Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 |
Summary of Significant Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
(1) Summary of Significant Accounting Policies |
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Basis of Financial Statement Presentation and Business |
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| Air Methods Corporation, a Delaware corporation, and its subsidiaries (Air Methods or the Company) serves as a provider of air medical emergency transport services and systems throughout the United States of America. The Company also conducts aerial tours primarily in and around the Grand Canyon and Hawaiian Islands and designs, manufactures, and installs medical aircraft interiors and other aerospace and medical transport products for domestic and international customers. The accompanying consolidated financial statements included all majority-owned subsidiaries over which the Company exercises control. All significant intercompany balances and transactions have been eliminated in consolidation. | | | | | |
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| The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company considers its critical accounting policies involving more significant judgments and estimates to be those related to revenue recognition, deferred income taxes, and valuation of long-lived assets and goodwill. Actual results could differ from those estimates. | | | | | |
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Certain reclassifications were made to certain line items in prior year consolidated statements of comprehensive income to conform to the 2013 presentation. The impact of the reclassifications is not considered to be material to the consolidated financial statements. |
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| Cash and Cash Equivalents | | | | | |
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| For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. Cash equivalents of $625,000 at December 31, 2012, consisted of short-term money market funds. The Company had no cash equivalent instruments as of December 31, 2013. | | | | | |
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| Trade Receivables, net | | | | | |
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| Trade receivables are presented net of allowances for contractual discounts and uncompensated care. The Company determines its allowances for contractual discounts and uncompensated care based on payer mix, payer reimbursement schedules, and historical collection experience. The allowances are reviewed monthly and adjusted periodically based on actual collections. Billings are charged off against the uncompensated care allowance when it is probable that the receivable will not be recovered. Billings in excess of actual payment are charged off against the contractual allowance when payment is received. The allowance for contractual discounts is related primarily to Medicare and Medicaid patients. The allowance for uncompensated care is related primarily to receivables recorded for self-pay patients. | | | | | |
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| Inventories | | | | | |
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| Inventories are comprised primarily of expendable aircraft parts and manufactured parts for medical aircraft interiors and are recorded at the lower of cost (average cost) or market. | | | | | |
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Property and Equipment |
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| Hangars, equipment, and leasehold improvements are recorded at cost. All maintenance and repairs, including scheduled aircraft component overhauls and replacements, are expensed when incurred. Major modifications and costs incurred to place aircraft in service are capitalized. Improvements to leased helicopters and airplanes are included in flight and ground support equipment in the accompanying financial statements. Leasehold improvements to hangar and office space are included in buildings and office equipment in the accompanying financial statements. Depreciation is computed using the straight-line method over the shorter of the useful lives of the equipment or the lease term, as follows: | | | | | |
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Description | Lives | Residual value |
Buildings, including hangars | | 40 years | | | 10 | % |
Helicopters, including medical equipment | | 8 – 25 years | | | 25-Oct | % |
Ground support equipment and rotables | | 5 – 10 years | | | 0 - 10 | % |
Furniture and office equipment | | 3 – 10 years | | | 0 | % |
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| Intangible Assets | | | | | |
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| The Company recognized intangible assets related to trade names, customer lists, and other customer or contractual relationships as a result of its recent acquisitions. Useful lives are determined based on the estimated period of economic benefit, measured by the present value of associated cash flows, derived from each of these assets and range from five to sixteen years. Amortization expense, computed using the straight-line method, is estimated as follows: $4,363,000 in 2014, $4,361,000 in 2015, $4,099,000 in 2016, and $4,048,000 in each of 2017 and 2018. Intangible assets totaling $24.5 million have indefinite lives. | | | | | |
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| The Company capitalizes incremental direct costs related to the application for multiple Supplemental Type Certificates (STC’s). STC’s are issued by the Federal Aviation Administration (FAA) and represent the FAA’s approval and certification of the airworthiness of an aircraft modification, such as a medical interior. A multiple STC allows the modification to be made to more than one aircraft without additional certification. STC costs are amortized using the straight-line method over the estimated useful economic life of the STC, typically five years. | | | | | |
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| Goodwill | | | | | |
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| The Company accounts for goodwill under FASB ASC 350, Intangibles – Goodwill and Other. Under ASC 350, goodwill and certain identifiable intangible assets are not amortized, but instead are reviewed for impairment at least annually in accordance with the provisions of the statement. The Company did not recognize any losses related to impairment of goodwill in 2013, 2012, and 2011. Goodwill has been allocated to the Company’s segments as follows: $117,466,000 to the Air Medical Services Division, $495,000 to the United Rotorcraft Division, and $10,160,000 to the Tourism Division. | | | | | |
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| Derivative Instruments | | | | | |
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The Company accounts for derivative financial instruments under FASB ASC 815, Derivatives and Hedging. ASC 815 requires the Company to measure all derivatives at fair value and to recognize them in the balance sheet as an asset or liability. Changes in fair value of derivative instruments not designated as hedging instruments are recognized in earnings in the current period. The Company’s derivative instruments are not designated as hedging instruments. Changes in the fair value of the fuel derivative instruments are reflected in fuel expense, included in aircraft operations expense, in the consolidated statements of comprehensive income. |
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| Redeemable Non-controlling Interests | | | | | |
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| In accordance with FASB ASC 480-10-S99, Distinguishing Liabilities from Equity, the Company adjusts the carrying amount of redeemable non-controlling interests to current redemption amounts at the end of each reporting period. Adjustments to redeemable non-controlling interests that affect the numerator of earnings per share calculations are accounted for as increases or decreases to retained earnings. | | | | | |
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| Long-lived Assets | | | | | |
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| The Company periodically reviews long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. No impairment related to long-lived assets has been recognized in the accompanying consolidated financial statements. | | | | | |
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| Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated selling costs. As of December 31, 2013, assets held for sale consisted primarily of six aircraft, which the Company intends to sell within one year. Periodically the Company identifies aircraft to be sold or used for spare parts as part of its long-term plan to phase out certain older models of aircraft and replace them with newer models. | | | | | |
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Revenue Recognition |
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| Fixed fee revenue under the Company’s operating agreements with hospitals and other institutions is recognized monthly over the terms of the agreements. | | | | | |
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| Revenue relating to emergency and tourism flights is recognized upon completion of the services. Revenue relating to emergency flights is recorded net of provisions for contractual discounts and estimated uncompensated care. The Company has from time to time experienced delays in reimbursement from third-party payers. In addition, third-party payers may disallow, in whole or in part, claims for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, determinations of medical necessity, or the need for additional information. Laws and regulations governing the Medicare and Medicaid programs are very complex and subject to interpretation. The Company also provides services to patients who have no insurance or other third-party payer coverage. As a result, there is a reasonable possibility that recorded estimates will change materially in the short-term. Retroactive adjustments may change the amounts realized from third-party payers. | | | | | |
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The Company has contracts to manufacture and install medical equipment and modify aircraft for third parties. When the total cost to complete a project can be reasonably estimated, revenue is recorded as costs are incurred using the percentage of completion method of accounting. Losses on contracts in process are recognized when determined. |
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| Stock-based Compensation | | | | | |
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| The Company accounts for its stock-based compensation under FASB ASC 718, Compensation – Stock Compensation. ASC 718 requires recognition over the vesting period in the income statement of the grant-date fair value of stock options and other equity-based compensation issued to employees. | | | | | |
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Income Taxes |
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| Deferred tax assets and liabilities are recognized for future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | | | | | |
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| The Company evaluates its tax positions in accordance with FASB ASC 740-10-25, Accounting for Uncertainty in Income Taxes. ASC 740-10-25 prescribes a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. | | | | | |
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| Income Per Share | | | | | |
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| Basic earnings per share is computed by dividing net income, plus or minus adjustments to redemption value of redeemable non-controlling interests, by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income, plus or minus adjustments to redemption value of redeemable non-controlling interests, by all outstanding and potentially dilutive common shares during the period. | | | | | |
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New Accounting Standards |
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In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which specifies the presentation in the balance sheet of an unrecognized tax benefit in the aforementioned circumstances. The ASU is effective for periods beginning after December 15, 2013. The Company does not expect the implementation of ASU No. 2013-11 to have a material effect on its financial position or results of operations because it does not currently have any unrecognized tax benefits. |