$	902,187	$	1,682,955	$	1,533,701

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided or when ticket voucher breakage occurs, to the extent different from estimated breakage. As of December 31, 2020, approximately 27.9 percent of the air traffic liability balance was related to forward bookings, with the remaining 72.1 percent related to credit vouchers for future travel.

The normal contract term of passenger tickets is 12 months and revenue associated with future travel will principally be recognized within this time frame. $201.0 million of the $250.0 million that was recorded in the air traffic liability balance at December 31, 2019 was recognized into passenger revenue during the 12 months ended December 31, 2020.

In April 2020, the Company announced that credits issued for canceled travel in April through the end of the COVID-19 pandemic will have an extended expiration date of two years from the original booking date. The Company later announced that this extension would also apply to credits issued for cancelled travel in January through March 2020. This change has been considered in estimating the future breakage rate, which represents the value of credit vouchers that are not expected to be redeemed prior to their contractual expiration date.

Co-brand redemptions

In relation to the travel component of the co-branded credit card contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the transportation is provided.

The following table presents the activity of the co-brand point liability as of the dates indicated:


	Year Ended December 31,
(in thousands)	2020		2019
Balance at January 1	$	15,613	$	10,708
Points awarded	19,202		20,023
Points redeemed	(12,974)		(15,118)
Balance at December 31	$	21,841	$	15,613

As of December 31, 2020 and 2019, $10.9 million and $11.6 million, respectively, of the current points liability is reflected in accrued liabilities and represents the current estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities and expected to be recognized into revenue in periods thereafter.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Property and Equipment (Notes)

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure

Property and Equipment

Property and equipment consisted of the following:


	As of December 31,
(in thousands)	2020		2019
Flight equipment	$	2,331,499	$	2,289,157
Computer hardware and software	149,727		171,516
Land and buildings/leasehold improvements (1)	87,030		98,885
Other property and equipment	80,601		161,760
Total property and equipment	2,648,857		2,721,318
Less accumulated depreciation and amortization	(598,546)		(484,510)
Property and equipment, net	$	2,050,311	$	2,236,808

(1) Balance includes a building currently held for sale in Chesterfield, Missouri with a carrying value of $4.8 million

As of December 31, 2020, the Company had firm commitments to purchase three Airbus A320 series aircraft which are expected to be delivered between 2021 and 2022.

Accrued capital expenditures as of December 31, 2020 and 2019 were $16.9 million and $16.5 million, respectively.

Accrued Liabilities (Notes)

12 Months Ended

Dec. 31, 2020

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure

Accrued Liabilities

Accrued liabilities consisted of the following:


	As of December 31,
(in thousands)	2020		2019
Salaries, wages and benefits	$	21,878	$	44,441
Sunseeker Resort development	14,084		15,209
Maintenance and repairs	12,847		12,713
Loyalty card program liability	10,929		11,567
Station expenses	10,526		14,573
Property taxes	9,042		12,272
Interest	6,560		6,514
Passenger taxes and fees	4,686		14,653
Advertising accruals	890		3,303
Other accruals	24,651		23,786
Total accrued liabilities	$	116,093	$	159,031

Long-Term Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Long-term debt consisted of the following:


	As of December 31,
(in thousands)	2020			2019
Fixed-rate debt and finance lease obligations due through 2030	$	525,240		$	235,071
Variable-rate debt due through 2029	1,133,771			1,186,782
Total long-term debt and finance lease obligations, net of related costs	1,659,011			1,421,853
Less current maturities, net of related costs	217,234			173,274
Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,441,777		$	1,248,579

Weighted average fixed-interest rate on debt	5.7		%	3.7		%
Weighted average variable-interest rate on debt	2.4		%	4.5		%

Maturities of long-term debt as of December 31, 2020, for the next five years and thereafter, in the aggregate, are:


(in thousands)	As of December 31, 2020
2021	$	217,234
2022	137,252
2023	136,781
2024	806,383
2025	89,194
Thereafter	272,167
Total debt and finance lease obligations, net of related costs	$	1,659,011

Total long-term debt is presented net of related costs of $23.5 million and $23.6 million at December 31, 2020 and 2019, respectively.

Term Loan and Senior Secured Notes

In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $450.0 million, guaranteed by all of the Company's subsidiaries, excluding Sunseeker Resorts Inc. and its subsidiaries, and other insignificant subsidiaries (the "Term Loan Guarantors"). In February 2020, the Company entered into an amendment to the Term Loan under which the interest rate was reduced by 150 basis points, and the principal amount of the debt was increased by a net amount of $100.0 million to $545.5 million. Quarterly principal payments increased under the amendment, but the remaining provisions were substantially unchanged, including the maturity date. The Term Loan is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding aircraft and aircraft engines, and excluding certain other assets. The Term Loan bears interest based on LIBOR with a zero percent floor and provides for quarterly interest payments along with quarterly principal payments of $1.4 million through February 2024, at which time the Term Loan is due. The Term Loan may be prepaid at any time without penalty.

In October 2020, the Company closed on the private offering of $150.0 million principal amount of 8.5 percent Senior Secured Notes due 2024 (the "Senior Secured Notes"). The Senior Secured Notes and related guarantees are secured by first priority security interests in the same collateral package as securing the Term Loan and the debt is subject to an Intercreditor Agreement with the collateral agent for the Term Loan.The guarantors of the Notes include all significant subsidiaries other than Sunseeker Resorts, Inc. and its subsidiaries.

Consolidated Variable Interest Entities

The Company evaluates ownership, contractual lease arrangements and other interests in entities to determine if they are variable interest entities ("VIEs") based on the nature and extent of those interests. The Company consolidates a VIE when, among other criteria, it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits of the VIE, thus making the Company the primary beneficiary of the VIE.

In October 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $23.5 million secured by one Airbus A320 series aircraft. The trust was funded on inception. The borrowing bears interest at a blended rate of 3.2 percent and is payable in monthly installments through October 2024, at which time the Company will have a purchase option at a fixed amount. As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $18.6 million and $23.5 million, respectively, at the time of borrowing.

In March 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $44.0 million secured by one aircraft. The trust was funded on inception. The borrowing bears interest at a blended rate of 3.8 percent and is payable in quarterly installments through April 2029, at which time the Company will have a purchase option at a fixed amount. As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $38.5 million and $44.0 million, respectively, at the time of borrowing.

In September 2018, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $44.0 million secured by one Airbus A320 series aircraft. The trust was funded on inception. The borrowing bears interest at a blended rate of 4.0 percent and is payable in quarterly installments through September 2028, at which time the Company will have a purchase option at a fixed amount. As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $37.8 million and $44.0 million, respectively, at the time of borrowing.

CARES Act Payroll Support Program Loan

In April 2020 the Company entered into a low-interest rate, senior unsecured term promissory note (the "PSP" Note) with the Treasury under the CARES Act payroll support program. The Note matures in full on April 20, 2030, and bears interest at a rate of 1.0 percent per annum prior to April 20, 2025 and, thereafter, at the secured overnight financing rate (SOFR) plus 2 percent. The PSP Note is prepayable at any time at par, without penalty.

During 2020, the Company received $23.1 million in funds under the PSP Note, which is recorded within noncurrent debt on the balance sheet.

In connection with the PSP Note, the Company is required to comply with the relevant provisions of the CARES Act, including those prohibiting the repurchase of common stock and the payment of common stock dividends until September 30, 2021, as well as those restricting the payment of certain executive compensation for periods through March 24, 2022. These restrictions have been extended until March 31, 2022 with respect to stock repurchases and payment of dividends and until October 1, 2022 with respect to executive compensation limits as a result of the Payroll Support Extension Program.

Senior Secured Revolving Credit Facility

The Company has a senior secured revolving credit facility under which it is entitled to borrow up to $81.0 million. The facility has a term of 24 months and the borrowing ability is based on the value of the Airbus A320 series aircraft placed in the collateral pool. In December 2019, the Company drew down $81.0 million under this facility. Principal payments were made during 2020 totaling $27.1 million, and the remaining balance as of December 31, 2020 is $53.9 million. Aircraft remain in the collateral pool for up to two years, and, as of December 31, 2020, there were six aircraft in the pool. The notes for the amounts borrowed under the facility bear interest at a floating rate based on LIBOR and are due in March 2021.

Other Secured Debt

In September 2020, the Company borrowed $84.0 million under a loan agreement secured by aircraft and spare engines. The note bears interest at a fixed rate, payable in monthly installments maturing in September 2025 and September 2026 for the spare engines and aircraft, respectively.

In April 2020, the Company borrowed $31.0 million under a loan agreement secured by two aircraft. The note bears interest at a fixed rate, payable in quarterly installments with a maturity date in April 2028.

General Unsecured Notes

In connection with the Term Loan discussed above, the Company completed a tender offer in February 2019, whereby it purchased $347.9 million of its previously outstanding unsecured notes due July 2019, and incurred related debt extinguishment costs of $3.7 million. The remaining $102.1 million of the unsecured notes were paid at their maturity in July 2019.

Construction Loan Agreement

In March 2019, Sunseeker Florida, Inc. (“SFI”), a wholly owned subsidiary of the Company, entered into a Construction Loan Agreement with certain lenders affiliated with TPG Sixth Street Partners, LLC (the “Lender”). Under the Construction Loan Agreement, SFI would have been able to borrow up to $175.0 million (the “Loan”) to fund the construction of Phase 1 of Sunseeker Resort - Charlotte Harbor. No amount was ever drawn under this agreement.

Due to the various impacts of COVID-19, the Company suspended construction of Sunseeker Resort, and it is uncertain when construction will resume. In light of these conditions, the Company reached a $19.8 million settlement agreement with the Lender to terminate the Loan which was fully paid in 2020. The expense is reflected within non-operating special charges on the statement of income.

Finance Leases

The Company has finance lease obligations related to six aircraft, which impacted the Company's recognized assets and liabilities as of December 31, 2020. See Note 8 for more information on finance lease obligations.

Lease (Notes)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Lessee, Operating Leases [Text Block]

Leases

Total rental expense for operating leases for the years ended December 31, 2020, 2019 and 2018 was $24.6 million, $15.0 million and $12.7 million, respectively.

The Company had six aircraft under finance leases as of December 31, 2020 with remaining terms through 2029.

Lease Costs

The components of lease costs recognized on the statements of income were as follows:


		Year Ended December 31,
(in thousands)	Classification on the Statements of Income	2020		2019
Finance lease costs:
Amortization of assets	Depreciation and amortization	$	6,631	$	6,517
Interest on lease liabilities	Interest expense	5,335		5,264
Operating lease cost	Aircraft lease rentals; Station operations; Maintenance and repairs; Other operating expense	12,616		3,541

Variable lease cost	Station operations; Maintenance and repairs; Other operating expense	3,560		2,274
Total lease cost		$	28,142	$	17,596

Lease position as of December 31, 2020

The table below presents the lease-related assets and liabilities recorded on the balance sheet.


		As of December 31,
(in thousands)	Classification on the Balance Sheet	2020			2019
Assets
Operating lease assets	Operating lease right-of-use assets, net	$	115,911		$	22,081
Finance lease assets	Property and equipment, net	133,175			111,665
Total lease assets		$	249,086		$	133,746

Liabilities
Current
Operating	Current operating lease liabilities	$	14,313		$	2,662
Finance	Current maturities of long-term debt and finance lease obligations	9,767			7,666
Noncurrent
Operating	Noncurrent operating lease liabilities	102,289			21,290
Finance	Long-term debt and finance lease obligations	117,060			107,930
Total lease liabilities		$	243,429		$	139,548

Weighted-average remaining lease term
Operating leases		8.3 years			9.1 years
Finance leases		7.6 years			9.9 years
Weighted-average discount rate
Operating leases		5.4		%	4.3		%
Finance leases		5.0		%	4.4		%

Sale-Leaseback Transactions

During the year ended December 31, 2020, the Company entered into sale-leaseback transactions involving eight total aircraft. The transactions qualified as sales, and generated $87.6 million of proceeds. As a result of the sales, the aircraft were removed from property and equipment in the Company's balance sheet, resulting in a $53.2 million loss on the sales. The loss is reflected within operating special charges on the statement of income since the Company would not likely have completed the transactions absent cash conservation efforts as a result of COVID-19. The leased aircraft were subsequently recorded within operating lease right-of-use assets, with the related lease liabilities recorded within current and noncurrent operating lease liabilities on the balance sheet. The proceeds from the sales of aircraft in these transactions are treated as cash inflows from investing activities on the statement of cash flows.

Other Information

The table below presents supplemental cash flow information related to leases during the year ended December 31.


	Year Ended December 31,
(in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	13,102	$	2,927
Operating cash flows for finance leases	$	5,335	5,264
Financing cash flows for finance leases	15,908		7,336

Maturities of Lease Liabilities

The table below indicates the future minimum payments of lease liabilities as of December 31, 2020.


(in thousands)	Operating Leases		Finance Leases
2021	$	20,055	$	15,871
2022	20,313		14,366
2023	20,160		26,045
2024	19,853		10,500
2025	17,723		10,500
Thereafter	44,486		82,458
Total lease payments	142,590		159,740
Less imputed interest	(25,988)		(32,913)
Total lease obligations	116,602		126,827
Less current obligations	(14,313)		(9,767)
Long-term lease obligations	$	102,289	$	117,060

Sale Leaseback Transactions

Sale-Leaseback Transactions

Stockholders' Equity

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Stockholders' Equity

Shareholders’ Equity

The Company is authorized by its Board of Directors to acquire the Company’s stock through open market purchases under its share repurchase program. As repurchase authority is exhausted, the Board of Directors has, to date, authorized additional expenditures for share repurchases. The Company suspended stock repurchases upon the onset of the pandemic and as part of accepting benefits from the Treasury under the PSPA and PSP2, the Company has agreed not to repurchase stock through March 31, 2022.

Share repurchases consisted of the following during the periods indicated:


	Year Ended December 31,
	2020		2019		2018
Shares repurchased(1)	197,570		103,943		—
Average price per share	$	155.14	$	141.64	NA
Total (in thousands)	$	30,651	$	14,723	$	—

(1) Share amounts shown above include only open market repurchases and do not include shares withheld from employees for tax withholding obligations related to restricted stock vestings, which were 19,001, 27,700 and 22,981 shares for 2020, 2019 and 2018, respectively.

Cash dividends declared by the Board and paid by the Company consisted of the following during the periods indicated:


	Year Ended December 31,
	2020		2019		2018
Total quarterly cash dividends declared, per share	$	0.70	$	2.80	$	2.80
Total cash dividends paid (in thousands)	11,361		45,552		45,247

The Company suspended payment of cash dividends upon the onset of the pandemic and as part of accepting benefits from the Treasury under the PSPA and PSP2, the Company has agreed not to pay cash dividends through March 31, 2022.

Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Investments

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is 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. Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities

Level 2 - Defined as inputs other than Level 1 inputs that are either directly or indirectly observable

Level 3 - Defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions

The Company uses the market approach valuation technique to determine fair value for investment securities. The assets classified as Level 1 consist of money market funds for which original cost approximates fair value. The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities, corporate debt securities, and US treasury bonds, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs. The Company has no investment securities classified as Level 3.

For those assets classified as Level 2 that are not in active markets, the Company obtains fair value from pricing sources using quoted market prices for identical or comparable instruments, and uses pricing models which include all significant observable inputs: maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers and other market related data. These inputs are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.

Financial instruments measured at fair value on a recurring basis:


	As of December 31, 2020						As of December 31, 2019
(in thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2
Cash equivalents
Money market funds	$	5,340	$	5,340	$	—	$	42,653	$	42,653	$	—
Commercial paper	48,908		—		48,908		5,807		—		5,807
Municipal debt securities	34,338		—		34,338		1,202		—		1,202
Federal agency debt securities	51,400		—		51,400		—		—		—
Total cash equivalents	139,986		5,340		134,646		49,662		42,653		7,009
Short-term
Commercial paper	229,821		—		229,821		161,286		—		161,286
Corporate debt securities	166,768		—		166,768		145,975		—		145,975
Federal agency debt securities	48,598		—		48,598		13,515		—		13,515
Municipal debt securities	87,290		—		87,290		12,237		—		12,237
US Treasury Bonds	—		—		—		2,915		—		2,915
Total short-term	532,477		—		532,477		335,928		—		335,928
Long-term
Corporate debt securities	—		—		—		15,396		—		15,396
US Treasury Bonds	—		—		—		146		—		146



Total long-term	—		—		—		15,542		—		15,542
Total financial instruments	$	672,463	$	5,340	$	667,123	$	401,132	$	42,653	$	358,479

There were no significant transfers between Level 1 and Level 2 assets for the years ended December 31, 2020 or 2019.

Long-term Debt

None of the Company's long-term debt is publicly traded. The Company has determined the estimated fair value of all of this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable and, therefore, could be sensitive to changes in inputs.The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.

Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs:


	As of December 31, 2020				As of December 31, 2019
(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Fair Value Level
Non-publicly held debt	$	1,555,637	$	1,191,008	$	1,329,882	$	1,140,232	3

Other

Due to the short term nature, carrying amounts of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

The Company is subject to income taxation in the United States, foreign countries and various state jurisdictions in which it operates. In accordance with income tax accounting standards, the Company recognizes tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities.

In 2020, 2019 and 2018, the Company recorded net tax (benefit)/provision of $(177.0) million, $69.1 million and $37.5 million, respectively. Cash taxes, net of refunds, were $(95.2) million, $2.2 million and $41.6 million, respectively.

Components of Income before Income Taxes from Continuing Operations

The components of income before taxes for domestic and foreign operations consisted of the following:


	Year ended December 31,
(in thousands)		2020		2019		2018
Domestic		$	(361,242)	$	299,330	$	195,843
Foreign		175		1,917		3,475
Total		$	(361,067)	$	301,247	$	199,318

Income Tax Provision/(Benefit)

The provision for income taxes is composed of the following:


	Year ended December 31,
(in thousands)	2020		2019		2018
Current:
Federal	$	(195,572)	$	(34)	$	(3,707)
State	(211)		505		(650)
Foreign	132		530		1,086
Total current	(195,651)		1,001		(3,271)
Deferred:
Federal	24,126		63,430		41,593
State	(5,449)		4,699		3,744
Foreign	—		—		(4,550)
Total deferred	18,677		68,129		40,787
Total income tax provision	$	(176,974)	$	69,130	$	37,516

Reconciliation of Effective Tax Rate

The effective tax rate on income before income taxes differed from the federal statutory income tax rate as follows:


	Year ended December 31,
(in thousands)	2020		2019		2018
Income tax expense at federal statutory rate	$	(70,459)	$	63,262	$	41,857
State income taxes, net of federal income tax benefit	(5,495)		5,070		3,560

CARES Act	(97,988)		—		—
Foreign income tax expense	132		530		(3,464)
Other	(3,164)		268		(4,437)
Total income tax expense	$	(176,974)	$	69,130	$	37,516

Deferred Taxes

The major components of the Company’s net deferred tax assets and liabilities are as follows:


	As of December 31,
(in thousands)	2020		2019
Deferred tax assets:
Accrued vacation	$	1,024	$	907
Accrued bonus	—		5,523
State taxes	—		88
Accrued property taxes	1,111		1,742
Stock-based compensation expense	1,025		1,415
Net operating loss	15,979		58,066

Tax credit	10,995		—
Less: valuation allowance	1,214		1,193
Total deferred tax assets	28,920		66,548
Deferred tax liabilities:
Prepaid expenses	2,517		6,211
Depreciation	308,266		278,554

Other	20,242		14,522
Total deferred tax liabilities	331,025		299,287
Net deferred tax liabilities	$	302,105	$	232,739

Net Operating Loss and Tax Credit Carryforwards

Pursuant to the CARES Act, the Company carried back net operating losses generated in 2018, 2019 and 2020 in the amounts of $185.4 million, $116.7 million and $422.1 million respectively to tax years ended December 31, 2013 through December 31, 2016. The net operating loss carryback resulted in prior years’ foreign tax credits and general business credits being released, and these credits generated in 2014 - 2020 in the amount of $5.7 million and $5.2 million will be carried forward. The foreign tax credit and general business credits will expire 2024 – 2040, but the Company expects to utilize these credits prior to the expiration.

In addition, as of December 31, 2020, the Company recognized federal and state net operating loss carryforwards for income tax purposes in the amount of $8.5 million and $7.4 million, respectively. Federal net operating loss carryforwards will not expire per the “Tax Cuts and Jobs Act” (the “Tax Act”). The majority of the state net operating loss carryforward amounts will expire between 2022 and 2040 while some state net operating losses have an indefinite carryforward period.

The Company previously recognized a federal capital loss carryforward of $0.7 million, as remeasured pursuant to the Tax Act, as of December 31, 2016 which expired in 2021.

Tax Contingencies

The reconciliation of the Company's tax contingencies is as follows:


	As of December 31,
(in thousands)	2020		2019		2018
Beginning Balance	$	3,970	$	4,175	$	778
Increases for tax position of prior years	—		—		3,364
Increases for tax position of current year	—		146		293
Decreases for tax positions of prior years	(3,602)		(135)		(10)
Settlements	(26)		(216)		(110)
Decreases for lapses in statute of limitations	—		—		(140)
Ending Balance	$	342	$	3,970	$	4,175

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company’s income tax returns are subject to examination by the Internal Revenue Service as well as

other taxing jurisdictions. The timing of the resolution of income tax examinations is uncertain, and the ultimate resolution with these taxing authorities may differ from the amounts accrued. Therefore, the Company cannot currently provide an estimate of the range of possible outcomes in the next twelve months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Related Party Transactions (Notes)	12 Months Ended
Related Party Transactions (Notes)	Dec. 31, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsDuring the years ended December 31, 2020 and 2019, 2018 there were no related party transactions that required disclosure.

Employee Benefit Plans (Notes)

12 Months Ended

Dec. 31, 2020

Employee Benefit Plans [Abstract]

Employee Benefit Plans

401(k) Plan

The Company has a defined contribution plan covering all eligible employees. Under the plan, employees may contribute up to 90 percent of their eligible annual compensation with the Company making matching contributions on employee deferrals of up to 5 percent of eligible employee wages. The matching contributions on pilot deferrals is 10 percent of eligible wages resulting from the pilot collective bargaining agreement.

The Company recognized expense under this plan of $18.6 million, $19.0 million, and $19.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Share-based employee compensation

The Company reserved 2,000,000 shares of common stock for the Company to grant stock options, restricted stock, cash-settled stock appreciation rights ("SARs") and other stock-based awards to certain officers, directors and employees of the Company under the 2016 Long-Term Incentive Plan (the "2016 Plan"). The 2016 Plan is administered by the Company’s compensation committee of the Board of Directors.

Employee Stock Purchase Plan

The Company reserved 1,000,000 shares of common stock for employee purchases under the 2014 Employee Stock Purchase Plan ("ESPP"). Shares are purchased semi-annually, at a discount, based on the market value at period-end. Employees may contribute up to 25 percent of their base pay per offering period, not to exceed $25,000 each calendar year, for the purchase of common stock. The ESPP is a compensatory plan under applicable accounting guidance and results in the recognition of compensation expense.

The following table provides information about the Company’s ESPP activity during 2020, 2019, and 2018:


	Total number of shares purchased in year	Average price paid per share		Weighted-average fair value of discount under the ESPP (1)
As of December 31, 2018	33,300	$	134.31	$	16.79
As of December 31, 2019	38,464	$	133.54	$	23.51
As of December 31, 2020	56,866	$	90.63	$	14.10

(1) The weighted-average fair value of the discount under the ESPP granted is equal to a percentage discount from the market value of the common stock at the end of each semi-annual purchase period. The Company increased the discount from 10 percent to 15 percent for the second offering period of 2018. 15 percent is the maximum allowable discount under the ESPP.

Compensation expense

For the years ended December 31, 2020, 2019 and 2018, the Company recorded compensation expense of $20.1 million, $19.2 million and $15.6 million, respectively, related to restricted stock, stock options, cash-settled SARs and the ESPP. Forfeiture rates are estimated at the time of grant based on historical actuals for similar grants, and are matched to actuals over the vesting period.

The unrecognized compensation cost was $27.5 million as of December 31, 2020 for unvested restricted stock expected to be recognized over a weighted-average period of 1.34 years. As of December 31, 2020, there was no unrecognized compensation cost for either cash-settled SARs or stock options.

Stock options

The fair value of stock options granted is estimated as of the grant date using the Black-Scholes option pricing model. The contractual terms of the Company’s stock option awards granted range from five to ten years. A summary of option activity as of December 31, 2020, 2019 and 2018, and changes during the years then ended, is presented below:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (thousands)
Outstanding at December 31, 2017	27,575	$	97.88	0.72	$	1,568
Exercised	(17,838)	92.04
Outstanding at December 31, 2018	9,737	$	108.59	0.18	$	—
Exercised	(9,737)	108.59
Outstanding at December 31, 2019	—	$	—	0.00	$	—
Exercised	—	—
Outstanding at December 31, 2020	—	$	—	0.00	$	—

During the years ended December 31, 2020, 2019 and 2018, the total intrinsic value of options exercised was $0.0 million, $0.2 million and $1.4 million, respectively. Cash received from option exercises for the years ended December 31, 2020, 2019 and 2018 was $0.0 million, $1.1 million and $1.6 million, respectively.

Restricted stock awards

The closing price of the Company's stock on the date of grant is used as the fair value for the issuance of restricted stock. A summary of the status of non-vested restricted stock grants during the years ended December 31, 2020, 2019 and 2018 is presented below:


	Shares	Weighted Average Grant Date Fair Value Per Share
Non-vested at December 31, 2017	192,890	$	153.32
Granted	102,842	155.02
Vested	(85,410)	153.85
Forfeited	(14,128)	154.65
Non-vested at December 31, 2018	196,194	$	153.88
Granted	218,477	143.72
Vested	(104,816)	152.07
Forfeited	(15,047)	148.97
Non-vested at December 31, 2019	294,808	$	147.25
Granted	267,169	137.80
Vested	(291,303)	147.58
Forfeited	(5,147)	145.82
Non-vested at December 31, 2020	265,527	$	142.25

The total fair value of restricted stock that vested during the years ended December 31, 2020, 2019 and 2018 was $43.0 million, $15.9 million and $13.4 million, respectively.

Cash-settled SARs

Cash-settled SARs are liability classified awards for which the fair value and compensation expense recognized are updated monthly using the Black-Scholes option pricing model.

The following range of assumptions in the Black-Scholes pricing model was used to determine fair value as of December 31 of the years indicated below (all cash-settled SARs were fully vested as of December 31, 2019):


	2020		2019		2018
Weighted-average volatility	—	%	—	%	35.0	%
Expected term (in years)	N/A		N/A		0.8
Risk-free interest rate	—	%	—	%	2.6	%
Dividend yield	—	%	—	%	1.68	%

These rights were fully vested as of December 31, 2019. Expected volatilities used for award valuation are based on the historical volatility of the Company's common stock price.

Expected term represents the weighted average time between the award’s grant date and its expected exercise date. The Company estimated the expected term assumption in 2020, 2019 and 2018 using historical award exercise activity and employee termination activity.

The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal Reserve rates for U.S. Treasury securities.

The dividend yield reflects the effect that paying a dividend has on the fair value of the Company's stock.

The contractual term of the Company’s cash-settled SARs awards granted is five years.

A summary of cash-settled SARs awards activity during the years ended December 31, 2020, 2019 and 2018 is presented below:


	# of SARs	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (thousands)
Balance at December 31, 2017	80,464	$	155.13

Forfeited	(12,890)	181.47
Exercised	(13,642)	98.37
Balance at December 31, 2018	53,932	$	163.19


Exercised	(9,886)	135.53
Balance at December 31, 2019	44,046	$	169.40

Forfeited	(29,046)	181.47
Exercised	(15,000)	186.85
Balance at December 31, 2020	—	$	—	0.00	$	—
Vested at December 31, 2020	—	$	—	0.00	$	—
Exercisable at December 31, 2020	—	$	—	0.00	$	—