Air Methods 8K/A Financial Statements and Exhibits | AIRM 17 Oct 11

Exhibit 99.3

Air Methods Corporation and Subsidiaries

Pro Forma Financial Information

(unaudited)

On August 1, 2011, Air Methods Corporation (the Company) acquired 100% of the outstanding common stock of OF Air Holdings Corporation and its subsidiaries, including Omniflight Helicopters, Inc. (together, Omniflight), for a cash purchase price of $200 million, subject to final determination of working capital, as defined in the merger agreement, as of the closing date. The accompanying unaudited pro forma combined balance sheet presents the historical financial information of the Company as of June 30, 2011, as adjusted for the acquisition of Omniflight, as if the acquisition had occurred on June 30, 2011.

The accompanying unaudited pro forma combined statements of income for the six months ended June 30, 2011, and the year ended December 31, 2010, combine the historical operations of the Company with the historical operations of Omniflight as if the transaction had occurred on January 1, 2010. Because Omniflight’s fiscal year-end was previously March 31, Omniflight’s historical statement of income for the year ended March 31, 2011, was combined with the Company’s statement of income for the year ended December 31, 2010, for purposes of the pro forma presentation for the year ended December 31, 2010. The accompanying unaudited pro forma combined statement of income for the six months ended June 30, 2011, combine the historical operations of the Company for the six months ended June 30, 2011 with the six months for Omniflight, including the three months ended March 31, 2011. These same three months are also included in the pro forma statement of income for the year ended December 31, 2010.

The acquisition was accounted for under the acquisition method of accounting whereby the total estimated purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values as of the effective date of the acquisition. The unaudited pro forma combined financial statements have been prepared by the Company’s management based upon the historical financial statements of the Company and Omniflight and preliminary estimates of fair values, which are subject to change pending a final analysis of the fair values and useful lives, as applicable. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. The pro forma financial statements and notes thereto should be read in conjunction with the historical financial statements included in the Company’s previous filings with the Securities and Exchange Commission.

In Omniflight’s historical financial statements used in the accompanying pro forma financial statements, certain aircraft leases were classified as capital leases based upon certain default clauses deemed to be subjective and Omniflight’s interpretation of the maximum amount they could be required to pay to the lessor in the event of default. In the Company’s historical financial statements used in the accompanying pro forma financial statements, aircraft leases with similar provisions are classified as operating leases based upon the Company’s differing interpretation of the maximum amount they could be required to pay to the lessor in the event of default.

In light of the foregoing, the Company has submitted a letter to the Securities and Exchange Commission requesting clarification regarding the appropriate GAAP interpretation of ASC 840-10-25-14, which may impact the Company’s presentation for aircraft leases. The effects of any change in the Company’s presentation of aircraft leases are not included in the accompanying unaudited pro forma combined financial statements.

Air Methods Corporation and Subsidiaries

Pro Forma Combined Balance Sheet

As of June 30, 2011

(Amounts in thousands)

(unaudited)

	Historical
	Air Methods			OF Air Holdings			Pro forma				Pro forma
	Corporation			Corporation			adjustments				combined
ASSETS

Current Assets:
Cash and cash equivalents	$	43,197			15,715			-				58,912
Current installments of notes receivable		4			-			-				4
Receivables:
Trade		142,011			24,891			(1,000	)	(g)		165,902
Other		2,399			360			-				2,759
		144,410			25,251			(1,000	)			168,661

Inventories, including work-in-process on medical interiors and products contracts		30,612			2,454			1,940		(c)		35,006
Costs in excess of billings		719			-			-				719
Assets held for sale		13,469			43			-				13,512
Deferred income taxes		-			602			(602	)	(l)		-
Prepaid and other current assets		15,716			3,124			(1,307	)	(a)		17,533
Total current assets		248,127			47,189			(969	)			294,347

Property and equipment:
Land		251			-			-				251
Flight and ground support equipment		278,446			81,403			(43,411	)	(c)		315,300
								(1,138	)	(i)
Buildings and other equipment		38,923			9,575			(6,553	)	(c)		41,945
Capital lease assets		-			59,847			(31,588	)	(c)		28,184
								(75	)	(i)
		317,620			150,825			(82,765	)			385,680
Less accumulated depreciation and amortization		(105,346	)		(66,883	)		66,883		(c)		(105,346	)
Net property and equipment		212,274			83,942			(15,882	)			280,334

Notes and other receivables, less current installments		119			-							119
Goodwill (net)		20,291			46,597			(46,597	)	(d)		90,481
								70,190		(e)
Other intangible assets		-			31,202			(31,202	)	(d)		72,900
								72,900		(e)
Other assets		16,057			8,192			1,705		(b)		25,954

Total assets	$	496,868			217,122			50,145				764,135

(Continued)

Air Methods Corporation and Subsidiaries

Pro Forma Combined Balance Sheet

As of June 30, 2011

(Amounts in thousands)

(unaudited)

	Historical
	Air Methods		OF Air Holdings			Pro forma				Pro forma
	Corporation		Corporation			adjustments				combined
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable	$	11,837		-			-				11,837
Current installments of long-term debt		33,590		189,494			(189,494	)	(a)		43,590
							10,000		(b)
Current installments of obligations under capital leases		841		35,406			(1,125	)	(i)		10,328
							(24,794	)	(k)
Accounts payable		15,901		1,503			-				17,404
Other accrued liabilities		11,811		17,017			(2,325	)	(a)		24,570
							(104	)	(g)
							671		(h)
							(2,500	)	(i)
Due to third-party payors		4,339		-			-				4,339
Accrued wages and compensated absences		12,208		6,623			-				18,831
Deferred income taxes		7,767		-			-				7,767
Billings in excess of costs		1,248		-			-				1,248
Deferred revenue		4,124		1,064			(896	)	(g)		4,292
Total current liabilities		103,666		251,107			(210,567	)			144,206

Long-term debt, less current installments		52,537		-			190,000		(b)		242,537
Obligations under capital leases less current installments		956		-			31,944		(k)		32,900
Deferred income taxes		46,108		11,506			(6,118	)	(l)		51,496
Other liabilities		27,719		6,835			(102	)	(a)		27,785
							(6,667	)	(j)
Total liabilities		230,986		269,448			(1,510	)			498,924

Total stockholders' equity		265,882		(52,326	)		52,326		(f)		265,211
							(671	)	(h)
Total liabilities and stockholders' equity	$	496,868		217,122			50,145				764,135

See accompanying notes to unaudited pro forma combined financial statements.

Air Methods Corporation and Subsidiaries

Pro Forma Combined Statement of Income

For the Six Months Ended June 30, 2011

(Amounts in thousands, except share and per share amounts)

(unaudited)

	Historical
	Air Methods			OF Air Holdings			Pro forma				Pro forma
	Corporation			Corporation			adjustments				combined
Revenue:
Flight revenue, net	$	265,413			91,572			(2,197	)	(g)		354,788
Medical interiors and products revenue		13,342			-			-				13,342
Other		3,312			320			-				3,632
		282,067			91,892			(2,197	)			371,762

Operating expenses:
Flight centers		111,977			34,826			(2,197	)	(g)		144,606
Aircraft operations		57,439			18,096			(41	)	(i)		75,494
Aircraft rental		23,633			2,672			(11	)	(i)		26,294
Cost of medical interiors and products sold		9,394			-			-				9,394
Depreciation and amortization		13,767			8,589			(2,276	)	(c)		21,825
								(936	)	(d)
								2,804		(e)
								(123	)	(i)
Loss (gain) on disposition of assets, net		(26	)		153			-				127
General and administrative		37,007			16,261			(625	)	(j)		52,643
		253,191			80,596			(3,405	)			330,382

Operating income		28,876			11,296			1,208				41,380

Other income (expense):
Interest expense		(2,619	)		(14,566	)		13,113		(a)		(6,380	)
								(2,436	)	(b)
								56		(i)
								72		(k)
Other, net		253			69			-				322

Income (loss) before income taxes		26,510			(3,201	)		12,013				35,322

Income tax expense		(10,441	)		(3,752	)		460		(l)		(13,733	)

Net income (loss)	$	16,069			(6,953	)		12,473				21,589

Basic income per common share	$	1.27										1.71
Diluted income per common share	$	1.26										1.69


Weighted average number of common shares outstanding:
Basic		12,633,222										12,633,222
Diluted		12,788,094										12,788,094

See accompanying notes to unaudited pro forma combined financial statements.

Air Methods Corporation and Subsidiaries

Pro Forma Combined Statement of Income

For the Year Ended December 31, 2010

(Amounts in thousands, except share and per share amounts)

(unaudited)

	Historical
	Air Methods			OF Air Holdings
	Corporation			Corporation
	For the year ended			For the year ended			Pro forma				Pro forma
	December 31, 2010			Marach 31, 2011			adjustments				combined
Revenue:
Flight revenue, net	$	533,852			171,346			(4,397	)	(g)		700,801
Medical interiors and products revenue		22,447			-			-				22,447
Other		5,703			517			-				6,220
		562,002			171,863			(4,397	)			729,468

Operating expenses:
Flight centers		216,092			68,036			(4,397	)	(g)		279,731
Aircraft operations		112,829			35,475			(350	)	(i)		147,954
Aircraft rental		47,670			5,135			(21	)	(i)		52,784
Cost of medical interiors and products sold		15,776			-			-				15,776
Depreciation and amortization		24,602			17,993			(4,095	)	(c)		41,048
								(2,814	)	(d)
								5,608		(e)
								(246	)	(i)
Loss (gain) on disposition of assets, net		417			(146	)		-				271
General and administrative		69,226			29,418			(1,250	)	(j)		97,394
		486,612			155,911			(7,565	)			634,958

Operating income		75,390			15,952			3,168				94,510

Other income (expense):
Interest expense		(5,924	)		(28,774	)		25,613		(a)		(13,770	)
								(5,051	)	(b)
								126		(i)
								240		(k)
Other, net		591			(19	)		-				572

Income (loss) before income taxes		70,057			(12,841	)		24,096				81,312

Income tax benefit (expense)		(25,942	)		110			(5,782	)	(l)		(31,614	)

Net income (loss)	$	44,115			(12,731	)		18,314				49,698

Basic income per common share	$	3.53										3.98
Diluted income per common share	$	3.50										3.95


Weighted average number of common shares outstanding:
Basic		12,496,513										12,496,513
Diluted		12,596,414										12,596,414

See accompanying notes to unaudited pro forma combined financial statements.

Air Methods Corporation and Subsidiaries

Notes to Pro Forma Combined Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying unaudited pro forma combined financial statements are presented to reflect the acquisition of Omniflight by the Company using the acquisition method of accounting whereby the total estimated purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values as of the effective date of the acquisition.

The accompanying unaudited pro forma combined balance sheet presents the historical financial information of the Company, as of June 30, 2011, as adjusted for the acquisition of Omniflight, as if the transaction had occurred on June 30, 2011. The accompanying unaudited pro forma combined statements of income for the six months ended June 30, 2011, and the year ended December 31, 2010, combine the historical operations of the Company with the historical operations of Omniflight as if the transaction had occurred on January 1, 2010. Certain reclassifications have been made to the historical Omniflight financial statement presentation to conform to the Company’s basis of presentation.

These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. The Company recorded approximately $250,000 in transaction costs related to the acquisition of Omniflight in its historical statement of income for the six months ended June 30, 2011, included in this pro forma presentation. In the year ending December 31, 2011, the Company expects to incur the following nonrecurring expenses relating to the acquisition and integration of Omniflight into the Company’s operations: approximately $1.1 million in additional transaction costs, $1.4 million in stay bonuses and severance for Omniflight employees, and $2.8 million related to the consolidation of Omniflight’s Part 135 Air Carrier Certificate into the Company’s certificate. These nonrecurring charges are not included in pro forma income statements included in this document.

(2) Fiscal Periods Presented

Prior to the acquisition, Omniflight’s fiscal year-end was March 31. In the accompanying unaudited pro forma combined statement of income for the year ended December 31, 2010, Omniflight’s historical statement of income for the year ended March 31, 2011, was combined with the Company’s statement of income for the year ended December 31, 2010. The unaudited pro forma combined statement of income for the six months ended June 30, 2011, includes the three months ended March 31, 2011, for Omniflight. These same three months are also included in the pro forma statement of income for the year ended December 31, 2010. Summarized operating information about the duplicated quarter is as follows:

Revenue	$	44,539
Expenses		51,107
Net loss		(6,568	)

Air Methods Corporation and Subsidiaries

Notes to Pro Forma Combined Financial Statements, continued

(unaudited)

(3) Pro Forma Adjustments

The unaudited pro forma combined financial statements reflect the following adjustments:

(a)

Record the retirement or settlement of Omniflight’s outstanding debt and related accrued interest and debt origination costs at the date of the acquisition. Eliminate related interest expense.

(b)

Record the issuance of $200 million term loan under the Company’s Amended and Restated Revolving Credit, Term Loan and Security Agreement to finance the acquisition. Record related loan origination fees and interest expense. The Amended Credit Facility is secured by substantially all of the Company’s accounts receivable, inventory, equipment and general intangibles and bears interest at a variable interest rate, estimated to be 2.4% for all periods presented.

(c)

Eliminate accumulated depreciation and adjust Omniflight fixed assets and spare parts inventory to estimated fair value. Adjust related depreciation expense based on estimated fair value and average remaining useful life of 6.5 years for owned aircraft. Fair value is based on aircraft bluebook values and current vendor price lists and is considered preliminary pending final inventory counts and review of airworthiness documentation.

(d)

Eliminate Omniflight goodwill and other intangible asset balances as of June 30, 2011, and related historical amortization expense.

(e)

Record estimated goodwill and other intangible assets and related amortization expense. Fair value and estimated useful life of other intangible assets is based on a preliminary estimates and is subject to review and finalization by the Company’s management. Other intangible assets are amortized on a straight-line basis over a thirteen-year life.

(f)

Eliminate Omniflight equity balances as of June 30, 2011.

(g)

Eliminate the impact of certain transactions which occurred between the Company and Omniflight prior to acquisition, including intercompany receivable and payable balances.

(h)

Record transaction costs, net of tax effect, incurred by the Company in relation to the acquisition of Omniflight.

(i)

Eliminate certain assets and liabilities retained by the sellers of Omniflight and not included in the acquisition in accordance with the merger agreement.

(j)

Eliminate management fees due to the sellers accrued by Omniflight prior to the acquisition.

(k)

Adjust capital lease obligations to fair value based on estimated current market interest rates. Omniflight classified all capital lease obligations as short-term as of June 30, 2011, because of certain default provisions contained in other debt agreements which did not allow for capital leases. Because all of these debt agreements were paid or settled at the acquisition date, the capital lease obligations are classified as short-term and long-term in accordance with scheduled payment terms in the accompanying pro forma presentation.

Air Methods Corporation and Subsidiaries

Notes to Pro Forma Combined Financial Statements, continued

(unaudited)

(3) Pro Forma Adjustments, continued

(k)

(l)

Record estimated income tax provision using a 39% effective corporate tax rate. Since the acquisition was accounted for as a stock acquisition, deferred tax assets and liabilities were adjusted to reflect the pro forma changes in net book value. The valuation allowance previously recorded by Omniflight was also reversed since the Company expects to benefit from the use of all deferred tax assets.

Air Methods (AIRM) Inactive 8-K/AFinancial Statements and Exhibits