The financial statements and schedule of
the Air Methods Corporation 401(k) Plan (the “Plan”) as of and for the years ended December 31, 2015 and 2014,
prepared in accordance with the financial reporting requirements of ERISA, along with the reports thereon of independent registered
public accounting firm, are provided beginning on page 1 attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Plan administrator has duly caused this annual report to be signed on its behalf by the undersigned,
hereunto duly authorized.
Air Methods Corporation 401(k) Plan
Dated: June 27, 2016
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By:
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/s/ Peter Csapo
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Chief Financial Officer
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Air Methods Corporation
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Plan Administrator
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AIR METHODS
CORPORATION 401(
K
) PLAN
Financial Statements
and Supplemental Information
December 31, 2015 and 2014
(With Report of Independent Registered Public
Accounting Firm Thereon)
AIR METHODS
CORPORATION 401(
K
) PLAN
Table of Contents
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Page
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Report of Independent Registered Public Accounting Firm
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1
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Financial Statements
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Statements of Net Assets Available for Benefits December 31, 2015 and 2014
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3
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Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 2015 and 2014
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4
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Notes to Financial Statements
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5
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Supplemental Information
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Schedule H, Line 4i – Schedule of Assets (Held at End of Year) December 31, 2015
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14
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Schedule H, part IV, Question 4a – Schedule of Delinquent Participant Contributions for the Year ended December 31, 2015
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15
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Plan Administrator and Benefits Committee
Air Methods Corporation 401(k) Plan
Englewood, Colorado
We have audited the accompanying statements
of net assets available for benefits of Air Methods Corporation 401(k) Plan (the “Plan”) as of December 31, 2015
and 2014, and the related statements of changes in net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is
not required to have nor were we engaged to perform an audit of its internal control over financial reporting. Our audits include
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over
financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the net assets available for benefits of Air Methods Corporation 401(k)
Plan as of December 31, 2015 and 2014, and the changes in net assets available for benefits for the years then ended in conformity
with accounting principles generally accepted in the United States of America.
Plan Administrator, Committee, and Participants
Air Methods Corporation 401(k) Plan
Page Two
The supplemental information in the accompanying
schedule of assets (held at end of year) as of December 31, 2015, and schedule of delinquent participant contributions as of the
year ended December 31, 2015, have been subjected to audit procedures performed in conjunction with the audit of the Plan’s
financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part
of the financial statements, but is supplemental information required by the Department of Labor’s Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility
of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the
financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness
and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information
in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented
in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedules are fairly stated, in all
material respects, in relation to the financial statements as a whole.
EKS&H LLLP
June 27, 2016
Denver, Colorado
Notes to Financial Statements
Note 1 - Summary of Significant Accounting
Policies
Basis
of Financial Statement Presentation
The Air Methods Corporation 401(k) Plan
(the “Plan”) is a defined contribution plan sponsored by Air Methods Corporation (the “Employer”).
The accompanying financial statements have
been prepared on the accrual basis of accounting and present the net assets available for benefits and the changes in those net
assets.
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires the plan administrator 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 increases and decreases to Plan assets during the
reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In May 2015, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-07,
Disclosures for Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent).
ASU 2015-07 removes the requirement to categorize within the fair
value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient and the
requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset
value per share practical expedient. Rather, those disclosures are limited to investments for which the entity has elected to measure
the fair value using that practical expedient. ASU 2015-07 is effective for fiscal years beginning after December 15, 2015.
The Plan does not expect the adoption of ASU 2015-07 to have a material effect on its financial statements.
In July 2015, the FASB issued ASU No. 2015-12,
Plan Accounting: Defined Benefit Pension Plans, Defined Contributions Plan, and Health and Welfare Benefit Plans
, consisting
of three parts. Part I designates contract value as the only required measure for fully benefit-responsive investment contracts.
Part II simplifies investment disclosure requirements for employee benefit plans. Part III permits plans to measure investments
and investment-related accounts as of a month-end date that is closest to the plan's fiscal year-end, when the fiscal period does
not coincide with month-end. ASU 2015-12 is effective for fiscal years beginning after December 15, 2015, with earlier application
permitted. The Plan elected to adopt Part II for the year ended December 31, 2015, and adjusted financial statement disclosures
for all periods presented. Parts I and III are not applicable to the Plan. Adoption did not have a material impact on the Plan’s
financial statements.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 1 - Summary of Significant Accounting
Policies, continued
Investments
The Plan’s investments are managed
by Fidelity Management Trust Company (“Fidelity”), the trustee of the Plan. The Plan’s investments are stated
at their fair values. Air Methods Corporation common stock, which is traded on a national securities exchange, is valued based
upon the last reported sales price on the last day of the Plan year. Mutual Funds are valued at quoted market prices. Money Market
Funds are valued at cost plus accrued interest, which approximates fair value. Common/collective trusts are valued based upon the
market value of the underlying investments. Changes in market values after the Plan year-end are not reflected in the accompanying
financial statements.
Investment transactions are recorded on
the date of purchase or sale (trade date). Dividend income is recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. The net realized and unrealized investments gain or loss (net appreciation or depreciation in fair value of
investments) is reflected in the accompanying statements of changes in net assets available for benefits, and is determined as
the difference between fair value at the beginning of the year (or date purchased if during the year) and selling price (if sold
during the year) or year-end value.
Investment contracts held by a defined
contribution plan are required to be reported at fair value. However, contract value is a relevant measurement attribute for that
portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment
contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under
the terms of the Plan.
The Plan’s interest in the guaranteed
interest account (“Stable Value Fund”) is based on the fair value of the Stable Value Fund’s underlying investments
using the net asset information reported by the investment advisor in the audited financial statements of the Stable Value Fund
at year end. As required, the statement of net assets available for benefits presents the fair value of the investment. No adjustment
to the investments in fully benefit-responsive investment contracts from fair value to contract value was required for the years
ended December 31, 2015 and 2014, as contract value approximated the estimated fair value as of December 31, 2015 and 2014.
As of December 31, 2015 and 2014, $13,787,638
and $13,941,166 respectively, was invested in the Stable Value Fund. The Stable Value Fund is a common/collective trust that is
held in the general account of Fidelity. The Stable Value Fund invests in fully benefit responsive guaranteed investment contracts.
The crediting interest rates are fixed for the life of the underlying investments or change quarterly. The average yields for the
years ended December 31, 2015 and 2014, were approximately 1.64% and 1.41% respectively. The objective of the Stable Value Fund
is to provide preservation of capital, relatively stable returns consistent with its comparatively low risk profile, and liquidity
for benefit responsive plan or participant payments.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 1 - Summary of Significant Accounting
Policies, continued
Loans
to Participants
Participants may borrow from their fund
accounts a minimum of $1,000 up to a maximum equal to $50,000, reduced by the highest outstanding loan balance in the prior twelve
months, or 50% of their account balance, whichever is less. The loans are secured by the balance in the participant’s account.
Loans to Plan participants are recorded at the amounts borrowed plus accrued interest less principal balances repaid. Participant
loans are valued at their outstanding balance, which approximates fair value. New loans bear interest at the prime rate plus 2.00%,
as of the loan inception date, and have maximum terms of five years, except for loans for primary residences, which may have a
term of up to ten years. The interest rates on loans outstanding were between 4.25% and 9.25% at December 31, 2015, with maturity
dates ranging from January 2016 to March 2035.
Note 2 - Plan Description
The following summary of the Plan provides
general information only. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan was established effective January
1, 1989 by the Employer for the benefit of its employees and to qualify under Section 401(k) of the Internal Revenue Code
(“IRC”). The plan was amended on various dates in 2015 and 2014 through the adoption of the Fidelity Volume Submitter
Plan Document Nos. 17 and 14, respectively. The Employer contracts with the trustee for the investing, safekeeping, and accounting
for the Plan’s assets and valuation of the individual participant’s accounts.
Employees who are over the age of 18 are
eligible to participate in the Plan on the first day of the month following 30 days of service. Participants may enter the Plan
immediately upon satisfaction of eligibility requirements. Although it has not expressed any intention to do so, the Employer has
the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the
Employee Retirement Income Security Act (ERISA). In the event of Plan termination, the participants would become 100% vested in
their accounts. Each terminated participant is assessed an annual administrative fee which varies based upon the number of participants
and rates negotiated by the Employer. All other administrative Plan expenses with the exception of loan and distribution fees are
paid by the Employer.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 2 - Plan Description, continued
Contributions
The Employer may make discretionary matching
contributions on behalf of eligible participants. During the years ended December 31, 2015, and 2014, the Employer contributed
discretionary matching contributions equal to 70% of the first 8% of compensation. Discretionary matching contributions are funded
on a payroll basis. Participants may annually contribute up to 60% of their annual compensation, subject to annual IRC limitations
($18,000 in 2015 and $17,500 in 2014). Participants who are age 50 years or older during the Plan year are eligible to make a catch-up
contribution based on Internal Revenue Service (IRS) limitations. During 2014, the Employer ceased matching on catch-up contributions.
The contributions are invested at the direction of the participant in a variety of investment options. The Plan also permits pre-tax
rollover contributions from other qualified retirement plans. The Plan previously accepted after-tax employee contributions but
no longer permits such contributions; however, those accounts are being maintained by the Plan.
Beginning in July 2013 through April 2014,
the Employer erroneously calculated and contributed matching contributions on employee contributions over 8% of compensation. The
error was discovered in March 2014. The Employer determined the amount over contributed to be $910,742 in 2013 and $686,747 in
2014. Those amounts and earnings thereon were removed from participant accounts and utilized to offset Employer matching contributions
in 2014.
The Employer determined in 2014 that participant
contributions totaling $2,273,833 and employer matching contributions totaling $1,322,310 were transferred late to the Plan for
three pay dates in July and August 2013. These contributions were allocated to participant accounts in July and August 2013, and
correction for lost earnings thereon were allocated to participant accounts in September 2014.
Participant
Accounts
Each participant’s account is credited
with the participant’s contributions and allocations of a) the Employer’s discretionary contributions and b) Plan earnings
and losses, and is charged with an allocation of administrative expenses. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s
vested account.
Benefit
Payments
Withdrawals from the Plan may be made by
a participant or beneficiary upon death, disability, retirement (age 59½), financial hardship, or termination of employment.
Distributions are made in a lump-sum cash payment. Vested account balances up to but not exceeding $1,000 for terminated participants
will be automatically distributed. Balances between $1,000 and $5,000 for terminated participants can also be rolled into an IRA
at the election of the participant.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 2 - Plan Description,
continued
Benefits are recorded when paid. For financial
statement reporting purposes, benefits payable are not accrued but are considered as part of net assets available for participant
benefits. There were no benefits payable to participants who had withdrawn from participation in the Plan and requested a distribution
as of December 31, 2015 or 2014.
Vesting
Participant contributions and employer
discretionary profit sharing contributions and the earnings thereon are fully vested at all times. With the exception of matching
contributions from two previous employers, which are subject to historical vesting schedules, vesting of Employer matching contributions
and the earnings thereon is based on years of continuous service, as follows:
Years of Service
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Non-Forfeitable
Vested
Percentage
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1
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33
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%
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2
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67
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%
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3
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100
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%
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At December 31, 2015 and 2014, forfeited
non-vested accounts totaled approximately $354,000 and $380,000, respectively. These accounts will be used to reduce future Employer
contributions. During 2015 and 2014, forfeitures of $412,000 and $1,978,000, respectively, were utilized to reduce employer contributions.
Note 3 - Fair Value Measurements
Fair value accounting guidance defines
fair value as the price that would be received from selling an asset in an orderly transaction between market participants at the
measurement date and establishes a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices
in active markets for identical assets and the lowest priority to unobservable inputs. This guidance establishes three levels of
inputs that may be used to measure fair value:
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Level 1:
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Quoted prices for identical assets in active markets;
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Level 2:
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Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets; or
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Level 3:
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Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets.
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AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 3 - Fair Value Measurements,
continued
A financial instrument’s level within
the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The following table sets forth by level,
within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2015:
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Level 1
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Level 2
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Level 3
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Total
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Company stock
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$
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21,553,855
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|
|
|
—
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|
|
|
—
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|
|
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21,553,855
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|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
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Mutual funds
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223,998,258
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|
|
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—
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|
|
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—
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223,998,258
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Money market funds
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|
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6,461,153
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|
|
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—
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|
|
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—
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6,461,153
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Guaranteed interest account
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|
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—
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13,787,638
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|
|
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—
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|
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13,787,638
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value
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$
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252,013,266
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|
|
|
13,787,638
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|
|
|
—
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|
|
|
265,800,904
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The following table sets forth by level,
within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2014:
|
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Level 1
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|
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Level 2
|
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Level 3
|
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Total
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|
|
|
|
|
|
|
|
|
|
|
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Company stock
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$
|
24,472,150
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|
|
|
—
|
|
|
|
—
|
|
|
|
24,472,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
|
217,572,998
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|
|
|
—
|
|
|
|
—
|
|
|
|
217,572,998
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Money market funds
|
|
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6,552,976
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|
|
|
—
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|
|
|
—
|
|
|
|
6,552,976
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|
Guaranteed interest account
|
|
|
—
|
|
|
|
13,941,166
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|
|
|
—
|
|
|
|
13,941,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total assets measured at fair value
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$
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248,598,124
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|
|
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13,941,166
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|
|
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—
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|
|
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262,539,290
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|
The valuation methodologies described above
may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore,
while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date.
There were no changes to the valuation
techniques used during the period.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 4 – Investments
Net depreciation in fair value for the
years ended December 31, 2015 and 2014, including realized and unrealized gains and losses, was as follows:
|
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2015
|
|
|
2014
|
|
|
|
|
|
|
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Mutual Funds
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$
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(11,839,234
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)
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(724,500
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)
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Air Methods Corporation Common Stock
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(1,233,337
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)
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(8,009,578
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)
|
|
|
|
|
|
|
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|
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|
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$
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(13,072,571
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)
|
|
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(8,734,078
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)
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Note 5 - Federal Income Taxes
The Plan operates under an opinion letter
dated March 31, 2014, from the IRS stating that the Plan constitutes a qualified Plan under section 401(k) of the IRC and is, therefore,
exempt from federal income taxes under provisions of applicable sections of the IRC. The Plan has been amended since receiving
the opinion letter; however, the Plan Administrator believes that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the IRC. Therefore, no provision for income taxes has been included in the Plan’s financial
statements.
FASB ASC 740-10-25,
Accounting for Uncertainty
in Income Taxes
, requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the
Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator
has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2015, there are no uncertain positions
taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan
is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Note 6 – Risks, Uncertainties,
and Concentrations
Investments, in general, are exposed to
various risks, such as significant world events and interest rate, credit, and overall market volatility risk. Due to the level
of risk associated with certain investments, it is reasonably possible that changes in the value of investments will occur in the
near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.
Additionally, some investments held by
the Plan are invested in the securities of foreign companies, which involve special risks and considerations not typically associated
with investing in U.S. companies. These risks include devaluation of currencies, less reliable information about issuers, different
securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover,
securities of many foreign companies and their markets may be less liquid and their prices more volatile than those of securities
of comparable U.S. companies.
AIR METHODS CORPORATION 401(K) PLAN
Notes to Financial Statements
Note 6 – Risks, Uncertainties,
and Concentrations, continued
As of December 31, 2015 and 2014, respectively,
Fidelity ContraFund K ($28,391,731) and Spartan Extended Market Index Fund ($29,169,893) represented more than 10% of the Plan’s
net assets available for benefits.
For the year ended December 31, 2015, Spartan
Extended Market Index Fund ($1,541,946) and Fidelity Contra Fund K ($1,459,488) generated more than 10% of the Plan’s dividend
and interest income. For the year ended December 31, 2014, Fidelity Contra Fund K ($1,720,113) and Fidelity Freedom 2030 K Fund
($1,484,346) generated more than 10% of the Plan’s dividend and interest income.
Note 7- Related Party and Party-in-Interest
Transactions
Certain Plan investments are shares of
money market funds and mutual funds managed by Fidelity. Fidelity is the trustee as defined by the Plan, and therefore, these transactions
qualify as party-in-interest transactions under ERISA. Personnel and facilities of the Employer have been used to perform administrative
functions for the Plan at no charge to the Plan. In addition, the Plan holds common shares of Air Methods Corporation, the Plan
Sponsor, which also qualifies as a party-in-interest transaction. Participant loans also qualify as party-in-interest transactions.
All of these transactions are exempt from the prohibited transaction rules.
SUPPLEMENTAL INFORMATION